UBA20602T-ETHICS AND CORPORATE GOVERNANCE IN BUSINESS

UNIT 1

What is ethics?

At its simplest, ethics is a system of moral principles. They affect how people make decisions
and lead their lives.

Ethics is concerned with what is good for individuals and society and is also described as
moral philosophy.

The term is derived from the Greek word ethos which can mean custom, habit, character or
disposition.

Ethics covers the following dilemmas:

 how to live a good life

 our rights and responsibilities

 the language of right and wrong

 moral decisions - what is good and bad?

Our concepts of ethics have been derived from religions, philosophies and cultures. They
infuse debates on topics like abortion, human rights and professional conduct.

Introduction: Ethics is the philosophical study of morality. It is one of the main branch of
philosophy which corresponds to the traditional division of philosophy into formal, natural
and moral philosophy. It can be turned into a general study of goodness, right action, applied
ethics, meta-ethics, moral psychology and metaphysics of moral responsibility. The general
study of goodness and right action is the main task of ethics. It has correlatively its
substantive question as: how are we rational beings and what moral principles should govern
our choice and pursuit?

Meaning of Ethics: The word Ethics is derived from the Greek word ‘ethos’ which means
character or conduct. Ethics is also called as moral philosophy or philosophical thinking
about morality. This morality has been further elaborated as action and behaviour which is
concerned with ‘good’ or ‘evil’, of particular traditions, groups or individual. The term
‘moral’ and ‘ethical’ is often used as equivalent to right or good as opposed to ‘immoral’ and
‘unethical’. It doesn’t mean morally right or morally good but it definitely pertains to
morality.

Ethics is that science which is concerned with moral behaviour or with right or wrong and
good or evil of human behaviour. It propounds those principles which make our conduct
moral. It becomes clear when we explain the derivation of the words right and good. The
word right is derived from Latin word ‘rectus’, which literally means ‘straight’ or ‘according
to rule’. It means that we are concerned with those principles which make our conduct right
or straight. The analysis of the word ‘right’ explains one aspect of ethics. Rules are the means
and whenever there are means, there must be an end or goal as well. If Right is the mean of
conduct, then the question arises that what should be its end. We get the answer to this only
when we analyse the word good which is derived from the German word ‘gut’. Gut means
everything useful or serviceable for some end or purpose. When we say that such and such
school is good, what we actually mean is that it is useful for education of the children. Thus
in our daily life we do not interpret good as something which is useful for some end rather we
mean by it, the end or good itself. So we arrive at the conclusion that ethics is concerned with
end or goal of life. As we know in our life and in the lives of others there are innumerable
things that can be regarded as good. Ethics as a science is not concerned with particular good
of the individuals; on the contrary it is concerned with the supreme goal or the ultimate end
with reference to which the entire life of individual is directed - the ‘Summum Bonum’.

Importance of Ethics

Most of us would agree that it is ethics in practice that makes sense; just having it carefully
drafted and redrafted in books may not serve the purpose. Of course all of us want businesses
to be fair, clean and beneficial to the society. For that to happen, organizations need to abide
by ethics or rule of law, engage themselves in fair practices and competition; all of which will
benefit the consumer, the society and organization.

Primarily it is the individual, the consumer, the employee or the human social unit of the
society who benefits from ethics.
In addition ethics is important because of the following:

1. Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic
human needs. Every employee desires to be such himself and to work for an
organization that is fair and ethical in its practices.
2. Creating Credibility: An organization that is believed to be driven by moral values
is respected in the society even by those who may have no information about the
working and the businesses or an organization. Infosys, for example is perceived as an
organization for good corporate governance and social responsibility initiatives. This
perception is held far and wide even by those who do not even know what business the
organization is into.
3. Uniting People and Leadership: An organization driven by values is revered by its
employees also. They are the common thread that brings the employees and the decision
makers on a common platform. This goes a long way in aligning behaviors within the
organization towards achievement of one common goal or mission.
4. Improving Decision Making: A man’s destiny is the sum total of all the decisions
that he/she takes in course of his life. The same holds true for organizations. Decisions
are driven by values. For example an organization that does not value competition will
be fierce in its operations aiming to wipe out its competitors and establish a monopoly in
the market.
5. Long Term Gains: Organizations guided by ethics and values are profitable in the
long run, though in the short run they may seem to lose money. Tata group, one of the
largest business conglomerates in India was seen on the verge of decline at the
beginning of 1990’s, which soon turned out to be otherwise. The same company’s Tata
NANO car was predicted as a failure, and failed to do well but the same is picking up
fast now.
 6. Securing the Society: Often ethics succeeds law in safeguarding the society. The law
machinery is often found acting as a mute spectator, unable to save the society and the
environment. Technology, for example is growing at such a fast pace that the by the time
law comes up with a regulation we have a newer technology with new threats replacing
the older one. Lawyers and public interest litigations may not help a great deal but ethics
can.
Ethics tries to create a sense of right and wrong in the organizations and often when the law
fails, it is the ethics that may stop organizations from harming the society or environment.

Role of Management in Inculcating Workplace Ethics

Management plays an essential role in inculcating workplace ethics in employees. Bosses

need to set an example for their subordinates. You need to come on time if you expect your
team members to reach office on time.

Management needs to act as a source of inspiration for the employees. It is generally

observed that team managers, leaders influence their team members to a large extent.
Superiors strictly need to adhere to the rules and regulations of the organization for their
employees to follow the same.

Remember, you have no rights to scold your subordinates if you yourself are at fault.
Moreover no one would bother to listen to you as well. Don’t expect your team members to
sit till late if you yourself leave early.

It is the role of the management to motivate the employees and guide them as to what is
right and wrong.

A Boss is like the captain of the ship. It is your responsibility to take your team members
along and provide constant mentoring. Rebuking is not the only solution. If you know one of
your team members is meeting his girlfriend during office hours, do you feel insulting or
criticizing in front of others would help? NO. Call him to your cabin or speak to him in
private and make him realize that it is not morally correct to bunk office. You need to counsel
him and make him understand his mistake politely. Trust me, being rude would make the
situation more worse. Do not discuss the matter in front of others. The other person might not
like it. Your job is to make the other person feel guilty and realize that indeed he has done
something wrong. Believe me; he would never repeat his mistake.
Constant communication between the management and employees is of utmost
importance in inculcating workplace ethics. Management ought to be transparent with its
employees. Let them have a say in company’s decisions. Let them decide what is right and
what is wrong for them. Sit with them, discuss, brainstorm ideas and listen to what they have
to say. Never ignore their opinions. Let them come out with their grievances.

Lend a sympathetic ear to their problems as well. Try to provide them a solution. If you feel
most of your employees have a problem coming to office early as they in any case have to
stay back till late in the evening as per the client’s availability, please adjust the office
timings accordingly. How can you expect your employees to reach office sharp at 8 AM
when they are leaving for the day at 10 PM.

Rules and regulations should not act as a hindrance in their performance. Be realistic and
logical. If the problem is genuine and faced by a major chunk of employees, there is no harm
in changing the policies. Think from the employee’s perspective as well. Policies should not
be too rigid.

Don’t be too strict with the employees. If someone is not present in the office, please do not
call his family members to enquire about him. No one would like it. We all are mature
professionals to understand that if there is work, we need to finish it first rather than waste
our time in gossiping and surfing social networking sites.

Management can’t force employees to respect the organization. Respect must be

commanded and not demanded. Respect your employees if you expect the same in return.

Some organizations do not easily release their employees. Remember, you cannot stop
an individual from changing his job if he/she has already decided to move on. Try to
convince him once and if he/she is still not willing to continue, let him go. Employees depend
on fake relieving letters, experience certificates when they do not get it from their previous
organization on time.
VALUES –UNDERSTANDING

Values are basic and fundamental beliefs that guide or motivate attitudes or actions. They
help us to determine what is important to us. Values describe the personal qualities we choose
to embody to guide our actions; the sort of person we want to be; the manner in which we
treat ourselves and others, and our interaction with the world around us. They provide the
general guidelines for conduct.

Values in a narrow sense is that which is good, desirable, or worthwhile. Values are the
motive behind purposeful action. They are the ends to which we act and come in many forms.
Personal values are personal beliefs about right and wrong and may or may not be considered
moral. Cultural values are values accepted by religions or societies and reflect what is
important in each context.

Values are essential to ethics. Ethics is concerned with human actions, and the choice of
those actions. Ethics evaluates those actions, and the values that underlie them. It determines
which values should be pursued, and which shouldn't. As I discussed in last week’s blog,
courage is one such value. Those who value courage are willing to stand up for what they
believe, even in the face of strong condemnation. Courage is a moral value when it deals with

right and wrong conduct.

Value specifies a relationship between a person and a goal. It is relational in the sense that
what one person values may not be what another person values even in the same situation.
For example, a person who values honesty might blow the whistle on financial wrongdoing
by a superior whereas another person who values loyalty may remain silent. This is an
example of values conflict. The honest person may believe there are limits to loyalty and
keeping quiet about a wrongful act out of loyalty might harm others. The loyal person may
believe in the importance of keeping one’s confidence even if it might harm others because of
the trusting relationship.  

Some values stand up well over the test of time; they are always good or rightful behavior.
Honesty and kindness are two such examples. It is difficult to imagine having a satisfying
relationship without them because they build trust in relationships. There are always
exceptions but they are rare. For example, if a criminal out to do harm to your friend knocks
on the door and asks whether you have seen the friend, you’re probably not going to say yes
and rationalize it out of a sense of honesty. Here, the greater good, so to speak, is to protect
your friend from harm.

I’m a proponent of virtue ethics because it holds that moral values can be turned into
excellences of character with practice and repetition. We become virtuous by being virtuous.
We use practical wisdom to make decisions about what virtuous behavior is. It all makes
sense -- at least to me. 

From a virtue perspective, it is most important to distinguish intrinsic from extrinsic value.
Intrinsic value is something that has value in its own right, such as honesty and kindness,
whereas extrinsic value is doing something for another reason (i.e., wealth and fame).  

I believe what’s missing in society today is the commitment to core ethical values that all
people should strive to achieve, such as honesty, kindness, compassion, respect, and personal
responsibility. These are values to be admired and illustrative of a person of integrity. Where
have they gone???

Why are core values important to your business?

Organizations should give importance to “Core Values” regardless of the size of the

company. Values determine the course of business which in turn influences strategy and
decision making. Basically, core values form the foundation on which we build the business.
Core Values brings in numerous benefits to the company. You must ensure core values are
being upheld, implemented across the entire business unit. All the employees should know
them by heart and it should be referred to during the decision-making process through core
values rating.

Benefits and importance of having core values in our day to day work
Organizational core values define how we treat people and it gives a structure to our basic
work ethics. A systematic approach to creating perfect organizational values help build an
enriched and effective work culture that influence the behavior of the people.

Business blooms
Core Values determine the way how organizational goals are achieved. If you utilize core
values to achieve your goals, the business will grow successfully. You would have already
put in a lot of thoughts and efforts in setting up the core values and this will drive your
business in the right path. Hence core values are very important in business growth.

Employee Involvement
A good deck of core values will help to keep your employee committed more into their work.
It will keep the employee motivated as well. Employees will get job satisfaction and there
will be a drastic change in the attitude towards his/her job. Job involvement will project the
extent to which a person identifies psychologically with his/her work and this enhances
employee performance and overall productivity of the company.

Gain Goodwill
Advertising core values is a hyper-efficient method to earn goodwill for your company.
Showcase them in your website; frequently mention this to your potential clients; Use them in
your marketing campaigns, also make sure to demonstrate the values in all aspects of your
business. Doing so will trigger an eagerness to the outsider to see how your business work
and if they love it, they will spread the message. We can’t deny that “Word of Mouth” in
one of the best advertising tool.

Healthy Attrition Rate

Employees become loyal and stay back if the workplace is enriching and enjoyable. The
employees should feel that they are appreciated, listened, recognized, and trusted. These
factors are crucial in employee retention along with other incentives such as career
progression and monetary growth. If the company’s core values are incorporated with the
above-said factors, it will help you to create an employee-friendly work environment.

Attract new clients/employees

Making the core values public is one kind of strategy to attract more clients and potential
employees. Usual client/employees will do research before deciding on your company and to
impress them core values will help. If your company values are in line with their own liking
then you have a very good chance to end up working with tier-1 clients/employees.

Customer Delight
Developing customer focused core values is fundamental irrespective of whether you are into
direct customer-facing business or not. Incorporating and upholding core values such as
integrity and commitment will make your customer happy and satisfied.

“Values determine culture

            Culture determines Behavior

                            Behavior determines Outcome”

-Rohan Dredge

So let’s value the values..!! Now that we know the importance of core values lets set it up.
Click here to know 6 steps for Successful Core Value Implementation.

What Is Business Ethics?

By definition, business ethics refers to the standards for morally right and wrong conduct
in business. Law partially defines the conduct, but “legal” and “ethical” aren't necessarily the
same. Business ethics enhances the law by outlining acceptable behaviors beyond
government control.

