Genesis of Ethics
Ethics is derived from the Latin word “ethicus” and Greek
word “ ethikos”, it means character or manners.
Ethical codes of conduct instruct us on what we ought or
ought not to do.
Fundamental principles of ethics
PROFESSIONAL COMPETENCE AND DUE CARE
• The principles and standards that determine acceptable
conduct in business organizations.
•Is a form of professional ethics that examines ethical
principles and moral or ethical problems that arise in a
Nature of Ethics
Nature of Business Ethics:
Most businesses encounter two types of ethical problems:
Overt Ethical Problems:
o Deals with bribery, theft, collusion etc.
o They are clear (transparent) and reprehensible (conveying
disapproval, criticism or punishment).
Covert Ethical Problems:
o Incorporate acquisitions, marketing and personnel policies, capital
o They are complex, clear and have deft (skilful and quick) ethical
3 TYPES OF ETHICS
The Unitarian view of ethics
The Separatist view of ethics
The Integration view of ethics
Unitarian view argues that morality and ethics are related to business.
TheSeparatist view expressed that, business should concentrate on
profits, and ethics and morality do not form a part of business.
The Integration view defined a new area called business ethics,
where ethical behavior and business are integrated.
Ethics help a lot in effective productivity as well as a great
balance of responsibilities in your life on personal &
3 Models of Management Ethics
Three Types Of Management Ethics
Models of Management Ethics
1. Moral Management—Conforms to high
standards of ethical behavior.
2. Immoral Management—A style devoid of
ethical principles and active opposition to
what is ethical.
3. Amoral Management—
3. Unintentional - casual or careless about
ethical considerations in business
Stages of Ethical Consciousness in Business:
Ethical standards vary between cultures and countries.
It has been found that moral (ethical) development follows a specific
sequence of stages, irrespective of cultures and countries.
In the business context, the stages of ethical consciousness are as
Law of the jungle
Anything for profit
Profit maximizing in the short-term
Profit maximizing in the long-term
First Stage: Law of the Jungle-
Businesses were run on brute strength
Business decisions were driven by the philosophy of
“might makes right”
Business ills like price fixing etc are common in this
Second stage: Anything for profit
Business was ready to do any thing to make profit.
Business at this stage had only one goal ie, profit.
To generate profit, business resort:
False representation of products
Bribery of Govt officials
Tax evasion etc.
Business in this stage of ethical consciousness strongly
believe that “anything goes as long as one does not get
caught by the law or by the customer”.
The third Stage, “Maximizing profits in the
Business believed that “good business is good ethics”.
Performance of businesses is measured based on short-term growth
in sales and profits.
Main aim of business in this stage was to maximise profits within
the constraints of the law.
The Fourth Stage, “ Maximizing profits in the long-term”:
A shift in focus from ‘business’ to ‘ethics’.
Business acknowledge that “sound ethics is good business” in the
Interest of the shareholders remain primary concern of businesses
Equal concern for conducting business in a manner that is both
‘right’ and profitable over the long term.
short term profits alternatives are declined.
At this stage firm created the post of an ‘ethics officers’.
Fifth Stage, “Stakeholders Concept”:
Concentrated on profits to have a social as well as economic mission.
Business objectives included:
development of community service projects
Assumption of this concept is:
Providing service to stakeholders
Working towards the good of society
Building and maintaining mutually enabling relationships, which in turn create value
for others and justified firms profit.
Success measured not just in:
But also in terms of contribution to society
Some companies have gone so far as publish regular:
Annual social reports
Annual Financial reports
Sixth Stage, “Corporate Citizenship”:
Proposes a higher level of ethical consciousness
Redefines the mission of business in society
“World Business Academy” and “Business for Social
Responsibility” are among the principal proponents
Major responsibility to society transformation
Their belief, “ Business can be healthy, only if society around it
is healthy” and no other institution (Govt and religious) in society
has the resource and credibility to bring about this transformation.
Entrepreneurs on this level seek to achieve:
promoting community health
participating in job creation
Employing handicapped people
Self realization of employee
Financial success of the company
Ethical theories are commonly divided into 3 branches :
Meta-ethics is the branch of ethics that seeks to understand the
nature of ethical properties, statements, attitudes, and judgments.
Metaethics is the study of what ethical terms and theories actually
refer to.Meta-ethics addresses questions such as "What is goodness?"
and "How can we tell what is good from what is bad?
