6

ETHICS

Learning Objectives
After studying this chapter one should be able to understand:
The meaning and definition of ethics
3 Significance of Ethics
Meaning & definition of Business Ethics
Source of Business Ethics
63 Values
6 Code of Conduct
6 Ethical Issues
Ethical Theories
Morality & Ethical Theory
nce 63
64
1.1 INTRODUCTION
6.4
Business environment is influenced by many forces,
6.4 and indirect
factors and institutions which may have direct
environment
impact on various decisions. General business
6.4
6.4 comprises economic, social, political, legal and
technological environments. This will never change as per
but individuals who
the requirements of an individual
QP! environment have to
operate their business in this general
changes in the
change their plans and policies according to have a
environment. This would enable them not only to
gain, but at times
lead among their competitors and make a
even to sustain in the business.
 ETHICS
BUSINESS ETHICS AND CORPORATE
GOVERNANCE 1.3
11.2

DEFINITION that govern

MEANING AND wrong; the rules
1.2 willingness to do what considered mainly right and embedded, fostered
Ethics basically refers
to the
easy is ethics, those activities; and the values that are
what is The morality
right. Doing what is right and not what or pursued by those activities and practices.
is "Ethics is a study of the customs accepted
of John Deigh of a society is related to its mores, or
In the words pursue in life and what it is right by a society or a group as being right and wrong, as well as
ends to therefore, above add legal prohibitions and
are good and bad conduct of life. It is to those laws of a society that
do in the determine considered to be immoral.
and wrong to Its primary aim is to sanctions to many activities
discipline.
all, a practical live and what actions one ought to do in Ethics in general can be defined as a
systematic
how one ought to individual's social and moral
one's life." attempt to make sense of an
the conduct of
Elder define ethics experience, in such a way as to determine
the rules that
and Linda worth pursuing,
Richard William Paul that guide us in ought to govern human conduct, the values
cepts and principles development in life.
as "a set of con behavior helps or harms sentient and the character traits deserving
determining what different people.
Ethics is used in a variety of ways by an
creatures".
ethics is "the science Sometimes it is synonymous with morality; for example,
Kidder one. Codes of
According to Rush worth science of moral duty. action that is morally right is called an ethical
character' or the frequently called
of the ideal human principles moral conduct adopted by professions are
ethics as moral business
Oxford Dictionary defines activity. ethical codes. Although, philosophically speaking, the
person's behaviour or the conduct of an ethics is a branch of general ethics; some people interpret
that govern a
that examines one's
moral phrase business ethics to mean business morality.
Ethics is the discipline tells
standards of the society. It 1.3 SIGNIFICANCE OFETHICS
standards or the moral
where these standards are to be applied to that makes sense. The
bow, why, when, It is ethics in practice fair, clean and
dealings to be
our lives.
that ethics stakeholders expect business
from these definitions to happen, organizations
It is quite evident beneficial to the society. For this themselves in
an individual or
governing rule of law, engage
refer to the principle of conduct morality. It examines one's need to abide by ethics or
competition, all of which will
benefit the
study of and
a group. It is basically a or the moral standards
of fair practices
organization. Ethics is important
perception of moral standards
individual's consumer, the society and
its application in an
the society. It emphasizes circumstances. due to the following reasons.
It is branch of
a Needs: Being fair,
life at various stages and individuals think Satisfying Basic Humnan basic human needs.
philosophy which explains how honest and ethical is one of
the
philosophically about morality and moral
judgment. be unique and to work
Every employee desires to fair and ethical in its
morality. Morality is for an organization
that is
Ethics is normally referred to activities that are
practices and
a term used to cover thOse practices.
