BUSINESS ETHICS

and
SPIRITUALITY
“Business ethics is rules, standards, codes, or principles
which provide guidelines for morally right behavior
and truthfulness in specific situations.” (Lewis)
 “Business ethics is the study of business situation,
activities, and decisions where issues of right and
wrong are addressed.” (Crane and Matten)
“Business ethics refers to clear standards and norms
that help employees to distinguish right from wrong
behaviour at work.” ( The Ethics Resource Centre)
 “Business ethics has to do with the extent to which a person’s
behaviour measures up to such standards as the law,
organizational policies, professional and trade association
codes, popular expectations regarding fairness and what is
right, plus one’s own internalized moral standards”. ( William
Sauser)

 “Business ethics is disciplined normative reflection on the

nature, meaning and context of business activity. As such it
deals with comprehensive questions about the justice of the
economic context in which business operates and about the
nature, function, structure and scope of business in that context,
as well as with more specific issues raised by the relationship of
business to government, the consumer, its employees, and
society at large”. ( Hoffman and Moore)
“Business ethics is a study of moral standards and how these
apply to the systems and organizations through which
modern societies produce and distribute goods and services,
and to the people who work within these organizations.
Business ethics, in other words, is a form of applied ethics.
It includes not only the analysis of moral norms and moral
values, but also attempts to apply the conclusions of this
analysis to that assortment of institutions, technologies,
transactions, activities, and pursuits that we call business.”
(Manuel Velasquez)
• Framework- Set of rules, standards, codes,
principles, philosophy etc. to be followed for ethical
decision making in business.
• Internal development of ethical traits-Development
of virtues, values, morality and inner conscience.
• Situation- Business situations demanding ethical
judgements.
• Behaviour- Ethical behaviour from the legal,
stakeholder and humanity point of view.
Nature of Business Ethics

Complex Dynamic

Interdependent Subjective
• Complex because of no common consensus
• Dynamic because of dynamic nature of business decision
making
• Interdependent because ethical decision making is
dependent on many factors and one’s decision affect others.
• Subjective because the frameworks referred for ethical
decision making are usually normative and are varied in
nature. These frameworks differ from people to people and
organization to organization.
 There may be varied arguments
regarding business ethics but one commonly accepted

fact is that intensity of ethics in business

will always be limited to the extent

of ethical behaviour shown by those

who are involved in business.

So the human factor is the key.

Significant Developments in Business
Credited to Business Ethics
• Profit is no more considered as the sole objective of
business.
• Instead of maximization of shareholders wealth now the
focus of business organizations is on stakeholder
approach.
• Many large business organizations are involved in socially
responsible activities.
• Environmental issues are now openly discussed by
business world.
• Framework of Corporate Governance has improved
considerably.
Many business organizations have already framed their
ethical code of conduct and are strictly following it.

Business ethics is no more considered as an undesirable

transgression into the functioning of business
organizations. Instead organizations themselves are taking
it seriously and now consider it as good for business.
Perceptions Regarding Business Ethics
Rules,
Rules, Standards
Standards or
or Codes
Codes Governing
Governing
an
an Individual
Individual or
or Organization
Organization

Morality,
Morality, Virtues,
Virtues, Values
Values
Clarity
Clarity of
of Right
Right and
and Wrong
Wrong
Honesty,
Honesty, Integrity
Integrity
Character,
Character, Conscience
Conscience
Situational
Situational and
and Temporal
Temporal
Being
Being True
True to
to Oneself
Oneself
Stakeholder
Stakeholder Approach
Approach
Objectives of Business Ethics
Arguments ‘against’ the Business Ethics

• Milton Friedman, a Nobel laureate had suggested

that there is no need for business people to bring
ethical factors into their managerial decision
making. He believed that when they have occupied
the role of business then automatically they are
supposed to throw away their role of autonomous
moral agent in favour of making efforts for fulfilling
the purpose of shareholders. According to Friedman
there is one and only social responsibility of
business and that is to use its resources and engage
in activities designed to increase its profits so long
as it stays within the rules of the game, which to say,
engages in open and free competition without
deception or fraud.
 John Ladd believes that by virtue of basic nature of business
organization the possibility of ethical evaluation of its actions is
ruled out. Ladd argues that there are specific goals of business
which are meant to be achieved and these goals are non-moral. So,
business organizations should be evaluated from the point of view of
achieving those specific goals successfully or not instead of from the
point of view of ethics or morality.

