A

Research paper on
An Overview of Business Ethics in Indian
Businesses

Authors:
1) Ms. Swenee Shah
2) Ms. Mehal Pandya
3) Ms. Chitral Patel
(Faculties of Hasmukh Goswami College Of Engineering (MBA))

Submitted to:
Gujarat Technological University

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 Abstract

Business ethics deals with ethical rules and principles necessary for a successful
business. It explains the various ethical problems that can rise in a business setting
and the responsibilities of persons who are engaged in an organization. We have here
shown how the Indian Businesses follows ethical practices even though they are
working globally. We have here also taken few examples MNCS to show how are
they going ahead unethically. In this research paper we have tried to show that no
business can get success even though they are going globally (locally) if they don’t
follow ethics and legitimate values. Our research paper reflects that true and ethical
business can sustain for longer time and even can survive at toughest time. ethical
training ,policies procedures will help any organization to manage their work place
very well .we have shown that how ethics will help to enhance reputation of business
and generate loyalty from staff members. Our research paper will open new avenues
to the ethical dilemmas

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Table of Contents

Particulars Page No.

What is Business Ethics 4
Ethics and military 4
Overview of issues in Business Ethics 6
Ethics in Indian context: Scope of business ethics 6
Approaches to Business ethics. 8
Importance of Ethics in Business. 9
Ethics and legality (code of ethics) 10
Issues in business ethics(Types of Morally Questionable acts) 12
Problems in its follow up 12
Ethical considerations in Corporate Entrepreneurship 13
Ethics and teaching field 15
List of Most Ethical Companies in the world 15
Unethical Companies 18
Conclusion 22

WHAT IS BUSINESS ETHICS?

Business ethics is a form of applied ethics or professional ethics that examines ethical
principles and moral or ethical problems that arise in a business environment.

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It is also known as corporate ethics. It applies to all aspects of business conduct and is
relevant to the conduct of individuals and business organizations as a whole. Example
for it deals with the ethical question in the field of medical, technical, legal and
business ethics.

ETHICS AND MILITARY:

Today the corporate world has so many challenges. It can immensely benefit from the
army ethos that stress on dedication, justice, equality and total commitment.
Col Dr. Kailash Chand
Introduction
The high level of transparency in the functioning of the Indian army and other
government and private organizations has created so much of scope to benefit from
each other. The military as an organization has very time tested ethos enabling it to
keep its head very high, both during peace as well as war.
The army ethos has so much of applicability in any other government and civil
organization and the corporate sector in particular can benefit immensely from it.

A look at some of the military ethos:

1. The first military ethos is to live and die for each other and this creates lot of
esprit de corps and camaraderie amongst everyone.
2. The second military ethos is to apply the principle of impartiality and justice
to everyone across board and this creates a lot of mutual trust and confidence
amongst the soldiers of Indian Army.
3. The third military ethos is to create a family feeling amongst everyone and this
happens by respecting the religion, the tradition and the culture of each other.
The principle of secularism is the root of the survival of the Indian Army.
Everyone, irrespective of his caste, color, and creed is soldier and that is the
only religion followed by everyone.
4. The fourth military ethos is to put the interest of the country at the top most
level under any circumstances and then comes the welfare of the subordinates
and the welfare of the officers’ class comes only at the last. This creates a total
sense of patriotism and nationalism amongst everyone and very high level of
officers-man relationships gets established.
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Blending of military ethos in the corporate culture and other sector
All above mentioned military ethos, if followed in letter and spirit, can further
enhance the homogeneity and the integrity of the corporate sector and all other
sectors.
Ensuring of best mutual understanding and following the principle of impartiality and
justice enhances the working environment of any organization. All the top and middle
level managers need to connect properly with their subordination to understand them
in totality and to get the maximum from them.
The subordinates in any organization only play up when they have full faith and
confidence in their leaders. The real welfare of any subordinate is only ensured by
giving him the best of his duties. Any kind of recruitment and promotion in the
corporate world has to be based on the principle of meritocracy and impartiality. The
maximum cohesion and integrity within an organization has to be ensured to create a
true family feeling.
Today, the corporate world has so many challenges to meet and only the best of
dedication and sincerity in all the team members can help it to achieve its targets. It is
therefore very essential for the employees of corporate world to treat their respective
companies as their homes and to render their best of loyalties to achieve the maximum
in such a competitive world.
The time has come for the Army and the corporate world to exchange its ethos and
culture with each other to achieve the best of intermingle.
The issue of maintaining the best of security by every organization & establishment of
Indian Army is very well understood and suitable mechanisms need to be devised to
interact and exchange ideas and information with the corporate world and any other
sector without compromising in this regard in any matter what so
ever.