 ETHICS
14 BUSINESS ETHICS AND CORPORATE
GOVERNANCE 1.3
organizatio. that is
Creating Credibility: An Securing the Society: Often ethics Bucceeds
is re pected
believed to be driven by moral values law in
who may have no safeguarding the society.
in the society even by those
information about the working and the
business machinery is often found acting asThe law
a mute
dealings of it. Infosys, for example, is
perceived as spectator, unable to save the society and the
an organization for good corporate governance environment. Technology, example, is growing
at such a fast pace
for
and social responsibility initiatives. This perception that by the time law comes up
is held far and wide even by those who do not even
with a regulation a new
know what business the organization is into. new threats replacing thetechnology emerges with
older one. Lawyers and
public interest litigations may not
Uniting People and Leadership: An deal but ethics can. help a great
organization driven by values is revered by its
employees also. They are the common thread that Ethics tries to create a sense of
brings the employees and the decision makers on organization and often when the lawright fails,
and wTong in the
it is ethics
may stop an
a comnon platform. This goes a long way in aligning organization from harming the societythat
behaviours within the organization towards environment. or
achieveTnent of one common goal or mission.
Business ethics, as a
Improring Decision Making: A man's destiny of ethics and business. field, is defined by the
It studies the interaction
is the sum total of all the
decisions that he/she justification of economic systems. possible moral
takes in the course of his/her life. The
same holds national, international, or global as Business ethics is as
good for organizations too.
Decisions are driven arbitrary geographical boundaries can business itself and no
by values. For example, an
organization that does 1.4 MEANING OF limit it.
not value conpetition will be fierce in its
operations aiming to wipe out its competitors and The term business BUSINESS ETHICS
establish a monopoly in the market. principles and rules ofethics refers to the system of
conduct moral
Long-Term Gains: Business being a social applied to
business.
ethics and values are Organizations guided by way detrimental to the organ shall not be conducted in a
though in the short-runprofitable the long - run, sector itself. Every interests the society and
in of
money. Tata group, one ofthey may seem to lose and don'ts for its profession or group franes business
the largest
business standard in which members. The members are certain dos
cOnglomerates in India was they
decline at the beginning ofseen on the verge of standards are influenced are supposed to given a
turned out to be 1990's, which soon social situations. The by the operate. These
prevailing
Tata NANO car otherwise. The same company's reviewed to suit the codes of conduct areeconomic and
later was found towas predicted as a failure, but
be picking up changing circumstances. periodically
fast.
 ETHICS BUSINESS ETHICS AND CORPORATE GOVERNANCE 1.7
1.6
Busine88 ethics typically involves four kinds of
1.5 DEFINITIONS
short can be defined
as tb. uctivities. The first is the applying of general ethical
"Business ethics in Lhe principles to certain cases or practices in business. Deciding
matters pertaining to
systematic study of ethical activities, institutions ond whether the actions involved are immoral or morally
related
business, industry or handling of valuo.
systematic justifiuble is important.
beliefs. Business ethics is theJohn Donaldson.
industry" - Business ethics, however, involves more than just
in business and
applying moral principles to business. The second kind of
Definition of Business Ethics nctivity is metacthical. Whether moral terms that are
is an art and
According to Whecler, Business Ethics relationship with generally used to describe individuals and the actions they
harmonious
science for maintaining institutions as well a perform can also be applied to organizations, corporations,
society, its various groups and the rightness and businesses and other collective entities is to be understood
reorganizing the moral responsibility for by the answers supplied by general ethical theory, which
wrongness of business conduct. traditionally has been concerned with the actions of human
According to Rogene A. Buchholz, Business ethics individuals. The analysis of this type of problem in business
decisions.
refers to right or wrong behaviour in business ethics cannot take place in abstraction from general ethical
theory. There is a reciprocal relation ship between business
"Business Ethics is generally coming to know what is
ethics and general ethics, but those involved in business
right or wrong in the workplace and doing what is right.
This is in regard to effects of products/services and in ethics often engage in meta-ethical inquiries than the
relationship with the stakeholders." - Cater Menamara. general theory.
