2. m Business Ethics and Corporate Governance Casiem A Study on Loyalty ECLA amala knew that something was wrong when Jagan got back at his desk. Jagan had been with Akash & Akash for twenty years. He was sincere, hardworking and also a strong supporter of the company. Kamala joined this accounting firm one year ago, after passing her C.A. exam One morning, Jagan was moody and upset. When Kamala was wishing him a good morning, Jagan said: "Look here, Kamala, | have been denied a senior position. | am working 60 hours per week for the last 20 years. This company wants me to wait for some more time”. Kamala asked him, "What are you going to do?”. Jagan replied, "I don't know”. Later on, Jagan began behaving in a different way. He used to come late and go earl, On a Sunday, when Kamala went to office to collect some papers, she noticed Jaga! was copying some software used on auditing and consulting. Jagan began to do some consulting work for small firms. He also said that long-term service was not recognise: in that company. Kamala was disturbed by this event. QUESTIONS 1. What are the ethical issues in this case? 2. Do you have some suggestions for this company?INTRODUCTION ‘The word ethies’ has originated either from the Latin word “Ethicus” or the Greek word. “Bthicos’. Both these words originated from the word “ethos” which means character. Ethies is a system of moral principles, rules and conduct. AS a science of moral principles, ethies siives guidelines such as “What is right?" and “what is wrong?” Ethical problems are faced by people in all the countries and at all times. In all organisation family business and religions, situations arise that demand right decisions, Centuries ago, Duryodhana said in the Mahabharata: “I know what is right but I am not able to act accordingly, 1 also know what is wrong but I am not able to restrain myself doing it”, ‘The famous Indian philosopher Kautilya says, “We are shaped by our thoughts, We become What we think, when the mind is pure, joy follows like a shadow that never leaves", Ethics can be described as philosophy in action, Business ethies is a branch of ethics dealing with application of ethical principles in business. The human beings have freedom of action to communicate good or bad to the world. While good acts are performed, people are happy and period of good activity is called the golden era Ethics encourages constructive actions, There are three types Of constructive actions: 1. Certain obligatory actions to be performed by every individual, such as good quality products, fair price and customer care; the non-performance of these activities bring disgrace. Certain activities are to be prohibited such as false weighing, prices, ferior quality and high 3 Certain other actions, called optional actions bring goodness and welfare to all. For example, handling a grievance of a customer is an optional activity. Tamil poet Tiruvalluvar says, “When prosperity comes to a good man from a good family, it is like village tank being filled with water, it helps everyone”, Indian philosophers stronglybelieve that ethical action is the supreme governing force of the universe. The world survives because of ethical action. As for as ethical values and deeds are concerned, they are more or less instinetive in humans rather than acquired, but in modern days, ethical training has become a necessity due to various reasons. ‘The level of ethical action in a society depends on the goodwill and maturity of the society. Higher the level of ethical action, grater is the status of the society. The purpose of ethi action is to welcome the good and the avoidance of bad, “Service to man is the service to God” is a sound and wise principle, Indian tradition “Sarve Janaahaa Sukhino Bhavantu” (let all the people be happy) is very much relevant in these days of globalisation. SCOPE OF BUSINESS ETHICS simply applying the basic principles of ethics to the field of business which is the major area of making profit. Business ethics demonstrates that profit can be made on a sustainable basic by following certain norms and respecting other. Indian goals have to be combined to achieve mutual benefits, An effective team can be limit based on Short-cuts can bring benefit sustainable results. In short, a good enterpris the short-run bit only good values bring long-run and can succeed if it takes care of all the stakeholders in terms of their interests. Business ethics is not just compliance to law, One firm can observe the law but can be unmindful of fair practices. On many occasions, contract labour practices have been unfair and unethical. Exploitation takes place in one form or the other. The business ethics programmes and policies should be top-driven. The success of ethical programme in an organisation depends on the degree of commitment by the top ‘management,Business ethics is not just related to an individual but to the whole organisation. It is concerned with a group that involves in all activities of businesses line production, purchase, 2 Business ethics is shifting the focus from sharcholders to stockholders. In this sense; it is holistic and benefits all, Business ethics is concerned with a code of ethics and not merely a code of conduct, In course of time, a right code of ethics gets internalised as a normative nance and managing. value. Three Principles of Business Ethics The following are the abiding principles of ethies: 1. Standardisation: All the rules should be allocable to all standardisation is the secret of success for the implementation of ethical practices, in other words, favoritism and partiality should be discouraged. Double standards have to be given up. Standardisation promotes a uniform standard for all and, hence, everybody will be happy with the administration. There is no place for ill-will or frustration. 