IMT 49-Business Ethics

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8/29/2011 2 . How lonely are the Humans! A bundle of contradictions, Ignorance and arrogance, Prejudice and superstitions, Bigotry and fanaticism, Illusions and hallucinations. Tamoso Maa Jyotirgamayo. ‘Let the Lights remove all Darkness’, ‘Let Noble Thoughts come from all sides’. .

1. Introduction: Concepts of Market, Business and Ethics :

8/29/2011 3 1. Introduction: Concepts of Market, Business and Ethics 1.1 Definition of Ethics 1.2 History of Ethics and Business Ethics 1.3 Scope of Business Ethics 1.4 Applicability of Business Ethics 2. Theoretical Issues of Business Ethics 2.1 Deontological Theory of Emanuel Kant 2.2 Utilitarianism 2.3 Cognitivism vs Non-Cognitivism 2.4 Consequentialism vs non-Consequentialism 2.5 The Concept of Rights 2.6 Ethical Relativism 2,7 Secular Morals vs Religious Morals

3.Indian Ethos- Ethical Heritage of India:

8/29/2011 4 3.Indian Ethos- Ethical Heritage of India 3.1 Vedic and Vedantic Ethics 3.2 Ethics of the Gita 3.3 Buddhist Ethics 3.4 Ethics of Jainism 3.5 Philosophy and Ethics of Swami Vivekananda 3.6 Philosophy and Ethics of Mahatma Gandhi 3.7 Philosophy of Rishi Aurobindo 3.8 Philosophy of Rabindra Nath Tagore

4. Ethics in Action: Corporate Governance and Corporate Social Responsibility:

8/29/2011 5 4. Ethics in Action: Corporate Governance and Corporate Social Responsibility 4.1Ethics and Laws- the Iron law of Responsibility 4.2 Basic Responsibilities of Companies and Corporations 4.3 Shareholders vs Stake-holders 4.4 Economic Responsibilities 4.5 Social Responsibilities 4.6 Total Social Responsibilities 4.7 Corporate Social Reporting 4.8 Social Audit

5. Ethics in Action: Ethics of Professions:

8/29/2011 6 5. Ethics in Action: Ethics of Professions 5.1 Ethics of Chartered Accountants / Public Auditors 5.2 Ethics of Doctors and Medical Profession 5.3 Ethics of Engineers 5.4 Ethics of Lawyers 5.5 Ethics of Public Servants 5.6 Ethics of Teachers and Education Profession

6. Ethics of Finance:

8/29/2011 7 6. Ethics of Finance 6.1 Ethics of Accounting and Accounts Manager 6.2 Ethics of Financial Advisor 6.3 Ethics of Investment Bankers and Lenders 6.4 Ethics of the Stock Exchange 6.5 Ethics of Investments 6.6 Positive and Negative Areas of Investment 6.7 Government Control in Investment 6.8 Ethics of Investment in Social Sectors-Educational Institutions and Healthcare

7. Ethics in Action: Ethics of Production:

8/29/2011 8 7. Ethics in Action: Ethics of Production 7.1 Safety and Security of Industrial Establishments and Equipment 7.2 Working Conditions and Environment in factories and Offices 7.3 Quality, Quantity, Price and Supply of Products 7.4 Control of Pollution- Air, Water, Soil and Environment 7.5 Transparency in Disclosure of Contents of Products

8. Ethics in Action: Ethics of Sales and Marketing:

8/29/2011 9 8. Ethics in Action: Ethics of Sales and Marketing 8.1 Ethics of Commercial Advertising 8.2 Control of Advertising 8.3 Customer Service and After-sales service 8.4 Customer Complaints Redressal Mechanism 8.5 Media Ethics- Paid News 8.6 Aggressive Marketing, Hostile Takeovers, Manipulations 8.7 Mergers and Aquisitions

9. Ethics in Action : Ethics at Work Place and Organization culture:

8/29/2011 10 9. Ethics in Action : Ethics at Work Place and Organization culture 9.1 Factors Contributing to Bad Work Culture and Factors Promoting good Work Culture 9.2 Role of HRD and Qualities of a Good Manager 9.3 Age of Stress –Manifestations of Stress at Work Place 9.4 The Executive as a Yogi- the Indian Solution 9.5 Ethical Behaviour of Employers 9.6 Unethical Behaviour of Employees 9.10 White collar Crime 9.11 Sexual harassment 9.12Whistle Blowing

12. Ethics in Governance-Ethics of the State:

8/29/2011 11 12. Ethics in Governance-Ethics of the State 12.1 Ethics of the Political System-the Politicians 12.2 Ethics of Policing 12.3 Business-Politician-Criminal-Police Nexus 12.4 Ethics of the Bureaucracy 12.5 Ethics of the Judiciary

International Business Ethics and Ethics of Economic Systems:

8/29/2011 12 International Business Ethics and Ethics of Economic Systems 12.1 Economic Blocs and Cartels 12.2 Discriminatory Treatment of Nations on Issues like Child Labour, Subsidy, Exploitation etc. in Trade 12.3 Ethics of Intellectual Property Rights 12.4 Political Influence of Transnational Companies 12.5 Discriminatory Treatment world Bodies like the IMF, World Bank, WTO etc.. 12.6 Treatment of Democratic and non-Democratic Regimes

Chapter 1:Introduction:

8/29/2011 13 Chapter 1:Introduction Introduction Shakespeare said the world is a stage (he meant acting - we are all actors) but today, the entire world is a stage not for acting but for business and marketing. You find business anytime, anywhere and in anything. And if there is “Business” (i.e. an economic activity where there are buyers, sellers and transactions for a consideration), there will be a “Market.” Except perhaps for a few hours at home ,you will always find yourself in some market place or other.