The third activity of business ethics is the analysis
It is evident from the definitions that business ethics
of the presuppositions of business-both moral
should take into consideration the following factors:
presuppositions and presuppositions from a moral point of
A business should aim to have fair dealing with view. As business operates within an economic system,
everyone dealing with it. part
of the proper task of business ethics is to raise
Ethics should be fixed for everyone working in the questions
about the morality of economic systems in general and about
organization at any level and their implementation the morality of the Indian economic system in
should be linked with a reward-punishment system. In evaluating structures of business, one particular.
must also analyze
Any violation of ethics should be detected at the the meaning and justification of such terms,
earliest and remedial measures taken immediately. which are
against moral principles, as property,
Business ethics should be based on broad guidelines competition and the presuppositions and exploitation,
uses of
of what should be done and what should be ayoided. benefit analysis, accounting procedures and so on. cost
Ethics should be based on the perception of Fourth, those in business ethics are
is right. what
embedded problems to go beyond the field ofsometimes led by
ethics into other
 1.8 ETHICS
areas of philosophy and into other domains of knowledgo BUSINESS ETHICS AND
CORPORATE GOVERNANCE
such as economics or organization theory; but when they address the problem directly with
go beyond their own areas, they usually do so to resolvo
some problem in business ethics, or to investigate in some important to truthfully describe the their employees. It's
other area what appeared initially to dealing with macro criticism humbly. situation and accept
moral issues, such as whether rich countries have any moral 1.6 SOURCE OF
obligations to poor countries. There is a special need to BUSINESS ETHICS
In every society
carefully sort out the issues, to see which are moral and ethics - namely religion,there are three sources of business
which are not and to clarily the language and the level of exert influences to culture and law. These three factors
moral discourse. Sometimes the task concerns reducing ultimately get reflectedvarying degrees on
in the ethics of an humans which
moral problems to managerial, organizational or economic example, ethics followed by Infosys are organization. For
problems or vice versa. followed by Reliance Industries or by Tata difTerent from those
procedures vary across geographic boundaries. group. Again, ethical
Business ethics can help people approach moral The HR
Manager in every
the unique systemorganization,
problems in business more systematically and with better thus, has to be well versed with
tools that they might otherwise use. It can help them to of values developed by
these three sources.
see issues they might normally ignore. It can also impel Religion
them to make changes they might otherwise not be moved Religion is the oldest
to make; but business ethics, as is true of ethics in general, There are more than 1,00,000source of ethical inspiration.
presupposes that those who study it already are moral whole religions that exist across the
world, but all of them are in
beings, that they know right from wrong and that they wish agreement on the
fundamental principles. Every religion gives
to be even better, more thoughtful, more informed moral of what is wrong and right in an expression
beings. It will not change business practices unless those business and other walks of life.
The principle of reciprocity towards
engaged in the practices that need moral change wish to one's fellow beings is
found in all the religions. Great religions preach the
implement them. It can produce arguments showing that for an orderly social system and necessity
a practice is immoral, but obviously, only those in a position emphasize social
responsibility with an objective to contribute to the general
to implement the changes willbe able to bring them about. welfare. With these fundamentals, every religion creates its
Business ethics is a field with practical import, but it is up own code of conduct.
to those who study it to put what they learn into practice.
Some examples of business ethics are if a customer comes Culture
into a store looking for a product that meets very specific Culture is a set of important understandings that
needs, it's important to provide them with the best product, members of a community share in common. It consists of
instead of encouraging them to buy a product that won't a basic set of values, ideas,
perceptions, pre ferences,
meet their needs. Another example, when faced with a public concepts of morality, codes of conduct, etc. which creates
relations crisis, companies should call a meeting and distinctiveness among human groups.
 ETHICS BUSINESS ETHICS AND CORPORATE GOVERNANCE
1.10
relected
refers to the pattern of development
Culture
knowledge, ideology, values,
laws Competition: Healthy competition among employees is
pattern of upon the one of the results of a shared organizational culture.
in a society's day-to-day rituals. Depending
social norms and differs from Employees will strive to perform at their best to earn
stage of development, culture
pattern and
Moreover, culture is passed
from recognition and appreciation from their superiors. This in
society to society. Culture facilitates the
generation turn increases the quality of their work, which helps the
generation to generation. individual organization prosper and lourish.
commitment to something larger than one's
of Direction: Guidelines contribute to organizational
self-interest. culture. They provide employees witb a sense of direction
members of an organization
Culture encourages the above thei and expectations that keep employees on task. Each
organizational goals over and employee understands what his roles and responsibilities
to give priority to also serves as a
sense-making
personal interests. Culture shapes the attitudes
are and how to accomplish tasks prior to established
guides and
and control mechanism that deadlines.
