What’s the matter with

business ethics?
 • Recent surveys show that three quarters of America’s major
corporations are actively trying to build ethics into their
organisations.
• Managers often need concrete help with 2 kinds of ethical
challenges:
- Identify the ethical courses of action in difficult grey area

Introduction situations – the conflict between right and right and not the
classic right vs wrong conflict.
- Navigating situations where the right course is clear but real
world competitive and institutional pressures lead even well
intentioned managers astray.
• However, the problem is that far too many business ethicists
occupy a moral high ground that is removed from the real
world concerns of a vast majority of managers.
 • The are too preoccupied with absolutist notions of what it
means for managers to be ethical with overly general
criticisms of capitalism as an economic system, with dense
and abstract theorising and with prescriptions that apply only
remotely to managerial practices.
• But does this mean that managers can safely dismiss the
Introduction enterprise of business ethics? NO!
• Several business ethicists, who have been taking a stock of
their field from within, have called for fundamental changes
in the way the enterprise of business ethics is conducted.
• And they are offering new approaches of value to both
academic business ethicists and professional managers.
 From where the thought of business ethics started?
• It started as a concept of CSR
• Everyone initially followed the neoclassical economics,
Why should which says that the sole purpose of the business is to
maximise the immediate bottom line subject to only the

managers most minimal constraints of the law

• Ethical management is a process of anticipating both the
be ethical? law and the market-and for sound business reasons

“The purpose of ethical management is to catch any new

spirit and embody it in voluntary standards without waiting
for legal compulsions”                       - E. Merrick Dodd Jr.
 • What are the Short term and Long term meaning of
being ethical?
• In the short term, ethical behaviour may prove costly to
Why should a company’s bottom line
• But in the long term, the market will reward such
managers behaviour
• Ultimately, socially responsible deliberation will not
be ethical? lead management to decisions that are different from
those indicated by long range profit considerations

“Ethics pay”                                            - John Shad

 • This fairly answers the question of “why be ethical?”
under the heading of ‘enlightened self interest’
• The next big question was ‘How can Managers
Why should determine the ethical course in any particular situation
and stick to it in the face of competing pressures?’
managers • So to address it, the managerial discipline of ‘Business
Ethics’ was introduced
be ethical? • Training in moral philosophy gave business ethicists the
analytical frameworks and business tools necessary for
making fine grained ethical distinctions and discerning
the appropriate course in difficult ethical situations
 • Problems in the Business Ethics discipline-
• Moral philosophy is based on the principles where
self interest does not rule
Why should • And thus its application in business percepts posed a
managers problem and was found dissatisfying by most
business ethicists themselves

be ethical? • So, far from taking a step towards real world moral
problems of management, several prominent business
ethicists have chosen to reopen the fundamental
question: ‘Why should managers be ethical?’
 Business Ethicists have tried to go beyond the question
‘Why be moral’ to answer more hard ethical questions.
Mistakes There work is generally suffered from one or more of
three typical tendencies. They are:
and Missed • It is too generally consumed with offering
fundamental proposals 
Opportuniti • It is too theoretical- and very complex( not user
es friendly at all)
• It is too impractical- doesn’t have much relation to
existing managerial role( untenable)
 • Too general: Thinkers like Karl Marx or Friedrich von Hayek questioned the
basic premises of economic and political systems such as capitalism or
socialism. Medicine and law provides and contrast here. This theories as too

Mistakes general for any manager to come and study it differently.

• Too theoretical: Both medicine and management are referred to as science.
Like medicine has gained credibility by understanding hard medical science

and Missed issues, business ethicists have gained credibility by girding their work with
abstract moral theories. The problem here is that mainstream managers see
ethics as ‘subjective’, ‘soft’ and ‘normative’ and their own respective fields as

