Business Ethics MGT-503

UNIT-1
NATURE OF MORALITY
• Business organization and ethics
• Morality and etiquette, Morality and law,
Conscience, Moral principles and self interest
 Introduction to Ethics

Introduction to Ethics

In the world of intense competition, every business entity work on

certain principles and beliefs which are nothing but the values. Likewise,
ethics is implemented in the organization to ensure the protection of the
interest of stakeholders like customers, suppliers, employees, society and
government.
 Introduction to Ethics
Ethics

Meta
Applied
Ethics Normative Ethics Descriptive
Ethics
Ethics
 Introduction to Ethics

 
 Introduction to Ethics
Introduction to Ethical theories

Natural Law

It is a legal theory that recognizes law & morality as deeply connected. Natural law theorists
believe that human laws are defined by morality, & not by an authority figure, like a king or a
government. Therefore, we humans are guided by our human nature to figure out what the laws
are, and to act in conformity with those laws.

The term 'natural law' is derived from the belief that human morality comes from nature.
Everything in nature has a purpose, including humans. Our purpose, according to natural law
theorists, is to live a good, happy life. Therefore, actions that work against that purpose -- that is,
actions that would prevent a fellow human from living a good, happy life -- are considered
'unnatural', or 'immoral'.

 
 Introduction to Ethics
Kantian ethics refers to a deontological ethical theory developed by German
philosopher Immanuel Kant –according to these theories, the rightness or wrongness
of actions does not depend on their consequences but on whether they fulfil our duty.
• Kant believed that there was a supreme principle of morality, and he referred to it
as The Categorical Imperative.  The CI determines what our moral duties are:-
Morality and imperatives:  What does it mean for one's duty to be determined by the
categorical imperative?
• What is an imperative?  An imperative is a command.  So, "Pay your taxes!" is an
imperative, as are "Stop kicking me!" and "Don't kill animals!"
• Hypothetical Imperatives:  these imperatives command conditionally on your
having a relevant desire.  E.g. “If you want to go to medical school, study biology in
college.”  If you don’t want to go to medical school, this command doesn’t apply to
you.  Another example, your father says, "if you are hungry, then go eat
something!" - if you aren't hungry, then you are free to ignore the command.
• Categorical Imperatives:  These command unconditionally.  E.g. “Don’t cheat on
your taxes.”  Even if you want to cheat and doing so would serve your interests, you
may not cheat.
•  
 Introduction to Ethics
Utilitarianism: The rightness or wrongness of any action must be viewed in terms of the
consequences that the action produces. In other words, the consequences are
generally viewed according to the extent that they serve some intrinsic good. The
most common form of consequentialism is utilitarianism .According to utilitarianism, an action is
morally right if it results in the greatest amount of good for the greatest amount of people
affected by the action.
Jeremy Bentham, John Stuart Mill
 This principle, also called the ‘greatest happiness principle’.
 Egoism is more focused on individuals, whereas this theory is more inclusive and
keep into account everyone’s utility (collective welfare).
“To maximise collective utility”
Virtue Ethics: Virtue ethics consists of two differing approaches to ethics and can, therefore,
be confusing to understand. Very briefly, the first approach to ethics in this theoretical
orientation proposes that “a systematic formulation of the traits of character that make human
behavior praiseworthy or blameworthy."
The second approach can be described as "practical wisdom" or "right reason."
Practical wisdom is the phrase used to describe ones ability to choose patterns of
actions that are desirable.
 BUSINESS ORGANIZATION AND ETHICS
Business ethics
The art and discipline of applying ethical principles to solve complex moral dilemmas.
Business ethics prove that business has been ethical and can continue to do so while earning
profits.
Business ethics has different meanings for different people, but generally it is to decide what
is right or wrong in the business. According to Wallace and Pekel, ‘attention to business
ethics is necessary during times of fundamental change as the moral values that were not
taken seriously are strongly questioned at that time’. Business ethics enables the leaders
and employees to act at the time of crises and confusion in the business. Therefore, business
ethics helps to deal with business ethical issues that are vague.
They are best demonstrated through acts of fairness, compassion, integrity, honour and
responsibility. The key for business owners and executives is ensuring that all employees
understand these ethics. One of the best ways to communicate organizational ethics is by
training employees on company standards.There are certain basic principles people are
expected to follow in their professional career.
• impartiality: objectivity;
• openness: full disclosure;
• confidentiality: trust;
• due diligence/duty of care;
• fidelity to professional responsibilities; and
• avoiding potential or apparent conflict of interest.
 BUSINESS ORGANIZATION AND ETHICS
Why is business ethics important?
 The power and influence of business in society is greater than ever before.
 Business has the potential to provide a major contribution to our societies.
 Business malpractices have the potential to inflict enormous harm on individuals,
communities and the environment.
 The demands being placed on business to be ethical by its various stakeholders are
constantly becoming more complex and more challenging.
 Business ethics can help to improve ethical decision-making by providing managers
with the appropriate knowledge and tools to allow them to correctly identify,
diagnose, analyse, and provide solutions to the ethical problems and dilemmas
they are confronted with.
 Business ethics is also extremely interesting in that it provides us with knowledge
that transcends the traditional framework of business studies and confronts us
with some of the most important questions faced by society.
 Business ethics provides us with a way of looking at the reasons behind such
infractions, and the ways in which such problems might be dealt with by managers,
regulators, and others interested in improving business ethics.
 BUSINESS ORGANIZATION AND ETHICS
Organization ethics includes various guidelines and principles which decide the way
individuals should behave at the workplace.
• It also refers to the code of conduct of the individuals working in a particular organization.
•  No organization should depend on unfair means to earn money.
•  Childhood is the best phase of one’s life and no child should be deprived of his childhood.
• Employees should not indulge in destruction or manipulation of information to get results.
• Employees should not pass on company’s information to any of the external parties.
• There must be absolute fairness in monetary transactions and all kinds of trading.
• Organizations must not discriminate any employee on the grounds of gender, physical
appearance, age or family background.
• Organization must not exploit any of the employees.
• Organization must take care of the safety of the employees.
• Never lie to your customers.
Business ethics is a broad field because there are so many different topics that fall under its
umbrella. It can be studied from a variety of different angles, whether it's philosophically,
scientifically, or legally. However, the law plays the biggest role in influencing business ethics by far.
 BUSINESS ORGANIZATION AND ETHICS
Business Ethics Can Be Denoted As Written Or Unwritten Codes Of Morals, Values,
And Principles
Create ethical culture in Organization
*Define company ethics
*Ensure that you have the necessary tools
*Strengthen the behavior you want
* Focus on building skills
• Factors influencing Business Ethics
– 1. Personal Code of Ethics
– 2. Legislation
– 3. Government Rules and Regulations
– 4. Ethical Code of the Company
– 5. Social Pressures
– 6. Ethical Climate of the Industry
 BUSINESS ORGANIZATION AND ETHICS