and behavior of people. Identity: An organization's culture defines its identity. An
organization entity's way of doing business is perceived by both the
Significance of culture in an individuals who comprise the organization as well as its
culture helps to unite
Unity: A shared organizational Many employees clients and customers and it is determined by its culture.
employees of different demographics.
different backgrounds
The values and beliefs of an organization contribute to the
within an organization come from cultures. Having brand image by which it becomes known and respected.
families and traditions and have their own
gives them a sense of
a shared culture at the workplace Law
promoting
unity and understanding towards one another,addition, a Laws are procedures and code of conduct that are laid
better communication and less conflict. In down by the legal system of the state. The legal system of
shared organizational culture promotes equality by any country guides human behaviour in the society. The
that
ensuring no employee is neglected at the workplace and major problem with the law is that all the ethical
each is treated equally. expectations cannot be covered by it and especially with
Loyalty: Organizational culture helps to keep employees ever-changing outer environment it keeps on changing but
motivated and loyal to the management. If employees view often fails to keep pace. Although it is expected that every
themselves as part of their organization's culture, they are business should be law abiding, seldom do the busine sses
more eager and want to contribute to the entity's success. adhere to the rules and regulations. Lawbreaking in
They develop a feeling of high sense of accomplishment for business is common, like tax evasion, hoarding,
being a part of an organization they care about and work adulteration, poor quality and high-priced products,
harder without having to be coerced. environment pollution etc.
 ETHICS 1.11
BUSINESS ETHICS AND CORPORATE GOVERNANCI
1.12
organizationare made by individun).
Decisions in an organization. Ifth They guide individuals in the decision-making
on the culture of the issues, the. process, especially in management with regard to
who decide based
onganization
ethical
is driven by decision which : selection, motivation, evaluation etc.
culture of an will never take
any
decision.
organization Values bring about coordination in a social group,
such an of making profits even if the eve
driven by the motive organizations wrong is wrong especially in uniting families, societies and nations.
such policies
are unethical. For the industry follow plans and CODE OF CONDUCT
follow. 1.8
if other firms in is right even if no firm
which are unethical:
right A business will enjoy a strong reputation for honesty
ethical plans and
policies. and integrity throughout the world ifit can uphold the trust
of its stakeholders which is an awesome responsibility of
business has
1.7 VALUES behaviour: it the management. This can be achieved if the
or standards of to meet its
Values are principles important in life. a well-defined code of conduct and ethics
one's judgment of what is obligations. This code will reveal the policy with which
denotes
value to be a type of belief the business is conducted. It has effect only when
the
Rokeach (1969)considers a system. to
wvithin one's total belief management, employees and officers commit themselves
that is centrally locatedought not to behave." abide by its principles.
about how one ought or
preferences concerning According to the International Federation of
Values can be defined as broad values
or outcomes. As such, "ought Accountants, code of conduct is defined as "principles,
appropriate courses of action the
or what
right and wrong values, standards, or rules of behaviour that guide
reflect a person's sense of decisions, procedures and systems of an organization inkeya
that (a) contributes to the welfare of its
to be.
individual's attitude and way
Values tend to influence an stakeholders and (b) respects the rights of all constituents
and beliefs about life that
behaviour. They are the ideas affected by its operations."
They are the rules by which
guide individuals to perform. right and wrong, should Code of conduct is a set of principles which remain as
individuals make decisions about frame values,
a tool in the hands of the management to
or shouldn't and good or bad. responsibilities and ethical obligations of the organization.
played by
Significance of values It is also established for each and every role
whether their individuals in the organization. This serves as a guide to
Values help individuals to conclude thereby enables
handle difficult ethical situations and
preferences or eventsare good or bad, right or wrong,
opinion people to take appropriate decisions.
They determine individuals' perception,
and attitude.