Types of Markets :

8/29/2011 14 Types of Markets The Retail Markets – Food, Vegetables, fruits, groceries, books, medicines etc. Commodity Markets – food grains, Cotton, jute etc. The Raw Materials Markets –Inputs for finished products. The Finished Goods Markets The Capital Goods Markets The Labour Markets The Financial Markets- stock market, Banking, Insurance etc. The Service Sector Markets –Transportation-air road, railways ,water Communications, Health, Hospitality, Entertainment ,Sports, Marriage Beauty etc.. International Markets- Export-Import etc. Cyber Market

Applicability of Business Ethics :

8/29/2011 15 Applicability of Business Ethics The common concept is business ethics concerns the corporate sector. Modern concept is it should cover: Ethics of companies & corporations. Ethics of Public Accountants. Ethics of Doctors and Medical profession. Ethics of Lawyers and Law Firms. Ethics of Public Administrators. Ethics of Engineers Ethics of Educators, Teachers & Educational Institutions. Ethics of traders, retailers and vendors. Ethics of NGOs, Trusts and Institutions.

Definition of Business and Ethics:

8/29/2011 16 Definition of Business and Ethics Business is an economic activity , a transaction where an offer is made by a seller and the offer is accepted by a buyer for a consideration with the hidden agenda of a gain or profit . Ethics comes from the Greek word Ethos which means character of the individual or the culture of the community. Business ethics is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Applied ethics is a field of ethics that deals with ethical questions in many fields such as medical, technical, legal and business ethics.

History of Business Ethics:

8/29/2011 17 History of Business Ethics Business ethics being part of the larger social ethics, always been affected by the ethics of the epoch. At different epochs of the world, people, especially the elites of the world, were blind to ethics and morality which were obviously unethical to the succeeding epoch. History of business, thus, is tainted by and through the history of slavery history of colonialism and later by the history of cold war. The current discourse of business ethics is the ethical discourse of the post-colonialism and post-world wars. The need for business ethics in the current epoch had begun gaining attention since 1970s.Historically, firms started highlighting their ethical stature since the late 1980s and early 1990s, as the world witnessed serious economic and natural disasters because of unethical business practices. The Bhopal disaster , and the fall of Enron are instances of the major disasters triggered by bad corporate ethics.


8/29/2011 18 . It should be noted that the idea of business ethics caught the attention of academics, media and business firms by the end of the overt Cold War . Cold Wars, seen through pages of history were fought through and fought for American business firms abroad. Ideologically, promotion of firms owned by American nationals were presented as if it were freedom and the local resistance against the excess of American firms were labeled as communist upraising sponsored by the Soviet Block. Further, even legitimate criticism against unethical practice of the firms were presented as if it were infringement into the 'freedom' of the entrepreneurs by activists backed by communist totalitarians . This scuttled the discourse of business ethics both at media and academics. Overt violence by business firms have decreased to a great extent in the democratic and media affluent world of the day, though it has not ceased to exist. The war in Iraq is one of the recent example of overt violence by the liberal western states on the behalf of oil business interests

Plethora of Laws, Rules and Regulations to govern Business:

8/29/2011 19 Plethora of Laws, Rules and Regulations to govern Business The Companies Act The Income Tax Act The SEBI Act The Factories Act The Environment Act The Minimum Wages Act The Provident Fund Act The Hazardous Substances Act The FEMA The Consumer Protection Act etc.etc.

Two Questions which arise::

8/29/2011 20 Two Questions which arise: 1.When there is a plethora of Acts ,Rules and Regulations to control business, where is the need to frame a separate Code of Business Ethics? 2.Why should the Corporate world be periodically rocked by scandals in spite of having the Code of Business Ethics? The answer is Ethics begins where the Law ends.

Chapter 2. Indian Ethos: Ethical Heritage of India:

8/29/2011 21 Chapter 2. Indian Ethos: Ethical Heritage of India 1.2 Indianness of Indian Business-Rediscovery of Indian Schools of thought and Philosophy. Treasure of Indian Philosophy and Ethical Values: The Vedas (4)- Rigveda, Samaveda,Yajur-veda, Atharvaveda (Nalayira Divya Prabhandham-Tamil) The Upanishads (123 books; 13 basic) The Puranas (18) The Greatest Epics -The Ramayana & The Mahabharata The Greatest Book of Philosophy-The Gita Indian Schools of Philisophy (6) Buddhism, Jainism, Jataka Tales,Panchatantra and a treasure of unparalled Sanskrit & Pali Literature, Ayurveda, Economics,Law, Logic etc.


