As per Calcutta University CBCS Regulations, this chapter is the introduction to business ethics.

1. INTRODUCTION TO BUSINESS
ETHICS
Prof. Mahua Mukherjee

24. DEFINITION
“Ethics refer to a set of moral principles which
should play a very significant role in guiding
the conduct of managers and employees in
the operation of any enterprise.” — Dale S.
Beach

25. FEATURES OF ETHICS
(i) Ethics is a set of moral standards and values
acceptable in a society. It is relevant in the context of
a society only.
(ii) Ethics guides human conduct or behaviour. If any
member of the society behaves contrary to the norms
and customs, society disapproves it. Moral principles
serve as a guide for personal and professional conduct.
Ethics checks people from taking decisions and actions
which are harmful to society.

26. (iii) Ethical principles are universal in nature. These
prescribe obligations and virtues for everybody in
a society. Ethics is important not only in business
and politics but in every human endeavour.
(iv) Ethics is normative or prescriptive in nature. It
deals not with what is but what ought to be. It
does not rest on feelings of approval or
disapproval but on principles. For example, it may
be unpleasant to fire an employee but morality
may require it.

27. (v)Ethical standards differ from society to society.
What is considered ethical behaviour in one
society might be considered unethical in another.
For e.g. euthanasia (mercy killing) is permitted in
some countries but is strictly unethical in most
countries.
(vi) There exist no sharp boundaries between
ethical and non-ethical. Therefore, people often
face ethical dilemmas wherein a clear cut choice
is very difficult.

28. (vii) Ethical norms might not be legally binding.
But these are more powerful than law
because these have the sanction of society.
When a person’s behaviour is inconsistent
with the prevailing values and norms, it is
called unethical. Ethics serves as a guide to
law by highlighting its short comings.

29. (viii) Ethics relates to the behaviour of individuals
and groups. The ethical norms do not apply to
the behaviour of animals, birds, and insects. Only
human beings have the capacity to guide and
regulate their behaviour.
(viii) Ethics are not hard and fast rules. They are an
expression of a society’s attitudes and beliefs.
There is an element of discretion as a person has
the option to adopt ethical norms. Ethics may
differ from place-to-place and time-to-time.

30. (ix) Ethics aims at perfection in human conduct.
It guides law makers in framing proper laws to
regulate the behaviour of all citizens. Existing
norms may contain valuable insights but
ethics sets out to critics and test them in
terms of ultimate norms.
(xi) The concepts of equity and justice are
implicit in ethics. Fair and equitable treatment
to all is its primary aim.

32. What is business ethics?
Business ethics is the study of appropriate
business policies and practices regarding
potentially controversial subjects including
corporate governance, insider trading, bribery,
discrimination, corporate social responsibility,
and fiduciary responsibilities. The law often
guides business ethics, but at other times
business ethics provide a basic guideline that
businesses can choose to follow to gain public
approval.

33. Importance of Business Ethics
1) Build customer loyalty: A loyal customer base is one of
the keys to long-range business success. If consumers
or customers believe they have been treated unfairly,
such as being overcharged, they will not be repeat
customers. Also, a company’s reputation for ethical
behavior can help it create a more positive image in
the marketplace, which can bring in new customers
through word-of-mouth referrals. Conversely, a
reputation for unethical dealings hurts the company’s
chances to obtain new customers. Dissatisfied
customers can quickly disseminate information about
their negative experiences with the company.

34. 2) Retain good employees: Talented individuals at all
levels of an organization want to be compensated fairly
for work and dedication. Companies who are fair and
open in their dealings with employees have a better
chance of retaining the most talented people.
3) Positive work environment: Employees have a
responsibility to be ethical. They must be honest about
their capabilities and experience. Ethical employees are
perceived as team players rather than as individuals.
They develop positive relationships with coworkers.
Their supervisors trust them with confidential
information

35. 4) Avoid legal problems: It can be tempting for a
company’s management to cut corners in pursuit
of profit, such as not fully complying with
environmental regulations or labour laws,
ignoring worker safety hazards or using sub-
standard materials in their products. The
penalties if caught can be severe, including legal
fees and fines or sanctions by governmental
agencies. The resulting negative publicity can
cause long-range damage to the company’s
reputation that can even be more costly than the
legal fees or fines.

36. TYPES OF ETHICS
Personal Ethics
Personal ethics determines what an individual
believes about morality and right and wrong.
Personal ethics has an impact on areas of life
such as family, finances and relationships.
Some professional organizations define their
ethical approach in terms of personal ethics
elements such as honesty, integrity,
transparency and confidentiality.

37. Professional Ethics
Professional ethics is a branch of applied ethics that
aims to define, clarify and criticize professional
work and its typical values. Professional ethics
sets the standards for practising one’s profession
and can be learned only in a professional school
or on the job.
It involves attributes such as commitment,
competence, confidence and contract.. It
comprises personal, organizational and corporate
models of behaviour expected of professionals.

38. Managerial Ethics
Managerial ethics is a set of principles and rules that
determine what is right and wrong in an organization;
managerial ethics is dictated by the higher
management. It includes guidelines that help govern a
lower manager’s decisions with respect to his or her
job when a situation that involves a conflict of values is
presented.
It involves values such as honesty, integrity, the fulfilment
of commitments, compliance with agreements and the
willingness to accept mistakes.

39. Participatory ethics
It refers to the ethics of individual and collective
citizenship.
It views public possibilities as a shared duty of
cooperativeness. It guides behaviour that
helps balance business goals and moral
demands and serve society in a more ethical
way along with the achievement of corporate
excellence.

40. Transactional ethics
Man is a social animal. He needs to act and react
with others through different transactions.
The practice of ethics involved in these
transactions is termed transactional ethics.
All involved parties in the transaction must
reciprocate ethically. Transactional ethics
include the individual value system and
his/her world view that facilitates interactions.

41. Recognition ethics
Recognition ethics is the branch of ethics related
to human rights and acknowledged basic
needs. It views moral interaction as a matter
of shielding individual liberty and yielding
public welfare.
According to this view, the rights of individuals
and our duties to other individuals supersede
personal egocentric interests.

42. CSR & Business Ethics
Corporate social responsibility (CSR), on the
other hand, is the process by which
businesses negotiate their role in the society.
The two terms—ethics and CSR—are
intertwined. In fact, in many firms, ethics and
CSR are interlinked. In some cases, CSR is also
considered to be a guarantee of ethical
behaviour.

43. CSR has now become a global issue and has
gained prominence in the language and
strategy of every business. Today, the image of
an organization is judged by the CSR activities
that it performs. Governments and many
international organizations are increasingly
encouraging CSR and forming CSR
partnerships.