Techno India

What is Ethics?
 Ethics reflects a society’s notions about the rightness or wrongness of
an act.
 Ethics also involves the evaluation and application of certain moral
values that a society or culture has come to accept as its norms.
 It is described as a set of principles or moral conduct.
 “Ethics” is derived from the Greek word ‘ethikos’ meaning custom or
character.
 Ethics is a code of behaviour considered correct
 Ethics is a branch of philosophy and is considered a normative science
which is different from formal sciences like mathematics, physical
sciences; Empirical sciences like psychology and economics.
 Personal & Professional ethics
 Principles of Personal Ethics:
- Concern & respect for others
- Honestly complying with the Law of the land
- Fairness and not take undue advantage of others
- Benevolence ; Prevent harm to others.
 Principles of Professional Ethics:
- Impartiality: objectivity
- Openness: full disclosure
- Confidentiality: trust
- Due diligence
- Faithful to professional responsibilities
- Avoid conflict of interest
 Myths & Ambiguity

 Myths about Ethics:

Religion
Law
Culture
Feelings
Collection of values
Contd…
 Ethics and Religion are different – Although all religions
preach high standards of morality, there are many who do
not subscribe to any religion and therefore it may not apply
to them. But ethics is universal and applies to all
irrespective of ones beliefs.
 Ethics and Law are not the same- Legal systems vary from
society to society and therefore is not universal in nature
except for some fundamental factors. Ethics is uniformly
universal
 Ethics and Culture are different- Sometimes Ethics drive
culture but culture does not determine ethics. Different
cultures have various traits which may not support ethics.
Contd…

 Ethics and Feelings are not same- Our Ethical choices are
determined by our feelings. Most people will repeat
behaviours which give them pleasure irrespective of
whether it is ethical or not.
 Ethics is not a collection of Values- Values by nature are
influenced by situational human reasoning which may not
assure ethical conduct.
 Ambiguity of Ethics
• Ethics is not a Science in the strictest sense of the term.
We draw data from scientific studies and which helps us to
make conclusions and decisions for future course of action.
• Science is not prescriptive by nature and leaves the choice
of decision of action on the individual.
• Ethics being a normative science is prescriptive and defines
the norms based on reasons and how humans ought to act
under situations.
• The difference is while science may show the path of what
is possible to do, ethics governs the reasons whether it
should be done or not.
 Contd…
• Ethics as a philosophy is imprecise as it deals with human
behaviour which cannot be put in a straitjacket.
• Philosophers have been discussing ethics for more than
2500 years and they are yet to arrive at a precise acceptable
definition which is why though there is a general
acceptance that it is study and philosophy of human
conduct with an emphasis on the right, good, proper.
• At the same time it is understood that these principles do
not lead to a single course of action and offers a path to
evaluate and decide among competing options.
 What is Business Ethics:
• Business ethics is related to what is ‘Right’ and what is
‘Wrong’ while doing business.
• It is that set of principles or reasons which should govern
the conduct of business whether at the individual or
collective level.
• Therefore Business ethics is based on the principle of
integrity and fairness and concentrates on the benefits to
the stakeholders both internal and external.
• A business or company is considered to be ethical only if it
reaches a trade-off between its economic objectives and its
social obligations to the society where it exists and
operates; to its people for whom it pursues economic goals;
to the environment from where it takes its resources; etc…
 Importance of BE
• Business Ethics enables to assess:
- benefits and problems associated with different ways of
managing ethics in organisations;
- the role of the business in contemporary society;
- malpractices if any while the business carries out its
operations by offering products, services, providing jobs,
creating wealth, facilitating economic growth;
- consequent repercussions and seeks to improve the
welfare of the society by offering a social and legal
platform for remedial and even proactive actions.
 Values and Ethics in Business

