Introduction To Business Ethics
Introduction To Business Ethics
Introduction To Business Ethics
When we hear that someone has been accused of immoral or unethical behavior, we tend to
understand the meaning in terms of the context of practice in which the accusation arises.
In Congress, “ethics” often reduces to accepting bribes or doing the bidding of contributors.
In the Academy it is frequently associated with plagiarism or falsifying research results.
Corporations or charitable organizations are considered to have behaved unethically insofar as
they are revealed to have carried out their operations in ways that damage or exploit workers or
people living in their immediate environment or have pocketed or misapplied charitable
institutions.
Understanding the foundation of the business ethics is very important to every decision makers and
members of the corporate organization. Easy resolution can be created and cautiousness for possible
repetitions of ethical issues can be observed and examined.
WHAT IS ETHICS?
- Derives from the Greek word ethos – meaning “character” - also known as moral philosophy,
which is a branch of philosophy that involves "systematizing, defending and recommending
concepts of right and wrong conduct".
- Involves understanding the differences between right and wrong thinking and actions and using
principled decision making to choose actions that do not hurt others. Although intuition and
creativity are often involved in having to decide between what seems like two “wrong” or less
desirable choices in a dilemma where there are no easy alternatives, using ethical principles to
inform our thinking before acting hastily may reduce the negative consequences of our actions.
2. NORMATIVE ETHICS
- The study of how to determine ethical values
- More practical; this type of ethics involves prescribing and evaluating ethical behaviors –
what should be done in the future. How do we decide if something is right or wrong? We
can inquire about specific moral standards that govern and influence right from wrong
conduct and behaviors. Normative ethics also deals with what habits we need to develop,
what duties and responsibilities we should follow, and the consequences of our behavior
and its effects on others.
3. DESCRIPTIVE ETHICS
The study of the use of the ethical value
Involves the examination of other people’s beliefs and principles. It also relates to
presenting –describing but not interpreting or evaluating –facts, events, and ethical actions
in specific situations and place. Is x right or wrong? (e.g. Is capital punishment right or
wrong?)
Application of ethical value
3. IMMORAL MANAGEMENT
Immoral management is synonymous with “unethical” practices in business. This kind of
management not only ignores concerns, it is actively opposed to ethical behavior.
BUSINESS ETHICS
Applies ethical reasoning to business situations and activities. It is based on a combination of
distributive justice –that is, the issuing of rewards for judgment that is placed on all activities’.
The study of moral standards and how they apply to the systems and organizations through
which modern societies produce and distribute goods and services, and to the people who work
in these organizations’.
ORGANIZATIONAL ETHICS
Refers to the rightness of the decisions and behaviors of individuals and the organizations of
which they are a part. The definition of Buchholz and Rosenthal (1998) highlights this.
‘Organizational ethics is concerned with good and bad or right and wrong behavior and practices
that take place within a business context. Concept right and wrong is increasingly being
interpreted today to include the more difficult and subtle questions of fairness, justice and
equality’.
In simple terms, Business ethics/corporate ethics are practically concerned with the entire gamut of
functions of an organization which scrutinizes and set the codes related to the moral/ethical principle to
find the solutions to the problems faced by an employee in specific and the organization in general.
From the above definitions, which echo similar views on ethics with minor shades of difference, it can be
concluded that business ethics are related to:
Morally right and wrong behavior,
In the business context,
Including questions of fairness, justice and equity,
That which require application of moral standards by persons in the organizations, and
The moral standards that are not separate, but derived from society.
Ethical Concepts
Throughout human history, there have always been ideas about right and wrong. To function,
any culture needs to define proper and improper behaviors. There are rules and laws in any
complex society, but underlying there is always a set of moral values. These values are the roots
of what we call “ethics,” which has been defined as the “discipline of dealing with what is good
or bad and with moral duty and obligation.”
For centuries, ethics has been among the great, deep subjects of philosophical study and
debate, but only in the 20thcentury did the modern idea of what we now call “business ethics”
truly emerge. Private enterprises have become powerful creators of wealth in today’s world, but
this power has, at times, been abused. So, there’s a clear social need to investigate and
influence the ethical foundations of these enterprises.
