Business Ethics & Corporate Governance

III Sem M.com

Concept of Ethics
• It is branch of social science.
• It deals with moral principles and social values
• It helps to classify what is good and what is bad

Major areas of study in ethics

1. Meta Ethics: How truth values may be determined.
2. Normative Ethics: determining a moral course of action
3. Descriptive Ethics: It is study of people's belief about morality
4. Applied Ethics: how moral outcomes can be achieved in specific situations.
Types of Ethical Concepts
1. Ethical Subjectivism- argues that what is ethically right or wrong for an individual
depends on the ethical principles he or she has chosen.
2. Ethical Relativism- argues that there is no universal set of principles by which to judge
morality. It is inappropriate to compare the ethical rules of the society with that of
another.
3. Consequentialism- first idea is value and second that of maximization of value. If
happiness is considered as value , an act is ethical only if it maximizes happiness.
4. Ethics of Virtue(Goodness)-It explores how characteristics of individuals would help to
lead better life from an ethical point of view
5. Ethical Dilemmas in Business-Ethical problems result in dilemma for managers because
they usually represent a conflict between an organizations economic performance and its
economic performance.

Nature of Ethics
• It is a subject which deals with human beings
• Humans by their nature are capable of judging between right and wrong, good and bad
behavior.
1. Personal Ethics
When a person accepts a moral code to such an extent that he is highly motivated
towards the conduct required by the principle and against behavior that conflict with those
principles. The guilt occurs when he violates his principles.

2. Professional Ethics- guided with six principles-honesty, fairness, respect, compassion,

integrity(honesty) and self discipline.

3. Managerial Ethics-Ethical issue present when the actions of a person or organization

may harm or benefit others. the companies use codes of ethics.
Objectives of Ethics
1. Deals with Human Behavior
2. To establish moral standard and norms of the behavior
3. To judge human behavior based on these standards
4. To assess human behavior and express an opinion or attitude about the behavior
5. To set a standard or code for the moral behavior.

The model of Ethics

6. Façade
This comes from the French language meaning “frontage” or “face”
2. Walk their talk- consumers ethical intention and the ethically minded consumers rarely
purchase ethical products.
3. Opportunist- chance to gain some advantage from a situation.
4. Salt of the Earth- they are most worthy people or a very good or worthy person

Ethical Decision Making

• Helps people to make difficult choices when faced with an ethical dilemma, a situation in which there is
no clear right or wrong answer.
• It examines three perspectives
 the ethic of obedience(moral values)
 the ethic of care
 the ethic of reason
• Experts says that decision been morally and legally accepted by the larger community
• The term ethics is used to describe a set of standards and principles which dictate how a
person acts ad behaves.
• All persons with strong characters live with their own code of ethics
• Decisions may vary from each other
• Experience is one of the best ways to learn about ethics too.
• A formal code of conduct is rolled out by companies to assist employees in their decision-
making dilemmas(to treat employees equal).
Types of Ethics
1. Meta Ethics- to understand the nature of ethical properties , statements, attitudes and
judgements
2. Normative Ethics-is the study of ethical action. It examines standards for the rightness and
wrongness of actions.
3. Applied Ethics-is the philosophical examination, from a moral standpoint of particular issues
in private and public life that are matters of moral judgment.
4. Descriptive Ethics-is the study of people's beliefs and morality.

Code of Ethics
It refers to a written set of guidelines issued by an organization to its workers and management
to help them conduct their actions with its primary values & ethical standards.
Difficulties in implementing Code of Ethics
1. Culture
2. Design
3. Enforcement
Code of conduct ethics for Professional Groups
A. Code of the Medical Council of India
B. Ethics for Chartered Accountants in Chartered Accountant’s act
C. The Engineers Code
D. Code for Marketing Managers
E. The code of Ethics of Public Relation Practitioners
F. Code of Ethics of the association for Computer Machinery
G. Code of Advertisers issued by the advertisement Council of India
Managing Ethics
1. Top Management-company must be committed to ensure that ethical standards are met.
2. Code of Ethics- Creating ethical statement and communicating it within the company.
3. Ethics Committee-in firms to help them with and advice on work related ethical issues.
4. Ethics Hotline-helps its employees report any ethical issues they face at work.
5. Ethics training Programs-Companies take ethics seriously and provide training for its
managers and employees.
6. Ethics and law-focus on defining the perfect human behavior. Law is the Government
attempt and ethics depends on individual.
Ethical Behavior
1. Value Systems
2. Locus of Control- In personality psychology, locus of control is the degree to which
people believe that they have control over the outcome of events in their lives, as
opposed to external forces beyond their control.
3. Machiavellianism- is defined as a strategy of social conduct that involves manipulating others
for personal gain.
4. Cognitive Moral Development- is the process of moving through stages of maturity in
terms of making ethical decisions.
Six Ethical Philosophies
1. Categorical Imperative- an unconditional moral obligation which is binding in all
circumstances and is not dependent on a person's inclination or purpose(right is right at

any extreme condition).

2. Utilitarianism-which is the belief in “the greatest good for the greatest number of
people”.
3. Hedonism-the ethical theory that pleasure (in the sense of the satisfaction of desires) is
the highest good and proper aim of human life.
4. The Golden rule-teaches people to “love your neighbor as yourself”.
5. Veil of Ignorance-it considers all people are equal
Advantages of Ethics
1. Significant improvement to society
2. Cultivate strong team work and productivity
3. Support Employee Growth
4. Insurance Policy
5. Avoid Penal Actions
6. Helps in Quality Management, Strategic Planning and diversity Management
Ethics in particular fields of Application
1. Bioethics-Controversial ethics brought about by advances in biology and medicines.
2. Geoethics- is an interdisciplinary field between geosciences and ethics which involves Earth and
planetary sciences.
3. Business Ethics-examines ethical principles and moral or ethical problems that arise in a business
environment.
4. Relational Ethics-are related to an ethics of care.
5. Machine ethics- Teaching robots right from wrong.
6. Military Ethics-to guide members of the armed forces to act in a manner consistent with the
requirements of combat and military organizations.
7. Political Ethics-is the practice of making moral judgements about political action and political agents.
8. Public sector ethics-is a set of principles that guide public officials in their service to their constituents