Part 1

Business Ethics

Part
1
 DAY 1

• 1. The Nature and Purpose of Ethical

Reflections: Introduction, Definition of Ethics,
Moral Behavior, Characteristics of Moral
Standards.

Part
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2
 Q. What is Ethics?
‘Set of moral principles’

1 “Desired norms of behaviour set by the society

to guide us what is wrong and what is right.”

2 “The collection of moral or principle about

acceptable action in a given field of human
activity.”
Part
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3 “Ethics is the science of character of a person
expressed as right or wrong conduct or action”..

3
 Q. What is Business Ethics ?
It is applied ethics…
1 “Desired norms of behaviour exclusively
dealing with business transactions.”

2 “It is the study of how personal moral

standards apply to activities & goals of a
commercial enterprise.”

3 “It aims at integrating core values like- trust,

Part
1
honesty, fairness, social responsibility in the
way business is managed.”

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 Q. Why Ethics ?
# Benefits of Ethical Standards…
“Doing what is Right is itself a Reward.”
“Good ethics is also good business .”
In the long run, higher ethical standards
translate into higher profits.

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 Unit: 1

Moral behaviour: Characteristics of Moral Standards

Q. What is moral behaviour? Before that…

# Descriptive ethics: It simply describes moral
behaviour and judgments.
# Normative ethics: It is a branch of philosophy,
which evaluates past moral behaviour by
applying moral standards* and seeks to
formulate advice for new situations.

Part
1
Characteristics of Moral Standards: …….

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 Characteristics of Moral Standards:
1. All moral standards deal with matters of serious
results for human well-being.. & animals & nature.
2. Moral standards can’t be established or changed
by the decisions of authoritative bodies like law.
These are accepted by a community, group or
individual.
3. These standards are supposed to override self-
interest or ego-centric interest.
4. These standards are based on impartial
Part considerations (Equality & justice).
1
5. These standards are associated with special
emotions under normal circumstances…

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 DAY 2
• Mediating between Moral Demands and
Interest, Relative Autonomy of Business
Morality, Studies in Business Ethics, Role
of Ethics in Business, Theory of Voluntary
Mediation, Participatory Ethics.

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 Unit: 2: Business Ethics

Mediating between moral demands & Interest

Relation between Ethics & Business: 3 Views –

Unitarian view, Separatist view, Integration view

1. Unitarian View: Business must follow morality.

Moral Structure

Business Business
or
Part
1 Business Ethics Moral Community
Business is only a sub-structure of the moral
structure of society…

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 2. Separatist View: Business separated from ethics.

Business Ethics

Society

Market
or system
Bureaucracy

Market Functional spheres

demand Law

Part Moral community

1

Ethics & morality plays no part in business affairs.

Law & Market are the controls…

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 3. Integration View: Linkage between economy &
ethics

Functional Spheres

Market
system
Bureaucracy

Market Law
demand Integration

Moral community

Part
1 Functional Spheres & Community are integrated
and communicate by overlapping zones…

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 Studies in Business Ethics:

There are different problem areas covered

under studies of business ethics.

1. Business and its internal stakeholders:

2. Business and consumers: -

3. Business and its social environment: -

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4. Business and natural environment: -

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 Theory of Voluntary mediation:
Participatory ethics: by Henk van Leuijk

It emphasizes on Voluntary participation of

business in a shared interest of co-operation of
parties to promote a public good.
This public good has three features:
1. The good can be realized through the
participation of All parties.
2. Participation should be Voluntary, it should not
Part
be enforced.
1

3. Every participant can abstain without risking a

damage for himself..
3 ethical outlooks

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 Henk proposed Three general ethical outlooks:
Transaction ethics, Recognition ethics & Participatory ethics

1. Transaction ethics: Individual interests can’t be

entertained on the cost of others’ interest and
business can not be altruistic. No unity & loyalty.
2. Recognition ethics: Each person is a member of
society with Rights & Duties. (Rights to a fair
share of common wealth & Duties to society)
3. Participatory ethics: Voluntary participation
beyond private interest for upliftment of society.
Part
Issues may be- voluntary waste reduction,
1
healthcare & education, public charity, facilities
for mentally retarded people etc.
Contribute to public welfare without expecting
anything. Mediation between society & business.
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 DAY 5,6,7,8
• Introduction; Balanced Concept of
Freedom, Individual responsibility,
Implications related to Modern Issues,
Public Accountability and Entrepreneurial
Responsibility,
Moral Corporate Excellence, Corporate
Part
1
Responsibility.

