Courseware from the course on Business Ethics that I taught at St. Joseph\'s College of Business Administration in 2009

1. Business
Ethics
Tathagat
Varma
Session
10/12:
11-­‐Sep-­‐09

2. Rotary
4-­‐Way
Test
• From
the
earliest
days
of
the
organizaAon,
Rotarians
were
concerned
with
promoAng
high
ethical
standards
in
their
professional
lives.
One
of
the
world's
most
widely
printed
and
quoted
statements
of
business
ethics
is
The
4-­‐Way
Test,
which
was
created
in
1932
by
Rotarian
Herbert
J.
Taylor
(who
later
served
as
RI
president)
when
he
was
asked
to
take
charge
of
a
company
that
was
facing
bankruptcy.
• This
24-­‐word
test
for
employees
to
follow
in
their
business
and
professional
lives
became
the
guide
for
sales,
producAon,
adverAsing,
and
all
relaAons
with
dealers
and
customers,
and
the
survival
of
the
company
is
credited
to
this
simple
philosophy.
Adopted
by
Rotary
in
1943,
The
4-­‐Way
Test
has
been
translated
into
more
than
a
hundred
languages
and
published
in
thousands
of
ways.

3. Rotary
4-­‐Way
Test

4. Ethics
Axis

5. Ethical
Dilemma
Grid
• A
2005
global
study
of
over
1100
managers
and
execuAves,
commissioned
by
the
American
Management
AssociaAon
idenAfied
the
top
three
factors
most
likely
to
cause
business
people
to
compromise
ethical
standards.
All
three
impact
most
of
us
from
Ame
to
Ame,
so
it
would
be
an
unusual
person
who
would
not
have
experienced
temptaAon.
The
factors,
in
order,
are:
– Pressure
to
meet
unrealisAc
business
objecAves/deadlines
– Desire
to
further
one's
career
– Desire
to
protect
one's
livelihood
• So
here
is
a
theory.
Model
the
dynamics
that
put
pressure
on
people's
ethics
and
you
have
an
early
warning
of
possible
problems.

6. Ethical…
• Dynamic
A
is
Pressure.
SomeAmes
the
pressure
to
compromise
comes
at
a
person
externally
on
vectors
such
as:
– Urgent
Aming,
'I
don't
care
what
the
policy
book
says,
I
need
your
decision
now.'
– Entrenched
opposiAon
that
can
be
avoided,
'HR
won't
find
out
All
it
is
too
late'
– Superiors
or
colleagues,
'If
you
don't
do
this,
we'll
all
pay
a
price'
– CriAcal
impact,
'NaAonal
unity
is
at
stake
here'
– CompeAtor's
tacAcs,
'CompeAAon
gives
them
money
under
the
table.
We
have
no
choice.'
• Any
single
one
of
these,
let
alone
a
combinaAon,
can
isolate
a
person
on
ethical
grounds.

7. Ethical…
• Dynamic
B
is
Personal
Benefit.
Even
scrupulous
people
generally
look
at
choices
through
a
lens
of
self-­‐interest
that
includes:
– Financial
gain
– Financial
risk
– ReputaAon
– Career
and
stature
– Power
and
influence
• The
greater
the
personal
upside
or
downside
associated
with
a
decision,
the
more
internal
pressure
will
build
to
compromise
on
honesty
and
ethics.

8. Ethical…

9. Ethics…
• That
is
what
our
panel
of
1100
managers
in
enterprises
around
the
world
thought.
If
you
want
an
ethical
organizaAon,
our
research
recommends
you
should
have:
– A
code
of
conduct
-­‐
known
and
enforced
– Ethics
training
-­‐
for
everyone,
with
annual
re-­‐
cerAficaAon
– Social
responsibility
programs
– An
ombudsman
-­‐
for
unvarnished
feedback
to
the
C-­‐
Suite
– An
Ethics
help
line
-­‐
for
immediate
guidance
on
issues
– Ethics
audits
-­‐
of
all
stakeholders
including
suppliers

