Unit 1

Introduction

Topics
1.

Definition & nature of business ethics

2.

Characteristics of business ethics

3.

Ethical theories

4.

Causes of unethical behavior

5.

Work ethics

6.

Code of conduct

7.

Public good.

1. Definition & Nature

Ethics derived from Ethos character or customs or

accepted behaviors

Oxford dictionary Ethics the moral principle that

governs a persons behavior or how an activity is
conducted

Ethics refers to well founded standards of right and

wrong that prescribe what humans ought to do,
usually in terms of rights, obligations, benefits to
society, fairness or specific virtues

Contd

Using ethical standards a person or a group of persons

or an organization regulate their behavior to
distinguish between what is right and what is wrong as
perceived by others

Not natural science but creation of human mind

Not absolute and open to the influence of time, place

& situation

Eg: Kings, leaders food testing

Business Ethics

Business ethics is a form of applied ethics

application of moral or ethical norms to business

Refers to the code of conduct which businessmen are

expected to follow while dealing with others

Comprises the principles & standards that guide

behavior in the conduct of business

Business maximize profit against the need of stake

holders

Maintaining balance requires trade offs where ethics

plays an important role

Scope of Business Ethics

1.

Ethics in Compliance about obeying to rules &

regulations

2.

Ethics in Finance accounting, insider trading,

securities fraud, bribery, kickbacks, overbilling,
facilitation payments, fake reimbursements, etc

Characteristics of Business Ethics

i.

A discipline

ii.

Ancient concept

iii.

Personal Dignity

iv.

Related to human aspect

v.

Study of goals and means

vi.

Different from social responsibility

vii.

Greater than law

Causes of Unethical Behaviour

What is unethical behavior?

Any

behavior prohibited by law is unethical

Can

be defined as one that is not morally

honorable or that is prohibited by law

Activities

include - corruption, mail and wire

fraud, discrimination and harassment, insider
trading, conflicts of interest, improper use of
company assets, bribery and kickbacks,
compliance procedures, ethical relations with
others, disciplinary action, fraud, illegal
business donations, patent infringement and
product liability

Unethical Behaviour
1.

False communications

2.

Collusion

3.

Gifts & kickbacks

4.

Conflict of interest

5.

Unethical practices in healthcare

6.

Insider trading

7.

Discrimination & harassment

8.

Wrong doing

Causes of Unethical Behaviour

Pressure

to meet unrealistic business

objectives & deadlines

Desire
To

to further ones career

protect ones livelihood

Job

pressure

Ignorance

about unethical behavior

Corporate

competitive advantage

Lack

of consistent leadership

Kinds of Unethical Behavior in

business
Theft
Vendor

relationships

Bending

the rules

Environmental
Wages

issues

& working conditions

Work Ethics

Introduction
Work

ethics based on hard work and

diligence

Also

a belief in the moral benefit of work & its

ability to enhance character

Ethical

workers grow faster

Characteristics of Work Ethics

Reliability
Dedication
Productivity
Cooperation
Character

Code of Conduct

Introduction
contains

standards of business conduct that

guide actions

Includes:
1.

Company values

2.

Avoidance of conflict of interest

3.

Accurate & timely disclosure of reports

4.

Compliance of laws, rules & regulations

5.

Maintaining confidentiality

Continued
6.

Maintaining fair deals

7.

Standards of business conduct for companys

customer, suppliers, communities

8.

Prohibition of senior management from taking

corporate opportunities for their family

Example

Public Good

Introduction
The

benefit or well being of public

Every

organization deems to maintain its

public good

Public

good is directly associated with the

organizations image

Importance
Attracting
Investor

& retaining talent

loyalty

Customer

satisfaction

Regulators

Ethical Theories

Introduction
Based

on ethical principles

Each

emphasize different aspects of ethical

dilemma and lead to correct resolution

People

choose ethical theory based on

experiences

Deontology Theory
States

that People should adhere to their

obligations & duties when analyzing ethical
dilemma

Means

that a person will follow his/her

obligations to another individual or society
because upholding ones duty is considered
ethically correct

Deontologist

will keep his promises to his

friend as well as follow the law

Contd
Will

produce consistent decisions as they are

based on duties

Provides

the basis for special duties &

obligations to specific people

Eg:

family brother protecting sister

Also

praises those who exceed duties and

obligations supererogation

Eg:

Train hijack one person scarifies for all

Contd
Weaknesses:
No

rationale or logic in deciding individuals

duties

A persons duty is conflicting in situations

meeting vs speeding
Does

not work in conflicting obligations

Utilitarianism
Based

on the ability to predict the

consequences of an action

Choice

that yields the greatest benefit to most

people is ethically correct

Utilitarian

can compare solutions and choose &

determine which is more beneficial

Provides

a logical and rationale argument for

each decision

Contd
Two

types:

1.

Act utilitarianism

2.

Rule utilitarianism

.Act

person performs the act that benefits

most people regardless of personal feelings &
society

.Rule
.Rule

considers law and fairness

utilitarian benefits most people in fair &

by law

Contd
Values
Both

justice & beneficence at the same time

rule & act are flawed

Future

cannot be predicted absolutely

Uncertainty

can lead to unexpected results &

in turn lead to unethical outcomes eg fire to
warm

Comparing

outcomes of money & intangible

gains are impossible

Contd
Does

not allow supererogation

An

individuals rights maybe infringed for the

benefit of a larger people act utilitarianism

Possibility

of conflicting rules in rule

utilitarianism

Rights Theory
Rights

set forth by society are protected &

given highest priority

Considered

ethically correct because large

population endorses them

Eg:

car borrowing scenario

Major

complication one must decipher the

characteristics of rights in society

Society

decides what is rights to the citizen

Contd
Therefore

works in conjunction with another

ethical theory that explains the goals of the
society

Eg:

Religious freedom in America vs Nazi

Casuist Theory
Compares

current ethical dilemmas with

similar ethical situations

Allows

to determine the severity of the

situation & create best possible solutions

Drawback
Assumes

no set example for situations

similar results for every situations

Virtue Theory
Judges

a person by his character rather than

by action that deviates from normal

Takes

into account persons morals,

reputation, motivation

Eg:

Plagiarism

Weakness

does not consider persons change

in moral character

End of Unit - I