An introduction to business ethics

AN INTRODUCTION TO
BUSINESS ETHICS
Professor Jayashree Sadri
And
Dr Sorab Sadri
Dr. Sorab Sadri & Prof Jayashree Sadri 2011

What is Ethics?
 Ethics is a set of rules that define
right and wrong conduct .These
ethical rules tell us when our
behavior is acceptable and when it
is disapproved and considered
wrong. Ethics deals with
fundamental human relationships.
 Ethical rules are guides to moral
behavior.

APPROACHES TO THE
STUDY OF ETHICS
 Spiritualism
 Political Science
 Sociology
 Economics
 Philosophy
 Anthropology

 Sociological route takes you to the
following chain of causality
 Values-Beliefs-Attitudes-Behavior-Outcomes
 Economic route takes you to the
following chain of causality
 Ethics – Governance-Excellence-Sustainability

What is Business Ethics?
 Business Ethics is not a special set of
rules different from ethics in general and
applicable only to business.
 Business Ethics is the application of
general ethical rules to business behavior.

Why is Business Ethics Important?
 The general public expects business to
exhibit high levels of ethical performance
and social responsibility.
 To Act Ethically is to prevent harm to
society.
 To protect business firms from abuse by
unethical employees or unethical
competitors Dr. Sorab Sadri & Prof Jayashree Sadri 2011

Why Ethical Problems Occur in
Business.
 Personal Gain.
 Individual Values in Conflict with
Organizational Values.
 Managers’ Values and attitudes.
 Competitive Pressures.
 Cross-cultural contradictions.

A set of actions born out of our
beliefs. These beliefs give rise to
values. Values condition attitudes.
Attitudes condition behavior .
Behavior can be ethical or unethical.
Ethics are an activity based concept.
ETHICS MEANS :

BELIEFS VALUES AND
IDEOLOGY
 Beliefs: Set of ideas about what is right or
wrong, good or bad in any context
whatsoever and from the basis of
behavior. These beliefs are often
conditioned by upbringing and the general
environment.

BELIEFS VALUES AND
IDEOLOGY
Essentially values are set of beliefs that
form the basis of thinking and thence to
action. Values are notions that are guided
by our actions. It forms the bulwark of our
attitudes which form our behavior. Values
are a thought-based concept.

Kinds of Values
 When we speak of values having been based on a
set of beliefs that we hold sacrosanct we are in the
subjective realm of values.
 When an organization operates on the basis of
such values it is called “value based.”

Kinds of Values
 When we speak of value addition by the
actions or thoughts of a person, the
functioning of a process and the sale or use
of a product we are in the objective realm of
values.
 When an organization operates such that
value “ought to be” added at the level of the
person, the process or the product it is called
“value driven”.

Kinds of Values
 When we speak simultaneously of the
subjective and the objective notions of value
then we are in the realm of rationality.
 When an organization operates simultaneously
in both realms (subjective and objective) it is
called “value centered”

BELIEFS VALUES AND
IDEOLOGY
 Ideology : Set of beliefs and values held by a
person, a group of persons or a nation about
what is good or bad for it and this forms its
basis of social, political and economic
policies.

ETYPOLOGICAL ROOTS
 Ethics comes from the Greek word ethos while
Morality comes from the Latin word mores.
 Both root words imply “from a culture”

DISCUSSION ON BUSINESS
ETHICS
At a general level this can be reduced to:
 1. Issues relating to what is right or wrong.
 2. Issues relating to what is good or bad.
 3. Issues relating to what is the desired
human conduct.

SPECIFICITY OF ETHICS
 Ethics is person specific
 Ethics is context specific
 Ethics is culture specific

Where do ethical conducts originate?
 Within the self?
 Within the norms of the larger civil
society?
 Within the organization's work
environment?

Three important axioms:
 ALL TRUTH IS RELATIVE [HEGEL]
 THE ONLY ABSOLUTE TRUTH IS THAT
GREAT IMMENSITY
 THE ONLY ABSOLUTE CERTAINITY IS
DEATH [DURKHEIM]

Problems in Decision Ethical
Executing.
 Can be manifested in a Covert Manner
 Can be manifested in an Overt manner

Three rules in the sociology of ethics:
 Always ask the question Why?
 Clarity of action follows clarity of thought.
 Ethical conduct must be seen always in the
light of the person, the culture and the
context. It should never be seen in isolation
as an act devoid of the surroundings.

Noam Chomsky once said:
States are not moral agents; people are, and can
impose moral standards on power institutions.
Hence the ideology or religion or politics driven
moral policing is unethical.

Man and Civil Society
 Man and organization are both a microcosm
of the larger civil society.
 No person works in isolation nor is an
organization an island unto itself. We can
see globalised relations of business in the
form of concentric circles viz:

Unity of Conduct At All Five Levels
 Individual
 Team
 Organization
 National
Economy
 Global Business
11
5
4
3
2
Values &
EthicsDr. Sorab Sadri & Prof Jayashree Sadri 2011

Where does ethics become most
relevant in business?
 At the point of delivery: sale or
production.
 At the point of decision making.
 At the point of decision executing.

Ethical Problems at the Point of
Delivery
 Is the product, service or process reliable?
 Does it meet the required quality standards?
 Does it actually possess ingredients that it claims
to possess?
 Does it pose a threat to the general humanity, the
geo-physical environment or the innocent
consumer?

Problems in Decision Making
 However, as the market gets more
competitive and organizations get more
complex, we are forced to make decisions
under conditions of relative uncertainty. All
facts relevant to the issue are never
available.

CLEAR
APPROVAL
HAZY
HAZY
CLEAR
REJECTION
OK
NOT
OK
Individualvalues
THE VALUE – DECISION LINK
Organizational values
OK NOT OK

PERSON
PROCESS PRODUCT
INDIVIDUAL
GROUP
ORGANIZATION
Ethic is involved in three levels of interaction
When we place one triangle over the other, we get a six pointed star that
exemplifies the form and nature of business ethics.

READINGS
 Jayashree S, Sadri S and Dastoor D S (2008): Theory and Practice of
Managerial Ethics, Jaico Pub. Co. Delhi
 Sadri S and Jayashree S (2011): Business Ethics and Corporate
Governance, Current Pub. Co. Agra.
 Sadri S (ed) (2011): Management in the New Millennium, Himalaya
Pub. Co. Mumbai.
 Sadri S, Jayashree S, Bendigiri S and Guha B S (2012):
Manifestations of Excellence in Management (forthcoming)
THANK YOU

An introduction to business ethics

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