Ethics & Values

Introduction to Business Ethics

Meaning & Definition

• Ethics is that discipline which deals with what is good and bad and also deal

with moral duty and obligation. Ethics are set of moral principles or values.

• Ethics is a conception of right and wrong conduct. Ethics tell us when our

behavior is moral and when it is moral. Ethics deal with fundamental human

relationship how we think and behave towards others and how we want them

to think and behave towards us.

Business Ethics – Definition

There are many definitions of business ethics, but the ones given by Andrew
Crane and Raymond C. Baumhart are considered the most appropriate ones.
According to Crane, "Business ethics is the study of business situations, activities,
and decisions where issues of right and wrong are addressed."
Baumhart defines, "The ethics of business is the ethics of responsibility. The
business man must promise that he will not harm knowingly."
Particulars Ethics Moral
Origin Greek Word “ethos” meaning Latin words “mos” meaning
“character” “customs”
Nature Universal Culture Specific region or country

Freedom to think Yes No

Consistency Ethics are generally uniform Morals may differ from society to
society and
Culture to culture
Expressions Ethics are abstract Morals are expressed in the form
of general and statements
Influence By Professionals , organizations , By Family , culture , religion ,
institute , etc community , etc

Example Truth , non-violence , kindness , Welcome (Pranam) , love to

etc youngsters , respect to elders
Six basic duties of a person

(i) Fidelity – doing no harm to others

(ii) Reparation – making amends to those we have hurt

(iii) Gratitude – repaying those who have helped us

(iv) Justice – treating people as well as they deserve

(v) Beneficence – helping others when we can

(vi) Self-improvement – bettering ourselves but not at the cost of others

 Features of Business Ethics
Code of Conduct − Business ethics is actually a form of codes of conduct. It
lets us know what to do and what not to do. Businesses must follow this
code of conduct.

Based on Moral and Social Values − Business ethics is a subject that is

based on moral and social values. It offers some moral and social principles
(rules) for conducting a business.

Protection to Social Groups − Business ethics protect various social groups

including consumers, employees, small businesspersons, government,
shareholders, creditors, etc
Offers a Basic Framework − Business ethics is the basic framework for doing business
properly. It constructs the social, cultural, legal, economic, and other limits in which a
business must operate.

Voluntary − Business ethics is meant to be voluntary. It should be self-practiced and

must not be enforced by law.

Requires Education & Guidance − Businessmen should get proper education and
guidance about business ethics. Trade Associations and Chambers of Commerce should
be active enough in this matter.

Relative Term − Business ethics is a relative term. It changes from one business to
another and from one country to another.

New Concept − Business ethics is a relatively newer concept. Developed countries have
more exposure to business ethics, while poor and developing countries are relatively
backward in applying the principles of business ethics.
Need of Business Ethics
• Legal Compliance

• Ethical Conduct

• Accountability

• Fairness

• Protect Stakeholders

• Promote Transparency.
Sources of Business ethics

Religion Culture

Law
Importance of Business Ethics

• Corresponds to Basic Human Needs

• Credibility in the Public

• Credibility with the Employees

• Better Decision Making

• Profitability

• Protection of Society
Utilitarianism
• Utilitarianism is the ethical theory that suggests the best action is the one that
maximizes overall happiness or pleasure and minimizes overall pain or suffering.

• Example: A company is deciding whether to shut down a factory. According to

utilitarianism, the company should consider the consequences of this action on all
stakeholders: employees, shareholders, customers, and the local community. If
shutting down the factory would result in greater overall happiness (e.g., by reducing
environmental harm and improving the financial health of the company) than keeping
it open, then utilitarianism would support the decision to shut it down.
Deontological Ethics
• Deontological ethics, associated with philosopher Immanuel Kant, focuses on
the adherence to rules, duties, or obligations. Actions are considered morally
right or wrong based on their adherence to these rules, regardless of the
consequences.

• Example: An employee discovers that their company is engaging in illegal

activities. According to deontological ethics, the employee has a duty to
report this wrongdoing, even if doing so might lead to negative consequences
for themselves or others. The act of whistleblowing is considered morally
right because it aligns with the duty to uphold the law.
Virtue Ethics
• Virtue ethics emphasizes the role of character and virtues in moral philosophy
rather than either doing one’s duty or acting to bring about good consequences. It is
associated with Aristotle and focuses on developing good character traits (virtues).

• Example: A doctor has the opportunity to accept a bribe to give a false diagnosis.
Virtue ethics would consider the character of the doctor and the virtues they should
embody, such as honesty, integrity, and courage. A virtuous doctor would refuse the
bribe because accepting it would be contrary to the virtues they strive to uphold
Ethical Egoism
• Ethical egoism is the theory that individuals should act in their own self-
interest. The morally right action is the one that maximizes one's own
benefits.

• Example: A business owner must decide whether to implement costly safety

measures in their factory. An ethical egoist would consider whether
implementing these measures benefits them personally, perhaps by avoiding
future lawsuits or attracting more customers due to a better safety record.
If the measures serve their self-interest, they should implement them;
otherwise, they might not.
Social Contract Theory
• Social contract theory, associated with philosophers like Thomas Hobbes, John
Locke, and Jean-Jacques Rousseau, posits that moral and political obligations are
dependent upon a contract or agreement among individuals to form a society.

