The document discusses business ethics, including defining ethics, the importance of ethics in business, principles of business ethics, and factors that influence ethics such as culture, managerial values and attitudes, and sources of business ethics. It provides examples and explanations of key concepts in business ethics and outlines objectives, scope, and needs for incorporating ethics into business practices.

1. Presented by:
Mallikarjun M. Maradi
Assistant Professor,
Dept. of Studies in Commerce,
Rani Channamma University, PG Centre, Vijayapur
Business Ethics and Corporate Governance

2. Chapter- I
Business Ethics:
The concept of ethics; Nature
and goal of business Ethics;
Managerial values and attitudes;
Culture and ethics; Ethics v/s

4. What is Ethics……??
Et hics which is Lat in word –
Ethicus and in Greek is
Ethikos has come f rom
t he wor d Et hos. I .e.,
character/manners, is
said t o be science of
mor als, moral pr inciples;
recognized r ules of
conduct .
Et hos, which r ef er s t o
character, guiding
belief s, st andar ds or
ideas t hat per vade a
gr oup, communit y or
people.
Ethics is a mass of moral
principles or set of values
about what conduct
ought to be. They give an
idea what is right or
wrong, true of false, fair
or unfair, just or unjust,
proper or improper, e.g.
Honesty, obedience,
equality, fairness etc and
respect and then doing
the right thing

5. Introduction of Ethics
• Ethics as a system of moral principles and methods
for applying them in a personal and professional
life.
– Character of a man is expressed in terms his conduct.
– Conduct of a person is a series of actions i.e., good or
bad, right or wrong etc are termed as moral
judgements.
Ethics is the science of character of a person expressed
as right or wrong conduct or actions.
Ethics is a branch of philosophy.

6. Tracing the Roots of ethics in India
• Ethics isn’t a new concept.
• It has been with us for thousands of years, except that its
importance is dawning on us only now.
• Our ancient literature: Vedas, Puranas, Ramayanas,
Gita, Bible, Guru Granth Sahib and the Koran all
are full of moral values and ethical code of conduct.
• “Ethics is thinking in terms of the larger picture, not
ignoring or neglecting ones own interest and well being
but not over-emphasising ones own interests either”

7. Ethics is used in two ways
• 1. as a field of study: it prescribes mass moral principles that define
what ought to be good or bad.
• 2. as a behavioral pattern: its relate to behavior that is ethical.
Behavior is set of actions or character. The character is within and
hence are being of an individual whereas behavior is external.
• The behaviour exhibited by individuals differs from weak to strong.
Desired mix:
Gandi, Basav, Budda, JRD Tata
character
Need correction-Hitler
Strategic man; an ordinary
sales man, mgr
Avoid and discard

8. Ethical Concepts
1. Ethical subjectivism: it argues that what is ethically right
or wrong for a person depends on the ethical principles has
chosen(personal pattern).
2. Ethical relativism: there is no universal set of principles
by which judgemorality.
3. Consequentialism: there are 2 central ideas i. Vales and,
ii. Maximization of values
4. Ethics of virtue: roleof individual traits
5. Ethical dilemmas in business: represent a conflict
between an org’sor economic and social performance.

9. Nature of ethics
• Ethics deals with human beings
• Ethics is more a science than an art
• Ethics is normative science
• Ethics deals with human conduct
• Ethics is a field of social science

10. Objectives of ethics
• Ethics deals with human behavior & makes
evaluation assessment
• To establishes moral standards and norms of
behavior
• To judge human behavior and express an
opinion or attitude about the behavior
• To assess human behavior
• To set a behavior stds and make
recommendations about the desire behavior

11. Unethical Practices in Practice
• Sale of branded products through unauthorized
dealers.
• Electronic good piracy
• Piracy in software, music & film industry.
• Ordinary water being sold as mineral water under
fake logos and seals.
• Soaps and cosmetics being sold in the empty
packs of reputed brands.
• Inadequate or vague guarantees & warrantees.
• Use of non-biodegradable packaging material.

12. • Shoplifting
• Changing price tags
• Abusing products and returning them as
damaged goods.
• Reporting lost items as stolen to insurance
companies.
• Lying about a child’s age to get a lower price.
• Moving around casually out of the office during
office hours.
• Accessing private computer files without
permission.
• Listen to private cellular phone conversation.
• Sabotage systems/data of other employees.

