Global Business Ethics

Chapter:6

Presented by: Dr. Urvashi Anand Ohri

https://youtu.be/Pn8RGs-UmXE?si=clOszBwd95e1MtmP
https://youtu.be/l9vl--CWSI8?si=Zmei-6Vi9042SrI0
Meaning of Business Ethics
 Business ethics is a kind of applied ethics. It is the application of moral or ethical norms to
business.
 Ethics is a set of principles or standards of human conduct that govern the behaviour of
individuals or organization. Ethics can be defined as the discipline dealing with moral
duties and obligation, and explanation what is good or not good for others and for us
 Business ethics comprises the principles and standards that guide behaviour in the conduct
of business. Businesses must balance their desire to maximise profits against the needs of
the stakeholders. Maintaining this balance often requires trade-offs. To address these
unique aspects of businesses, rules- articulated and implicit are developed to guide the
businesses to earn profits without harming individuals or society as a whole.
The concepts and standards that influence ethical behaviour in the business environment are referred
to as business ethics. It entails making moral and socially responsible decisions while executing
commercial activity. Ethical corporate practice goes beyond simply following the rules and
regulations. It necessitates that organizations examine the consequences of their actions on
numerous stakeholders, such as employees, consumers, suppliers, communities, and the
environment.
Here are a few significant subjects and dimensions of business ethics:

Corporate Social Responsibility (CSR):

CSR refers to a company's commitment to functioning ethically and sustainably while taking into
account its influence on society and the environment. Fair trade, philanthropy, environmental
sustainability, and employee well-being are examples of such practices.

Fairness and Transparency:

Ethical businesses try to be fair and transparent to all stakeholders. This includes fair competition,
the avoidance of conflicts of interest, and the maintenance of transparency in financial reporting and
disclosure.
Workplace Ethics:
Businesses should strive to establish an ethical workplace environment. This involves building a
safe and respected workplace, promoting diversity and inclusion, ensuring equitable opportunities,
and fostering a safe and inclusive workplace.

Consumer Protection:
Ethical firms prioritize their consumers' well-being and rights. They provide accurate information,
deliver high-quality goods and services, and safeguard consumer privacy.

Environmental Sustainability:
Businesses are increasingly required to reduce their negative environmental impact. This can
include lowering carbon emissions, preserving resources, developing sustainable practices, and
supporting climate change activities.
Importance of Business Ethics
 Ethical is all about developing trust maintaining it fruitfully so that the firm
flourishes profitably and maintain good reputation. Trust leads to predictability
and efficiency of the business.
 Trust is used as an indicator variable of ethics. Basically, Trust is three
dimensional i.e., Trust in customer relationships, Trust in supplier relationships
and employee relationships
 Business ethics makes the employees want to stay with the business, reduce
labour turnover and therefore increase the productivity. This also reduce the
recruitment costs and enable the company to get the most talented employees.
Need of Business Ethics
The business unit needs to follow the ethics of business because business ethics
involves:
 The need of Compliance of legal enactments, principle of morality and customs
of community together with policy of the company.
 The Contribution which business makes towards the society by providing goods,
services and employment, creating wealth, carrying out social and welfare
activities.
 Bearing the Consequences of business activities towards environment, various
stakeholders and good public image.
An organization had to follow these 3 Cs of the business ethics for its existence in
long run.
Concept of Business Ethics

The following are significant ideas and rules of corporate ethics:

1.Integrity: The cornerstone of a corporate ethic is integrity. It entails being sincere, telling the truth, and
abiding by moral and ethical standards in all business operations. In their contacts with others, people and
organizations should act honourably.

2.Transparency : Transparency in business operations refers to being upfront and sincere. This entails giving
stakeholders accurate information, revealing potential conflicts of interest, and being open about how
corporate operations affect society and the environment.

3.Fairness: Being fair is treating all parties involved justly and fairly. This includes treating employees fairly,
setting fair prices for customers, paying suppliers fairly, and distributing earnings to shareholders fairly.
4.Corporate Social Responsibility : (CSR) is the notion that companies have a duty to make a constructive
contribution to society. This can include charitable endeavours, environmental sustainability initiatives, and
efforts to get resources ethically.

5.Sustainability: Practices of sustainability, which include reducing adverse effects on the environment and
supporting ethical resource management, are frequently included in discussions on business ethics. This
entails cutting back on waste, saving energy, and using environmentally friendly production techniques.

