Ethics and Marketing: Prof Gautam Dutta Be. Mba, PHD (Iit), GCPCL (Harvard

Ethics and Marketing
Prof Gautam Dutta

BE. MBA, PhD (IIT), GCPCL (Harvard
Copyright © 2012 Dorling Kindersley (India) Pvt. Ltd.
Business Ethics and Corporate Governance, 2e A. C. Fernando
What is Ethics?
Ethics:
• is a branch of philosophy.
• is a normative science because it is concerned
with the norms of human conduct.
• as a science, it must follow the same rigours of
logical reasoning as other sciences.
• as a science, involves systemising, defending
and recommending concepts of right and
wrong behaviour.
Descriptive Science Normative Science
Descriptive sciences aim Normative sciences are
to describe, measure evolving and seek to
understand and record discover the way things
the actual measurable should be.
realities around us. In areas such as ethics it will ask
questions such as ‘is the death
Experimental approach. penalty right?’ whereas
Such as chemistry or
physics. descriptive sciences will seek only to
discover facts such as‘what
percentage of people
believe the death penalty is
Produce observable facts right?’ Normative sciences seek to
discover ‘good’ ways of doing
verifiable things, or the ‘right’ way of
measurements. thinking..
Principles of Personal Ethics
application of values in
Personal ethics refers to the
everything one does.
Principles of personal ethics include:
1. Concern for the well being of others;

2. Respect for the autonomy of others;
3. Trustworthiness and honesty;
4. Willing compliance to law;
5. Basic justice: being fair;
6. Refusing to take unfair advantage;
7. Benevolence: doing good; and
8. Preventing harm to any creature.
Principles of Professional Ethics
The basic principles people are expected to follow in their

professional career are the following:
• Impartiality: Objectivity;
• Trustworthiness and honesty;
• Openness: Full Disclosure;
• Confidentiality: Trust;
• Due Diligence: Duty of care;
• Fidelity to professional responsibilities; and
• Avoiding potential or apparent conflict of interest.
What is Business Ethics?
Business ethics is the application of general

ethical ideas to business behaviour.
It is based on the principle of integrity and fairness
and concentrates on the benefits to the
stakeholders, both internal and external.
Stakeholder includes those individuals and groups
without which the organization does not have an
existence. It includes shareholders, creditors,
employees, customers, dealers, vendors,
government & the society.
What is not Business Ethics?
1. Ethics is different from religion.

2. Ethics is not synonymous to law. Why ?
3. Ethical standards are different from cultural
traits.
4. Ethics is different from feelings.
5. Ethics is not a science in the strictest sense
of the term.
6. Ethics is not just a collection of values.
Code of Conduct of managers and 7 principles of
Ethics
1. Principles of justice, (Justice is fairness)
2. Beneficence,(“Good deed )
3.Nonmaleficence, ( Act of committing no harm or

evil).
4. Accountability, (to stakeholders)
5. Fidelity, (Faithfulness to a person, cause, or belief)
6. Autonomy, (ability of the person to make his or her

own decisions.
7.Veracity. (the quality of being true, honest, or accurate)

Evolution of Business Ethics over the years
1. The 1970s saw papers from the academic circle.
2. Businessmen became more concerned with their public image and
addressed ethics more directly.
1974: The first conference held at the University of Kansas.

1975: Business ethics became institutionalized at many levels through
writings and conferences.
1979: Three anthologies on business ethics appeared:
(i) Ethical Theory and Business by Tom Beauchamp and

Norman Bowie;
(ii) Ethical Issues in Business: A Philosophical Approach by
Thomas Donaldson and Patricia Werhane; and
(iii) Moral Issues in Business by Vincent Berry.
(contd.)
• 1980s: The subject was taught in several universities

in the US and Europe. There were also, by this time,
many journals of business ethics, apart from centres
and societies established to promote ethical
practices.
• 1982: Richard De George brought out
Business Ethics, and Manuel G. Velasquez
published his Business Ethics: Concepts and
Cases.
(contd.)
• 1990: Business ethics as a management

discipline was well-established.
• Parallel to these academic pursuits, the late 1980s
and early 1990s saw increased concern for
consumer rights, quality, safety, price, customer
service and environment world over.
• Simultaneously, with these developments,
religion also lent its powerful voice.
Importance and Need for Business Ethics
• A business organization competes in the global market on its own