13. Unethical practices done in the Business….
• Abusive or intimidating behavior.
• Theft or fraud.
• Sexual harassment
• Taking harmful decisions.
• Resorting to dishonesty, trickery, deception.
• Distortion of facts to mislead or confuse.
• Window dressing.
• Lack of transparency & resistance to investigation.

15. Sources of Business Ethics…….
Most preferred aspects Special reference of a
country
Special reference to
individuals & business
1. Genetic inheritance
2. Religion
3. Philosophical system
4. Code of conduct
5. Legal system
6. Cultural background
1. Corporate experience
2. Economic situations
3. Type of economy
1. Management and
employees
2. Inner promptness
3. Leadership
4. Environment of
business
5. Competition.

16. Genetic inheritance
• Many of the basic qualities like courage, cooperation,
goodness, sympathy, generosity come to man from
inheritance by their forefathers. The son or grandson of a
businessman will get their qualities while operating business.
Examples:-
1. The owner of “TATA group of industries”, Mr. Ratanji Tata
is following his forefathers view that ‘less to me, more to
society’.
2. The Ambani brothers believe that, to run business we
should keep ‘power’ in our hand.

17. Religion
• Religious morality is clearly a primary focus in shaping
societal ethics. Religion provides ethical principles and
standards to all humans. The religious beliefs of what is
right and what is wrong are coming to us from generation to
generation. The books are read through many centuries and
are followed.
For Hindu’s- Bhagawad-Geeta, For Christians-Bible, for
Muslims- Quran.
Examples:-
We cant find alcoholic industries in Tirupati, Puttaparti is not
having any meat shops/hotels, McDonalds produces food
without adding beef & fork in India, Brahmins doesn’t own
footwear shops.

18. Philosophical system…..
• The quality of pleasure to be derived from an act was the
essential measure of its goodness. The philosophical base
of the society we live in add to the thinking and decision
making process.
Examples:-
1. some peoples view is- act good
2. Indians- Ahimsa, don’t cheat, don’t kill.
3. Modern business thinkers- Hard work & efficiency
4. Abdul kalam – Don’t keep more than you need.
5. Muslims- Make strong your neighbor also.

19. Code of conduct
The code of conduct refers to the actions made, the
manner of action, the rules & beliefs followed in a particular
aspect. The codes of conduct are in various types.
Company code of conduct, company operating methods,
industry principles, etc. these are some types of codes of
conduct.
Examples:-
Rules of Infosys ltd, Principles of TATA group of industries.

20. The legal system
• Laws are defined as a consistent set of universal rules that
are widely published, generally accepted and usually
unforced. These are based on societal rules, these rules are
made by the authority to the proper regulation of a
community.
Examples:-
Tobacco, Gutka are banned in Andhra Pradesh, Obama
decreased the level of number of employees who are
Indians, government refused to give loan to Kingfisher
airlines, Samsung company punished due to copying Apple
company products.

21. Cultural background
Customs, beliefs and standards that are transmitted from
generation to generation act as guides to a businessman in
decision making. Individual values are shaped by the society
where we grow and live in.
Example:-

22. Corporate experience
A country’s corporate experience refers to the ethics,
rules followed in the corporate segment. The big business
concerns will show the way of action to other companies of
the country, the actions were sometimes good and
sometimes bad even.
Examples:-
The achievements of Tata and Infosys company. The
scandal of Sahara groups of companies, the 2G spectrum
scam, the earnings and awards rewards to the compnies.

23. Economic situations
• Economic situations of a country refers to the rise
and falls of the economic strength. The declining
economic situations may push the companies to
unethical practices, the rising economy will give
rise to good competition and good ethical
practices.
Examples:-
Dumping activity of China in India, Ambani
brothers tricks in 2009.

24. Type of economy
There are three types of economies, those can be the
source of business ethics.
1. Capitalistic economy
2. Socialistic
3. Mixed economy
Management and employees
The acts of management will create ethical norms in the business, the
good management will satisfy the employees which make them to work
properly. The bad decisions may become harmful to the employees income.
Examples:-
Subrato Roy’s scam in Sahara groups of companies.

25. Leadership/Leader…..
• A leaders ethical & unethical views will create a ethical norm in
his followers, as a leader he should make a protocol tp his
followers, so whatever moves he will do will be the ethical
source for the followers. Likewise a corporate leader company
or the big businessman’s views will create new ethical norms to
other businesses.
Examples:-
Narayan murthy, Vijay Mallya, Suresh kalmadi, Jemshet ji
Tata.
Inner promptness
• It refers to the morals, beliefs, followed by an individual. The
moral values were inherited from family, friends, society,
etc.

