08990402 - BUSINESS ETHICS AND CORPORATE GOVERNANCE

CH 1 Understanding Ethics
Morality, Ethics & Value: Ethical absolutism, relativism, subjectivism, Meta Ethics, Normative
Ethics (Teleological Ethics, deontological ethics & Ethics by virtue), Applied Ethics
Traditional Ethical Theories : Consequential & Non Consequential Ethics of Rights - Moral
Right, Legal right, Positive Right, Negative right, Kantian Right & Categorical Imperative
Ethics of Justice : Distributive Justice, Retributive justice & Compensatory justice, Ethics of care
Law and Morality : Kohlberg Model, Gilligan Model.
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Morality, Ethics & Value

Morality : Morality refers to a system of beliefs about what is right and wrong behavior, often
guided by societal norms, culture, or religion. It focuses on individual conduct and principles of
right and wrong in daily life. નીતિમત્તા

Ex : In Indian culture, respecting elders and seeking their blessings is considered a moral
obligation. For instance, touching the feet of elders during festivals like Diwali symbolizes
humility and moral duty.

Ethics : Ethics is the study of moral principles that govern a person’s or group’s behavior,
particularly in professional or organizational settings. It provides a framework for decision-
making to ensure fairness, justice, and accountability. નૈતિકિા

Ex : In corporate India, adhering to ethical practices includes avoiding corruption and ensuring
transparency in business transactions. The Tata Group is often cited as an example of maintaining
high ethical standards in business operations.

Values : Values are deeply held beliefs or standards that influence behavior and decision-making.
They act as guiding principles for individuals and organizations, shaping their priorities and
actions. મૂલ્યો

Ex : Gandhian values like non-violence (Ahimsa) and truth (Satya) are ingrained in Indian society.
These values guide peaceful protests, such as the Chipko Movement, where villagers hugged trees
to prevent deforestation.

These concepts interconnect in guiding behavior, decisions, and organizational culture, both
personally and professionally.

Check Ur Knowledge
1 A multinational pharmaceutical company decides to sell life-saving drugs at a significantly
reduced price in developing countries. The decision is driven by the company’s belief that

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everyone deserves access to healthcare, even if it reduces their profits. Does this scenario
reflect morality, ethics, or values?
2 An employee discovers their company is misreporting financial data to increase its stock
price. The employee feels compelled to report this practice, even though it could result in
losing their job. Is this an example of morality, ethics, or values?
3 A global corporation mandates equal representation of genders and ethnicities in its
workforce. This decision aligns with its belief in inclusivity as a cornerstone of its
organizational culture. Does this situation illustrate morality, ethics, or values?
4 A sales executive is offered a bribe by a foreign government official to secure a lucrative
contract. While local business culture sees such practices as acceptable, the executive refuses
because they believe bribery is wrong. Is this situation driven by morality, ethics, or values?
5 A manager allows employees to leave early during a religious festival, even though company
policy requires them to stay until regular hours. The decision reflects the manager’s personal
belief in respecting religious practices. Does this reflect morality, ethics, or values?
6 A company invests heavily in renewable energy, even though it increases operating costs,
because it prioritizes environmental sustainability as part of its corporate culture. Is this an
example of morality, ethics, or values?

Ethical Absolutism (નિરં કુશતા), Relativism (સાપેક્ષવાદ), and Subjectivism

(નવષયવાદ)

Ethical Absolutism : Ethical absolutism asserts that there are universal moral principles that apply
to all individuals, irrespective of culture, time, or situation. It holds that certain actions are
inherently right or wrong, and these standards are immutable.
Ex : The principle of Ahimsa (non-violence) as advocated by Mahatma Gandhi could be seen as
an example of ethical absolutism. Regardless of circumstances, causing harm to others is
considered wrong.

Ethical Relativism : Ethical relativism suggests that moral principles are not universal but depend
on cultural, societal, or situational contexts. What is considered morally right in one culture may
be wrong in another.
Ex : In India, eating beef is taboo in Hindu culture but may not be considered wrong in
communities with different cultural or religious practices, such as Christians or Muslims.

Ethical Subjectivism : Ethical subjectivism posits that moral judgments are based on individual
preferences or beliefs. What is right or wrong depends on personal opinions and feelings rather
than external standards.

Ex : A person may believe that paying a bribe to expedite a government service is acceptable
because it benefits their situation, even though it is unethical and illegal.

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These frameworks reflect different approaches to understanding morality and ethical behavior,
emphasizing the role of universal principles, cultural influences, or personal beliefs.

