 Business ethics is an art and science for maintaining harmonious relationship with

society, its various groups and institutions as well as reorganizing the moral
responsibility for the rightness and wrongness of business conduct.
 Theory of business ethics helps-
1. Serve and protect business interest.
2. Protect the interest of al stakeholders of business and thus earns trust and
confidence of society in business activity.
3. Prevent damages and harms to society caused by business operations.
4. Contribute to the revenue of government by paying fees and taxes.
5. Work not only with wealth motive but with welfare motive also.
 Descriptive Ethics-it is defined as the presentation of actual ethical
behavior of an individual or members of a business organization. It is
used when one just wants to know and understand the cause of
ethical behavior.
 Analytical Behavior-analytical ethics studies the motive behind the
ethical behavior of the individual or organization. It helps to
determine the legality of the ethical behavior.
 Normative Ethics-normative ethics can be defined as a course of
action that ensures that the ethical behavior will took place
accordingly. This deals with what and how one conduct in future.
 The word teleological is an adjective of the word teleology which is derived from the Greek word
telos which means end, goal and purposes. Telogy is the study of the end, goal and purposes.
 Teleological theory judges the rightness of an action based on its consequences in terms of end,
goal and purposes.
 Under consequentialists theory, the consequences of an action determine its moral rightness.
Depending on the consequences of actions on different groups ,consequentialists theory has
three form:
o Ethical egoism: an action is morally right if the consequence of that action are more favorable than
unfavorable only to the agent performing that action.
o Ethical altruism: an action is morally right if the consequences of that action are more favorable
than unfavorable to everyone except the agent.
o Utilitarianism: an action is morally right if the consequence of that action are more favorable than
unfavorable to everyone.
 The Teleological Ethical Theories are concerned with the consequences of actions which means
the basic standards for our actions being morally right or wrong depends on the good or evil
generated.
1.Theory Of Utilitarianism: The Utilitarianism theory holds that an action is good if it
results in maximum satisfaction for a large number of people who are likely to get
affected by the action.
EX- Suppose a manager creates an annual employee vacation schedule after soliciting
the vacation time preferences from all the employees and honor their preferences, then
he would be acting in a way that shall maximize the pleasure of all the employees.
 Jeremy Bentham (1789)who is one of the propounders of the utilitarian views “an action
is right if and only if it produces the greatest balance of happiness or pleasure over
pain for everyone. "based on Bentham's above ethical assertion ,the utilitarian theory
involves the following four basics these are:
a)Consequentialism:the thesis of consequentialism holds the rightness or goodness of
any action ultimately depends on the consequences it produces.
 It means that a morally right act is one that will produce a good consequence.
b)Hedonism: this thesis asserts that the utility of any action depends and is
determined by the pleasure it creates. Hedonism school of thoughts which argues
that the pleasure is the only intrinsic good involved in doing any activity.
c)Maximalism: it says that the rightness of any action is determined only when it
creates greatest amount of good for greatest number even if the action involves
some bad consequences also.
 The proponents of utilitarian theory Bentham and mill view that it can be done by
subtracting the pain from the pleasure produced by an action just like an
accountant determines the net worth by subtracting debts from the assets of a
business.
d)Universalism: the consequences produced by the action need to apply to everyone
not only to ourselves.
 In order to decide whether to close the polluting industries around Delhi, we need
to take into consideration the people who suffer from the pollution emitted from
industries, the employees who will rendered jobless if the industries are closed, the
owners of these industries, and even consumers as well consuming the products
produced by these industries.it states that what decision is taken ,the interest of
some people will be certainly harmed. The universalism thesis of Unitarianism,
thus obligates us to consider not only our interest but interest of everyone in
performing our actions.
 Example-if in a village of 100 people,99 are happy and 1 is miserable, then
according to utilitarianism approach the situation in the village is RIGHT AS
maximum people are happy
 We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use
our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive
to provide value, reduce our costs and maintain reasonable prices. Customers' orders must be serviced promptly and
accurately. Our business partners must have an opportunity to make a fair profit.
 We are responsible to our employees who work with us throughout the world. We must provide an inclusive work
environment where each person must be considered as an individual. We must respect their diversity and dignity and
recognize their merit. They must have a sense of security, fulfillment and purpose in their jobs. Compensation must be
fair and adequate and working conditions clean, orderly and safe. We must support the health and well-being of our
employees and help them fulfill their family and other personal responsibilities. Employees must feel free to make
suggestions and complaints. There must be equal opportunity for employment, development and advancement for
those qualified.We must provide highly capable leaders and their actions must be just and ethical.
 We are responsible to the communities in which we live and work and to the world community as well. We must help
people be healthier by supporting better access and care in more places around the world. We must be good citizens
— support good works and charities, better health and education, and bear our fair share of taxes. We must maintain in
good order the property we are privileged to use, protecting the environment and natural resources.
 Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas.
Research must be carried on, innovative programs developed, investments made for the future and mistakes paid for.
New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to
provide for adverse times. When we operate according to these principles, the stockholders should realize a fair
return.
 Thus the utilitarian principle suggest that we should the action most likely to bring
about thee greatest happiness of the greatest number.
 Bentham (1789)has proposed the ‘Hedonic calcus’ to calculate the most pleasurable
action by taking seven elements into consideration:
 the intensity
 duration
 certainty
 remoteness
 choice of there being further pleasures
 purity and extent of the pleasure
 There are different form of utilitarianism given by philosophers Jeremy Bentham
and john mill.
 1.Act utilitarianism –it focus on the action that it produces more good than bad
consequences. FOR EXAMPLE- A Pharmaceutical company may operate by
following the principle that it will release any officially approved drug with some
side effects as long as it helps more persons combat a particular disease than the
people suffered by its minor side effect. If the benefits are sufficiently great and the
problems with the side effects are sufficiently limited, then the action of the
pharmaceutical company may be justified as act utilitarian.
 2.rule utilitarianism: it looks at whether the action conforms to the rule that
attempts to maximize the overall utility.
 The Virtue Ethical Theories hold that ethical value of an individual is determined
by his character.
 according to Aristotle (1992),the good life is possible only for people possessing
the traits of a good character that we call the virtues.
 He further says that a virtuous person is someone who has ideal character traits.
Honesty is virtue of a person, but we do not call a person honest who speaks the
truth once only, but who speaks the truth as his general practice.
 Aristole posited virtue as self- realizationism and claimed that self realized
persons realizes his full potential to do good acts. Aristotle illustrates: at birth, a
baby is not a person ,but a potential person.To become a real person, the child
inherent potential must be realized.
 He mention that man has three types of nature:
 1.vegetable(physical/metabolism):physical nature can be assuaged through
exercise and care.
 2.animal(emotional/appetite):emotional nature through indulgence of instinct and
urges.
 3.rational(mental/conceptual):mental through human reason and developed
potential. Rational development was considered the most essential nature for man’s
self-awareness and /or self-realization.
 Accordingly, an act or choice is morally right if, in carrying out the act, one
exercises, exhibits or develops a morally virtuous character.
 Virtue ethics have been developed in three main direction
 1.Eudaimonism-eudaimonism implies performing one’s distinctive function well.
Aristotle argued that the distinctive function of we humans is reasoning and so that
life ‘worth living’ is one which we reason well.
 2.Agent-Based Theory-an agent theory emphasizes that virtue are determined by
common-sense intuitions that we as observers judge to be admirable traits in other
people.
 3.Ethics Of Care-the ethics argue that along with justice, important feminine traits,
such as caring and nurturing, should also be considered while performing one’s
action.
 Thus, the Virtue Ethical Theories are based on the notion that developing a sound
character is what the life is all about. The character builds a substantive moral
foundation for one’s actions.
 It is believed that a person with the strong character has imbibed emotional,
intellectual, moral and social virtues to achieve the self-discipline and do the right
thing or want what is actually good for him. Whereas, the person with weak
character finds himself doing all the wrong things, wanting what is truly harmful
and making excuses for all his ill doings.
 John Rawls,a Harvard philosopher(1921-2002),by using elements of both Kantian
and utilitarian philosophy developed his classic work's a theory of justice(Rawls
1971) which was subsequently revised in 1975 and 1999.
 One of the most discussed elements of Rawl’s view of justice as fairness is his
modelling device known as the original position. The original position has often
been compared to the state of nature or the pre-political condition of humanity. The
specific element in his theory of justice is an Artificial device which he terms as
'original position and claims that everyone principles of justice, i.e. equality from
behind a veil of ignorance.
 Thus the veil is one that essentially blinds people to all facts about themselves that
might cloud them what the notion of justice actually is. He holds the view that the
ignorance of these details about oneself will, in turn, lead to the principles that are
fair to one and all. If an individual does not know how he will end up in his
conceived society, he is likely not going to privilege any one class of people, but
rather develop a scheme of justice that treats all fairly.
 Rawls has divided various issues involved in justice and fairness into three
categories:-
 Distributive justice: This is the category concerned with the fair and just
distribution of social benefits among its members. Yes there arise sometimes
situation when the resources and benefits to be distributed are less than the no of
members getting these benefits. Such a situation can be overcome by following
certain principles like first-come-first served, ladies first or old and old members
be given preference over the normal members.
