Business Ethics: An Indian Perspective

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An Overview…
Business Ethics
Business Ethics: An Indian Perspective

What is Ethics?
Ethics:
• is a branch of philosophy.
• is a normative science because it is concerned with

the norms of human conduct
• as a science, it must follow the same rigours of logical

reasoning as other sciences.
• as a science, involves systemising, defending and

recommending concepts of right and wrong behaviour.
.

Principles of Personal Ethics
Personal ethics refer to the application of

values in everything one does.
Principles of personal ethics include:
1. Concern for the well being of others;

2. Respect for the autonomy of others;
3. Trustworthiness and honesty;
4. Willing compliance to law;
5. Basic justice: being fair;
6. Refusing to take unfair advantage;
7. Benevolence: doing good; and
8. Preventing harm to any creature.

Principles of Professional Ethics
The basic principles people are expected to follow in

their professional career are the following:
• Impartiality: Objectivity;
• Trustworthiness and honesty;
• Openness: Full Disclosure;
• Confidentiality: Trust;
• Due Diligence: Duty of care;
• Fidelity to professional responsibilities; and
• Avoiding potential or apparent conflict of interest

What is Business Ethics?
Business ethics is the application of general ethical

ideas to business behaviour.
It is based on the principle of integrity and fairness and

concentrates on the benefits to the stakeholders, both
internal and external.

What is not Business Ethics?
1. Ethics is different from religion

2. Ethics is not synonymous with law
3. Ethical standards are different from cultural traits
4. Ethics is different from feelings
5. Ethics is not a science in the strictest sense of the term
6. Ethics is not just a collection of values

Code of Conduct and Ethics for Managers
Managers must observe these ethical values while performing

their duties:
• Impartiality
• Responsiveness to public interest
• Accountability
• Honesty
• Transparency
• Integrity

Evolution of Business Ethics over the years
The 1970s saw papers from the academic circle.

Businessmen became more concerned with their public
image and addressed ethics more directly.
1974: the first conference held at the University of Kansas.
1975: business ethics became institutionalised at many

levels through writings and conferences.
1979: three anthologies on business ethics appeared:
(i) “Ethical Theory and Business” by Tom Beauchamp and Norman

Bowie;
(ii) “Ethical Issues in Business: A Philosophical Approach” by
Thomas Donaldson and Patricia Werhane; and
(iii) “Moral Issues in Business” by Vincent Berry
(contd.)
• 1980’s: The subject was taught in several universities

in the US and Europe. There were also, by this time,
many journals of business ethics, apart from Centres
and Societies established to promote ethical practices.
• 1982: Richard De George brought out “Business

Ethics”, and Manuel G. Velasquez published his
“Business Ethics: Concepts and Cases”.

(contd.)
• 1990: business ethics as a management discipline

was well-established.
• Parallel to these academic pursuits, the late 1980’s

and early 1990’s saw increased concern for consumer
rights, quality, safety, price, customer service and
environment in Britain.
• Simultaneously with these developments, religion also

lent its powerful voice.

Importance and Need for Business Ethics
• A business organisation competes in the global market on

its own internal strength, in particular, on the strength of its
human resource, and on the goodwill of its
stakeholders…trust
[Enron & WorldCom (2002), Lehman Brothers, Merrill Lynch (2008)]
• The value-based management and ethics that an

organisation uses in its governance enables it to establish
productive relationship with its internal customers, and
lasting business relationship with its external customers.
• Real type situations (Tata Steel and Infosys) show that

use of ethical practices in business creates high returns
for companies.
Values and Ethics in Business
A value is a view of life and judgement of what is

desirable. It is very much part of a person’s personality
and a group’s morale.
Business ethics relates to issues of “what is right”

and “what is wrong” while doing business. What values
are to individuals, ethics are to business.
Business ethics operates as a system of values,

relating business goals and techniques to specific
human ends.

Distinction between Values and Ethics
Values Ethics
Personal in nature (eg. a Generalised value system

belief in providing customer (eg. avoiding discrimination
satisfaction and being a in recruitment and adopting
good paymaster) fair business practices).

Why should Businesses act Ethically?
• To protect its own interest,
• To protect the interests of the business community as a

whole so that the public will have trust in it.
• To keep its commitment to society to act ethically,
• To meet stakeholder expectations.

Why should Businesses act Ethically? (contd.)
• To prevent harm to the general public,

• To build trust with key stakeholder groups,
• To protect themselves from abuse from unethical
employees and competitors,
• To protect their own reputations,
• To protect their own employees, and
• To create an environment in which workers can act in
ways consistent with their values.

How to Make Ethical Decisions?
Norman Vincent Peale’ and Kenneth Blanchard’s suggestions to

conduct ethical business.
•Is your decision fair?
•Is it a win-win situation for all?
•Is your decision legal? If it is not legal, it is not ethical.
•The Eleventh Commandment – “Thou shall not be

ashamed when found”, meaning when hauled up for
unethical behaviour, if one’s conscience is clear, then
there is nothing to be ashamed of.

How Corporations Observe Ethics in their
Organisations?
• Publish in-house codes of ethics to be strictly followed

by all their associates
• Employ people with a reputation for high standards of
ethical behaviour at the top levels
• Incorporate consideration of ethics into performance
reviews.
• Give rewards for ethical behaviour.

How Corporations Observe Ethics in their
Organisations? (contd.)
• SEBI, CII and such other organisations representing

corporations issue codes of best practices and enjoin
their members to observe them.
• IIMs, KU and highly rated B-schools give extensive and
intensive instruction in business ethics, corporate social
responsibility and corporate governance as part of their
curriculum.
• Conduct an Ethics Audit

Benefits from Managing Ethics in Workplace
• Attention to Business Ethics improves Society

• Ethical practice contributes towards high productivity
and strong team work
• Changing situations require ethical education
• Ethical practices create strong public image
• Strong ethical practices act as an insurance

Characteristics of an Ethical Organisation
Mark Pastin provides the following characteristics of ethical

organizations:
• At ease while interacting with diverse internal and
external stakeholder groups.
• Obsessed with fairness.
• Individual responsibility, with individuals assuming
personal responsibility for actions of the organisation.
• See their activities in terms of purpose.

Recognising Ethical Organisations
There are certain characteristics by which we will be able to identify

an ethical organization:
• On the basis of Corporate Excellence
• In relation to the Stakeholders
• In relation to Corporate Governance

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