The nature of business ethics is also known as features of business ethics. It includes

various points related to their ethics of business which is related to the corporate sector…
So, the nature of business ethics arises two types of questions but the answer to both
questions are the same and the questions are:

1. Discuss the nature of business ethics.

2. Explain the nature of business ethics.
1. Ethical Values:
Business ethics is totally focused on their morality factor because, in today’s world,
community firms play a vital role in society and its actions are directly affected by the
welfare and well-being of the society. Business affects society in terms of which type of
products it supplies and produces.

So, that is the reason, it is mandatory that the business community conduct its activities with
self-check, self-inspection, self-control,  self-sacrifices and also keeping always in mind the
ethical values of community and their society.

2. Relative Term:
Ethics is a term of relation with the concept of morality and immorality. It differs from an
individual to an individual, society to society, culture to culture, country to country. It helps
to define the moral and immoral term of business ethics.

3. The interest of Society:

In this features of business ethics, Business ethics said that business should first do excellent
to society and community and then to itself because social welfare is also the objective of a
business.
Business is an important institution and they have various social responsibilities to protect the
category of all formal or informal groups which are directly or indirectly related to the
organization like employees, shareholders, consumers, and their stakeholders also to
contribute to the growth of the business.
4. Business Social Relationship:
Business ethics helps to set or formulate the terms and standards to understand social
affection or relationship of business. It describes what community or society expects from
business and what it presumes about the business.

5. Provides the framework:

Business is an institution which includes various social and economic rules and regulations.
Business is always trying to restrict its activities (formal or informal) within the limits of the
social, cultural, regional, religion, and economic environment.
6. Facilitates the protection of social groups:
Business ethics is a type of code of conduct which includes the guidance of norms and
behavior of an individual i.e., how to behave yourself, how to follow the norms, how to
improve yourself, and so on. It gives protection to consumers and other social members such
as shareholders, society, and employees.

7. Not against profit-making:

Business ethics is not in against real or fair profit making. However, it is totally against those
profits which are earned by cheating and exploiting their customers, employees, and
investors. It helps to support business activities but by accurate or fair means and not through
illegal activities.

8. Needs willing acceptance:

Business ethics cannot be forced by law and other aspects. It must be accepted as self-
indulgence by any businessman. It should come from the inner part of the soul. Businessman
follows the guidelines of ethical trade activities by own and not by force of any law.

The characteristics of ethics in business include various points such as:-

1. Stakeholder Balance:
This is the first characteristics of business ethics and it means that the business policies
follow the two basic points like protect the interest of shareholder values or balancing the
needs of multiple stakeholders.
Stakeholders include inner and outer business peoples such as employees, the local
community, and the customers.

2. Mission and Vision Driven:

In this characteritics of business ethics, ethical business is commonly focused on something
more than profit, and those things are values and beliefs. When these values are supported by
management and valued by individuals, the workforce becomes more effective and united by
common goals rather than simply co-existing to pursue profits.
These type of values and beliefs are performed better for their employees and their
relationship with the public and its market.
3. Process Integrity:
This is the third characteritics of business ethics and it means that the organizational culture
is the product of hundreds of various processes that take place on a regular basis. These
processes can be healthy or unhealthy, depending upon various factors effective to the
process.
For Example, ‘healthy’ competition is a formulation of success, equal treatment by
management and distribution of foils. Unhealthy competition is totally different, they have
misaligned goals and unequal treatment of the better performers.

So, that is the reason, human resource managers help to review the integral processes and
protect them with transparency.

4. Long-term Perspective:
In this characteristics of business ethics, companies follow the long term process with their
ethical values and beliefs. This long term view should not only relate to wealth or profits but
it also relates to the community and their standards. It helps to reflect the self-reflection
policy so that the employees of an organization can freely take decisions and improve
themselves also.
Thinking in the long term perspective also allow businesses to make the plan effective for
their future growth and developments.

So, these are the explanation of nature, features, and characteristics of business ethics…

Business Policy –Introduction

Business policies are the guidelines developed by an organization to govern its actions.

They define the limits within which decisions must be made. Business policy also deals with
acquisition of resources with which organizational goals can be achieved.

Business ethics policies play a major role in highlighting favorable employee conduct. A
company with elevated ethical standards improves the public’s trust and the likelihood of
consumers to buy products from them. Ethical practices link to legally complying with
regulations while ensuring the company can still get a competitive advantage in their market. 
The basics of business ethics policies

Business ethics correlate with the implementation of policies related to areas like social and
fiduciary responsibilities. Ethics are also included when you write official policies that
demonstrate how an employee should behave in the workplace. A few other reasons your
company should have an ethics policy include: 
o It serves as a guide for interacting with coworkers and customers. Ethics
policies can help employees determine the best approach to speaking with
coworkers, along with potential and current customers to build long-term
relationships with them. The purpose of expanding on these types of details is
to build trust between the employees and everyone they work with. Employees
can feel more inclined to be ethical if they feel satisfied with the behavior of
their coworkers. 

o It demonstrates the company’s culture, You can outline your company’s ethics

policy to interested applicants, so they know the way employees behave daily.
The company’s culture can be a deciding factor if an applicant has multiple
offers from various employers. Therefore, you should communicate this
information before you begin asking questions about an applicant’s work
experience, so you can ensure that you’re being transparent with them. 

 It can give a company a good reputation. If a company performs well in its industry, it
is attributed to the code of conduct outlined in the ethics policy. A company wants to
buy products from a reputable organization, so employees from all levels of the
company must adhere to the guidelines you wrote in the policy to consistently
maintain its image. This result can lead to receiving national or global recognition for
the service your company provides. 

Types of ethical challenges in business

Even with a well-written ethics policy, a company and its employees still face ethical
challenges. These challenges indicate the trajectory of the organization. Take a look at the
types of ethical challenges that you should be aware of: 
 
 Accounting 
  Social Media 

 Harassment and Discrimination

 Health and Safety

 Technology and Privacy

1. Accounting 
Generally, a company engages in two types of accounting: financial and managerial.
Financial accounting is the reporting of the organization’s financial data during the fiscal year
to present to the public. Managerial accounting is the measurement, analysis and presentation
of a company’s financial performance to see if they meet its financial goals for the fiscal
year. 
 
A company can be highly regarded for displaying its financial performance to the public.
Some companies must do so to comply with regulations from the federal government. You
should encourage financial accounting as a part of the ethics policy, so all stakeholders know
about the company’s financial performance. 
 
2. Social Media 
Social media documents any action taken by an employee that’s posted on a social media
account. An employee’s content can affect the perception of the company they work for
because they’re viewed as a representative of the organization. 
 
Some employees state that they publish their opinions on their social media accounts to make
the distinction between them and the company. You should clearly outline best practices for
how employees should communicate on social media, explain how their actions affect the
company and what type of conduct is prohibited. 
 
3. Harassment and Discrimination
Harassment and discrimination exist in multiple forms, including, age, race, sex, religion and
national origin.  Your ethics policy should underline how you address discrimination if an
employee reports an incident in the workplace. Additionally, you’ll need to list the
company’s compliance with discrimination laws and highlight related policies like
compensation and time-off to ensure all employees receive equal treatment. 
 
4. Health and Safety
The health and safety of employees affect their level of performance and their relationship
with employers. You can describe the working conditions within a job description, but ethics
policies detail how you should use specific equipment to perform a job effectively such as
guidelines for machine guarding, electrical equipment, usage of ladders, potential hazards and
methods to reduce risks of falls and other emergencies. 
 
5. Technology and Privacy
The rise of technology changes the way employees interact and perform in the workplace. It’s
changed the way companies review employee activity and their production. With companies
relying on technological advances, you must record procedures for tracking an employees’
performance and monitoring capabilities. Employees need to be comfortable with monitoring
practices that you implement, so try to get a consensus from employees on monitoring
procedures before they become official policy. 

What is business strategy and example?

A business strategy is a plan that outlines how a company will achieve its goals. There are
many different business strategies, but some common examples include cost leadership,
differentiation, and focus.

Impact of Ethics on Business Strategy

Compliance with Codes of Conduct will be mandatory for members and employees subject to
the Codes. Ethical tests enable managers to consider ethical consequences of decisions where
The wording of codes may be imprecise
Where situations arise that are not covered in the Codes.
The Institute of Business Ethics offers three tests to apply to decisions to assess whether they
raise ethical issues:
1. Transparency: Do I mind others knowing what I have decided?
2. Effect: Who does my decision affect or hurt?
3. Fairness: Would my decision be considered fair by those affected?
Impact of Ethics on Business Strategy

Ethics can be thought of as impacting at several points in the strategy process.

 In the formulation of strategic objectives. Some firms will not consider lines of business for
ethical reasons.
 External appraisal will need to consider the ethical climate in which the firm operates. This
will raise expectations of its behavior.
 Internal appraisal: Management should consider whether present operations are
‘sustainable’, i.e. consistent with present and future ethical expectations.
 Strategy selection: Management should consider the ethical implication of proposed
strategies before selecting and implementing them.

Role of Management in Inculcating Workplace Ethics

Management plays an essential role in inculcating workplace ethics in employees. Bosses

need to set an example for their subordinates. You need to come on time if you expect your
team members to reach office on time.

Management needs to act as a source of inspiration for the employees. It is generally

observed that team managers, leaders influence their team members to a large extent.
Superiors strictly need to adhere to the rules and regulations of the organization for their
employees to follow the same.

Remember, you have no rights to scold your subordinates if you yourself are at fault.
Moreover no one would bother to listen to you as well. Don’t expect your team members to
sit till late if you yourself leave early.

It is the role of the management to motivate the employees and guide them as to what is
right and wrong.

A Boss is like the captain of the ship. It is your responsibility to take your team members
along and provide constant mentoring. Rebuking is not the only solution. If you know one of
your team members is meeting his girlfriend during office hours, do you feel insulting or
criticizing in front of others would help? NO. Call him to your cabin or speak to him in
private and make him realize that it is not morally correct to bunk office. You need to counsel
him and make him understand his mistake politely. Trust me, being rude would make the
situation more worse. Do not discuss the matter in front of others. The other person might not
like it. Your job is to make the other person feel guilty and realize that indeed he has done
something wrong. Believe me; he would never repeat his mistake.

Constant communication between the management and employees is of utmost

importance in inculcating workplace ethics. Management ought to be transparent with its
employees. Let them have a say in company’s decisions. Let them decide what is right and
what is wrong for them. Sit with them, discuss, brainstorm ideas and listen to what they have
to say. Never ignore their opinions. Let them come out with their grievances.

Lend a sympathetic ear to their problems as well. Try to provide them a solution. If you feel
most of your employees have a problem coming to office early as they in any case have to
stay back till late in the evening as per the client’s availability, please adjust the office
timings accordingly. How can you expect your employees to reach office sharp at 8 AM
when they are leaving for the day at 10 PM.

Rules and regulations should not act as a hindrance in their performance. Be realistic and
logical. If the problem is genuine and faced by a major chunk of employees, there is no harm
in changing the policies. Think from the employee’s perspective as well. Policies should not
be too rigid.

Don’t be too strict with the employees. If someone is not present in the office, please do not
call his family members to enquire about him. No one would like it. We all are mature
professionals to understand that if there is work, we need to finish it first rather than waste
our time in gossiping and surfing social networking sites.

Management can’t force employees to respect the organization. Respect must be

commanded and not demanded. Respect your employees if you expect the same in return.

Some organizations do not easily release their employees. Remember, you cannot stop
an individual from changing his job if he/she has already decided to move on. Try to
convince him once and if he/she is still not willing to continue, let him go. Employees depend
on fake relieving letters, experience certificates when they do not get it from their previous
organization on time.
IMPACT OF BUSINESS ETHICS ON BUSINESS

Ethics in Compliance

Business ethics play an efficient role in the compilation of business activities with legal rules
and regulation. It ensures that business adheres to all established laws and any of its
operations don’t go unlawful. It reduces any chance of facing any unfavourable action by
authorities like payment of fines and penalty. Business following ethics in their operations
frames strategies and policies in accordance with established rules and regulations. All
activities are monitored and ensured that they go in accordance with framed policies.

Ethics in Human Resource

Human resources are the key element of every business and have an important role in its
success. Ethics helps in improving the employer - employee relations and overall productivity
of the business. Ethics related to human resource are introduced and implemented by Human
resource management in business. HRM covers all ethical issues related to employer -
employee affecting their relationship.

The various issues covered are Discrimination issues, sexual harassment, employee’s privacy
issues, salaries and wages issues, safety and health issues. Ethics aims at overcoming all these
issues so that employees are happy and motivated towards their roles. This booms the overall
performance and reduce the risk. Ethics in Finance Finance is a crucial part of every business
and is needed for its successful operations. Finance should be properly managed by every
business otherwise it may have adverse effects. Ethics aims at controlling and handling all
finance issue faced by companies and employees. The various ethical issues included are
accounting related like fake reimbursements, overbilling, bribery, kickbacks etc.

Ethics in Production

Ethics in business helps in monitoring and controlling the overall production activities. It
ensures that production processes do not adversely affect the business. Ethics frames
production policies by considering organisation goals, objectives and various environmental
factors. Attempts are made to minimise the degree of risk and danger. The various ethical
issues covered are defective and dangerous products, environmental ethics and pollution
issues, Issues arising out of new technologies and product testing issues. Implementation of
ethics controls these issues and fosters overall productivity. Ethics in Marketing Marketing is
an important part of every business organisation. It is the means through which it improves
the sales and profitability of the business. Marketing practices should be ethical and should
avoid the adoption of any unfair means. Implementation of ethics ensures that all marketing
programmes are moral-ethical. The various ethical issues covered are pricing issues like price
discrimination and price skimming, misleading advertisements, black marketing, anti-
competitive practices, wrong advertisement content etc.

