08990402 - BUSINESS ETHICS AND CORPORATE GOVERNANCE

CH 1 Understanding Ethics

Meta-Ethics : Meta-ethics deals with the nature of ethical concepts and principles. It examines
the foundation, meaning, and origin of moral values rather than prescribing actions. It seeks
to answer questions like:
 What does "right" or "wrong" mean?
 Are moral values subjective or objective?
 How do we know what is good or bad?
Ex : The debate over whether corruption is inherently wrong (objective) or wrong only because
of societal laws (subjective) is a meta-ethical issue. For instance, in rural areas, informal
payments for services might be seen as a necessity for survival, raising questions about the
objective morality of corruption versus cultural relativism.

Normative Ethics : Normative ethics focuses on prescriptive moral standards, providing

frameworks or principles for deciding what is morally right or wrong. It addresses questions
like:
 How should people act?
 What principles guide ethical behavior?
It includes theories such as:
 Deontology: Acting based on rules or duties.
 Utilitarianism: Acting to maximize overall happiness or welfare.
 Virtue Ethics: Acting based on character and virtues.
Ex : A corporate leader deciding whether to prioritize environmental sustainability over profit
aligns with normative ethics. For instance, when Tata Steel adopted stringent environmental
policies despite increased costs, it reflected a utilitarian approach—prioritizing long-term
societal benefits over short-term gains.

Teleological Ethics : Teleological ethics, also known as consequentialism, focuses on the

outcomes or consequences of actions to determine their morality. An action is considered
morally right if it leads to the greatest good or the best outcome for the majority.

This ethical approach emphasizes results rather than the means of achieving them. The most
common form is utilitarianism, which seeks to maximize overall happiness or welfare.
Ex : When the Indian government implemented the Goods and Services Tax (GST) reform, it
disrupted many businesses initially. However, the decision was justified based on its long-term
benefits, such as simplifying the tax structure and improving economic efficiency. This reflects
teleological ethics, as the decision prioritized the long-term good of the economy over short-
term challenges.

Deontological Ethics : Deontological ethics focuses on adherence to moral duties, rules, or

principles, regardless of the consequences. An action is considered morally right if it aligns
with established rules or duties.
This ethical approach emphasizes the intrinsic morality of actions. It asserts that certain duties
or principles must always be followed, even if the results are unfavourable.
Ex : When Infosys whistleblowers exposed unethical practices in the company’s financial
reporting, they acted out of a duty to uphold honesty and transparency, even though it risked

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the company's reputation. This reflects deontological ethics, as their actions were driven by
adherence to ethical principles rather than potential consequences.

Virtue Ethics : Virtue ethics focuses on the character and virtues of the individual performing
the action, rather than on rules (deontology) or consequences (teleology). It emphasizes being
a good person by cultivating virtuous qualities like honesty, integrity, and compassion.
Virtue ethics asks, "What kind of person should I be?" rather than "What should I do?" It
highlights the importance of developing moral character over time through consistent virtuous
behavior.
Ex : Ratan Tata is often celebrated for his integrity, philanthropy, and leadership. His
consistent actions reflect virtues like generosity and humility, making him a role model for
ethical business practices. His personal character and actions align with virtue ethics,
showcasing how a virtuous leader can inspire ethical behavior in an organization.

Sr
Aspect Teleological Ethics Deontological Ethics Virtue Ethics
No

Consequences of Adherence to rules or Moral character and

1 Focus
actions duties virtues

"What will be the "What kind of person

2 Qn "What is my duty?"
result?" should I be?"

Infosys whistleblower Leadership of Ratan

3 Example GST implementation
case Tata

Applied Ethics : Applied ethics is the branch of ethics that deals with specific, practical issues.
It involves analyzing and providing guidelines for ethical decisions in particular contexts, such
as medicine, business, law, and technology. Applied ethics addresses questions like, “What
should be done in specific scenarios?”
Applied ethics takes theoretical ethical principles and applies them to real-world situations to
guide decision-making. It often involves balancing competing values and interests to arrive at
ethical solutions.
Ex : The issue of corporate social responsibility (CSR) is a classic example of applied ethics
in India. Companies like Tata Consultancy Services (TCS) integrate CSR into their business
strategy, focusing on community development, education, and sustainability. Their decision to
prioritize social welfare aligns with applied ethics by directly addressing the moral
responsibility of corporations to contribute positively to society.
Applied ethics involves taking general ethical theories and applying them to practical
situations. For instance, while teleological ethics might consider the outcome of corporate
social investments in terms of profit maximization, applied ethics would focus on the ethicality
of those investments themselves.
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 It examines specific problems in business, law, medicine, and other fields, considering the
nuances of each situation.
 The approach often requires evaluating different perspectives, societal impacts, and moral
implications to arrive at a reasoned judgment.
Consider the ethical issue of data privacy in e-commerce. In India, the rise of e-commerce
platforms has led to concerns about how consumer data is collected, stored, and used.
Example: A major e-commerce company like Flipkart implementing privacy policies that
ensure customer data security reflects applied ethics.
This involves applying ethical principles related to privacy and consent to protect users'
information. The company must balance its business interests with its moral duty to protect
consumers' personal data. The ethical considerations here include the transparency of data
collection practices, the security of the data, and the ethical implications of data sharing with
third parties.
By adhering to these principles, Flipkart not only protects its reputation but also builds trust
with customers, reflecting a broader commitment to ethical business practices in the digital age.

