This document provides an overview of ethics, including business ethics. It defines ethics as a system of moral principles concerning what is good or bad. Ethics is distinguished from laws in that ethics provides guidelines rather than enforceable rules. The document outlines the importance, scope, and objectives of ethics in both personal and professional/managerial contexts. It discusses the three levels of moral development and three types of ethics: transactional, participatory, and recognition. Business ethics aims to benefit society and stakeholders through compliance, contribution, and consideration of consequences. The government plays a role in legislating and supervising business ethics.

2. UNIT 1
oEthics: Concept of Ethics, Evolution of Ethics, Nature of Ethics- Personal, Professional,
Managerial Importance of Ethics, Objectives, Scope, Types – Transactional, Participatory and
Recognition
oBusiness Ethics: Meaning, Objectives, Purpose and Scope of Business Ethics Towards Society
and Stakeholders, Role of Government in Ensuring Business Ethics Principles of Business Ethics,
3 Cs of Business Ethics – Compliance, Contribution and Consequences
oMyths about Business Ethics Ethical Performance in Businesses in India

3. WHAT IS ETHICS?
“A discipline dealing with what is good or bad with moral duty and obligation”

4. CONCEPT OF ETHICS
oAt its simplest, ethics is a system of moral principles. They affect how people make decisions and lead their lives.
oEthics is concerned with what is good for individuals and society and is also described as moral philosophy.
oThe term is derived from the Greek word ethos which can mean custom, habit, character or disposition.
oEthics covers the following dilemmas:
ohow to live a good life
oour rights and responsibilities
othe language of right and wrong
omoral decisions - what is good and bad?
oOur concepts of ethics have been derived from religions, philosophies and cultures. They infuse debates on topics like
abortion, human rights and professional conduct.

5. ETHICS VS LAWS
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.

6. Process of Moral Development
Pre-Conventional Level – Person follows the dictates of law and good behavior out of fear of punishment or
expectation of reward. In the early stage of childhood, he is taught by mother, father and teachers to follow
certain rules and he does that more out of fear of punishment or for promised reward. This is pre-ethical stage or
preparation stage for ethics
Conventional Level – Person conforms to the behavioral standards to meet the expectations of peers and
society to avoid ridicule and gain acceptance.
Post -Conventional (Principled ) Level – Person develops a personal, internal set of standards and values which
he is not willing to compromise even in the face of threat or personal loss. He sticks to these values for his own
sake (About 20% of adults reach this stage fully or partially)

7. Objectives of
Ethics
Truthfulness
Accuracy
Objectivity Impartiality
Fairness
Public
accountability

8. IMPORTANCE OF ETHICS
oSatisfying Basic Human Needs
oCreating Credibility
oUniting people and Leadership
oImproving decision making
oLong term gains
oSecuring the society

9. SCOPE OF ETHICS
oEthics is a science:Ethics is a science, concerned with a particular sphere of nature that deals with certain judgments that
we make about human conduct. It also talks about systematic explanation of rightness or wrongness in a man’s life.
oEthics is a normative science: Ethics is a normative science as it deals with norms by which we can judge human
actions. Ethics does not deal with facts. Rather, it deals with values and principles. Therefore, it is clear that ethics is
concerned with judgments of value, while natural science deals with judgments of facts. That is why ethics is not a natural
science but a normative science.
oEthics is different from morality: Ethics does not teach how to lead a moral life. Ethics merely help us to justify the
right and good which leads us to achieve our goals. Morality deals with purpose, motive, intention and choice which are
considered right or wrong in the light of customs and manners.
oEthics is a science of values:Ethics is a science of values as it discovers the forms of conduct or behaviour, which have
the character of moral obligation. Ethics deals with a phenomena and it observes, classifies and explains them by moral
values.

10. PERSONAL ETHICS
Personal ethics is a category of philosophy that determines what an individual believes about morality and
right and wrong.

11. FEATURES OF PERSONAL ETHICS
oPersonal values and moral qualities
oIncorporated by family,friendsand surroundings since your childhood
oNot conforming to these may harm or hurt others
oRefusing to take unfair advantage
oTrustworthiness and honesty
oConcern for the well-being of others

12. EXAMPLES OF PERSONAL ETHICS
oSoftware piracy
oCopying homework or tests
oIncome taxes
oPlagiarism
oUsing copy machine at work

13. Professionally accepted standards of personal and business behavior, values and guiding principles. Codes of
professional ethics are often established by professional organizations to help guide members in performing
their job functions according to sound and consistent ethical principles.

14. PRINCIPLES OF PROFESSIONAL ETHICS
oImpartiality
oOpenness
oConfidentiality
oDue diligence
oFidelity to professional responsibilities
oAvoiding potential or apparent conflict of interest

15. EXAMPLES OF PROFESSIONAL ETHICS
oTo know and respect laws pertaining to professional work
oTo reject bribery in all its form
oHonor contracts, agreements and assignments
oTo disclose any conflicts of interest
oAccept and provide appropriate professional review

16. MANAGERIAL ETHICS
oManagerial ethics is the set of standard behavior, social norms and values, self-recognized moral
standard generally accepted that business should be conducted by the managers in the decision
making process.
o Making ethical choices can be often be difficult for the managers as it is compulsory to obey the
rules and regulations of the law but acting ethically which goes beyond mere compliance with the
law.
o Business ethics is the moral behavior of a businessman to promote goodwill and reputation in the
society, gain profit in the long run.