 Another argument against the business ethics is that the

organizations and corporations can’t be held morally responsible for
anything, simply because they don’t act, it’s the individuals who
act.

 According to free economy promoters, the market regulate itself

without any need for externally induced controls. So let the rules of
the economy and free markets work instead of the rules of ethics.
 Arguments ‘for’ the Business Ethics

• Those who argue for the business ethics are of the view that the
profit is not the only motive of business; business
organizations deserves ethical reasoning; business does not
enjoy any special status and morality is as much applicable to
it as to any one else; and rules of ethics and morality are as
much intrinsic to business as the rules of economy and free
markets. The acts of bribery, corruption, and deception in
business are strongly criticized in this view.

• As the organizations are run by individuals they are as much

liable for ethical judgements as any individual. They can’t get
away by stating their impersonal nature.
• The special status for business free from ethical
evaluation is also opposed by many economists,
philosophers, academicians, and other ethicists. They
argue that ethics and business can’t be separated and
there is no ethical relativism between business and
others.

• Peter Drucker argues that ethical code remains

same for everybody whoever he may be. It is same for
rich, poor, kings, business leaders, managers, mighty
or meek.
• For business to operate successfully and in accepted
manner these social interactions should provide mutual
benefits and for that ethics is one key element that
make these interactions mutually fruitful.

• Against the argument of allowing rules of economy and free

markets to operate without ethical considerations, ethicists
argue that businesses operate in a society and their actions
have both direct and indirect impact on the society and so
many cases of fraud, corruption, and bribery have come up
in recent times doing excessive harm to the society that
relevance of ethics to business is more than ever. Rules of
free markets in no way can justify fraud, corruption, bribery,
deception, and other immoral acts.
 Three Roles of Business Ethics
The first role of business ethics is to do three level investigation
The second role is to develop theoretical foundations of universal nature
for business ethics on the basis of three level investigation or study such
as:

Rules
Standards
Standards
Codes
Codes
Principles
Principles
Theories
Theories
Virtues
Virtues
Normative
Normative Statements
Statements
Models
Models
Importance of Business Ethics
 Morality and Ethics

