Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Ethics in management
PRADEEP KUMAR
ROLL NO – 43
MIB
BATCH 2010-2012
Ethics in Management
All persons, whether in business, government, a university, or any other enterprise, are
concerned with ethics. In Webster’s Ninth New Collegiate Dictionary, ethics is defined as “the discipline
dealing with what is good and bad and with moral duty and obligation.” Thus, personal ethics has been
referred to as “the rules by which an individual lives professional conduct of accountants.” Business
ethics is concerned with truth and justice and has variety of aspects such as the expectations of society,
fair competition, advertising, public relations, social responsibilities, consumer autonomy, and corporate
behavior in the home country as well as abroad.
Three basic types of moral theories in the field of normative ethics have been developed. First,
the utilitarian theory suggests that plans and actions should be evaluated by their consequences. The
underlying idea is that plans or actions should base on rights holds that all people have basic rights.
Examples are the rights to freedom of conscience, free speech, and due process. Third, the theory of
justice demands that decision makers be guided by fairness and equity, as well as impartiality.
Institutionalizing Ethics
Business ethics are increasingly addressed in seminars and at conferences. Managers especially top-level
managers, do have a responsibility to create an organizational environment that fosters ethical decision
making by institutionalizing ethics. This means applying and integrating ethical concepts with daily
actions. Theodore Purcell and James Weber suggest that this can be accomplished in three ways
The publication of code of ethics is not enough. Some companies require employees to sign the
code and include ethics criteria in the performance appraisal. Moreover, certain firms connect
compensation and rewards to ethical behavior. Managers should also take any opportunity to
encourage ethical behavior and publicize it. On the other hand, employees should be encouraged to
report unethical practices (commonly known as ‘whistleblowing’). Most important, managers must set a
good example through ethical behavior and practices.
Simply stating a code of ethics is not enough, and the appointment of an ethics committee,
consisting of internal and external directors, is considered essential for institutionalizing ethical
behavior. The functions of such a committee may include –
Any person in business, government, a university, or some other organization is aware that
ethical, as well as legal, standards do differ, particularly among nations and societies. For example,
certain nations with privately owned companies permit corporations to make contributions to political
parties, campaigns, and candidates. In some countries, payments to government officials and other
persons with political influence to ensure the favorable handling of a business transaction are regarded
not as unethical bribes but as proper payments for services rendered. In many cases, payments made to
ensure the landing of a contract are even looked upon as a normal and acceptable way of doing
business. Consider the Quaker Oats Company, which was faced with a situation in which foreign officials
threatened to close the operation if the demand for “payouts” were not meet. Or what should a
company do when the plant manager’s safety will be in question if payoffs are not made?
The question facing responsible American Business managers is: What ethical standards should they
follow? In China and East Asia, for example, “guanxi” which pertains to the informal relationships and
exchanging of favors, influences the business activities in those countries. There is no question of what
to do in the United States, and American executives have had to refuse the suggestion of putting money
in a “paper bag.” In a country where such practices are expected and common American executives are
faced with a difficult problem. With the passage of laws by the U.S. Congress and the adoption of
regulations by the Securities and Exchange Commission, not only must American firms report anything
that could be called a payoff, but also anything else the can be construed as a bribe is now unlawful.
Thus, the United States has attempted to export its standards for doing business to other countries,
which can improve ethical standards abroad.