17. Primary reasons for bad decisions by good managers are as follows –
(a) No Co-relation between Managerial Ability and Ethics – There is actually nothing surprising about good managers taking bad ethical
decisions because there is not much co-relation between two. Managerial ability is about planning,
organisingdeveloping/deploying/directing, co-ordinating and controlling a particular activity. Hardly do any of these functions require
ethical input. On the contrary, control function when dealing with human element, often requires employment of cunning to extract best
out of people in the short term.
(b) Greed is one of the prime reasons for managers taking bad ethical decisions. Material success is high on most managers’ mind. Desire to
achieve material success drives them towards unethical conduct.
(c) Short term focus is another reason. Ethical conduct is a sure but slow way to success. Managers lack patience and take short cut of
unethical way to achieve quick material success. However, long term consequences of such unethical conduct are often disastrous.
(d) Inadequate moral development is another reason. Many managers during their development process don’t get exposed to don’t reach
Post Conventional Level (page 6) of moral development and remain at Pre- conventional level where they are guided in their actions by
rewards and punishments.
(e) Misplaced Loyalty – Many managers fall due to their misplaced. These are people who are perfectly ethical in their personal conduct.
However, they indulge in all sort of unethical practices as managers. That is because they attach more loyalty to their company rather than
society. They take bad decisions in order to benefit the company. They are ethical in their own right but not in popular sentiments of society
who are at receiving end of their skewed loyalty. General O’Dyer was one such person.

18. Principles of
Managerial
Ethics
Honesty
Integrity
Trustworthiness
Fairness
Concern for
others
Law abiding

19. TYPES OF ETHICS
oTransactional ethics: Transactional ethics is the honest behaviour you potray when you speak to your
customers or clients when you indulge in any materialistis transaction.
oParticipatory ethics : guided by common good,all the participations follow some ethical practices.
oRecognition ethics : as human beings, people are endowed with the ability to understand the problems
of others. This quality leads to there cognition of individuals, institutions and societies, conflicting
situations can be solved by correct recognition of the situation.
Eg: a strong is helping a weak
an experienced is helping a new entrant

20. CONCEPTUALAPPROACHES TO BUSINESS ETHICS
o Utilitarian Approach : It focuses on taking action that will result in the greatest benefit for the
maximum number of people.
oMoral-Rights approach : this approach considers moral principles, regardless of the consequences.
Under this view, some actions are simply considered as right or wrong.
oUniversalism: it follows the concept that- “we should do to others,what we would want others to do to
us”
oCost -Benefit approach : under this concept an individual compares negative and positive aspects of a
particular action and then decision is taken.

21. IMPORTANCE/OBJECTIVES OF BUSINESS ETHICS
Raises the goodwill
Profitability
Sustainability
Competitive edge
Quality of product

22. THREE C’S OF BUSINESS ETHICS

23. ROLE OF GOVERNMENT IN BUSINESS ETHICS
o Legislating role : some degree of legislation is necessary to ensure that businesses comply with
their ethical obligations and the public does not offer as a result of dishonest business practices.
oSupervisory role : the government must monitor and supervise mergers which are subject to
antitrust law
oIncentivizing role : the government can encourage ethical behavior by incentivizing it with tax
breaks, or by imposing surcharges on companies with high levels of emissions.
oEnsure product safety : government should adopt or encourage the adoption of appropriate
measures,including legal systems,safety regulations,national or international standards.

24. STEPS TO IMPROVE ETHICAL PERFORMANCE
Developing code of conduct
Senior management taking charge
Engaging staff and other stakeholdes
Provide support routes for staff
Measuring effectiveness

25. MYTHS OF BUSINESS ETHICS
o1. Myth: Business ethics is more a matter of religion than management.:Diane Kirrane, in “Managing Values: A
Systematic Approach to Business Ethics,”(Training and Development Journal, November 1990), asserts that “altering
people’s values or souls isn’t the aim of an organizational ethics program — managing values and conflict among them is
…”
oMyth: Business ethics is a discipline best led by philosophers, academics and theologians.:Lack of involvement of
leaders and managers in business ethics literature and discussions has led many to believe that business ethics is a fad or
movement, having little to do with the day-to-day realities of running an organization. They believe business ethics is
primarily a complex philosophical debate or a religion. However, business ethics is a management discipline with a
programmatic approach that includes several practical tools. Ethics management programs have practical applications in
other areas of management areas, as well.

26. oMyth: Business ethics is a matter of the good guys preaching to the bad guys.:Some writers do seem to claim a
moral high ground while lamenting the poor condition of business and its leaders. However, those people well
versed in managing organizations realize that good people can take bad actions, particularly when stressed or
confused. (Stress and confusion are not excuses for unethical actions — they are reasons.) Managing ethics in the
workplace includes all of us working together to help each other remain ethical and to work through confusing and
stressful ethical dilemmas.
oMyth: Ethics can’t be managed.:Actually, ethics is always “managed” — but, too often, indirectly. For example,
the behavior of the organization’s founder or current leader is a strong moral influence, or directive if you will, on
behavior or employees in the workplace. Strategic priorities (profit maximization, expanding marketshare, cutting
costs, etc.) can be very strong influences on morality. Laws, regulations and rules directly influence behaviors to be
more ethical, usually in a manner that improves the general good and/or minimizes harm to the community
oMyth: Our organization is not in trouble with the law, so we’re ethical.:One can often be unethical, yet operate
within the limits of the law, e.g., withhold information from superiors, fudge on budgets, constantly complain
about others, etc. However, breaking the law often starts with unethical behavior that has gone unnoticed