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KV Institute of Management and Information Studies
BA7402-Business Ethics, Corporate Social Responsibility & Governance
UNIT 1 – INTRODUCTION
Business ethics-management concepts & Business ethics values-Principles-ethical dilemmaethical theories-work ethics
Contents
1.1 BUSINESS ETHICS ......................................................................................................................... 2
1.2 MANAGEMENT CONCEPTS & BUSINESS ETHICS VALUES ................................................. 3
1.3 BUSINESS ETHICS ......................................................................................................................... 6
1.4 PRINCIPLES OF BUSINESS ETHICS ........................................................................................... 8
1.5 HOW CAN BUSINESSES RESOLVE ETHICAL DILEMMAS? .................................................. 9
1.6 ETHICAL THEORIES ................................................................................................................... 10
1.7 WORK ETHICS ............................................................................................................................. 15
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1.1 BUSINESS ETHICS (also corporate ethics) is a form of applied ethics or
professional 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 entire organizations.
Business ethics has normative and descriptive dimensions. As a corporate practice and a
career specialization, the field is primarily normative. Academics attempting to understand
business behavior employ descriptive methods. The range and quantity of business ethical
issues reflects the interaction of profit-maximizing behavior with non-economic concerns.
Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within
major corporations and within academia. For example, most major corporations today
promote their commitment to non-economic values under headings such as ethics codes and
social responsibility charters. Adam Smith said, "People of the same trade seldom meet
together, even for merriment and diversion, but the conversation ends in a conspiracy against
the public, or in some contrivance to raise prices. Governments use laws and regulations to
point business behavior in what they perceive to be beneficial directions. Ethics implicitly
regulates areas and details of behavior that lie beyond governmental control. The emergence
of large corporations with limited relationships and sensitivity to the communities in which
they operate accelerated the development of formal ethics regimes
Ethics
Ethics is not recent phenomenon. Ethical codes have been prepared along with the
development of human civilization. In olden days, people might have found some of their
actions was wrong and others right. The question what is right and what is wrong gave birth
to ethical and unethical codes.
The word ethics is derived from the Greek word ‗Ethikos„ and Latin word ‗Ethicus„ mean
custom or character. The concept of ethics deals with human beings. So it is a social science.
Ethics is a branch of philosophy and is considered as normative science because it is
concerned with norms of human beings. In the words of Peter.F.Drucker, ―Ethics deals with
right actions of individuals
Ethics includes the following
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1. Well based standards: Ethics refers to well based standards of right and wrong that
prescribe what humans ought to do
2. Study and development of one„s ethical standards: Ethics refers to the study
and development of one„s ethical standards.
Culture
Culture is the man made part of the environment which provides a comprehensive frame
work for understanding the way of life of a person, his beliefs, values, norms, behavior etc.
Culture is one of those terms that are difficult to express clearly, but everyone knows it when
they sense it. Our behaviour is driven by three forces:
1. Human Nature: this is inherited and universally shared across all human cultures
2. Culture: Our collective programming which is learned, not inherited
3. Personality: Personality is the additional unique set of mental programme not shared with
other human beings. It is partly inherited and partly learned.
Organization culture is the personality of the organization. Culture is comprised of the
assumptions, values, norms and tangible signs of organization„s members and their
behaviours.
Kinds of Cultures
1. Strong Culture: in strong culture, the conceptual principles or values are translated very
directly into people„s day to day lives. For example, the military has a definite set of values
and very strong culture. They are enforced through external rules and regulations as well as
internal education.
2. Weak Culture: some have a set of generally accepted conceptual values, yet these do not
really translate to daily life. For example, religious values in western countries. School of
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1.2 MANAGEMENT CONCEPTS & BUSINESS ETHICS VALUES
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The word value is derived from French word ‗valoir„ which means worth, merit, usefulness
or importance of a thing. Values are traits or qualities that are considered valuable.
They represent an individual„s highest priorities and deeply held driving forces.
A broad definition of values, derived from an insight into ancient India„s psycho
philosophical wisdom literature is ―Values are states of feelings/emotions that underpin the
content of a choice/decision and determine the manner of using the intellect/reason for
justifying and implementing that choice/decision.
The study of values is fundamental in managing an organization„s behavior.
Characteristics of Values
1. Values represent an individual„s highest priorities and deeply held driving forces
2. Values are the hub of personality and is powerful force affecting behavior
3. Value varies according to time
4. Many values are relatively constant and durable