10. Ethics
in
Professions

11. Ethics
in
Professions

12. Ethics
in
Professions

13. Global
Ethics
Issues
• Sexual
and
Racial
DiscriminaAon
• Human
Rights
• Price
DiscriminaAon
• Bribery
• Harmful
Products
• PolluAon
and
the
Natural
Environment
• Internet,
online
privacy,
idenAty
thec
• Intellectual
Property
protecAon
• WTO

14. Poor
Development
breeds
CorrupAon

15. Ethical
Business
Cultures
• Dimensions
of
Ethical
Business
Cultures:
Comparing
Data
from
13
countries
of
Europe,
Asia,
and
the
Americas

16. Means
and
Standard
DeviaAons

17. Homogeneous
subsets
for
select
survey
items

18. InternaAonal
Context
• Return
of
Ethics
hdp://www.forbes.com/2009/07/21/
business-­‐culture-­‐corporate-­‐ciAzenship-­‐
leadership-­‐ethics.html?
partner=whiteglove_google

19. Ethical
Aitudes
in
India
• Business
Scenario
in
India
and
Ethical
A>tudes
of
Business
Execu@ves
-­‐
P.
M.
Joseph
ChrisAe,
S.J.,
Loyola
InsAtute
of
Business
AdministraAon,
Chennai,
India

20. Where
does
India
rank
?
• CorrupAon
PercepAon
Index
2008:
#85
in
180
countries
• Bribe
Payer
Index
2008:
#19
in
22
of
the
world’s
wealthiest
and
economically
dominant
countries

21. Global
Integrity
Index

22. Global
Integrity
-­‐
India

23. Indian
Context
• Jagdish
Sheth,
execuAve
director
of
the
India,
China
and
America
InsAtute
and
a
professor
of
markeAng
at
Emory
University
– Indian
business
culture
puts
a
premium
on
favors,
friendship
and
clanship.
Friendship
is
highly
valued,
whether
based
on
mulAgeneraAonal
family
friendships,
school
friendships
or
personal
friendships.
The
Western
concept
of
conflict
of
interest
does
not
always
mesh
well
with
the
Indian
value
of
loyalty
to
one’s
group.
– Western
business
has
its
own
versions
of
these
ideas:
Procurement
departments
in
U.S.
companies
are
more
likely
to
buy
from
the
company’s
customers,
for
example.

24. Indian…
• In
terms
of
government
rules
and
regulaAons,
Sheth
said
that
in
India,
the
government
acts
as
a
gatekeeper
rather
than
an
enabler,
with
slow
approval,
a
complex
bureaucracy
and
corrupAon.
Enforcement
is
also
lax.
• There
is
a
strong
belief
in
corporate
social
responsibility
in
India,
Sheth
said.
He
also
noted
how
Indian
management
style
differs
from
that
in
the
West:
Decisions
are
made
by
the
person
at
the
top,
not
in
a
parAcipatory
way.
And
there
is
what
he
called
a
caste
system
by
educaAon.

25. Indian…
• What
are
the
implicaAons
of
these
differences
–
and
of
India’s
rise
–
for
business
ethics?
Sheth
cited,
among
other
ideas,
a
shic
from
a
focus
on
shareholders
to
a
focus
on
stakeholders.
He
predicted
that
ethics
will
be
anchored
to
the
idea
of
business
as
a
profession,
similar
to
the
way
the
field
of
medicine
is
now.
And
he
said
there
will
be
global
standards
of
governance,
but
their
applicaAon
will
be
adapted
to
local
condiAons.

26. Wipro
-­‐
Premji
• Even
as
it
stands
out
for
its
sterling
financial
performance,
Wipro
is
a
good
example
of
a
rare
Indian
company
that
plays
by
the
rules.
Apart
from
innovaAon
and
giving
the
customer
value
for
money,
the
organizaAon
pays
great
adenAon
to
integrity
in
all
its
business
dealings.
• According
to
Premji,
being
ethical
is
a
business
tool
that
gives
structure
to
Wipro's
funcAoning
and
brings
in
more
business
in
the
long
run.
"We
have
had
no
problem
with
pracAcing
the
value
of
integrity.
Because
Wipro
has
a
reputaAon
of
being
transparent
in
every
respect,
we
have
saved
Ame
and
effort
in
conducAng
business
interacAons
and
Wipro
employees
have
been
able
to
stand
public
scruAny
and
maintain
their
self
esteem
under
all
eventualiAes,"
the
shy
and
reAcent
Wipro
chairman
has
been
quoted
as
saying.

