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TRANSCRIPT
Business Ethics & Corporate Governance
Dr. Mousumi Sengupta
What is Ethics??
• The word ethics is derived from Latin word ethicus and Greek word ethikos.
• Ethics are moral guidelines which govern good behaviourSo behaving ethically is doing what is morally right
• A system of moral principles • Our Ethical compass
Concepts of Ethics• Ethical subjectivism – the morally correct decision often
depends on the circumstances of a person making it.
• Ethical relativism – there is no universal set of principles by which to judge morality.
• Consequentialism – it consists of two ideas: • the concept of value • maximization of value.
• Ethics of virtue – it emphasizes the role of individual traits.
Business ethics Ethical problems in business:
– Overt problems – transparent – Covert problems - complex
An ideal ethical decision comprises of the following virtues:
• Right – morally correct • Equitable- just and equal• Good- highest good for all concerned • Proper – appropriate and acceptable • Fair – honesty• Just – action
Stages of ethical consciousness in business
1. Law of jungle 2. Anything for profit3. Profit maximizing 4. Stakeholder analysis5. Corporate citizenship
Importance of ethics in business
• The Corruption Perceptions Index "on a scale from 10 (very clean) to 0 (highly corrupt)
• New Zealand is the least corrupt
• India stands at 95th place, among 178 countries
Ethical theories
• Metaethics
• Normative ethics – Teleological ethical theory– Deontological ethical theory– Virtue ethics
• Applied ethics
Ethical theories• Metaethics –
– it deals with the gamut of ethical issues.
– It is defined as the study of the origin and meaning of ethical concepts. It questions whether the moral values exist independently of humans or they are simply human conventions
– Psychological issues that deal with psychological basis of the moral action
– Linguistic issue that deal with the meaning of key moral terms we use.
– ‘Axe’ – even angels will fall !!!
Ethical theories• Normative ethics –
• It implies something that ‘guides’ or ‘controls’
• It guides human conduct. • We should treat others the same way
we want others to treat us. – Prescriptive – Universal– Overriding– Public– Practical
• Livon Hair Gain
Three normative theories
• Teleological ethical theories –thinking rationally about ends. An action is morally correct if the consequence of the action are more favorable. It is also called as Consequentialist theories. They offer 3 theories, based on 3 meaning of ‘good’:
• Egoism – if the consequence is good for self
• Utilitarianism – if the consequence is good for everyone
• Altruism – if the consequence is good for everyone except self
• Deontological ethical theory – focuses on certain fundamental duties that we have as human being
• Virtue ethics – focuses on character development
Theory of corporate moral excellence
• Culture is based on values • Espoused values• Values in practice
• Espoused values refer to a company’s statements, credos and code of ethics.
• They describe the organizations purpose and ethical perspective.
• Espoused values may differ from values in practice, depending on situations.
• Hoffman classified corporate culture into three types:
• Basic values attitudes and beliefs of the organization
• Organizational goals, policies, structure, strategies that are shaped by the values and beliefs prevalent in the organization
• Organizational procedures and processes
Common format for Corporate Code
• Compliance code • corporate credos• Management philosophy statements• Special documents• Circulated letters• Compliance certificate• Purchase orders
• Johnson and Johnson credo says, "We believe our primary responsibility is to the doctors, nurses and patients, mothers and all others who use our products and services“
• Tata credo says 'give back to the people what you have earned from them'.
• Wal-Mart, established the “Three Basic Beliefs” as the company's credo: - Respect for the Individual - Service to our Customers - Strive for Excellence