• Example: A group of people stranded on a deserted island agrees to create a set of

rules to ensure peace and order. They all consent to these rules, understanding that
their individual rights are protected by the collective agreement. According to social
contract theory, the legitimacy of these rules comes from the mutual agreement of
all members of the group.
Care Ethics
• Care ethics, developed by Carol Gilligan and other feminist philosophers,
emphasizes the importance of interpersonal relationships and the ethics of
care as central to moral action.

• Example: A nurse prioritizes spending extra time with a terminally ill patient
who is feeling isolated and depressed. According to care ethics, this action is
morally right because it focuses on the relationship between the nurse and
the patient and addresses the patient’s emotional needs, showing empathy
and compassion.
Divine Command Theory
• Divine command theory is the ethical theory that moral values and duties are
commanded by a divine being (e.g., God), and actions are morally right if they
conform to God's will.

• Example: A person donates a significant portion of their income to charity

because their religious teachings command them to help those in need.
According to divine command theory, this action is morally right because it
follows the divine command to be charitable and care for others.
Teleological ethics
Teleological ethics, or consequentialism, is a moral theory that evaluates
the morality of actions based on their outcomes or consequences. Central
to this approach is the idea that the ends justify the means, meaning an
action is considered morally right if it leads to a favorable outcome.
Imagine a doctor with five patients in critical need of organ transplants,
each requiring a different organ to survive. The doctor has one healthy
patient whose organs could save the five. According to teleological ethics,
sacrificing the healthy patient to save the five others could be seen as
morally right because the outcome—saving more lives—maximizes overall
well-being. This illustrates the focus on consequences characteristic of
teleological ethics, even though the means might seem morally troubling.
Heinz’s wife was dying from a particular type of cancer. Doctors
said a new drug might save her. The drug had been discovered by a
local chemist, and the Heinz tried desperately to buy some, but the
chemist was charging ten times the money it cost to make the drug,
and this was much more than the Heinz could afford.
Heinz could only raise half the money, even after help from family
and friends. He explained to the chemist that his wife was dying
and asked if he could have the drug cheaper or pay the rest of the
money later.
The chemist refused, saying that he had discovered the drug and
was going to make money from it. The husband was desperate to
save his wife, so later that night he broke into the chemist’s and
stole the drug.
Should Heinz have broken into the laboratory to steal the drug for
his wife? Why or why not?
Kohlberg asked a series of questions such as:
Should Heinz have stolen the drug?
Would it change anything if Heinz did not love his wife?
What if the person dying was a stranger, would it make any difference?
Should the police arrest the chemist for murder if the woman dies?
By studying the answers from children of different ages to these questions, Kohlberg hoped
to discover how moral reasoning changed as people grew older.

The sample comprised 72 Chicago boys aged 10–16 years, 58 of whom were followed up at
three-yearly intervals for 20 years (Kohlberg, 1984).

Each boy was given a 2-hour interview based on the ten dilemmas. Kohlberg was interested not
in whether the boys judged the action right or wrong but in the reasons for the decision. He
found that these reasons tended to change as the children got older.
Kohlberg's Six Stage Module

Level III – Post – Conventional morality

i. Social & Legal Morality
ii. Universal Morality.

Level II – Conventional morality

i. Good boy Orientation
ii. Legal Orientation

Level I – Pre-Conventional morality

i. Punishment Obedience Orientation
ii. Personal Reward Orientation
Level 1 – Pre-Conventional Morality
• In this stage children take decisions about right and wrong based on their desires
and needs. The main idea behind their actions are to avoid punishment and beat
physical consequences. In this level children work the principal of “tit for tat”.

Stage I – Punishment Obedience Orientation

This stage explains that children avoid all that action and act by which they have to
face punishment and they get reward for some work.

Stage II – Personal Reward Orientation

In this stage children judgment is based on their requirements , in this process they
also become self-centered and their judgment is based on the personal reward.
Level II – Conventional Morality
• In this stage people do judgment based on socially expected rules , norms , rituals,
rule of law, loyalty towards nation and so on.

Stage I – Good Boy Orientation

In this stage people do work which provides them good acceptance in society , there
are sets of rule for boys and girls in each society & people follows them to gain a
good social status and acceptance.

Stage II – Legal Orientation

In this stage people believes that morality is legal. They follow rules & legal order
because they feel that they must be respected to maintain an order in society. They
believes that law is absolute and all should obey them.
Level III – Post Conventional Morality
This is the higher level of morality , at this stage people think beyond all personal , social , and legal
dimensions and thinks largely about humanity. A person helps the other person without any interest.
People at this stage of moral development works and take decisions that are directed more towards
humanity than for personal benefits.

• Stage I – Social & Legal morality

At this stage person knows about social & legal morality. He or she emphasis over social morality
more than legal morality. People understand the legality but they also understand that legal
perspective is based on social perspective on social contract.

• Stage II – Universal morality

This is the highest level of morality because at this stage a person provides priority to humanity over
any other rule. People help any other people or animals when they needed it without any interest.
Criticism

• The theory is more about morality and thinking but its not clear about
whether this leads a person towards morality or not.

• Involves only justice and does not give much importance to caring ,
loving , emotional bonding's.

• Not very effective for all culture.

Conclusion

It explains various stage of morality.

The major changes in children thinking takes place through role of

school , teacher , family members and peer group.