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BUSINESS ETHICS
and
SPIRITUALITY
Sandeep Singh
Reader
School of Management Sciences, Varanasi
e-mail:[email protected]
Copyright © Sandeep Singh, SMS Varanasi
 “Business ethics is rules, standards, codes, or principles
which provide guidelines for morally right behavior and
truthfulness in specific situations.” (Lewis)
 “Business ethics is the study of business situation, activities,
and decisions where issues of right and wrong are addressed.”
(Crane and Matten)
 “Business ethics refers to clear standards and norms that help
employees to distinguish right from wrong behaviour at
work.” ( The Ethics Resource Centre)
Copyright © Sandeep Singh, SMS Varanasi
 “Business ethics has to do with the extent to which a person’s
behaviour measures up to such standards as the law, organizational
policies, professional and trade association codes, popular
expectations regarding fairness and what is right, plus one’s own
internalized moral standards”. (William Sauser)
 “Business ethics is disciplined normative reflection on the nature,
meaning and context of business activity. As such it deals with
comprehensive questions about the justice of the economic context in
which business operates and about the nature, function, structure and
scope of business in that context, as well as with more specific issues
raised by the relationship of business to government, the consumer, its
employees, and society at large”. ( Hoffman and Moore)
Copyright © Sandeep Singh, SMS Varanasi
“Business ethics is a study of moral standards and how these apply to
the systems and organizations through which modern societies
produce and distribute goods and services, and to the people who
work within these organizations. Business ethics, in other words, is
a form of applied ethics. It includes not only the analysis of moral
norms and moral values, but also attempts to apply the conclusions
of this analysis to that assortment of institutions, technologies,
transactions, activities, and pursuits that we call business.” (Manuel
Velasquez)
Copyright © Sandeep Singh, SMS Varanasi
contains four interconnected elements
• Framework- Set of rules, standards, codes, principles,
philosophy etc. to be followed for ethical decision making in
business.
• Internal development of ethical traits-Development of
virtues, values, morality and inner conscience.
• Situation- Business situations demanding ethical
judgements.
• Behaviour- Ethical behaviour from the legal, stakeholder
and humanity point of view.
Copyright © Sandeep Singh, SMS Varanasi
Nature of Business Ethics
Complex
Dynamic
Interdependent
Subjective
Copyright © Sandeep Singh, SMS Varanasi
• Complex because of no common consensus
• Dynamic because of dynamic nature of business decision
making
• Interdependent because ethical decision making is dependent
on many factors and one’s decision affect others.
• Subjective because the frameworks referred for ethical decision
making are usually normative and are varied in nature. These
frameworks differ from people to people and organization to
organization.
Copyright © Sandeep Singh, SMS Varanasi
There may be varied arguments regarding
business ethics but one commonly accepted
fact is that intensity of ethics in business
will always be limited to the extent
of ethical behaviour shown by those
who are involved in business.
So the human factor is the key.
Copyright © Sandeep Singh, SMS Varanasi
Significant Developments in Business
Credited to Business Ethics
• Profit is no more considered as the sole objective of business.
• Instead of maximization of shareholders wealth now the focus
of business organizations is on stakeholder approach.
• Many large business organizations are involved in socially
responsible activities.
• Environmental issues are now openly discussed by business
world.
• Framework
considerably.
of Corporate Governance has improved
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 Many business organizations have already framed their ethical
code of conduct and are strictly following it.
 Business ethics is no more considered as an undesirable
transgression into the functioning of business organizations.
Instead organizations themselves are taking it seriously and now
consider it as good for business.
Copyright © Sandeep Singh, SMS Varanasi
Perceptions Regarding Business Ethics
Rules, Standards or Codes Governing an
Individual or Organization
Morality, Virtues, Values
Clarity of Right and Wrong
Honesty, Integrity
Character, Conscience
Situational and Temporal
Being True to Oneself
Stakeholder Approach
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Objectives of Business Ethics
Solutions for
business
situations
that calls for
ethical
Judgements
Stakeholder
approach of
business
organization
s
Providing
ethical
frameworks
Developing
understandin
g about what
is right and
what is
wrong
Objectives
of Business
Ethics
Ensuring
Ethical
Behaviour
Ensuring
practical
utility of
business
ethics
Arguments ‘against’ the Business Ethics
• Milton Friedman, a Nobel laureate had suggested that there is no need for
business people to bring ethical factors into their managerial decision making. He
believed that when they have occupied the role of business then automatically
they are supposed to throw away their role of autonomous moral agent in favour
of making efforts for fulfilling the purpose of shareholders. According to
Friedman there is one and only social responsibility of business and that is to use
its resources and engage in activities designed to increase its profits so long as it
stays within the rules of the game, which to say, engages in open and free
competition without deception or fraud.