 ETHICS
BUSINESS ETHICS AND CORPORATE GOVERNANCE 1.15
1.14
set of
organization will have its own helps Every industry has certain standards within which
Every business beliels. This they are deemed to operate. An ethical issue will arise when
will define its culture and unity
values that various issues with a firm's principles conflict with the standards of the
organization to deal with establishing
an ultimate purpose of behaviour industry. Whether the operations of a firm are ethical or
among themselves. The values is to encourage unethical depends on how wll it confines itself to the
these principles andmembers of the organization which standards of the industry. Ethical issues that may arise
patterns among the and mission.
achievement of its goals organization will differ from one organization to another and from one
would lead to the principles, an job to another.
Through these values and what is wrong.
determines what is right and In a globalized world it becomes imperative for every
of conduct focuses on: business organization to have a set of code of conduct for
In anutshell, the code
the smooth functioning of business. This will enable
Getting results the right way; individuals associated with the organization to play their
stakeholders;
Upholding the interest of roles ethically. When these individuals fail in their roles
achieve
Aiming for high performance to and act in an unethical manner, the situation becomes
operational excellence; worse, leading to various types of ethical issues. Lack of
integrity and trust is the foremost among various
ethical principles in decision making and
Applying categories of ethical issues which may also include issues
Conducting business in a socially responsible and relating to diversity, decision-making, compliance and
ethical manner. governance.

1.9 ETHICAL ISSUES 1.10 FUNDAMENTAL ETHICAL ISSUES

According to Law Dictionary, an ethical issue refers Integrity and Trust
to a conflict of right (ethical) or wrong (unethical) or a
situation forcing alternatives on an entity seeking ethical Every business organization has a great responsibility
behavior. towards its stakeholders. Legitimate policies of an
organization will help to uphold the confidence of its
It is evident from the above definition that an ethical employees, suppliers, customers and shareholders. The
issue relates to a challenging situation wherein an organization will not face any ethical issue if these policies
individual or an organization has to take a decision after are followed with ethical values when it comes to dealing
evaluating various other alternative decisions based on with people associated within the organization and outside
right (ethical) or wrong (unethical). the organization. The stakeholders' will continue to trust
The legitimacy with which an organization functions the organization only when the organization carries out
reveals its ethical behaviour, which in turn determines the its affairs on the principles of integrity and ethics.
goodwill of the organization in the long run.
 1.16
ETHIC BUSINESS
ETHICS AND
As long as this relationship of trust exists botwce CORPORATEGOVERNANCE 1.17
an organization and its stakeholders, (especially i Only if this course of
customers) the organization will continue to enjoy th decision, cspecially when an action is
adopted in making a
ruits of succesS. it organization
challenges, amounts to ethical is
confronted with
Diversity Issues when Decision-making
it
decision-making.
process is said to be
Maintaining diversity and ethics in an organization with thesafeguards the interest of all the peopleethical only
would help to maintain the trust of its employees and the rightsorganization. Such a process will help in associated
and beliefs of
customers. Responding to diversity in an ethical mann associated with the customers, employees and upholding
organization. others
starts with the creation of a diverse workforce, provisio
of a respectable work environment to the employees wit Compliance and Governance Issues
opportunities to enhance their skills and recognizing thei An
organization may
contributions to the organization. challenge of adhering sometimes
the
to the
be confronted with

Diversity in the workplace enables people of allsocio regulations or going against them togovernment
make a gain.
rules and
economic backgrounds to feel comfortable working in th This kind of compliance issue may be
organization. Diversity in the workplace would lead t when an organization ethically solved
frames its policies that
with the do not clash
enhanced creativity and new processes resulting in a government laws with a commitment to
to corporate governance. compliance
increase in productivity and sales. At the same time, a
organization may face some challenges of diversity 1.11 ETHICAL THEORIES
Diversity issues may be tackled smoothly if an organizatio The formal study of ethics relates
enforces non-discriminatory standards and enforce back to the
nenalties for non-compliance. The organizanons suouu ais philosopher Socrates. Many other philosophers tooGreek
on bevond to embrace the tried to
differences. This would Open ey would beexplain what "ethics" is and what its source is.hadIt
horizons with new customer demograpnies nd buses by appropriate to learn the theories of ethics framed
partners.
renowned philosophers in order to understand the source
of ethics.

