Session 1
Investigation: should they have done SESSION 2
1. Ethics: standards of behavior that tells us how
human being ought to act in the many situations
in which they find themselves.
2. Ethics: study of standards of behavior which
promote human welfare and the good
a. Business Ethics: study of standards of
business behavior which promote
human welfare and the good
3. Ethics is about:
a. How we behave, about the standards we
hold ourselves to
b. How we treat each other, even those we
don’t know
4. Ethics is:
a. Not just feelings or conscience
b. Not the same as religion
c. Not just following the law
d. Not following “what everyone does”
e. Not technology or science – what can be
done
5. Ethics is:
a. How we act as individuals
b. How we structure our organizations and
their work
c. How we structure our society, our laws,
our systems
6. Business Ethics is:
a. How we act as individuals in business
b. How we structure our business
organizations and the way they work
c. How we structure our business society,
our laws affecting business, our systems
7. Ethics is also defined as the study of morality; an
investigation
a. Morality: standards an individual or
group has about what is right and
wrong; absorbed as children and
modified subsequently
b.
this? Was it the right thing to do?
8. Characteristics of moral standards:
a. Involved with serious injuries or benefits
b. Not established by law
c. Preferred to other standards including
self interest
d. Felt to be universal
e. Based on impartial considerations
f. Associated with special emotions and
vocabulary (shame, remorse)
9. Business Ethics: specialized study of moral right
and wrong as applied to business institutions,
organizations and behavior
10. Kind of issues in business ethics
a. Systemic (economic, political, legal..)
b. Corporate (a particular organization)
c. Individual (a particular individual or
individuals)
11. Sort issues first (into systemic, corporate,
individual), before attempting analysis as the
solutions may vary
CASE: B F Goodrich: Brakes for USAF
(Page 8,9,10,16)
Issue: Employees pressured into writing false
reports, clearing badly-designed brakes system for
A7-D airplanes; pilots’ lives endangered
Resolution:
Systemic: Dept of Defense changes the way
equipment is tested; makes it harder to submit false
reports.
Corporate: Switch to safe design; replace defective
brakes “at no extra charge”
Individual: Employees quit; notify FBI of wrong-doing
1. Legal vs Ethical
“All that is legal is not necessarily ethical; all that
is ethical is not necessarily legal.”
Note: The “legal” line keeps moving up, as laws
catch up with ethics and get stricter.
CASE: Merck & Co.: River Blindness
(Page 4,5,6)
Brief:
 Disease affecting 18 m poor people in Africa
and Latin America
o Bite of the black fly transfers parasitic
worm
o Lesions and itching; finally, blindness
o Treatment expensive; out of reach
 1979: Merck & Co.’s animal drug Ivermectin
($300m sales/year) found to be effective for
river blindness – low cost, safe
 $100 m required to research, test and launch
for human version; no guarantees it will
succeed.
o Affordability, reach issues
o Could affect sales of Ivermectin
 Co. not doing well; declining profits; project a
risk
 Dr. Roy Vagelos new to his position
 1980: Top management approves development
budget for human version
  1987: Mectizan developed; one pill a year
eradicates parasite
 No buyers! Co. decides to give it free
 2004: Co. reaches 40 million people through
Govts. And NGOs
 Addl. 20 million benefitted in preventing
elephantiasis
 Chairman Dr. Roy Vagelos:
o Only ethical choice: develop human
version
o People will remember and respond
favorably in future
o Ethical actions have strategic long-term
advantages
 Merck brought streptomycin to
Japan to eliminate TB; did not
make money; but now largest
American pharm co. in Japan
2. “Over the long run and for the most part, ethical
behaviour can give a company significant
competitive advantages over companies that are
not ethical”
3. “The good guy sometimes loses”
4. Ethics and corporate organizations:
a. Corporate organizations are morally
responsible for their acts in the same
sense that individuals are
b. It makes no sense to apply moral terms
to organizations as a whole, but only to
the individuals who make up the
organization
c. It is a collective responsibility.