Check Ur Knowledge
1. A debate within a multinational corporation about whether ethical standards are universally
applicable or vary depending on the cultural context. Is this a meta-ethical issue, and why?
2. A decision by a global company to relocate its manufacturing plant to a country with lower
labor costs, despite the potential negative impacts on local workers. Is this an example of
teleological ethics?
3. A company implementing a strict no-bribery policy across all its global operations,
regardless of local laws or cultural practices. Does this reflect deontological ethics?
4. A company’s decision to promote an employee to a leadership position based on their
demonstrated virtues like integrity, empathy, and accountability. Is this an application of
virtue ethics?
5. A company in India facing a dilemma about how to handle employee layoffs during an
economic downturn while also maintaining its social responsibility towards the
community. Does this situation pertain to applied ethics?
6. A discussion within a global business group about the nature of ‘fair trade’ and whether it
should be considered an ethical issue or a practical business decision. Does this concern
meta-ethics or applied ethics?

MCQs
1. What does Meta-Ethics primarily examine?

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A) Moral duties
B) The outcomes of actions
C) The nature of ethical concepts and principles
D) Developing personal virtues
2. In normative ethics, what is a primary concern?
A) Understanding cultural relativism
B) Deciding what is morally right or wrong
C) Exploring the origin of moral values
D) Developing personal virtues
3. Which ethical theory is focused on the consequences of actions?
A) Meta-Ethics
B) Deontological Ethics
C) Teleological Ethics
D) Virtue Ethics
4. A corporate leader choosing to implement stringent environmental policies is an example of
which ethical approach?
A) Meta-Ethics
B) Deontological Ethics
C) Teleological Ethics
D) Virtue Ethics

5. What does Deontological Ethics primarily emphasize?

A) The intrinsic morality of actions
B) Cultivating personal virtues
C) The outcomes of actions
D) Subjective moral values
6. How does virtue ethics differ from other ethical theories?
A) Focuses on following rules
B) Emphasizes character and virtues
C) Concerned with the consequences
D) Centers on cultural relativism
7. Which ethical theory would support a company's decision to stop using unethical suppliers?
A) Meta-Ethics
B) Deontological Ethics
C) Teleological Ethics
D) Virtue Ethics
8. Why might a company use a teleological ethical approach in decision-making regarding
environmental policies?
A) To maximize profits regardless of environmental impact
B) To adhere strictly to duty-based rules
C) To achieve the best overall outcome for society
D) To develop personal virtues
9. What is the main concern of Meta-Ethics?
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A) Moral duties
B) Moral values and their origins
C) Consequences of actions
D) Developing personal virtues
10. In the context of business ethics, what would be an example of virtue ethics?
A) Prioritizing short-term profits
B) Following established moral duties
C) Acting based on personal virtues like honesty and integrity
D) Maximizing overall happiness

Answer Key :
1. C) The nature of ethical concepts and principles
2. B) Deciding what is morally right or wrong
3. C) Teleological Ethics
4. C) Teleological Ethics
5. A) The intrinsic morality of actions
6. B) Emphasizes character and virtues
7. B) Deontological Ethics
8. C) To achieve the best overall outcome for society
9. B) Moral values and their origins
10. C) Acting based on personal virtues like honesty and integrity

Traditional Ethical Theories serve as foundational frameworks in moral philosophy, offering

systematic approaches to evaluate what is right and wrong. These theories have been developed
and debated over centuries, providing guidance for ethical decision-making.

Traditional ethical theories can be broadly categorized into Consequentialist (પરિણામવાદી)

and Non-Consequentialist theories based on their approach to determining moral rightness or
wrongness.