Factors affecting business ethics

  The individual’s personal code of behavior

 The ethical standards imposed on a manager by his superiors 
 The policies of the company also influence the determination of
ethical conduct.
 The ethical climate of a country.
Ethics and Morality
 Ethics and Morality
ETHICS MORALITY
“theory” of right action “practice”, rightness or wrongness of human and the
greater good action

“systematic study” “prescriptive”

of the underlying principles of morality tells us what we ought to do
encourage us to follow the right way
Science of morals
Practice of ethics
 MORAL AND NON MORAL STANDARDS
NORMS + VALUES = MORAL
STANDARDS
GENERAL RULES ENDURING BELIEFS ABOUT
ABOUT ACTIONS OR BEHAVIORS WHAT IS GOOD AND DESIRABLE OR NOT

KILLING INNOCENT PEOPLE HELPING THE POOR

IS GOOD!!!!
IS ABSOLUTELY WRONG!!!
DIFFERENT CULTURES HAVE DIFFERENT MORAL
STANDARDS.
A matter of moral indifference, that is, a matter of taste in one
culture may be a matter of moral significance in another.
 MORAL AND NON MORAL STANDARDS
Moral standards are norms that individuals or groups have about the
kinds of actions believed to be morally right or wrong, as well as the values placed
on what we believed to be morally good or morally bad.
Moral standards normally promote “the good” that is welfare and well-
being of humans as well as animals and the environment.
People have to understand the difference between moral standards and non-
moral ones, to identify fundamental ethical values that may guide or actions.
Moral standards Non-Moral standards