Decision-Making Issues Ethical theories are mostly sought when individuals

As a decision-maker, an individual or an organization nt to make decisions as these theories explain whether
has to consider the consequences of the decision on th acton or a set of action is morally right or wrong. They
organization and on the stakeholders. This will enable them help to examine moral problems, reach conclusions through
to understand the impact of the decision; accordingly, i logical reasoning and defend the conclusions.
would facilitate in evaluating alternative decisions which
would be beneficial not only to the organization but also tt
all others associated with it.
 ETHIG BUSINESSETHICS AND CORPORATE cOVERNANCE 1.31
1.30
facie duties
described prima we The third characteristic is that moral praise can
Ross later ourselves and to others" and he
to [o properly accompany the doing of morally right actions and
"responsibilities (our duty proper moral blame can properly accompany acting immorally. f
that "what we should do of thes.
on to say determined by the balance person X has acted immorally in a business transaction, it
actual duty]) is means that, from a moral point of view, it is appropriate
responsibilities." for anyone to blame that perBon. For instance, if taking
THEORY
AND ETHICAL bribes is immoral, then those involved in bribery deserve
1.12 MORALITY practices and
to cover those moral blame.
Morality is a term usedsignificantly right and wrong
that are considered
activities
govern those activities and the values tha 1.13 NEED FOR ETHICAL THEORY
the rules that and
embedded, fostered or pursued by those activities Most moral judgments in business, as in other areas
are of life, are made on the basis of such generally accepted
practices. background rules as "Do no harm", "Do not kill"; still an ethical theory
is related to its
The morality of a society society or a group as being is required. The requirement of ethical theory can be
by a
or the customs accepted laws of a society that
understood in a threefold manner.
to those
right and wrong as well as First, although the general rules are frequently
sanctions to many activities
add legal prohibitions and sufficient, they are not always so. How to decide upon cases,
considered to be immoral.
and wrong, in which the moral intuitions of people differ, in which two or
Morality refers to the judgnents of right associated more general moral rules seem to conflict, in which following
are usually
good and bad. Three characteristics a general moral rule seems to lead to an immoral action, or in
moral judgments about the
with such judgments. First, action are held to be
which a generally accepted rule or practice is challenged? New
rightness or wrongness of an
person X practices arise constantly in business for which moral rules
universally applicable. If an action is right for a Ifit do not clearly give answers. How to evaluate these practices?
same situation.
it is also right for anyone else in the similarly In any of these cases it would be helpful if there was some
anyone else
is wrong for X, it is also wrong for way of deciding which rules apply and some technique for
placed. deciding that certain rules are moral and others not. An
The second characteristic of morality is that moral Ethical theory provides these by explaining why actions
judgments are important. They are so important, in fact, are right or wrong and by providing a decision procedure
that they override other considerations. Individuals are for resolving difficult or controversial cases. Someone who
morally bound to do what they sometimes may not want to knows ethical theory can engage in moral reasoning as
do. For instance, it is wrong to steal, even when an outlined by the theory. This is useful for an individual in
individual likes to steal. resolving difficult moral issues that the individual may
face.
 1.32
ETHICS
BUSINESS ETHICS AND
of the standard
methods CORPORATE GOVERNANCE
Second, knowing some
1.33
an individual wh
possible for The search for a
moral reasoning makes it them completely
to explain and justifypromotox is a one. There is no satisfactory ethical
does make moral decisions hires or lires or never-ending
or all philosophers agree. theory on which all theory
people
others. If a business executive
certain individuals and is challenged as to the justice here the many different Nonetheless, we need not describe
fairness of his or her decision,
that executive is called upns
developed in the historyethical systems that have been
of philosophy.
to justify the action.
centuries, two basic approaches to moral Through the
action is fair i prevailed. reasoning have
Simply saying that one believes the arguments in One
reasons or approach argues on the basis of
not enough. One must present
defense of one's decision. To do so means
theory
to engage in moral
one can do
This approach to ethical
s
approach. It reasoning is calledconsequences.