A. Consequentialist Theories assert that the morality of an action is determined solely by its
outcomes or consequences. If the consequences are good, the action is deemed morally right;
if the consequences are bad, it is morally wrong.
Key Features :
 Focus on Results: The ethical value of an action is judged by its ability to produce
desirable outcomes.
 Maximization of Good: Actions are evaluated based on their ability to maximize benefits
or minimize harm.
 No Intrinsic Right/Wrong: Actions are not inherently good or bad; their morality depends
on their effects.
Following are Prominent Consequentialist theories :

1. Utilitarianism (ઉપયોરિતાવાદ)
Proposed by : Jeremy Bentham, John Stuart Mill

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Core Idea : An action is right if it maximizes happiness or minimizes suffering for the
greatest number of people.
Types :
 Act Utilitarianism : Each action is judged individually by its specific consequences.
 Rule Utilitarianism : Actions are guided by rules that, in general, lead to the greatest
good.
Ex : Implementation of the Goods and Services Tax (GST) in India. The Indian government
introduced GST to streamline the indirect tax system, unifying multiple taxes into one.

- Short-term hardships for businesses due to compliance requirements and transitional

challenges.
- Long-term benefits include increased revenue for the government, reduced tax evasion,
and a simplified tax structure.
- The action is ethical as it results in economic growth and a more transparent tax system,
benefiting a majority of stakeholders.

2. Ethical Egoism (નૈરતક અહં કાિ)

Core Idea : Actions are morally right if they promote the individual's long-term self-
interest.
Focus : Individuals are not morally obligated to consider others’ welfare unless it benefits
them.
Criticism : Often criticized as being selfish or lacking a broader moral scope. Often
dismissed as selfishness rather than true ethical reasoning.
Ex : A business invests in sustainable practices because it enhances their brand image and
profitability.
Ex. Startup India Initiative
- Entrepreneurs in India are encouraged to create businesses that solve local problems
while benefiting themselves financially.
- Startups like Zomato and Flipkart started with profit motives but have significantly
contributed to employment generation and improved services for consumers.
- The entrepreneurs' focus on self-interest aligns with societal good, making it an ethical
approach.

3. Altruism (પિોપકાિ)
Core Idea : An action is morally right if it benefits others, even at a cost to oneself.
Focus : Prioritizes others' welfare over personal gains.
Ex : Donating a significant portion of one's income to help underprivileged communities.
Ex : Corporate Social Responsibility (CSR) by Indian Companies
- Tata Group invests heavily in social welfare programs like healthcare, education, and
rural development.
- Villages receive clean water and electricity, improving the standard of living for
marginalized communities.

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- The actions are ethical as they prioritize the welfare of others, even at a cost to the
company.

B. Non-Consequentialist theories argue that the morality of an action depends on factors other
than its consequences, such as adherence to rules, duties, or inherent principles.
Key Features :
 Focus on Intentions and Principles : Morality is judged by motives, duties, or the
intrinsic nature of actions, not their outcomes.
 Intrinsic Right/Wrong : Actions are inherently right or wrong, regardless of their results.
 Objective Standards : Ethical behavior is guided by universal rules or duties.

Following are Prominent Non-Consequentialist theories :

1. Deontology (Duty-Based Ethics)
Proposed by : Immanuel Kant
Core Idea : Actions are morally right if they adhere to a set of universal duties or principles.
Principles : Act only on principles that everyone can consistently follow without contradiction.
Treat every individual as valuable in themselves, never merely as a tool for achieving other
goals.
Ex. Telling the truth is a moral duty, even if lying would prevent harm.
Ex. Gandhi followed non-violence during India’s freedom struggle, even when violence could
have sped up independence. He upheld non-violence as a moral duty, inspiring peaceful
resistance regardless of the consequences.

2. Natural Law Theory

Proposed by : Thomas Aquinas
Core Idea: Actions are morally right when they align with natural purposes like preserving
life and pursuing knowledge. Morality reflects the natural order, rooted in universal reason or
God's will.
Objective Moral Laws: Ethics comes from universal natural laws understood through reason.
Actions are judged as right or wrong based on their alignment with these natural purposes, such
as preserving life or reproduction.
Ex. Killing is inherently wrong as it violates the purpose of preserving life. However, killing
in self-defence may be justified as it aligns with the natural right to protect life.
Ex. Several Indian states have banned single-use plastics to protect the environment, a vital
resource for life.
- The ban supports the natural purpose of preserving life and the environment, making it
ethically justified.
- It upholds the balance of nature, essential for human survival and sustainability.

3. Divine Command Theory

Core Idea : Morality is determined by the commands of a divine being (e.g., God).
Focus : Actions are right if they align with God's will and wrong if they go against it.
Ex. Following religious rules, such as the Ten Commandments, is considered moral irrespective
of the outcomes.