2. Workable: The rules of business ethics should be practical and workable so that tangible benefits can be experienced. The benefits of business ethies should be made available to all the stockholders. The rules of the business should not suffer from a theoretical bias and work for practical purposes. Ethics is for everybody and should be a concern of primary importance, 3. Driven form the top: Business ethies should be always driven from the top. Business ethics can work only of the top management is seriously committed to it. Unless and until, the top management is committed to ethical considerations, the implementation of ethical programmes would be difficult to be implemented,REUGION AND Religion provides guidelines for people on the various aspects of life. It gives primary importance to God and provides people a spiritual path for the success and happiness. Religion stresses what our life ought to be. It lays down the various steps like prayers, meditation and rituals to be performed. Religion underlines the concept of human values and inner growth. It provides guidelines to have a positive attitude towards life. It advocates spiritual growth and will-power, It advocates good practice in all the aspects of life inclu business, In short, it advocates “Be good, see good and do good” type of practice. Being ‘good brings a Jot of mental and spiritual satisfaction. According to Indian philosophy, there are three gunas, namely the Sattvik, the Rajasi and the ‘Tamasi gunnas. Rajo guna refers to valour and physical strengths leading to wars and extension of territory, Tamo guna induces laziness and promotes inactivity. The Satvik guna is ideal for acquiring both the physical and mental abilities, itis also said that hands that serve are holier than the lips that pray to inculcate the spirit of service in the minds of the people. Indulging in too much of selfishness can never make people happy. The easiest way to be happy is to make others happy. The Role of Karma Yoga Karma yoga, an Indian doctrine, states that action performed without attachment makes people happier. Karma yoga leads to prosperity, success and sound decisions. The doctrine or Karma also suggests that the rewards and punishments are due to the actions of the people in previous births. The fear of punishment and the pleasure of reward provides the correct guidelines for this life of an individual. The doctrine of Karma is logical and ethical.A human being is not a mere ‘political animal’ as described by ” as presented by Benjamin Franklin or “economic animal” jotle, “tool-making as thought by Alvin ‘Toffler. Indian philosophy strongly believes that every individual has divine qualities. Indian ethies has offered three core values, namely Ananda Lahari, Prema Lahari and Soundarya Lahari, The word “Lahari” means wave. Ananda Lahari stands for wave of happiness. We can be happy now without working about future happiness. To be happy is an ethical decision and not a mere pleasure if we decide to be happy. Prema Lahari refers to the wave of love. We have to love what we do to promote internal growth, Soundarya Lahari suggests to see the patterns of beauty in what is and not what should be. anim: In short, as summarised by Swami Sukhbodhananda, everyday is a possibility and everyone is divine. Very often, our mindsets have to be altered for achieving success and peace. A new mindset can create an enlightened society. Indian philosophy believes that ignorance is no longer a bliss. Since the root Of happiness lies in righteous action, right action comes from right thinking and right information, Hence, ethical actions have become necessary in a modern global economy in this information age. Morals and Ethics Morals deal with the right behaviour of individuals. Ethies deals with right character in a given situation. Both are closely related to each other. Some of the basic morals like helping others, treating all equally and not cheating others are converted in terms of good business practices. Morals form the foundation of ethies which can be applied to business. The following agreements reveal the relationship between morals and ethies. 1, All moral standards aim at the development of positive standards, Ethical standards also aim at the betterment of the ethical practices in organizations. 2. If the moral standards are not followed, there will be serious and disastrous consequences like crimes, corruption and fraud, If ethical standards are not adopted, there will be fall in the values and decline in the efficiency of business enterprises. Both morals and ethical standards can be established only with the active and sincere participation of the people.TYPES OF ETHICS There are three important types of ethics, namely, transactional ethics, participatory ethies and recognition ethics. 