BUSINESS ETHICS & CORPORATE SOCIAL RESPONSIBILITY

CHAPTER-1
INTRODUCTION TO BUSINESS ETHICS

ETHICAL KNOWLEDGE IS NOT PRECISE KNOWLEDGE LIKE MATHIMATICS

OR LOGIC BUT GENERAL KNOWLEDGE. IT IS A PRACTICAL DISCIPLINE
RATHER THAN THEORETICAL.

IN SIMPLE WORDS, ANY ETHICAL CONDUCT BRINGS PEACE AND

HARMONY TO THE PERSON AND TO THE COMMUNITY AND UNETHICAL
CONDUCT BRINGS PAIN AND MISERY.

IT GIVEN GUIDELINES FOR THE COMPANIES RESPONSE AND

ACCOUNTABILITY TO ITS VARIOUS STAKEHOLDERS LIKE SHAREHOLDERS,
CUSTOMERS, EMPLOYEES, DIRECTORS AND MANAGEMENT,
SUPPLIERS,REGULATORY BODIES, GOVERNMENT ETC.

IT HAS TO MAINTAIN FINE BALANCE AND TAKE CARE OF THE INTEREST

OF SHAREHOLDERS ON ONE HAND AND EMPLOYEES AND DIRECTORS ON
OTHER HAND. BUSINESS ETHICS ALSO DEALS WITH THE RESPONSIBILITY
OF THE MANAGERS AND EMPLOYEES IN A COMPETITIVE BUSINESS.

“THERE IS A GROWING REALISATION ALL OVER THE WORLD THAT

BUSINESS ETHICS IS IMPORTANT FOR ANY BUSINESS AND THE PROGRESS
OF ANY SOCIETY.ETHICS ALONG, NOT GOVT. NOR LAWS CAN PROTECT
THE SOCIETY. AN ETHICALLY RESPONSIBLE COMPANY IS ONE WHICH HAS
DEVELOPED THE CULTURE WHICH FLOWS THROUGHOUT THE
ORGANISATION FROM THE TOP MANAGERS AND LEADERS.

WHY STUDY BUSINESS ETHICS?

1) BUSINESS EXECUTIVES AND MANAGERS STUDY THE VARIOUS

ETHICAL THEORY, ETHICAL PRINCIPLES AND ETHICAL
JUDGEMENTS.
2) IT WILL HELP BUILD AND GROOM A VALUE BASED ORGANISATION.
IN A VALUE BASED ORGANISATION THERE IS A HIGH DEGREE OF
TRUST AND INTEGRITY.
3) IT CREATES AWARENESS ABOUT THEIR SOCIAL RESPONSIBILITY
4) MAKING THEM BETTER INDIVIDUALS STUDY OF ETHICS

THUS ETHICAL CONDUCT WOULD BE A SELF-REALISED CONDUCT WHICH

WOULD GIVE A NEW VISION.
ADVANTAGES

1) IT BUILDS A VALUE BASED ORGANISATION ETHICAL BEHAVIOUR IS

IMPORTANT FOR BUSINESS LEADERS.E.G. TATA GROUP OF
COMPANIES HAS A VERY GOOD REPUTATION OF BUSINESS ETHICS.
2) IT CREATES AWARENESS ABOUT THE CORPORATE SOCIAL
RESPONSIBILITY OF BUSINESS.
3) BUSINESS ETHICS IS A PRACTICE AND MANAGERS HAS TO STUDY
THE THEORY OF BUSINESS ETHICS.
4) PRACTISING ETHICS AT WORK PLACE MAKES THE INDIVIDUAL
ASSOCIATED WITH THE ORGANISATION AWARE ABOUT THEIR
DIVINE NATURE AND BRINGS PEACE AND HARMONY.

BUSINESS ETHICS – ROLE AND IMPORTANCE

BUSINESS ETHICS IS A FORM OF APPLIED ETHICS THAT EXAMINES

ETHICAL PRINCIPLES AND MORAL OR ETHICAL PROBLEMS THAT ARISE IN
A BUSINESS ENVIRONMENT.

