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Business	  Ethics	         Tathagat	  Varma	          Session	  10/12:	  11-­‐Sep-­‐09	  
Rotary	  4-­‐Way	  Test	  •  From	  the	  earliest	  days	  of	  the	  organizaAon,	  Rotarians	     were	  concerned	  wi...
Rotary	  4-­‐Way	  Test	  
Ethics	  Axis	  
Ethical	  Dilemma	  Grid	  •  A	  2005	  global	  study	  of	  over	  1100	  managers	  and	     execuAves,	  commissioned...
Ethical…	  •  Dynamic	  A	  is	  Pressure.	  SomeAmes	  the	  pressure	     to	  compromise	  comes	  at	  a	  person	  ex...
Ethical…	  •  Dynamic	  B	  is	  Personal	  Benefit.	  Even	  scrupulous	     people	  generally	  look	  at	  choices	  th...
Ethics…	  •  That	  is	  what	  our	  panel	  of	  1100	  managers	  in	     enterprises	  around	  the	  world	  thought....
Ethics	  in	  Professions	  
Ethics	  in	  Professions	  
Ethics	  in	  Professions	  
Global	  Ethics	  Issues	  •    Sexual	  and	  Racial	  DiscriminaAon	  •    Human	  Rights	  •    Price	  DiscriminaAon	 ...
Poor	  Development	  breeds	  CorrupAon	  
Ethical	  Business	  Cultures	  •  Dimensions	  of	  Ethical	  Business	  Cultures:	     Comparing	  Data	  from	  13	  co...
Means	  and	  Standard	  DeviaAons	  
Homogeneous	  subsets	  for	  select	         survey	  items	  
InternaAonal	  Context	  •  Return	  of	  Ethics	     hdp://www.forbes.com/2009/07/21/   business-­‐culture-­‐corporate-­‐...
Ethical	  Aitudes	  in	  India	  •  Business	  Scenario	  in	  India	  and	  Ethical	     A>tudes	  of	  Business	  Execu@...
Where	  does	  India	  rank	  ?	  •  CorrupAon	  PercepAon	  Index	  2008:	  #85	  in	  180	     countries	  •  Bribe	  Pa...
Global	  Integrity	  Index	  
Global	  Integrity	  -­‐	  India	  
Indian	  Context	  •  Jagdish	  Sheth,	  execuAve	  director	  of	  the	  India,	     China	  and	  America	  InsAtute	  a...
Indian…	  •  In	  terms	  of	  government	  rules	  and	  regulaAons,	     Sheth	  said	  that	  in	  India,	  the	  gover...
Indian…	  •  What	  are	  the	  implicaAons	  of	  these	  differences	     –	  and	  of	  India’s	  rise	  –	  for	  busin...
Wipro	  -­‐	  Premji	  •  Even	  as	  it	  stands	  out	  for	  its	  sterling	  financial	  performance,	     Wipro	  is	 ...
Wipro…	  •  At	  Wipro,	  integrity	  comes	  into	  play	  in	  all	  situaAons,	  within	  the	     company	  itself	  a...
Wipro…	  •  Wipros	  code	  of	  conduct	  for	  employees	  says	  it	  all:	     Do	  not	  do	  anything	  that	  you	 ...
References	  •  hdp://www.san.beck.org/EC10-­‐Social.html	  •  hdp://content.msn.co.in/MSNContribute/Story.aspx?   PageID=...
References	  •  hdp://www.bized.co.uk/educators/16-­‐19/   business/external/acAvity/ethics.htm	  •  hdp://www.jmu.edu/cob...
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Business Ethics 09

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

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Business Ethics 09

  1. 1. Business  Ethics   Tathagat  Varma   Session  10/12:  11-­‐Sep-­‐09  
  2. 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  worlds  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. 3. Rotary  4-­‐Way  Test  
  4. 4. Ethics  Axis  
  5. 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  ones  career     –  Desire  to  protect  ones  livelihood    •  So  here  is  a  theory.  Model  the  dynamics  that  put   pressure  on  peoples  ethics  and  you  have  an  early   warning  of  possible  problems.    
  6. 6. Ethical…  •  Dynamic  A  is  Pressure.  SomeAmes  the  pressure   to  compromise  comes  at  a  person  externally  on   vectors  such  as:     –  Urgent  Aming,  I  dont  care  what  the  policy  book  says,   I  need  your  decision  now.     –  Entrenched  opposiAon  that  can  be  avoided,  HR  wont   find  out  All  it  is  too  late     –  Superiors  or  colleagues,  If  you  dont  do  this,  well  all   pay  a  price     –  CriAcal  impact,  NaAonal  unity  is  at  stake  here     –  CompeAtors  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. 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. 8. Ethical…  
  9. 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. 10. Ethics  in  Professions  
  11. 11. Ethics  in  Professions  
  12. 12. Ethics  in  Professions  
  13. 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. 14. Poor  Development  breeds  CorrupAon  
  15. 15. Ethical  Business  Cultures  •  Dimensions  of  Ethical  Business  Cultures:   Comparing  Data  from  13  countries  of  Europe,   Asia,  and  the  Americas  
  16. 16. Means  and  Standard  DeviaAons  
  17. 17. Homogeneous  subsets  for  select   survey  items  
  18. 18. InternaAonal  Context  •  Return  of  Ethics   hdp://www.forbes.com/2009/07/21/ business-­‐culture-­‐corporate-­‐ciAzenship-­‐ leadership-­‐ethics.html? partner=whiteglove_google  
  19. 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. 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. 21. Global  Integrity  Index  
  22. 22. Global  Integrity  -­‐  India  
  23. 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. 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. 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. 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  Wipros  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. 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  mans  contribuAon  to  the  company  was  significant;  the   bills  amount  was  not.  Yet  he  had  to  go  for  this  solitary  lapse.   It  was,  Premji  stressed,  a  mader  of  principle.    
  28. 28. Wipro…  •  Wipros  code  of  conduct  for  employees  says  it  all:   Do  not  do  anything  that  you  are  unwilling  to  have   published  in  tomorrows  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. 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:  Indias  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. 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/