1. Transactional ethics: Man is a social animal. He has to act and react with others through different transactions. The practice of ethies in all these transactions is called as transactional ethics. All involved parties should 1 interests are binding all the people. It isa wi procate ethical practices. The common good ethical avin approach from all prospective, Let us take the example of a medical doctor, He examines the patients, gives the right type Of treatment and changes moderately. The patients are also replying on getting the treatment from this doctor and promote a word-of-mouth communication. The principle of honesty is the basic principle in transactional ethics. The interest of both the parties is taken care of Participatory ethics: It is an important part of business ethics. Guided by common good, all the participations follow some ethical practices. The important features of participatory ethies are: (a) All the parties like consumers, producers and employees maintain some basic ethical standards. (b) The level of participation depends on the degree of motivation in a society. (c) Participation comes from external forces and inner commitment. This can take place only through the process of creating ethical awareness. (A) The level of participation has to be watched by all the groups leading to mutual checks and balances. Special attention has to be given to the least powerful and marginalised sections of society. (e) The growth of participation indicates the level of social development. It is the ‘growth of solidarity in an angle of individualism. Many social-economic problems of developed countries are solved by the ethical practices. Example: Ford Foundation.3. Recognition ethies: As human beings, people are endowed with the ability to understand. the problems of others. This quality leads to the recognition of individuals, institutions and societies, conflicting situations can be solved by the correct recognition of the situation, This requires a correct perspective and empathy. The strong is helping the weak. The learned is helping the lesser learned. The experienced is helping the new ‘entrant. Compensation is given to victims. CHARACTERISTICS OF BUSINESS ETHICS 1. Each and every person is individually responsible for the ethical or unethical decisions. ‘The way in which the person is brought up, the values learnt and the working atmosphere decides the ethical standards of people. Many times, uneducated people are more ethical than the so-called educated people. 2. Ethical decisions are voluntary in nature and people have the freedom of choice and frce-will. The conscience of people may vary from time and place to place. The freedom Of choice is left to the individual to follow a good practice or not. I is the free-will that mentation of ethical standards and practices. makes the suecessful imp! 3. Ethical decisions differ from person to person, time to time and place to place. Due to changes, the ethical decisions also change, What was considered as ‘good at one time is considered bad at another point of time. Many decades ago, the ‘customer care was not given prominence. In the modern age, customer care is given ‘utmost importance. socio-econo: 4. Ethical decisions affect in a widespread way. Ethical decisions affect all the stakeholders like shareholders, employees and customers. These ethical dei to other business firms across the region, nation and even the globe. jons spres 5. Ethical decisions involve a trade-off between the cost and benefits received. Some ethical decisions may be costly in the short-run but these decisions may bring good benefits in the long-run, For example, social responsibility of business brings a lot of benefits to the business firms in the long-run,The effects of ethical decisions cannot be predicted. Ethical decisions are made by taking into account certain variables like the growth of population, prevailing business and present attitudes. In course of time, these variables are bound to change. For example, disclosure norms like disclosure of many business results are accepted as good business practices in modern days. These ideas were not encouraged in traditional times. The lower level managers are pressurised to compromise their ethical standards. In fact, many young people join the business organisations with the great ideals and ethical standards. Unfortunately, in course of time, their standards are diluted due to pressures from different sides. Unfortunately, they fall in line with others. In most organisations, people experience ethical dilemmas. Dilemma means choice between two options, When values are in conflict, an ethical examination can help the managers, Deadlines, sales goals, career advancement and lack of information are the risks of ethical conduct. These risks have to be managed effectively. In fact, ethies has to be taught to the managers at the corporate doors, The managers should be given opportunities for analysing the various real or hypothetical situation: Apart from increasing sensitivity to moral issues, it will build moral courage also. This ethical training will boost the moral climate of the firm. The managers should be trained to follow some quick ethical tests, like the following. Isit right? As it fair? Who gets the benefit?Who gets hurt? Whar will you feet about this decision after five years? 