Copyright © Sandeep Singh, SMS Varanasi
 John Ladd believes that by virtue of basic nature of business
organization the possibility of ethical evaluation of its actions is
ruled out. Ladd argues that there are specific goals of business
which are meant to be achieved and these goals are non-moral.
So, business organizations should be evaluated from the point of
view of achieving those specific goals successfully or not instead
of from the point of view of ethics or morality.
 Another argument against the business ethics is that the
organizations and corporations can’t be held morally responsible
for anything, simply because they don’t act, it’s the individuals
who act.
 According to free economy promoters, the market regulate itself
without any need for externally induced controls. So let the rules
of the economy and free markets work instead of the rules of
ethics.
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Arguments ‘for’ the Business Ethics
• Those who argue for the business ethics are of the view that the
profit is not the only motive of business; business organizations
deserves ethical reasoning; business does not enjoy any special
status and morality is as much applicable to it as to any one else;
and rules of ethics and morality are as much intrinsic to business
as the rules of economy and free markets. The acts of bribery,
corruption, and deception in business are strongly criticized in
this view.
• As the organizations are run by individuals they are as much
liable for ethical judgements as any individual. They can’t get
away by stating their impersonal nature.
Copyright © Sandeep Singh, SMS Varanasi
• The special status for business free from ethical
evaluation is also opposed by many economists,
philosophers, academicians, and other ethicists. They
argue that ethics and business can’t be separated and
there is no ethical relativism between business and
others.
• Peter Drucker argues that ethical code remains same
for everybody whoever he may be. It is same for rich,
poor, kings, business leaders, managers, mighty or
meek.
Copyright © Sandeep Singh, SMS Varanasi
• For business to operate successfully and in accepted manner
these social interactions should provide mutual benefits and
for that ethics is one key element that make these
interactions mutually fruitful.
• Against the argument of allowing rules of economy and free
markets to operate without ethical considerations, ethicists argue
that businesses operate in a society and their actions have both
direct and indirect impact on the society and so many cases of
fraud, corruption, and bribery have come up in recent times
doing excessive harm to the society that relevance of ethics to
business is more than ever. Rules of free markets in no way can
justify fraud, corruption, bribery, deception, and other immoral
acts.
Copyright © Sandeep Singh, SMS Varanasi
Three Role of Business Ethics
The first role of business ethics is to do three level investigation
economic
systems
businesses within
these economic
systems
Copyright © Sandeep Singh, SMS Varanasi
individuals
within the
businesses
The second role is to develop theoretical foundations of universal
nature for business ethics on the basis of three level investigation or
study such as:
Rules
Standards
Codes
Principles
Theories
Virtues
Normative Statements
Models
Copyright © Sandeep Singh, SMS Varanasi
The third role is to test the developed theoretical
foundations in various practical situations of
business decision making for their applicability
and effectiveness, so that solutions for simple as
well as complex ethical situations in business can
be found without creating any confusion and with
full acceptability of the concerned objects.
Without the applicability of universals to the
particular situations, theoretical foundations
degenerate into dogma and ideology. So this role
of business ethics has complete practical
application and has most significance for business.
Copyright © Sandeep Singh, SMS Varanasi
Importance of Business Ethics
Business ethics provides unbiased opinions about the economic
systems, business practices, and individual behaviors.
Business is made aware of its obligations towards stakeholders. The actions
and behavior of organizations are even questioned when any of these
obligations are not met. This helps organizations in looking beyond their self
interests.
Business ethics adds a new dimension of ethical reasoning in business.
Unethical behaviors of business have the potential to cause lot of
harm on individuals, communities, and on environment. By making
people understand about the causes and consequences of these
unethical behaviors, business ethics seeks to improve the human
condition.
Copyright © Sandeep Singh, SMS Varanasi
The stakeholders ethical expectation from the business organizations are
becoming more and more complex and challenging. Business ethics
provides a clear framework for organizations in appreciating and
understanding these expectations.
Business ethics provides us with a new set of knowledge and reasoning
transcending the traditional structure of business studies and brings us
face to face with some of the most pertinent questions faced by the society.
Business ethics seeks to improve ethical decision making and moral
reasoning of business people in simple as well as complex business
situations.