ROLE OF BUSINESS ETHICS

• Role of business ethics in finance (trading practices, trading conditions, financial

contracting, sales practices, tax payments, executive compensation, audit - ensure
transparency in financial transactions.)

• Improve employee and organizational morale

• Attract new customers • Improve customer loyalty

• Role of business ethics in sales and marketing (product ingredients, environment risk -
transparency about product/services)

• Role of business ethics in HRM (safety and health, employment law, discrimination - age,
gender, race, religion, disabilities - whistle blowing)

• Role of business ethics in production (ensure that products and production processes do not
cause harm)

• Role of business ethics in technology

NEED FOR BUSINESS ETHICS • Stop business malpractices • Safeguarding consumer’s

rights • Gain confidence of customers • Survival and growth of business • Creating goodwill •
Healthy competition • Consumer satisfaction. • Building strong relationship with customers
and clients

CHIEF EXECUTIVE OFFICER A chief executive officer (CEO) is the highest-ranking

executive in a company, whose primary responsibilities include making major corporate
decisions, managing the overall operations and resources of a company, acting as the main
point of communication between the board of directors and corporate operations and being
the public face of the company. A CEO is elected by the board and its shareholders. A CEO
must possess these certain traits to truly become an Effective leadership.

1. Ability to learn from the past A CEO must have the ability to learn from past experiences.
CEOs are only human. Mistakes will happen, but it's important that a CEO learn from them
to prevent them from happening again.

2. Strong communication skills A CEO needs strong communication skills. A CEO must
learn how to communicate effectively to boost moral when necessary. Top executives are
consistently transparent and balanced in their communication.

3. Building relationships A CEO must have the ability to build relationships with clients and
co - workers to be successful. Relationships create loyalty and an image for the CEO and the
company. Positive relationships also create great word-of-mouth.

4. Realistic optimism It's important for a CEO to be confident, but not arrogant about their
skills and what they offer their employees. They should remain aware of and confront
challenges while still striving to reach audacious goals.

5. Understanding A CEO must be understanding of matters in and out of the workplace.

Employees are people with lives outside of work, and if there's an emergency, a CEO should
be understanding and let the employee handle it. A CEO must also understand things happen
out of anyone's control. In sales, sometimes a customer can suddenly change their mind. A
CEO must understand and accept the situation and handle things accordingly.

6. Listening skills The Top executives are distinguished by the consistency with which they
listen to, and actively seek out the ideas and opinions of others. They incorporate other views
into their plans to solve organizational problems. A good CEO must have the ability to listen
attentively.

7. Willingness to take calculated risks Great, and sometimes unforeseen opportunities often
come from taking risks. Taking calculated risks shows confidence and helps you grow as a
business leader. Often times, risky decisions may take you on a new, important path.
8. Reading people and adapting to necessary management styles One of the greatest traits a
CEO can have is the ability to read people and adapt management styles accordingly. Not
everyone has the same learning style and if you want your company and your employees to
succeed, it's important to be able to adapt to the needs of your employees.

9. Coaching employees effectively As the head of a company, you are creating a healthy and
collaborative work environment. You are not only preparing the next generation of your
company but the next generation in your line of work. It's your job to give your employees
the tools they need to be successful. You must be able to teach and train in a way that inspires
your staff to succeed.

10. Thinking outside the box While it may seem like an obvious fact, the market changes
with the times. It's important to think outside the box because sometimes there are better
ways to achieve business goals. Sometimes, the same tried and true methods don't always
work. When a CEO thinks outside the box, it makes them and their company stand out to
customers and prospects.

ROLE OF CEO

•Communicating, on behalf of the company, with shareholders, government entities, and the
public.

• Leading the development of the company’s short- and long-term strategy.

• Creating and implementing the company or organization’s vision and mission.

• Evaluating the work of other executive leaders within the company, including directors,
vice presidents, and presidents.

• Maintaining awareness of the competitive market landscape, expansion opportunities,

industry developments, etc

Business culture

It refers to the set of behavioral and procedural norms that can be observed within a
company — which includes its policies, procedures, ethics, values, employee behaviors and
attitudes, goals and code of conduct.
What is business culture and why is it important?

It's how a company cultivates business growth by offering each employee a voice, while
encouraging healthy day-to-day attitudes, behaviours and work ethics. Some say
company culture refers to the mission statement of a business, along with the values and
beliefs upheld by its founders.

An ethical business culture can be defined by several key components, which places
reliable companies above those that will do anything for a buck.

Adhering to Commitments

The most important aspect of an ethical business culture is the same as it is for individuals:
Keep your promises and honor your commitments. As stated by Charles D. Kerns in the
"Graziadio Business Review," a business culture that means what it says will refrain from
lying or deceiving others. Products will not be marketed in a duplicitous way, partners will
not be misled or deceived about the deals they are making, and employees will not be
induced to work for bonuses that never materialize. In cases where a commitment cannot be
met, the wronged party needs to be told exactly why and receive assurances of reparation in
some manner in the future.

Code of Conduct

An ethical business structure will create a viable code of conduct: stating how employees
will behave at work, the standards the product will adhere to, and the overall ethical
underpinnings of the company as a whole. According to Kerns, it should include
enforceable punishments for those who break the code of conduct. It should also be adopted
proactively -- anticipating ethical dilemmas rather than reacting after an ethical lapse has
been revealed. The code of conduct needs to apply to everyone associated with the
company. Leaders and senior officers need to lead by example and adhere to the code of
conduct in every way; that makes it easier to expect all employees to engage in the same
behavior.

Transparency and Communication

Ethical businesses have nothing to hide, and while it may be prudent to keep marketing
strategies or similar plans hidden, a culture of secrecy often leads to abuse. Good
businesses communicate important information to their employees, maintain an open-door
policy towards questions about the company's direction, and permit reports of abuses and
complaints in a manner which does not punish those who speak out. An ethical business
knows the difference between "playing its cards close to its vest" and distorting or
disguising information in an effort to divert suspicion.

Treatment of People

Every business is essentially a collection of people: employees, customers and partners who
exist as more than simply assets to be exploited. An ethical business structure understands
these facts and strives to provide a positive experience to people in its organization. That
means rewarding loyalty with improved wages or other benefits; demonstrating flexibility
when customers require a little give; understanding how business strategies affect those in
the company; and generally understanding how the company's conduct affects the lives of
those around it.

Some people argue that a company's sole purpose is to maximize profits and that focusing
on any other concerns is a violation of fiduciary responsibility. But just because business is
a highly competitive field does not mean that a company has to be amoral. A company can
still make money while adhering to an ethical code of business operations. With social
media forming an increasingly important role in shaping the reputation of a business, any
company that charts its course with a moral compass will enhance its reputation, building a
loyal customer base in tune with its good intentions thereby boosting sales and profits.

Moral Values in Organizations

Before the social upheavals of the 1960s, business ethics and social responsibility weren’t
major considerations in the business world. So, it is a relatively new discipline and one that
flow from the golden rule – “treat others the way you want to be treated yourself.” Just
because there is money involved doesn’t mean that your company should ignore basic
moral principles. We are all consumers, so we know what it’s like to deal with businesses
from the other side.
Basic precepts your company should adhere to include making sure that both parties to a
deal be treated fairly so that they mutually benefit from a transaction, that the truth be told,
and that customers be accorded respect. A moral business can thrive only if it is making a
profit, so an ethical money-making business plan should be laid out and adhered to.

Morality Flows from the Top Down

If a boss cheats and cuts corners, his employees will do the same. A company’s integrity
has to be a precept insisted upon at the very highest levels of management. Ethical precepts
have to be emphasized regularly to the entire company. Morality in business has to start in
how it treats its employees. If workers aren’t managed fairly, there is no reason for them to
treat customers right. A formal mission statement is a great way to put forth ethical
precepts, especially if workers see that those principles are applied to everyone. Benefits
packages and profit sharing are great ways to offer incentives to employees because the fate
of the company becomes their own.

Impact on the Business

Good business ethics can reduce employee turnover, since people are more likely to stay
with an organization they perceive to be acting ethically and doing good in the world,
reports Small Biz Daily. Reducing turnover cuts recruitment costs, and thus saves money
for the business. A moral business also increases the allure of the business to prospective
employees, enhancing the talent of the recruitment pool. A morally run business will see
increases productivity because employees will take pride in their work.

Moral Organizations Examples

There are many ways for a business to be moral and make good, ethical decisions. The
electronics retailer Best Buy, for example, switched its "Geek Squad" customer service
team members over to Toyota Prius hybrid cars, saving over 140,000 gallons of gas, the
website Great Work Life reports. Best Buy was named “America’s most sustainable
company” as a result of its ethical commitment to reducing its environmental impact.

Other companies act morally towards their staff which, in turn, is good for business. For
instance, the car manufacturer Volkswagen has adopted a 'no layoffs' approach for staff,
instead eliminating positions by not seeking replacements for retiring workers. Knowing
their jobs are safe increases employee morale and improves their loyalty to the business and
shareholders. When you practice responsible business, you and your company take
responsibility for the consequences of your marketing strategies. Good citizenship, suggests
the AMA, includes protecting the environment in marketing campaigns. Recycle your
marketing materials, for example.

Most businesses are started for two reasons: to meet a need that's not being met, and to
make money. When a business can do both, it's a wonderful thing. However, if a business
wants a more robust bottom line, sometimes it looks for ways to cut corners. If those cuts
don't affect the quality of the goods and services, that's great.

But when the product starts to suffer and people are put at risk, this is where problems can
arise. This approach can also cause problems internally. If a company expects its employees
to perform their jobs in a way that might cause a conflict legally or morally, a business'
ethical reputation could be in jeopardy.

Business Ethics Defined 

Business ethics are the rules and principles that determine what is morally right and wrong
in a business atmosphere. It's the unspoken agreement that a business will conduct itself
fairly and within the established rules. Many businesses operate within the proper ethical
guidelines, without the need for an outside agency to step in.

However, there are also many instances in which the government has entered into the
situation and has forced a company to adhere to more ethical standards. Most of the
government regulatory agencies that exist do so, because a company or an entire industry
has ranked profits over their workers or the environment.

Legal But Not Ethical

There are business practices that are legal but aren't necessarily ethical. Charging $500 for a
pill that cost 50 cents is legal, but ethically, it could be questioned, especially if the price
point creates a challenge for those who need the medication. Providing miners with
required equipment is legally compliant, but if say, the oxygen masks are shoddily made or
ventilation equipment is not as up-to-date or maintained as it could be, ethically that could
be a problem. Governmental agencies such as the Food and Drug Administration and The
Occupational Safety and Health Administration keep businesses within legal and ethical
standards.

Why Business Ethics Are Important

People do business with other people and businesses they trust. A business that is known
for dealings that are fair and ethical fare better over the long haul than those who operate
using less ethical practices. Although a business might be able to get away with fooling its
customers for a time, eventually the underhanded operations are revealed and the company
is as best vilified, at worst driven out of business.

Unethical practices can involve how a business treats its customers, but can also carry over
into how the company treats its employees. For example, a business that underpays its
customers while showing record profits can find themselves on the wrong side of public
opinion. This can have a negative impact on a business; bottom line. Ironically, increasing
profits is often the reason that unethical practices were started in the first place.
UNIT II

Ethical Issues in Business

An ethical issue is a circumstance in which a moral conflict arises in the workplace; thus, it
is a situation in which a moral standard is being challenged.

Ethical issues in the workplace occur when a moral dilemma emerges and must be resolved
within a corporation. Many areas of a company's general operating standards can be affected
by ethical issues. Although each ethical dilemma is unique, there are a few commonalities. In
every ethical dilemma, right and incorrect choices exist. When faced with an ethical issue,
one must choose between doing the right thing and doing the wrong thing. There may be no
right or incorrect answer when faced with a common challenge or issue. A person may suffer
harm as a result of a wrong decision in an ethical quandary. Even if the harm is limited to
physical discomfort, it might also include emotional distress. Ethical dilemmas also
frequently deal with legal issues. Ethical behavior is an important component of obeying the
law.

A high ethical standard might lead to increased costs for a corporation. This is because
ethically sourced products tend to be more expensive. As a result, the corporation may fear a
loss in market share and profit margins due to the policy. Individuals and businesses can both
suffer from unethical conduct. Moreover, behavior that harms an organization's reputation,
morale, or production can lead to significant fines and financial losses.

Business ethics raise the bar for acceptable conduct above and beyond what the government
may mandate. Companies use business ethics to maintain the trust of key stakeholders and
the integrity of their employees. This leads to better decision-making and higher morale in
the workplace.

Ethical Issues in the Workplace

As part of developing a workplace code of ethics, the company must first identify potential
ethical issues that should be addressed, such as developing a sense of professionalism. One
should make an effort to be friendly and upbeat, ensure not to spread rumors, and be
considerate of others. Moreover, it is advisable to maintain a reputation of honesty, fairness,
and consistency. This is the best way to build trust with others. Another way to manifest
ethical issues in the workplace is through a person's level of dedication. A company can boost
its total productivity by ensuring that employees are punctual and motivated.