5. Corporations and individuals
a. Corporations and their actions depend
on human individuals
b. These individuals are the primary
carriers of moral duties and
responsibilities
c. Corporations have moral duties and
responsibilities in a secondary sense
d. Co. policies, culture and norms influence - Carol Gilligan: 3 levels (Care for
employees oneself/care for others (and neglect
e. Ulitmately, employees choose to act in a self)/balance between oneself and
particular way others)
f. “I followed orders” has limited validity. b. Lawrence Kohlberg:
Does not completely eliminate i. 3 levels (2 stages in each level;
responsibility second stage is more advances
(Seriousness of injury or wrong lessens and organized form of general
mitigations) perspective of that level)
6. Ethical relativism
Level Stage 1 Stage 2
a. There are no ethical standards
Preconventional Punishment Instrumental
i. That are absolutely true and
and and Relative
ii. That apply or should be applied
Obedience Orientation
to companies and people of all Orientation
societies Conventional Interpersonal Law and
b. Should a company follow the principle- Concordance Order
“When in Rome, do as the Romans do?” Orientation Orientation
- This is the best way a manager can Post Social Universal
choose what to do because moral Conventional Contract Moral
standards differ and there is no absolute Orientation Principles
standards of wrong or right. Orientation
c. If ethical relativism is wrong, then there c. Not everybody passes through all stages
are some moral standards that should d. “Doing ethics”- when you start
be applied to the behaviors of everyone examining standards critically
(regardless of what society they live in) e. Studying ethics stimulates moral
7. Integrative Social Contracts Theory (ISCT) development
Framework 9. Moral Responsibility
a. Two kinds of moral standards (for a harm/injury/wrong)
- Hypernorms: moral standards a. Morally responsible=To blame, not
applicable to people in all societies moral obligation; responsible for injury
- Microsocial norms: differ from one or wrong
community to another; applicable only if b. A person is morally responsible (for
community accepts the norms injury or wrong) if
b. Hypernorms take priority over i. Causality (person caused or
microsocial norms helped cause it; or failed to
8. Moral Development prevent it when (s)he could have
a. Two approaches and should have
- Lawrence Kohlberg: 3 levels (Pre- ii. Knowledge: Did so knowingly
conventional, Conventional, Post- iii. Freedom: Did so of own free will
conventional/autonomous)
 c. Person not morally responsible even if
any cone condition not met
d. Mitigating circumstances
i. Diminished active involvement
(not applicable if specifically
given responsibility – eg auditor)
ii. Uncertainty about facts or
circumstances
iii. Threats or duress
e. Extent of mitigation depends on
seriousness of wrong or injury
f. Rationalization (eg “Everybody does it”,
“Boss made me do it”) = Attempt to
escape responsibility
Session 3
Framework for ethical decision-making:
1. Recognize an ethical issue
-Are ethical standards at risk?
-Will this fail the “smell test”?
2. Get the facts
3. Develop options for action
-Talk all affected parties
-Consult another person
4. Evaluate options from various ethical, co. policy,
legal and personal standards
-Utilitarian, Rights, Fairness or Justice, Common
Good, Virtue approaches
-Company policy
-Laws of the land
-Personal conviction and standards
5. Make a decision and test it
-Can you explain it to TV? To your mother?
6. Act on the decision
7. Reflect on the decision later
-How did it turn out for all concerned?
-Would you take the same decision again?
Case: Slavery in the chocolate industry
Systemic:
-Continuation of child slavery and societal
acceptance
-Farmers unaware of market prices and absence of
organized supply chain
-Poor enforcement of existing laws, acceptance and
corrupt systems
-Use of lobbying
-Big 4 ducking their responsibility
Corporate:
-Chocolate companies not following through on the
commitments
-Use of lobbying
-Small firms could have helped resolve the issue
-Big 4 ducking their responsibility
-Big 4 paying lip service
Individual:
-Farmers knowingly using children, parents allowing
it
-Consumers continuing to eat chocolates
-No justified pays to the child laborers by the
middlemen
Who is morally responsible?
-Farmers, African govts, Procurement Agents,
Processors (Cargill, Archer, Daniels, Callebaut),
Chocolate Cos (Hershey, Mars, Nestle, Kraft),
Importers/Distributors, Wholesalers/Retailers,
US/Govt, Advertising agencies, Consumers, Parents –
all are responsible (causality, knowledge, freedom)
-Some parents are not morally responsible as they
did not know the children are being taken away.
-The slave children were taken away hence they are
not morally responsible.
What should be done? Who has maximum
impact/capability/opportunity?
-Option 1: Consumers – if we stop preferring brands
who source cocoa ethically, brands who are involved
in this slavery of cocoa will feel the pressure of lost
sales
-Option 2: Companies – if they sign the “Harkin –
Engel Protocol” and follow it.