IMPORTANCE OF BUSINESS ETHICS IN AN ORGANISATION

1) STANDARD BEHAVIOR
WHEN WE TALK ABOUT BUSINESS ETHICS, USUALLY WE ARE
SPEAKING OF STANDARDS OF BEHAVIOR IN THE
WORKPLACE.COMPANIES KNOWN FOR HIGH ETHICAL STANDARDS
USUALLY HAVE AN ETHICAL CODE STATING THAT THEY TREAT
EVERYONE WITH DIGNITY.
2) SHORT TERM GAIN AND LONG TERM PAIN V/S SHORT TERM PAIN
AND LONG TERM GAIN
PEOPLE NORMALLY LIKE TO TAKE A SHORT CUT TO SUCCESS NOT
REALIZING THAT SHORT TERM GAINS LEAD TO LONG TERM PAIN.
UNETHICAL BEHAVIOR USUALLY BREEDS MORE UNETHICAL
BEHAVIOR.

3) VALUE BASED LEADERSHIP CREATES ETHICAL PRATICES

MOST PEOPLE IN POSITION OF POWER TEND TO BECOME MORE
EGOCENTRIC AND SELF-FOCUSED. THIS LIMITS THEIR CAPACITY TO
UNDERSTAND THE VIEWPOINTS OF OTHER PEOPLE.
4) MORAL VALUES OF EMPLOYEES
EMPLOYEES OF A FIRM HAVE THE MORAL OBLIGATION TO
MAXIMIZE SHAREHOLDER VALUE.
 5) STRONG AND INDEPENDENT BOARD
BUSINESS ETHICS ARE CRITICAL FOR MEMBERS OF COMPANY
BOARDS, A PEOPLE SHOULD PROVIDE A GREAT DEAL OF MORAL
LEADERSHIP.IN SOME CASES BOARD MEMBERS TURN TO BLIND EYE
TO DEVELOPING PROBLEMS AND THIS CAN MAKE BAD SITUATIONS
WORSE.
6) ROLE OF REGULATION IN BUSINESS ETHICS
LAGISLATING SOME ETHICAL BEHAVIOR CAN HELD KEEP THE
MARKET PLACE FREE OF MONOPOLISTIC BEHAVIOR AND
SAFEGUARD STAKEHOLDERS SUCH AS PARTNERS, CUSTOMERS AND
INVESTORS.
7) ROLE OF IT AND BUSINESS ETHICS
SOME OF THE BIGGEST ISSUES WITH ETHICS AND TECHNOLOGY
CAN BE FOUND IN SECURITY AND PRIVACY CONCERNS.ETHICAL
COMPANIES DO THEIR BEST TO PROTECT COMPANY ASSETS
WITHOUT MAKING PEOPLE FEEL AND THIS BALANCE IS
INCREASINGLY IMPORTANT FOR INNOVATION AND CREATIVITY.

ETHICS OF ACCOUNTING INFORMATION

- CREATIVE ACCOUNTING, EARNINGS MANAGEMENT, MISLEADING

FINANCIAL ANALYSIS.
- INSIDER TRADING, SECURITIES FRAUD, FOREX SCAMS,
- EXECUTIVE COMPENSATION – EXCESSIVE PAYMENTS.
- BRIBERY, KICKBACKS
EXAMPLES – ENRON, ANDERSON ETC.
ETHICS OF HRM

THE ETHICS OF HRM COVERS THOSE ETHICAL ISSUES ARISING AROUND

THE EMPLOYER-EMPLOYEE RELATIONSHIP.
-DISCRIMINATION ISSUES INCLUDE DISCRIMINATION ON THE BASES
OF AGE, GENDER,RACE, RELIGION, DISABILITIES, WEIGHT AND
ATETRACTIVENESS.
-ISSUES SURROUNDING THE REPRESENTATION OF EMPLOYEES AND THE
DEMOCRATIZATION OF THE WORKPLACE, UNION BUSTING, STRIKE ETC.
-ISSUES AFFECTING THE PRIVACY OF THE EMPLOYEE
-ISSUES AFFECTING THE PRIVACY OF THE EMPLOYER
-ISSUES RELATING TO THE FAIRNESS OF THE EMPLOYMENT CONTRACT
AND THE BALANCE OF POWER BETWEEN EMPLOYER AND EMPLOYEE.
-OCCUPATIONAL SAFETY AND HEALTH.
ETHICS OF SALES AND MARKETING
MARKETING ETHICS OVERLAPS STRONGLY WITH MEDIA ETHICS BECAUSE
MARKETING MAKES HEAVY USE OF MEDIA.
PRICING, ANTI-COMPETITIVE PRACTICES, MARKETING STRATEGIES,
ADVERTISEMENTS DETERMINES ETHICS OF MARKETING.