Most ethical businesses aim to develop their employees' moral courage, beliefs, and efficacy.
There are a number of workplace elements that must be present in order to maximize
productivity. Unfortunately, workplaces still have ethical problems. A company may also
face legal repercussions if it does not take these threats seriously. It is critical that a company
identifies and addresses these issues early and effectively.

Examples of Ethical Issues in the Workplace

There is a multitude of examples of ethical issues in the workplace. Obeying the company's
Codes of Conduct is an example of appropriate workplace behavior. As part of their
employment contract, employees may be asked to sign a variety of documents, including the
company's rules and regulations. Employees could also receive a manual for reference
purposes. The most common rules include inappropriate clothes, disrespectful language, and
being on time.

Employees who are excited to begin a new position may fail to study company policies and
procedures, which could cause issues in the future. Effective communication is an ethical
issue to minimize misunderstandings when dealing with workplace concerns. In addition,
good professional relationships assist in building teamwork among employees and aid in the
growth of each employee's personal and professional career. Developing professional
relationships with coworkers and colleagues outside of the workplace can also have a positive
impact on productivity.

Types of Ethical Issues

There are five main types of ethical issues in the workplace:

 Unethical accounting — In order to make themselves appear more profitable than

they are, publicly-traded corporations may engage in unethical accounting practices.
 Harassment — It creates a hostile work environment and leads to early departures for
employees.
  Health and safety — Work-related stress can result from a lack of consideration for
workers' safety and physical injuries.

 Technology, privacy, and social media — Using social media in an improper manner
can have serious consequences for privacy and security, both online and offline.
Outside of the job, it is easy to abuse power. Managers have the ability to enrich
themselves by manipulating reports, taking credit for others' work, wasting money,
and accepting gifts from vendors and clients.

 Discrimination — Discrimination is defined as any activity that results in the

treatment of a worker in a less favorable manner.

Accounting

The temptation to manipulate statistics, sins of omission, information access, and the
confidentiality of personal information are only some of the ethical dilemmas that
accountants have to deal with. Clients and employers should know that they can rely on
accountants with financial information. If an individual wants to work as an accountant, that
person will need to be trustworthy and dependable. This portrays accountants as trustworthy
and reliable. For example, a company may purposefully overstate its assets while concealing
its debt or other liabilities to obtain financing or sell a business.

Harassment

Harassment can take many forms, including unwelcome behavior and policies based on an
employee's race, national origin, gender identity, or sex such as pregnancy and motherhood,
age, physical or mental handicap, or genetic information. Abhorrent humor and insulting or
degrading remarks, name-calling, insulting or degrading words, offensive imagery or items,
bullying, physical assault, threats, and intimidation are some of the characteristics of
harassment. Examples of harassment in the workplace include the reality of tolerating an
offensive behavior making it a requirement for work or the behavior is severe or widespread
enough to warrant termination.
Health and Safety

Health and safety ethics state that all employers are morally obligated to provide their
employees with a safe and healthy workplace. The government punishes those who disregard
safety standards, but workers are only afforded a limited right to decline hazardous work. The
most significant health and ethical safety issues are confidentiality of medical records,
discrimination against minorities and women, and "blaming the victim" versus decreasing
exposures.

Technology, Privacy, and Social Media

The responsiveness and manipulation of data are the major ethical implications of
technology, not its impact on data collection, storage, retrieval, and transmission. It opens the
door to more people having access to more information simultaneously. An increase in the
use of technology has led to an increase in ethical boundaries that appear to violate
employees' privacy and communication rights.

People's freedoms, privacy, and well-being can all be threatened by technology. Technology
can also be morally problematic as it provokes contemplation on personal beliefs and societal
standards. Discrimination, unsafe working conditions, poor working circumstances, and the
disclosure of proprietary information are all examples of ethical lapses. Situations like
bribery, forgery, and theft, while morally wrong, are generally dealt with outside of the
corporation since they cross over into criminal behavior. A person breaks the law when
violating confidentiality by sharing identifiable information about their clients or research
subjects on social media. Another example of a social media violation is when one
misrepresents their expertise or the products one sells.

In this lesson, we will discuss favoritism and ethical and fair wages from the perspective of
business ethics in the workplace. Favoritism can play an unfair role in the promotion process.

Sandra was furious. She was not offered the position at her company that she knew she was
qualified for. Her experience and skills were higher than the job requirements! She was
passed over for her co-worker who everyone knew was her supervisor's favorite, but had
fewer qualifications!

Favoritism

Favoritism at the job means that a supervisor consistently gives someone the best projects or
promotions or opportunities for growth, not based on the employees' job performance, or
qualifications, but because of relationships that are outside the scope of the job.

Sandra was looking forward to the promotion and everyone knew she was a hard worker.
Sandra was very unhappy and she immediately left the job to work for a different company.
This was not the first time something like this has happened; Matt was hired as a new
employee but is now frustrated because his salary is lower than his team members.

Business Ethics should promote Fairness and Quality for Success

Negative impacts of Favoritism

After Sandra left unhappy, the company reviewed its business ethics policies. The HR
manager met with Sandra's supervisors to discuss the negative affects favoritism can have on
the morale of employees and on the health of the company. They discussed some of the
negative effects.

 Employee Morale is Lower

One of the immediately noticeable effects of favoritism is that employee morale is lower.
Employees perceive a sense of unfairness and they begin to believe that all their efforts will
go unnoticed since only a few favored people will benefit.

 Employees Desert the Company

When an employee leaves because of explicit favoritism, others see what happened and start
leaving the work environment that they now perceive as hostile. This is what happened in
Sandra's case - following Sandra, four other employees left because they thought favoritism
would affect their chances for promotion.

 Employees Resent the Company

Sandra was filled with resentment when she realized that the job that was rightfully hers was
given to someone less qualified. This made her leave on short notice without consideration of
the projects she was working on. If the employee does not leave, they may still show
resentment by tainting the reputation of the company and discouraging new hires.

 Employees' Potential is Wasted

From the company's point of view, the potential of their employees is overlooked and being
wasted. If those under-qualified are consistently favored, the company does not benefit from
the skills and talents of those who truly deserve the position.

 The Company Suffers Stunted Growth

Favoritism is also responsible for stunted growth. The employees' morale and wasted
potential would impact the company's productivity and profit margin and overall health of the
company.

Types of Favoritism

The HR management team conducted training sessions about the kinds of favoritism that
could purposefully or even inadvertently be fostered in the workplace.

 Illegal Discrimination
When favoritism is shown, and job decisions are made, based solely on age, sex, race or
disabilities, this could be illegal discrimination. For instance, laying off someone because
they are over a certain age, and hiring a younger person in their place would be
discrimination. Consistently promoting people with certain religious beliefs or based on
gender would also be illegal discrimination.

 Sexual Favors

If employees are provided additional assignments, job benefits, promotions and salary raise
as a result of sexual favors given, or received, that would be sexual harassment according to
the Equal Employment Opportunity Commission (EEOC).

 Retaliation

If an employee is punished by being demoted, reduced work hours, or denied fair wages,
because of complaining about discrimination and harassment, that would be considered
retaliation and is illegal.

 Other Types of Favoritism

Other types of favoritism are:

Nepotism (favoring family members),

Cronyism (favoring friends regardless of qualifications),

Patronage (promoting favorites and hiring their family and friends).

Business Ethics in Environment, Wages, and Promotion

The HR managers advised the executives about what they could do to take proactive
measures to discourage favoritism in the workplace, and to develop policies that would
follow business ethics principles for the work environment, wages and promotion.

Work Environment

 Professional Work Environment

Ethics can be described as an acceptable code of conduct or behaviour someone exhibits or is
expected to display in a society. That behaviour is dictated by various scenarios or situations
that are different in nature. For example in a company there are various ethical issues that
dictate how the company runs. These ethical issues can be internal or external in nature.
Internal ethical issues mainly involve the shareholders of a company, employees and the
management. External issues focus more on the relationship of the company with the outside
environment. It can be the company and its suppliers, community it operates in and government
agencies.
For example, suppliers are very critical players in the day to day operations of a company.
The reputation of my company is at stake and a solution is needed to safeguard the future
growth of the company. This therefore becomes an ethical issue and a good framework of
ethical decision making is needed to solve the stalemate. One of the actions I may take is going
back to the drawing board. Going to the drawing board means dissolving the current suppliers
and choosing the suppliers that my company will work with. This action will be motivated by
the fairness and utilitarian and virtue approach to ethics in selecting new partner. The suppliers
who go an extra mile to contribute to the welfare and profitability to the company will be
considered for partnership. Going back to the drawing board will be critical to establishing
which suppliers are consistent in supplying and supply quality goods and services to the
company on time.
Another action I would take is having a well set quality requirements for the suppliers. In this
decision, I will involve the suppliers in collectively coming up with a formula of the quality
needed by my company. This is because making the suppliers to be part of the quality decision
making process will make it possible for the company to get quality supplies. In this case the
utilitarian approach will be applicable since its will entail which action points will yield
maximum benefits at the lowest.
In this case, I will perform an audit of the payment process to establish if the delays are being
deliberately caused by the accounting employees’. I will also seek to establish whether the
payment system is up-to-date and meets the required international standards.

Top 5 Unethical Business Practices against Employees

Unethical Business Practices against Employees

Not only the society, but also even the employees are badly exploited by the capitalist. The
popular modes of exploitation found in our country are as follows:
Low Salaries: Except a very few organizations, the salaries being paid to the employees tend
to be very low. If this is the condition prevailing in corporate sector, it is needless to mention
the pitiable state of affairs in other small private organizations. Labour being in abundance in
our country, workers tend to accept low wages.
2. Poor Working Conditions: There is hardly any attention paid to the work environment.
The working conditions in most of the factories tend to be unhygienic inadequate ventilation,
poor lighting, and lack of welfare facilities. Besides, safety of workers is not also cared for.
In our Factories Act, there are certain provisions prescribing the standard norms and the
working conditions to be provided in each factory. But these regulations are not strictly
followed since the administrative machinery itself is very weak and highly corrupt.

3. Exploitation: Exploitation of the workers cannot be tolerated in any decent society.

Bonded labour is not still uncommon; the workers are not being allowed to move from their
work place. Moreover, they are hardly given merely two square meals and are forced to work
for the whole day.
Cases have been reported not only in remote areas of India but also from capitals, and
neighboring cities, in the U.P., Andhra Pradesh, Haryana and Rajasthan. Even though the
Government has taken steps to eradicate this social evil, it still remains.

4. Signing for more wages than actually paid: Besides, employees – even educated ones –
are made to sign receipts for salaries more than what actually paid to them. Teachers and
college lecturers are no exception to this.
5. No Job Security: Earlier, both Central and State Governments’ employees were appointed
on permanent basis. They were also remunerated fairly. However, at present, the trend is
changing. Mostly, persons are taken for job in Government departments only on contract
basis that too for consolidated pay. In such cases, employees have no job security and no
retirement benefit. If this is the status of Government employees, we need not mention the
position of employees in private organizations.

Unit III

Environment is very essential for the survival of humans or any species. We humans depend
so much on the environment in our day to day life. Trees provide us with fresh oxygen for
breathing and fruits, pulses and cereals for sustaining life. The rivers provide us with water
which is an essential part of our existence.

The role of the environment is crucial in the survival of society and the businesses. Therefore,
it is extremely necessary on the part of businesses to conserve and protect the environment to
prevent global emergencies.

A business organisation or the businesses around the globe can take the following steps in
order to reduce environmental pollution and thereby protect the environment:

1. Companies involved in the production of various utilities or products can go for eco-
friendly, low waste and clean technology for equipment used in such industries.

2. Industrial wastes should be recycled every time so that it minimises the chances of
pollution.

3. The machinery should be upgraded so that it complies with the pollution norms, which will
be beneficial in reducing the levels of pollution.

4. Conduct quarterly/yearly audits for checking the effectiveness of the pollution control
programs and making changes so as to bring about more success in pollution control
programmes.

5. The companies and industries should comply with the rules laid down by the government
with respect to prevention of environmental pollution.

6. The businesses should take steps to save the environment by setting up campaigns of
planting trees, cleaning of rivers.

How to protect Environment?