8/29/2011 22 . Many Hindu intellectual traditions were classified during the medieval period of Brahmanic-Sanskritic scholasticism into a standard list of six orthodox (astika) schools (darshanas), the "Six Philosophies" (ṣad-darśana), all of which cite Vedic authority as their source: 1.Nyaya, the school of logic 2.Vaisheshika, the atomist school 3.Samkhya, the enumeration school 4.Yoga, the school of Patanjali (which provisionally asserts the metaphysics of Samkhya) 5.Purva Mimamsa (or simply Mimamsa), the tradition of Vedic exegesis, with emphasis on Vedic ritual, and 6.Vedanta (also called Uttara Mimamsa), the Upanishadic tradition, with emphasis on Vedic philosophy.

Ethical Principles of Indian Society –Individuals. Business and Governance:

8/29/2011 23 Ethical Principles of Indian Society –Individuals. Business and Governance 1.Aims of Life: Four Phases of Life- Brahmacharya(Duties as Student life), Grihastha (Duties as a Householder), Banaprastha (Pilgrimage and Meditation), Moksha (Salvation). 2. Duties of Life: Artha, Kama, Moksha, Dharma Every individual including businessman and ruler must conduct himself according to DHARMA i.e. honesty, fairness, equity and with a sense of divine duty and Nishkam Karma. 3. Style of Living: Spiritualistic against Materialistic: Simple Living and High Thinking 4. Reverence for Elders: Matrideva bhaba, Pitrideva bhava, acharyadeva bhaba , Atithideva bhava 5.Attitude towards Self: Inner Happiness, peace of mind, Detachment, Yoga and Meditation. Chidanandam 6.Attitude to the World : Shanti, Sukham, Anandam-let there be peace evrywhere-to humans, to vegetation, to the universe. Vasundhara Kutumbakam- the whole world is your family. ---Universalism

Indian Concept of Indebtedness:

8/29/2011 24 Indian Concept of Indebtedness Five Categories of Indebtedness (Rin) 1 .Devarin :-Indebtedness to supra- human powers for the gifts of Sun, air, water light etc. 2.Rishi Rin :-Indebtedness to sages who leading a life of utter self denial, realised the highest truths and gave the wisdoms. 3.Pitri Rin :-Indebtedness to Parents and ancestors for their cumulative contributions to us. 4.Nri Rin :-Indebtedness to humanity at large, to countless people who have contributed to make existence a reality. 5.Bhuta Rin :-Indebtedness to all sub-human species - trees, animals, birds, fish, insects etc. for their incalculable gifts to us. Albert Einstein had the same concept.

Principles of the Gita:

8/29/2011 25 Principles of the Gita Raj Yoga, Gyan Yoga, Bhakti Yoga (the Beauty of Surrender) Karma Yoga -Nisham Karma-Egoless work with Divine Duty. Karmanye aadhikaresthey maa phaleshu kadachana Soul is indestructible- as you discard old clothes, the Soul discards the old body and enters into a new body. The cycle of death and birth is painful. You can avoid this cycle and achieve Moksha (Salvation) through Nishkam Karma and Surrender to God. Be Fearless and do your duty with Dharma . Don’t fear death because death is certain when one is born and birth is certain when one dies- so why worry? A person who can give up ego, power, pride, lust ,anger and taking favours, he only is qualified to think of achieving Brahma.

System of Education in Ancient India- Vedic System and Buddhist System :

8/29/2011 26 System of Education in Ancient India- Vedic System and Buddhist System Essentials of Indian Philosophy: The law of Karma, Rebirth and Salvation (idea of liberation)-Brahmacharya, Grihastha, Baanprastha, and Moksha. Eight Schools of Thoughts or Philosophy. Common principles—simple living high thinking-nonattachment to material things. Difference with Buddhist philosophy.

Ethics of Buddhism-the principle of Suffering-existence, causes and cessation of sufferings.:

8/29/2011 27 Ethics of Buddhism-the principle of Suffering-existence, causes and cessation of sufferings. Eightfold Noble Path or Madhyapantha 1.Sat Vakya - Right Speech 2.Sat Karma- Right Action (Right Conduct) 3.Sat Chinta- Right Thinking (Right Resolve) 4.Sat Cheshta—Right Effort 5.Sat Smriti- Right Remembrance (Right Views) 6.Sat Jeevan- Right Livelihood 7.Samyag Drisht- Right Perception ( Mindfulness) 8.Smyag Samadhi- Right Meditation - ( Concentration). Short-cut principles for ordinary people- don’t steal, don’t lie, respect ladies and abjure violence.