Business ethics helps organizations in understanding that unethical
practices can provide only short term benefits. For long term success,
ethics are must and are a viable long term strategy.
Business ethics help corporations in framing corporate code of ethics
directly or indirectly. Even Corporate laws framed by the Governments are
also influenced by business ethics
Copyright © Sandeep Singh, SMS Varanasi
Morality and Ethics
Morality is concerned with understanding of what is right
and wrong behaviour. In the study of business ethics many
people treat the concept of ethics and morality as same.
There is no harm in it. However treating them as different
but strongly inter-related is a better approach in enriching
the field of business ethics. Morality could be considered as
one of the subject matter of study in business ethics.
Copyright © Sandeep Singh, SMS Varanasi
Difference between Morality and Ethics
Ethics
1. Ethics is the study of framework such as standards,
Morality
Morality is right action, conduct or behaviour
principles, rules or codes and traits for ensuring
right action, behaviour or conduct.
2. Ethics is the philosophical study of morality
Morality is the subject matter of ethics
3. Ethics encompasses morality
Morality is the sub-field of ethics
4. Ethics attempts to bring rationalization to morality
Morality gets rationalization through ethics
5. Ethics tries to systemize morality
Morality becomes systematic through ethics
6. Ethics legitimizes morality
Morality gets legitimized through ethics
7. Ethics is covert as well as overt
Morality is overt
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Rest Model of Moral Behaviour
Recognize
moral issue
Make
moral
Judgement
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Establish
moral
intent
Engage in
moral
behaviour
Kohlberg Model of Moral Development
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Virtues and Ethics
 The word virtue is derived from the Greek word ‘arete’
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which is translated as excellence.
Virtues are the good moral habits that are acquired over a
period of time by repeatedly choosing the good.
Virtues play an important role in the decision making process
of individuals and that is why virtues are important from the
ethics point of view.
The foundation of morality lies in the development of
virtues.
Good character traits or moral habits, when learned and
practiced repeatedly, gets cultured or internalized in the
people and takes the form of virtues.
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 Right conduct, action or behaviour of an individual which we
call morality can be temporal but through the development
of virtues righteousness becomes a habit.
 Virtues imply that there is a set of qualities which will make
people fulfill their functions as people, properly and well.
Without virtue, people are unable to do justice with their
tasks.
 For Aristotle, the difference between doing something and
doing it well or excellently lies in virtues. In other words, we
do not display virtue when we do something that happens to
be good, but we must act with a deliberate desire to perform
our function as human beings properly.
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Aristotle on Virtues
Moral Virtues
Moral virtues relates to those
virtues which an individual
develops or acquires through
practice.
Virtues
Intellectual Virtues
These virtues are developed over
a period of time through
experience
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Cardinal Virtues
Prudence
Prudence can be
equated to good
judgment and right
reasoning
Courage
Courage is the
ability to face and
to overcome
difficult situations
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SelfControl
It is the ability to
control the self and
acquire self mastery
Justice
Justice could be
described as the
conscious
realization of a
person about the
others rights and
giving them what
they deserve
Spirituality and Business Ethics
 Spirituality is integral and holistic, incorporating within itself
the material, moral and cultural values.
 There is a misconception regarding spirituality that spiritual
value is opposed to the material one.
 The term ‘spiritual’ as also the Sanskrit substitute “Atmika” or
“Adhyatmik” literally meaning any thing that pertains to the
spirit (the Self or soul or atman).
 There are virtues and values associated with spirit (Atman) as
its very nature, provided the Atman (spirit) is in natural state,
freed from impurities.
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 Impurity here means something that is mental – it is ego and
selfishness and raga (infatuation or favoritism) and Dvesa
(abhorrence or enmity). So, purity would really mean
freedom from these mental impurities, and not rejection of
material life.
 For the practice of value it is not necessary to have
metaphysical (ontological) presupposition about the spirit
(the Self) – neither for the practice of morality, nor for the
spirituality. One can practice morality, for example, even
without believing in the higher Self (the higher spirit) or
God.
 One can practice the spiritual values just with phenomenal
and limited self, present in the body, even without accepting
any extraordinary metaphysical status of the existing self.
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 The Budhist and the Jaina way of life is highly spiritual and yet
there is no belief in God there.
 In the Brahmana (Vedic) tradition too, half of the
philosophical schools (Vaisesika, Samkhya and Mimamsa) do not
believe in God and yet they present a moral and spiritual way
of life to follow, although the definition of morality and
spirituality differs from school to school.