ETHICS OF PRODUCTION
IT DEALS WITH THE DUTIES OF A COMPANY WHICH ENSURE THAT
PRODUCTS DO NOT CAUSE HARM.
-DEFECTIVE, ADDICTIVE DANGEROUS PRODUCTS AND
SERVICEDS(TOBACCO, ALCOHOL, HAZARD CHEMICALS)
-ETHICAL RELATIONS BETWEEN COMPANY AND ENVIRONMENTAL
POLLUTION, CARBON EMISSIONS ETC.
-ETHICAL PROBLEMS ARISING OUT OF GENETICALLY MODIFIED FOODS,
MOBILE PHONES RADIATION ETC.
EXAMPLES – BHOPAL GAS TRAGEDY.

ETHICS OF INTELLECTUAL PROPERTY

PATENT INGRINGEMENT, COPYRIGHT INFRINGEMENT TRADEMARK
INFRINGEMENT.
-MISUSE OF THE INTELLECTUAL PROPERTY, COPYRIGHT MISUSE.

INTERNATIONAL BUSINESS ETHICS

MANY NEW PRACTICAL ISSUES AROSE OUT OF THE INTERNATIONAL
CONTECT OF BUSINESS.
-COMPARISON OF BUSINESS ETHICAL TRADITIONS IN DIFF. CONTRIES
-ETHICAL ISSUES ARISING OUT OF INTERNATIONAL BUSINESS
TRANSACTIONS.
-GLOBALISATION ISSUES
-VARYING GLOBAL STANDARDS
-OUTSOURCING PRODUCTION.

GLOBAL DRIVERS FOR CHANGE:

Role of Corporate Governance:

Govt. around the world are now well aware of the need for trust in capital markets. US
learned the need to control financial mgmt of listed companies to have ethical codes.

Good ethics are vital to good corporate governance. Co. boards are becoming much more
aware of the need to have the right ethical culture. The culture of an organization is
probably the most important aspect of its system of internal control, and it is the
foundation of other internal controls.
CHAPTER – 2 ETHICS AND MORALITY

Introduction: What is right and what is wrong in human relations. Classes in ethics are
taught not only in the undergraduate courses but also in the professional schools. Doctors,
Lawyers and public administrators attend seminars about morality.

THE MORAL SITUATION: It involves moral agents with both rights and duties.

1) Rights and Duties: Human rights are universal rights and should be contrasted
with legal or civil rights. Rights and duties are reciprocal. I have a right to my life
and therefore have a duty not to take away your life.
2) Virtues and Vices: In society, certain approved traits, such as unselfishness,
honesty, courage, and self-control are almost universally encouraged, these
qualities are called virtues. Other characteristics, such as murder, theft, cheating
are regarded as undesirable, these failings are called vices.
3) Agreements and Laws: One way for a group of people to protect their rights and
lead an orderly social life is through agreements, including understandings,
principles and laws.
4) Changes in Morals: Morals evolve, as do social life and institutions.

ASSESSING MORALITY: In assessing morality we have to consider motives, means

and consequences.

a) Motives: Motives are basic for determination of morality.A good motive

is a prerequisite to conduct that we approve without qualification. Define
the good as “good will”. Nothing can be possibly be conceived in the
world, which can be called good without qualification, except a goodwill.
b) Means: The term means can be defined as an agency, instrument or
method used to attain an end.
c) Consequences: Consequences are the effects or results of moral decision
based on a value. The terms moral and ethics are closely related in their
original meanings.

MORAL JUDGEMENTS: The question of morality may be the central issue of our time,
there is a renewed interest in rethinking goals and values in contemporary society.

NORMATIVE ETHICS: Which is concerned with the principles by which we ought to

live.The highest values by which moral judgements are made are often referred to as
norms, principles, ideals or standards.For example, happiness is chosen by some
philosophers as the highest value by which we should judge morality, happiness may also
be regarded as a norm, a principle, an ideal, or a standard.
There are diff. Approaches to the problems of morality:

1) Absolutism: is to hold to some belief or line of conduct and to appeal to some

absolute authority for its support.The second is to claim that morality is entirely
relative and that there are no fixed moral standards.The third approach is situation
ethics.
2) Authority: Reliance on authority has been widespread in human history.Many
authorities have been chosen. They include custom and tradition, moral codes,
churches and other institutions, natural law or the word of some individual. The
role of authority has been weakening in modern society, partly because of the
influences of modern science, historical studies and rapid changes in our life and
work.
3) Relativism: The position that rejects ethical absolutism and the appeal to any
external authority is ethical relativism. The ethical relativists claim that there are
no standards accepted by all people everywhere and that custom can make
anything appear right.
4) Subjectivism: Ethical relativism holds that all ethical norms originate in the
human intellect or emotions and are therefore subjective.