Session 4
1. Ethical Standards (Utilitarian, Rights,
Fairness/Justice, Common Good, Care, Virtue
Approach)
2. Utilitarian approach: one that produces greatest
good and least harm for all affected entities:
customers, employees, shareholders,
community, environment
3. Rights approach: one that best protects and
respects moral rights (to live, not to be injured,
privacy...) of those affected
Rights imply duties – incl. respecting others’
rights
Non-humans also have rights (eg animals)
4. Fairness or Justice approach: treat all human
beings equally
if unequally, then fairly, based on some
defensible basis
5. Common Good approach: actions should
contribute to the community
Focus on welfare of everyone – esp. the
vulnerable
6. Care approach: caring for well-being of those
near to us
Particularly those dependent on us
7. Virtue approach: basic alternative to other
approaches; evaluates character rather than
actions
Ethical actions should be consistent with ideal
virtues (human beings at their best)
Enables us to act according to the highest
potential of our character
Asks the questions, “What kind of a person will I
become if I do this?”
8. Ethical standards: Some reflections
a. Utilitarian: Appropriate when deciding
on limited but vulnerable resources;
high reliance on measurements,
estimates and comparisons
-How to measure life, love, freedom,
health, beauty
-Impact on “Rights” and “Justice”;
unequal distribution of benefits and
burdens
-Impacted people not consulted
b. Justice: Generally carries more weight
than utilitarian
-If societal gains “sufficiently large”,
some injustice “may be tolerated”
c. Rights: Moral rights of some cannot be
sacrificed for others’ benefit
-Correcting “extreme injustices” may
justify restricting some rights
d. In general:
-Moral rights have greater weight than
Utilitarian or Justice
-Justice carries greater weight than
Utilitarian
-Caring carries greater weight than
impartiality when it comes to
dependents
9. Rights and duties
10. Ethical rules governing contracts
a. Both parties have full knowledge of
agreement
b. Neither party intentionally
misrepresents facts
c. Neither party enters contract under
duress or coercion
d. Contract must not bind parties to
immoral act
Contract violating any one condition is
considered void
11. Integrated approach
a. Incorporate all approaches to reasoning
b. Assess which principle(s) more relevant
or applicable to that situation
c. No universal rule available
d. Criteria are “rough, intuitive”
12. Corporate Social Responsibility
a. Business ethics and CSR not the same-
but related
b. CSR: Corporation’s obligation towards
society
c. Shareholder View (Milton Friedman)
-Co.’s only responsibility is to make as
much money as possible (legally and
ethically) for its owners/shareholders
-Managers have no right to spend on
social causes if that does not result in
more profits
d. Stakeholder Theory (Freeman and Reed)
-Co. should be run for benefit of all
stakeholders (Customers, employees,
community, stockholders…)
-Managers should balance interests of
stakeholders
-Each stakeholder should get “fair share”
of benefits
-Rejects Friedman’s view that resources
should not be used to benefit other
stakeholders at the expense of
shareholders
Session 5
1. Business ethics and CSR
a. Business ethics is a part of corporate
social responsibility
-Being ethical is one of the obligations
companies owe to society
b. CSR: Larger and more inclusive concept
-Ethical obligations
-Legal obligations
-Economic contributions
-Discretionary or philanthropic
contributions
c. Ethics provides “normative” reasons for
CSR
2. Making CSR meaningful
a. Deeply integrate external engagement
into strategy and operations
Make CSR part and parcel of everyday
business
b. How?