• Business Ethics operates as a system of values relating to

business goals and techniques to meet specific human
ends.
• This would mean viewing the needs and aspirations of
individual as part of society.
• This also means realisation of personal dignity of Humans.
• Leadership task is to inculcate personal values and impart
ethical conduct in business amongst the organisational
members.
• At one end values and ethics shape the corporate culture
and determine how the politics and power will be used and
at the other end establish the social responsibility of the
organisation.
 Values, Ethics and Business strategy
• To enable the company to maximise profits as well as fulfill
it societal obligations it is imperative:
- the organisation uses ethical considerations in strategic
decision making which will result in creating both effective
long term and short term strategies.
- Ethical criteria must be included as part of the strategic
process before profit decisions rather than after profit
decisions.
- Executives, who are decision makers, therefore must take
business decisions not only purely economic reasons but be
guided by ethical and moral values.
Touchstones of Business ethics
• Ethical corporate behaviour is but a reiteration of the
ancient wisdom that “ Honesty is the best Policy”
• For every profession there would be code of conduct or
a set of ethical code which has a moral content and
would be the essence of ethics for the profession
namely:
- Honesty
- Integrity
- Transparency etc,
which leads to accountability ensuring safety and
protection of the interest of all the stakeholders.
Code of Conduct and Ethics for Business Leaders
• Based on what is Ethics and how business should operate
the following are the code of conduct that should govern
the behaviour of the Business Leaders/Managers-
- Integrity : It is the cornerstone of all values. A business
leader should be morally strong. This characteristic
differentiates a business leader/ Manager from a
mercenary.
• Impartiality : A business Leader/Manager must look at all
aspects and treat an issue in a fair and unbiased manner.
• Transparency : Business leaders/Managers should be
transparent and set standards for others.
 Code contd….
• Responsiveness to public interest: Business
Leaders/Managers have to serve the public interest which
is of paramount importance alongwith that of the
Shareholders
• Honesty : It is cardinal Ethical value no less important
than “Integrity”. Truthfulness, Sincerity, Commitment to
the profession are some of the attributes.
• Accountability : Business Leaders/ Managers must be
responsible and accountable for their decisions and actions
while carrying out the business. They are accountable to all
the stakeholders – Shareholders, Creditors, Employees,
Consumers, Government, Environment & society at large.
 Theories of Ethics

Normative Theories

Consequential Non - Consequential

Egoism Kantian Theories

Utilitarianism
 Normative Theories

 Literally “Normative” means setting standards or rules of

behavior”. Normative theories propose some actions or
principles for distinguishing right actions from wrong
actions.
These theories can be divided into :
 01: Consequentialist approaches
 02: Non- consequentialist approaches.
 Contd…
 1. Consequentialist Approach:
Many philosophers, including Jeremy Bentham, Stuart Mill
etc… have argued that the moral rightness of an action is
determined solely by its results or consequence.
• If the results are good , then the act is right.
• If the results are bad , then that act is wrong.
It can be further divided into two more approaches :
A: Egoism
B: Utilitarianism
 Contd…
 Egoism:
• The view morality with self interest is referred to as egoism. This
approach contends that an act is morally right if and only if it
best promotes an agents self interest (agent refers to particular
group or organization). Egoism uses self interest as the standard
for measuring the actions rightness
• According to egoism we care for others because it is in our best
self interest. “ I am not required to act in the interest of others,
but I should if that is the only way to promote my own self
interest”.
• Example… Providing more and more facilities to the employees
does not mean that Organisation is caring for the employees, but
by giving more it wants them to be more productive(profit).
 Contd…
 Utilitarianism:
• This approach proposes that an action is right if it produces
the most utilities(benefits) for all persons affected by the
action (including the person performing the act).
• Example: Is it right to let one patient die in order to harvest
his organs and perhaps save five lives?
• It contends that actions and policies should be evaluated
on the basis of the “benefits” and “costs” they will impose
on society. In any situation the right action or policy is the
one that will produce the greatest net benefits and less
cost.
Note: Benefits here means happiness and satisfaction or
monetary benefits.
 Utilitarian contd…
• Example: The government may appropriate private
property for public use, usually with compensation to the
owner. Thus the government may legally purchase ones
house to widen the highway- even if that person don’t want
to sell the house or want more money than the government
is willing to pay. The public interest is served at his private
expense. Is this just?
• Utilitarianism make it appealing as a standard for decision
making in business and non-business organizations.
• It provides a clear and straightforward basis for formulating
policies. By utilitarian standards, an organizational policy,
decision or action is good if it promotes the general welfare
and larger interest.
 Normative contd…
 2. Non- Consequentialist:
• These philosophers contend that right and wrong are determined
by more than the likely consequences of an action. Example: Tom
to lie to Fred is wrong not simply because it has bad results ( Fred’s
hurt feelings), but because of the inherent character of the act
itself.
• The most prominent ethician philosopher of this approach is
Immanuel Kant, a German.
• Kantianism : The Ethics of Duty:
He said that for an action to be morally worth it should reflect ‘goodwill’
By will he meant the unique human capacity to act with principle. The
notion of goodwill is also containing the concept of ‘Duty’.
• Only when we can act from duty does our action have moral
worth.
 Kantianism contd…
• The core idea is that human beings are not mere objects—
they are persons who are worthy of respect, and who must
be treated as such. In particular, other persons must not be
treated as mere tools in the pursuit of one’s own goals.
• In business contexts, Kantianism implies an obligation for
businesses (and business people) to treat all persons with
respect.
• In particular, respectful treatment is considered
obligatory regardless of what ones goals and mission are.
• A desire to achieve a particular outcome, such as to make a
profit, cannot override the obligation to treat people fairly
and with respect.
 Contd…
• Kantianism even insists that the desire to achieve outcomes
that you think are ethically good cannot justify actions that,
incidentally, fail to treat people with respect.
• For instance, a Kantian would likely say that it is wrong to
lie to a customer to get them to buy a product, even if you
sincerely believe that the product is one that will bring
them great joy.
 Ethical Theories in Business
 In an effort to establish some ethical guidelines for
business, three normative ethical theories have evolved in
Western capitalist societies.
 They include:
• the stockholder theory,
• the stakeholder theory,
• the social-contract theory.
 These theories propose a set of ethical principles that can
be easily assessed and expressed by the typical business
person--not only by ethical philosophers.
 B of Business
Ethical Theories