Ethics is the branch of philosophy that is used to evaluate human actions. Some basic ethical concepts in
business are as follows:
ETHICAL SUBJECTIVISM
This concept emphasizes that the ethical choice of the individual decides the rightness or
wrongness of his behavior.
ETHICAL RELATIVISM
According to this concept, no principle is universally applicable and so it would be inaccurate
to measure the behavior of one society with another’s principles or standards. Relativism
overlooks the fact that there may be enough evidence to believe than an ethical practice is
based on false belief, illogical reasoning and so on.
CONSEQUENTIALISM
Consequentialism is based on two ideas: the concept of value and the maximization of
value. If, for example, honesty is considered a value, an act is considered ethical only if it
maximizes this value. An act, which does not maximize the said value, is not ethically
permissible.
DEONTOLOGICAL ETHICS
This concept stresses that ethical values can be developed from the concepts of reason as all
rational individuals possess the ability to reason. We may, for example, end up causing pain
unknowingly while trying to create happiness. Therefore, the ethical value of an action
cannot be determined by its consequences. Instead, it is in the motive that lies behind the
particular action.
ETHICS OF VIRTUE
This concept emphasizes those traits that give the individual a sense of satisfaction from
ethical point of view. Virtuous acts like courage, honesty, tolerance, and generosity are done
as a way of living and not by chance.
ETHICAL MODELS
Ethical models can be used to define ethical situations and manage ethical dilemmas that may
occur in the organizations. The Golden Rule Model and The Right-driven or Kantian model are
two operational models that have emerged from the work of philosopher Immanuel Kant.
Ethical Values
Ethical values and actions are an integral part of ethical societies. Ethical actions in the ethical
society refer to the initiative taken by the people to show their commitment towards building a
better life for them and for their children. Ethical actions are also termed as the categorical
imperative actions. The whole world is created by action and is meant for action. The future
depends on the actions performed by the people. Ethical actions are the activities performed by
the social, national or personal group. The people in these groups perform the activities in a
spirit of service and commitment. The dimensions of ethical actions can be divided into two
major categories. These categories are:
a. COMMUNITY SERVICE
- Community service aims at helping the organizations and the people in the
community.
DESTRUCTIVE ACTIONS
- Are those that can harm the people performing the actions as well as others. It is very
difficult for people to find out which actions are harmful. Some actions can cause damage in
one situation and the same actions can be useful in some other situation. Buddhist ethics
point out that the motivation and frames of mind are the two concepts that can be useful to
determine destructive actions. A destructive action must be motivated by passion, anger
and naivety about its effects. Buddhist ethics determined that most of the mental, physical
and verbal actions could be destructive.
- The ten destructive actions determined by Buddhist ethics are:
Taking the life of others
Taking something from others that has not been given to them
Lying
Talking and speaking insensitively
Using cruel language
Using language consisting of idle words
Thinking thoughts of meanness
Thinking jealous thoughts
Distorted and aggressive thinking
Behaving like a moderator
CONSTRUCTIVE ACTIONS
- Are also considered as desire-prompted duties. Constructive actions are always done by
people who consider if their responsibility or duty to perform these actions. These actions
can be performed either daily or on some special time. These actions always provide a result
that is purposeful and self-determined. Constructive actions can be of three different types.
These types are:
a. OBLIGATORY ACTIONS
- These actions can be performed by any type of person in the society. These
actions do not affect any special category of people. Every man, society and
the universe would be affected by these actions.
b. PROHIBITED ACTIONS
- Prohibited actions do not prove to be of worth for the people. The non-
performance of prohibited actions is also obligatory.
c. OPTIONAL ACTIONS
- Optional actions are also called hypothetical imperative actions. These
actions prove to be beneficial to human beings and are also performed by
the people to secure their personal benefits. Therefore, ethical actions are
responsible for performing the obligatory and optional actions successfully
and avoiding the prohibited actions.
Morality
Morality refers to the concept of human action which pertains to matters of right and wrong.