AN ETHICAL DILEMMA: If the question of morality is the central issue of our time,
we may appear to have a dilemma. For example, a young man is living with his old
mother. He is the sole source of happiness to her. He lived in France during the second
world war.The young man is caught in a ethical dilemma as he believes that as a young
man he should join army and fight the war however as he is the only child he also has to
take care of his old mother. This is a Ethical Dilemma – To join the war or not?

Ethical Dilemma arises due to the following:

a) Moral Uncertainty: It can be created as you are not sure about the outcome, about
the moral implications and the moral choices you are making
b) Self Imposed ‘dilemma: This is also called as Dharma Sankat.
c) World Imposed Dilemma: This is created due to outside situation which is
beyond once means.
d) Prohibition Dilemma: This is created when to make a choice or not itself is
prohibited by law.There are certain actions prohibited by the law of the country.

HOW TO SOLVE ETHICAL DILEMMA:

1) Consider your own motive and detach them from your decisions.
2) Consider your own code or conduct/ethics.
3) Consider the consequences.
4) Listen to your gut feelings.
MORALITY – PRINCIPLES IN USE TODAY:

Respect for persons: Human beings should be treated as subjects, not objects. Human life
is of significant value.

Autonomy: Human beings deserve personal liberty in order to make informed

judgements and decisions about their lives.Women and men should be self-determining
within the context of their own societies.

Beneficence : Do good, promote goodness, this standard rejects knowingly doing evil.

Nonmaleficence: Do not harm, prevent harm.This principle rejects knowingly doing

harm.

Justice: Human beings ought to be provided with what is fair and what is deserved,
goodness should be distributed among people.

Honesty: Telling the truth is the norm, it is essential to promote and maintain respect for
persons.

CHAPTER – 3

VARIOUS SCHOOLS OF THOUGHTS

Various Ethical Theories: We will study various moral theories, begin with their
historical origins and then proceed to examine their content. Some theories judge in terms
of character or nature of act itself, others in terms of consequences of the action and some
on the basis of the motive.

1) UTILITARIANISM: “Nature has placed mankind under the governance of true

sovereign master, pain and pleasure. It is for there alone to point out what we
ought to do, as well as to determine what we shall do.”
Bentham is a widely recognized leader of the English Utilitarians of the view that
we should judge ideas, actions,and institutions on the basis of their utility or
usefulness or their ability to produce happiness. He believed that pleasure is
ultimate standard of morality.

2) DEONTOLOGICAL: Deon is the Greek word for duty means morals and it
believes in intrinsic worth of the action itself-whether good or bad.

3) NATURE LAW THEORY: “We word these truths to be self evident, that all men
are created equal and that they are endowed by their creation with certain
inalienable rights, among which are life, liberty and pursuit of happiness.” The
idea that morality is based on human nature is of natural law theory.
 4) MACHIAVELLI SCHOOL: Machiavelli goal was to rule Italy and he worked
relentlessly towards that end. We see today, businessman, executives as driven by
targets, goals and objectives who advocate this philosophy and believe that morals
are only tobe read and not be practiced.

5) HEDONISTIC SCHOOL: Hedonism is the doctrine that teaches happiness is the

highest good.

6) PRAXIS SCHOOL: There is nothing immoral and unethical unless there is

deception and manipulation involved. Motive and intentions have to be clear and
straight forward.

NORMATIVE ETHICS: Pleasure or happiness as the ethical standard.

The first of these is derived from the Greek word for pleasure, Epicureanism.
Epicurus, a Greek Philosopher founded the school of thought called Epicureanism.
He taught that pleasure and happiness are the natural purpose of life. He believes:
a) The blessed and immortal nature knows no trouble itself nor causes trouble to any
other so that it is never constrained by anger or favour.
b) Death is nothing to us
c) The limit of quantity in pleasures is the removal of all that is painful.
d) Pain does not last continuously.
e) It is not possible to live pleasantly without living prudently.
f) To secure protection from men anything is a natural good.
g) Some men wish to become famous, thinking that they would thus win.
h) No pleasure is a bad thing in itself.
i) If every pleasure could be intensified so that it lasted and influenced the whole
organism or the most essential parts of our nature, pleasures would never differ
from one another.