a teleological
reasoning, and armed with ethical states that whether an action is right or wrong
of moral depends on the consequences of that
effectively. Knowledge of the standard techniquescorporato of action. A common form
argumentation also enables one to take part
in teleological ethics that is very strongly represented in
an intelligentsociety is utilitarianism.
discussions or public policy discussions in evaluate moral
knowledge of how to present and The second basic approach is called the
way, with
arguments.
deontological
approach. This states that duty is the basic moral
and that duty is independent of category,
Third, even though conventional morality is the consequences.An action is
starting point for ethical theory and is generally accepted, has certain characteristics or is of a certain kind
determine this and and wrong if it has other characteristics or is of another
it may not always be correct. How to
evaluate conventional morality solely depends on the kind. The traditional Judeo-Christian approach to morality
is deontological.
answers provided by ethical theory. The Ethical theory, to
this extent, is critical rather than conventional. Philosophers and others, who wish to be
often attempt to use only ethical approaches to consistent,
The relation between conventional morality and Those questions.
interested in ethics as a theoretical pursuit attempt
ethical theory is an interactive one. Ethical theory to construct their approach so that it can handle difficulties
attempts to justify conventional morality, in turn corrects and objections and can be defended and
conventional morality and is then evaluated in terms of rationally justified.
how well it explains the results as a whole. Those who are willing to mix their approaches are
sometimes called ethical pluralists. They hold one primary
This on going interrelation of conventional morality approach or set of principles but join them with another
and ethical theory continues until one either reaches at approach or set of principles.
least a temporary point of equilibrium or until one is forced
to act on the basis of the best insight that one's theory,
however defective or incomplete, permits.
134 ETHIG BUSINESS ETHICS AND CORPORATE GOVERNANCE 135
morality
According to many philosophers'
more than moral rules and moral reasoning. It p involv requirements, all take time and money. However,
the extra cost and effort will result
with an individuo
involves moral virtue, which has to do emnanate from h. the long run. If success is being
in profits in
that measured from
charaoter and the types of actions this longer perspective, it is more likely to observe
character and ideals
character. The notions of virtue, the positive effect ethical behaviour and
with respect
all important. They apply especially will have on all those who are practices
individuals. associated with a
business.
1.14 SIGNIFICANCE OF BUSINESS ETHICS Attraction and retention of talented work
It has become imperative for every organization t force: Employees with strong moral values get
have a business ethics program. In this globalised worla attracted towards organizations which
with day today evolvement in technology and with ethical values and principles. Such operate
communication, it has become very easy for the entire worla are less likely to engage in unethical employees
to identify and publicize unethical business practices.
behaviour
that compromises productivity. Business ethics
To be on the right track and at the same time to avo help the company to get talented
negative implications, organizations have started focussing board which ultimately reduces theemployees on
recruitment
cost and brings productivity in the company.
more on enhancing resources to business ethics When
Organizations have a vital role in developing good ethig employees morally identify with their
in business. organizations, they are more likely to remain on
the job, resulting in lower
Profit Maximization: The ultimnate motto of any turnover. Employees
want to feel safe, secure, encouraged, valued, and
organization is to maximise profits. When
business operations are carried out with honesty respected. Fostering an ethical compliance culture
enhances all of these elements of a positive,
transparency and with customer centric attitude. thriving corporate environment and thus improves
it is quite obvious that the business
would yield employee morale.
profits in the long run. Measuring true
profitability, however, requires taking a long-term Greater reputation: Business organizations
perspective. Success cannot be measured within a which have a reputation for consistently being
quarter of a year; a longer time is often required ethical in how they source and build
for a product or service to find its treat their employees, customers products,
and the
market and gain
popularity against competitors, or for the effects community, it is for sure that people would want
of a new business policy to be torelate with such
felt. Satisfying organizations to have business
consumers' demands, going green, being dealings. Ethical behaviour is indeed a pillar of
responsible, and acting above and beyond thesocially
basic
corporate reputation.
1.36
BUSINESSETHICS AND CORPORATE GOVERNANCE
Clients and customers who believe
ETHIC 1.37
n 1.15 SCOPE OF BUSINESS ETHICS
organizations continue to support thn ethia ghlcs in Compliance
Trade and community organizations open tht "Ethics" and "compliance" are
door to such ethical organizations to beco the samo.
related, but they are not
their members.