26. Environment of business
• Different business places are having different business
environment. Environment refers to the views of the
businessman, trust worthiness, rules, practices followed a
particular place businessman.
• examples-:
Punjab, Bihar.
Competition
Competition running in a country also will be the
reason ethics creation. The healthy & unhealthy competitions
will create different type of ethics in business.

27. Importance of Ethics
• There are Tangible Benefits on following
Ethical Behaviour.
• Businesses are built on relationships with
suppliers, customers, employees and other
groups.
• The strength of these relationships is largely a
function of the amount of trust the parties in
each other.
• Unethical behaviour undermines trust and
destroys relationships that ultimately affect the
profitability of an organisation.

28. What is Business Ethics…..??
• Business ethics is a form of applied ethics or professional ethics
that examines ethical principles and moral or ethical problems
that arise in a business environment.
• Business ethics is a study of business situations, activities, and
decisions where issue of right and wrong are addressed.
• The ethics of business is ethics of responsibility. The businessman
must promise that he will not harm knowingly.

30. Needs for Business Ethics
• Business operates within the
society
• Every business irrespective of size
exits more on ethical means
• Business needs to function as
responsible corporate citizens in
the country
• Business needs to remain ethical
for its own good
• Approach to resolve ethical
dilemmas
• Analysis and evaluation of ethical
operations

31. Scope of Business Ethics
Ethics issues exits at all levels of business
activities:
1.Societal level:
- Concern for poor and downtrodden
- Concern for clean environment
- Preservation of scare resource for posterity
- Contributing to better quality of life
1.Internal policy level:
– Fair practices relating to requirement
compensation, layoffs, perks, promotion etc.
– Transformational leadership
– Better communication at levels

32. 3. Personal policy level:
- Not to use office car, money etc., for
personal use
- not to misuse others for personal
- not to spoil promotional growth
-promise keeping and mutual help
4. Stakeholders level:
a. Employees level- 1. Security of job 2. better
working condition 3. better recommendation 4.
participative management 5. employees welfare.
b. Customers: 1. better quality of goods 2.
reasonable price 3. not create discriminatory pricing
4. misadvirtising
c. Shareholders: 1. ensuring capital appreciation 2.
ensure steady and regular dividend 3. faire
disclosure 4. protect minority shareholders’ interest 5.
not window dressing balance sheet 6. protect
interest in times of mergers, acquisitions and
turnover
5. Organisational level:
- Right business decisions
- no hazards activities
- proper code of ethics about business
- better working environment
- equal pay for equal work
- to protect and ensure interest of
stakeholders
- to reduce malpractices and whistle
blower activities
- to avoid window dressing activities in
financial disclosure
- formulate proper objectives
- develop organizational culture
- transparent and accountability for
fair business strategies

33. Principles of Business Ethics

34. Managerial Values and Attitude
• Questions 1) Does the notion of managerial values coexist with moral
judgment?
• 2) Does the notion of managerial values coexist with managerial
practicesand ethical work climate?
• 3) Does the notion of moral judgment and managerial practices &
ethical work climatecollectively impact businessconsequences?
• 4) Does the established entrepreneurial ethical business context
coexist with businessconsequence?
• 5) Do demographic variables influence the relationship between
managerial values, managerial practice& ethical work climate and
moral judgment?

35. Managerial values and attitude
Values describe what managers are trying to achieve through work and
how they think they should behave.
Values - enduring beliefs that a specific mode of conduct or end state of
existence is personally or socially preferable to an opposite or converse mode
of conduct or end state of existence
Attitudes capture their thoughts and feelings about their specific jobs
and organizations.
Managersvaluesand attitudestowardsethicsin an organisation.
1.The big five personality traits can think of an individual’s personality:
extraversion, negative affectivity, agreeableness, conscientiousness, and
opennessto experience.
2.Important for understanding managerial effectiveness: locus of control,
self-esteem, and theneedsfor achievement, affiliation, and power.