Stakeholder Social Contract

Stockholder Theory
Theory Theory
 Stockholder Theory

• The stockholder theory asserts that the investors in a

business essentially run the show.
• They advance capital to their managers, who make
decisions exclusively for the sake of acquiring further
wealth.
• The stockholder theory admits to no social responsibility:
maximizing the return on investment is the only goal of the
business.
• It supports Egoism theory that ensures optimal financial
gain for the business above all else.
 Stakeholder Theory
• The stakeholder theory holds that a business should also
take into consideration the needs and wants of its
customers, suppliers, owners and employees.
• Though the ultimate goal of this model is also to maximize
the firm’s financial success, the theory holds that the
interests of the stockholders must sometimes be sacrificed
in an effort to ensure a company’s survival.
• The stakeholder theory is based on Utilitarianism that
business is t be done keeping the interest of the larger good
of people/society affected.
 Social Contract Theory
• John Hasnas, a professor of business at Georgetown University,
suggests that the most widely accepted business theory is the
social contract theory.
• Based on the philosophies of 18th-century political thinkers such
as Thomas Hobbes and John Locke, who each imagined what the
world would be like without government. This theory claims that
all business should be dedicated to improving the interests of
humanity as a whole, by functioning in a manner that considers
the well-being of consumers and employees--not just
stockholders--without violating any rules of integrity.
• Under this theory a business must function with an obligation to
"social welfare and justice."
• Though the social contract theory is not considered an actual
"contract," it holds business ventures to very high standards by
"imposing significant social responsibilities”.
• It reflects a balance of Kantian and Utilitarian approach.
More principles of Ethics:
 Rights Principle :
• The morally correct action is the one that you have a moral
right to do.
• According to this view, all people have natural rights to life,
liberty, and property, and everyone is morally permitted to
do anything they wish, provided that their actions do not
violate the rights of other people.
• Rights are entitlements –
Example: Right to free speech.
Example: Right to freedom of religion
Example: Right to an education
 Contd…
 Distributive Justice Principle:
• The morally correct action is the one that produces a fair
distribution of resources(benefits and burdens).
• Each person receives resources according to how much
they deserve (in terms of contribution, effort or merit.)
• People who are similar in relevant respects should be
treated similarly
• People who differ in relevant respects should be treated
differently.
• If Jack and Jill both do the same work, and there is no
relevant difference, then in fairness they should be paid the
same wages but if Jack is paid more than Jill simply because
he is a man, or because he is white, then we have injustice.
 Contd…
 Ethics of Care Principle:
• The morally correct action is the one that appropriately cares for the
people with whom you have relationships.
- Example: love toward son or daughter versus love toward a stranger
• Care for the needs of people with whom you have relationships.
Examples: ( Care for your own needs) • Family • Friends • Employees •
Customers • Stockholders
 Ethics of Virtue Principle:
• The morally correct action is the one that displays good moral
virtues(moral excellence), and that does not display bad moral
vices(activities/specific form of evildoing).
- Examples of virtues: compassion(kindness), conscientiousness(care),
cooperativeness, courage, fairness, generosity(The trait of being willing
to give your money or time), honesty, industriousness (Persevering
determination to perform a task), loyalty, self-control, self-
reliance(confidence), tolerance
-Examples of vices: cowardice(weakness/The trait of lacking courage),
deceit (The quality of being fraudulent), dishonesty, laziness, neglect,
selfishness
 Absolutism Vs Relativism
 Both Absolutism and Relativism are philosophical concepts
on moral values.
 These are two of the popular philosophical debates under
ethics, the study of morality.
 Absolutism holds that standards are always true. On the
other hand, relativism considers the contexts of situations.
 Hence, Absolutism endorses equality while Relativism
advocates equity. The following paragraphs further delve
into such differences.
 What is Absolutism? …
• Absolutism maintains that moral values are fixed
regardless of time, place, and the people concerned.
• Under moral absolutism is graded absolutism which views
a certain standard as either greater or less than another
moral absolute. For instance, the guideline, “Do not lie” is