CHAPTER – 4 ETHICAL ISSUE IN MANAGEMENT

What is right, proper and just? These terms, and these question are going to become more
important in the future than in the past as our society becomes more crowded, our
economy more competitive and our technology, morfe complex. It focuses on what are
our relationships with our employees, customers, shareholders, society etc. What do we
owe to an employee who has been loyal with the company for over 2 decades and is now
no longer required? What do we owe to our shareholders and how do we maximize their
returns and at the same time do our best for the other stakeholders?

EXAMPLES OF ETHICAL PROBLEMS IN MANAGEMENT:

Pricing : An economic decision based upon cost and demand.

- Low Quality trap : Consumers will assume that the quality is low, if the product
is priced low.
 - Discounts : The discounts are factored in the price.
- Bundling : The Company prices the entire product including the parts, home
delivery, free after sales service etc.

Advertising Messages: Truth in advertising is a complex issue and emotional one.

Product Promotions: Advertising is one form of promotion, another is the use of free
gifts and price rebates to attract customers. Airlines have developed product promotions
in the form of additional flights and vacation lodgings for frequent flyers passengers who
exceed a given mileage on a particular airline each year.

Working Conditions: The working conditions for many manual and clerical employees
are less than ideal.Temp., humidity, noise levels may be too high, ventilation and lihting
may be too low, and fumes and dust are still found in some workplaces.

Customer Service: Declining product quality has been a concern for many industries.
How do you service the customers? There is a social responsibility of marketing which
looks at ethical, environmental and social context of marketing activities which goes
beyond the customers and is accountable for society as a whole.

Workforce Reduction: It has become common to reduce the size and the overhead cost of
many large companies by discharging some of the employees to create a lean and mean
style of management.

Environmental Pollution: Improper disposal of toxic wastes is clearly illegal, yet some
companies continue to dump chemicals despite possible harms.

Community Relations: The major employer within a local community has substantial
economic power, if the employer has plants in other locations, can move work and
employment among plants.

Supplier Relations: Large corporations have economic power within the communities in
which they operate and are able to have a comparative advantage over their small
suppliers.They are thus able to dictate their terms and conditions which may or may not
be favourable to them.

HOW ETHICS CAN MAKE CORPORATE GOVERNANCE MORE MEANINGFUL?

a) Corporate governance is meant to run companies ethically in a manner such that
all stakeholders, creditors, distributors, customers, employees, the society at large
and governments are dealt in a fair manner.
b) Corporate governance should come from within.
c) There is a number of grey areas where the law is silent or where regulatory
framework is weak.
d) The securities and Exchange Board of India (SEBI) keeps watch on listed
companies and are concerned only with their protection.
 e) The Department of Company Affairs (DCA) has been investigating several
vanishing companies which tapped the capital market, collected more than Rs.800
crores from the public and subsequently became untraceable.

CHAPTER – 5 BUSINESS AND PROFITS

A business is a legally recognized organisatio n designed to provide goods and services to

consumers.Businesses are predominant in capitalist economies. Most businesses are
privately owned. A business is typically formed to earn profit that will increase the
wealth of its owners and grow the business itself.

In accounting, profit is the difference between price and the costs of bringing to market
whatever it is that is accounted as an enterprise (whether by harvest, extraction,
manufacture or purchase) in terms of the component costs of delivered goods and servi
ces and any operating or other expenses.

- Gross profit equals sales revenue less cost of goods sold (COGS)
- Operating profit equals gross profit less all operating expenses.
- Profit Before Tax equals operating profit less interest expense.
- Net profit equals Profit After Tax (PAT).
- Net income less dividends becomes retained earnings.

PROFITABILITY V/S ETHICS: The impression of most people is that ethics and
profit are opposed to one another and that if a company is ethical, it may forget about
making profits. People believe that a profitable company must necessarily be
unethical.This is like saying that a company can make profits only through unethical
means. It is only ethical companies which discharged its social responsibilities and have
contributed to social welfare.

A Shareholder approach has the following characteristics :

- Narrow focus driven by numbers and things that have been qauantified and
measured
- Executive mgmt may react to valuations (mergers, layoffs)
- Performance evaluation tends tobe financially focused.
- Slow to respond to change
- Prople who create value may be viewed as too radical
- The bottom line focus is on earnings
- Traditional approaches to growth

A Stakeholder approach has the following characteristics:

- Sustainable, competitive thinking that tends tobe visionary

- Multi-view of the organization
 - Performance evaluations follow strategic issues, not just operations
- Strong value systems across the entire value-chain
- Easy flow of new ideas and innovation
- People who create value are most likely to advance within the oreganisation
- The bottom line focus is on value – what value are we adding?
- Growth through the intangibles
- Business success is what we create for all stakeholders, not just shareholders

VALUE CREATION: A value is a belief in action. It is a choice about what is good or

bad. Values shape behaviour.Until a value is acted upon it remains an aspiration. Values
are hard to detect yet they underpin organizations like the foundations of a house. If the
foundation is weak, then the house falls down.

