Transcript Document

Unit 1- Business
Ethics & Corporate
Governance
Rachna Bansal Jora
Unit 1- Contents
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Introduction to Business Ethics,
Ethics, Morals & Values,
Concepts of Utilitarianism and Universalism
Theory of rights
Theory of Justice
Virtue ethics
Ethics of care
Law and Ethics
The Nature of Ethics in Management
Business Standards and Values
Value Orientation of the Firm.
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Values
• Values are fundamental belief of an
individual .
• They are standards/ parameters.
• They are what an individual believes to be
having worth and important in their life.
Moral
• Moral are the values, a system of beliefs
which gets its authority from something
outside the individual- a higher being
(society).
Ethics
• The principle of conduct governing an
individual or group.
• Ethics of individual decisions and actions
are defined socially not individually.
Business Ethics
• Business ethics refers to the moral principles
which should govern business activities.
• Purpose of Business Ethics is to
– Regulate objectives (ends) of business
– The means to achieve the objective
• A set of moral principles which should play a
significant role in guiding the conduct of
managers and employees in the operation of
enterprise.
Levels of Business Ethics
International Level
Societal Level
Stakeholders Level
Organization’s level
Individual Level
Need & Relevance
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Environmental Pressure
Enlightened Self Interest
Moral Consciousness
Legal Requirements
Principles of Business Ethics
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Be trustful
Keep an open mind
Meet Obligations
Have clear documents
Become community involved
Maintain accounts
Be respectful
Utilitarianism/ Telelogical Theory
• Given by Jeremy Bentham & John Stuart
Mill
• An action is judged as good or right on the
basis of its consequences. Ends of an
action justify the means taken to reach
those ends.
• Example Bhakhra Nangal Dam was
(capturing lands and roads did harm to a few farmers but
the entire state of Punjab was benefitted)
Utilitarianism
Consequentialist Principles
• An action is morally right if it produces the
greatest good for the greatest number of people.
• An action is morally right if the net benefits over
costs are greater for all affected, compared with
the net benefits of all other possible choices.
• An action is morally right if its benefits are
greatest for each individual and if these benefits
overweigh the costs and benefits of the
alternatives.
Criteria used in utilitarianism
• Rule based: general rules are used as
criteria for deciding the greatest benefits to
be calculated.
• Act Based: analyze a particular action or
behavior to determine whether the
greatest utility can be achieved.
Problems with Utilitarianism
• No agreement about the definition of good
for all.
• No agreement about who decides, but
rather their consequences.
• Actions are not judged.
• Cost benefit analysis of non monetary
stakes i.e. Health & safety
• Principle of justice and rights are ignored
Universalism/ Deontological
• Given by Immanuel Kant
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of
consequences
this
approach is based upon universal
principles such as justice, rights, fairness,
honesty and respect.
• This approach believes in categorical
imperative (The moral principle that
behavior should be determined by duty)
Parts of categorical Imperative
1. First part states that a person should
choose to act if and only if she or he
would be willing to have every person on
the earth, in the same situation, act
exactly the same.
2. Second part says a person should act in
a way that respects and treats all others
involved as ends as well as means to an
end.
Criticism of universalism
• Imprecise and lack practical utility.
• Hard to resolve conflicts of interest.
• Difficult to take an absolute decision when
limited resources, time and conflicting
values are factors.
Theory of Rights
• Rights are individual entitlements to
freedom of choice and well being.
• In the rights ethical theory the rights set
forth by a society are protected and given
the highest priority.
• Rights are considered to be ethically
correct and valid since a large or ruling
population endorses them.
• Legal rights are the entitlements that are
limited to a particular legal system and
jurisdiction.
• Moral rights/ human rights are universal
and based on norms in every society
• Natural rights are those that are moral
while conventional are those created by
humans and reflect society's values.
• Exp. The right to life, The right to liberty,
The right to pursue happiness
• The concept of rights based ethics is that
there are some rights, both positive and
negative, that all humans have based only
on the fact that they are human.
• Negative rights refers to the duty that
others have to not interfere with actions
related to a person’s rights.
• Positive rights imposes a duty on others to
provide for your needs to achieve your
goals, not just protect your right to pursue
them.
Limitations of rights based theory
• This justification that individuals are
entitled to rights, can be used to disguise
and manipulate, selfish, unjust political
claims and interests.
• Protection of rights can exaggerate certain
entitlements in society at the expense of
others.
Theory of Justice
• Principle of justice deals with fairness and
equality.
• Moral authority which decides what is right
and wrong concerns the fair distribution of
opportunities as well as hardships to all.
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Principles of Justice
• All individual should be treated equally.
• Justice is served when all person have
equal opportunities and advantages to
society’s opportunities and burdens.
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Types of justice- Richard DeGeorge
• Compensatory
Justice:
compensating
someone for a past harm or injustice
• Retributive justice: serving punishment to
someone who has inflicted harm on another.
• Distributive justice: fair distribution of benefits
and burdens
• Procedural justice: fair decision practices,
procedures, and agreements among parties.
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Problems with theory of justice
• Other than the state and judiciary who
decides who is right or who is wrong.
• Who has the moral authority to punish
whom?
• Can opportunities and burdens be fairly
distributed to all?
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Virtue Ethics
• Founders are Plato and Aristotle
• Virtue ethics emphasize moral character in contrast
to moral rules or consequences of actions.
• Virtue ethics is grounded in ‘Character Traits’ that is
‘a disposition which is well entrenched in its
processor’.
• Virtue ethics focuses on the type of person one
ought to be, not on specific actions that should be
taken.
• It is grounded in good character, motives and core
values.
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Virtue Ethics- Critiques
• Does not offer precise guidelines of
obligation.
• Can't correctly assess the occasional
tragic actions of virtuous people.
• Virtue theory does not provide a list of
intolerable acts.
• Character traits change and unless they
are not practiced, there is risk of loosing
proficiency.
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Ethics of Care
• Ethics of care is an ethic that emphasizes
caring for the concrete well being of those
near to you.
• We have an obligation to exercise special
care toward those particular persons with
whom
we
have
valuable
close
relationships, particularly relations of
dependency.
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Ethics of care
• According to this approach the moral task is
not to follow universal and impartial moral
principles, but instead to attend and
respond to the good of particular concrete
persons with whom we are in a valuable
and close relationship.
• Compassion, love, friendship, and kindness
are the sentiments or virtues that normally
manifest this dimension of morality.
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Ethics of Care- Objections
• An ethic of care can degenerate into
unjust favoritism.
• Its demands can lead to burnout.
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LAW
• Law can be defined as a consistent set of
universal rules that are widely published,
generally accepted, and usually enforced. These
rules describe the ways in which people are
required to act in their relationships with others
in a society. They are requirements to act in a
given way, not just expectations or suggestions
to act in that way. Since the government
establishes law, the government can use powers
to enforce laws.
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Ethics
• The word ethics is derived from the Greek
word ethos (character), and from the Latin
word mores (customs). Together they
combine to define how individuals choose
to interact with one another. In philosophy,
ethics defines what is good for the
individual and for society and establishes
the nature of duties that people owe
themselves and one another.
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Law and Ethics
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Nature of Ethics in Management
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Business Standards & Values
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Value orientation of the firm
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