10. Ethies have to be imparted from a very early age both at home and in schools. The values have to be built with education. Importance has to be given to both the means and ends. The managers should be trained to get others’ feedback before acting or deciding. MYTHS OF BUSINESS ETHICS Like other areas of knowledge, there are some myths in the area of business ethies also, 1. Bihies is a personal and individual affair: W is wrong to think that ethics is related to personal affair of an individual, Ethies embraces the entire society and, hence, it should govern and influence all the members of an o1 a person is individually good but collectively bad, then there is no benefit of the organisation from the personal ethies of individuals.Business and ethics do not go hand-in-hand: It is a mistaken notion that business and ethics do not go simultaneously. Business ethies suggests that profit should be made on a sustainable basis by following correct norms and principles, In fact, everybody agrees that individual goals cannot be attained separately and there is a common horizon within which everybody should function, Relative ethics is a common practice: Business ethics consists of principles and standards that guide behaviour in the world of business. Whether a particular behaviour ethical or unethical is determined by stakeholders like investors, employees, customers interest groups and the community. Good business means good ethics: It is a myth to believe that good business automatically promotes good ethies. Enron Corporation, once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt. The inflated sales led to bankruptcy for Global Crossing with its fiber-optic telecommunications network. Arthur Anderson LLP formed in 1913 once exemplified for integrity collapsed because of questionable accounting pract es. It is also a myth that people learn ethical practices on their own. In fact, people have to be taught ethical practices in the corporate world. Many are not aware of the ethical implications of various decisions taken from time to time. Ethical training programmes can educate employees about the ethical policies and programmes of the company, the relevant laws and regulations and the general social and ethical standardsThe following are the important sources of ethies, in general, and business ethies, in particular, Religion All the religions of the world insist on ethical conduct and behaviour. Business people get guidance and inspirations from their respective religions. In modern days, religion is interpreted in terms of moder socio-economic problems. Prominent religious texts are the Bible, Bhagawad Gita and Quran. Religion strongly believes that God has created the world, Naturally, God gives the world, a final purpose or goal. The beings on earth have a goal or purpose ordained by God. Since the world has come from God and aiming towards God, the world has been good with positive values. Religion says that evil is a part of life and we have to avoid it, Religion stresses on harmony, beauty, peace of mind, wealth, health and success, Religious Religion stresses on harmony, beauty, peace of mind, wealth, health and success. Religious morality guides an individual back into a state of harmony with all that surrounds the individual. Religion stresses on the important harmonies, namely, natural, human, and supernatural harmony and suggests ecological balances and reduction of pollution rates. It also encourages able practices in business and production. Human harmony refers to better understanding among the business firms rather than dominati sus n Of one over the others,If harmony is achieved at the natural and human levels, naturally supernatural harmony can take place with the blessing of God. Religion advocates the maintenance of orderliness and the avoidance of excessiveness. Too much Of production leads to glut and too much of consumption creates imbalances in the society. Rituals are intended to establish harmony with God. These rituals promote better relationship and make us understand the spiritual significance also, Islam suggests three canonical clements, namely, faith (Imam), practice (Islam) and virtue (Ihsan), Religion covers all the areas of human behaviour like what is required, permitted, discouraged and forbidden, In modern days, religion shows compassion to other religions and considers the welfare of humanity. Buddhism discourages too much desire and its natural results of unli ited suffering. It states that suffering arises from a discrepancy between desire and actuality. Buddhism has suggested an Eight-fold path which can be incorporated in any scheme of business operations. These are right views, right intention, right speech, right action, right livelihood, right effort, right mindfulness and right concentration. Mahayana Buddhism stresses on ethics of comparison for all living things, which forms two bases of social society, measures and social responsibility of business,Cultural Experience Culture refers to a system of learnt values and norms shared among a group of