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Role of Religion in Business Ethics and Governance

Submitted By Inderjit Singh B10081

Business ethics has received substantial attention from the corporate world, academician, and public sectors firms over the past several decades. Most recently, the alleged behaviour at Satyam, Enron (Making false financial accounts) as well as other highly exposed scandals (e.g., WorldCom) have come under close scrutiny and has brought the topic of business ethics to the publics attention. As these scandals have shown us, unethical behaviour is costly to company stakeholders. In all the recent surveys, business leaders acknowledge that they feel business students, leaders; managers should be exposed to business ethics. It has prompted various colleges and corporate to induct as a mandatory course in their various training curriculum. While there is a general agreement on the value of addressing business ethics, no consensus exists as for the appropriate and effective means by which this can be accomplished. In my paper, I will look at the role of religion in shaping business ethics and will also look into role of ethics in governance discretion.

Religion effect on Ethics

The role that religion plays in affecting ethical attitudes is well recognized. We have well documented papers showing that the religion is generally associated with higher ethical attitudes. We will look at Kohlbergs stage development theory to get more specific. Even though he has argued strongly that religious and moral judgments are separate, Kohlberg admits there are parallels: Religion is a mindful response to, and an expression of, the quest for the decisive meaning for moral judging and acting. As such, the foremost function of religion is not to provide moral prescriptions but to support moral judgment and action as purposeful human activities. If this is true, it implies that the given stage of solutions to moral problems is needed, but not sufficient, for a parallel stage of solutions of religious problems. Kohlberg has argued that religion helps us to answer the Why be moral? question, which he turns is related to the existential question, Why live? .He also maintains that the union with God experience found in religion may provide a suitable opportunity to find the answer to these questions. Further, the religion experience may provide a motivation to incorporate the general ethical principles and, hence, help in progression to Stage 6.Also researches in the business ethics field points to the fact that the major religions contain universal moral tenets, such as the Ten Commandments as applied to Islam, as well as other Biblical traditions that provide instructive moral guidance. Study has found out that students who fear getting caught have a significantly lower willingness to act unethically. If we can look deep into the findings than believers in God

are less willing to act unethically because they believe that higher power will catch them in the act know their unethical thoughts or attitudes. Adam Smith in his book The Theory of Moral Sentiments states Religion, even considered in its rudest form, gave a sanction to all the rules of morality, long before the new age of artificial reasoning and philosophy. Thus the terrors of religion should thus enforce the natural sense of duty, was too much importance to the happiness of mankind for environment to leave it dependent upon the slowness and uncertainty of philosophical researches. He adds The regard to the propriety of action, as well as to the reputation; the regard to the applause of his own breast, as well as that of others; are motives which, they presume, have the same influence over the religious man as over the man of the world. But the earlier lies under another restraint, and never acts deliberately but as in the presence of that Superior who is finally to repay him according to his deeds. The recent findings which link religion and ethics have encouraged recent calls for absorption of religious traditions into business ethics curricula or a re-examination of common spiritual ideals among world religions. Since todays college and university students are tomorrows business leaders, we should look whether religion influences ethical attitudes across a variety of scenarios and also if it is controlling for several important background factors.

Governance Discretion and Ethics

In a modern society, Managers are authorized to take decisions on many complex issues owing to their own local variations, needs and circumstances. There may be no specific directive to address those issues. In such cases, managers have to depend on their own sense of judgment in making decisions. Decisions like these are called Governance Discretion. According to Michael J Hill, The exercise of discretion occurs when officials are required or permitted to make decisions without being given instructions which would in effect predetermine those decisions. To clarify the matter further, a few case examples are mentioned. Case-1: If the MTNL authority receives eighty applications for only eight telephone sets for distribution and if all the applicants fulfil conditions for getting telephone connection, to decide who from among applicants would be given telephone sets, would be a subject of Governance Discretion of the respective officials of the MTNL authority. Case-2: Magistrates are empowered to arrest any individual who seems to them hurtful to state or social order and keep him confined in custody without bail for 24 hours. Case-3: The Court, on the basis of claim from A, can summon B to present himself before the court or directly issue warrant of arrest against the defendant. This is within the purview of administrative discretion of the Magistrate. Under the general exceptions clause of the Penal

Code, Magistrates are given immunity for their actions. Affected persons can only appeal to the higher Court but cannot accuse the Magistrates for their wrong judgements. Case-4: In some cases, it is observed that the judge reject bail petitions in bailable cases or the person arrested in a non-bailable case is set free or bailed out. These examples prove that discretionary power of the managers plays an important role in the governance system of a country. Surveys, time and time again, have shown that the managers often face complex ethical dilemmas in applying discretion in administration. On the one hand, there is the urge to serve stakeholders interest, and on the other, is the individual or group interest. It is desirable, of course, that in the above cases, the Police, Magistrates or the MTNL would apply their public authority wisely and in public interest and not for aggrandizing self interest. These means managers should do whatever they consider necessary for stakeholders welfare and avoid matters which are bad or undesirable, although beneficial to self interest. Here comes the question of ethics. Since the basis of manager discretion is mainly the sense of mind or the consideration of mangers and not the usual rules and regulations, ethics becomes important as inner check on managers behaviour. In recent years, with the expansion of governmental activities in the social and economic fields of nations, governance has increasingly been engaged in collecting income taxes, industrial monitoring, signing government contracts, issuing business licenses, economic and social policies and their implementation. In these economic negotiations, avoidance of expediency and self-interest mentality and performing managerial functions with honesty and integrity, is a necessary precondition for ensuring good governance and development. In these matters, the managers in South Asian countries are commonly alleged of favouritism, unnecessary formalism and client harassment, pointless delay in decision-making and taking bribe, mistreatment of official position for personal gains, tempering of official accounts and fund misappropriation. The clients inclination to offer bribe to bureaucrats for quick clearance of cases, tax evasion and illegal benefit are also to a great extent responsible for managerial corruption. In a society where family bond or group loyalty is main, bribes are presented to high officials in administration in the form of gifts. In the society, although bribery is damned as an illegal gratification of money, giving and receiving gifts are measured as token of mutual love and courtesy. That is why, in order to check misuse of official position and power for personal gains, some countries of Asia have prohibited government officials to take any gift from clients or citizens

