CONCEPT OF ETHICS

• Ethics is the study of morals and moral choices.

• It focuses on standards, rules and codes of conduct that govern

the behaviour of individuals and groups.

• Ethics is the set of universally accepted moral principles and

values that govern the behaviour of a person or group in terms of
what is right and wrong.

• Ethics is concerned with how people think about and behave

towards each other; how the consequences of their decisions and
behaviour impact human life.

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 ETHICS AND MORALITY

Ethics is also known as a moral philosophy; it is a branch of

philosophy that involves systematising, defending and
recommending concepts of right and wrong conduct.
Parameter Morality Ethics
Name Greek - “Mos” meaning ‘customs’ Greek - “Ethos” meaning ‘character’
Origin Spiritual principles Materialistic and social principles
Onus Generally on society, religion and One’s own self
culture and the leaders
Acceptance As designed by a group, no choice Individual is free to think and choose
of acceptance, ie.. Do or die
Dynamism Varies to people to people, society to Regardless of society or culture
society and culture to culture
Business Not applicable Applies in businesses
Basis Based on right and wrong actions Based on right or wrong choices
Format Expressed as general rules or Abstract as the close associates only
statements can understand
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 ETHICS Vs. ETHOS
Ethics means a set of moral standards, rules and codes one has to follow
in a social context,
whereas
ethos mean a set of qualities that defines one’s character and manners.

ETHICS ETHOS
1. Generally universally accepted 1. Generally individual specific
2. Helps in getting to know how to behave 2. Helps in creating impression on how we like to
behave
3. Violations are prescribed with consequences 3. Consequences depends the context in which / how the
individual acts

4. Change is possible only with the help of the 4. Change is in the hands of the individual
formulators

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 ETHICS, ECONOMICS AND LAW

Lega & Ethical, but not

Economical & profitable – find ways to make
Ethical probably it profittable..!!
Legal too – Proceed Profitable, Legal and
Cautiously..!! Ethical – Go for it..!!

Profitable & Legal – Proceed

Cautiously..!!

Courtesy: Archie B Carroll,

https://www.researchgate.net/figure/The-Three-Domain-Model-of-Corporate-Social- 4

Responsibility-Corporate-Examples_fig2_261827186
 Case-related Additional Resources
Film Recovery Systems, US – Case Summary
https://sci-hub.tw/https://www.jstor.org/stable/27801081

https://www.nytimes.com/1985/06/15/us/3-executives-convicted-of-murder-for-unsafe-
workplace-conditions.html

Enron (Financial Brokerage Firm) - Case Summary

https://www.investopedia.com/updates/enron-scandal-summary/
Malden Mills Inc. – Case Summary
https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-lab
or/businesses-and-occupations/malden-mills-industries-inc

Napster (Music sharing site) – Case Summary

https://abcnews.go.com/Technology/story?id=119627&page=1

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OBJECTIVES / BENEFITS OF ETHICS
• Making evaluative assessment about human behaviour as moral or immoral.

• Establishing moral standards/norms of behaviour.

• Making judgment upon human behaviour based on these standards and

norms.

• Prescribing moral behaviour, makes recommendations about do’s and

don’t’s of human behavior.

• Expressing an opinion or attitude about human conduct in general.

• Defining the greatest good of man and establish a standard for the same.

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Broad Types of Values
(Rokeach)

1. Terminal Values are the

ultimate goals individuals or
groups intend to achieve. 

2. Instrumental Values are the

specific modes of behavior that
help an individual to achieve the
desired purpose.

7
 VIEWS OF VALUES (Cont…)
THE TRADITIONAL VIEW OF VALUES
(RELIGION):
• From the traditional viewpoint any
group, i.e. any social unit, is
defined by its possession of shared
values.
• A group‘s values derive from the
ancient traditions of the group or are
presented if they did.
• By turning their gaze inwards and not
outwards to other groups and
societies, they fail to recognize the
fragmentation and diversity of
values that surrounds them.
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 VIEWS OF VALUES (Cont…)
THE MODERNIST VIEW OF VALUES
(REASONING)
• Characterized by value
fragmentation.
• Through the application of reason,
the pieces can be put back together
and true values defined.
• Believe that values are tangible, and
can be unambiguously stated and
defined through formal and rational
debate.
• The modernist believes that values
can be determined by ethical study.

