Ch 12 Ethics

What is Ethics ??? Ethics is a general term for what is often described as the "science (study) of morality".sciencemorality In philosophy, ethical behavior is that which is good or right.

It refers to the basic principles of moral values that are expected to be followed by every citizen in a civilized society, aiming to maintain tranquility and virtues. Any of the organization whether manufacturing or service oriented needs to abide by ethical principles so that entire nation is benefited. What is Ethics ???

Source of business ethics Major source of ethical values are knowledge imbibed through 1.Religious sermons and books 2.Culture 3.Law

Unethical Business Practices It can be divided into three category. 1.By organization 2.By employees 3.By regulating agencies

Unethical Business Practices - By organization Exploiting employees without giving proportionate salary Deceiving customers by selling defective products. Hidden charges levied in the bills of the customers. Non transparency of the business activities. Favoritism committed during recruitment, selection, appointment, promotion etc…

Unethical Business Practices - By employees Some trade unions accept hush money from various contractors. Always applying policy of work to rule Leaking company’s secret Getting drunk while on duty. Threatening and discouraging employees who are sincere and loyal.

Unethical Business Practices - By regulating agencies Being mute spectator of unethical business practices Cover up issue if ruling party is involved in such dispute Failure to press investigating agencies at the right time Block assess of the documents which reveal the scam

Unethical business practice in India Bhopal disaster Fraudulent in Satyam computer Scandal by Harshad Mehta

Some of the act to ensure fair business practices The Companies Act,1956 The Consumer Protection act, 1986 The Environmental Protection Act,1986 The Essential Commodities Act, 1955

Are Ethical Standards Universal or Dependent on Local Norms? Ethical Universalism Ethical Relativism Integrative Social Contracts Theory

Ethical Universalism –Same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of Local traditions and Cultural norms

Examples of Universal Ethical Principles or Norms Honesty Trustworthiness Treating people with dignity and respect Respecting rights of others Respecting the environment

Ethical Relativism –Different societies/cultures/countries Put more/less emphasis on some values than others Have different standards of right and wrong Have different social mores and behavioral norms –What is ethical or unethical Must be judged in light of local customs and social mores and Can vary from one country to another

Integrative Social Contracts Theory integrative social contracts theory, the ethical standards a company should try to uphold are governed by both –A limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and –The circumstances of local cultures, traditions, and shared values that further prescribe what constitutes

Integrative Social Contracts Theory Social contracts theory maintains adherence to universal or first-order ethical norms should always take precedence over local or second-order norms!

Managerial ethical and moral principles Moral manager Immoral manager Amoral manager

What Are the Drivers of Unethical Strategies and Business Behavior? Large numbers of immoral and amoral business people Overzealous pursuit of personal gain, wealth, and other selfish interests Heavy pressures on company managers to meet or beat earnings targets Company cultures that place profits and good performance ahead of ethical behavior

Approaches of Business Ethics Unconcerned or non-issue approach Damage control approach Compliance approach Ethical culture approach