PROFITS NOT AN UNETHICAL WORD: It is unethical not to make profits. It is

unethical for a company to make losses. Thus instead of profits being contradictory to
ethics, business ethics dictates that the first responsibility of business is to remain
profitable and generate revenue for the shareholders and the society.

CONCEPT OF TRIPLE BOTTOM LINE (TBL): It is also known as “People, Planet,

Profit” or “the three pillars” captures an expanded spectrum of values and criteria for
measuring organizational success i.e. economic, ecological and social. In practical terms,
Triple Bottom Line accounting means expanding the traditional reporting framework to
take into account ecological, and social performance in addition to financial
performance.The concept of TBL demands that a company’s responsibility be to
stakeholder rather than shareholders.

“People” pertains to fair and beneficial business practices toward labour and the
community and region in which a cooperation conducts its business.

“Planet” refers to sustainable environmental practices. Ecologicalloy destructive

practices, such as overfishing or other endangering depletions of resources are avoided.

“Profit” is the economic value created by the organisaiton after deducting the cost of all
inputs, including the cost of the capital tied up. Watching the bottom line is very
important when one is in business but even more important is keeping a vigilant eye on
one’s business ethics. Putting business ethics first means that employees will be loyal not
out of fear but out of respect.
CHAPTER – 6 MANAGERS AND ENTREPRENEURS

Good ethics is synonymous with good management. The perception that business and
ethics are contradictory is based on a generally accepted view of what managers are
supposed to do and thus, how they are supposed to act.

THE ROLE OF A MANAGER: Social norms and role expectations are powerful drivers
of behaviour.

- Corporate executive is an employee of the owners of the business. He has direct

responsibility to his employers.
- As long as a company does not transgress the rules of the game set by law, it has
the legal right to shape its strategy without reference to anything but its profits.

Manager’s Role :

- Profit maximization is the exclusive goal of business management

- The expectations of others serve as constraints on a manager’s ability to achieve
the exclusive goal of profit.

THE INTERDEPENDENT ENVIRONMENT OF BUSINESS: As long as the role of

management is defined in terms of profit maximization, the conflict with ethics remains.
Most Managers recognize the existence of interdependence and create win-win situations
daily. For instance, most managers don’t insult their subordinates because they know if
they do so, subordinates will be uncooperative.Behaviour is most functional in an
environment of interdependence.

PERSONAL ETHICS V/S PROFESSIONAL ETHICS: Personal ethics depends highly

on personal beliefs and loyalties, and results in behaviour in a person’s life in his
relationships, family and friends. Personal ethics can also change depending on major
events in our lives.

Professional ethics depends highly on the reaquirements of the profession,l looking out
for the interests of the organization as well as the customers.

WHY PROFESSIONAL ETHICS?

We have professions for a reason. It is summed up in the example of the physician who
prescribes aspirin, we need to know whom we can trust ro apply expert knowledge. If
physicians did not identify themselves as members of profession, it would be much
harder to know. Traits of a profession are:

- expertise in a particular area

- the disposition to apply it responsibly
- the members of a profession profess.
WHY PROFESSIONAL ETHICS IN BUSINESS?

Medicine, law and teaching are generally regarded as having an underlying mission.
Business people often get involved in community service.

THE SPECIAL OBLIGATIONS OF MANAGERS:

- To generate wealth
- To provide meaningful and gainful employment
- To contribute to social order and stability
BUSINESS ETHICS & CORPORATE SOCIAL RESPONSIBILITY

UNIT-II INDIAN PERSPECTIVE OF ETHICS

CHAPTER – 7

DHARMA & PURUSHARTH

DHARMA:

This concept is very central to the Indian Philosophy. The Dharma of ice is to cool
anything that comes in contact . The Dharma of fire is to provide heat anything that
comes in contact similarly Dharma of tree is to give shelter. According to Sanatan
Dharma, there are three components of Dharma:
SATYA :
This means complete truth in thoughts, intentions, words and deeds. A man with integrity
who is completely thuthful in thoughts, words and deeds is called a Dharmic Man. He
may belong to any religion yet he follows Dharma.

YAGNA:
It means sacrificing one’s cherised dreams aspirations for a common good. In Yagna, we
offer our dreams and aspirations and have full faith in the divine power.