27. Wipro…
• At
Wipro,
integrity
comes
into
play
in
all
situaAons,
within
the
company
itself
as
well
as
in
its
dealings
with
the
outside
world.
The
story
is
ocen
recounted
in
Indian
business
circles
of
how
Wipro
had
to
wait
for
18
months
to
get
an
electricity
sub-­‐staAon
for
one
of
its
units
because
the
company
refused
to
bribe
the
concerned
people.
The
unit
was
run
on
capAve
generaAon
for
nearly
20
months.
This
cost
the
company
dearly
but
Premji
preferred
that
to
breaking
his
values.
• Another
anecdote
has
Premji
asking
a
senior
general
manager
of
the
company
to
leave
because
he
had
inflated
a
travel
bill.
The
man's
contribuAon
to
the
company
was
significant;
the
bill's
amount
was
not.
Yet
he
had
to
go
for
this
solitary
lapse.
It
was,
Premji
stressed,
a
mader
of
principle.

28. Wipro…
• Wipro's
code
of
conduct
for
employees
says
it
all:
Do
not
do
anything
that
you
are
unwilling
to
have
published
in
tomorrow's
newspaper
with
your
photograph
next
to
it.
• It
is
this
kind
of
integrity
that
has
catapulted
Premji
and
Wipro
to
unprecedented
heights.
But
then,
Premji
has
never
been
your
usual
Indian
businessman.
Unlike
others
of
his
ilk,
he
shuns
flashy
cars
and
drives
an
ordinary
Ford
sedan.
Even
today,
he
flies
economy,
stays
in
budget
hotels
and
asks
his
managers
to
do
the
same.
None
of
his
relaAves
find
a
place
in
Wipro.

29. References
• hdp://www.san.beck.org/EC10-­‐Social.html
• hdp://content.msn.co.in/MSNContribute/Story.aspx?
PageID=94bd7e1e-­‐670f-­‐4287-­‐914c-­‐a17badd98tf
• We
failed
to
communicate,
says
Coke
India
• India:
Using
Ethics
to
Build
an
Industry
• Business
Ethics
in
a
Global
World:
India's
Changing
Ethics
• Business
Ethics:
India
Knowledge
@
Wharton
• Coke
&
Pepsi
in
India
• hdp://www.in.iofc.org/node/40481
• hdp://assets.cambridge.org/97805218/63797/excerpt/
9780521863797_excerpt.pdf
• The
Business
Ethics
of
JRD
Tata
• Confucian
Ethics,
China
and
India
• hdp://www.financialexpress.com/news/business-­‐ethics-­‐leadership-­‐
qualiAes-­‐intertwined-­‐ghandy/199102/
• hdp://www.amnesty.org/en/library/asset/ASA20/002/2009/en/
79a5264e-­‐2dd2-­‐44f1-­‐8c92-­‐b2f0cd8f5c72/asa200022009en.pdf

30. References
• hdp://www.bized.co.uk/educators/16-­‐19/
business/external/acAvity/ethics.htm
• hdp://www.jmu.edu/cob/ethics/
Case_studies.shtml
• hdp://www.cebcglobal.org/uploaded_files/
Dimensions_of_Ethical_Business_Cultures_-­‐
_June_2009.pdf
• hdp://Amesofindia.indiaAmes.com/news/india/
Lack-­‐of-­‐professional-­‐ethics-­‐led-­‐to-­‐Metro-­‐mishap-­‐
Sreedharan/arAcleshow/4869884.cms
• hdp://blog.nasscom.in/nasscomnewsline/
2009/02/raising-­‐the-­‐bar-­‐on-­‐corporate-­‐
governance/