-Define what you contribute
-Know your stakeholders (not just
customers)
-Apply world-class management
techniques to CSR
-Engage radically
Session 6
1. Degrees of Competition
a. Perfect Competition
-Free market
-No buyer or seller can affect prices
 -Free entry/exit
-No external regulator
b. Oligopoly
-Small no. of large players
-Together can somewhat influence
prices
c. Pure monopoly
-single firm
-only seller
-new firms barred from entry
2. Monopoly competition
a. Characteristics:
-One seller (not many)
-High entry barriers (free entry not
possible)
-Qty. below equilibrium
-Price above equilibrium
-Can extract monopoly profit
b. Justice, Utility, Rights- not met
c. Statistical Data: Monopoly firms seek
monopoly profits, unless restrained
d. Producer is king- not the customer
3. Oligopolistic competition
a. Unethical practices
-Price fixing
-Manipulation of supply
-Exclusive dealing arrangements
-Typing arrangements
-Retail price maintenance
-Price discrimination
4. Oligopolies and public policy
a. “Do nothing” view
-Power of large oligopolies not as large
as it appears
-Large corporation balanced out by
other large corporations or entities (eg
govt, union)
-Big is good in a globalizing world
b. “Antitrust” view 3. Environmental costs and remedies: Possible
-Break up large corporations into small approaches
cos. a. “Social audit” = Report of social costs
c. “Regulation” view and benefits
-Regulatory agencies and laws required -Issue: Not possible to measure impacts
to control large cos. accurately in all cases
d. Conclusion: Ethical rules prohibiting -Risk assessment not precise
collusion need to be followed voluntarily b. Utilitarian approach may violate moral
or legally enforced rights (eg benefits from nuclear plant vs
disposal of nuclear waste)
c. Possible alternatives to utilitarian
Session 7 approach
-Choose option that carries no risk of
1. Threats to environment irreversible damages
a. Pollution -Identify most vulnerable segments (if
i. Air things go wrong); protect them
-Global warming -Assume worst will happen; choose
-Ozone depletion option that leaves us best off when
-Acid rain worst happens (“maximin rule” of
-Airborne toxics probability)
-Air quality 4. Ecological ethics (or) Deep ecology and
ii. Water Sustainability
iii. Land a. Ecological ethics: “Non-human parts of
-Toxic substances the environment deserve to be
-Solid wastes preserved for their own sake, regardless
-Nuclear wastes of whether this benefits human beings”
b. Resource depletion b. Duty to recognize and preserve the
i. Species & Habitats ecological systems within which we live
ii. Fossil fuels (“Hubbert Curve”) c. Sustainability: The capacity something (a
iii. Minerals thing, a quality, an activity, a system…)
2. Worlds in collision has, to continue to function into the
future
5. Ecological ethics
a. Bolivia: “Law of Rights of Mother Earth”
-Grants rights equal to humans to all
nature
b. 11 new rights to nature, including
-right to life and to exist
-right to continue vital cycles and
processes free from human alteration
 -right to pure water and clean air
-right to balance
-right not to be polluted
-right to not have cellular structure
modified or genetically altered
-right of nature “to not be affected by
mega-infrastructure and development
projects that affect the balance of
ecosystems and local communities”
6. Ethics of conservation of depletable resources
a. Justice to future generations
-John Rawls: Leave the world no worse
than we found it
-“Care”: Leave the immediately
succeeding generation a world not
worse than that we received
-Robin Attfield: Leave the world as
productive as we found it
Session 8
4. Internet Ethics and Artificial Intelligence (AI)
1. What is Internet Ethics?
Basically refers to the analysis of the role that
the internet plays in what philosophers call the
development of the good life- the kind of life
that we want for ourselves, for society over all,
the kinds of people we want to be
2. Internet Ethics: Stakeholders
5. Markets and consumer protection
3. Internet Ethics in the following contexts:
a. Human relations
b. Role of social media
c. Net neutrality
the idea that the controllers of the
pipelines of the internet will not be able
to pick and choose between the kinds of
content that’s available, that everything
will be able to flow freely
d. Access to the internet (or lack of it)
e. Privacy
Personal data being collected and stored
and used in a variety of ways that
they’re not really aware of
f. Big Data
collection and analysis of big data, which
raises fascinating ethical questions
about who or what the data is being
collected about
These contexts can be inter-connected.