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 VIEWS OF VALUES (Cont…)
THE NEO-TRADITIONAL VIEW OF
VALUES (CULTURE)
• Values originate from organizational and
social cultures.
• fragmentation of values should be
overcome as organizations and societies
have unified values.
• But such an end cannot be achieved by
rational analysis, which sees values as
objects for analysis and not as shared
myths, which is how neo-traditionalists
view them.
• Myths can act as the glue that holds and
organization or society in unity because of
their simplicity (which needs no
sophisticated explanation) and because of
their ability to skilfully or effortlessly deal
with dilemmas. 10
 VIEWS OF VALUES (Cont…)
THE POSTMODERN VIEW OF
VALUES (NO VALUES)
• Sees nothing in the social and
intellectual world as tangible or ?
fixed. ?
• No eternal truths of values.
No
• What we think of as objectively ? Values
true emerges through
discourses. ?
?

• Uncertain because the language

we use is opaque and carries no
single, clear messages.
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 VIEWS OF VALUES (Cont…)
THE PRAGMATIC VIEW OF VALUES (PRACTICALITY):
• If a belief helps us to interpret our other beliefs and
vice versa then it is useful. The justification of belief is
therefore conversational.
• The line taken by pragmatists is that the inability to
ground values in some overarching theory such as
Hinduism, Christianity, Marxism, Islam or Capitalism
does not prevent people making sensible and practical
arrangements for living in a civil and well-mannered
life.
• Principles of pragmatism:
 Principle of empiricality/evidence-based and
 Principle of change 12
MAJOR CORE VALUES OF A BUSINESS
(Class Workshop)

13
 BENEFITS OF VALUES IN
MANAGEMENT / BUSINESS
• Values provide basis for business decisions
• Values improve service quality
• Values facilitate innovation to support
competitiveness
• Values provide good knowledge of business KPIs
• Values enhance communication and teamwork
• Values bring commitments among the stakeholders

Values for business by University of Texas (1.27 Mins.)

https://youtu.be/SCjYaatMJuY
 APPROACHES / PERSPECTIVES TO ETHICS

ETHICAL THEORIES
ETHICAL
THEORIES

Ethics of Conduct
Ethics of Character
What is the right choice of
action in an ethical dilemma What sort of person should we
be

Non-
Consequentialism Consequentialism
The right action is that which The right action is that which
achieves the best outcome is good-in itself, or follows a
rule

DEONTOLOGY / TELEOLOGICAL /
ETHICAL EGOISM /
INDIVIDUALISM JUSTICE APPROACH VIRTUE THEORY /
UTILITARIANISM
Best of Oneself (Randism) Best for Everybody (Benthamism)
To perform one’s moral duty (Kantism)
* No exemptions to the Categorical
MORAL RIGHTS
* Reasoning We should be virtuous, i.e., act with virtue
Imperative
* Rational Self-interest (Aristotlism)
* Act Utilitarianism * Formula of Universality
* Laissez-faire Capitalism * Rule Utilitarianism 4 Cardinal Virtues:
* Formula of Autonomy
* Formula of Humanity * Prudence
* Temperance
* Courage
* Justice
INDIAN VALUES/ETHOS IN MANAGEMENT/BUSINESS
(A Comparison to the Western Business World)
 MODULE-II: BUSINESS
ETHICS
Concepts, Importance and Benefits, Theories of Business Ethics

Ethical leadership with examples - Ethical Decision Making

Work ethics: Nature and Scope, Ethical issues at workplace,

Ethics and Cultural Issues
Environmental Ethics
Ethical Dilemma – sources and their resolution

Ethical Displacement
 CONCEPT OF BUSINESS ETHICS
Business Ethics means conducting all aspects of
business and dealing with all stakeholders in an
ethical manner.

18
 ROLE OF ETHICS IN BUSINESS
• Builds trust

• Promotes confidence

• Validates relationships

WHY ETHICS IS IMPORTANT TO A BUSINESS – Video by Investopedia

(1.29 Mins.)
https://www.investopedia.com/ask/answers/040815/why-are-business-ethics
-important.asp

19
 THEORIES OF BUSINESS ETHICS
Maximiz
e profit STOCKHOLDER
CORPORATE
THEORY

Maximize the
SHAREHOLDER C
shareholder PROFESSIONAL / INDUSTRY
value THEORY

SOCIAL CONTRACT D
Maximize the
agreed and
THEORY LAW
voluntary
contributions for
mutual interest