internal strength, in particular, on the strength of its human resource and
on the goodwill of its stakeholders.
• The value-based management and ethics that an organization uses in its

governance enables it to establish productive relationship with its
internal customers, and lasting business relationship with
its external customers.
• Real type situations (Tata and Infosys) show that use of

ethical practices in business creates high returns for
companies.
United Nations Global Compact came out
during 2000
• The United Nations Global Compact is a non-binding
United Nations pact to encourage businesses worldwide
to adopt sustainable and socially responsible policies, and
to report on their implementation
• Corporate sustainability starts with a company’s value
system and a principles-based approach to doing
business. This means operating in ways that, at a
minimum, meet fundamental responsibilities in the areas
of human rights, labour, environment and anti-
corruption..
• The Ten Principles of the United Nations
Global Compact are derived from: the
Universal Declaration of Human Rights, the
International Labour Organization’s Declarati
on on Fundamental Principles and Rights at Wo
rk
, the
Rio Declaration on Environment and Develop
ment
, and the
United Nations Convention Against Corruption
Human Rights
• Principle 1: Businesses should support and

respect the protection of internationally
proclaimed human rights; and
• Principle 2: make sure that they are not
complicit in human rights abuses.
Environment
• Principle 7: Businesses should support a
precautionary approach to environmental
challenges;
• Principle 8: undertake initiatives to promote
greater environmental responsibility; and
• Principle 9: encourage the development and
diffusion of environmentally friendly
technologies.

Anti-Corruption
• Principle 10: Businesses should work against

corruption in all its forms, including extortion
and bribery.

Labour
• Principle 3: Businesses should uphold the
freedom of association and the effective
recognition of the right to collective
bargaining;
• Principle 4: the elimination of all forms of
forced and compulsory labour;
• Principle 5: the effective abolition of child
labour; and
• Principle 6: the elimination of discrimination
in respect of employment and occupation.
Values and Ethics in Business
A value is a view of life and judgement of what is

desirable. It is very much part of a person’s
personality and a group’s morale.
Business ethics relates to issues of “what is right”

and “what is wrong” while doing business. What
values are to individuals, ethics are to
business.
Business ethics operates as a system of values,

relating business goals and techniques to specific
human ends.
Distinction Between Values and Ethics
Values Ethics
Personal in nature Generalized value

(e.g. a belief in system (e.g. avoiding
providing customer discrimination in
satisfaction and being recruitment and
a good paymaster) adopting fair business
practices).
Offer alternatives to Provides general

choose from. guidelines within which
the management can
operate.
Why should Businesses act Ethically?
The reasons for an organization to be ethical

include:
• To protect its own interest,

• To protect the interests of the business
community as a whole so that the public will
have trust in it,
• To keep its commitment to society to act
ethically, and
• To meet stakeholder expectations.
Why should Businesses act Ethically? (contd.)
The reasons for an organization to be ethical include:
• To prevent harm to the general public,

• To build trust with key stakeholder groups,
• To protect themselves from abuse from unethical
employees and competitors,
• To protect their own reputations,
• To protect their own employees, and
• To create an environment in which workers can act in
ways consistent with their values.
Ethical Decision-making
Norman Vincent Peale’s and Kenneth Blanchard’s

suggestions to conduct ethical business.
•Is your decision fair?

•Is it a win-win situation for all?
•Is your decision legal? If it is not legal, it is not
ethical.
•The Eleventh Commandment: “Thou shall not be
ashamed when found”, meaning when hauled up for
unethical behaviour, if one’s conscience is clear, then
there is nothing to be ashamed of.
How Corporations Observe Ethics in Their
Organizations?
• Publish in-house codes of ethics to be strictly

followed by all their associates.
• Employ people with a reputation for high
standards of ethical behaviour at the top levels.
• Incorporate consideration of ethics into
performance reviews.
• Give rewards for ethical behaviour.
How Corporations Observe Ethics in Their
Organizations? (contd.)
• SEBI, CII and such other organizations representing

corporations issue codes of best practices and
enjoin their members to observe them.
• Highly rated B-schools give extensive and intensive
instruction in business ethics, corporate social
responsibility and corporate governance as part of
their curriculum.
• Conduct an Ethics Audit.
Corporate Governance Ethics
• Corporate governance is a set of rules that