In this respect, an example worth mentioning is found in the life of Prophet Muhammad. The Prophet once appointed Abdullah as tax collector. At the time of depositing the collected compulsory tax on wealth, Abdullah had divided that into two parts. One part of this was tax money from people, and the other was the gift presented by people to him. The Prophet of Islam instructed Abdullah to deposit the gifted amount along with the collected revenue to government treasury, and the following morning issued an official moratorium prohibiting officials to receive any gift from people. He said If anybody is entrusted with official responsibility, he will be given salary and emoluments sufficient to meet his needs. If he receives anything beyond this that would be a breach of trust

Defining Ethics from Religious Angle

What is the criterion for measuring ethical behaviour? How to distinguish between right and wrong? If there is any universal standard of ethical behaviour, different human groups or even different persons of the same group may have different perceptions of ethics. For example, for the steadiness of civilization, what is suitable to the consideration of a capitalist would possibly be intolerable to a socialist. Both may have contradictory views regarding the behaviour of bureaucracy with the people. This may again become conditional with ever changing values of society. So, if we admit that peoples perception regarding right or wrong, good or bad is related to peoples interest and to the changing social customs and environment, these cannot be the dependable guide to our behaviour. Therefore, the universal basis for achieving uniformity in human behaviour regarding good and bad should be some impersonal ethical code, which can only be received from superhuman revelation i.e., religion. Some authors argue that a growing lease of literature suggest that there is a strong spiritual reality to peoples lives. Some may, however, argue that a connection between morality and God is pointless to make sense of life. Others contend that religious faiths and spirituality are the fundamentals of ethical decision making. Despite the theoretical differences of different religions, the central message of every religion is to create the feeling among people that the survival and goings-on of the universe are the result of the desire of a conscious and innovative universal force. Another realization is that man has got spiritual relationship with this divine force. Owing to this realization, man has been asked to make a distinction between right and wrong. Without the existence of such a realization, peoples perception of ethics is bound to be smoky and would become dependent on convenience. As a result, the concept of should and

shouldnt would be a relative experience. This may then be subjected to mishandling for personal or group interest. As mans requirements are dependent on ever changing social environment, in such a process, it becomes difficult to determine any stable ethical standard. But religion encourages man to be familiar with such an ethical standard which would be free from personal or social influence. If honesty and benevolence can be increased in the behaviour of managers through religious teachings in ethics study, it would be beneficial to public interest. Religion creates among the managers the feeling that, as the vice-regents of God, the power and responsibility entrusted on them is derived from God. The use of power and performance of responsibility with utmost honesty and sincerity and for stakeholders interest is not only mandatory for organizational interest, but also a religious virtue. Besides institutional obligation, the public managers will have to account for their deeds to the Almighty Lord. This sort of feeling and awareness among managers works as a mental check against corruption and maladministration. For this reason, it has been emphasized in academic discourses to include religious teachings in the study of managerial ethics. Ferrel Heady in his study has identified some positive benefits of religious education in the managerial training. According to Heady, the Swiss managers are more conscious about honesty and responsible behaviour because of their Protestant orientation. The Chinese bureaucrats are found more well-mannered in their dealings with the public because of their Confucius teaching. The above findings of Heady support the views of Waldo and Friedrich that besides certain common characteristics, managerial behaviour in a particular culture is influenced by its own environment, belief and values. To change one is to change the other.

Good governance is a product of the quality of decisions and actions of managers that enhances the trust of people in the policy and leadership. Managers while making decisions always faces two conflicting situations such as between serving personal interest and serving stakeholders interest. Since it is expected that managers should always be guided by stakeholders interest and conquer individual interest, the question of ethics or the feeling of right or wrong become important in managerial behaviour. But the question is what would be the criteria to judge the difference between right and wrong or should and should not behaviour of managers if there is no impersonal standard of ethical value? Different communities and individuals within the same nation may have different perceptions of the same issue. Therefore, the universal basis to

achieving uniformity in human behaviour regarding good and bad may be the formidable ethical code, which can only be derived from religion. Religion encourages to synchronies human thought and deeds with a code of ethical values free from the pressure of personal and social life. Therefore, to instil ethical sense in the minds of managers, religious values are being given priority in managerial teaching in many countries of the present world.