Ethical actions should be performed as a community standard rather than as an individual
responsibility. Individuals in a society can perform three types of ethical actions. These are:
The terms ‘morality’ and ‘ethics’ have a strong relationship with each other. Morality refers to
moral character or standards. Morality is used to analyze the behavior of the individual and the
standards of conduct. Ethics is used to refer to the formal study of these standards. Morality can
be considered as ethics inaction.
1. PRE-CONVENTIONAL LEVEL
- Person follows the dictates of law and good behavior our of fear of punishment or
expectation of reward.
2. CONVENTIONAL LEVEL
- Person conforms to the behavioral standards to meet the expectations of peers and
society to avoid ridicule and gain acceptance.
The mind is responsible for the thoughts and feelings of individuals. The existence of individuals
and their activities is only due to their mind. The feelings and opinions of persons depend on
their mind. A person having a good mind has good feelings and a person having a disturbed
mind has disturbed feelings.
Professor Gardner suggests five types of minds. The ethical mind is one of them. The others are
disciplined mind, synthesizing mind, creating mind and respectful mind. The ethical mind of a
person is affected by the nearby surroundings and culture. Ethical minds can be of two types.
These are:
a. SUBJECTIVE MIND
- The subjective mind faces motivation from the different objects of the world. This
type of human mind is also called the outer mind.
b. OBJECTIVE MIND
- This type of mind reacts to the encouragement received from the outside world.
This type of human mind is also called the inner mind.
Training of the mind can be accomplished by two methods. These methods are:
1. ART OF DISENGAGEMENT
- Mental disengagement can only be developed by developing a mind that is free
from abstracted and fractional feelings and is more concentrated.
2. SELF-DENIAL
- Self-denial is an inner characteristic of a person, by which he does not let any
extraneous thoughts enter his mind so as to achieve something. This is one of the
methods to train the mind.
SELF DEVELOPMENT
- The responsibility and duty of the individuals to learn and develop themselves. Individuals
can use the process of assessment, reflection and take necessary action to achieve self-
development. Self-development is the only way for individuals to update their skills and
knowledge in order to face the new problems that emerge in life.
- Self-development also determines one’s future career direction.
The person undergoing self-development does not depend on the support of the outside world.
Such type of person becomes self-sufficient. Self-development in individuals makes them
independent.
Self-development brings in the feature of objectivity in individuals. Such feature gives individuals
an impersonal attitude.
A self-developed person looks happy in life. His inner nature looks full of cheer and joy. He will
not be depressed and miserable.
A self-developed person becomes dynamic, active and brighter in life.
A self-developed person is more lovable.
METHODS OF DEVELOPMENT
1. PATH OF ACTION
- It states that people should only perform their job and should not care for the fruits or
results. Ethical actions are a way to perform one’s duties or responsibilities in an
unselfish manner.
2. PATH OF KNOWLEDGE
- The path of knowledge means to move towards acquiring knowledge. It also eliminates
the distance between the subjective mind and the objective mind. Thus, the path of
knowledge makes a man confident and self-developed.
3. PATH OF DISCRIMINATION
- This path assists a person to identify his inner faults. The person has to transform the
inner motives and mental attitudes to train the mind. The path of discrimination forces
individuals to control the emotions of attachment, fear and anger.
6. PATH OF MIND-CONTROL
- It consists of concentration and meditation, Concentration refers to focusing on the
object on which one is working. Devotion to God helps in achieving concentration.
- Meditation refers to the state of the body in which the person feels relaxed and the
mind is more focused. Therefore, meditation helps in achieving concentration.
- The path of meditation is also called the path of yoga. Yoga is the only way to keep the
mind calm and focused and hence to get concentration.
Ethical Decisions
The management of an organization is responsible for making effective decisions.
Managers are responsible for all business operations and they also make all the important
decisions.
Managerial decision-making involves defining problems and then structuring them for positive
results.
Business strategies are an important part of businesses, firms and industries. To make a business
strategy, all businesses firms and industries need to develop a strategic plan once a year.
Business strategies are used for the following purposes:
They help determine the products and services that an organization needs to provide.
They help determine the various industries in which the organization competes.
They help identify the competitors, suppliers and customers of the organization.
They help analyze the long-term goals of the firm.