Cthics refers to the
Investors extend financial support (behaviours) made by an
decisions, choices, and actions
for thei,
business to grow. individual/organization
reflectand enact their values; Compliance
that
is conforming
Other business oradapting one's actions to another's wishes, to a rule or
get organizations would want
associated with ethical organizations.
to to necessity.
Special recognition is offerod to these Phics, takes a proactive approach, as it guides to
organizations by Newspapers, magazines and moral thinking and behaviour based on the
other media.
internal
motivation of one's own character, values, and principles.
On the other hand, compliance takes a more reactive
Other points of significance of approach, as it forces one to make a conscious decision to
ethics are: business follow a ruule or law that someone else has created.
" It provides a solid
culture of respect, foundation
for building a Business Ethics ensures that all the operations of an
trust, transparency, and organization are backed by due compliance to various rules,
accountability. regulations and laws. This adherence prevents an
It improves the standard of behaviour. arganization from facing unfavourable litigations and
It leads to more
efTective business practices. nenalties. These organizations which follow ethics in their
It leads to long-term gain for husiness have well established rules, regulations, policies
the business. and strategies, which are not only made known to every
It improves the nerson within, but also monitored as to their adherence.
moral values of employees.
$ It regulates the
ethical behaviour of the Ethics in Human Resource
industry as a whole.
The pillars of an organization are its human
It helps in
regulating IT resources. To foster a good relationship between the
protecting confidentiality security and in employer and the employees and to enhance the productivity,
business ethics plays a vital role, being implemented
through various policies of Human resource management.
employer and
It covers all ethical issues related to an
policies are
employee. The various issues backed by ethical
 1.38 ETHICS
BUSINESS ETHICS AND cORPORATE
discrimination issues, sexual harassment, employeel, GOVERNANCE 1.39
healt
privacy issues, salaries and wages issue, safety and Respecting the
acquiredconfidentiality
of
issues. Business ethics help employees to overcome these which is in the business information
an: information should not be course and such
issues with ease, makes them to work more efiiciently uBed for the personal
keeps them motivated. benefit.
Ethics in Finance Promoting ethical behaviour among all the
The ethics in finance incorporate truthfulness
associates and stakeholders of a company.
Ethics in Production
integrity, honesty, justice, and fairness in all sorts o
financial activities. Ethics is one of the most critical and Ethics in production is a subset of
business
ensure that the production function orethics that
intricate aspects of an organization, especially in domains is meant to
activities
like finances. There is either "right" or "wrong" associated are not damaging to the consumer or the
with any human action based on the organization'a with the responsibility of an organization tosociety. It deals
conventional morality and business ethics. The most the products and processes of production are make sure that
frequently occurring ethical violations in finance relate to harm to the environment. The main aim is to not causing
mininise the
insider trading, stakeholder interest versus stockholder degree of risk and danger. The various ethical issues of
interest, fake reimbursements, overbilling, bribery, production are defective and dangerous products,
kickbacks etc. environmental ethics and pollution issues, Issues arising
out of new technologies and product testing issues.
Code of Ethics in Finance
Implementation of ethics controls these issues and fosters
Acting with honesty and integrity while handling overall productivity.
dilemmas of the world of finances. It throws light on the following issues:
Not associating with any real/clear conflicts of Avoiding rendering of services or producing
înterest in personal, or company relationships. products that are hazardous to health. For
Providing information that is full, accurate, fair, example, tobacco and alcohol;
complete, relevant, objective, understandable, and Maintaining ethical relations with the
timely in and for different documents and reports. environment and avoiding environmental
Acting in accordance with all the applicable rules, pollution.
lews, and regulations of governments along with Ethics in Marketing
other relevant public/private regulatory agencies.
Marketing ethics deals with moral standards and
" Acting responsibly and in good faith with due care, extend beyond legal limit. Every aspect of marketing ethics
carefulness, and competence without any sort of promotes fairness, honesty, responsibility, and trust in a
misrepresentation of material facts. company's marketing policies.