governs the administration and management
of companies.
• Its goalposts are transparency, integrity, full
disclosure of financial and non-financial
information, and protection of stakeholders’
interests.
Benefits from Managing Ethics in Workplace
The many benefits that arise from managing

ethics in the workplace are:
•Attention to business ethics improves society.
•Ethical practice contributes towards high
productivity and strong team work.
•Changing situations require ethical education.
•Ethical practices create strong public image.
•Strong ethical practices act as an insurance.
Theory 1: Principal and Standards of Conduct
• Focuses on the actions people take and then tries to
determine whether that action itself is right or
wrong WHETHER A GIVEN ACT ITSELF IS ETHICALLY
ACCEPTABLE.
• It discounts, or excludes, our focus on who is doing the

action and the likely outcomes of the act.
• In moral philosophy, the school of thought focused on this

approach to ethics is known as deontology. (study of
the nature of duty and obligation).
Theory 1: About duty-based ethics
• Duty-based or Deontological ethics
• Deontological (duty-based) ethics are concerned with what people
do, NOT WITH THE CONSEQUENCES OF THEIR ACTIONS.
• Do the right thing.
• Do it because it's the right thing to do.
• Don't do wrong things.
• Avoid them because they are wrong.
• Under this form of ethics you can't justify an action by showing that
it produced good consequences, which is why it's sometimes called
'non-Consequentialist'.
• https://www.youtube.com/watch?v=fTxQP81yRgg
Origins of Principles and Standards of Conduct
• Because actions are viewed as having inherently good or bad

qualities (e.g., benevolence, murder), it is important to
understand how we derive these norms.
• Deontological principles can arise from a variety of sources. For
instance, they might arise from various influential religious and
philosophical traditions.
• Much of morality is influenced by RELIGION and particularly the

basic dos and don’ts that come out of those religious traditions,
greatly influenced various cultures around the world as well.

DEONTOLOGY IS SACROSANCT
• DEONTOLOGICAL ACCOUNTS MAINTAIN THAT THERE ARE CERTAIN
STANDARDS OF HUMAN DECENCY OR RESPECT FOR THE WORTH OF
OTHERS THAT APPLY TO EVERYONE AND EMERGE OUT OF ANY
TRADITION.
• These standards rule out treating each other in certain ways (e.g.,
don’t lie, don’t cheat, don’t steal, don’t murder). Sometimes these
principles are made explicit and codified in some way; other times
the principles are simply understood and largely implicit.
• Principles often involve concepts such as rights and duties

Key questions for Managers
1. What principles are relevant to this situation?

2. How do principles help clarify the moral tension
I feel in this decision?
3. What principles do different stakeholders bring
to this situation, and how does looking at this issue
from their point of view generate new principles

Second THEORY : Character ethics
focused on the AGENT
 Ethics deals with more than rules and norms.
 It also addresses issues of character—the traits and
qualities that define us (as people or as organizations) and
shape how others see us.
 A person of good character is someone who possesses
many important virtues (forms of human excellence), while
someone with bad character has significant failings or vices
(expressions of corruption or a lack of excellence).
https://www.youtube.com/watch?v=M6fGTz1hok0
 Building business on character ethic - Kevin Byrne at TEDxNoviSad

Origin of Character
What it means to live a good life and how that fits within a larger community.?
•Character is something learned from childhood, from parents, friends,

and community—ways of living that are encouraged and praised.
•Character is also something that takes great effort and hard work. We
don’t become a good person simply by saying the right things. We must
work hard to learn these abilities and make them a part of who we are.
•Similarly, a virtue such as courage can only be learned by repeated

efforts to face danger and respond courageously (rather than with fear
or in a foolhardy manner)

Origin of Character
VIRTUES: These are traits that are morally commendable, such as prudence, fairness,
trustworthiness, and courageousness.
VICES: These are traits that are morally problematic, such as deceitfulness, unjustness,
cowardliness, ineptitude, incompetence, and recklessness. We may also talk about things
that leaders and organizations want to avoid being linked to, such as supporting corrupt
organizations,
VIRTUES AND CONTEXT: What counts as virtue, however, is often determined in large
part by the context in which we operate. For example, action that is praiseworthy with
close friends and family (i.e., forthrightness, candor) might be considered a vice in certain
business
INTEGRITY: This is a central aspect of good character. Integrity literally means wholeness
or the sense that we have a clear conscience and can affirm who we are and what we
have done. People of integrity usually have high moral standards and the strength of
character to act according to their beliefs, particularly when they are in difficult situation.
Importance of Character
Firm managers should not only identify key purposes or goals, but also
the character qualities
Most companies seek “good people,” which is a shorthand way of saying