A B

CONSEQUENTIALIST / CATEGORICAL /
TELEOLOGICAL DEONTOLOGICAL

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 FORMS OF UNETHICALITY IN BUSINESS

• Accounting fraud
• Deceptive advertising
• Unfair competitive /
labor practices
• Internet theft
Top 10 Crime Types as reported to the Internet Crime
Complaint Centre (IC3) by Victim Loss

• Trademark infringement 
• Unauthorized substitution of one brand of
goods for another
• Misappropriation of trade secrets
• False representation of products or services
• Violating HR Policies and Labor Laws
• Harassment / Discrimination / Bias

21
 CONCEPT OF ETHICAL
CORPORATE BEHAVIOUR (ECB)
Ethical Corporate Behavior (ECB) is how the corporates
behave with the stakeholders of the business.
STAKEHOLDER GROUPS

• Shareholders (BODs)

• Product Market Stakeholders (customers, supplier and host communities)

• Organizational Stakeholders (managerial and non-managerial employees)

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 STEPS TO DEVELOP CORPORATE ETHICAL
BEHAVIOUR (CEB)
(1) Ethical Training Programme: focus on official policy on ethical issues
(2) Code of Ethics: General, Stakeholders, Stockholders, Employees and
Community/Neighbourhood
(3) Organisation Ethics Development System (OEDS):
• Moral Leadership,
• Regular Assessments,
• Strategy and Structure &
• Ethics Steering Committee
(4) Ethics Committees:
• Working Group by the Companies Act,
• Confederation of Indian Industry (CII),
• Kumaramangalam Birla Committee / Audit Committee by SEBI,
• Naresh Chandra Committee,
• Narayan Murthy Committee
(5) Integration of Ethical Concepts
(6) Checklist Method
(7) Reward-Punishment System and
(8) Whistle Blowing

23
 The Confederation of Indian Industry (CII), 1987
• to create and sustain an environment conducive to the development of India, partnering
Industry, Government and civil society, through advisory and consultative processes.
• non-government, not-for-profit, industry-led and industry-managed - around 9000
members from the private as well as public sectors, including SMEs and MNCs - an
indirect membership of over 300,000 enterprises from 286 national and regional sectoral
industry bodies.
• charts change by working closely with Government on policy issues, interfacing with
thought leaders, and enhancing efficiency, competitiveness and business opportunities for
industry through a range of specialized services and strategic global linkages - provides a
platform for consensus-building and networking on key issues.
• assists industry to identify and execute corporate citizenship programs - including
affirmative action, livelihoods, diversity management, skill development, empowerment
of women, and sustainable development, etc.
• the Theme for 2022-23 as Beyond India@75 - Competitiveness, Growth, Sustainability,
Internationalisation has prioritized 7 action points under these 4 sub-themes that will
catalyze the journey of the country towards the vision of India@100.
• With 62 offices, including 10 Centres of Excellence, in India, and 8 overseas offices in
Australia, Egypt, Germany, Indonesia, Singapore, UAE, UK, and USA, as well as
institutional partnerships with 350 counterpart organizations in 133 countries, CII serves
as a reference point for Indian industry and the international business community.
24
 Kumaramangalam Birla Committee /
Audit Committee by SEBI (1999) (contd…)
• To promote and raise the standards of good corporate
governance
• Chaired by Sri Kumar Mangalam Birla
• Released the first report of “Code of Corporate
Governance” to Indian corporates
• Suggests suitable amendments to the listing agreement to
SEBI
• Areas covered are: continuous disclosure of material
information, responsibilities of independent and outside
directors, drafting a code of corporate best practices, and
offering suggestions on the best practices of insider
trading and insider information. 25
 Kumaramangalam Birla Committee /
Audit Committee by SEBI (1999)
Mandatory Recommendations Non-Mandatory Recommendations
• The mandatory recommendations apply to the listed • Role of chairman
companies with paid up share capital of 3 crore and
• Remuneration committee of board
above.
• Shareholders’ right for receiving half yearly
• Composition of board of directors should be
financial performance.
optimum combination of executive & non-executive
directors. • Postal ballot covering critical matters like alteration
in memorandum
• Audit committee should contain 3 independent
directors with one having financial and accounting • Sale of whole or substantial part of the undertaking
knowledge. • Corporate restructuring
• Remuneration committee should be setup • Further issue of capital
• The Board should hold at least 4 meetings in a year • Venturing into new businesses
with maximum gap of 4 months between 2 meetings
to review operational plans, capital budgets, quarterly
results, minutes of committee’s meeting.
• Director shall not be a member of more than 10
committee and shall not act as chairman of more than
5 committees across all companies
• Management discussion and analysis report covering
industry structure, opportunities, threats, risks,
outlook, internal control system should be ready for
external review
• Any Information should be shared with shareholders
26
in regard to their investments.
 Naresh Chandra Committee (2012)
• The 14-member task force was headed by Naresh Chandra, a former bureaucrat
who has held top administrative jobs in the Ministry of Defense and the PM’s
Office.
• To review the Kargil Review Committees’ recommendations and issues relating
to border management and restructuring the apex command structure in the
armed forces have not been implemented
Major recommendations:
• Creation of a new post of Intelligence Advisor to assist the NSA and the National Intelligence
Board 
• Amendment to Prevention of Corruption Act
• A permanent Chairman of the Chiefs of Staff Committee
• Expediting the creation of new instruments for counter-terrorism, such as the National Intelligence
Grid and National Counter Terrorism Centre
• Deputation of officers from services up to director’s level in Ministry of Defense
• Measures to augment the flow of foreign language experts into the intelligence and security
agencies, which face a severe shortage of trained linguists
• Promotion of synergy in civil-military functioning to ensure integration.
• Establishment of a National Defense University (NDU) and the creation of a separate think-tank on
internal security.
27
 Narayan Murthy Committee on
Corporate Governance (2003)
• to evaluate the existing corporate governance
practices and
• to improve these practices as the standards
themselves were evolving with market dynamics.
• The committee’s recommendations are based on 
– the relative importance, fairness, accountability, transparency,
ease of implementation, verifiability and enforceability related
to audit committees, audit reports, independent directors,
related parties, risk management, directorships and director
compensation, codes of conduct and financial disclosures.