We have no right to impose FORCE others to act accordingly.

on others.
 MORAL AND NON MORAL STANDARDS
Characteristics of moral standards:
 Deal with matters we think can seriously injure or benefit
humans, animals and the environment;
 Not established or changed by the decisions of
authoritative individuals or bodies;
 Overriding that is they take priority of other standards
and considerations especially of self-interest;
 Based on impartial considerations;
 Associations with special emotions.
 MORAL AND NON MORAL STANDARDS
NON MORAL STANDARDS refer to standards by which we judge
what is good or bad and right or wrong in a non-moral way.

Examples: standards of etiquette, the law, the standard of aesthetics.

NON MORAL STANDARDS are the matters of taste or preference.

Ethics and Values together lay the foundation for sustainability. While they are
sometimes used synonymously, they are different, wherein ethics are the set of rules
that govern the behavior of a person, established by a group or culture. Values refer
to the beliefs for which a person has an enduring preference.

Ethics and values are important in every aspect of life, when we have to make a choice
between two things, wherein ethics determine what is right, values determine what
is important.
 Morality
Morality can be a body of standards or principles derived from a code of conduct
from a particular philosophy, religion or culture, or it can derive from a standard
that a person believes should be universal. Morality may also be specifically
synonymous with "goodness" or "rightness".
The study of obligation, duty, other-regarding values, needs, what must be done
etc.
 The question now is “Why ought we to check (or mitigate) such harm.” 
 The answer is because it is harm! Harm is bad by definition. Morality requires us to
avoid doing bad things, again, by definition. Hence we all have a moral duty not to
harm other living things. 
• Consequentialist moral reasoning — locates morality in the consequences of an act (in the
state of the world that will result from the thing you do) — 5 lives saved vs1.
• Categorical moral reasoning — locates morality in certain duties and rights — regardless
of the consequences.
The three major aspects of every moral action are: the moral object (what), the intention or motive (why),
and the circumstances (who, where, when, and how.)
 Morality
Moral absolutism is an ethical view that all actions are intrinsically right or
wrong. Stealing, for instance, might be considered to be always immoral, even if done
for the well-being of others (e.g., stealing food to feed a starving family), and even if it
does in the end promote such a good. Moral absolutism stands in contrast to other
categories of normative ethical theories such as consequentialism, which holds that
the morality (in the wide sense) of an act depends on the consequences or the
context of the act.
Moral Universalism holds merely that what is right or wrong is independent of
custom or opinion but not necessarily that what is right or wrong is independent of
context or consequences (as in absolutism). Moral universalism is compatible with
moral absolutism, but also positions such as consequentialism. Louis Pojman gives the
following definitions to distinguish the two positions of moral absolutism and
universalism.
Moral absolutism: There is at least one principle that ought never to be violated.
Moral Universalism: There is a fact of the matter as to whether any given action is
morally permissible or impermissible: a fact of the matter that does not depend solely
on social custom or individual acceptance.
 Morality
Lawrence Kohlberg's(1958) theory proposes that there are three levels of moral
development. Kohlberg suggested that people move through these stages in a fixed
order, and that moral understanding is linked to cognitive development. The three
levels of moral reasoning include preconventional, conventional, and
postconventional.
 Morality
Morality principles:-

 Moral Reasoning:
 Moral judgements should be logical
 Moral Judgements should be based on facts
 Moral Judgement should be based on acceptable moral
principles
 Morality
- Adequate moral judgements require gathering as much information as
possible before making them.
- The information or facts supporting a moral judgement should be relevant,
that is the information should be related to the judgement.
- All significant data should be complete, inclusive and accurate
- Judgements should be based on analysis of all relevant and accurate
information.

Moral judgements are based on moral standards – Reliable moral judgements must
be based on sound moral principles. That is, the principle is unambiguous and can with
stand critical scrutiny and rational criticism. Judgements should be based on considered
beliefs rather than on gut responses.
 Law
Different legal theories developed throughout societies. Though there are a
number of theories, here described are Natural, Positive, Marxist, and Realist
Law theories.