Ethics of Buddhist Economics:

8/29/2011 28 Ethics of Buddhist Economics Sustainable Growth-Planting and nurturing of trees and nature. Utilization of local resources Full employment ‘Dana’-gifts-and charities to others-profit- sharing (ethics of the wealthy and the business class) Least expenditure on armies and promote development through non-violence (ethics of governance) Following Dharma by the Rulers (ethics of rulers)

Ethics of Jainism:

8/29/2011 29 Ethics of Jainism 1.Ahimsa (Abstinence from all injury) 2.Satyam (Abstinence from falsehood) 3.Asteyam (Abstinence from stealing) 4.Brahmacharyam (Abstinence from self-indulgence) 5.Aparigraha (Abstinence from all attachments) Bondage of the soul: causes: anger, pride, infatuation and greed. Liberation of the soul: dissociation of the soul from the matter. Believes in the Theory of Karma and Rebirth but not in God.

Swami Vivekananda-Philosophy & Ethics:

8/29/2011 30 Swami Vivekananda-Philosophy & Ethics Don’t forget that the poor, the down-trodden, and the untouchables are your brothers & sisters. You will reach God by playing football rather than by reading the Gita. You can not preach religion to people with empty stomach-food and education come first before anything else. Education, education, & education for all- women’s freedom, enlightenment and freedom from superstition and blind faith. Service to Humanity .Those who are serving jiva i.e living beings are serving God. Building of a strong nation and character through education, economic and spiritual development.

Philosophy of Mahatma Gandhi:

8/29/2011 31 Philosophy of Mahatma Gandhi Ahimsa- Non-violence ( imbibed Buddhism & Jainism & Tolstoy) Dharma- Moral Law (Gita) Truth-Truth is God and God is Truth (Aristotle: know Thyself) Communal Harmony (Indian tradition of tolerance and harmony) Equality of all human beings and Women (Western thoughts) Harijans- up-liftment of the downtrodden (Vivekananda) Khadi & Village development- dev. from grassroots (innovation) Trustee for Industries & Industrial Houses (innovation) Sarvodaya & Community Development ( Marxism)

Philosophy of Rishi Aurobindo-the Divine Man :

8/29/2011 32 Philosophy of Rishi Aurobindo-the Divine Man Evolution of Consciousness. Divine Life on earth. Money not despised-it is an instrument of Life Divine- ‘I do not regard business as something evil or tainted..’ Super-consciousness and mind-ascent of human soul to Supreme Spirit. “ India cannot perish ...among all the divisions of mankind, it is to India that is reserved the highest and most splendid destiny, the most essential to the future of human race. It is she who must send forth from herself the future religion of the entire world, the eternal religion which is to harmonize all religions, science and philosophies and make mankind one soul. It is for this Shi Ramkrishna came and Vivekananda preached”.

Philosophy of Rabindranath Tagore:

8/29/2011 33 Philosophy of Rabindranath Tagore Universalism against Nationalism; Humanism; Humanizing Education System in natural environment (Shantiniketan); Agricultural development (Sriniketan); The religion of Man; Peace and Non-violence; Unity of Mankind, Freedom and Fearlessness; Truthfulness; “those who do injustice and those who tolerate injustice are equally condemnable.” “Where the mind is without fear and the head is held high….” Tagore epitomized the entire Indian Culture of five thousand years. A unique example of Total Quality Management.

Chapter 3. Theoretical Aspects of Ethics :

8/29/2011 34 Chapter 3. Theoretical Aspects of Ethics Cognitivism and Non-cognitivism Consequentialism and Non-consequentialism Deontological Theory of Emanuel Kant -‘goodwill’ Utilitarianism- maximum good for the maximum number -Jeremy Bentham Egoism- Enlightened Egoism- Market Ethic (Adam Smith), Protestant Ethic (work ethic-Max Weber), Liberty Ethic (John Lock). Rights Principles- Animal Rights, Human Rights, Democratic Rights, Women Rights, Children’s Rights Theory of Justice-based on principles of rights, fairness and equality. Distributive Justice. Retributive Justice. Compensatory Justice. Ethical Relativism- attitudes of races, religion & societies Secular Ethics- truth, rationality and humanism.

Ethics is all about distinguishing between: :

8/29/2011 35 Ethics is all about distinguishing between: *Good & bad or good and evil *Right & wrong *Morality & immorality *Rationality & irrationality *Justice & Injustice *Reason & unreason or prejudice *Fairness & unfairness *Truth and untruth

Cognitivism and Non-Cognitivism:

8/29/2011 36 Cognitivism and Non-Cognitivism Moral principles which can be identified or recognized. (mainly religion based e.g. abortion, drinking, cow slaughter or killing of animals for meat or hunting, female infanticide, sati, interest on deposits etc.) The second view is Moral principles can never be known because there is nothing in the world which is absolute truth and which does not depend upon or vary with time, place, situations and circumstances. What is moral today may be immoral tomorrow, what immoral in one society may be moral in another society depending on the cultural differences. There is nothing in the world which is unconditional except man’s Free will and Good Will. Ethical Relativism

Consequentialism & Non-Consequentialism:

8/29/2011 37 Consequentialism & Non-Consequentialism Consequentialism : Utilitarianism-Jeremy Bentham Egoism- Enlightened Self Interest –Adam Smith Non- Consequentialism: Deontological Theory of Emmanuel Kant (Duty and Goodwill). Justice Principles –Distributive Justice, Retributive Justice, Compensatory Justice. Rights Principles – Human Rights, Women Rights, Animal Rights, Environmental Rights, Children Rights, Minority Rights, Education Rights,

Human Values For Indian Managers:

8/29/2011 38 Human Values For Indian Managers In spite of the fact that ancient India set highest ethical, moral and spiritual standards, there is no evidence of those in Corporate governance. While Japan has largely retained their own cultural values in management Indian managers are governed by western values which are mainly materialistic. Need for moral regeneration and adopt an Indian Style of Management.


8/29/2011 39 . Basic Questions in Economics—WHAT, HOW and FOR WHOM—answers all questions. When there are plethora of Acts, Rules, Guidelines and Regulatory Authorities to regulate Business ,the question arises why should there be a separate set of Business Ethics? The answer is Acts and Rules are not enough-Business has to do much more than this and that brings us to the question of Morality and Moral Judgements.

Nature of Business Ethics :

8/29/2011 40 Nature of Business Ethics Three Approaches to Study of Business Ethics: Descriptive (describing practices, moral codes and beliefs) Prescriptive (attempt to formulate and defend basic moral norms) Conceptual study of ethics (analysing central ethical terms such as right, good, justice, virtue-an attempt to distinguish what is moral and what is immoral). Four-part structure of Business Ethics: 1.Specification of Moral Judgement. 2.Moral Judgement and Moral Standards. 3.Logical Reasoning and Moral Standard. 5.Moral Judgement and Moral Responsibility.


8/29/2011 41 . Various Aspects of Business Ethics. 1.General Business Ethics This part of business ethics overlaps with the philosophy of business , one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it should be seen as unethical for a company to consider the interests and rights of anyone else. Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated. Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept v. shareholder concept .


8/29/2011 42 . Ethical issues concerning relations between different companies: e.g. hostile take-overs , industrial espionage . Leadership issues: corporate governance ; Corporate Social Entrepreneurship Political contributions made by corporations. Law reform, such as the ethical debate over introducing a crime of corporate manslaughter . The misuse of corporate ethics policies as marketing instruments.


8/29/2011 43 . . . 2. Ethics of Accounting and Financial Information Creative accounting , earnings management , misleading financial analysis . Insider trading , securities fraud , bucket shops , forex scams : concerns (criminal) manipulation of the financial markets. Executive compensation : concerns excessive payments made to corporate CEO's and top management. Bribery , kickbacks , facilitation payments : while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti-competitive or offend against the values of society. Cases: accounting scandals , Enron , WorldCom , Satyam


8/29/2011 44 . . 3. Ethics of Human Resource Management The ethics of human resource management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee. Discrimination issues include discrimination on the bases of age ( ageism ), gender, race, religion, disabilities , weight and attractiveness. See also: affirmative action , sexual harassment . Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment . Issues surrounding the representation of employees and the democratization of the workplace: union busting , strike breaking .


8/29/2011 45 . . Issues affecting the privacy of the employee: workplace surveillance , drug testing . See also: privacy . Issues affecting the privacy of the employer : whistle-blowing . Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery , indentured servitude , employment law . Occupational safety and health . All of the above are also related to the hiring and firing of employees. An employee or future employee can not be hired or fired based on race, age, gender, religion, or any other discriminatory


8/29/2011 46 . 4. Ethics of Sales and Marketing Marketing, which goes beyond the mere provision of information about (and access to) a product, may seek to manipulate our values and behavior. To some extent society regards this as acceptable, but where is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics , because marketing makes heavy use of media. However, media ethics is a much larger topic and extends outside business ethics. Pricing: price fixing , price discrimination , price skimming . Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. See: anti-competitive practices , antitrust law . Specific marketing strategies: green wash , bait and switch , shill , viral marketing , spam (electronic) , pyramid scheme , planned obsolescence


8/29/2011 47 . . Content of advertisements: attack ads , subliminal messages , sex in advertising , products regarded as immoral or harmful Children and marketing: marketing in schools . Black markets , grey markets . See also: , disinformation , advertising techniques, false advertising , advertising regulation Cases: Benetton .


8/29/2011 48 . 5. Ethics of Production This area of business ethics usually deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk. Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping ).