5. It contains a judgment element
6. Everyone does not hold the same values
Indian Ethos
Ethos can be defined as ―the moral ideas and attitudes that belong to a particular group or
society. Indian Ethos is all about what can be termed as ―national ethos‖.
The Indian ethos is the results of Hindu way of life. Indian life has four fundamental goals
(Purushartthas) such as Dharma, Artha, Kama and Moksha. To fulfill these goals human life
is divided into four stages namely Brahmacharya, Grahasthasrama, Vanaprastha and
Sanyasrama. To achieve the purusharthas, the Indian philosophy states three fundamental
ways.
They are Karma (Action), Bhakthi (Devotion) and Jnana (Knowledge). An individual can
select a particular mraga which depends upon the degree and level of his psychological and
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spiritual evolution, his Pravirthi, Samskara (Culture), Vasana (Passion), and his Gunas. A
man has Gunas namely Satva (the enlightening force), Rajas (the kinetic force) or Tams (dark
force).
The Indian ethos consists of:
1. Spirit and matter: Indian ethos [places emphasis on both spirit and mater. Both these are
interlinked in holistic approach. This means that man is permitted to enjoy both internal as
well as external quality of life. School of Distance Education
Management Concepts & Business Ethics
2. Relationship between man and universe: Indian ethos emphasizes the holistic aspect
between men and cosmic. There is intimate relationship between man and universe, between
men and nature. This view states that all human beings and nature are interconnected and
interdependent.
3. Co- Operation: Indian ethos stresses on co-operation amongst other at work and
otherwise. Excessive competition within the organization and organization to organization
has destroyed many young minds and family life. Co-operation, mutual trust and respect,
joint efforts and team spirit can lead an all round prosperity and success to everyone.
4. Self management: Indian ethos states that man should be able to control himself before he
controls others. So every manager must manage himself before controlling his subordinates.
He must know what are his strengths, weakness, dreams, goals and ambitions.
5. Meditation: Excellence in work can be achieved through Yoga. Meditation helps to
concentrate and to solve many complicated problems of the organizations. Mediation results
in calm mind which helps one to focus on problems in a clearer frame of mind.
6. Dharma: As per Indian philosophy Dharma means duty. It stands for all those ideals,
philosophies, purposes, influences, teachings and experiences that shape our character. Every
organization is required to follow its own dharma.
7. The spirit of sacrifice: Renunciation results in mental peace, inner growth and spiritual
growth. It results in a higher level of consciousness.
Indian Ethos in Management (IEM)
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Formally, the body of knowledge which derives its solutions from the rich and huge Indian
system of ethics (moral philosophy) is known as Indian Ethos in Management (IEM). Is IEM
some kind of Hindu concept of management? Certainly not.
Management is behavioural science and it has to be culture specific. IEM has as its basis, the
culture base of India and as a country whose culture has its roots in religion - it does draw its
lessons from the religions of the land - be it Hinduism, Buddhism, or any other.
1.3 BUSINESS ETHICS
Business ethics is nothing but the application of ethics in business. Business ethics is the
application of general ethical ideas to business behavior. Ethical business behavior facilitates
and promotes good to society, improves profitability, fosters business relations and employee
productivity. The concept of business ethics has come to mean various things to various
people, but generally it„s coming to know what it right or wrong in the workplace and doing
what„s right - this is in regard to effects of products/ services and in relationships with
stakeholders.
Business ethics is concerned with the behavior of a businessman in doing a business.
Unethical practices are creating problems to businessman and business units. The life and
growth of a business unit depends upon the ethics practiced by a businessman. Business
ethics are developed by the passage of time and custom. A custom differs from one business
to another. If a custom is adopted and accepted by businessman and public, that custom will
become an ethic. Business ethics is applicable to every type of business. The social
responsibility of a business requires the observing of business ethics. A business man should
not ignore the business ethics while assuming social responsibility. Business ethics means the
behaviour of a businessman while conducting a business, by observing morality in his
business activities.
IMPORTANCE OF BUSINESS ETHICS
There may be many reasons why business ethics might be regarded as an increasingly
important area of study, whether as students interested in evaluating business activities, or as
managers seeking to improve their decision-making skills.
It is generally viewed that good business ethics promote good business.
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1 The power and influence of business in society is greater than ever before. Business ethics
helps us to understand why this is happening, what its implications might be, and how we
might address this situation.
2 Business has the potential to provide a major contribution to our societies, in terms of
producing the products and services that we want, providing employment, paying taxes, and
acting as an engine for economic development and thereby increases the goodwill.
3 Business malpractices have the potential to inflict enormous harm on individuals, on
communities and on the environment. Through helping us to understand more about the
causes and consequences of these malpractices, business ethics helps to create mutual trust
and confidence in relationship.