NATURAL LAW THEORY

• Natural law theory is the earliest of all theories. It was developed in Greece by
philosophers like Heraclitus, Socrates, Plato, and Aristotle. It was then followed
by other philosophers like Gairus, Cicero, Aquinas, Gratius, Hobbes, Lock,
Rousseau, Kant and Hume.
- One of them is made by person to control the relations within a society and so it may vary from
society to society and also from time to tome within a society.
– The other one is that not made by person but controls all human beings of the world. Such
laws do not vary from place to place and from time to time and even used to control or weigh
the laws made by human beings. These philosophers named the laws made by human beings
as positive laws and the laws do not made by human being as natural laws.
 Law
POSITIVE LAW THEORY is also called, imperative or analysts law
theory.
According to this theory, rules made by the sovereign are laws irrespective of
any other considerations. These laws, therefore, vary from place to place and from
time to time. The followers of this theory include Austin, Bentham and H.L.A
Hart. For these philosophers and their followers law is a command of the sovereign
to his/her subjects and there are three elements in it:

 Command is the rule given by the sovereign to the subjects or people under the
rule of the sovereign.
 Sovereign refers to a person or a group of persons demanding obedience in the
state.
 Sanction is the evil that follows violations of the rule.
 Law
MARXIST LAW THEORY {Karl Marx}
 Marxists believe that private property is the basis for the coming into existence of
law and state. They provide that property was the cause for creation of classes in
the society in which those who have the means of production can exploit those
who do not have these means by making laws to protect the private property. They
base their arguments on the fact that there was neither law nor state in primitive
society for there was no private property. The theory has the assumption that
people can attain a perfect equality at the communism stage in which there would
be no private property, no state and no law. 
REALIST THEORY OF LAW [Biset ;2006]
 Realist theory of law is interested in the actual working of the law rather than its
traditional definitions. It provides that law is what the judge decides in court.
According to this theory, rules not put to use to solve practical cases are not laws
but merely existing as dead words and these dead words of law get life only when
applied in reality. Therefore, it is the decision given by the judge but not the
legislators that is considered as law according to this theory. Hence, this theory
believes that the lawmaker is the judge and not the legislative body.
 Morality and Law
Morality and Law
Complying with the law does not necessarily guarantee moral behaviour, just
as breaking the law does not always result in immoral behaviour.But
nonconformity to law is not always immoral; there are circumstances where
breaching a law might be morally permissible. An action that is legal can be
morally wrong:
-Failure of a person with knowledge of first aid to render assistance at the
scene of an accident, when there is no valid reason not to help.
- Laws codify a society’s customs, ideals, norms and moral values.
- Laws are not sufficient to establish the moral standards to guide us.
-The law is an instrument to provide moral guidance.
- It provides a base from which to form our moral standards, but it does
not encompass all possible breaches of moral conduct.
 Morality and Law
Devlin's philosophy of legal moralism takes an idealist's approach to role of
law in society. Devlin's philosophy of law argued that the collective judgment of a
society should guide enforcement of laws against both private and public behavior
that was deemed immoral. 
According to Devlin, when a behavior reached the limits of "intolerance,
indignation and disgust," legislation against it was necessary.  Hart's philosophy of
legal positivism is a pragmatist's approach to the role of law in society.  Hart's
philosophy of law held that laws should not be based only on popular moral
consensus, in the absence of other harms.  This is consistent with Hart's argument
that one role of law was to protect individual liberty.   

Legal positivism is a school of jurisprudence whose advocates believe that the

only legitimate sources of law are those written rules, regulations, and principles
that have been expressly enacted, adopted, or recognized by a governmental entity
or political institution, including administrative, executive, legislative
 Relationship between Law and Morality