TAPASYA :
In various religions, there are various rituals and fasts observed to purify our body, mind
and soul. Muslim fast for an entire month of Ramazan, similarly Jains have a week of
Paryushan and Hindus have Shravan. All these rituals are aimed to purify our heart as the
pure hearted only can be entitled to the divine grace of the Lord.
In Mahabharat, we have four categories of Dharma, as explained by Maharshi Vyas
Muni.
1. Dharma : A conduct of Dharma is to believe in charity, tapasya, meditation, non-
violence, pursuit of truth.
2. Apad-Dharma: If someone from enemy camp has come for help, we need to
forgive the soldier and give him shelter, which is Apad Dharma.
3. Adharma: There is a very thin line separating Dharma from Adharma. For
instance, in a forest a Cow goes running in one direction and behind him comes
the cow slaughter, he asks the person if he has seen the cow and in which
direction did she go? The person if he speaks the truth, the cow will be
slaughtered, however, if he does Adharma, and speaks falsely, he misdirects the
slaughter and saves life of the cow.
4. Swadharma: Lord Krishna emphasizes that doing Swadharma is based on one’s
swabhava and aptitude. Swadharma gives an individual freedom to choose his
career and important decisions as per his swabhava.
DHARMIC LEADERSHIP:

A Dharmic leader is someone who tells the prople the difference between right and
wrong. In Dharmic leadership, one places satisfaction and good of maximum number of
people as one of the important goals. In such leadership style, everyone wishes to
contribute meaningfully in the progress of organization or society.

VARNASHRAM DHARMA:

The four social classes in Ancient India:

1. Brahmins: This social class was engaged in imparting knowledge and skills in
different walks of life.This class of people were running GURUKULS to impart
education.
2. Kshatriya: This social class was engaged in protection of the civilians. They
faught was and gave up their life for ideals like Truth, Honour and Dignity.
3. Vaishya: This was the trading community which was engaged in commerce and
business and for providing goods and services to the local community.
4. Sudra: They were the working class which took care of public health and
sanitation and were engaged in keeping the environment neat and clean.

There was another set of rules laid down for different stages of life like:

1. BRAMHACHARYASHRAM: These are the formative years of life which is

from the age of 8 to 21 years when the male child goes to a GURUKUL to learn
and absorb skills.
2. GRIHASTHASHRAM: After acquiring knowledge and skills to maintain his
livelihood, around the age of 25 years he becomes householder having civic
responsibilities and remains a law abiding citizen.
3. VAANPRASTHASHRAM: a male member retires from active social life after he
has completed all his responsibilities, he engages in spiritual pursuits.
4. SANYASASHRAM: This is the last stage of his life, where he would renounce
everything and lives a life of a ascetic.

PURUSHARTHA

The Purusharthas that have been recognized in India from very early times are four:
Dharma(duty). Artha(Wealth), Kama(pleasure) and Moksa(liberation). Dharma, Artha,
Kama and Moksa are the aims or goals of himan life which man ought to strive it
throughout his life. All these four facets of life have to be brought together into a focus of
attention at the same time. Non of these aspects can be ignored in our life. All this is the
foundation that you have to lay for your aspiration towards spiritual perfection.
Historically, the first three goals – Dharma, Artha and Kama were articulated first and the
fourth goal Moksa later. In living tradition, the notion of the four purusharthas represents
a holistic approach to the satisfaction of man’s spiritual, physical and emotional needs.
Dayananda Saraswati explains the concept as follows:
Dharma occupies the first place in the four categories of human goals because the sursuit
of security, artha, kama need to be governed by Ethical Standards.Artha, striving for
security comes second because it is the foremost desire of everyone. The last category is
the goal of liberation, Moksa ranked last because it becomes a direct pursuit only when
one has realized the limitations in the first three pursuits.

CHAPTER – 8

ADVERTISING ETHICS AND SOCIAL RESPONSIBILITY

Advertising Ethics: Advertising tries to convince the audience to do something.

Therefore it is not objective. This fact disturbs those who think that advertising ought
tobe objective neutral and informative. Subtle messages are aimed special groups i.e.
childrens and teenagers, with limited experience.If advertising product is look as
violating ethical standards, customers are able to exert pressure refusing to buy the
product. They are able to complain to the company and other regulator bodies. The
following are the examples of advertising ethics:

- Advertising restrains from making misleading, false, or inaccurate claims

orstatements about his products and services or a competitors.
- Advertising must reveal the fact the neglect would mislead the public.
- Advertisement must clearly reveal where the full text of the guarantee is able to
examine before buying.
ETHICAL IMPLICATIONS OF TECHNOLOGY:
Manager must be responsible for the security and reliability of company information
system.
- Collect special information that is needed.
- Allot user ID passwords that limit the information
- Log out e-mail when leave computers
- Apply safeguards for the security of information and the importance of
confidentiality.