people. Culture constitutes a design for living Values refer to abstract ideas about the good, the right and desirable. and guidelines which determine appropriate behavior Norms indicate the social rule: specific situations. Mores are the norms central to functioning of social life. Mores brings serious retribution like theft and corruption ‘There are various determinants of culture namely, economic philosophy, political philosophy, social structure, religion, language and education If the social structure is well-organised, the cultural standards are high. High mobility can promote better culture. If language promotes communication, the culture is bound to be progressive, Basic values are developed only from culture, The cultural norms and values promote ethical business practices. Morals are extended to business too. Fair practices such as fairp consumer care and after sales service are the results of positive cultural experience. In the context of globalisation, business enrichment to protect the interest of various stockholders. ms are interested in the basic values of humanPhilosophical System Philosophy is the study of nature and meaning of existence. A philosopher is a person whose mind is not troubled by passions and hardships. He lets reason govern his life. Old Epicurean philosophy taught that pleasure was a good thing; later on the philosophers of both the Bast and West opposed this view and strongly suggested that one should be indifferent to pleasure or pain. Opinion polls place business people in lower esteem than politicians. More than 60 percent Of people feel that recognition of corporations is necessary to protect the public. Investors are obsessed with the lies, greed and accounting. Scandals have engulfed big and small companies, eroded the markets and confidence of the investors, Because of frauds, an organisation on an average loses Rs. 500 per day. Philosophy is not a mere anti-business sentiment, Philosophy gives guidelines and frames the scope of ethical activities. Modern philosophy suggests integrity. Integrity suggests soundness, principles and honesty. That is why, business ethies stresses the importance of transparency, accountability and responsi The days of mere natural philosophy have come to an end. In the same way, mere philosophy cant deliver the goods. A golden combination of both material and aspects of philosophy is practical, tactical and relevant. nmaterial material All human activities have well-defined rules and regulations, these rules and regulations have been framed by philosophical system. Philosophy deals with the most basic beliefs, concepts and attitudes of an individual or group. Business philosophy is about bettering the lives of all stockholders through empowerment and better business transactions. Our knowledge is shaped by our attitudes. Optimists live in hope and believe that business can provide good solutions to the problems of people. Pessimists live in fear and expect the worst future scenarios. An ethical guideline has been given by Mark Twain ~ “Do what is right. You will please some people and you will astonish the rest.” If there has to be a choice between reputation and income, it is better to protect the reputation,Legal System The legal system of a county is also a source of business ethics. The legal system includes the constitution, prevailing laws and judiciary. If the legal system is alert, the unethical practices are discouraged. The legal system of country provides the guidelines for business related t0 location, production, conditions of employment, pricing and consumer care. For example, The Competition Act, 2002 prohibits anti-competitive measures and encourages the growth of competition. It has established the Comp. can enquire into any violation of the provisions of the Act. This Act has provided the major criteria to decide whether an enterprise commands a dominant position in the market: (a) The size of the market (b) Six of the competitors (c) Monopoly position (d) Barriers to entry (©) Social obligation and costs The legal system is protecting the interests of its stockholders. The social and natural environment have to be taken care Of. The rights Of the consumers have to be protected. Consumer rights (a) Right to protection (b) Right to information (©) Right to assurance (d)_ Right to be heard (©) Right to redressal. FACTORS INFLUENCING BUSINESS ETHICS A variety of factors is responsible for the operation of business ethies:(a) Leadership: Business is all about the interaction of customers, suppliers, employees, financiers and managers. Greater the effectiveness Of interaction, higher is success of business. An effective leadership is very much required for the success of business, Bill George says: “There is no conflict between serving all your stockholders and providing excellent returns for stockholders, In the long-term, it is impossible to have 14m Business Ethis and Corporate Governance one without the other. However, serving all these stockholders groups requires discipline, vision and committed leadership”. If a leader is strong and follows good skills, he will at n success in his goals. A value-based leader can lead others on the basis of sound values and effective processes. The ethical leader frames actions in ethical terms. According to the ethical leader, leadership is a fully ethical task. For example, Johnson and Johnson responded to the Tylenol incident after it held a series of challenge meetings all round the world, Above all, the ethical leaders search best people and develop them.