 However, faith in God or the Higher Self strengthens the
moral and spiritual attitude, and facilitates the ethicospiritual living. So, faith in the metaphysical spiritual reality is
also a value – a supplementary value.
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Two Aspects of Sprituality
 While defining spirituality, we have to understand that there
are two aspects of spirituality – a negative aspect and a
positive aspect, and the two aspects are complementary to
each other. Negatively, spirituality means melting or effacing
the ego, and positively it means realizing one’s unity with
others (or in other words, having universal love).
 Ego is the principle of differentiation of oneself from others;
ego rests on the feeling of otherness (what in the spiritual
philosophy is technically called ‘dvaitabhava’ or ‘bheda-bhava’).
 Ego takes place when I do not consider the so-called others
as ‘me’ or ‘my own’ and cut myself off from them and confine
myself to my own individuality.
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 In the ego-state we wish only the good of ourselves and not
the good of others, we impose ourselves on others and even
exploit others for our own end. Selfishness and ego are like
the two sides of one and the same coin.
 Ego is the foundation and the root cause of all evil, of all
immorality.
 If spirituality negatively means effacement of the ego, and if
the ego means separating oneself from the others and
confining oneself to one's own individuality and taking into
consideration only oneself and the others, then it becomes
easy to understand the positive meaning of spirituality as
what in the spiritual philosophy is technically called 'Advaitabhava' or 'Abheda-bhava' which means feeling of one's unity
with all.
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 Spirituality is the state of consciousness in which the feeling
of otherness is gone and the feeling of affinity and unity with
the so-called others is established.
 The feeling of unity can be explained with the help of
examples. One such example is that of the loving mother.
The mother feels that the children are her own or herself; the
happiness and suffering of the children are the happiness and
suffering of the mother. The bodies of the children are
separated from the mother, and in that sense the children are
'others' to her, but in her consciousness or in her feeling they
are not others. What she does good for the children, she
thinks she is doing for her own self, as she feels that the
children are herself or her own. This is what is called love.
Thus love is the meaning of spirituality; love is 'the' spiritual
value.
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 Love is considered as 'the' spiritual value. But love should be
distinguished from such mental states and situations that are
falsely taken to be love. For example, infatuation,
possessiveness, selfish attachment, etc are not love. Love may
be understood as the opposite of selfishness.
 In love which is the spiritual value, there is natural synthesis
of what is called 'Sreya' (the good) and 'Preya'
(the
pleasant). Love is actually the two in one – the good and the
pleasant both at once.
 In love the good of oneself and the good of others become
one, as the 'others' too become one's own. Morality becomes
natural in love, as one would not exploit the beloved person
and, on the contrary, would do good to him/her.
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 Thus the spiritual value (love) satisfies the demands of
Dharma (morality) and Sukha (pleasure or happiness) both at
once. It gives immense pleasure and satisfaction to oneself on
the one hand, and on the other hand one becomes
spontaneously inclined to do good to the so called others.
 Egolessness and love or the feeling of unity-are the two
negative and positive meanings of spirituality. The two
meanings are complementary to each other, or it would be
more true to say that the two denote one and same state of
consciousness. One cannot be loving without being egoless,
because the very meaning of ego is the separation of oneself
from others and more the ego is tight, the less loving we are.
 There is inverse relationship between love and ego.
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 That is why Kabir, the great mystic poet, has said; "If you
want to drink the nectar of love and also want to keep up
your ego, this is impossible like putting two swords in one
and same sheath“.
 Karuna (compassion), Bhakti or Bhaktiyoga (surrender to God
or surrender to Truth), Jnana or Jnanayoga (Advaita-bhava or
realization of one's unity with all beings), Karmayoga (doing
all work with the sense of being the instrument of God or
with the sense of selfless duty) – all these are co-relates or
corollaries of the central spiritual value which negatively
means egolessness and positively means love or unity of
oneself with all.
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Difference Between Spirituality and Morality
Morality
• In the moral consciousness, the imperative and
the direction for performing a particular action
come from the ethical sense; that is, we perform
an action because we think it is ethically right or
good, and we refrain from doing an action
because we think it is ethically wrong or sinful.
Spirituality
• In the spiritual consciousness, the incentive to perform
a particular action comes not from moral
consideration but from compassion or love, and
morality is naturally present there, as love (true love
and not the so-called love) is the natural matrix of all
morality. The saints and sages are in the spiritual
consciousness; the acts of a Krishna or a Buddha or a
Christ are of this very type.