a. Complex and rapidly changing
technology-proceed with caution
b. Law will always struggle to catch up;
may not be a good guide
c. Understand technology fully before
deployment
d. Form your own code of ethics (based on
virtue ethics, rights and common good)
especially taking care of the vulnerable
e. Be transparent-keep customer fully
informed
a. “Market approach” to consumer
protection
-Consumer safety is a “good”
-Best provided by free market
mechanism
-Producers will respond to consumer
demands for more safety
-Consumers will indicate preference by
paying more
b. Issues
-Consumers do not have full and perfect
information
-Consumers irrational and inconsistent
when choosing
-Many markets are monopolies or
oligopolies
6. Ethical duties of manufacturers: 3 theories
(Contract view, Due care view, Social costs view)
7. Contract view:
a. Relationship essentially contractual;
firm’s moral duties are those created by
contract
b. Secondary moral constraints to a
contract
-Both parties have full knowledge
-Neither party intentionally
misrepresents facts
-No duress or undue influence from
either side
c. 4 moral duties of business
-Comply with contract
-Disclose nature of product
-Avoid misrepresentation
-Avoid duress and undue influence
d. Problems:
-Manufacturers do not always have
direct agreements with consumers
(indirect relationship exists)
-Disclaimers can nullify all contractual
duties of manufacturer
-Buyers and sellers are not equal
(Manufacturers have more knowledge)
e. Caveat emptor: Buyer beware
8. Due care view:
a. Manufacturers in advantaged position
 b. Have duty to take special care of
consumers’ interests
-Design
-Production
-Information
c. Caveat vendor: Let the seller take care
d. Problems:
-Defects/problems emerge after many
years; manufacturer himself did not
know
-Paternalistic assumption: Consumer not
capable of taking important decisions
(on safety)
9. Social costs views
a. Manufacturers should pay for costs of all
injuries caused by product-even if due
care has been exercised
b. Leads to legal doctrine “strict liability”
c. Problems:
-Unfair to manufacturers (unforeseen,
not preventable)
-Unfair to consumers if costs are passed
on
-Encourages carelessness among
consumers
-Leads to expensive litigation and
compensation (eg, hot coffee)
10. Crisis management: Best practices
a. Get the facts
b. If issue exists, admit it
c. Provide immediate short-term fix
d. Identify root cause(s)
e. Implement corrective action
f. Publish updates
g. Put customer first
h. Communicate, communicate
Session 10
1. Responsibilities of the Board c. Communicate Policy (Multiple occasions,
a. Setting corporate strategy, overall reinforcement)
direction, mission, vision d. Encourage dialogue (Increase
b. Hiring / firing CEO and top management ownership)
c. Controlling, monitoring, supervising top e. Come down hard on cynicism
management f. Set example from top
d. Reviewing and approving use of g. Circulate among customers and
resources suppliers
e. Caring for shareholder interests h. Establish Ethics Hotline
f. Ensure conformance with laws; exercise i. Take swift action
“due care” j. Review and update Policy regularly
“Direct the affairs of corporation but not
manage them.
Session 11
2. Board of Directors Continuum
1. Corporate Governance
a. “Relationship among shareholders, top
management and Board of Directors in
determining the direction and
performance of the corporation”
2. Corporation fundamentally governed by BoD
overseeing top management, with concurrence
of shareholders
3. What can the Board do?
a. “Hire and fire the CEO” – Pick the right
person!
b. Ask questions
c. Develop relationships with people
d. “Noses in, hands off”
e. “Expect” vs. “Inspect”
f. Red flags: (Strange) numbers, decisions
inconsistent with values...
4. Ethics and Governance: Not global frontier for
3. Board’s role in corporate ethics
India Inc.
a. Power tends to corrupt. Hold the CEO
a. Formulate Ethics and Governance Policy
accountable.
(Discussions, benchmarking, plain
b. No inverse relationship between
language)
c. profits and ethics.
b. Publish Policy – with Code of Conduct
d. Board can’t change CEO’s character.
(Examples, cases, user-friendly)
4. Ethics & the manager’s “mind map”

5. Issues and corrective actions
a. Governance:
-Active Boards and Audit Committees
(“Gate-keepers”)
-Separation of Chairman and MD
-Process for appointment of
independent directors
-Professional code of ethical conduct
-Strengthening whistleblower protection
b. Auditor Independence
-Eliminate conflict of interest (through
non-audit services)
-Mandatory rotation of audit firms
-Mandatory rotation of lead audit
partner
-Dual audit / joint audit
-Auditors hired by insurance firms
(which insure financial statements)
-Stronger internal controls (in global
audit firms)
-Audit the auditor
c. Leadership qualities/DNA/Culture
-CEO selection and evaluation by Board
-Ethics systems
-“Walk the talk”
d. Regulators’ response
-Speedy investigation and prosecution
-Continuity of business
-Laws to evolve to keep up with
changing business climates and culture
and technology
Session 12
1. Seven signs of ethical collapse
a. Pressure to maintain number
b. Fear and silence
c. Young ones and iconic leaders
d. Weak Boards
e. Culture of conflict of interest
f. Innovations like no other
g. Goodness (elsewhere) as rationale
2. The way forward
a. Stricter regulatory environment
-FCPA enforcement
-Bribery Act 2010 (UK)
-Sarbanes-Oxley Act (SOX)
-Companies Act 2013
b. Setting up ethics systems
c. Exhortation and compliance not
adequate
d. The way forward: A culture of ethical
business