37. Value
• Terminal value: a
lifelong goal or
objective that an
individual seeks to
achieve.
• Instrumental
value: a mode of
conduct that an
individual seeks to
follow. Attitude A
collection of feelings
and beliefs.
• Norms informal:
rules of conduct for
behaviors that are
considered important

38. CULTURE AND ETHICS
Culture describes a collective way
of life, or way of doing things. It is
the sum of attitudes, values, goals,
and practices shared by individuals
in a group, organization, or society.
The beliefs, values, behavior, and
material objects that constitute a
people's way of life.
Culture reflects the moral
and ethical beliefs and standards
that speak to how people should
behave and interact with others.
•Culture can obstruct progress, but it can
nevertheless be a tool for emancipation.
•Culture is also a goal in itself: it gives

39. Elements of culture

40. Cultural diversity: The combination of culture

41. Cultural Ethics

42. Overview of culture and ethics
1. Clear Expectations for What is Okay and Not Okay
2. Modeling Desired Behavior (especially from
organizational leaders)
3. Reinforce the Behavior You Want, and Don’t Reinforce
the Behavior that You Don’t Want
4. Focus on Skill Building and Problem Solving
5. Provide the Tools People Need to Act Ethically
6. Provide Corrective Feedback

43. Culture• Observable Culture
– Each company has their own unique culture, but in larger organizations diverse and
conflicting cultures may exist dueto different characteristicsof management teams.
– Observable culture simply refers to the parts of an organization's culture that can be observed, such
asasymbolic CEO, abusinesspolicy, or even aproduct .
– A company'svaluesplay abig rolein reflecting their observable culture.
– Recognizetheway in which intrinsic organizational culture is transmitted into an observable, public
facefor organizational culture
• Cultural Intelligence
– Studying the components of culture, the theories pertaining to cultural dimensions and
competencies, and thecurrent initiativesin promoting theseconcepts.
– The components of cultural intelligence, from a general perspective, can be described in terms of
linguistics, culture (religion, holidays, social norms, etc.), and geography (or ethnicity).
– Individuals interested in developing their cultural quotient (CQ) are tasked with studying each of
these facets of cultural intelligence in order to accurately recognize the beliefs, values, and
behaviorsof the culture in which they areimmersed.
– An interesting perspective on cultural intelligence is well represented in the intercultural-
competence diagram, which highlights the way that each segment of cultural knowledge can create
synergy when applied to the whole of cultural intelligence, where overlapping generates the highest
potential CQ.

44. • Understanding Culture Shock
– In assessing culture shock, the central components are the four phases individuals cycle through as
they adapt to a new culture, along with the corresponding symptoms that culture shock sufferers
often encounter.
– Negotiation Phase - As the honeymoon phase winds down and the individual becomes fully
immersed in the new culture, dissonance may begin to emerge between the new culture and the
individual'snative culture.
– With cultures that are significantly differentiated from their host culture, this can take well over a
year to achieve.
– Oneinteresting development in thestudy of culture shock isreverse culture shock
– Thomas Wolfe's novel illustrates the danger of reverse culture shock, and underestimated
component of the culture shock framework.
• Considering Cultural and Interpersonal Differences
– This cultural competenceisimperativefor managersto succeed in aglobalized world.
– Still, cross-cultural competenceisarelatively vagueconcept.
– Cultural identity – Coming to terms with another culture requires cultural self-awareness, which
createsacritical benchmark.
– To attain a high level of cultural awareness, along with intercultural communication skills, requires
thinking about and understanding different peopleand their respective cultures.
– Managers who pursue intercultural competency while possessing a strong understanding of their
own strengths, weaknesses, and cultural identity will more effectively immerse themselves into
the cultures of co-workers.

45. • Communicating Organizational Culture
– Management is tasked with both creating culture and accurately communicating it acrosstheorganization.
– Corporate culture isused to control, coordinate, and integratecompany subsidiaries.
– Culture runs deeper than this definition, however, because culture also represents the embedded values,
traditions, beliefs, and behaviorsof agiven group.
– Leadershaveanumber of tools and strategiesat their disposal to communicate culture.
– Human resource professionals are tasked with identifying candidates with culturally consistent perspectives and
with underlining theimportanceof cultural considerationsin interviewsand on-boarding processes.
• Building Organizational Culture
– Managersaretasked with both creating and communicating aconsistent organizational culture.
– The process of ingraining culture into an organization is simply one of communicating and integrating a
broad cultural framework throughout theorganizational process.
– While there are a variety of cultural perspectives and many organizational elements within a culture, the initial
processof instilling culture isrelatively consistent from amanagerial perspective.
– Storiesand myths: Finally, storiesarepowerful communicatorsof culture.
– Overall, managers must be aware of their role as cultural ambassadors and their responsibility in creating a
context for successfully instilling organizational culture.
• Culture-Specific Nuances of Decision-Making
– Through combining decision-making models with cultural deviations, meaningful correlations can be identified
and considered.
– As a result, the decision-making process is inherently differentiated across cultural groups, and these cross-
cultural deviationsarecritical to understanding negotiations, conflicts, influencesand motivations.
– In thismodel theassumption isthat cultural inclinationsareomnipresent, and will emergein all contexts.
– Theantithesisisessentially 'counter-culture' culture, which dictatestheoppositedecision-making influence.
– Tolerance for Ambiguity - A high tolerance for ambiguity or risk taking is 'counter-culture' culture, which
dictatesahigh level of tolerancefor going against thegrain.