We can all work together to discover solutions to the massive problems in reducing pollution
of all kinds. It can be done
What is Pollution Prevention?
Pollution prevention is any practice that reduces, eliminates, or prevents pollution at its
source. P2, also known as “source reduction,” is the ounce-of-prevention approach to waste
 management. Reducing the amount of pollution produced means less waste to control, treat,
or dispose of. Less pollution means less hazards posed to public health and the environment.
Specific pollution prevention approaches
Pollution prevention approaches can be applied to all potential and actual pollution-
generating activities, including those found in the energy, agriculture, federal, consumer and
industrial sectors. Prevention practices are essential for preserving wetlands, groundwater
sources and other critical ecosystems – areas in which we especially want to stop pollution
before it begins.
In the energy sector, pollution prevention can reduce environmental damages from extraction,
processing, transport and combustion of fuels. Pollution prevention approaches include:
 increasing efficiency in energy use;
 use of environmentally benign fuel sources.
In the agricultural sector, pollution prevention approaches include:
 Reducing the use of water and chemical inputs;
 Adoption of less environmentally harmful pesticides or cultivation of crop strains
with natural resistance to pests; and
 Protection of sensitive areas.
In the industrial sector, examples of reducing pollution practices include:
 Modifying a production process to produce less waste
 Using non-toxic or less toxic chemicals as cleaners, degreasers and other maintenance
chemicals
 Implementing water and energy conservation practices
 Reusing materials such as drums and pallets rather than disposing of them as waste
In homes and schools examples of reducing pollution practices include:
 Using reusable water bottles instead of throw-aways
 Automatically turning off lights when not in use
 Repairing leaky faucets and hoses
 Switching to “green” cleaners
Why is pollution prevention important?
Pollution prevention reduces both financial costs (waste management and cleanup) and
environmental costs (health problems and environmental damage). Pollution prevention
protects the environment by conserving and protecting natural resources while strengthening
economic growth through more efficient production in industry and less need for households,
businesses and communities to handle waste.
 Corporate Environmental Responsibility (CER) refers to a company's duties to
abstain from damaging natural environments. The term derives from corporate social
responsibility (CSR)

These cover the environmental implications of a company's operations:

 Eliminate waste and emissions

 Maximize the efficient use of resources and productivity

 Minimize activities that might impair the enjoyment of resources by future

generations

Benefits of Corporate Environmental Responsibility[edit]

Corporate social responsibility can prove to be more profitable for companies and to extend it
survivability in markets because greater awareness on this topic, in both social and business
markets, has been in higher demand. Customers have responded with overall satisfaction and
loyalty when companies have a better CSR, especially in countries like Spain and Brazil.
Culture has an impact on the CSR ratings and studies, as well as human values across
different nations.[9]

This topic can also be found under sustainable development. This area is concerned with not
only protecting the environment but maintaining economical growth. There were several
agreements internationally to help adopt new business practices that held these standards, but
they were considered individual and there was no law-abiding body to regulate nor
implement them.[8]

One of the other factors that is considered an integral part of sustainable development are
human beings, and specific groups and their habitat. Counties and companies that more
developed would lead, and other small countries and business would slowly make gains. It is
important to recognize that just because corporate environmental responsibility is being
recognized that consumption is something that is not discouraged.[10]

The idea of corporate environmental responsibility (CER) is for humans to be more aware of
the environmental impact and counteract their pollution/carbon footprint on the natural
resources.[9] One of the main factors is to reduce carbon footprint and carbon emissions.
[10]
 Many of the studies focus on trying to find a balance between economic growth and
reducing waste and cleaner environments.[10]
Furthermore, many firms are discovering that there is an advantage to advocating for
environmental regulations and preparing for them to be implemented before they become
law. In a recent study, the researcher found that firms support climate change legislation as a
means of gaining power over their competitors. Essentially, even if a new regulation hurts a
firm in the short term, the firm may embrace it because they know that it will hurt their
competitors even more. This allows them to come out on top in the long run.[11]

Summary

The environmental aspects of security have increasingly become a major issue being
considered by states. The process of securitization has had a big impact in creating a new
understanding of security. Globalization also plays a key role in the adoption of new
environmental strategies as a multi-faceted process influencing modern societies, and
creating interconnected and multidimensional environments.

CER is used by multinational corporations as well as small, local organizations. It is

highlighted and more institutionalized because of stakeholders' awareness of the huge
impacts of business activities on the environment. To understand CER, its relations with CSR
strategies need to be recognized. CER and CSR are the main strategies that help in the
creation of efficient and environmentally sustainable businesses.

What is stakeholder value?

Stakeholder value is a business concept that companies use to create the best possible levels
of return for their stakeholders. Businesses may use the three dimensions of value to figure
the levels of return. They include:

 Emotional: Returns that offer security or good feelings to promote trust within an

organization
 Financial: Returns related to money

 Functional: Returns that offer flexibility and choice to increase productivity

Some stakeholder values may put an emphasis on net profits or cash flows, while others can
improve employee benefit plans, decrease resource usage or tackle social responsibility
issues.
What are the characteristics of a stakeholder value mindset?

Companies that have a stakeholder value mindset, and the people who run them, may share
certain characteristics in their thinking and business practices, which can include:

 Adhering to a company morals or values system

 Considering the societal and global effects a company can have on other entities

 Promoting a free flow of ideas from all levels to increase innovation

 Recognizing and rewarding those who add value to the organization

 Considering and discussing multiple options or approaches before making decisions

 Thinking of ways to make the organization competitive and sustainable

 Using performance evaluations to solve strategic issues

 Viewing the operations of the company from multiple perspectives.

Why is stakeholder value important?

Stakeholder value is an important factor to consider when creating a corporate strategy.

Building a large, supportive group of stakeholders may be an asset to a company that can lead
to competitive advantages, favorable legislation or a positive brand image. The more an
organization cares about its stakeholders, the more likely they'll do the same in return.

How is stakeholder value different from shareholder value?

Stakeholder value and shareholder value differ based on the group in which a company or
organization focuses its attention. Shareholder value puts that focus on those who fund the
business financially. Shareholders may include taxpayers, investors or the government. A
shareholder value mindset may promote the idea that money is the most valuable asset to a
business and that it is most important to appease those who benefit the company in that way.

In contrast, shareholder value puts the focus on all people or groups that interact with an
organization, regardless of their financial status. Companies that engage in stakeholder value
may put emphasis on benefits beyond financial profit such as loyalty and innovation.
How to determine stakeholder value

Use these steps to learn how to determine the stakeholder value at an organization:

1. Identify the stakeholder groups

Stakeholders can include a variety of groups or individuals who have time, money or
resources invested in a business. They may include financial benefactors, employees,
customers, suppliers and government officials. Identify your stakeholders and get specific
about the groups you're targeting. Find out if you have niche groups within larger groups.
Learn what makes them unique and how pleasing these individual groups could be an asset to
the company.

2. Rank each group

Though a long-term goal may be to provide perks for all stakeholders, consider which groups
you'll focus your attention on first. There isn't a right way to choose which groups go higher
on the list, and the rankings may be different for each company. Some may prioritize those
who have met with management to discuss change. Others may rank customers or those with
financial interests in the top spot. Consult your company mission statement, values and
business model to help rank your stakeholder groups.

3. Create a value proposition for each group

Decide what dimension of value would best benefit each specific stakeholder subgroup.
Some stakeholders may have a more vested interest in one dimension than another. For
example, lending organizations may be most interested in the financial dimension of value.
However, other groups may be interested in a little of each dimension.

For example, employees may be interested in the financial dimension because they want the
company to be profitable so they can keep their jobs, but they may also care about the
functional and emotional dimensions for personal reasons.

To determine a group's value position, you may choose to use polls and feedback or conduct
regular interviews and meetings with shareholders to discover and understand what is
important to them and what benefits they're hoping to get from the organization.
4. Determine the company's return from the stakeholder groups

Though stakeholder value prioritizes the needs of the affected groups, in balance, it also gains
returns for the business in the financial, functional and emotional dimensions. Determine
what gains each group can give to the organization. Some examples may include higher
productivity from employees, lower shipping rates from suppliers, higher profits or a good
brand image.

5. Compare current practices to your strategy

Look at the current practices within your company and determine if they align with the value
propositions for each stakeholder group. Also, check to see if the organization is receiving the
expected company return from each group. In areas with gaps, consider meeting with
stakeholders to discuss possible changes or strategies to create a more symbiotic relationship.

6. Determine the key performance indicators

To track the progress and benefits of stakeholder value initiatives, choose a set of key
performance indicators for each group. These may include productivity rates, number of sales
or profit margin. For the financial and functional dimensions, consider choosing indicators
you can track and measure with numerical data. For stakeholder value in the emotional
dimension, consider creating feedback forms or surveys to track stakeholder feelings or
satisfaction with a controlled set of variables.

Stakeholder value examples

These examples of shareholder value show fictional situations in which specific shareholder
groups and companies benefit from joint endeavors:

Discounts and sales

The Shoe Emporium decides they want to achieve more sales in the third quarter to make
room for new stock. According to customer surveys, discount initiatives may encourage more
purchases. The Shoe Emporium offers a one-weekend 40% off sale on all items for all
customers and an additional monthly mystery discount coupon for all customers who sign up
for their e-newsletter.
The Shoe Emporium tracks the number of customers who visit the store during the sale
weekend, the number of mystery discount coupons used throughout the quarter and the total
number of sales at the end of the quarter. Sales rose by 4% for the quarter from the same time
the previous year.

Employee benefits
The Brilliant Marketing corporation noticed a dip in employee productivity during the winter
months for the last three years. After meeting with multiple teams, management found that
employees had to take more sick and personal time in the winter because of illness and poor
travel conditions to work.
This year, from December to March, Brilliant Marketing institutes a work-from-home policy
that allows employees to work remotely up to three days per week. They also offer a $50
incentive to individuals whose teams exceed their production goals. At the end of March,
productivity among all teams increased 25% from the last three years.

Purchasing in bulk
DeLuca's Italian Eatery uses a small local supplier for their fruits and vegetables. They make
weekly purchases to meet their customer demand. The produce arrives on time, but it can
take up to a month for the supplier to process the purchase order. This creates confusion in
DeLuca's accounting ledger.
After talking with the supplier, the owner discovers they haven't had enough staff to both
make timely deliveries and process weekly payments. DeLuca's owner and the supplier work
out a deal to purchase produce in bulk at the beginning of the month and keep the same
delivery schedule. After three months, deliveries continue to arrive on time and the supplier
processes purchase orders within 10 days of payment.

Securing grant funding

Parkville Community Library wants to upgrade their computer systems to provide faster
internet and more devices for patrons. Despite targeted fundraising efforts, they could not
start the project. Parkville's new council president has been looking for ways to boost her
approval ratings with residents. She receives an email from a global technology company
asking for proposals for joint government-community-sponsored tech initiatives. She contacts
the library to work on a joint proposal.
Parkville received the grant, which funded the purchase of an entire system upgrade, all new
desktop computers, five new laptops and three tablets. Under the grant, the library offers bi-
monthly technology classes for patrons of all ages. The council president's approval rating
rose 10% following the grant award.

“Ethos” is a Greek Word which means “Character”.Ethos is a set of beliefs, ideas, etc.,
about social behaviour and relationship of a person or group. Indian Ethos is all about
what can be termed as “national ethos”. Indian ethos refers to the principles of self-
management and governance of society, entity or a system by wisdom as revealed and
brought-forth by greatholyscriptures (வேதங்கள்) like Veda, Upanishads,
Gita,Mahabharata, Bible and Quran. This wisdom evolved through the old practices of
Indian mystics, philosophers and religious ‘gurus’, and is now found to have profound
implications for self-management and good governance of a stormy society and business
environment, or even a politicallydivided world. According to Oxford Advanced Learner’s
Dictionary, “Ethos are the moral ideas and attitudes that belong to a particular group or
society”.

FEATURES

1. Divinity(தெய்வீகம்) of Human Being: Indian ethos focuses on the existence of human

being as truth. There is nothing more perfect than the supreme soul.

2. Balance or Equilibrium: Balance or equilibrium is a stable state of Indian thought, i.e.,

balance between desire and desirelessness, spiritual and secular values, subjective and
materialistic world.

3. Balance of Personal and Work Life: Indian ethos focuses on the concept that if you are
good then the world is also good for you. So, every individual should have an effective
management and balance of personal and work life in the organisation.
 4.Cosmic (characteristic of the cosmos or universe) or Pure Consciousness: The divine
element, which is an inner part of an individual, is a part of cosmic or pure consciousness. It
gives a base for mutual trust, cooperative, teamwork and common good.

5. Importance to Character: The Indian ethos gives much importance to character not to the
knowledge. It is the character, which is the real power and wealth.

6. Whole-Man Approach: Indian ethos is based on Indian scripture like-Shruties of Gita and
Upanishad and Smruties of Puranas. Indian thought provides the whole-man approach
through knowledge of creation, cosmos and internal relation between spiritual and
materialistic life.

7. Work in Worship: Indian ethos works with the fact that all work is worthy and
honourable. ‘Work is worship’ is the guiding principle for all effort as advocated in the
Indian ethos.

8. Duty and Responsibility: Indian ethos rarely talks of rights and prevails ages. It always
emphasises only on the duties and responsibilities of human beings.

9. Knowledge: Indian ethos deals with two types of knowledge:

1.Knowledge of creation

the act of causing something new to happen or exist.

Knowledge Creation describes the construction of new knowledge in a collaborative

process. It is based on the knowledge of individuals which is then combined in a synergetic
way. Individuals contribute their knowledge and build on and combine the contributions of
others.

2. Knowledge of creator

a person who makes or produces something new.

10. Excellence at Work: According to Indian ethos, total quality management can be assured
through excellence at work, through self-motivation and self-development.