6.Whistleblowing: A key component of business ethics is encouraging and protecting whistleblowers. People
who reveal unethical or unlawful behavior within a company are known as whistleblowers, and they ought to
be shielded from reprisals.
Impact of Ethics in Business and Society
In both business and society, ethics is important and has a variety of effects on behavior, choices, and results.
The effects of ethics in these fields are extensive and varied. The following are some significant ways that ethics
impact business and society:

1.Trust and Reputation: In both business and society, trust is based on ethics. People and organizations gain
the trust of their stakeholders, such as clients, staff members, investors, and the general public, when they
uphold moral standards. Reputation, which is a vital asset for businesses and contributes to a stable and peaceful
society, is enhanced by trust.

2.Legal Compliance: Moral behaviour frequently complies with the law. Adhering to moral principles aids
organizations and people in avoiding legal issues and penalties, enhancing the general stability of the legal
system in society.

3.Consumer Confidence : It is boosted by ethical company practices like transparent marketing, reasonable
pricing, and high-quality goods and services. Customers are more inclined to make purchases and stick with a
company if they believe it to be ethical.
4.Employee Morale and Productivity: Workplaces with strong ethical standards tend to have
happier and more productive employees. Employees are more motivated, engaged, and content
in their work when they believe their company promotes ethical ideals.

5.Environmental Impact: Addressing environmental challenges requires more and more ethical
considerations. Businesses can lessen the detrimental effects of their activities on the
environment by implementing sustainable and environmentally responsible practices.

In conclusion, business and societal ethics are interwoven and have a significant influence on
one another. A more just and peaceful society is made possible by ethical behavior, which also
benefits businesses and promotes sustainability, social responsibility, and trust. On the other
hand, unethical behavior can have detrimental effects on enterprises and society as a whole,
deteriorating trust and harming people.
Multinational corporation

 Organizations, who have established business in more than one country, are
called Multinational corporation.
 The headquarters are in the home country and the business is extended in
many host countries.
 The Wester organizations doing business in less economically developed
(developing and overpopulated) countries gain more advantage of:
i. - Inexpensive labour
ii. - Availability of natural resources
iii. - Conducive-tax atmosphere
iv. - Virgin market of products
 At the same time, developing countries are also benefited by
fresh job opportunities, jobs with higher remuneration and
challenges, transfer of technology, and several social benefits by
the wealth developed.
 But this happens invariably with some social and cultural
disturbance.
 Loss of jobs for the home country, and loss or exploitation of
natural resources, political instability for the host countries are
some of the threats of global
 A few principles are enlisted
here The activities of the The business practices
MNC should give of the multinational
economic and transfer organisations should
technical benifits, and improve and promote
MNC should respect implement welfare morally justified
MNCs and Morality: measures of the institutions in the host
the basic human rights
The economic and of the people of the workers of the host countries
countries
environmental conditions of host countries
home and host countries
may vary.
But the multinational
institutions have to adopt The multinational Multinational
institutions should
organizations should
appropriate measures to not provide a fair provide necessary
disturb or dislocate the The multinationals
must respect the laws
renumeration to the safety to workers
when they are
emplyees of the
social and living conditions and political set up, countries, if engaged in hazardous
and cultures of the home besides cultures and
promote the cultures
renumeration is high activites and
compensation should
that of home, it creates
countries. of the host countries. tension, and if its too be be paid for
low it leads to additional risks taken
exploitation
15
World’s Most Ethical Companies
 Kellogg’s
Based In: Michigan, United States
Ethics: Supports farmers, reduces food loss & waste, low-impact packaging
Known For: Cereal, crackers, pastries.
 IBM
Based In: New York, United States
Ethics: Renewable energy, gender equality, responsible production
Known For: Hardware, software, consulting
 Allianz Group
Based In: Munich, Germany
Ethics: Clean energy, low-carbon economy, human rights
Known For: Insurance, asset management
World Most Ethical Companies
 PepsiCo
Based In: New York, United States
Ethics: Racial equality, sustainable agriculture, pay equity, sustainable
plastics
Known For: Grain-based snack foods, beverages.
 Important Note : In 2021 , Three Indian companies have been awarded for
being the most ethical companies by Ethisphere. And the companies are
 Infosys
 Wipro
 Tata Steels
 Companies with Unethical Business Practices
 Examples of least ethical companies as voted for by Ethical Consumer readers were:
1. Nestle
Nestle is subject to the world's longest running boycott for the irresponsible marketing
of baby milk to mothers in the developing world. The company has also been criticised
for a number of other businesses practices including the use of unsustainable palm oil
and genetically modified ingredients in its foods.
2. Volkswagen
Almost everyone is familiar with one of the latest cases of corporate misconduct:
the Volkswagen emissions scandal. The company admitted to having installed software
that manipulated emissions readings to make its cars appear as if they were
environmentally friendly.
3. Nike
In the past, Nike has been accused of using child labour and supposedly nurturing
sexual harassment and discrimination cultures. Plus, its factories are not independently
monitored by labour rights groups.
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