OVERVIEW OF ISSUES IN BUSINESS ETHICS:

• This part of business ethics overlaps with the philosophy of business, one of
the aims of which is to determine the fundamental purposes of a company.
If a company's main purpose is to maximize the returns to its shareholders,

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 then it should be seen as unethical for a company to consider the interests and
rights of anyone else.
• Corporate social responsibility or CSR: an umbrella term under which the
ethical rights and duties existing between companies and society is debated.
• Issues regarding the moral rights and duties between a company and its
shareholders: fiduciary responsibility, stakeholder concept. shareholder
concept.
• Ethical issues concerning relations between different companies: e.g. hostile
take-overs, Leadership issues: corporate governance; Corporate Social
Entrepreneurship
• Political contributions made by corporations.
• Law reform, such as the ethical debate over introducing a crime of corporate
man slaughter (crime in several jurisdictions).
• The misuse of corporate ethics policies as marketing instruments.

ETHICS IN INDIAN CONTEXT:

SCOPE OF BUSINESS ETHICS

Since business ethics is the normative science of conduct, i.e., its function is to judge
the moral worth of conduct with reference to a norm ideal or standard the scope of
business ethics is wide.
Business ethics covers all aspects of business as there is no business conduct which is
totally free from moral consideration. As science of conduct, it is concern with the
ideal or slandered to which business conducts should be conform.

Scope of business ethics

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 Societal Stakeholder’s Internal Personal
level levels policy level policy level

1) Societal level

A) Concern for poor and down trodden

B) No discrimination against any particular section/group
C) Concern for clean environment
D) Preservation of scarce recourses for prosperity
E) Contributing to better quality of life.

2) Stakeholder level

A) Employee
B) Customers
C) Shareholder
D) Bank and other landing institutes
E) Government.

3) Internal policy level

A) Fair practices relating to recruitment, compensation, lay off, perks,

promotion, etc.
B) Transformational leadership to motivate employee to aim and better and
higher things in life.
C) Better communication at all level.
4) Personal policy level

A) Not to misuse other for personal end.

B) Not to indulge in politics to gain power
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 C) Not to spoil promotional chances others
D) Promises keeping
E) Mutual help.

APPROACHES TO MANAGERIAL ETHICS

ORGANIZATIONAL IMMORAL AMORAL MORAL

CHARACTERISTICS MANAGEMENT MANAGEMENT MANAGEMENT
Ethical norms Managerial Management is neither Managerial activity
dicisions, actions, moral nor immoral, but conforms to a standard
and behaviour decisions lie outside the of ethical, or right,
imply a positive sphere to which moral behaviour. Managers
and active judgements apply. conform to accepted
opposition to what Managerial activity is professional standards
is moral. Decisions outside of a particular of conduct. Ethical
are discordant with code. A lack of ethical leadership is
accepted ethical perception and moral commonplace on the
principles. An awareness may be part of management.
active negation of implied.
what is moral is
implied.
Motives Selfish: Well-intentioned but Good: Management
Management cares selfish: The impact on wants to succeed but
only about its or others is not considered. only within the confines
the company’s of sound ethical
gains. precepts (fairness,
justice, due process).
Goals Profitability and Profitability; other Profitability within the
organizational goals not considered. confines of legal
success at any obedience and ethical
price. standards.
Orientation toward law Legal standards are Law is the ethical Obedience is toward the
barriers guide, preferably the letter and spirit of the
management must letter of the law. The law. Law is a minimal

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 overcome to central question is what ethical behaviour.
accomplish what it managers can do Managers prefer to
wants. legally. operate well above what
the law mandates.
Strategy Exploit Give managers free Live by sound ethical
opportunities for rein. Personal ethics standards. Assume
corporate gain. Cut may apply but only if leadership position
corners when it managers choose. when ethical dilemmas
appears useful. Respond to legal arise. Enlightened self-
mandates if caught and interest prevails.
required to do so.