NEED AND RELEVANCE OF INDIAN ETHOS

1. Maintain Holistic(complete) Universe: Modern science has accepted that in this holistic
universe, all minds and matters are interconnected at a deeper level. The basic unity of life
cannot be broken. Love, sacrifice therefore emerges as the only means for a meaningful
living. On the basis of this holistic vision, Indians have developed work ethos of life. This
helps in living life to the fullest.

2. Elucidate Motivation: Concept of motivation can be explained holistically by Indian

ethos. Considering motivations as internal, every human being has the same divine atman
with immense potentialities within. Vedanta brings infinite expansions of the mind, breaks
down all the barriers and brings out the God in man. Motivation is to be internal and not
external. Such motivation involves the inner beauty and does not promote any greed in an
individual to have more and more in return for his work.

3. Welfare: Indian ethos teaches welfare of all (yagna spirit). “Atmano Mokharth Jagat
Hitay Cha” (serve your personal interest but do not forget others). This philosophy is needed
in modern times.

4. Unique Work Culture: Indian ethos helps in development of unique work culture. Work
is considered as duty or Sadhana and there is no difference between Karma(work)
andDharma(religion). The term Dharma does not indicate any particular religion. Dharma is
a duty to be performed in a given situation. Thus, Dharma is possible through Karma only.

5. Evenness of Mind: Indian ethos helps in evenness of mind. Means are equally important
as the ends. Thus, society acceptable values are to be followed in determining the objectives
as well as in the process of achieving these objectives.

6. Self-development: Integrated human personality of self-developed manager can assure

best and competent management of any enterprise, involving collective works and efforts.
The refined or higher consciousness will adopt holistic attitude. It will bring out the divine in
man. It will achieve perfection or excellence in whatsoever sector of work. One shall achieve
peace, harmony and prosperity within and without, i.e., in the internal world and in the
external world simultaneously.

7. Provides Concentration: Vedanta provides the ways and means of controlling the mind.
It helps to concentrate, increase efficiency, productivity and prosperity. It is not religion
of resignation and retirement. One cannot renounce their action. As the Gita says “You have
to be a man of action, do not run away from your action or Karma but the same should be
according to your Dharma”. The second aspect, is while doing the Karma; do not be tempted
by worldly pleasures, materialism and the results. One has to be man of action, working in a
spirit of renunciation. Renunciation does not mean living a life of isolation or living in a
forest. One has to face the world and should not run away from your action. Do not get
attached to anything.

8. Establishes Value System: Many of the present ills are the results of decline in our
valuesystem and loss of character. Forces of fierce competition in the technology driven era
of globalisation have taken a heavy toll of traditional values. People need to re-imbibe the
sanatan values of honesty, integrity, compassion, care and cooperation. There is again a
need to establish conduct, based on truth and non-violence, peace, and harmony. One needs
to promote a secular ethos that entails ‘sarva-dharm-sambhav’. That alone will promote
enshrined in our ancient maxim of ‘Vasudhaiv Kutumbakam’. That will be India’s unique
contribution towards enrichment of content of globalisation which today has its focus only on
trade and commerce.

PRINCIPLES PRACTICED BY INDIAN COMPANIES

Following are the few basic principles of Indian ethos management:

1. Immense potential, energy and talents for perfection, as a human being has the spirit
within his heart.

2. Holistic approach indicating unity between the Divine (the Divine means perfection in
knowledge, wisdom and power), individual self and the universe.

3. Subtle, intangible subject and gross tangible objects are equally important. One must
develop one’s third eye, Jnana Chakshu, the eye of wisdom, visions, insight and foresight.

4. Inner resources are much more powerful than outer resources. Divine virtues are inner
resources. Capital, materials and plant and machinery are outer resources.

5. Karma yoga (selfless work) offers double benefits, private benefit in the form of self-
purification and public benefit.

6. Yogah karmasu kaushalam, which means excellence at work through self-motivation and
self-development with devotion and without attachment.
7. Cooperation is a powerful instrument for team work and success in any enterprise
involving collective work.

REQUISITES FOR INDIAN ETHOS

1. Management Attitude: Top management having firm belief in value-oriented holistic

management. Profit is earned through service and satisfaction of all stakeholders –
employees, customers, shareholders and citizens. Fulfillment of social responsibility must be
ensured.

2. Humanising the Organisation: Looking at the three aspects of humane organisations, i.e.,
inter personal relations,man-machine equation where man is the prime concern and inner
management through mental and spiritual growth of individuals.

3. Interiorising Management:self-management or management by consciousness. When the

soul manages the other four members of the human being, namely, the body, mind,intellect
and the heart, the conflict these four have amongst themselves can be resolved. This is
called management by consciousness. The objective of self-management is to first know and
manage oneself and then manage others.

4. Self-Introspection: Embark upon self-study, self-analysis and self-criticism to locate

areas of friction and disharmony, a self-examination of one’s own feelings, thoughts,
emotions, sensations and passions and a desire to reduce and subdue the ego.

5. Brain-Stilling: For rational and enduring decisions, silent mind is a necessity. A perfect
Mounum(calm mind enjoying tranquillity) is necessary. Brain-stilling or meditative silence
is the most reliable method to discover solutions to problems which seem to be difficult to
tackle by reason and intellect, because through this, one can come into contact with the inner
mind or higher consciousness, called Chetana.

6.Stepping-back (for a While): Never decide anything, never speak a word and never
throw yourself into action without stepping-back. The stepping-back from a situation for a
while enables one to control and master a situation.

7. Self-Dynamizing Meditation: A dynamic meditation helps in transformation of lower

consciousness into higher consciousness and hence is called transforming meditation.
Through meditation, one reaches a higher level of consciousness with a silent and calm mind,
which offers guidance in the form of intuitions to tackle a multitude of problems. This is
called consciousness approach to management.

8. Role of Intuition: Intuition is the act of coming to direct knowledge or certainty

without reasoning or inferring. It is immediate cognition by the inner mind and when fully
developed, is efficient and effective for taking prompt and sound decisions. Intuition skills
enable one to cope with confidence the fluctuating environment and rapid changes. Faith is a
prerequisite to develop and realise the power of intuition

ELEMENTS OF INDIAN ETHOS

Three elements of Indian ethos are as follows:

1. Focus on the permanent: In real life fashions change, concepts change, situations change,
environments change, however, certain things do not change. These are the values of the
good, truth and beautiful. The recent experience in the 90s and the early part of this century
shows, that the world is re-discovering the principle of ‘honesty is the best policy’. After all,
honesty is linked to truth and that is the first principle which perhaps underlines human
existence. In these days, the operational word for integrity is corporate governance. Corporate
governance has two elements. Transparency, which helps to fix accountability, which in turn
highlights that accountability, is for the shareholders and stakeholders. Transparency and
accountability are nothing but exercises in integrity and ensuring that clever financial
engineering or window dressing do not mislead the investing public. If there is a crisis today,
whether in the Indian capital market or the U.S. market, it is the crisis of confidence of the
investors in the business enterprises. It is therefore found that one of the central elements of
Indian ethos, namely, the focus on truth and integrity is also eminently relevant in the
business context.

2. Quest for Perfection: It has been immortalised in the shloka: “Om poornamada
poornamidam poornathpurana mudachyate poornasya poornamadaya poornameva vashistate”
Out of perfection comes perfection. This quest for perfection ultimately, is the quest for
quality. When it comes to quality, the concepts like total quality management, etc., have only
once again underlined this principle of the fact that quality products and services cannot come
out of an organisation unless the principle of quality pervades every function of that
organisation. This all-pervasive quality is also reflected in the shloka of Vallabhacharya, who
found that every aspect of Lord Krishna was beautiful: “Adharam madhuram vadhanam
madhuram Nayanam madhuram hasitam madhuram Hridayam madhuram gamanam
madhuram Madhurathipathe akhilam madhuram” All pervasive sense of sweetness and
elegance is not only the reflection of quality but also of excellence. In any management
today, this ultimate focus on excellence can never be lost. Thus, it is found that this aspect of
Indian ethos is also not only relevant to India but globally.

3. Joy in Performing One’s Function: It was Deming who said that ’quality’ is the pride,
which an artisan takes in his craft. It is the pride which an artist takes in his art. If one is
enjoying what one is doing, automatically, he is bound to do extremely well; and while
excellence becomes a by-product or a spin of the benefit of happiness, it also leads to success.
After all, every excellent organisation has excellent morale. Excellence, in terms of
enjoyment through doing is the third aspect of Indian ethos. It is found that this aspect is not
only restricted to India, but is universally applicable.

ROLE OF INDIAN ETHOS IN MANAGERIAL PRACTICES

1. Creates strong relation: Organizations following Indian ethos consider humanity as

supreme. This provides a strong bond with internal as well as external customers, resulting in
an improved performance.

2. Inward considerations: Indian ethos focuses on ‘if a person is good then the whole world
is good’. Any organization which follows the above ethical thought automatically get
converted into an ethical organization with less conflicts and hindrances.

3. Avoids unethical aspects: As Indian ethos is a principle derived from Upanishads,

Bhagwat Gita and Puranas, where the performance is always ethical

4. Balanced values: Indian ethos promotes a person to live a life of materialism and
spirituality by maintaining a balance between spiritual values and secular values.

5. Improves performance: Indian ethos impacts the performance of business by

emphasising on the concept like sacrificing individual desires in favour of social benefits,
preferring long-term benefits.

6. Improves quality: Self-motivation and self-development helps a lot in development of

business and its quality

7. Helps in problem solving

Renunciation (or renouncing) is the act of rejecting something, especially if it is something
that the renunciant has previously enjoyed or endorsed.

An act or instance of relinquishing, abandoning, repudiating, or sacrificing something, as a

right, title, person, or ambition

In religion, renunciation often indicates an abandonment of pursuit of material comforts, in

the interests of achieving spiritual enlightenment. It is highly practiced in Jainism and
Hinduism. In Hinduism, the renounced order of life is sannyāsa; in Buddhism, the Pali word
for "renunciation" is nekkhamma, conveying more specifically "giving up the world and
leading a holy life" or "freedom from lust, craving and desires". See Sangha, Bhikkhu,
Bhikkhuni, Śramaṇa. In Christianity, some denominations have a tradition of renunciation of
the Devil.

Renunciation of citizenship is the formal process by which a person voluntarily relinquishes

the status of citizen of a specific country. A person can also renounce property, as when a
person submits a disclaimer of interest in property that has been left to them in a will.

What exactly is karma?

The sum of a person's good and bad actions in this and previous states of existence,
viewed as affecting his/her future fate.

The good or bad effect of doing something.

The true definition of karma can vary depending on who you ask. Some people adhere to the
traditional meaning grounded in Eastern religions, while others interpret it from more of a
Western view of good and bad. As a result, this can lead to different views on how karma
applies to life.

For example, the Georgetown University Berkley Center for Religion, Peace, and World
Affairs says karma is the Hindu view of causality in which good thoughts, deeds, and words,
may lead to beneficial effects, while bad thoughts, deeds, and words, may lead to harmful
effects.

However, many experts like to look at karma as more than just “good” or “bad.”
According to Dr. Jennifer Rhodes, a licensed psychologist, karma is simply those situations
or interactions that help us navigate our path toward our higher purpose.

“We are often easily distracted and miss messages which make us believe we have a lot of
‘bad’ karma. But those situations are simply signs for us to course-correct and move forward
toward our higher purpose,” Rhodes explains.

“The journey is not about being perfect, it’s about undoing what is not us and becoming who
we really are,” she adds.

Tejal Patel, a meditation and mindfulness expert, looks at karma as a cycle of cause and
effect that’s about action, not result.

“Karma is a philosophy of how to live our lives so we can truly become the best version of
ourselves and live the most fulfilling life we desire,” she says.

And since the future isn’t set in stone, Patel says we can change the path of our life by the
choices, thoughts, and deeds we choose right now.

Laws of karma?

Everything is energy, including your thoughts and emotions, which are energy in motion. So,
in essence, everything you do creates a corresponding energy that comes back to you in some
form, Patel explains.

“Simply, everything you do creates either a positive or negative consequence,” she says.

Using karma as a set of powerful guidelines for your life can incentivize you to be more
mindful of your thoughts, actions, and deeds before you make decisions.

With that in mind, think of the laws of karma as guidelines to follow as you go through daily
life. The 12 laws of karma can help you understand how karma really works and how to
create good karma in your life.

Let’s look at each of these laws in more detail.

1. The great law or the law of cause and effect

When most people talk about karma, they’re likely referring to the great law of cause and
effect, Patel says.
According to this law, whatever thoughts or energy you put out, you get back — good or bad.
In order to get what you want, you have to embody and be worthy of those things. It’s the
concept of what you reap, you sow.

“For example, if you want love in your life, be loving to yourself,” she says.

2. The law of creation

The law of creation underscores the importance that life doesn’t just happen to us. To make
things happen in your life, you need to take action, instead of waiting for something to
magically come your way.

“You are the co-creator of making what you want, based on your intentions,” Patel says.

She recommends asking yourself what you need to release so you can create space for the
thing you desire to show up.

Also consider how you can use your skills, talents, and strengths to create something that not
only benefits you but others, too.

3. The law of humility

According to Paul Harrison, creator of The Daily Meditation, the law of humility is based on
the principle that you must be humble enough to accept that your current reality is the result
of your past actions.

