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  • Sandeep Singh
  • Reader
  • School of Management Sciences, Varanasi

What is Business Ethics
  • 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
  • Business ethics refers to clear standards and
    norms that help employees to distinguish right
    from wrong behaviour at work. ( The Ethics
    Resource Centre)

  • Business ethics has to do with the extent to
    which a persons 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 ones 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)

  • 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

The concept of business ethics actually contains
four interconnected elements Four Interconnected
elements of business ethics
  • 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
  • Behaviour- Ethical behaviour from the legal,
    stakeholder and humanity point of view.

Nature of Business Ethics
  • Complex

  • 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 ones 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

  • 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.

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 of Corporate Governance has improved

  • 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.

Perceptions Regarding Business Ethics
Objectives 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.

  • 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 cant be
    held morally responsible for anything, simply
    because they dont act, its the individuals who
  • 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

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 cant get away by stating their
    impersonal nature.

  • 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 cant 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.

  • 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.

Three Role of Business Ethics The first
role of business ethics is to do three level
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
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Importance of Business Ethics

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.

Difference between Morality and Ethics
  • Ethics
  • 1. Ethics is the study of framework such as
    standards, Morality is right action,
    conduct or behaviour

  • principles, rules or codes and traits for
  • right action, behaviour or conduct.
  • 2. Ethics is the philosophical study of morality
    Morality is the subject matter of
  • 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

Rest Model of Moral Behaviour
Kohlberg Model of Moral Development
Virtues and Ethics
  • The word virtue is derived from the Greek word
    arete 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
  • 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.

  • 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.

Aristotle on Virtues
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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
  • 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

  • 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
  • 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.

  • The Budhist and the Jaina way of life is highly
    spiritual and yet there is no belief in God
  • 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 ethico-spiritual living. So,
    faith in the metaphysical spiritual reality is
    also a value a supplementary value.

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 ones 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
  • 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

  • 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 'Advaita-bhava' or
    'Abheda-bhava' which means feeling of one's unity
    with all.

  • 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

  • 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
  • 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.

  • 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

  • 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.

Difference Between Spirituality and Morality
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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
    lifeboth 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

Understanding Moral and Spiritual Impurity
  • There are two types of impuritythe moral
    impurity and the spiritual impurity.
  • Unscrupulous life of deceit, dishonesty,
    corruption including various kinds of crime, etc.
    all these come under the category of moral
  • 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.

Spiritual Lessons for Business Leaders
  • Acquisition of material wealth (Artha) and
    satisfaction of desires (Kama) become unhealthy
    only when they are done selfishly and
  • 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.

  • 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

Spiritual Lesson for Corporate Social
  • 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.

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.

  • " Love gives and forgives, selfishness gets and

  • (Sai Baba)