less important than “Do not kill”.
• Its advantages include the critical evaluation of ethics and
observing equality since rules apply to people from
different walks of life. For instance, lying is immoral and
saying the truth should be practiced at all times.
• One popular example of absolutism is Kantian ethics
(developed by Immanuel Kant, a German philosopher)
which posits that an action is only good if the principle
behind it is moral.
 What is Relativism?
• Relativism asserts that moral standards are dependent on
contexts since nothing is innately right nor wrong.
• This kind of view is more applicable to the current society
as the value of tolerance is being advocated.
- Example: it is immoral in some countries for women to go
outside without covering their faces while it is perfectly
normal in most territories.
• Relativism’s advantages include acknowledging diversity
and grey areas. On other hand, its disadvantages include
reducing a behavior’s value from being “morally correct” to
merely being “socially acceptable”.
-Example: Polygamy is being practiced in some cultures;
would it then be ok to tolerate such a practice?
 Relativism contd…
• One theory under relativism is situational ethics which posits that
there should be fair judgment by looking into personal drivers.
• Its proponents include Jean-Paule Sartre, Simon Lucie Ernestine Marie
Bertrand de Beauvoir, Karl Theodor Jaspers, and Martin Heidegger.
• It specifies that a certain principle may only be applicable to a situation
which may not be helpful in a different context.
The following are the major categories of relativism:
 Moral relativism: diversity in moral standards across various
populations and cultures
 Truth relativism: what is true is dependent on a certain perspective
 Descriptive relativism: the distinctions between groups are simply
described; they are not judged
 Normative relativism: morality is evaluated based on a certain
framework
 Difference between Absolutism and Relativism
• Moral Guidelines :
In absolutism, the moral guidelines are definite while those of
relativism are dependent on the contexts of various situations.
• The Value of Tolerance:
Relativism is more closely associated with the value of tolerance since
the differences in background are considered. On the contrary,
absolutism does not look into diversity as it strictly adheres to the
moral guidelines; hence, its critics argue that this perspective paves
way for discrimination.
• Intrinsic Values:
Unlike relativism, absolutism holds that acts are intrinsically right or
wrong. For instance, since absolutists believe that killing is intrinsically
wrong, a woman who killed a rapist in self-defense is condemned as
immoral. On the other hand, a relativist understands the crime as
compulsion involved in the situation and views the woman as moral.
 Contd…
• Religion:
As compared with relativism, absolutism is more associated
with Religion since religious doctrines often endorse specific ethical
guidelines.
• Advantages:
The advantage of absolutism includes the ability to critically evaluate
the ethics of different situations while that of relativism is the capacity
to tolerate diverse kinds of beliefs.
• Disadvantages:
The disadvantages of absolutism include the inability to consider the
context of situations and value the grey areas of morality while that of
relativism is reducing being “morally correct” to merely being “socially
acceptable” and that the lines between what is right and wrong may
become too vague.
• Consequences :
Absolutism does not consider consequences as its moral tenets are
deontological or only based on the specified rules.
• Relativism is teleological or values the results of one’s actions.
Example –
Absolutism views Robin Hood as immoral since stealing is bad;
However, Relativism sees him as moral since he steals from a corrupt
individual and gives money to the poor.
 Summary
• Both absolutism and relativism are philosophical concepts on moral values.
• Absolutism maintains that moral values are fixed regardless of time, place, and
the people concerned.
• Unlike in absolutism, the value of tolerance is emphasized in relativism.
• Unlike relativism, absolutism believes that values are intrinsically right or
wrong.
• As compared to relativism, absolutism is more connected with religion.
• The advantage of absolutism is its ability to critically evaluate a situation’s
morality while that of relativism is its capacity to consider grey areas.
• The disadvantage of relativism is the possible reduction of what is morally
correct to being merely socially acceptable while that of absolutism is not
considering the context.
• Relativism has major categories while absolutism has none.
• Unlike absolutism, relativism considers consequences.
• An example for absolutism is Kantian Ethics and that of relativism is
Situational Ethics.