For example, if you’re blaming your colleagues for your poor performance at work, Harrison
says you must accept that you created this reality by not performing as well as you could
have.

4. The law of growth

Growth starts within us. To positively shape the world, you need to start with yourself. That’s
because real change or personal growth begins with what you have control over, which is
yourself, not others.

The law of growth also looks at the things you can’t control and how you deal with accepting
this fate. Ultimately, your focus should be on you, not trying to control the people or things
around you.
5. The law of responsibility

Alex Tran, a yoga instructor based in Seattle, Washington, says the law of responsibility is
her favorite law to teach in class.

“It’s a reminder that you own what happens to you in life. It’s a great reminder that what
happens to you is because of you. This eliminates the opportunity for you to look outward to
find the cause of your problems,” Tran explains.

She likes to use this to describe the karma law of responsibility: “You are the product of the
choices you make.

6. The law of connection

This law is based on the principle that everything in your life, including your past, present,
and future, are connected.

“Who you are today is the result of your previous actions,” Harrisons says.

And who you will be tomorrow will be the result of your actions today.

7. The law of focus

Focusing on too many things at once can slow you down and lead to frustration and
negativity. That’s why the law of focus encourages you to concentrate on one thing at a time.

“If you focus on higher values like love and peace, then you’re less likely to be distracted by
heavy feelings of resentment, greed, or anger,” Patel says.

8. The law of giving and hospitality

You must give to the things you believe in. This law helps you understand the importance of
your actions, reflecting your deeper beliefs.

For example, if you want to live in a peaceful world, you need to focus on cultivating peace
for others, Harrison explains.

9. The law of here and now

To experience peace of mind, you have to embrace the present. This can only happen when
you let go of negative thoughts or behaviors from your past.
If you get too focused on past events, you’ll keep reliving them. One exercise Patel
recommends to get in touch with the here and now is to get rooted into your senses.

“Look around the room you are in, focus your eyes on something, blink, and say ‘I am here,’”
she says.

10. The law of change

According to this principle, history will continue to repeat itself until you learn from the
experience and take steps to do something differently to stop the cycle.

Change gives you a new path so that you can create a new future and a better version of
yourself, free from the patterns of the past.

11. The law of patience and reward

To generate change in the future, Harrison says we must be consistent in our karmic deeds
today.

“It’s no good living healthily for one day and then sabotaging it in the next,” he says.

Be consistent in your goals, and they will come to fruition.

12. The law of significance and inspiration

We all play a part and have something to contribute to this world. What we share may
sometimes seem small to us but can make an enormous difference in someone else’s life.

Patel says the law of significance and inspiration is a great law to focus on when you need a
motivational boost or begin to feel like you don’t have a purpose or matter.

According to this law, every contribution you make will affect the world. You have been
born with a specific gift, mission, and purpose that only you can bring into the world with
your uniqueness. Authentically sharing your skills and gifts is why you’re here.

The bottom line

The 12 laws of karma can serve as a guideline or road map to follow as you go through your
daily life. These laws can help you understand how karma really works, and the effect that
your thoughts and actions can have on you and the world around you.
Using karma as a set of guidelines in your life can incentivize you to be more mindful of your
thoughts, actions, and deeds before you make a decision.

UNIT IV

What is Social Responsibility?

Social responsibility is a moral obligation on a company or an individual to take decisions or

actions that is in favour and useful to society. Social responsibility in business is commonly
known as Corporate Social Responsibility or CSR. For any company, this responsibility
indicates that they acknowledge and appreciate the goals of the society, and therefore, would
support them to achieve these goals.

Advantages of Social Responsibility

A company can boost its morale and enhance work culture when they can engage their
employees with some social causes. There are many factors that can have a positive impact
on the business while delivering social responsibilities. Such few factors are

 Justification for existence and growth

 The long-term interest of the firm

 Avoidance of government regulation

 Maintenance of society

 Availability of resources with business

 Converting problems into opportunities

 A better environment for doing business

 Holding business responsible for social problems

Disadvantages of Social Responsibility

Like there are many advantages of social responsibility there are similarly many
disadvantages for business. Few factors are mentioned below.

 Violation of profit maximization objective

  Burden on consumers

 Lack of social skills

 Lack of broad public support

Types of Social Responsibilities

Following Are the Different Types of Social Responsibilities:

(1) Economic Responsibility

 Every business is engaged in economic activities.

 So, the prime social responsibility of every business should be economic

responsibility.

 Hence they should sell products and service which can satisfy the need of the society.

(2) Legal Responsibility

 The company should comply with the political and legal environment of the country.

 The company should consider protecting the environment.

(3) Ethical Responsibility

 This type of responsibility expects a certain type of behaviour or conduct from the
company.

 This behaviour may not be documented by law.

(4) Discretionary Responsibility

 These are voluntary actions taken by the entities in case of natural calamities, helping
poor people etc.

 They help them by providing a charitable contribution, education activities etc.

 It prevents investments of charitable funds into speculative activities.

Opinions in Favour of Social Responsibilities:

Following Are the Opinions in Favour of Social Responsibilities:

(1) Justification for Existence and Growth

 Good quality products help in expansion of the business.

 When the business organisation keeps on providing good quality products, it’s
actually a fulfillment of social responsibility.

(2) Long Term Interest of the Business

 Every business wants long term profits and gains.

 If increasing no. Of stakeholders are not giving their best, there may be the
withdrawal of cooperation of society.

 It can be noted that the public image of the business can be improved by focusing on
social goals.

(3) Avoidance of Government Regulations

 Good social behaviour is an ethical aspect of the business. They are beyond the law.

 Business entities avoid government regulations as it their freedom.

(4) Maintenance of Society

 The business should take social responsibilities.

 However, the law is not made for every situation.

 People who are against the organisation can come into conflict. They can also harm
the organisation.

 This situation can create criminal intent in society.

(5) Availability of Resources With Business

 Business entities have huge set-ups and good infrastructure.

 These organizations have access to different types of resources.

  These resources should be used for fulfilling social responsibilities.

(6) Holding Business Responsible for Social Problems

 Business activity should see if any type of activity is causing harm to society.

 The business should themselves held responsible for causing harm rather than waiting
for any government or social team to come and correct them.

Opinions Which Are Against the Idea of Fulfillment of Social Responsibility:

Following Are the Opinions Against Social Responsibilities:

(1) Violation of Profit Maximisation Objective

 The sole motive of the business is profit maximization.

 Supporting social responsibilities is violating the profit-making objective of the

business.

 It would be better if entities increase the profits through increased efficiency.

(2) Burden on Consumers

 Social responsibilities like environment protection, pollution control are very costly in
nature.

 If entities opt for these social responsibilities, they always try to shift their burden on
ultimate consumers.

 It is not reasonable to charge the customers on the name of social responsibilities.

(3) Lack of Social Skills

 Every entity does not have enough skills and knowledge to solve each and every
social problem.

 This can be the reason for a poor image in the society.

 So, these problems should be solved by some specialized parties.

(4) Lack of Broad Public Support

  Generally, society does not accept the involvement of business entities in social
programs.

 That is why it gets difficult for the business to solve the problems without the
participation of the public.

Social Responsibilities for Different Interest Groups

(1) Responsibility Towards the Shareholders

 Shareholders are the owners of the company.

 The company should make all the efforts to maximize and protect shareholder’s
wealth.

 Sharing of useful information with the shareholders, utilization of funds etc.

(2) Responsibility Towards the Workers

 Workers are the key persons behind company success.

 Management of the enterprise must provide the proper working conditions to the
workers.

 Workers should get fair salaries and wages.

(3) Responsibility Towards the Consumers

 It is the consumer who buys the company’s product & services.

 So, it is the responsibility of the company to provide the right quality, right quantity
with the right price to the consumer.

 There should not be the unfair trade practices like adulteration, poor quality, courtesy
to the customers etc.

(4) Responsibility Towards the Government & Community

 Enterprises must follow the laws and regulations of the country/ state in which it is
operating.

 The organisation should interact with society to know what they require.
  It should maintain proper infrastructure, proper disposal system and should not cause
harm to the society in any manner.

Solved Question

Q.1 Name the Responsibility Which Should Be Fulfilled Towards the Society?

Answer: Social Responsibility

Q.2 Why Social Responsibilities Are Important to Fulfill?

Answer:

 For avoiding government interventions

 For long term concentration of the business in the society.

Q.3 Name the Responsibility Which is Towards the Fulfillment of Government Compliance?

Answer: Legal Responsibility

Q.4 Production of Goods and Services is the Part of Which Social Responsibility?

Answer: Economic Responsibility

Q.5 Name the Responsibility Which is Codified by the Business Organisations?

Answer: Ethical Responsibility

Green CSR and Innovation Performance

Green CSR is the recognition of obligation or the waste-reduction practice of firms’ operation
to maximize the efficiency of their inputs and minimize the means of negatively influencing
the future generations of the country [23]. In recent years, worldwide environmental issues
have brought an increasing challenge to firms that used to pursue fast growth at the expense
of massive resource consumption and environmental degradation. Therefore, green CSR is
gaining more importance due to the changes of stakeholders’ values from profit-oriented to
ecology-friendly. In order to cater to global stakeholders’ interests, today’s firms are often
compelled to behave more responsibly toward the environment. Previous research [24,25]
points out three critical stakeholder groups that may act as a driving force to propel firms to
undertake green CSR, which are community stakeholders such as industrial associations and
non-profit organizations, regulatory stakeholders such as governments and legislatures, and
organizational stakeholders including employees, partners, and media. The first two groups
are among the most important stakeholders giving attention to firms’ implementation of green
CSR [26].

Following the foregoing arguments, it can be inferred that firms with more emphasis on green
CSR issues may gain more positive feedback from all kinds of stakeholders, particularly
those community stakeholders such as non-profit green groups, as well as regulatory ones.
Firms focusing on environmentally friendly activities can capture valuable information and
knowledge about the community stakeholders’ green needs, preferences, and early warnings
about shifts in green values [27]. The external information and knowledge accepted by
collective communication with community stakeholders can help firms achieve innovative
potential, as firms can embody this information and knowledge in innovation processes [28].
In this sense, firms with stronger green CSR can lead to innovation through improving the
quality features of their products with environmental concern, which may enable their
offerings to be unique [29]. Thus, green CSR initiative may be the origin station of proactive
innovation. For instance, Jacobs et al. (2010) find that announcements of philanthropic gifts
for environmental causes are associated with significant positive market reaction [30]. Wei et
al. (2017) argue that green CSR signals a firm’s efforts to accommodate pressure from
business stakeholders, and thus green CSR indirectly influences firm performance through
business legitimacy [18]. These empirical results support the argument that firms
implementing green CSR could establish cooperation relationship with community
stakeholders, which further leads to knowledge input and trigger innovation.

More importantly, by covering the negative impacts of products, operations, and facilities on
the environment, firms undertaking green CSR also obtain potential benefits form regulatory
stakeholders’ supports, including financial supports and political supports to promote their
innovation activities. As the most influential stakeholder, regulatory stakeholders have the
power to channel valuable resources toward or away from a firm [31]. Regulatory
stakeholders have constructed general environmental protection codes and norms together
with related incentive schemes. Firms demonstrate that their obedience to these codes and
norms may contribute to increase their political legitimacy from the perspective of regulatory
stakeholders, thus resulting in active responses [32]. Therefore, firms that limit their adverse
environmental impact can obtain financial capital and preferential political support form
regulatory stakeholders, such as tax exemption, support funding, project subsidy, interest-free
or discount government lending, and relaxed or stiffer regulatory enforcement. These
financial capital and preferential political supports are critical for firms seeking to build up
their R&D base, implement their R&D projects, and upgrade the skill level of their R&D
employees with the potential to generate high innovation performance. Previous research also
stresses the impact of green CSR on political legitimacy, which can be taken as a signal of
support for our arguments.

How Does CSR Benefit Consumers?

CSR benefits not only the company but the consumers as well. For instance, a company that
implements a policy that helps them strive to reduce their carbon footprint will allow the
consumer to reduce their carbon footprint at the same time. 

Consumers can look at companies Corporate social responsibility and see if their ideologies
match with the company. A consumer will be able to keep up with the lifestyle choices when
buying goods or services from specific places. 

Corporate Social Responsibility allows consumers to help a cause even if they are not
passionate about the cause. By making the conscious decision to use a specific brand that
does implement CSR, a consumer can positively impact the world without having to put the
effort in themselves. For example, you can choose to buy cruelty free products only without
going out and trying to save the animals. 

CSR also helps influence consumers to help the community within their own area once they
see large businesses helping less fortunate organizations, helping preserve the environment,
and overall being more responsible when it comes to civilization. 

Final Thoughts 

Corporate Social Responsibility can change so many lives for the better. As a consumer, you
can get the benefits and help others in the process without having to lift a finger. You need to
become more aware of which companies you choose to buy from and which causes you to
choose to support. 

Social Responsibility of Business Towards Different Groups shows the responsibility of

Business owners for the business’s performance.

This includes ensuring a fair return on capital, consolidating the business’ financial position,
and capital appreciation to allow owners to weather any eventuality.

Let’s now look at the different responsibilities a business has towards its associations.

The business is generally associated with owners, investors, workers, suppliers, consumers,
competitors, the government, and the community.