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Ex. Ethical Rules in Jainism to practice strict vegetarianism and avoid harming any living
beings, believing these actions are commanded by their faith. Ahimsa is followed as a divine
directive, irrespective of any practical consequences.
4. Rights-Based Ethics
Core Idea : Actions are morally right when they respect individuals' fundamental rights, like
life, liberty, and property
Focus : Protecting individual rights is more important, even if it leads to less favorable
outcomes for the majority.
Ex. Freedom of speech must be upheld, even if some expressions cause discomfort to others.
Ex. Right to Education Act (RTE), 2009. The Indian government introduced RTE to provide
free and compulsory education for children. The act upholds the fundamental right to education,
ensuring every child has access to learning and growth, regardless of implementation
challenges.

5. Ethical Intuitionism
Core Idea : Morality is known through intuitive understanding of right and wrong.
Focus : Certain moral truths are self-evident and require no further justification.
Ex. Helping a Road Accident Victim - The action is guided by an intuitive sense of moral duty
to help, showing inherent ethics without the need for justification.

Consequentialist and Non-Consequentialist Theories

Aspect Consequentialist Theories Non-Consequentialist Theories

Focus on duties, rules, or intrinsic

Moral Basis Focus on consequences or outcomes
principles

Determined by adherence to moral

Right / Wrong Determined by the results of an action
duties or principles

Flexibility Context-specific; allows exceptions Rigid; applies universal principles

Justifies immoral actions for greater Can lead to undesirable outcomes by

Criticism
good ignoring consequences

Saving the most lives, even at the cost Following the rule to not kill,
Example
of one life regardless of consequences

MCQs
1. What is the primary focus of Consequentialist theories in ethics?
A) Adherence to universal rules
B) Intentions behind actions
C) Consequences of actions
D) The morality of individual duties

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2. Which theory views actions as morally right if they adhere to a set of universal duties
or principles?
A) Utilitarianism
B) Ethical Egoism
C) Deontology
D) Altruism
3. In the context of Natural Law Theory, why is killing considered inherently wrong?
A) It causes emotional pain
B) It goes against social norms
C) It violates the natural purpose of preserving life
D) It results in negative consequences
4. How would a proponent of Ethical Egoism justify a business's investment in
sustainable practices?
A) As an ethical duty to society
B) To benefit the community without any self-interest
C) To enhance the company's brand image and profitability
D) As an altruistic act to improve social welfare
5. What is a key criticism of Ethical Egoism?
A) It promotes altruism
B) It encourages selfishness
C) It lacks practical application
D) It focuses solely on universal duties
6. How does the Rights-Based Perspective justify the implementation of the Right to
Education Act (RTE) in India?
A) By focusing on long-term societal benefits
B) By promoting individual self-interest
C) By protecting the fundamental right to education for all children
D) By maximizing happiness for the majority
7. Compare and contrast Utilitarianism and Deontology in terms of their ethical
foundations.\
A) Utilitarianism focuses on consequences; Deontology on intentions.
B) Deontology focuses on universal principles; Utilitarianism on personal benefits.
C) Both theories emphasize maximizing happiness.
D) Both theories are inherently selfish.
8. Evaluate the ethical implications of the Goods and Services Tax (GST) implementation
from an Ethical Egoism perspective.
A) It benefits the government by increasing revenue.
B) It prioritizes individual businesses over societal welfare.
C) It reduces tax evasion and simplifies the tax structure.
D) It ignores the challenges faced by small businesses.
9. How does Divine Command Theory view the practice of Ahimsa (non-harming) in
Jainism?
A) As a necessary practice to maintain social harmony
B) As a divine mandate without concern for consequences
C) As a personal choice based on intuition
D) As an ethical duty to maximize happiness

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10. Critically evaluate the limitations of the Rights-Based Perspective in addressing

ethical dilemmas such as environmental protection.
A) It relies solely on individual freedoms.
B) It ignores the collective good.
C) It lacks a logical framework for balancing rights.
D) It does not consider societal impact.
11. How effective is the Non-Consequentialist theory of Deontology in addressing
moral dilemmas in business ethics?
A) It provides clear guidelines for ethical decision-making.
B) It focuses on individual self-interest.
C) It prioritizes outcomes over principles.
D) It ignores the consequences of actions.
12. Analyze the ethical implications of the Right to Education Act (RTE) from a
Consequentialist perspective.
A) It maximizes happiness by providing free education.
B) It may lead to short-term hardships for businesses.
C) It ignores individual rights and freedoms.
D) It focuses solely on legal mandates.

Answers :
1. C
2. C
3. C
4. C
5. B
6. C
7. A
8. A
9. B
10. B
11. A
12. A

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