8/29/2011 49 . Ethical relations between the company and the environment: pollution , environmental ethics , carbon emissions trading Ethical problems arising out of new technologies: genetically modified food , mobile phone radiation and health . Product testing ethics: animal rights and animal testing , use of economically disadvantaged groups (such as students) as test objects. See also: product liability Cases: Ford Pinto scandal, Bhopal disaster , asbestos / asbestos and the law , Peanut Corporation of America


8/29/2011 50 . 6. Ethics of Intellectual Property, Knowledge and Skills Knowledge and skills are valuable but not easily "own able" as objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee, or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Patent infringement , copyright infringement , trademark infringement . Misuse of the intellectual property systems to stifle competition: patent misuse , copyright misuse , patent troll , submarine patent . Even the notion of intellectual property itself has been criticized on ethical grounds: see intellectual property . Employee raiding : the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess. The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them. Bioprospecting and biopiracy . Business intelligence and


8/29/2011 51 . 7. I nternational Business Ethics and Ethics of Economic Systems International business ethics While business ethics emerged as a field in the 1970s, international business ethics did not emerge until the late 1990s, looking back on the international developments of that decade. Many new practical issues arose out of the international context of business. Theoretical issues such as cultural relativity of ethical values receive more emphasis in this field. Other, older issues can be grouped here as well. Issues and subfields include: The search for universal values as a basis for international commercial behaviour. Comparison of business ethical traditions in different countries. Also on the basis of their respective GDP and [ Corruption rankings ]. Comparison of business ethical traditions from various religious perspectives.


8/29/2011 52 . . Ethical issues arising out of international business transactions; e.g. bioprospecting and biopiracy in the pharmaceutical industry; the fair trade movement; transfer pricing . Issues such as globalization and cultural imperialism . Varying global standards - e.g. the use of child labor . The way in which multinationals take advantage of international differences, such as outsourcing production (e.g. clothes) and services (e.g. call centres) to low-wage countries. The permissibility of international commerce with pariah states. Foreign countries often use dumping as a competitive threat, selling products at prices lower than their normal value. This can lead to problems in domestic markets. It becomes difficult for these markets to compete with the pricing set by foreign markets. In 2009, the International Trade Commission has been researching anti-dumping laws. Dumping is often seen as an ethical issue, as larger companies are taking advantage of other less economically advanced companies.


8/29/2011 53 . Ethics of Economic Systems This vaguely defined area, perhaps not part of but only related to business ethics, is where business ethicists venture into the fields of political economy and political philosophy , focusing on the rights and wrongs of various systems for the distribution of economic benefits. John Rawls and Robert Nozick are both notable contributors. I.Theoretical Issues in Business Ethics - Conflicting interests Business ethics can be examined from various new perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole. Very often, situations arise in which there is conflict between one or more of the parties, such that serving the interest of one party is a detriment to the other(s). For example, a particular outcome might be good for the employee, whereas, it would be bad for the company, society, or vice versa. Some ethicists (e.g., Henry Sidgwick ) see the principal role of ethics as the harmonization and reconciliation of conflicting interests.

Unit 4 Features and Purpose of Ethics:

8/29/2011 54 Unit 4 Features and Purpose of Ethics Ethics –a Normative Science. Postulates of Ethics-(a) Free will, (b) Reason, and (c) Personality. Motive or Intention-What is the Objective of Moral Judgment? The Scope of Ethics-Concerns all sciences and all actions of individuals, politics and society. The Need for Ethics The Need to go beyond Ethics Spirituality is not Denial of the World Ethics and Religion

Features of Values-Types of values-Formulation of values:

8/29/2011 55 Features of Values-Types of values-Formulation of values The Relevance of Human Values in Management Elements of Indian Ethos Secular Vs Spiritual Values in Management. An independent rational morality not based on religious faith or commandments. Work Ethos. Development of work culture Factors responsible for poor work culture in an organization.

Unit 5. Importance of Ethics and Moral standards:

8/29/2011 56 Unit 5. Importance of Ethics and Moral standards Importance of Ethics in Business-essential for long-term success in business. - Unethical behaviour will damage Public Image, erode Goodwill( biggest Asset), affect efficiency and will invite Govt. Intervention. Unethical Behaviour from a Macro Perspective . Bribery Coercive Acts Deceptive Information Theft Discrimination

The Macro Perspective-Ethics and Trust:

8/29/2011 57 The Macro Perspective-Ethics and Trust Trust in Supplier Relations Trust in Customer Relations Trust in Employee Relations Moral Standards Essential Elements of Social contract theory Consequentialist Principles-decision ethical or unethical will depend on consequences. Egoism-individual’s personal interest. Utilitarianism-utility to individual & community.

Unit 6. Model of Management in the Indian – Socio-political Environment:

8/29/2011 58 Unit 6. Model of Management in the Indian – Socio-political Environment Role of Indian Ethos in Management : A Twenty- First Century Perspective Fragmentation of human consciousness accelerated by science and technology is a prime cause of the widespread fall in the level of human values reflected in our lives. Prospective scenario of the Future Organization: Stress -second nature of Executives Total Quality Control-zero-defect product, quality conscious production, increased creativity, reduced obesity, flattened hierarchy, customer satisfaction etc.