46. Effects Of Culture
•Determines how people communicate
•Determines how people interact
•Determines how people relate to one another
•Guides day-to-day working relationships
•Determines what is appropriate behavior
•Determines how power and status are allocated

47. Cultural Conflict: Unethical Behavior
1. Different cultures have
different rules of conduct.
2. Some cultures view certain
ethical practices with different
levels of condemnation.
3. The more serious problem
concerns two different ethical
standards meeting in a
business transaction. e.g.-US
vs. Russian
4. This situation is characterized
as cultural conflict

48. Ethics Vs Law
BASIS FOR
COMPARISON LAW ETHICS
Meaning
The law refers to a systematic
body of rules that governs the
whole society and the actions of
its individual members.
Ethics is a branch of moral
philosophy that guides people
about the basic human conduct.
What is it? Set of rules and regulations Set of guidelines
Governed
By
Government
Individual, Legal and Professional
norms
Expression
Expressed and published in
writing.
They are abstract.
Violation
Violation of law is not permissible
which may result in punishment
like imprisonment or fine or both.
There is no punishment for violation
of ethics.
Objective
Law is created with an intent to
maintain social order and peace in
the society and provide protection
to all the citizens.
Ethics are made to help people to
decide what is right or wrong and
how to act.
Binding Law has a legal binding.
Ethics do not have a binding
nature.

49. Ethics and Law
The major differences between law and
ethics are mentioned below:
1.The law is defined as the systematic
body of rules that governs the whole
society and the actions of its individual
members. Ethics means the science of a
standard human conduct.
2.The law consists of a set of rules and
regulations, whereas Ethics comprises of
guidelines and principles that inform
people about how to live or how to behave
in a particular situation.
3.The law is created by the Government,
which may be local, regional, national or
international. On the other hand, ethics
are governed by an individual, legal or
4. The law is expressed in the constitution
in a written form. As opposed to ethics, it
cannot be found in writing form.
5. The breach of law may result in
punishment or penalty, or both which is not
in the case of breach of ethics.
6. The objective of the law is to maintain
social order and peace within the nation and
protection to all the citizens. Unlike, ethics
that are the code of conduct that helps a
person to decide what is right or wrong and
how to act.
7. The law creates a legal binding, but
ethics has no such binding on the people.

50. Summary of ethics and law
• 1. Ethics are rules of conduct. A Laws are rules developed by
governments in order to provide balance in society and
protection to its citizens.
• 2. Ethics comes from people’s awareness of what is right and
wrong. A Laws are enforced by governments to its people.
• 3. Ethics are moral codes which every person must conform to.
A Laws are codifications of ethics meant to regulate society.
• 4. Ethics does not carry any punishment to anyone who
violates it. A The law will punish anyone who happens to violate
it.
• 5. Ethics comes from within a person’s moral values. A Laws

51. Ethical congruence
Ethical Congruence refers to a situation where one's decision is
consistent with, aligns with, the applicable set(s) of values.
Under these circumstances, a choice to take some action will
harmonize with the decision-maker's values. The organizational state
where values, behaviors and perceptions are aligned.
Research on value congruence focuses on the degree to which an
individual’s personal values match the values they encounter in their
work environment, as well as the behavioral and attitudinal outcomes
that result from varying degrees of agreement between these values.
Different types of congruence explored in the literature include person-
organization, person-job, person-group, and person-supervisor
congruence (Kristoff-Brown et al. 2005).

54. Types Business ethics
• Applied ethics
• Normative ethics
• Descriptive ethics
• Meta ethics
• Social ethics
• Personal ethics
• Professional/managerial ethics
• Transactional ethics
• Participatory ethics
• Recognitional ethics