So they are called business associations because, by every business activity, these groups’
profits may be affected directly or indirectly.

Responsibility towards owners and Investor

These are the primary Social Responsibility of Business Towards Different Groups,
investors, and owners:

 Run the business well-organized,

 Proper usage of assets and other resources,

 Expansion and appreciation of assets,

 A consistent and reasonable return on capital invested,

 Assuring the safety of their investment,

 Fixed retrieval of interest, and

 On-time compensation of the principal amount.

Responsibility towards Creditors

In Social Responsibility of Business Towards Different Groups there are responsibilities

toward creditors.
For example,

 Timely payment,
 To ensure the safety of credit approved by them, and

 To follow standards of business as observed by others.

Responsibility towards employees

These are the Social Responsibility of Business Towards Different Groups and their workers:

 On-time and regular payment of salaries and wages,

 Proper working conditions and well-being facilities,

 Opportunity for better job possibilities,

 Job safety and social security include provident funds, group insurance, pensions, and
retirement privileges.

 Proper living conditions like home, transportation, restaurant, etc.; and

 Timely education and improvement.

Responsibility towards suppliers

These are the responsibilities of businesses towards suppliers:

 Regular delivery of orders for the purchase and sale of goods,

 Adaption on reasonable terms and conditions,

 Availing sensible credit period, and

 Duly payment on time.

Responsibility towards customers

These are the responsibilities of businesses towards their consumers:

 Goods and services should be able to meet the needs of customers,

 Goods and services should have a high quality,
  Regularly supplement of goods and services,

 There should be a reasonable and affordable price for goods and services,

 All profits and losses of goods and procedures to use the goods must be informed to
the consumers,

 Proper function of after-sales service,

 Prioritize the grievances of the consumers and quick settlement,

 Unlawful means like under weighing the goods, corruption, etc., must be avoided.

Responsibility towards competitors

The responsibilities of business towards its rivals should not be as follow:

 Offering unusually high sales commission to distributors, agents, etc.,

 Offering huge discounts or free products in every sale to the customers, and

 Defame rivals through false or vague advertisements.

Responsibility towards government

These are the responsibilities that business has towards the government:

 Setting up units as per rules and regulations of the government,

 Payment of fees, charges, and taxes consistently and honestly,

 Not to indulge in monopolistic and restrictive business practices,

 Adaptive to pollution control standards set up by the government, and

 Not to engage in adulteration through bribing and other illegal activities.

Responsibility towards society (community)

A community includes individuals, groups, organizations, people, etc.

They communicate with each other and are also reliant on each other in almost all activities.
There are direct and indirect relationships between them.

Business, being a part of the community, keeps its relationship with all other community
members.

Therefore, it has specific responsibilities towards the community that are as follows:

 To help the vulnerable and backward parts of the society,

 To maintain and promote social and cultural importance,

 To create employment,

 To preserve the environment,

 To save natural resources and wildlife,

 Support sports and culture, and

 To assist in progressive research on knowledge, education, medical science, and

technology.

What Is Stakeholder Management?

Stakeholder management is the process of identifying, prioritizing, and engaging stakeholders

throughout the product development process. It’s an essential component of product
management because stakeholders – the individuals or groups who can either impact the
success and execution or impact the product – ultimately play a significant role in a product’s
life.

Product managers (PMs) must first accurately identify who their stakeholders are to cultivate
and nurture strong stakeholder relationships successfully. PMs also need to fully understand
the unique points of view and needs of their stakeholders. Like any solid relationship, it
requires ongoing strategic engagement and effort.

What Are the Different Types of Stakeholders?

There are many different types of internal and external stakeholders. Examples include
employees, customers, shareholders, suppliers, communities, and governments. Upstream
stakeholders contribute to or approve the activities required to design, build and bring a
product to market. Those who buy or use a product and those who support, sell, and market a
product are considered downstream stakeholders.

Regardless of type, stakeholders generally have these attributes in common:

 Influence: Stakeholders have enough power and strategic importance to the business
that their ideas and opinions can impact the ability to advance the product strategy,
create a roadmap, and execute it.
 Connection: Stakeholders are concerned about the product because they are impacted
by product decisions—from investors concerned about financial performance, market
share, and valuation to customers worried about how the product will continue to
support their needs.

 Power: Stakeholders have something product managers need (e.g., information,

approval, budget, cooperation, etc.).

 Irreplaceability: Each stakeholder or stakeholder role (e.g., CFO) brings a unique

value to the project.

In addition, some stakeholders are self-evident, like a CFO who must sign off on a pricing
plan or critical customers who will ultimately use the product to get built. But not all
stakeholders are as apparent.

What is a social audit?

A social audit is a way of measuring, understanding, reporting and ultimately improving an

organization’s social and ethical performance. A social audit helps to narrow gaps between
vision/goal and reality, between efficiency and effectiveness. It is a technique to understand,
measure, verify, report on and to improve the social performance of the organization.

Social auditing creates an impact upon governance. It values the voice of stakeholders,
including marginalized/poor groups whose voices are rarely heard. Social auditing is taken up
for the purpose of enhancing local governance, particularly for strengthening accountability
and transparency in local bodies.
The key difference between development and social audit is that a social audit focuses on the
neglected issue of social impacts, while a development audit has a broader focus including
environment and economic issues, such as the efficiency of a project or programme.

Objectives of social audit

1. Assessing the physical and financial gaps between needs and resources available for
local development.
2. Creating awareness among beneficiaries and providers of local social and productive
services.

3. Increasing efficacy and effectiveness of local development programmes.

4. Scrutiny of various policy decisions, keeping in view stakeholder interests and

priorities, particularly of rural poor.

5. Estimation of the opportunity cost for stakeholders of not getting timely access to
public services.

Advantages of social audit

(a) Trains the community on participatory local planning.

(b) Encourages local democracy.
(c) Encourages community participation.
(d) Benefits disadvantaged groups.
(e) Promotes collective decision making and sharing responsibilities.
(f) Develops human resources and social capital

To be effective, the social auditor must have the right to:

1. seek clarifications from the implementing agency about any decision-making,

activity, scheme, income and expenditure incurred by the agency;
2. consider and scrutinize existing schemes and local activities of the agency; and

3. access registers and documents relating to all development activities undertaken by

the implementing agency or by any other government department.
This requires transparency in the decision-making and activities of the implementing
agencies. In a way, social audit includes measures for enhancing transparency by enforcing
the right to information in the planning and implementation of local development activities.

Five steps to improve ethical performance

1. Develop a code, and make ethical performance a strategic priority. A relevant code of
ethics, conduct or similar policy that sets clear objectives, standards and expectations
is a key requirement for ethical performance. A code needs to be supported by a focus
on ethical performance in wider decision making.
2. Set the tone from the top. Senior management teams must show leadership and be
seen to live the organisation’s ethical values. Only once that happens can employees
get in step and ensure the whole organisation lives those values.

3. Engage, communicate and train your staff. Engage staff and other stakeholders such
as suppliers, investors, regulators and consumer communities, through effective and
informative communication. Good, regular and consistent communication and
training will help to embed an ethical culture.

4. Provide support routes for staff. Organisations need to develop clear routes for
reporting suspected fraud and violation of company policies on ethical behaviour. Too
many organisations are weak in this regard and must adopt a zero-tolerance approach.

5. Measure effectiveness of your ethics programme. To ensure best practice,

organisations need both to measure their ethical performance and to foster open
discussion.

What is the relationship of social development?

Social development refers to the long-term changes in relationships and

interactions involving self, peers, and family. It includes both positive changes,
 such as how friendships develop, and negative changes, such as aggression or
bullying.

What are the problems of social development in India?

The problems of social development in India are the gap between the areas which are not
socially developed and the others that are socially developed. There are disparities in
education, class, and gender that need to be addressed.

What is socially neglected?

Social neglect means failing to provide social contact, activities, or information to the

elderly.

Top 10 Social Issues in India

 Illiteracy.
 Basic education.
 Poor Sanitation facilities.
 Healthcare.
 Pollution.
 Overpopulation.
 Safety of Women.
 Poor Infrastructure.

What is Social Responsibility?

The obligation of business to act in a manner which will serve in the best interest of
society is termed as Social Responsibility. The obligation of business to take decisions
and perform actions, which are desirable in terms of the objectives and values of our
society is known as Social Responsibility.
In the words of Keith Davis,“Social Responsibility refers to the businessman’s decisions
and actions taken for reasons at least partially beyond the firm’s direct economic or
technical interests.”
 Businesses try to accomplish social gains along with economic gains, in which the
business is interested. 
 Profit Maximisation should not be the sole objective of social responsibility. The
business should think about other people, society, etc. 
 Social Responsibility is a broader concept than legal social responsibility. Legal
responsibility can be fulfilled by mere compliance with the law; whereas, in the case of
social responsibility, voluntary efforts are involved by businesses for the benefit of
society.

Arguments for Social Responsibility

The arguments for Social Responsibility are as follows:

1. Justification for Existence and Growth: Business uses the resources of society and is
a creation of society, so it is expected to satisfy human needs by providing goods and
services. Profit earning should be looked at as an outcome of service to the people. If the
image of the business is good, it enjoys the support of society, and it can prosper and grow
only when it fulfils its social responsibility. 
2. Long-term Interest of Firms: A firm can be profitable and prosperous only when it
thinks of being profitable in the long run. A firm and its image stand to gain maximum
profits in the long run when it has its highest goal as Service to Society. A business has to
fulfil social responsibility towards various groups of society, like workers, consumers,
shareholders, government officials, etc.
3. Avoidance of Government Regulations: If a business does not want intervention from
the government, then it must fulfil social responsibility. The government can restrict the
freedom and flexibility of a business, and enact and force them to assume social
responsibility, so businesses should voluntarily fulfil their obligations to society.
4. Maintenance of Society: If the people related to the business feel that they are not
getting their dues from the business, then they may resort to anti-social activities.  This can
distort the image of the business and can be very harmful, so businesses must fulfil their
social responsibility.
5. Availability of Resources with Businesses: The problems of society can be effectively
solved with the help of valuable financial and human resources of the businesses.  For
example, managerial talent and capital resources, and years of experience in organising
business activities can help society to tackle its problems better, given the huge financial
and human resources at its disposal.
6. Converting Problems into Opportunities: Businesses can convert problems into
opportunities by taking risks. It takes risk as the reward of profit bearing. It not only solves
social problems but also provides opportunities for growth. For example, the problem of
regional disparity can be solved by setting up industries in backward regions, and it can
benefit the business as it gets various tax benefits.
7. Better Environment for Doing Business: There are little chances for the success of a
business when society is confronted with diverse and complicated problems. Thus, in order
to have a better environment for doing business, the business should meet its social
responsibilities.
8. Holding Business Responsible for Social Problems: As business uses capital, physical
and human resources of the society and a lot of social problems like environmental
pollution, unsafe workplace, corruption, etc., arise due to the activities of a business. So it
becomes the moral responsibility of the business to help society in solving problems and
serving society. 
Arguments against Social Responsibility

The arguments against Social Responsibility are as follows:

1. Violation of Profit Maximisation Objective: It is considered that social responsibility

is against the objective of profit maximisation. But business is an economic activity and its
main goal is to earn and maximise profit.
2. Burden on Consumers: Huge financial investment, which has no proper return, is
required to fulfil social responsibilities, like in the case of pollution control and
environmental protection. The burden of such costs is usually passed on to consumers in
the form of higher prices. It is unfair to pass the burden on consumers in the name of
social responsibility.
3. Lack of Social Skills: There is a difference between the way in which how business
problems and social problems are solved. A person might be good at managing a business
but may not have the required skills to solve complex social problems. Therefore, social
problems should be solved by specialised agencies.
4. Lack of Broad Public Support: Businesses do not get the support of people as the
public does not like the involvement or interference of businesses in social programmes.

Reality of Social Responsibility

1. Threat of Public Regulation: There is always a threat of public regulation on

businesses. Businesses have to act in a responsible manner otherwise strict actions are
taken to regulate them for safeguarding people’s interests. Due to the threat of public
regulation businesses now feel concerned with social responsibility.
2. Pressure of Labour Movement: Business enterprises are forced to pay due regard to
the welfare of workers instead of following a policy of ‘hire and fire’ because labour is
now more educated and organised. Because of such labour movements, businesses practice
social responsibilities.
3. Impact of Consumer Consciousness: Consumers are more conscious of their rights
and power in determining market forces because of the development of education and
mass media and increasing competition in the market. The principle of Caveat Emptor or
let the buyer beware has been replaced by the principle of ‘Customer is King’. Customer-
oriented policies are now being followed by businesses.
4. Development of Social Standard for Business: A business cannot exist in isolation.
Society permits a business to grow and prosper. Business is now not considered as a mere
money-making entity. It has to follow social norms and standards as developed by society.  
5. Development of Business Education: More and more people are aware of the social
purpose of business because of the development of business education with its rich content
of social responsibility. Consumers, investors, employees, and owners have become more
aware and sensitive towards social issues than before.
6. Relationship between Social Interest and Business Interest: Social interest and
business interest are not contradictory, but complementary to each other. Businesses have
realised that they cannot grow in the long run by exploiting society. Instead, they can
prosper by serving society.