Opportuniti
objective, hard and scientific. Ethical theories can help illuminate this moral
problem manager face.
• Too impractical: Even when business ethicists try to be practical, much of what

es they recommend is not particularly useful to the managers. Take an example of a

doctor when their diverse interest of the same principals comes into conflict.
Like when a patients interest in being told the truth conflicts with the interest of
his/her having a peace of mind. In this case the answers ethicists are provide are
too impractical and most of the times they are untenable. 
 • Two major problems that Business Ethicists face:
• •They disagree that ethical behaviour is always in
company’s best interests i.e. to behave ethically sometimes
The myopia may cost dearly. In other words, ethics and interests can do
conflict

of moral • •Secondly, even when doing good is in company’s best

interests, such acts motivated by self-interests can’t be

philosophy
ethical. This refers to the idea of altruism which is that an
individual should do good because it’s right and will benefit
others, not because the individual will benefit from them
So, motivation could be either altruistic or self-interested,
not both
 • •To be ethically as a business because it may increase your
profits is entirely wrong. The ethical business must be ethical
because it wants to be ethical
• •However the fundamental issue that remains for a manager is
The myopia to handle the conflicts between ethics and interest and the way
they handle such conflicts. If ethical actions means that

of moral company’s profits are reduced, then it must accept the fact
without any regret

philosophy • •However, absolutism leads to ethicists devaluing business

interests in favour of more ethical demand
• •As explained by R. Edward Freeman and Daniel R. Gilbert, no
corporation is truly ethical unless it has banished all forms of
external motivation for employees
 • •Business ethicists should help managers to do the arduous,
conceptual balancing required in difficult cases where every
alternative has both moral and financial costs
• •A company’s decision to practice ethical actions would always
The myopia provide benefits to the companies that are not ethical. In other
words, if there are no free riders, there would be no moral

of moral companies
• •A manager’s actions should be independent of external
philosophy motivations to be categorized as truly ethical because if there’s
a reward for his/her ethical actions, then the acts are not truly
ethical
• •A strong implication of this is that a manager can be truly
good in a bad corporation
 • The old concept of ethics is being questioned
• A productive approach to business ethics
New
• Acceptance of 2 fundamental ideas:
Business • Observation as starting point and not the ending
Ethics point
• Awareness and acceptance of messy world of
mixed motives
 • Looking back to Aristotle’s concept of virtue
to device an ethics of practical value to
managers
Robert
• Moral means practical
Solomon & • Toughness one of the workable virtues for
“Virtue” mangers is defined as:
• Willingness to do what is necessary
• Insistence on doing it as humanely as possible
 • Ethics does not take place in isolation; it seems to rest
J Gregory on reciprocity
• Unfair to require ethics when individual has no
Dees and reasonable grounds for trusting others will take same

Peter C risk or make same sacrifice

• Against absolutist perspective of cotemporary business
Crampton & ethics which says that such risks or sacrifices will gain
moral lustre.
“Mutual • Will help find moral justification
• Most important need is creation of actionable strategies
Trust” for pragmatics
 • “Minimalist” as opposed to “perfectionist”
Thomas
• Identifying the diverse ethical norms and
Donaldson evaluating them against certain universal, but
minimalistic moral principles
an Thomas
• Insider information: Real Estate vs Securities
Dunfee & Transactions
“Social • According to Norman Bowie, business ethics
id not a matter of concern for managers
Contracts” alone. It is everyone’s responsibility.
 • Propounded by Boston University School of Management
Good Intentions Professor, Laura L. Nash

Aside: A • “Sermonizing” ethical behavior is not enough

• In the face of hard issues that don’t have obvious solutions and
Manager’s reconciliation of ethics and profits is uncertain and tricky,
business ethics should find solutions and address these problems
Guide to • Business ethics should inculcate the notion that Managers are
Resolving human being with a normal range of ethical instincts. Which
implies there are situations where you do not know what is right
Ethical or wrong
• A set of common sense approaches should be developed to
Problems provide guidance to managers
 • All parties should prosper should be the
primary obligation of manager
• For e.g.: Stride Rite Corporation
Conventiona • Makes long-standing, quasi-medically
dedicated footwear
l ethics • Sells them through appealing shoe designs
and aesthetically pleasing boutiques
• Has successfully reconciled bottom line to
ethical behavior
THANK YOU