28
Narayan Murthy Committee on Corporate Governance
(2003) contd…
Mandatory Recommendations:
• Strengthening the responsibilities of audit committees - At least one member should be ‘financially
knowledgeable’ and at least one member should have accounting or related financial management proficiency.
• Quality of financial disclosures - Improving the quality of financial disclosures, including those related to
related party transactions.
• Proceeds from initial public offerings - Companies raising money through an IPO should disclose to the Audit
Committee, the uses / applications of funds by major category like capital expenditure, sales and marketing,
working capital, etc.
• Other recommendations
– Requiring corporate executive boards to assess and disclose business risks in the annual reports of
companies.
– Should be obligatory for the Board of a company to lay down the code of conduct for all Board members
and senior management of a company.
– The position of nominee directors: Nominee of the Government on public sector companies shall be
similarly elected and shall be subject to the same responsibilities and liabilities as other directors
– Improved disclosures relating to compensation paid to non-executive directors.
Non-mandatory recommendations:
• moving to a regime where corporate financial statements are not qualified;
• instituting a system of training of board members; and
• the evaluation of performance of board members.

29
Source - Harvard Business Review

30
 ETHICAL DECISION MAKING INVOLVING ETHICS,
ECONOMICS AND LAW OF A BUSINESS

Lega & Ethical, but not profitable –

Economical & Ethical probably Legal
find ways to make it profittable..!!
too – Proceed Cautiously..!!

Profitable, Legal and

Ethical – Go for it..!!

Profitable & Legal – Proceed

Cautiously..!!

Drivers of Ethical Decision Making (3.3 Mins.)

https://www.youtube.com/watch?v=n0uwTBrgqxI By 07.01.2023
Courtesy: Archie B Carroll,
https://www.researchgate.net/figure/The-Three-Domain-Model-of-Corporate-Social- 31
Responsibility-Corporate-Examples_fig2_261827186
 WORK ETHICS
(Work Ethics Conference by Family, Career and Community Leaders
of America (FCCLA), 2017)

A set of moral principles or standards of behavior, or

set of values regarding proper conduct in the
workplace.
 WORK ETHICS
(Work Ethics Conference, FCCLA, 2017 Contd…)

FORMS OF WORK ETHICS

• Attending the work regularly

• Arriving on time and be ready to work

• Listening to and following instructions

• Willingness to learn (learning attitude)

• Performing quality work

• Displaying a positive “can do” attitude

• Completing work in time

 CONCEPT OF ETHICAL
ISSUE IN BUSINESS

Ethical Issue is an identifiable problem,

situation, or opportunity that requires a
person to choose from among several
actions that may be evaluated as right or
wrong, ethical or unethical.