Relevance of Indian Ethos to Future Organizations:

8/29/2011 59 Relevance of Indian Ethos to Future Organizations The Executive as a Yogi- Karma and Dharma Imaan and Izzat. The East and the West Plain Living and High Thinking : a Study in Contrast

Problems Relating to Stress in Corporate Management and Indian Perspective:

8/29/2011 60 Problems Relating to Stress in Corporate Management and Indian Perspective Age of Discontinuity (Peter Drucker) Age of Uncertainty (J.K. Galbraith ) Age of Future Shock (Alvin Toffler ) Age of Anxiety ( Karl Albrecht ) STRESS : Symptoms ,causes and Solutions Environmental Factors & Life style Indian Perspectives :Meditation, Yoga, Mindfulness, Music, Self-introspection, Brain stilling, family values and bonding.

Unit 7 Corporations and Social Responsibilities:

8/29/2011 61 Unit 7 Corporations and Social Responsibilities The concept of Social Responsibility Plethora of Acts, Laws, Rules and Regulations exist, then why other responsibilities? Howard Bowen ( Social Responsibilities of Businessman ) K. R . Andrews (intelligent and objective concern ) Keith Davis –”social responsibility begins where the law ends”.

Need for Social Responsibilities:

8/29/2011 62 Need for Social Responsibilities The iron Law of Responsibility To fulfil long-run Self-interest To establish a better Public Image To avoid Government Regulation or Control To avoid misuse of National resources and economic power To avoid Class conflicts To convert resistance into Resources To minimize Environmental damage.

Responsibility of Business Towards Society:

8/29/2011 63 Responsibility of Business Towards Society Four Categories of Responsibilities: 1.Resposibility Towards the Shareholders. 2.Responsibilities Towards their own Employees. 3.Responsibility Towards the Consumers and the Government. 4.Responsibility Towards the Society in General especially Environment. Economic Objectives Social Objectives ( profits can no longer be the Sole objective of Business—Urwick)


8/29/2011 64 . Social Responsibility towards Government: 1.Be Law abiding Citizen. 2 .Pay Taxes and dues to Govt. honestly and promptly . 3.Not to corrupt Govt. Servants and the Democratic processes for selfish ends. 4.Not purchase Political support by unfair means. 5 Not to produce and sell Sub-standard commodities and services . 6.Not to resort to hoarding and unfair Trade practices.

Place of Ethics and Values. To Whom Are Organizations Socially Responsible?:

8/29/2011 65 Place of Ethics and Values. To Whom Are Organizations Socially Responsible? Total Social Responsibilities Economic Responsibilities Legal Responsibilities Ethical responsibilities Discretionary Responsibilities *Social Responsibility and Economic Performance. *Milton Friedman’s Thesis *Ethics in Management.

Corporate and Socio-Economic Conflict:

8/29/2011 66 Corporate and Socio-Economic Conflict The Social Audit * The Sachar Committee Recommendations* Corporate Social Reporting* Corporate Social Objectives Social Report in Practice : - Environmental controls, -Minority Employment -Responsibility to personnel -Community activities -Product Improvement (Fortune 500 companies )

Unit 8 .Ethics and Environment:

8/29/2011 67 Unit 8 .Ethics and Environment Environmental Ethics-1 : Bhopal Gas Tragedy (Union Carbide) Chernobyl Nuclear power plant Tragedy (USSR) Ecological Sustainability Indira Gandhi on Environment. (development without environmental destruction) Environmental Ethics-II (John Locke) –the Earth is given to men to protect and comfort all beings. A Brief Historical Sketch of Environmental Ethics * Rachel Carson-Silent Spring. Peter Singer-Animal Liberation. Ancient Indian Values. Ashoka’s Edicts.

Unit 9. Ethics in Action – Ethics of Professions:

8/29/2011 68 Unit 9. Ethics in Action – Ethics of Professions A. Medical Profession. International Code Of Medical Ethics: Duties of Doctors in General :THE HIPPOCRATIC OATH. (Ancient Greece) Duties of Doctors Towards the Sick: Duties of Doctors Towards Each Other: THE DECLARATION OF GENEVA (General Assembly of World Medical Association,1948)

B. Code Of Ethics For Engineers:

8/29/2011 69 B. Code Of Ethics For Engineers Code of Ethics for Corporate Members mandated by the Institution of Engineers(India),1954 , 1997. The Tenets of the Code Ethics: 11 Codes of Conduct and 10 Instructions as Guidelines. C . Professional Ethics for Chartered Accountants:( Chartered Accountants Act,1949. The Council of the Institute has two booklets-(i ) Code of Conduct and (ii) Professional Ethics.

Fundamental Principles for Chartered Accountants :

8/29/2011 70 Fundamental Principles for Chartered Accountants Integrity Objectivity Professional Competence and Due Care (e.g. Satyam Scandal-PWC ) Confidentiality Professional Behaviour. (Professional Misconduct Defined by the CA Act) Four Basic Needs to be met: Credibility Professionalism Quality of Service and Confidence

D. Professional Ethics for Lawyers-Not Codified-Fundamental Moral Values Only.:

8/29/2011 71 D. Professional Ethics for Lawyers-Not Codified-Fundamental Moral Values Only. The Universal Moral Codes are wantonly violated in this Profession No Accountability( Ghaziabad Treasury Scandal) Justice Delayed, Justice Denied Plight of Common Man—either you lose all your money or lose your life before justice comes. Strict Codes for both inside and outside courts needed for speedy justice.