Morality is concerned with understanding of what is

right and wrong behaviour. In the study of business
ethics many people treat the concept of ethics and
morality as same. There is no harm in it. However
treating them as different but strongly inter-related is a
better approach in enriching the field of business
ethics. Morality could be considered as one of the
subject matter of study in business ethics.
 Difference between Morality and Ethics
Ethics
1. Ethics is the study of framework such as standards,
principles, rules or codes and traits for ensuring
right action, behaviour or conduct.
2. Ethics is the philosophical study of morality
3. Ethics encompasses morality
4. Ethics attempts to bring rationalization to morality
5. Ethics tries to systemize morality
ethics
6. Ethics legitimizes morality
ethics
7. Ethics is covert as well as overt
Morality
Morality is right action, conduct or behaviour
Morality is the subject matter of ethics
Morality is the sub-field of ethics
Morality gets rationalization through ethics
Morality becomes systematic through
Morality gets legitimized through
Morality is overt
Rest Model of Moral Behaviour
Kohlberg Model of Moral Development
 Virtues and Ethics
The word virtue is derived from the Greek word ‘arete’
which is translated as excellence.
Virtues are the good moral habits that are acquired over
a period of time by repeatedly choosing the good.
Virtues play an important role in the decision making
process of individuals and that is why virtues are
important from the ethics point of view.
The foundation of morality lies in the development of
virtues.
Good character traits or moral habits, when learned and
practiced repeatedly, gets cultured or internalized in the
people and takes the form of virtues.
Right conduct, action or behaviour of an individual which
we call morality can be temporal but through the
development of virtues righteousness becomes a habit.
Virtues imply that there is a set of qualities which will
make people fulfill their functions as people, properly and
well. Without virtue, people are unable to do justice with
their tasks.
For Aristotle, the difference between doing something
and doing it well or excellently lies in virtues. In other
words, we do not display virtue when we do something
that happens to be good, but we must act with a deliberate
desire to perform our function as human beings properly.
Aristotle on Virtues
Spirituality and Business Ethics
Spirituality is integral and holistic, incorporating
within itself the material, moral and cultural values.
There is a misconception regarding spirituality that
spiritual value is opposed to the material one.
The term ‘spiritual’ as also the Sanskrit substitute
“Atmika” or “Adhyatmik” literally meaning any thing
that pertains to the spirit (the Self or soul or atman or
consciousness).
There are virtues and values associated with spirit
(Atman) as its very nature, provided the Atman (spirit)
is in natural state, freed from impurities.
Impurity here means something that is mental – it is ego
and selfishness and raga (infatuation or favoritism) and
Dvesa (abhorrence or enmity). So, purity would really
mean freedom from these mental impurities, and not
rejection of material life.
For the practice of value it is not necessary to have
metaphysical (ontological) presupposition about the spirit
(the Self) – neither for the practice of morality, nor for the
spirituality. One can practice morality, for example, even
without believing in the higher Self (the higher spirit) or
God.
One can practice the spiritual values just with phenomenal
and limited self, present in the body, even without
accepting any extraordinary metaphysical status of the
existing self.
The Budhist and the Jaina way of life is highly
spiritual and yet there is no belief in God there.
In the Brahmana (Vedic) tradition too, half of the
philosophical schools (Vaisesika, Samkhya and
Mimamsa) do not believe in God and yet they present
a moral and spiritual way of life to follow, although
the definition of morality and spirituality differs from
school to school.
However, faith in God or the Higher Self strengthens
the moral and spiritual attitude, and facilitates the
ethico-spiritual living. So, faith in the metaphysical
spiritual reality is also a value – a supplementary
value.
Two Aspects of Spirituality
While defining spirituality, we have to understand that
there are two aspects of spirituality – a negative aspect and
a positive aspect, and the two aspects are complementary
to each other. Negatively, spirituality means melting the
ego, and positively it means realizing one’s unity with
others (or in other words, having universal love).
Ego is the principle of differentiation of oneself from
others; ego rests on the feeling of otherness (what in the
spiritual philosophy is technically called ‘dvaitabhava’ or
‘bheda-bhava’).
Ego takes place when I do not consider the so-called others
as ‘me’ or ‘my own’ and cut myself off from them and
confine myself to my own individuality.
In the ego-state we wish only the good of ourselves and
not the good of others, we impose ourselves on others
and even exploit others for our own end. Selfishness and
ego are like the two sides of one and the same coin.
Ego is the foundation and the root cause of all evil, of all
immorality.
If spirituality negatively means effacement of the ego,
and if the ego means separating oneself from the others
and confining oneself to one's own individuality and
taking into consideration only oneself and the others,
then it becomes easy to understand the positive meaning
of spirituality as what in the spiritual philosophy is
technically called 'Advaita-bhava' or 'Abheda-bhava'
which means feeling of one's unity with all.
Spirituality is the state of consciousness in which the
feeling of otherness is gone and the feeling of affinity and
unity with the so-called others is established.
The feeling of unity can be explained with the help of
examples. One such example is that of the loving mother.
The mother feels that the children are her own or herself;
the happiness and suffering of the children are the
happiness and suffering of the mother. The bodies of the
children are separated from the mother, and in that sense
the children are 'others' to her, but in her consciousness or
in her feeling they are not others. What she does good for
the children, she thinks she is doing for her own self, as
she feels that the children are herself or her own. This is