GREEN MARKETING ETHICS AND SOCIAL RESPONSIBILITY:

Green marketing is essential.Organisations and companies ought to introduce of green

mktg programme to ethical motives of social responsibility.It is understood that
environment is now priority for the people and most customers shall opt for the cheapest
and will not take much notice of environmental criteria.

Social responsibility is shown in terms of a brand value rather than as moral principle.
Green communications are the most common problem to which moral considerations of
both a negative and positive nature. Companies try to joint efforts to adjust these issues
by working with suppliers to develop products with more fundamental environmental
improvement than those previously supplied. Collaboration also with competitors,
customers or environmental groups is potentially important means of developing and
reaching green mktg resource and competence available. Customers are now more
concerned about environment issues than ever. The majority of Indians regard a number
of encironmental problems as very serious, such as industrial air and water pollution,
destruction of rain forests and ozone, oil spills, industrial accidents and hazardous waste.
All advertisements contain environmental claims in all media, or ecological domains
related to the production, distribution, pkgs, disposal goods, services. Green advertising
must be legal, decent, truthful and honest.
ENVIRONMENTAL SOCIAL AUDIT: Social audit refers to an audit of social costs
caused by companies and social benefits generated by them, as well as the impact of
safety and health programme, the impact of an environmental control programme, and
social responsibility of business. It is mechanism examining andevaluating activities and
responsibility of companies towards society at every level. It provides information to
management and to the outside wsorld about the impact of company on
society.Environmental awareness promotion and incentives to support them to use
cleaner production technologies are important tasks.

CHAPTER – 9 ILO AND ITS ROLE IN INDIA

INTERNATIONAL LABOUR ORGANISATION (ILO):

International Labour Standards are conventions, treaties and recommendations designed

to eliminate unjust and inhumane labour practices. India is a founder member of the
International Labour Organisation, which came into existence in 1919. At present ILO
has 175 members.

International Labour Conferences: General Assembly of the ILO meets every year in the
month of June.
Governing Body: Exutive council of ILO meets three times in a year in the month of
March, June and November.
International Labour Office: A permanent secretariat. The work of the Conference and
the Governing Body is supplemented by Regional Conferences, Regional Advisory
Committees, Committee of Experts, Panel of Consultants etc.

International Labour Standards and Conventions: Conventions are international treaties

and are instruments, which create legally binding obligations on the countries that ratify
them.The approach of India with regard to International Labour Standards has always
been positive. The ILO have provided guidelines and useful framework for the evolution
of legislative and administrative measures for the protection and advancement of the
interest of labour.
Core Conventions of the ILO:
- Forced Labour Convention
- Abolition of Forced Labour Convention
- Equal Remuneration Convention
- Discrimination Convention
- Freedom of Association & Protection of Right to Organised Convention
- Right to Organise and Collective Bargaining Convention
- Minimum Age Convention
- Worst forms of Child Labour Convention

INTERNATIONAL LABOUR OFFICE: The International Labour Office, Geneva

provides the Secretariat for all Conferences and other meetings and is responsible for the
day to day implementation of decisions taken by the Conference, Governing Body etc.
ILO AND CHILD LABOUR: ILO’s interest in child labour is well known. It has adopted
a number of Conventions and Recommendations in this regard. In India, within the
framework of the Child Labour(Prohibition and Regulations)Act, 1986 and through the
National Policy on Child Labour, ILO has funded the preparation of certain local and
industry specific projects.The implementation of International Programme on Elimination
of Child Labour (IPEC) programmes in India has certainly created a very positive impact
towards understanding the problem of child labour and in highlighting the need to
elimination child labour as expeditiously as possible.

LINKAGE BETWEEN TRADE AND LABOUR STANDARDS:

India and other developing countries had taken the position that labour standards at the
international levels can be appropriately addressed only in the ILO and not in WTO.
ILO is the competent body to set and deal with core labour standards and WTO affirms
its support in promoting such standards.

ILO – India’s Labour Force:

A substantial number of skilled people have left India to work abroad and may remain in
India working alongside a trained industrial and commercial work force. The Trade
Unions Act of 1926 provided recognition and protection for Indian labour union
movement.