Law is an enactment made by the state. It is backed by physical coercion. Its

breach is punishable by the courts. It represents the will of the state and realizes its
purpose.
The popular conception of the connection between law and morality is that in
some way the law exists to promote morality, to preserve those conditions which make
the moral life possible, and than to enable men to lead sober and industrious lives.
Laws reflect the political, social and economic relationships in the society. It
determines rights and duties of the citizens towards one another and towards the
state. It is through law that the government fulfils its promises to the people. It
reflects the sociological need of society.
 Relationship between Law and Morality
Law regulates and controls the external human conduct. It is not concerned with
inner motives. A person may be having an evil intention in his or her mind but law does
not care for it. Law will move into action only when this evil intention is translated into
action and some harm is actually done to another person.
 Law is universal in a particu­lar society. All the individuals are equally subjected to
it. It does not change from man to man.
 Political laws are precise and definite as there is a regular organ in every state for
the formulation of laws.
 Law is framed and enforced by a determinate political author­ity. It enjoys the
sanction of the state. Disobedience of law is gen­erally followed by physical pun­
ishment. The fear of punishment acts as a deterrent to the breach of political law.
 Law falls within the purview of a subject known as Jurispru­dence.
 Relationship between Law and Morality
Morality regulates and con­trols both the inner motives and the
external actions. It is concerned with the whole life of man. The
province of law is thus limited as compared with that of morality
because law is simply concerned with external actions and docs not
take into its fold the inner motives.
 Morality condemns a person if he or she has some evil intentions
but laws are not applicable unless these intentions are manifested
externally.
 Morality is variable. It changes from man to man and from age to
age. Every man has his own moral principles.
 Moral laws lack precision and definiteness as there is no author­ity
to make and enforce them.
 Morality is neither framed nor enforced by any political author.
 Morality and etiquette

Morality is the moral code of an individual or of a society,while etiquette is a

set of rules for well-mannered behaviour. Etiquette is an unwritten code or
rules of social or professional behaviour. Morality can be also
differentiated from law which consists of statutes, regulations, common
law and constitutional law. Morality is different from professional codes of
ethics which are special rules governing the members of a profession, say
of doctors, lawyers and so on.
The moral principles, standards of behaviour, or set of values that guide a
person’s actions in the workplace is called- (a) Office place ethics (b)
factory place ethics (c) behavioural ethics (d) work place ethics.
Ettiquette refers to the norms of correct conduct in polite society, any
special code of social behavior or courtesy. For example, Good
business etiquette calls for writing follow-up letters after meetings,
retuning phone calls, and dressing appropriately.
 Morality and etiquette

The rules of both business ethics and business etiquette are the foundations
of strong, productive professional relationships. You wouldn’t want to do
business with people who worked for an organization that had little regard
for either ethics or etiquette.
 Conscience
Human's ability to internalise the moral code.
Conscience describes two things – what a person believes is right and how a
person decides what is right. 
• Ethical Awareness

This is our ability to recognise ethical values and principles

.Conscience was the process by which a person brought the principles  into
a practical situation through our decisions.

• Ethical Decision Making

This is our ability to make practical decision in light of ethical values

and principles. This was the ability to evaluate a situation clearly, how to act
virtuously under the circumstances.
 Moral principles and self interest
Accepting a moral principle generally involves a desire to follow that
principle for its own sake.

Kitchener (1984) has identified five moral principles that are viewed as the
cornerstone of our ethical guidelines. The five principles are autonomy, justice,
beneficence, nonmaleficence, and fidelity are each absolute truths in and of themselves.
By exploring the dilemma in regards to these principles one may come to a better
understanding of the conflicting issues.

A tangible truth about having moral principles is if you do the right thing only because
you think it will pay off, you're not really motivated by moral concerns.
 Moral principles and self interest
Autonomy is the principle that addresses the concept of independence. The
essence of this principle is allowing an individual the freedom of choice and action.
Nonmaleficence is the concept of not causing harm to others. Often explained
as "above all do no harm“. This principle reflects both the idea of not inflicting
intentional harm, and not engaging in actions that risk harming others.
Beneficence refers to the responsibility to contribute to the welfare. Simply
stated it means to do good, to be proactive and also to prevent harm when possible.
Justice is the first virtue of social institutions, as truth is of system of thought
and injustice is tolerable only when it is necessary to avoid an even greater injustice.
Being first virtue of human activities, truth and justice are uncompromising.

Fidelity involves the notions of loyalty, faithfulness, and honouring commitments.

Moral principles and self interest

Thank you