(b) () @ Strategy and performance: Exhies is closely related to the strategy followed by the business organizations. An ideal strategy should not be limited to generated revenue only. It should take into account the ethical values engendered by the proposed decisions. Corporate governance is the formal system of accountability and control of ethical organisational decisions involving the use of resources, Business ethies and accountability are given a reasonable importance in the board of directors meetings. Accountability for organisational decisions begins with a strategic mission and vision An effective board of directors serves as a type of insurance against the business cycle and fluctuations of the economy. Many investors believe in the stockholder model of corporate governance, A stockholder model follows a strategy of social investing in terms of which social and ethical criteria are integrated in investment decisions. Environment: Business ethics is also divided by the type of environment in which a business organisation is situated. There are two aspects of environment, namely external and internal, Internal environment refers to all aspects like vision, mission, power structure and other related matters. External environment refers to elements which are outside the organisation like government policy, monetary policy, fiscal policy, general economic conditions and labour standards, These factors influence business ethical practices. Corporate Culture: The corporate culture varies from company and time to time. It all depends on the nature of leader; the competition should be healthy, based on rules. A good corporate culture should take care of the interests of all the stockholders. It should take care of the customers and employees Culture is a body of learnt beliefs, traditions and guides for behavior among the members of an organisation. Corporate culture includes norms, physical settings, modes of dress, special language, rituals, heroes and sto Organisational culture may be strong or weak. In a strong culture, the standards and guidelines are known and shared by all. It is providing the behaviour of all on a day- to-day basiCorporations are paying attention to ethical programmes. An ethical programme consists of the rules and policies of an organisation by motivating ethical performance. Rules and policies are framed for orientation, training, compensation, promotion and auditing (©) Individual characteristics: The individual characteristics influence the ethical behavior. Many ethical issues are related to individuals. For example, sexual harassment is an individual matter, the individuals may differ in their characteri to the other with regard to ethies. Some others are extremely unethical. There are many in between these two extremes, s from one extreme Objectives of business ethics: Peter Pratley has given a two-fold objective of business ethics in his book, The Esence of Business Ethies, (Prentice Hall of India, 1995). i, Evaluation of human practices with reference to certain moral standards in business world. It is the analysis of the situation. ii, Offering prescriptive advice on how to act morally in a specified kind of situation It is the normative aspect of business ethies offering creative advice. IMPORTANCE OF BUSINESS ETHICS It is important to make clear what business ethics is and what it is not.Business ethies is not about morality but about the establishment of transparent norms of relationship in an organisation. Morality is an individual set of commitments and eihies brings the idea of introducing good practices. Business ethies is not just philanthropy but promoting social awareness in the business world. Business ethies is not just concerned with shareholders but more concerned with the various stakeholders, Business ethics is not just a code of conduct but is concerned with a code of ethies. A code of ethics can easily bring about a defined and suitable code of conduct. Code of conduct should be internalised as a normative value. It cannot be an external instrument of control Business ethics is not just about establishing compliance but concerned with establishing employee morale. Employee morale depends upon the good cultural conditions 6f an organi Business ethics aim to bring about commitment from all the stakeholders and this can be done only by mutual benefits.The importance of business ethics can be discussed as follows: 1 Social concern: Any business operating in a society has a moral responsibility of giving back to society in terms of welfare schemes and projects. No society can afford to be greedy. No business can be called an island. Business is always a part and parcel of any society. Social responsibility: Social responsibility refers to a firm’s obligation to maximise its positive impact on stakeholders and to minimize its negative impact. There are four areas Of social responsibility, namely, economic, legal, ethical and philanthropic, At the basic