Check Ur Knowledge
1. A multinational company refuses to purchase products from a supplier who uses child labor,
stating that child labor is always unethical, no matter the circumstances. However, the supplier
argues that in their country, it is common for children to contribute to family income. Does
this situation reflect ethical absolutism, relativism, or subjectivism?
2. An Indian exporter doing business in a foreign country encounters a situation where small
bribes are a customary part of closing deals. The exporter believes accepting or offering bribes
is always wrong, while the local partners insist that it is a necessary business practice in their
culture. What ethical stance is the exporter following?
3. A global apparel brand decides to invest 5% of its profits into community development
projects, stating that corporations have an inherent responsibility to give back to society.
However, another company argues that such initiatives depend on regional expectations and
cultural norms. Is this an example of ethical absolutism, relativism, or subjectivism?

4. A manufacturing firm in India adheres to strict global environmental standards for its
operations, even though local laws are more lenient. The CEO believes environmental
protection is a universal obligation, irrespective of the local legal framework. Which ethical
framework does the CEO follow?
5. An Indian IT company pays its employees lower wages compared to their counterparts in
developed countries for the same work, justifying it based on the lower cost of living in India.
A global labor rights organization criticizes the company for this disparity. Does this reflect
ethical absolutism, relativism, or subjectivism?
6. A global beverage brand launches an ad campaign in a Middle Eastern country, ensuring that
it aligns with local cultural and religious sensitivities. However, the brand’s global policy
emphasizes universal creative freedom. Does this situation highlight ethical absolutism,
relativism, or subjectivism?
7. An employee discovers that their company is involved in insider trading. They report it
because they believe financial integrity should be upheld under all circumstances, even if the
practice is seen as a norm in the financial industry. Is this decision based on ethical absolutism,
relativism, or subjectivism?
8. A multinational company mandates gender and cultural diversity in all its offices worldwide,
arguing that diversity is a fundamental ethical value. However, some regional managers feel
the policy should be adapted to the cultural norms of each country. Does this policy reflect
ethical absolutism or relativism?

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9. A CEO believes that honesty is the most important trait in leadership and always insists on
disclosing all financial information transparently to stakeholders, even if it results in
temporary losses. What type of ethical framework does the CEO follow?
10. A global coffee brand implements fair trade practices, paying farmers in developing countries
higher wages than the market rate. Another competitor argues that pricing should depend on
the local economy and market conditions. Does this scenario represent ethical absolutism,
relativism, or subjectivism?

Reading : What Is Business Ethics? Definition, Principles, and Importance

by Alexandra Twin https://www.investopedia.com/terms/b/business-ethics.asp

1 Which of the following best describes morality?

(A) A system of beliefs about right and wrong conduct guided by societal norms, culture, or religion
(B) A universal principle of ethics applied in all cultures and contexts
(C) A study of professional behavior standards in organizations
(D) Individual preferences for making decisions.
2 What does ethical absolutism emphasize?
(A) Morality based on individual opinions.
(B) Cultural dependence of moral principles.
(C) Immutable, universal moral standards.
(D) Situational factors affecting moral decisions.
3 Which of the following examples illustrates ethical relativism?
(A) Avoiding harm as a universal principle.
(B) Eating beef is acceptable in one culture but taboo in another.
(C) Personal belief that bribery is acceptable.
(D) Adhering to organizational transparency policies.
4 Ethical subjectivism primarily considers moral judgments as based on:
(A) Universal principles.
(B) Cultural norms.
(C) Individual preferences.
(D) Professional standards.
5 In Indian culture, the act of touching elders' feet during Diwali exemplifies:
(A) Ethical absolutism.
(B) Morality.
(C) Ethical subjectivism.
(D) Ethics in professional life.
6 Which of the following best defines ethics?
(A) Study of moral principles governing behavior in professional contexts.
(B) Personal values influencing decision-making.
(C) Situational moral judgments.
(D) Cultural relativism in action.
7 The Chipko Movement reflects which type of values?
(A) Ethical subjectivism.
(B) Gandhian values of non-violence and truth.
(C) Ethical relativism.
(D) Organizational ethics.

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8 Adhering to transparency in business transactions by the Tata Group represents:

(A) Morality in Indian culture.
(B) Ethical absolutism.
(C) Organizational ethics.
(D) Personal values influencing behavior.
9 How does ethical relativism differ from ethical absolutism?
(A) It supports universal principles rather than cultural norms.
(B) It focuses on personal opinions over societal norms.
(C) It considers morality dependent on culture and context.
(D) It emphasizes fairness in professional settings.
10 Values can best be described as:
(A) Professional codes of conduct.
(B) Cultural norms dictating behavior.
(C) Deeply held beliefs guiding behavior and decision-making.
(D) Universal moral principles.

Answer Key
1. (A) 6. (A)
2. (C) 7. (B)
3. (B) 8. (C)
4. (C) 9. (C)
5. (B) 10. (C)