 Redistributive justice: The principle upholds the view that a defaulter should be
awarded some form of punishment to prevent him/her from doing similar type of
wrong activity.It is possible that punishment awarded may not all times just and
appropriate and the punishment is in proportion to default committed and vice
versa. The main criterion for punishment in redistributive justice should be the
motivation behind wrong dong what is called in legal laxican’mens rea’
 Compensatory justice: Compensation is given to a person who has been caused
harm or loss in any form. The basic premise of the justice is to give compensation
in proportion to the harm caused to the person. However it is not always possible to
proportionately compensate the person for the harm or loss caused to him/her. In
such case, justice will be relative justice, not the absolute justice.
 The English word ‘deontology’ has its origin from the Greek word’deon’,which
means duty or obligation. For example, an elder brother has obligation to help his
quite younger sister to cross the road.
 The Deontological Ethical Theories hold that when people adhere to their
obligation or duty, their acts are considered ethically correct or right.
 As per deontological theory, rightness of an action does not depend on its
consequences, but on the act itself, for deontologists the ends or consequences of
our actions are not important in and of themselves, and our intentions are not
important in and of themselves, but our actions or important to judge them
ethically right.
Duty theory
 It provides a basis for duties and obligation to people.
 Duty theory also discuss the discharging of duties and obligations beyond normal
limits. Such duty theory is known as supererogation. For example-suppose a
terrorist hijacks an aero plane full of soldiers and put the condition that one soldier
would have to jump from the aero plane to die in order for the rest to survive. In
that case the soldiers who volunteers to die is exceeding his duty to the rest of
soldiers and, thus, performs an act of supererogation’
The duty theory is classified in three categories:-
1.Duties to god-
Theoretical duty to know the existence and nature of god and
Practical duty to both inwardly and outwardly worships of god.
2.Duties to oneself-
 Duties of the soul, which involve developing one’s skills and talents and
 Duties of the body, which involve not harming our bodies,as we might through
gluttony or drunkness,and not killing oneself.
3.Duties to others-
 Avoid wronging others,
 Treat people as equals, and
 Promote the good of others.
 A right is a person’s entitlement to act in a certain way or is entitled to have other
persons act in a certain way towards him or her.
 Rights are tightly correlated with duties in the sense that right of one person
implies duties of another person. For example, employee has a right of getting his
salary and employer has a duty to pay the salary to the employee.
 Developed by a British philosopher of 17th century John Locke(1963)
 In this theory Locke has mentioned four natural rights given by the gods to human
beings.
o Not harm anyone’s life
o Health
o Liberty
o possession
 In line with Locke, Thomas Jefferson who authored the united state declaration of
independence also listed three foundational rights
o Life
o Liberty
o The pursuit of happiness
 Rights are broadly classified as:-
 Legal rights-when a person derives entitlement from a legal system to act in a
certain way or others act in certain ways towards that person ,the entitlement is
called legal right. For ex-the constitution of India gives all the citizens the right to
freedom of speech.
 Moral rights-rights based on moral norms that entitles all human beings to do
something or to have something to be done for them. For ex-the right to work, it is
not guaranteed buy the Indian constitution yet it is considered a right that all
citizens of the country posses.
 Moral rights are characterized by the four specific features:-
1.Natural-these are not created by others: be individuals or government.
2.Universal-they remain the same and do not change from country to country.
3.Equal-all people irrespective of gender, race enjoy the same rights.
4.Inalienable-one cannot handover his/her rights to another persons.
 Influenced by Pufendrof(1691) Kant argued that we have moral duties to oneself
and others. However, Kant argues that there is more foundational principle of duty
that encompasses our particular duties.
 Kent asserted that moral obligations has nothing to do with consequences, but
arises solely from a moral law that is to be abided by all the rational human beings.
For eg, do not lie, do not cheat, do not kill other people etc,are principles that
would eventually lead to better world, if everyone would follow them.
 Kant himself says act only on rules (maxims) that you would be wiling to see
everyone follows. Kant argues that to act in a morally right way, people must act
from duty. He also argued that it was not the consequences of action that make
them right or wrong but the motives of the person who carries out the action.
 It was developed by British philosopher W.D Ross(1930-21)
 Ross considers human duties as the part of the fundamental nature of the universe.
 Ross’s list of duties consists of four duties:-
1. Justice-The basic idea of justice is based on equity and fairness. Without justice
moral principles are rendered to ineffectiveness.
2. Gratitude-This is the duty to reciprocate favours that others do for us.
3. Fidelity-This duty is based on honesty and trust between the members of the
society. This is the duty of keeping promises, in all situations by respecting the
rule of mutual contract of trust.
4. Preparation-In principle, reparation (compensation)should be proportional to
the damaged caused. However it may not be possible to ascertain exact volume
of compensation in some cases.In such cases, compensation should be made as
per the compromise made by the parties involved in the case.