4 The demands being placed on business to be ethical by its various stakeholders are
constantly becoming more complex and more challenging. Business ethics provides the
means to appreciate and understand these challenges more clearly, in order that firms can
meet these ethical expectations more effectively.
5. Business ethics can help to improve ethical decision making by providing managers with
the appropriate knowledge and tools that allow them to correctly identify, diagnose, analyse,
and provide solutions to the ethical problems and dilemmas they are confronted with.
6 A business can prosper on the basis of good ethical standards and it helps to retain the
business for long years.
7 Business ethics can provide us with the ability to assess the benefits and problems
associated with different ways of managing ethics in organizations.
8 In the age of complexity in business fileds , competition is increasing day by day Good
ethical standard helps the business to face the challenges
CHARACTERISTICS OF BUSINESS ETHICS
The following are the important features of business ethics:1. Business ethics are the principles, which govern and guide business people to perform
business functions and in that sense business ethics is a discipline
2. It is considered both as a science and an art.
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3. It continuously test the rules and moral standards and is dynamic in nature School of
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4. It is based on theological principles such as sincerity, human welfare, service, good
behaviour etc.
5. It is based on reality and social customs prevailing in business environment.
6. It studies the activities, decisions and behavior which are related to human beings
7. It has universal application because business exists all over the world
8. Many of the ethical principles develop the personal dignity
9. Business ethics keeps harmony between different roles of businessman, with every citizen,
customer, owner and investors.
1.4 PRINCIPLES OF BUSINESS ETHICS
The Principles of business ethics developed by well known authorities like Cantt, J.S.Mill,
Herbert Spencer, Plato, Thomas Garret, Woodrad, Wilson etc are as follows
1. Sacredness of means and ends: The first and most important principles of business ethics
emphasize that the means and techniques adopted to serve the business ends must be sacred
and pure.It means that a good end cannot be attained with wrong means, even if it is
beneficial to the society.
2. Not to do any evil: It is unethical to do a major evil to another or to oneself , whether this
evil is a means or an end.
3. Principle of proportionality: This principle suggests that one should make proper judgment
before doing anything so that others do not suffer from any loss or risk of evils by the
conducts of business.
4. Non co-operation in evils: It clearly points out that a business should with any one for
doing any evil acts.
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5. Co-operation with others This principles states that business should help others only in that
condition when other deserves for help
6. Publicity: According to W. Wilson, anything that is being done or to be done, should be
brought to the knowledge of everyone. If everyone knows, none gets opportunity to do an
unethical act.
7. Equivalent price: According to W. Wilson , the people are entitled to get goods equivalent
to the value of money that he will pay.
8. Universal value: According to this principle the conduct of business should be done on the
basis of universal values.
9. Human dignity: As per this principle, man should not be treated as a factor of production
and human dignity should be maintained.
10. Non violence: If businessman hurts the interests and rights of the society and exploits the
consumer by overlooking their interests this is equivalent to violence and unethical act.
1.5 HOW CAN BUSINESSES RESOLVE ETHICAL DILEMMAS?
A dilemma is a situation where there is a difficult choice between two or more options.
Dilemmas have good points and bad points on both sides. But not all dilemmas are rightversus wrong Scenarios. For example, a business decision about where to locate is a decision
and may even be a dilemma if there are a lot of issues to consider. But it is not an ethical
dilemma because it is not a right-versus-wrong decision. An ethical dilemma is a moral
problem with potential right or wrong answers. It occurs in business when a business has a
decision to make that weighs values and morals against profitability and competitiveness.
Suppose you are the manager of a business that has no really good place to dispose of its
toxic waste, so the company has been simply dumping it. If you stop dumping it, you will
hold up production until you find a proper place to dispose of it. But what if that turns out to
be very expensive? Should you inform the business owners that the company is violating an
environmental code? Or should you just ignore the problem?
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Some ethical dilemmas facing society and business include
downsizing of staff, pollution control, disposal of toxic waste, depletion and allocation of
scarce resources, cost containment, changes in law and technology, employee rights,
discrimination against women and minorities, and product safety.
Resolving ethical dilemmas requires honesty, the ability to work co-operatively, respect for
others, pride in one‟s work, willingness to learn, dependability, responsibility for one‟s
actions, integrity, and loyalty. It may help to respond to the following questions when seeking
a resolution:
1. Who will be helped by what you do?
2. Who will be hurt?
3. What are the benefits and problems of such a decision?
4. Will the decision survive the test of time?
The types of ethical dilemmas people encounter in business, and the approaches used to
resolve them, are continually changing and developing. shows some of the changes that have
occurred over the last 50 years.
1.6 ETHICAL THEORIES
1. Buddhism