they want people of good character,
We can also think of character as closely related to the brand, a term

used in marketing. We all have a brand; the choices we make define
who we are and how others look at us.
Beyond what they can get away with or maximize a
particular outcome in a given situation, managers also need
to think about the larger importance of their choices and to
see new situations as a chance to reveal to the world who
they are. Business Ethics and Corporate Governance, 2e A. C. Fernando
Third Theory : Consequence
 Ethics also has to do with pursuing and achieving—
laudable ends.
Thus the moral worth of actions should be
determined by the likely consequences they would
generate.
 Do our actions create more good than harm in terms of
realizing our goals or purposes (e.g., winning a war,
creating profits, or helping others)? If so, actions can be
defended; if not, then those actions are unjustified.
 THE CONSEQUENTIALISM.
https://www.youtube.com/watch?v=G-e6vdk0sGk
Origin of Consequence
 Utilitarianism (i.e., creating the most favorable balance of benefit
over harm), which has heavily influenced economics, is the most
famous branch of ethical thought focused on consequences. There
are two core features of this branch of ethics:
 1. Morally defensible purposes: People need to be sure that the
ends they set for themselves are morally defensible.
 2. Creating favorable consequences: People need to undertake
actions that create the most favourable consequences for realizing
their purposes
 PURPOSES AND CONSEQUENCES ARE CENTRAL TO MANAGERS AND

THE CORE STAKEHOLDERS CONNECTED TO THE FIRM.

Example of Consequence
 Focusing on consequences leads us to focus on the
stakeholders (customers, employees, suppliers, shareholders,
and community).
 A helpful way for managers to identify the relevant purposes
and consequences in a given case is to do a stakeholder
analysis—list the relevant stakeholders in the case, highlight
their purposes (what they want), and consider likely courses
of action in terms of those purposes.
 It simply asks that we look at the interests of the various
groups and make decisions bearing that information in mind.
It is up to us to decide which interests to prioritize.
 A related challenge for managers is to think about the
interests of stakeholders, and what kinds of outcomes they
seek. Business Ethics and Corporate Governance, 2e A. C. Fernando
Key questions
• 1. Which stakeholders are likely to be affected by

protagonist’s decision?
• 2. For whom will value be created and destroyed
by protagonist’s choice?
• 3. Which stakeholders are most likely to be
opposed to protagonist’s choice, and what can
protagonist I do to address their concerns?

Fourth Theory : Relationships and Care
Relational Ecosystem
• Relationships and the ability to sustain healthy and
caring interaction are a critical part of the moral life.
• Much of our moral responsibility in life is tied to how
we interact with others, live out relational
responsibilities, and create a healthy relational
ecosystem both for ourselves and for other people.
• This fourth tradition marks relationships, and the
imperative to maintain care and healthy
relationships, as a key part of organizational life.
• Alternative Paradigms: Care Ethics and Feminine Ethics
• https://www.youtube.com/watch?v=4iaCpAFypq8
Origins of relationships and care
• The ethics of care emerged from the work of Carol Gilligan
and other feminist writers who noted important
differences in how boys and girls thought about moral
issues.
• Gilligan’s work stood in stark contrast to that of previous
psychologists, particularly Lawrence Kohlberg, who saw
abstract reasoning as the main principles of moral
development
• According to Gilligan, people are inherently social and
embedded in relationships, and therefore, living well and
being a good person involves one’s capacity to extend
care in relationships with others.
Examples of relationships and care
• Gilligan’s work highlights two critical themes: that ethics is
not just about abstract reason,
• but it is also about emotionally charged feeling and
sentiments that are critical to moral reflection; and that
both being and doing good involves connection with and
caring for others (and oneself) in relationships.