Modern Concept of Professional Behaviour:

8/29/2011 72 Modern Concept of Professional Behaviour Responsibilities Towards Clients Responsibilities Towards the Profession Itself Responsibilities Towards Society * Professional Ethics in Public and Private Organizations.

Unit 10. Ethics in Action-Ethics at Work Place:

8/29/2011 73 Unit 10. Ethics in Action-Ethics at Work Place What Are Work Ethos? Work Culture- discipline, commitment, sense of belonging, sense of pride Unethical or Dysfunctional Behaviour in Organizations: Employees & Employers Lying Free-riding Employee Crime White Collar Crime Embezzlement and Fraud Sexual Harassment Bribery Whistle Blowing

Operational Systems for improvement of work culture:

8/29/2011 74 Operational Systems for improvement of work culture Job Enrichment- Herzberg’s two-factor theory—Hygienes and Motivators Job Rotation Quality Circles* Workers’ Participation Organizational Development ( OD ) Labour Welfare Human Engineering-to fit man into machine.

Modern Concept of Professional Behaviour:

8/29/2011 75 Modern Concept of Professional Behaviour Responsibilities Towards Clients Responsibilities Towards the Profession Itself Responsibilities Towards Society * Professional Ethics in Public and Private Organizations.

Unit 11. Ethics and Employees:

8/29/2011 76 Unit 11. Ethics and Employees Decision-Making and Morality Moral Approbation Organizational Culture Organizational Climate Organizational Goals Decision Processes Total Benefit Test

Embedding Ethics in Organizational Culture *Decision Support Model .*Ethical Models :

8/29/2011 77 Embedding Ethics in Organizational Culture *Decision Support Model .*Ethical Models Developing Organizational Values : Selection Promotion Transfer Termination Prevent other unethical practices: 1.Sexual harassment, 2. Unfair labour practices, 3Unsafe work places, bad conditions and long working hours ,4.No redresal of ILO grievances ,and 5. Non -implementation of ILO conventions.

Qualities of a Personnel Manager:

8/29/2011 78 Qualities of a Personnel Manager 1. Training and learning opportunities 2. Growth opportunities 3.Accountability along with power for decision making 4. Openness 5. Nurturing innovation and allowing paticipation 6 Employee welfare

An Ethical HRD Manager:

8/29/2011 79 An Ethical HRD Manager A Personnel Manager must be a good manager and to be a good manager,one has to a good man-big-hearted, genuine concern for others, commands respect,big-minded and development of people below manager. HR men should provide proper Leadership. “You shall others as equals” “You should show the ability to forgive” “You shall love your fellowmen and women”

Unit 12. Ethics of Advertising:

8/29/2011 80 Unit 12. Ethics of Advertising Critics of Advertising argue: Ad is unethical, is inherently a social evil. It induces people to buy things they don’t need or can’t afford. Increases expectations. Propagates and perpetuates Capitalistic value system. It creates undue pressure on the Consumers Big firms can afford it but small producers can’t Huge money involved should be better spent on improving the quality of products *The critics blame the tool and not the user like blaming weapons.

Impact of Advertisement : To Influence :

8/29/2011 81 Impact of Advertisement : To Influence Advertisements can be categorized into 7 groups: 1.Informative-to create awareness of the presence of a company or a product- Govt. Advt; launching of new products. 2.Neutral and Aesthetic. (specially with children, dogs) 3.Message Bearing (Tata Tea) 4.Competitive and Comparative( cars) 5..Aggressive and Offensive 6.Dangerous Stunts 7.Deceptive *Deception is the main problem –it is immoral & unethical

Regulation of Advertising:

8/29/2011 82 Regulation of Advertising Legislation-Govt. Control Voluntary-Self-Regulatory Control-Ad Council as Watchdog Media Control Consumer Fora Public Control

UNIT 13 Ethics in Business and Investment:

8/29/2011 83 UNIT 13 Ethics in Business and Investment Negative and Positive Forms of Ethical Investment. Negative Criteria in Ethical Investment Decisions Positive Criteria Influencing Ethical Investment Decisions Animal Rights-A Moral Concept ?-The Big Debate- International Movement for Prevention of Cruelty to Animals.

Other Leading Ethical Investment ‘Target’ Industries:

8/29/2011 84 Other Leading Ethical Investment ‘Target’ Industries Alcoholic Beverages Production and Distribution. International Narcotics Trade International Arms Trade Use of Additives in Food Production. Different Value Systems in Different Cultures Kant’s Kingdom of Ends Other Possible Approaches

Unit 14 Ethics in SCI-TECH and LAW:

8/29/2011 85 Unit 14 Ethics in SCI-TECH and LAW *Bio-Ethics-Manufacture of Medicines, Medical Treatments (sex determination, fertility etc.) *Bio-Technology-Limits ? *Genetic Engineering –Moral and Safety Issues *Human Genome Project *Stem Cell Research.

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