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Morality
• Secondly, in the moral act we have to
exert our will, the act is deliberate and
effortful and not automatic. In the
moral act there is the 'sense of doership'
(Kartrtvabhimana)
Spirituality
• Spiritual act is spontaneous or effortless
or automatic. There is no
Kartrtvabhimana in the spiritual act, as it
is spontaneous and natural.
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Morality
• Thirdly, in the purely moral state of
consciousness there may be dichotomy
or opposition between the good (Sreya)
and the pleasant (Preya) or between the
good of oneself and the good of others.
Spirituality
• In the spiritual consciousness this
dichotomy ceases to exist – there the
good (Sreya) and the pleasant (Preya) are
naturally one, the good of oneself and
the good of others become one.
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 In the general Western tradition, morality is accepted as the
highest value. (However, there are strong exceptions also, for
whom spirituality is the highest value.). But in the Indian
tradition, spirituality is taken to be the highest or the ultimate
value. This is not because the moral value is underrated - not at all;
the moral value (Dharma) is rated very high and is taken to be
absolutely necessary for life–both individual and social. But
spirituality is placed even above morality (or above mere morality)
because spirituality (Adhyatma) naturally incorporates morality
(Dharma) within itself; it is the state of natural morality. Moreover,
the morality present in spirituality is free from its possible minus
points, namely (i) the ego, (ii) the effort or exertion of the will,
and (iii) the dichotomy of Sreya and Preya. Mere morality, although
valuable in itself, is a dry value, in order to be more effective and
more satisfying, it has to be saturated with spirituality.
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Understanding Moral and Spiritual Impurity
 There are two types of impurity–the moral impurity and the spiritual impurity.
 Unscrupulous life of deceit, dishonesty, corruption including various kinds of
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crime, etc. – all these come under the category of moral impurity.
There may be persons who are free from these impurities (the moral ones) and
yet they may be suffering from another kind of impurity which is equally bad,
sometimes even worse.This is what is called 'Ahamkara' (ego).
Ego is the spiritual impurity.
The moral impurity harms and hurts others; ego too hurts, sometimes even
more deeply. Therefore, it is necessary to free oneself not only from the moral
impurities but also from ego.
One cannot be called pure-hearted unless one is free from both these
impurities. The life of values cannot become perfect with moral perfection
alone; the spiritual value of egolessness (resulting in love) must also be
incorporated; then alone the life of values world become complete.
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Spiritual Lessons for Business Leaders
 Acquisition of material wealth (Artha) and satisfaction of
desires (Kama) become unhealthy only when they are done
selfishly and egoistically.
 Remove the feeling of possessiveness (mamatva) towards the
wealth and become unattached (Anasakta) with the wealth.
Then enjoy the wealth in an unattached manner, and in the
unattached state of consciousness. Then you will find that you
enjoy the wealth far better.
 The psychology of relishing or enjoying is that if we are
strongly attached, the degree of relishment or enjoyment is
very low; whereas if we are unattached, the enjoyment is
much better.
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 It can be safely proposed that only an unattached person can really
enjoy the world; the attached (Asakta) person accumulates and
possesses but does not enjoy.
 The purity of money means that it is spent not only for your good
but for the good of all (of course, including yourself). The society
has share in your earning because you are indebted to the society,
and you can clear your debt to the society by parting with the extra
money and giving the society their share.
 One who appropriates all money for oneself without giving others
their due share, is virtually a thief (“… yo bhunkte stena eva sah …”)
or "... such a person is a thief and deserves punishment …" (“ …
sasteno dandamarhati”) or, "…those who cook only for themselves,
eat sin…" (bhunjate te tvaghnan papa ye pacantyatma karmat”).
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Spiritual Lesson for Corporate Social
Responsibility
• Serve the people not in charity but in love
• Charity is moral act but service with love is
spiritual act.
• The act of charity may generate ego, but the
service done out of love reduces or melts
the ego.
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Make Material Life Spiritual
 By cultivating proper attitude towards Nature and the world,
the material life itself can be made spiritual and the so-called
dichotomy between the material and the spiritual be
abolished.
 Really there is no dichotomy between the two, we have
created the dichotomy by vitiating the world of matter. It is
we who have made the material life impure by our ego and
selfishness.
 If the material life is freed from the ego and selfishness, it
itself would become spiritual; in fact, originally it 'is'
spiritual, the impurity is introduced from our side.
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" Love gives and forgives, selfishness gets
and forgets".
(Sai Baba)
Copyright © Sandeep Singh, SMS Varanasi
Copyright © Sandeep Singh, SMS Varanasi