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 Unit: 3

Moral Responsibility:
Balanced Concept of Freedom
Two Concepts of Freedom:
1. Popular concept of Freewill: Freedom not
constrained by external factors…

2. Balanced concept of Freedom: Freedom is

ability to choose while considering Internal &
External circumstances with opportunities &
limitations.
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Balance concept of freedom =
Liberty to think + Responsibility towards
& perform Society.

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 Six Spheres of Life: by Huiberts

1) Individual person.
2) Primary Family Group.
3) Groups & Organization they
1
participate in (tribes).
4) Our common future as
mankind.
5) Life on earth (biosphere).
6) Physical Universe (Sun,
Part
water).
1

Smallest circle is most important. The larger the

circle, the smaller is our capacity to influence it..
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 Individual Responsibility:
Narrow & Partial concept of Individual
Responsibility:
‘A person is only responsible for the things that he
actually plans and does, not for what comes
afterwards.’

Broad & Complete definition of individual

responsibility:
‘A person is not only responsible for his plans and
activities, but to some extent for the subsequent
events and resulting harm & damage provided
Part
1
that:
1). The person acted willingly and knowingly, and he was
able to foresee this possible outcome.
2). Any person would be able to forecast that the course of
action might result in certain damage or harm...
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 Public Accountability &
Entrepreneurial Responsibility
Moral Responsibility of Entrepreneurial
performance:
Moral responsibilities are three-fold:
1. Producing functional & safe goods for consumers.
2. Concern for environmental care & reduction of
resource depletion.
3. Quality of corporate itself as a moral community.

Moral Corporate Culture:

Part  Moral corporate culture should be clear to all
1 members and deviations should not be tolerated.
 This moral culture must value and encourage
moral autonomy of its members..

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 Corporate Responsibility:

# Corporate Responsibility towards:

 Employees,
 Customers,
 Suppliers & Dealers,
 Shareholders,
Part
 General public,
1  Government,
 Environment…

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 DAY 9-12
• Interest based Outlook, Impact of Interest
on Moral Goals and Moral Principles,
Utilitarian Views on Business Ethics,
Enlightened Egoism.

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 Unit: 4

Business Ethics & Individual Interest

Types of Moral Standards:

1. Teleological Standards: Moral standards
formulating goals are Teleological standards.
(Telos= Objective)
2. Deontological standards: Moral standards
formulating Procedures/ duties are
Deontological standards. (Deon= duty)

Part There are two types of Teleological standards:

1 a. Egoism
b. Hedonism..

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 Types of Moral Standards:

Moral Standards

Teleological Standards Deontological

Standards

Egoism Hedonism

Part
1
Blatant Amoral In-group Enlightened
Egoism Business Egoism Egoism
Egoism

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 Types of Moral Standards: ..

1) Egoism: Teleological theory that considers

self-interest as the highest aim of moral
action.

2) Hedonism: Teleological theory that

considers Pleasure as the supreme good.

Three types of Egoism:

1. Blatant Egoism
Part 2. Amoral Business Egoism
1
3. In-group Egoism..

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 Types of Moral Standards: .
Three types of Egoism:
1. Blatant Egoism: According to it, Everybody
should pursue self-interest and disregard
others’ interests.
# Characteristics of Blatant egoism:
 Blatant egoist recognizes a limited scope of
human motives.
 He believes in Self-interest & calculated altruism
based on self-interest
 He does not have impartial moral guidelines…
Part
1 Blatant egoism is a confused theory because it is
unable to distinguish between goals, motives,
methods and consequences.. ?

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 Types of Moral Standards: ..

2). Amoral Business egoism: It follows two ideas:

a. when there is a clash between morality and
business interests, we should choose the
latter.
b. The ultimate goal of business to follow self-
interest without any control.

It highlights the abuse of Capitalism and profit

Part
maximization..
1

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 Types of Moral Standards: …

3). In-Group egoism/ Closed Tribalism:

In-group egoists do not agree on moral guidelines
concerning the rights of out-group.
It can be harmful for outsiders.

Common features of three unethical interests:

1) They follow partial rules giving priority to one
party only.
2) Abuse of power is a common practice.
Part
3) The feeling of altruism is absent.
1
4) They have instrumental reasons to justify their
actions.
5) They have a lack of concern for weaker parties..