what is called love. Thus love is the meaning of
spirituality; love is 'the' spiritual value.
Love is considered as 'the' spiritual value. But love should
be distinguished from such mental states and situations
that are falsely taken to be love. For example, infatuation,
possessiveness, selfish attachment, etc are not love. Love
may be understood as the opposite of selfishness.
In love which is the spiritual value, there is natural
synthesis of what is called 'Sreya' (the good) and 'Preya’
(the pleasant). Love is actually the two in one – the good
and the pleasant both at once.
In love the good of oneself and the good of others become
one, as the 'others' too become one's own. Morality
becomes natural in love, as one would not exploit the
beloved person and, on the contrary, would do good to
him/her.
Thus the spiritual value (love) satisfies the demands of
Dharma (morality) and Sukha (pleasure or happiness) both
at once. It gives immense pleasure and satisfaction to
oneself on the one hand, and on the other hand one becomes
spontaneously inclined to do good to the so ­called others.
Egolessness and love or the feeling of unity-are the two
negative and positive meanings of spirituality. The two
meanings are complementary to each other, or it would be
more true to say that the two denote one and same state of
consciousness. One cannot be loving without being egoless,
because the very meaning of ego is the separation of oneself
from others and more the ego, the less loving we are.
There is inverse relationship between love and ego.
That is why Kabir, the great mystic poet, has said; "If
you want to drink the nectar of love and also want to
keep up your ego, this is impossible like putting two
swords in one and same sheath”.
Karuna (compassion), Bhakti or Bhaktiyoga (surrender
to God or surrender to Truth), Jnana or Jnanayoga
(Advaita-bhava or realization of one's unity with all
beings), Karmayoga (doing all work with the sense of
being the instrument of God or with the sense of
selfless duty) – all these are co-relates or corollaries of
the central spiritual value which negatively means
egolessness and positively means love or unity of
oneself with all.
Difference Between Spirituality and Morality
 In the general Western tradition, morality is accepted as the
highest value. (However, there are strong exceptions also, for
whom spirituality is the highest value.). But in the Indian
tradition, spirituality is taken to be the highest or the ultimate
value. This is not because the moral value is underrated - not at
all; the moral value (Dharma) is rated very high and is taken to
be absolutely necessary for life–both individual and social. But
spirituality is placed even above morality (or above mere
morality) because spirituality (Adhyatma) naturally
incorporates morality (Dharma) within itself; it is the state of
natural morality. Moreover, the morality present in spirituality
is free from its possible minus points, namely (i) the ego, (ii)
the effort or exertion of the will, and (iii) the dichotomy of
Sreya and Preya. Mere morality, although valuable in itself, is a
dry value, in order to be more effective and more satisfying, it
has to be saturated with spirituality.
Understanding Moral and Spiritual Impurity
 There are two types of impurity–the moral impurity and the spiritual
impurity.
 Unscrupulous life of deceit, dishonesty, corruption including various kinds
of crime, etc. – all these come under the category of moral impurity.
 There may be persons who are free from these impurities (the moral ones)
and yet they may be suffering from another kind of impurity which is
equally bad, sometimes even worse. This is what is called 'Ahamkara' (ego).
 Ego is the spiritual impurity.
 The moral impurity harms and hurts others; ego too hurts, sometimes even
more deeply. Therefore, it is necessary to free oneself not only from the
moral impurities but also from ego.
 One cannot be called pure-hearted unless one is free from both these
impurities. The life of values cannot become perfect with moral perfection
alone; the spiritual value of egolessness (resulting in love) must also be
incorporated; then alone the life of values world become complete.
Spiritual Lessons for Business Leaders
Acquisition of material wealth (Artha) and satisfaction of
desires (Kama) become unhealthy only when they are
done selfishly and egoistically.
Remove the feeling of possessiveness (mamatva) towards
the wealth and become unattached (Anasakta) with the
wealth. Then enjoy the wealth in an unattached manner,
and in the unattached state of consciousness. Then you
will find that you enjoy the wealth far better.
The psychology of relishing or enjoying is that if we are
strongly attached, the degree of relishment or enjoyment
is very low; whereas if we are unattached, the enjoyment
is much better.
It can be safely proposed that only an unattached person
can really enjoy the world; the attached (Asakta) person
accumulates and possesses but does not enjoy.
The purity of money means that it is spent not only for
your good but for the good of all (of course, including
yourself). The society has share in your earning because
you are indebted to the society, and you can clear your
debt to the society by parting with the extra money and
giving the society their share.
One who appropriates all money for oneself without
giving others their due share, is virtually a thief or "...
such a person is a thief and deserves punishment …" or,
"…those who cook only for themselves, eat sin…"
 Spiritual Lesson for Corporate Social
Responsibility

• Serve the people not in charity but in

love
• Charity is moral act but service with
love is spiritual act.
• The act of charity may generate ego,
but the service done out of love reduces
or melts the ego.
 Make Material Life Spiritual
By cultivating proper attitude towards Nature and the
world, the material life itself can be made spiritual and
the so-called dichotomy between the material and the
spiritual be abolished.
Really there is no dichotomy between the two, we have
created the dichotomy by vitiating the world of matter.
It is we who have made the material life impure by our
ego and selfishness.
If the material life is freed from the ego and selfishness,
it itself would become spiritual; in fact, originally it 'is'
spiritual, the impurity is introduced from our side.
" Love gives and forgives,
selfishness gets and forgets".
(Sai
Baba)