 A school of thought that emphasizes individual harmony

path involves right
understanding, thought, speech, action, livelihood, effort,
 Eightfold
mindfulness, concentration


 Nirvana is a state of enlightenment: desires and ambitions are extinguished














Enables people to live in harmony with themselves and nature

Nirvana achieved by life of simplicity: abandoning possessions and pleasures
All living creatures should be treated with compassion, kindness, and love


Virtues are important for good life: eightfold path, and nonviolence and patience
Ethic is inclusive and egalitarian


All are equal and entitled to same rights

Focus on the individual who is ultimately responsible for own actions.

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


2.
Also emphasizes the importance of relationship with others

these relationships are often considered more important than individual rights

Confucianism/Taoism


 Good life involves searching for peace and enlightenment by achieving harmony

Focuses on defining and cultivating the Tao, or way to a harmonious society



 Harmonious society is achieved by following tradition rituals and roles









Morality is a social or cultural product
People are not individuals but part of the whole

Relationships and roles within community are important

Duty to family and community is more important that individual desires


a virtue ethic: kindness, uprightness or righteousness,decorum
or propriety, wisdom or

 Is
integrity, and faithfulness to self and others.


 Confucius golden rule: what you do not like when done to yourself, do not do to others



Taoism emphasizes harmony and holistic concept of life

Emphasizes living in harmony with nature and the rhythms of the universe

3. Hedonism


 Philosophy emphasizing that the good life is one devoted to pleasure



Only pleasure has intrinsic value that can lead to happiness

Differ over
definition of pleasure: is it of the body or pleasure of the mind ?(ataraxia or
serenity)
4. Stoicism


 The good life involves happiness, achieved through wisdom











Universe is well-ordered, guided by underlying logos or reason
People should strive to make their lives just a well ordered
Living in harmony with the universe



Exercise control over things that can be controlled such, as emotions and intent
Remain indifferent to thing such as consequences that cannot be controlled


Live wisely, control
 or eliminate desires and accept things uncontrollable
(E.g., body size)
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.
Virtue Ethics


 Emphasizes the role of character in guiding moral choices

A virtuous person is someone whose moral
choices are guided by good character rather
than by simply weighing the consequences


 Ancient Greeks: virtue meant excellence

virtuous meant doing things in a 
way that reflected rational thought, making the
 Being
best of skills, talents, and opportunities


 Aristotle: virtue is a matter of developing the unique human ability to reason.














Act in accordance with right reason

Rational part of the soul must control the irrational parts by choosing the middle path
Middle path is mean between the extreme of excess and deficiency
Moral virtue is the result of habit and training.




