Chapter –One

Business Ethics: An Overview

 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.

 Principles of Personal Ethics:

Personal ethics refer to the application of values in 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;

• 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 behavior.

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 and the society.

 Code of Conduct and Ethics for Managers:

Managers must observe the following ethical values while performing their duties:

• Integrity

• Impartiality

• Responsiveness to public interest

• Accountability

• Honesty

• Transparency

 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 Steel and Transcom Digital BD) show that use of ethical practices in
business creates high returns for companies.

 Values and Ethics in Business:

A value is a view of life and judgment 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.

 Characteristics of an Ethical Organisation

Mark Pastin provides the following characteristics of ethical organizations:

• At ease while interacting with diverse internal and external stakeholder groups.

• Obsessed with fairness.

• Individual responsibility, with individuals assuming personal responsibility for actions of the
organization.

• See their activities in terms of purpose.