Normative Ethics is the study of ethical theories that prescribe how
people ought to act.
Applied ethics: How do we take moral knowledge and put it into practice?
Why Ethics is important in business
• Creates credibility
• Unites people
• Work Efficiently
• Improves decision making
• Increases interest over shareholders
Easier change management
Strong team work and productivity
Enhanced Employee growth
Guarantee that personnel policies are legal
Helps to detect violations easily
Helps to manage values associated with quality management,
Why Ethics is important in business
Ethics brings a sense of right and wrong in organizations.
• When the law fails
• Ethics stops organizations from harming the society.
Common Causes of Unethical Behavior
Why Misconduct Is Not Reported...
belief that nothing will be done
fear of retaliation
fear of being viewed as a troublemaker
Sources of Ethical Norms
Society at Large
Common Unethical Acts...
lying and withholding needed information
abusive or intimidating behavior
misreporting time worked
discrimination and sexual harassment
breaking environmental and safety laws
drug or alcohol abuse
giving or accepting bribes
Coke & Pepsi in India
Today, more from the world of
product safety. This time the story
is about Coke and Pepsi, and
allegations that the versions of
their products manufactured in
India contain unacceptably high
levels of pesticides.
world’s biggest brand names,
known for wooing customers
around the world, are facing a
credibility crisis in one of their
crucial emerging markets.
2 5 , 0 0 0 H I G H S C H O O L S T U D E N T S :
•62% cheated on exams at least once
•35% copied documents from Internet
•23% cheated to win at sports
•F A L S E / M I S L E A D I N G A D V E R T I S I N G
•D E C E P T I V E P E R S O N A L S E L L I N G T A C T I C S
•P R O D U C T S A F E T Y A N D Q U A L I T Y
•U N S U B S T A N T I A T E D C L A I M S
•P R O D U C T L A B E L I N G
T H E A C T O F T A K I N G S O M E O N E E L S E ’ S W O R K
A N D P R E S E N T I N G I T A S Y O U R O W N W I T H O U T
M E N T I O N I N G T H E S O U R C E
How do you train your employees to be ethical to one and
all, whether in the professional realm or personal?
• A written code of conduct
• Define ethics to be maintained in an organization.
• Each employee should have one, including new hires.
• Organizations should focus on training in ethics at the
• A few members from the top level management can lead the
ethics training programs.
• Seniors behaving in a morally upright manner will set an
example for employees to follow.
Encouraging Ethical Conduct
Key features of effective ethics training programs
Top management support.
A clear focus on ethical issues.
Integration of ethics into the organization.
A mechanism for anonymously reporting ethical
Reward ethical conduct.
Encouraging Ethical Conduct (cont’d)
Code of Ethics
Published statement of moral expectations for
Requirements for an effective ethics code
Must describe specific practices as unethical
(e.g., kickbacks, payoffs, gifts, falsification of records, and
misleading product claims).
Must be firmly supported and fairly enforced by
How can high ethical standards be maintained?
Management - Chapter 3
Codes of ethics:
Formal statement of an organization’s values and ethical
principles regarding how to behave in situations
susceptible to the creation of ethical dilemmas.
Areas often covered by codes of ethics:
Bribes and kickbacks
Honesty of books or records
Confidentiality of corporate information
A whistleblower is an employee who reports real or
perceived wrongdoing under the control of his or her
employer to those who may be able to take
Didn’t believe action would be taken.
Feared retaliation from mgmt.
Didn’t trust confidentiality.
Feared not being a team player.
Feared retaliation from co-workers.
Didn’t know who to contact.
Nobody cares, why should I?
Encouraging Ethical Conduct (cont’d
The reporting of perceived unethical matters.
Reducing the fear of retaliation against whistleblowers
Anonymous hotlines and web sites
Personal, confidential guidance
An ethics specialist who plays a role of critical
questioner in top-management’s decision-making.
Serves as the Board of directors’ social conscience.
Helps prevent groupthink and blind conformity
Apart from the United States, few countries use the death penalty.
Only China and Iran execute more people than the U.S.
No member of the European Union uses it. Under the European
convention for the Protection of Human Rights and Fundamental
Freedoms, it is regarded as a human rights violation, so no nation can
be admitted to the European Union if it still has the death penalty on its