level, business firms have an economic responsibility to be viable and profitable so that all the stakeholders are rewarded. Adherence to the legal practices promotes ‘welfare to all, Ethical principles provide a foundation for the best practices of business. Above all, philanthropic responsibility refers to activities that promote human welfare. Avoidance of whistle-blowing: Whistle-blowing refers to the act of employees who go to public with complaints of corruption or mismanagement in business organisations. Every employee has certain expectations to be fulfilled by the organisation. When an employee feels that something is unfair in the organisation, he nurses a grievance, A grievance refers to any form of discontent, It arises out of employment conditions Sometimes, grievances may be factual or imaginary or disguised. Effective handling of grievance is an ethical act. The management should feel the pulse of the employees.4 Value in business: Business ethics promotes good business by generating support both within and outside the organisation. All the stakeholders develop a legitimate interest in the growth and development of business. Business ethics adds value because its effects are experienced by all the stakeholders. It promotes sustainable creativity among the employees and management. Following cthical principles, a firm is better related to the employees, customers, shareholders and public. It is a well-known fact that by adopting unethical practices, a firm can do well in the short-run, but only ethical firms can continue to sustain in the long-run. Improves organisational effectiveness: During the process of growth, the organisations experience different challenges and problems. Every problem should not be considered as a challenge and every challenge should add a learning curve to the organisation Ethical organisations promote standard training for the staff including time ‘management, stress management and effective communication. Role clarity, supportive climate and empathy are the inputs provided by an ethical administration. Ethics offers a holistic approach to business development Healthy competition: Business ethics offers competitive guidelines so that all the firms can follow good business practices. There is lesser room for exploitation of either the ‘customers or the employees. The core values are formulated and these core values promote better competitive conditions. Impartiality, technical excellence and professional respect among the colleagues are some of the examples of core values. The core values have to be clearly operationalised in terms of general business practice. In short, business is a cooperative activity and ethical behaviour alone can promote an ideal co-operative behaviour. Benefit for stakeholders: Originally, business was meant to bring good returns only (0 investors, In modern times, the importance of all the stakeholders has been recognised from the ethical angle. Apart from shareholders, employees, customers, suppliers and the members of community should be benefitted, ‘The stakeholders enjoy benefits like good reputation, records and recognition due to the ethical practices of business. An increasing number of transactions can bring benefits both to the stakeholders and business organisatioMectsstam Meenakshi's Question LIZ, Miers" a fresh MBA got a sales job in a leading software company. A training programme was arranged for allthe sales staff. Many sales people did not attend the programme by offering different excuses; even those attending were not attentive, The company was spending a huge amount of money on training. Meenakshi went to the Sales Director, Shyam, and suggested him that all people in the sales department should attend these programmes. She even said that some top achievers in sales and a few poor performers in sales should share their experiences. QUESTIONS 1. What are the ethical issues in this case? 2, Suggest the alternatives available for the Sales Director Shyam. SUMMAKY In this chapter, we have seen a definition of business ethics as a branch of ethics dealing with the application of ethical principles in business. Ethics encourages the right type of actions and discourages the wrong type of actions Business ethies demonstrates that profit can be made on a sustainable basis by follo good norms and practices. Short-cuts cannot help in the long-run, There are three principles of business ethics name standardisation, workable rules and ethics driven from top. There are three types of ethies, namely, transactional ethies. participatory ethies and recognitional ethics. There are ten characteristics of ethics. There are five commonly held myths of business ethics. Religion, cultural experience, philosophical system and legal system are the important sources of business ethics. There are many factors influencing business ethics, namely leadership strategy, environment, corporate culture and individual characteristics. There is a two-fold objective of business, evaluat prescriptive advice. The importance of business ethics is inereasi ethics is not just a code of conduct but is concerned with a code of ethics. The concept of comporate social responsibility has become popular. n OF practices and offering n modern times. Business