34
 UNETHICAL ISSUES IN BUSINESS

ETHICS AND COMPLIANCE INITIATIVE – GLOBAL BUSINESS ETHICS SURVEY (2016)

Bribery and corruption related misconduct by country

TRANSPERANCY INTERNATIONAL SURVEY (2011) – LOST BUSINESS DUE TO BRIBERY
Companies that decided not to conduct business in a particular country because
of the perceived / actual risk of corruption
The list of tax haven countries
includes…
• Andorra,
• the Bahamas,
• Belize,
• Bermuda,
• the British Virgin Islands,
• the Cayman Islands,
• the Channel Islands,
• the Cook Islands,
• Hong Kong,
• The Isle of Man,
• Mauritius,
• Lichtenstein,
• Monaco,
• Panama, and
• St. Kitts and Nevis 36
 ENVIRONMENTAL ETHICS
Environmental Ethics is a branch of ethics that studies
the relationship of human beings and the
environment and how ethics play a role in this.

Environmental ethics is a branch of applied philosophy

that studies the conceptual foundations of
environmental values as well as more concrete issues
surrounding societal attitudes, actions, and policies
to protect and sustain biodiversity and ecological
systems. 

37
 GLOBAL ENVIRONMENTAL ISSUES - THREAT OF EXTINCTION

as per 2009 statistics

Source: International Union for Conservation of Nature (IUCN) as reported by BBC

38
 Believes that Stresses
Nature is Advocates
To look after the animals Advocates upon the
important and holistic
the earth, its Advocates Rawl are essential importance rights of
humanbeings approach
human right and advocates for earthly of all living animals /
essentially to protect
responsibility wrong distributive life to beings for living-
are and
, i.e., actions justice continue, so human- beings preserve the
dependent on
stewardship their protection beings other than environment
the nature is important humans

39
 CONCEPT OF ETHICAL DILEMMA

Ethical Dilemma is a conflict between….

• one’s personal and professional values
• two values/ethical principles
• two possible actions each with reasons strongly
favorable and unfavorable
• two unsatisfactory alternatives
• one’s values/principles and one’s perceived role
• the need to act and the need to reflect
40
 COMMON STRATEGIES TO SOLVE ETHICAL
DILEMMA
• Refute / Disprove the paradox (dilemma): The
situation must be carefully analysed. In some cases,
the existence of the dilemma can be logically
refuted / disproved.

• Value theory approach: Choose the alternative

that offers the greater good and the lesser evil.

• Find alternative solutions: In some cases, the

problem can be reconsidered, and the new
alternative solutions may arise.
41
 STRATEGIES TO SOLVE ETHICAL DILEMMA IN
BUSINESS
• Own Code of Conduct – Eg. Ethics published as insider (communicative) tools –
Company Website
• Code of Conduct by Professional / Business Regulators – Eg. BIS, ISI, WTO, IRDAI,
TRAI, ASCI, NAAC, UGC, etc.
• Ethical Standard Program: Programs for making ethical awareness
• Ethics Training: Training on ethical issues, ethical dilemma and mechanisms to handle
• Due Diligence - Reasonable steps taken by a person / a business to avoid committing
a tort or offence - Administrative DD, Financial DD, Asset DD, HR DD, Environmental
DD, Tax DD, IT DD, Legal DD, Customer DD, Strategic DD, etc.

Ethical Dilemma – TED Video (4.3 Mins.)

https://www.ted.com/talks/alex_worsnip_ethical_dilemma_who_should_you_believe
 
Ethical Dilemma – TED Video-2 (4.36 Mins.)
https://www.ted.com/talks/eleanor_nelsen_would_you_sacrifice_one_person_to_save_five
 
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 CONCEPT OF ETHICAL DISPLACEMENT
Ethical displacement means that if an ethical conflict cannot be
solved at a certain level of social aggregation (the individual, the
organization, the industry, or the national international political
level), then one should look for a solution at a level other than
that at which the dilemma occurs.

Eg. Many of the scams should have been eradicated /

trapped / curtailed by internal audit and such system within
the organizations, but they are not. So, they were whistle-blown
to the attention of justice system and public opinion.