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Business Ethics & Corporate Governance

UNIT - II
UNIT - II
VIRTUE
A virtue is a positive trait or quality subjectively deemed to be morally excellent and it is
valued as a foundation of principle and good moral being. A virtue is a trait of character that
leads to good behavior, for example, wisdom, courage, modesty, generosity, and self-
control.
Virtue Ethics
Virtue Ethics describes the character of moral agent as a driving force for ethical behavior.
The general concept behind Virtue Ethics is that it focuses on what the individual should
choose for his / her own personal inward behavior (character) rather than the individual
relying solely on the external laws and customs of the persons culture, and if a persons
character is good then so ought the persons choices and actions be good.
Ethical Dilemma
An ethical dilemma is a moral situation in which a choice has to be made between two
equally likely alternatives. Dilemma may arise out of various sources of behavior or attitude
i.e.., it may arise out of the failure of personal character, conflict of personal values and
organizational goals, organizational goals versus social values etc. Ethical dilemmas involve
problem solving situations in which decision rules are often vague or in conflict.
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Ethical Gap
It is an approachable distance from wrong towards the right. Most people know right from
wrong; however, when it comes to business, sometimes compromising those values can
become a real temptation. This gap is present in any situation, especially business. Its
involved in how we work with customers, colleagues, staff and even family ethically. The
real challenge is to diminish the size of the gap rather than hope to eradicate it altogether.
Ethical Leadership
Ethical leadership is leadership that is involved in leading in a manner that respects the
rights and dignity of others. As leaders are by nature in a position of social power, focuses
on how they use social power in the decisions, actions engage in and ways they influence
others. Leaders who are ethical demonstrate a level of integrity for stimulating a sense of
leader trustworthiness.
Objectives of Ethical leadership
Integrate principles of leadership and principles of ethics
Enhance the capabilities of leaders to recognize and act according to their ethical
beliefs
Provide a forum to discuss how to build and maintain an ethical society

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Qualities of Ethical Leadership
Integrity - the integration of outward actions and inner values
Honest dealings - predictable reactions, well-controlled emotions
Dedication - spending whatever time or energy is necessary to accomplish the task
Magnanimity - giving credit where it is due
Openness - listen to new ideas and others ideas, accept new ways of doing things
Creativity - the ability to think differently
Fairness - dealing with others consistently and justly
Assertiveness - is the ability to clearly state what one expects so that there will be no
misunderstanding
A sense of humor - vital to relieve tension and boredom to energize followers

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Principles of Ethical Leadership
Respect others - Ethical leader should have mental molding to respect others.
Serve others - Ethical leader is a person who is willing to serve others
Shows Justice - must be always fair, justice, logical, equality, unbiased, follows moral
philosophy, attitudes, and democratic principles in decision making.
Manifests Honesty - sincere, truthfulness, integrity, frank and always be open to
subordinates and others.
Build community - Ethical leader is a person who is capable to influence others, acts as a
moral leader, motives creative thinking, co-ordinates the efforts to critical success.
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Whistle Blowing

A whistle blower is a person who tells the public or someone in authority about alleged
(suspected) dishonest or illegal activities (misconduct) occurring in a government
department, a public or private organization, or a company. The alleged misconduct may
be a violation of a law, rule, regulation or a direct threat to public interest, such as fraud,
health/safety violations, and corruption.
Types of whistle blowing
1. Internal whistle blowing
When an individual advocates beliefs or revelations (disclosing) within the organization
2. External whistle blowing
When an individual advocates beliefs or revelations outside the organization.
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Characteristics of a whistle blower
unselfishly motivated
Utilitarian
Uninterested in altering their behavior
Allows own attitudes and beliefs to guide them
Often are well educated and holds professional positions

Effects of whistle blowing
Forced to leave organization/demotion
Credibility ruined
Family, health, or life in jeopardy (threat)
Physical or psychological isolation
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Trade secrets
A trade secret is a formula , practice, process, design, instrument, pattern, or compilation of
information which is not generally known or reasonably ascertainable, by which a business
can obtain an economic advantage over competitors or customers. It includes sales
methods, distribution methods, consumer profiles, and advertising strategies etc.
Trade secret protection
First step - identity potential trade secrets thought trade secret audit
Second step - take measures to protect them
Uses of Trade Secrets
Protect valuable technical information
Protect ideas that offer a business a competitive advantage
They keep competitors from learning that a product or service is under development and
from discovering its functional or technical attributes
Protect valuable business information such as market plans, cost and price information and
customer lists
They protect any other information that has some value and is not generally known by
competitors



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