People can be taught to be virtuous
Aquinas: people can achieve perfection only by using reason to know God
Thomists: doing the right thing in obedience to god



Idea
of virtue as right conduct overtook ancient Greek idea of virtue as good character
 idea

WD Ross: modern philosopher: prima facie duties:
fidelity reparation, gratitude, justice,
 beneficence, self-improvement, non-maleficence

These duties are not the result of rational
 thought, but understood intuitively as part of the
fundamental nature of the universe
6. Existentialism

Philosophical movement that focuses on
individual autonomy and the necessity of
 making reasoned decisions for oneself

good person
is one who makes individual moral choices and takes responsibility for
A
those choices


 Absolute moral values do not exist

the idea of being true to oneself when making moral choices is the only

 Authenticity:
virtue


 Kierkegaard




Each person has a direct relationship with and direct access to god
People must make and judge their own moral choices


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
move beyond judging their actions according
to reason or societal standards and be

 Must
accountable only to the judgments of god


 Authentic choices are those that involve consistency of perception, thought and action

Inauthentic person runs away from the responsibility of creating self


urged people
to make their own moral choices rather than unthinkingly accept
 Nietzsche
the values of majority


 Faith in god was disappearing and with it the universal values provided by that faith






In absence of universal values, people must determine their own values

Sartre: atheist who believed humans had no particular purpose in living

No divine master plan, all events are random, nothing makes sense, and life is absurd.


precedes
 essence: essence created by defining self, determining identity, and
 Existence
choice of values


 Everything is a matter of choice




Everything is a matter of choice: no moral milestones exist to help guide choices
Places great importance on authenticity



A good person is 
one who recognizes own freedom and responsibility and makes
authentic choices
7. Divine command ethics


 Believe right/wrong are defined by Supreme Being


Divine commands are recorded in sacred texts of religions


is something
 right because it is favoured by the gods. Or do the gods favour it
 Socrates:
because it is right?


 Duns Scotus: god‟s commands define what is right

Aquinas: god commands people to do only
good and right things, god knows what is right
 and good through the natural law of reason

God and humans share 
the ability to reason, so people can use this ability to come to
know god‟s commands
8. Utilitarianism

Utility: the ability of an action to bring about benefit, advantage,
 pleasure, good or
 happiness and to prevent mischief, pain, evil, or unhappiness

What is morally good is generally
that which promotes social welfare, solidarity, and
 harmony in human relationships

Act utilitarianism:
moral choice results the greatest good for the greatest number of

people
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
Rule utilitarianism:
rule governing our actions produces the greatest good for the greatest
number of people
9. Kantian Ethics

choices must be judged not by consequences but by the good will of the moral

 Moral
agent


 Only thing that is good for its own sake is a good will











What is a good will: that which accords with duty
What is duty: that which is rational


To have a good will is to act on moral principles that are justified by reason.
Only one moral principle justified by reason: the categorical imperative


Categorical imperative: a rule that is absolute and must always be obeyed

Act only according the that maxim [principle or general rule] whereby you

can at the same time will that it should become a universal law of nature

with a good will
must choose the course of action that they would want everyone
 People
to choose ALL the time


 No exceptions to the categorical imperative

E.g. moral duty to always tell the truth, even if it leads to bad consequences

10. Egoism


 People should act in their own interest

Focuses exclusively on the greatest good for the individual person

11.Intuitionism


 Denies the importance of reasoning in making moral choices







Some truths are understood by intuition, an experience independent of reasoning

Moral rules are intuitive or self-evident and cannot be justified by appealing reason
Moral intuition is simple a gut feeling about right and wrong


