Entrepreneurship and Good Governance

Unit 3

Business Ethics

Prof K.V.S.RAJU

Morals are a set of beliefs or guild lines that people follow based on their culture or society.
Morals are almost always different for individuals because morals are based on an individual's
interpretation of what's good. A dictionary meaning of Morals concerns right and wrong, good
and bad, the rules that ought to be followed.

Values are Important beliefs and desires that shape attitudes and motivate our actions.Values as
socially or culturally accepted standards or rules of behavior . Examples are

Integrity

Responsibility

Respect

Fairness

Excellence

Ethics are A set moral principles or values or guiding philosophy. Moral principles of duty and
virtue that prescribe how we should behave; the foundation of our internal control.

Why ethics are important for a manager? Managers has to deal with

Changing norms

Mixed messages

Ambiguity

Competing pressures

Ethics help us in

Reaching the right direction

Study of human morality

Determining values in human conduct

Deciding the right thing to do- based on a set of norms

Ethics is not about words but actions. It is what we do. It is not about what we say or intend nor
is it simply a written code or a framed code. Whether we are willing to do the right thing even
if it is likely to cost more than what we want to pay?

What are business ethics?

Application of general ethical concepts to the unique situations confronted in business

It asks what is right or wrong behavior in business and what principles or rules can be
used as guidance in business decisions

Characteristics

Tell people what they ought to do

Set of principles or rules

Developed by moral philosophers over generations

Ethics - synonyms for morally correct or justified - set of justified moral principles of
obligation, rights, and ideals

Ethics - particular beliefs or attitudes concerning morality

Ethics - area of study or inquiry an activity of understanding moral values, resolving

moral issues, and justifying moral judgments

Why should managers study ethics?

Make you more ethical?

Help in trying to do the right thing

Used to distinguish ehtical from non-ethical behavior

Sample tests for ethics

Benefit Cost Test .Do the benefits exceed the costs to whomsoever they accrue?

Categorical Imperative.Are you willing to allow everyone to practice the proposed action
or do you want to be a special case?

Light of Day Test. What would be your reaction if the action were brought out into the
open for public scrutiny?

Do Unto Others Test. Golden Rule - If you would like others to do the same to you -
passes the test
 Ventilation Test.Seek out others views. Discuss the 5 tests with them. If others feel it is
OK - passes the test

Ethical dilemmas in business

Conflict of Interest. Have two interests - cannot purse one without having negative
impact on other

Two Types. Private Interest Conflicts with Corporate Business Interest Conflicts with
Public

How do you justify ethics in Business?

Money matters

Corporate matters

Ethics and profit

 Ethics and opportunities

3 beneficiary views on ethics

guidelines

Ethics and economics,profits,and opportunities.

Opposite ends

Profit and market share

Reasonable returns

Long-term reputation

Desire to contribute to economy

Fair trading

Evidence of ethical commitment

Food products-hygiene

Competitive advantage vs laws

Are the following ethical?

Ethical investment

Damage to Environment

Cruelty to animals

Arms manufacturing

Alcohol

Gambling

Advantages of following ethics

Developing managers and employees as committed functioning ethical individuals

Fostering a corporate environment

Implementation of e-policies. practices

 Goodwill

Quality of life

Ease of raising VC

Improves morale

Recruit/retain good talent

Reduces internal conflict

Reduced penalities

Ethical benefits can be broadly classified in to

In house

In market

In community

Why do we behave unethically?

Ethics should reflect social values and be responsible to them

What is corporate climate? How do you measure? What are the Advantages?

Medical check-up

Org process

Individual roles

Employee matters

Goods/services

Community involvement

Environment

IPR

Org plans

Fairness in accounting

Other political issues

 Politics and business

Advertising

Promises

Code for public servants

Code of conduct vs code of ethics

Application of codes outside work place

Ethics and morals when we are Knowing doing feeling what is right as per Standards held by the
community. If there is an Explicit code of conduct based on the Value system we can live
ethically.

What is corporate climate audit? Why is it necessary?

Naturalist fallacy

Supposed error of proceeding from factual statements

Assertions about what it is

To value statements about what ought to be

What ought to be vs what is done

Ex: drug dealers