Business

Ethics
 MEANING
Ethics is a set of rules that define right and wrong
conduct.

Business ethics can be defined as

written and unwritten codes of
principles and values that govern
decisions and actions within a
company.
Business Ethics
It is the application of ethical judgments to business
activities.

What is right or
Wrong in Business?
A moral standard to be applied to business policies ,
institutions and human behavior.
Business ethics is the ethical analysis of
business practices.
Relationship between business
and ethics
Milton Friedman and Talcott
-> Unitarian View of Ethics
If business want to exist , survive and flourish in the
long run morality and ethics cannot be separated
from the operation of the business.
 Moral
Structure

BUSINESS

Moral Ethics
The separatist view of Ethics

Business Ethics

society
Adam Smith and Milton
 Business Profit maximization
Morality and ethics has no influence in
business.
Milton says business should be concentrating on
production and distribution of goods. Social
problems will be tackled by government and
concerned individuals
The integration view

Law
Governmen
t

Morality
Business
and ethics

Business Ethics
Marke
t
syste Society
ms
 Ethical behavior and business should be
integrated or combined in a new area called
Business Ethics.

Business has all rights to make profits but at the

same time it should discharge the social
obligations.
Nature of Business Ethics
Ethical value
Relative terms
Interest of society
Provide frame work
1. Business ethics are the principles, which govern and
guide business people to perform business functions
and in that sense business ethics is a discipline
2. It is considered both as a science and an art.
3. It continuously test the rules and moral standards
and is dynamic in nature .
4. It is based on theological principles such as sincerity,
human welfare, service, good behavior etc.
5. It is based on reality and social customs prevailing in
business environment.
6. It studies the activities , decisions and behavior
which are related to human beings
7. It has universal application because business exists
all over the world
8. Many of the ethical principles develop the personal
dignity
9. Business ethics keeps harmony between different
Scope of business ethics
Societal Level

Stakeholders level

Personal Policy level

Internal Policy level

Need and Purpose of Business Ethics

stop business malpractices

Improve customers confidence
Survival business
protecting consumer rights
Protecting employees, shareholders etc.
Good relations between business and society
Smooth functioning of business
Healthy competition
CREATES good image
Consumer movement
Consumer satisfaction
Evolution of Business Ethics

Philanthro
pic
Ethical

Legal

Economic
Approaches to business ethics
Business ethics is about three main things
Avoid breaking the Law
Avoid action
Avoid actions that are bad for ones image
To derive standard ethics
1. Profit Motive Approach
2. Legal Approach
3. Moral obligations Approach
4. Social Approach
Sources of ethical knowledge for
business roots of unethical behavior
1) Religion :
Its a belief that ethics is an expression of
divine that reveals the nature of right and wrong
in business and other areas.
Religions do preach the necessity for an
orderly social system and emphasize
responsibility in such a way to contribute to the
general welfare
2)Cultural Experience:
Civilization itself is a cumulative cultural
experience. Changing economic ,social and
human history moral codification.

3) Legal system:
Laws are rules of conduct approved by
legislature that guide human behavior in any
society
Ethical decision making
According to Jones, an ethical decision is a decision
that is both legally and morally acceptable to the
larger community
Process of Ethical Decision
Making
Recognizing an
issue as an ethical
one

Making Ethical
Judgment

Resolving to do
ethical thing

Actually acting
ethically
Some unethical issues
1) Bribery
2) Unfair discrimination
3) Coercion
4) Black money
5) Tax evasion
6) Deception/ Fraud
7) Issues on honesty
8) Conflicts of interest
9) leaking confidential data
10)Corruption
Ethical organization
Ethical organizations are business entities that have
incorporated ethics and values in the blood
stream of the organization. They have a code of
ethics set out as the principles of organization.
Essentials of Ethical
Organizations
1) Ethical Leaders
- Moral Persons
-Moral Managers
2) Ethical Practices
-Recruitment and selection
-orientation and Training
-Policies and Codes
-Rewards and punishment System
3) Ethical Climate