Take for instance Heinz’s dilemma
• Highlight differences in thinking about moral issues.
• Heinz has a sick wife who needs an expensive drug to survive. Heinz
does not have the money to buy the drug, so he must decide whether
he should steal the drug to save his wife or respect the rules against
theft and let her die. Using the logic of standards of conduct, young
boys tended to turn the dilemma into a “math problem with humans”
noting that life was more important than property, so therefore Heinz
should steal the drug.
• In contrast, young women tended to talk about the case differently
noting that if Heinz stole the drug he would likely get caught and go to
jail, and when he did, who would care for his sick wife? Also rather than
accept the problem as it is, why not appeal to the druggist’s sense of
compassion, and ask if he would lower the price or find a way to help
Heinz finance the drug? While neither approach solves the problem,
the example highlights the contrasting ways of thinking about the
issues. Business Ethics and Corporate Governance, 2e A. C. Fernando
Importance of relationships and care
• Like character, healthy relationships are a critical aspect of
living well as is our ability to generate positive
consequences for the firm. Without healthy stakeholder
relationships and getting stakeholders to give their best
every day, firms erode their ability to sustain positive
results.
• WEAKNESSES: Different firms (and strategies) require
different kinds of relationships with various stakeholders,
making it challenging to understand what a healthy
relationship involves. In addition, maintaining a healthy
relationship may entail a variety of costs that can easily
drain organizational resources and invite forms of
“cronyism”—even corruption—if not carefully monitored
and limited. Business Ethics and Corporate Governance, 2e A. C. Fernando
KEY QUESTIONS
• 1, Which relationships are most relevant for
thinking about the dynamics of this case?
• 2. Which relationships are potentially at risk or put
under stress by the choices the business faces?
• 3. What can protagonist do to both protect key
relationships and repair any damage done by
his/her decision in this case ?

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Ethics and Marketing

Prof Gautam Dutta

1. Concern for the well being of others;

The basic principles people are expected to follow in their

Business ethics is the application of general

1. Ethics is different from religion.

3.Nonmaleficence, ( Act of committing no harm or

4. Accountability, (to stakeholders)

5. Fidelity, (Faithfulness to a person, cause, or belief)

6. Autonomy, (ability of the person to make his or her

7.Veracity. (the quality of being true, honest, or accurate)

1974: The first conference held at the University of Kansas.

(i) Ethical Theory and Business by Tom Beauchamp and

• 1980s: The subject was taught in several universities

• 1990: Business ethics as a management

• A business organization competes in the global market on its own

• The value-based management and ethics that an organization uses in its

• Real type situations (Tata and Infosys) show that use of

• Principle 1: Businesses should support and

Business Ethics and Corporate Governance, 2e A. C. Fernando

• Principle 10: Businesses should work against

Business Ethics and Corporate Governance, 2e A. C. Fernando

A value is a view of life and judgement of what is

Business ethics relates to issues of “what is right”

Business ethics operates as a system of values,

Personal in nature Generalized value

Offer alternatives to Provides general

The reasons for an organization to be ethical

• To protect its own interest,

The reasons for an organization to be ethical include:

• To prevent harm to the general public,

Norman Vincent Peale’s and Kenneth Blanchard’s

•Is your decision fair?

• Publish in-house codes of ethics to be strictly

• SEBI, CII and such other organizations representing

• Corporate governance is a set of rules that

The many benefits that arise from managing

• It discounts, or excludes, our focus on who is doing the

• In moral philosophy, the school of thought focused on this

• Because actions are viewed as having inherently good or bad

• Much of morality is influenced by RELIGION and particularly the

Business Ethics and Corporate Governance, 2e A. C. Fernando

Business Ethics and Corporate Governance, 2e A. C. Fernando

1. What principles are relevant to this situation?

Business Ethics and Corporate Governance, 2e A. C. Fernando

Business Ethics and Corporate Governance, 2e A. C. Fernando

•Character is something learned from childhood, from parents, friends,

•Similarly, a virtue such as courage can only be learned by repeated

Business Ethics and Corporate Governance, 2e A. C. Fernando

Most companies seek “good people,” which is a shorthand way of saying

We can also think of character as closely related to the brand, a term

 PURPOSES AND CONSEQUENCES ARE CENTRAL TO MANAGERS AND

Business Ethics and Corporate Governance, 2e A. C. Fernando

• 1. Which stakeholders are likely to be affected by

Business Ethics and Corporate Governance, 2e A. C. Fernando

Business Ethics and Corporate Governance, 2e A. C. Fernando

Business Ethics and Corporate Governance, 2e A. C. Fernando

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