1. BEV Module 1
•Definition
•Business Ethics
•Relationship between Business and Ethics
•Importance of Business Ethics
•Significance of Values
•Types of Values
•Managerial Values

2. Definitions
• Ethics- Principles of conduct governing an
individual or group. It deals with morality but
it is not the same as morality. It is a study of
morality.
• Business Ethics- It is the process of evaluating
decisions, either pre or post, with respect to
the moral standards of society’s culture. In
order to evaluate decisions we need tool box
of moral standards.

3. Relationship Between Business & Ethics
• Earlier in pre-medieval times the Church regulated moral
functioning of business-keeping business closed on
Sunday, while classical economists like Adam Smith and
Milton Friedman argued that only objective of business
was profit maximization.[Two separate views]
• The Unitarian View- Business is a sub-set of moral
structure of the society.[Church prescribed business must
exist to do good for the society- no other role to play]
• Separatist View – Views of Smith and Friedman- produce
goods and services efficiently, and leave the government
to solve social problems.
• The integration View – Business, being an economic
entity has a right and the need to make profit, but it must
also discharge its obligations to the society{sick and
bankrupt business is a social liability}.

4. NATURE OF BUSINESS ETHICS
1. In business activities, ethical question could be
overt[problems like bribery, theft, sabotage,
collusion] or covert[corporate acquisitions,
marketing and personnel policy]
2. Ethical decision possess characteristics :
a.Right(morally correct); b. Equitable; c. Good;
d. Proper; e. Fair and f. Just.
3. Ethics is unstructured [Depends upon moral
standards which depends upon our value system;
which again depends upon their background and
childhood experience.
4. Ethical decisions express should express some
obligations to others.

5. Characteristics of Business Ethics
• Ethical decisions differ from person to person
• Ethical decisions are not limited only to
themselves but affects wide range of other
situations as well. So does unethical decisions.
• Most ethical decisions involve a trade-off
between costs incurred and benefits received.
Both canot be maximized.
• The consequences of most ethical or unethical
decisions are not clear. However something
positive will result from ethical decision.
• Ethical decisions are voluntary human action. All
humn beings have the freedom of choice and of
free will.

6. IMPORTANCE OF BUSINESS ETHICS
• Ethical issues can arise in respect of any kind of business
and is an inescapable fact of business life.
• Describing something as ethical does not mean it is
ethically correct. All business decisions have an ethical
aspect.
• Everyday ethics: The key business concerns the way
business is conducted everyday.
• Business ethics is a corporate governance tool.
• Lack of business ethics can cost dear, A business that
ignores the demands of business ethics is unlikely to
maximize long-term owner value.
• A business which characteristically lies or cheats or breaks
promises is difficult and unrewarding to deal with.

7. Values
• Values are rankings or priorities that a person
establishes for his norms and beliefs. They
together form his moral standards- helps us to
judge if an action is right or wrong.
• Business is driven by values which determine
what business people do and how others
react.
• Values are potential sources of conflict as well
as cooperation.

8. Types of Values
Values or of many types. It includes:
• Cultural norms- Represents expectations
business clients, customers, employees etc.
• Moral(ethical)imperatives- Deep seated ideas
that overrule others.
• More general and controlling value –capable of
judging acceptability
• Ethical implications - Values are collective
representations of what constitutes a good life or
a good society. Exercise of good care and skill in
producing goods and services may be of value.

9. MANAGERIAL VALUES
• Pragmatic – Will a certain course of action will
work or not?
• Moralistic – Judging the right way. Being
evaluative in an ethical way.
• Affective(feeling) – Suggest an evaluative
frame work guided by hedonism- pleasure
over pain[happyness is the highest good]

10. Sources of Ethics
1. Genetic Inheritance- Evolutionary forces of natural
selection influence traits such as cooperation and
altercation.
2. Religion- Judaism, Christianity, Islam- Business people
who believe in these religions have ethical beliefs
professed by the tenants of their religion. This is
known as religious morality
3. Philosophical System - -Epicures(341-270 BC-
Greece)-who believed pleasure was the chief good.
4. Legal System – Laws educate about ethics
5. Codes of conduct- - company codes, company
operating policies(gifts, customer complaints, hiring
policies)

11. Factors Influencing Business Ethics
Ethical climate or culture that guide
employee thought and action are:
i. Leadership-judging the ethics of the leader.
ii. Perceived fairness
iii. Employee authority structure
iv. Reward system
v. Ethics as a topic of conversion in the
organization
vi. Organisal focus that communicates “care
for the employees and the community”

12. ETHICS OF LEADERSHIP STYLES
• A leader’s moral style in organizations can be
observed and evaluated. They can be:
1.Manipulator leadership style- based on
Machiavellian ethic that states ‘end justifies
the means’. Power is the driving force behind
a manipulator’s motive
2.Bureaucratic administrator- a rule-based
moral leadership style. Principles based on
chain of command concept, and following law.
Driving force behind this style is efficiency.

13. 3. Professional manager- ‘doing things right’.
Driving force amoral technique and assumptions
for getting work done by using expertise and
tools for accomplishing his task. “Group think”-
where consensus-dominated decision making
based on unethical, biased thinking may occur.
4. Transforming leader- bases leadership on
relationship with followers. The leader is
involved in growth and self-actualization. This
leadership is moral as it elevates ethical level of
the leader nd the followers.
5. Encompassing leadership- This style moves
beyond transformational leadership which
encompasses the shortcomings of the four
other styles.

14. LEADERSHIP STYLE CONTINUUM
LESS ETHICAL MORE ETHICAL
Manipulat
or
End
justifies
the means
Bureaucratic
rule addict
Professional
Manager
Social contact
ethic
Transforming
Leader-
Personal ethics