IMPORTANCE OF BUSINESS ETHICS IN BUSINESS

Profit Maximization

The importance of ethics in business can be understood by the fact that ethical
businesses tend to make much more profits than the others. The reason for this
is that customers of businesses which follow ethics are loyal and satisfied with
the services and product offerings of such businesses are satisfied, they will
become loyal to the company and come back again for re-purchasing. .

Efficient Utilization of Business Resources

In an organization, people working at the junior levels often emulate the ones
working at the top. The same applies with ethics too. If the management or
seniors of an organization follow ethical business practices, i.e, they do not
bribe to get their way or they do not cheat the customers, investors, suppliers,
etc., the employees will follow suit. The employees too will refrain from using
the office property or resources for personal benefits. This will result in better
and efficient utilization of the business resources.

Creates Goodwill in the Market

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 An organization, which is well known for its ethical practices, creates a
goodwill for itself in the market. Investors or venture capitalists are more
willing to put their money in the businesses which they can trust. Shareholders
too, remain satisfied with the practices of an ethical businesses. Thus, the
importance of business ethics in creating goodwill and building long term
relationships, can not be denied. Also, an ethical business puts greater value
on its employees and thus, employees remain loyal to such an organization
too.

ETHICS AND LEGALITY(CODE OF ETHICS):

Ethics and Laws:
For the entrepreneur the dilemma of legal versus ethical is a vital one. Just how far
can an entrepreneur go in order to establish his or her venture? Survival of the venture
is a strong motivation for entrepreneurs, and although the law provides the boundaries
for what is illegal (even though the laws are subject to constant interpretation), it does
not supply answers for ethical considerations.

Major Problems Regarding Laws Reflecting Ethical Standards:

1. The moral standards of members of society may be based on a lack of
information relative to issues of corporate conduct. Most people were
apparently unaware of the payments of large foreign bribes until the
revelations of the Lockheed case and the subsequent Securities and Exchange
Commission study. Many people now may be unaware of the magnitude of the
toxic-waste disposal problem, with 231 million metric tons of waste being
produced annually. It is difficult for personal moral standards to influence the
law if relevant information is missing.
2. The moral standards of members of society may be diluted by the formation of
small groups. People with similar norms, beliefs, and values tend to become
associated in small groups, but these standards generally are not precisely
similar among all members, and compromises have to be made. Further, many
small groups act from motives other than morality; economic benefits and

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 professional prestige often seem to be stressed. It is difficult for personal
moral standards to influence the law if they are not conveyed accurately.
3. The moral standards of members of society may be misrepresented in the
consensus of large organisations. Many organisations do share norms, beliefs,
and values, but no evidence indicates each individual and each group within
the organisation has equal influence, or even equal weighted influence, in
determining that consensus. This can be seen in the norms, beliefs, and values
of many non-profit organizations, such as hospitals and universities; the
standards of the professional personnel- the physicians and the faculty- often
seem to predominate.
4. The moral standards of members of society may be misrepresented in the
formulation of the laws. This is the same point made about shaping the
consensus of an organization, though on a larger scale. No guarantees exist
that all organizations have equal influence, or even equal influence weighted
by size, in determining the law. This can be seen in the provisions of much tax
legislation; certain organizations always seem to be favoured.
5. The legal requirements formed through the political process are often
incomplete or imprecise and have to be supplemented by judicial court
decisions or administrative agency actions. This can be seen in both product
liability cases and equal employment reviews; the meaning and the application
of the law have to be clarified outside of the legislative process. It is difficult
for personal moral standards to influence the law if they are considered only
indirectly- if at all- in two of the means of formulating that law.

TYPES OF MORALLY QUESTIONABLE ACTS

TYPE DIRECT EFFECT EXAMPLES

Nonrole Against the firm Expense account cheating
Embezzlement
Stealing supplies
Role failure Against the firm Superficial performance appraisal
Not confronting expense account cheating

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 Palming off a poor performer with inflated praise
Role distortion For the firm Bribery
Price fixing
Manipulating suppliers
Role assertion For the firm Investing in South Africa
Using nuclear technology for energy generation
Not withdrawing product line in face of initial allegations
of inadequate safety

ETHICS AND BUSINESS DECISIONS:

In addition to the normal challenges of business decisions, the entrepreneur is faced

with specific ethical dilemmas. The above figure illustrates four main themes of
ethical dilemmas- conflict of interests, personality traits, responsibility to
stakeholders, and level of openness. The conflict of interests theme deals with much
of what was mentioned earlier in the chapter concerning morality and economic trade-
offs. It involves the constant tension of trying to separate the “person” from the
“business decision.” Personality traits relate more specifically to relationships and
personal issues. In many instances, the personal issues or individual personalities
cause the dilemma. The responsibility to stakeholders theme incorporates the pressure

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 of managerial rationalization discussed earlier and emphasizes the importance of
having a code of conduct. Finally, the level of openness suggests that entrepreneurs
need to be more public about their values and expectations. Once again, the value of a
code of conduct is evident with this theme.

Amid these dilemmas, the entrepreneurs are challenged by the need to make business
decisions each day. Many of these decisions are complex and raise ethical
considerations.

ETHICAL CONSIDERATIONS IN CORPORATE

ENTREPRENEURSHIP

Organizationa LEADERSHIP ISSUES

INTERNAL NETWORK ISSUES
l obstacles
SYSTEMS STRUCTURES STRATEGI
POLICIES &
C PEOPLE CULTURE
PROCEDURES
DIRECTION
Managerial Misdirected Restricted Long, complex No vision Parochial Ill- defined
Dilemmas reward & communications approval cycles from the top bias values
evaluation channels
systems Lack of Extensive Lack of “Turf” Lack of fit
accountability documentation commitment protection
requirements from senior Values that
executives conflict
with
Unrealistic No role manager’s
performance models at the
criteria top
Ethical
CARRERISM AMORAL PARADIGM
consequences
Solutions ASSESSMENT OF ENTREPRENEURIAL ACTIVITY + CORPORATE
ENTREPRENEURSHIP TRAINING PROGRAM

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Corporate entrepreneurs- described in the academic literature as those managers or
employees who do not follow the status qup of their co-workers- are depicted as
visionaries who dream of taking the company in new directions. As a result, though,
in overcoming internal obstacles to reaching their professional goals they often a fine
line between clever resourcefulness and outright rule breaking. Researchers Donald F.
Kuratko and Michael G. Goldsby developed a framework as a guideline for managers
and organizations seeking the barriers that middle managers face in trying to be
entrepreneurial in less supportive environments, the unethical consequences that can
result, and a suggested assessment and training program for averting such dilemmas.
The barriers include the organizational obstacles under two major categories: internal
network issues and leadership issues. The specific barriers to innovate actions include
systems, structures, policies and procedures, culture, strategic direction and people.
Based on these barriers and the managerial dilemmas that can be caused, the
researchers advice companies that embrace corporate entrepreneurship to: (1)
establish the needed flexibility, innovation, and support of employee initiative and
risk taking; (2) remove the barriers that the entrepreneurial middle manager may face
to more closely align personal and organisational initiatives and reduce the need to
behave unethically; (3) include an ethical component to corporate training that will
provide guidelines for instituting compliance and values components into state-of-the-
art corporate entrepreneurship programs. However, even if corporate entrepreneurship
is supported, some managers may still pose ethical risks to the company.
Unfortunately, rarely will everyone in an organisation do the right thing. For this
reason, it would be wise to include an ethical component in corporate training
programs to insure everyone is aware of the expectations and vision of senior
management. It is believed that a more complete training program and approach to
corporate entrepreneurship will make for a better future for both the organization and
its members and prevent future ethical crises.

ETHICS AND TEACHING FIELD

Although new-paradigm researchers often teach enlarged versions of ethics, they
rarely, if ever, write about the ethics of teaching interpretivist inquiry. Five problems
associated uniquely with the teaching of such inquiry are identified: (a) teacher
modeling of a safe psychological classroom environment for students; (b) teaching

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students authentic collaboration; (c) fostering dialogues in racism, sexism, and
classism; (d) high tolerance for "taboo" topics such as sex in the field; and (e)
willingness to make judgments regarding the maturity of students to undertake field
work, especially in sensitive sites.