People should listen to their hearts and appeal to their compassion

12. Post-modernism


 Challenges the reliance on reason



Judging moral choices according objective values, is a waste of time

Moral values are entirely subjective; most
 people make their own decisions about
right/wrong without seeking guidance
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BA7402-Business Ethics, Corporate Social Responsibility & Governance
1.7 WORK ETHICS
◊ Ethics is defined as a collection of values and behaviors which people feel are moral. In
other words, “ethics” is the name we give to our values or good behavior. So a positive work
ethic is the collection of all the values and actions that people feel are appropriate in the work
place.
◊ Morals relates to right and wrong. Values are beliefs that a person feels are very important.
Our behavior, or actions, are most often a reflection of our values. Today‟s workforce is
demanding and competitive. Employees must not only have good technical skills but
demonstrate positive, cooperative attitudes. Kaskaskia College is dedicated in preparing
students with business and technical skills and also interpersonal skills needed to excel in
today‟s workplace.
Three primary results of the Work Ethics Program make it a winning proposition for all
concerned. These results are:
• Students begin employment with positive work ethic skills which will enhance their value
as employees.
• Instructors develop more motivated and attentive students.
• Employers acquire employees with desirable work habits.
The 10 Characteristics of Work Ethics
◊ Attendance
Attends class, arrives/leaves on time, notifies the instructor in advance of planned absences,
and makes up assignments punctually.
◊ Character
Displays loyalty, honesty, trustworthiness, reliability, dependability, initiative, self-discipline,
and self-responsibility.
◊ Teamwork
Is a team worker, is cooperative, is assertive, displays a customer service attitude, seeks
opportunities for continuous learning, and displays mannerly behavior.
This material is proprietary to KV Institute of Management, a Nationally Ranked B School in Coimbatore and cannot be copied or
duplicated for use outside of KV. Violators will face infringement proceedings of copyright laws.
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KV Institute of Management and Information Studies
BA7402-Business Ethics, Corporate Social Responsibility & Governance
◊ Appearance Displays appropriate dress, grooming, hygiene, and etiquette.
◊ Attitude
Demonstrates a positive attitude, appears self-confident, and has realistic expectations of self.
◊ Productivity Follows safety practices, conserves materials, keeps work area neat and clean,
follows directions, and procedures.
◊ Organizational Skills Manifests skill in personal management, time management,
prioritizing, flexibility, stress management, and dealing with change.
◊ Communication
Displays appropriate nonverbal and verbal skills.
◊ Cooperation Displays leadership, appropriately handles criticism and complaints,
demonstrates
problem-solving
capability,
maintains
appropriate
relationships
with
supervisors and peers, and follows chain of command.
◊ Respect Respects the rights of others, deals appropriately with cultural/racial diversity,
and does not engage in harassment of any kind.
Examples of Unethical Behaviour in Business
Unethical Behaviour Consequence
Fraud: A method used to deceive someone for personal gain harm to the person who is
deceived loss of job and/or jail time
Forgery: A form of fraud that could involve passing bad cheques by forging someone else‟s
name harm to the people whose signatures are forged or who accept bad cheques loss of job
and/or jail time
Theft: Stealing someone‟s property harm to the victim loss of job and/or jail time
Employer Theft: Could involve taking advantage of employees by not paying for overtime
worked harm to the employees that could result in people quitting loss of job and/or jail time
This material is proprietary to KV Institute of Management, a Nationally Ranked B School in Coimbatore and cannot be copied or
duplicated for use outside of KV. Violators will face infringement proceedings of copyright laws.
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KV Institute of Management and Information Studies
BA7402-Business Ethics, Corporate Social Responsibility & Governance
Embezzlement: A form of fraud where a person violates a trust by moving funds into their
account instead of the correct account harm to the person or company whose funds are stolen
loss of job and/or jail time
Misuse of Funds: Moving monies from one account to another without permission or
direction harm to the person or company whose funds are misused loss of job and/or jail time
Discrimination: Not hiring a person because of an issue not related to the person‟s ability to
do the job (e.g., race, religion, gender, or disability) harm to company because new
employees aren‟t always the best people for the job loss of job
Environmental Violations: A company ignoring laws and regulations that involve toxic
waste harm to the environment and possibly to people and animals fine and/or decrease in
market value of stock
Concealing Information: Not disclosing data that should be shared, for example, about
defective products harm to customers or employees, for example, because of unsafe products
or working conditions fine and/or decrease in market value of stock
Tampering with Records: A form of fraud where records are altered in some way to deceive
other persons harm to the people who are being deceived loss of job and/or fine and/or jail
time.
This material is proprietary to KV Institute of Management, a Nationally Ranked B School in Coimbatore and cannot be copied or
duplicated for use outside of KV. Violators will face infringement proceedings of copyright laws.
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