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 Types of Moral Standards:

Moral Standards

Teleological Standards Deontological

Standards

Egoism Hedonism

Part
1
Blatant Amoral In-group Enlightened
Egoism Business Egoism Egoism
Egoism

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 Types of Moral Standards: …

Enlightened Egoism: Positive egoism

It combines Moral goals with Moral guidelines.
Objectives:
1. Reaching optimal deal between parties
(Strategic Goal).
2. Guaranteeing minimum rights to outside
stakeholders (Moral Goal).
Part Goal: Improve the performance in such a way
1 that customers are satisfied and well-treated..

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 Types of Moral Standards: …

Enlightened Egoism:
Importance:
1. It protects interests of all parties
concerned.
2. It adopts a human approach of
respecting each other.

Part
Enlightened egoism is a valid and useful
1 tool..

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 UTILITARIANISM (Utility)
सवॅजनहिताय सवॅजन सुखाय
It believes that actions are justified if they are
useful for the benefit of maximum.
It holds public utility as the ultimate criterion
for moral quality.
“Greatest Good for Greatest People”.

Q. What is our criterion for Utility?

There are two theories to answer it.
a. Hedonistic Utilitarianism: (Bentham),
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Ultimate result should be Pleasure.
b. Eudaemonistic Utilitarianism: (John S. Mill),
result should be Happiness..

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 UTILITARIANISM: …

Q. Objections against Utilitarianism.

Objection: 1. It is a kind of Egoism.
Reply: An action is right if it produces the
highest amount of utility for all parties.
Objection: 2. It considers only Human beings.
Reply: Now it also contains animals & nature.
Objection: 3. It accounts only immediate costs
and benefits.
Part
1
Reply: It covers immediate and future cost &
benefits both..

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 UTILITARIANISM: …

# Problems with Utilitarianism:

1. Problem of Measuring Utility:
2. Problem of Comparing Utility:
3. Problems with Justice: An option may be
most profitable for many, but a loss for
others.
Eg.

4. Problems with Rights & Duties: Utility

Part
calculations may lead to solutions that may
1 be opposite to moral obligations._Eg.

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 DAY 13
• Duty ethics in the Business Environment.

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 Unit: 5

Duty Ethics in Business Environment:

Duty refers to legal or moral obligation.
Duty ethics are based on Altruism, Respect for
others and imposing duties that overrule self
interest.
Need of Duty based Ethics:
1. Value of tolerance & acceptance of multi-
culturalism.
2. Growing literacy that brings awareness about
Part
rights & duties.
1 3. Human rights for all.
4. Increasing globalization that brings
opportunities & competition..

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 Duty Ethics in Business Environment:

# Choice between Conflicting Rights:

The Deontological theory of Kant:
Kant proposed three criteria in case of
Conflicting Rights.
a. Reversibility: Whether the conduct can be
applied the other way.
b. Universalizability: Whether the conduct can
Part
be applied to every human being.
1 c. Intrinsic Human Rights: Whether the
conduct shows respect to all..

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 DAY 14-15
• Theories of Virtue
• Productive Practices and Team
motivation, Prospects of Virtues in
Business Ethics and Management Theory.

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 Unit: 6

Introduction to Theories of Virtue:

Virtue = Moral excellence ( सद् गुण)

According to Aristotle, Virtue is a character
trait that indicates a habitual action.
Virtues like Courage, Courtesy, Honesty,
Loyalty, Trust etc. are favourable.
Virtue Ethics considers virtues as tools to
Part fulfill the goals for human beings..
1

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 Introduction to Theories of Virtue:

According to MacIntyre, Virtue is acquired

human quality, which enables us to achieve
goods which are internal to practices.
Objectives of Virtues: Sustainable Growth.
To achieve virtues, few things are needed:
1. Managers should feel the duties of
commitment.
2. Enlightened egoism has to give way to
positive commitment.
Part
3. We have to define how we can contribute to
1
sustainable growth.
4. A Serious concern for environment..

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 Introduction to Theories of Virtue:

Q. How to cope with Cultural Diversity?

Eg: India

It needs a positive skill or excellence that can

be acquired by trained managers.
Understanding local cultures results into
personal growth. We learn different ways to
do things and to respect local customers.
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 Introduction to Theories of Virtue:

Finally,

A common saying:

When Wealth is lost, nothing is lost.

When Health is lost, something is lost.
When Character is lost, everything is lost.
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 Business Ethics (Part I)

Book:
Peter Pratley: Essence of Business Ethics

The End…
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