LIST OF MOST ETHICAL COMPANIES IN THE

WORLD

Aerospace
Apparel
• Harris Corporation
• Comme Il Faut
• Rockwell Collins Inc.
• Nike
• The Aerospace
• Patagonia
Corporation
Automotive
Auctions
• Cummins
• Barrett Jackson Auction
• Ford Motor Company
Company
Johnson Controls
•
Banking Business Services
• Rabobank • Accenture
• Standard Chartered • Noblis
Bank • Pitney Bowes
• Westpac Banking • Dun & Bradstreet
Corporation • Paychex
Chemicals
• Ashland
• Dow Corning Computer Hardware
Corporation • Hewlett-Packard Company
• Ecolab
• Flint Hills Resources
Computer Software Construction and Engineering
• Adobe Systems • CH2M Hill
• Salesforce.com • CRH
• Symantec • Fluor

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• Teradata
Consumer Electronics
• Ricoh
• Xerox
Diversified Industries
• General Electric Co.
Energy and Utilities
• Duke Energy
• FPL Group
• National Grid
• Sempra Energy
• Wisconsin Energy
Corporation
Financial Services
• American Express
• The Hartford
• The Principal Financial
Group
Food Service
ARAMARK
Sodexo
Forestry, Paper and
Packaging
• International Paper
• Stora Enso Oyj
• Svenska Cellulosa
• Weyerhaeuser • Premier
Hotels, Travel & Hospitality Industrial Manufacturing
• Rezidor Hotel Group
• Granite Construction
• Parsons
Consumer Products
• Henkel
• Kao
• L’ORÉAL
• Mattel
Electronics and Semiconductors
• Freescale Semiconductor
• Texas Instruments
Environmental Services
• Waste Management
Food and Beverage
• Campbell Soup Company
• General Mills
• PepsiCo
• Solae
Food Stores
Trader Joe’s
Wegmans
Whole Foods Market
Healthcare
• Cleveland Clinic
• Hospital Corporation of America
• J M Smith Corporation
• Johns Hopkins
• Caterpillar
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 • Deere & Company
• Eaton
• Wyndham Worldwide • Milliken and Company
• Rockwell Automation
• Timken
Insurance
• Aflac Internet
• Swiss Re • Google
• Wisconsin Physicians • Zappos
Service
Media, Publishing and
Medical Devices
Entertainment
Becton, Dickinson and Company
Thomson Reuters
Royal Philips
Time Warner
Pharmaceuticals
Real Estate
AstraZeneca
Jones Lang LaSalle
Novo Nordisk
Specialty Retail
• Best Buy
Restaurants and Cafes
• Gap
• Starbucks Coffee
• IKEA
Company
• Target
• Ten Thousand Villages
Telecom Hardware Telecom Services
• Avaya • T-Mobile
• Cisco Systems • Vodafone Group
Transportation and Logistics
• Nippon Yusen Kabushi
Kaisha
• UPS

UNETHICAL COMPANIES: COCA-COLA

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Coca-Cola is the largest soda provider in the world. Although it is widely consumed,
many people are unaware of its labor violations.
The company has come under fire in the last few months for the way in which its
workers are treated in Guatemala. The primary source of all the violence is the
workers’ union. On February 25, 2010, Coke was sued by those Guatemalan laborers,
who claim that they, “endured a campaign of violence” from the people who worked
for the bottling or processing plants owned by Coke (Business Week).
This violence took place in Guatemala City. The perpetrators were employed by
Incasa, which operated the bottling plant (Business Week). One of the plaintiffs is
Jose Palacios, who faced violence after rejoining the workers’ union in 2004. Not
only was he shot at and threatened at the bottling plant, but armed men broke into his
home and threatened his family (Atlanta Business News). A few weeks after this
invasion, in 2005, he was fired without a cause (North American Congress on Latin
America).
Another plaintiff in the case is Jose Chavez, a prominent union leader. In 2008, after
he participated in collective-bargaining activities in Guatemala City, returned home to
his waiting family. Upon his arrival, Chavez’s son and nephew were brutally
murdered in front of his eyes and his 16 year old daughter was gang-raped (North
American Congress on Latin America). This violence was a response to his activity in
the union.
Coca-Cola has faced legal action by workers before. In 2001, it was sued by union
laborers in Colombia for violence against unionized workers. In a statement at Coke’s
annual meeting of shareholders in 2005, the company claimed, “Our Company and
our bottling partners have been accused of complicity in the murder of union
members and the ongoing intimidation of union members and of the suppression of
union activity in Colombia. The allegations are not true” (PBS). The company paid
more attention to the problem only after an international boycott began in 2003
(Business Week). Ultimately, Coca-Cola and its bottlers were found not guilty and
cleared of any wrong-doing by Colombian courts (PBS). When the case was brought
to the United States, Coca-Cola fought to have its name removed from the lawsuit and
got its wish.

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Although this has not been widely publicized, the labor violations of Coca-Cola are a
prominent issue. Consumers of Coke, and other items produced by corporations with
foggy labor practices, have to ask themselves how they can make a difference.
Students at colleges across the United States, one being Rutgers University, have
started boycotts of the soda. Rutgers students were successful in their activism, and
the university has switched its contract to Pepsi (Killer Coke).
A new documentary was released in 2009 called “The Coca-Cola Case.” It was filmed
by German Gutierezz and Carmen Garcia to highlight “the reality of union busting at
Coca-Cola bottling plants in Colombia, Guatemala and Turkey” (Green Muze). This
movie reveals the practices of just one of the many multi-national corporations and
upon watching it, the consumers will hopefully be inspired to better inform
themselves about the products they consume (Green Muze). Here is a link to the
trailer for this documentary: The Coca-Cola Case.
Coca-Cola is one of the most powerful corporations in the world. Its business
practices have to be questioned by the consumer to ensure that labor violations are not
being committed.

There was a suicide done by a girl in the Infosys, Mysore girl’s hostel. The news
came from of the employees working in that campus. The possible reason told by the
employees could be due to excessive pressure of training that she could not handle.
Moreover the HR person there asked the other employees not to disclose this incident
to secure the repo of the company.

Infosys sacks techies for ‘unethical behaviour’

Infosys Technologies has sacked a software engineer, Abhishek Gupta, for making a
hoax call to budget carrier GoAir at Delhi airport Oct 25 to avoid missing his
Bangalore-bound flight, a company official said here on Tuesday.
“Yes, we have sacked Gupta for indulging in unethical behaviour. We have a very
strict code of conduct. We take strict action against those who do not adhere to it,”
Infosys board member and head of HRD and education and research T.V. Mohandas
Pai told media.
The 25-year-old Gupta caused a bomb scare by telling GoAir staff that there was
some suspicious object on the plane after he failed to convince them earlier to delay
the flight.

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“He thought the hoax call will delay the flight and he could reach the airport in the
meantime to catch the flight,” a Delhi police official said after Gupta was taken into
custody and jailed.
The IT bellwether has also suspended another software engineer, Pallav Chakraborty,
after he was arrested with his wife Sinchita by the Bangalore police Dec 29 for
allegedly torturing their 15-year-old domestic maid.
“Though Chakraborty joined the company 15 days before his arrest, we suspended
him after an inquiry into the child abuse, which is a very sad thing to have happened,”
Pai said.
As the police were investigating the case and the accused was in the judicial custody,
Pai said the company would take strict action against him after the law had taken its
course.
“We do not condone such acts. We are saddened by such an inhuman act. We have
109,882 employees on rolls. I think as we grow bigger, we are not the sample but part
of the universe,” Pai said on the margins of a media briefing on the company’s
financial performance for the third quarter.
Pallav and Sinchita, who hail from Kolkata, brought the girl from West Bengal for
household chores.
A social organisation rescued the girl after raiding the house following a tip that a
young domestic maid was in a bad state with injuries on her back and cut marks on
her lips.
The police did not name the victim to protect her privacy and not to hamper
investigation.
The company was also forced to suspend another engineer, Krishnamurthy, working
at its Mysore development centre, after the police arrested him Dec 3 on the charge of
molesting a French woman.
“Krishnamurthy remains suspended as police inquiry is still on. We will not spare
anyone if (his or her) behaviour is not in line with our code of conduct,” Pai said.
The three incidents occurred at a time when the company was recovering from the
impact of a year-long global tech meltdown.

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CONCLUSION

Ethics in business is necessary. Business does not operate in a vacuum. Firms and
corporations operate in the social and natural environment.
Because of Irrespective of the demands and pressures upon it, business by virtue of its
existence is bound to be ethical for at least two reasons: one, because whatever the
business does affects its stakeholders and two, because every moment of action has
courses of ethical as well as unethical paths wherein the existence of the business is
justified by ethical alternatives it responsibly chooses.

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