10-07-2025

BB 304:
Business Ethics
&
Corporate Governance

Syllabus
• Module 01: An Overview of Business Ethics:
• 1. Definition and Concept of Ethics, Morals and Values
• 2. Business Ethics: Characteristics, Need, Importance and Sources of Business Ethics
3. Causes of Unethical Behavior and Ethical Abuses
• 4. Guidelines for developing Code of Ethics
• 5. Case Study
• Module 02: Ethics Theories and Dilemmas:
1.Ethical Theories: Deontological Theory, Teleological Theory, Utilitaria
n Theory, Virtue theory, Modern Virtue Theory, Justice Theory, Theory of
Egoism, etc., in Modern Business
2. Ethics Analysis: Hosmer Model
3. Ethical Dilemmas in Business, Right versus Right and Right versus
Wrong
4. Case Study

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• Module 03: Ethics in Management and Corporate Frauds: 1. Ethics in Marketing

and Advertising, Production, Finance and Accounting and so on 2.
Impact of Ethics on Competitive Business Strategy 3. Role of International Trade
and Business Organizations in developing Business Ethics 4. Ethical Issues in the
Indian Context and Case Studies with special emphasis on corporate frauds
(Accounting Frauds, Bank Frauds, etc.) 5. Preventive Measures adopted to Curb
Frauds 6. Case Study
• Module 04: Conceptual Framework of Corporate Governance: 1. Meaning,
evolution, and features of Corporate Governance 2. Principles of Corporate
Governance; Elements of Good Corporate Governance 3. Theories and Models of
Corporate Governance; Green Governance/ E-Governance; Shareholder Activism
4. Failure of Corporate Governance in India 5. Case Study
• Module 05: Legal and Regulatory Framework of Corporate Governance: 1.
Structure and Development of Corporate Boards; Future of Governance-
InnovativePractices 2. Role of Independent Directors in Protecting Stakeholders,
Employees, and consumer 3. Regulatory Framework of Corporate Governance in
India; SEBI Guidelines and Clause 49; 4. Kumar Mangalam Birla Committee
Report and Cadbury Committee Report 5. Reforms in the Companies Act, 2013;
Corporate Governance in PSU and Banks 6. Case Study

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Introduction to Ethics
Module – 1

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Definitions:
• 1) Philip Wheel Wright : "Ethics is the branch of philosophy which
is the systematic study of selective choice, of the standards of
right and wrong and by which it may ultimately be directed.’’
• 2) Mackenzie : "The study of what is right or good in human
conduct" or the "science of the ideal involved in human life".
• 3) Swami Vivekananda : "Supreme oneness is the rationale of all
ethics and morality. Ethics cannot be derived from the mere
sanction to any personage. Some eternal principle of truth has the
sanction of ethics. Where is the eternal sanction to be found
except in the only infinite reality that exists in you and us and in
all, in the self, in the soul?"

Introduction to Ethics
• Ethics is the branch of philosophy that deals with questions of
morality, examining what is right and wrong, good and bad.
• It involves a set of principles or guidelines that influence how
individuals and groups make decisions and lead their lives.

• Greek word ETHIKOS Means CHARACTER Study of Behaviour

and values

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ETHICS
•1.. Ethics: A set of principles of right conduct.
•2: Ethics : The study of the general nature of morals and of the specific moral choices
to be made by a person; moral philosophy.
•3: Ethics : The rules or standards governing the conduct of a person or the members
of a profession: medical ethics.

 Ethics is the study of Behaviour

 What is Good and What is Wrong
 Branch of Philosophy
 Science of morals

Concept of Ethics
• The concept of ethics involves understanding the fundamental principles that guide human
behavior and decision-making. Here are some key aspects:
• Moral Principles: Ethics is grounded in moral principles that define what is considered right and
wrong. These principles can be influenced by cultural, religious, and personal beliefs.
• Normative Framework: Ethics provides a normative framework that helps individuals and societies
determine how to act in various situations. This framework includes rules, laws, and guidelines
that shape behavior.
• Philosophical Inquiry: Ethics is a branch of philosophy that involves critical thinking and reasoning
about moral issues. It seeks to answer questions about what constitutes a good life, what duties
we have to others, and what values we should prioritize.
• Applied Ethics: This aspect of ethics involves applying ethical principles to specific fields such as
medicine, business, law, and environmental issues. It helps address practical moral dilemmas in
these areas.
• Metaethics: This branch explores the nature of ethical statements, judgments, and properties. It
examines questions like “What does it mean to say something is morally right?” and “Are moral
values universal or relative?”
• Virtue Ethics: Focuses on the character and virtues of individuals rather than specific actions. It
emphasizes the importance of developing good character traits such as honesty, courage, and
compassion.
• Ethics is essential for guiding behavior in a way that promotes the common good and helps
individuals navigate complex moral landscapes.

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Morals
• Morals are principles or standards of behavior that distinguish between right and
wrong. Personal beliefs and guide individuals in making ethical decisions.
• Personal Beliefs: Morals are deeply rooted in an individual’s personal beliefs and
values. They reflect what a person considers important and worthy of upholding.
• Cultural Influence: Different cultures have different moral standards. What is
considered moral in one culture might not be seen the same way in another.
• Religious Teachings: Many people’s morals are influenced by their religious
beliefs, which provide guidelines on how to live a virtuous life.
• Universal Morals: Some moral principles, such as honesty, kindness, and respect
for others, are widely accepted across different cultures and societies.
• Moral Development: Morals can evolve over time as individuals grow and gain
new experiences. This development is often influenced by education,
relationships, and personal reflection.
• Moral Dilemmas: Situations where there is a conflict between moral principles
can lead to moral dilemmas. These require careful consideration and often
involve weighing different values and consequences.

Morals, Values, Ethics

• Understanding the key terms:
- Morals: Principles or habits with respect to right or wrong conduct.
- Values: Core beliefs or standards that guide behavior and
decision-making.
- Ethics: Systematic set of rules or guidelines for conduct, often
formalized in professional codes.
Each term's role in guiding human behavior and decision-making.

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Ethics, Morals and Values

•Do these words mean same or different?

Feature Ethics Morals

Origin External (society, profession) Internal (personal beliefs)

Flexibility More uniform across groups Varies by individual

Enforcement By institutions or communities By personal conscience

Application Professional/social settings Personal life and choices

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Different cultures view ethics versus morals

Culture Type Ethics Focus Morals Focus

Personal freedom,
Western Legal rights, fairness
individual choice
Eastern Social roles, harmony Duty, respect, loyalty
Reverence for nature,
Indigenous Spiritual balance, tradition
ancestral values

Feature Morals Values

Focus Right vs. wrong What matters most
Origin External (society, religion) Internal (personal beliefs)
Highly personal and
Flexibility Less flexible, more universal
adaptable
Shape goals, priorities, and
Function Guide ethical behavior
choices

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Ethics, Morals and Values

 Ethics are the set of rules that governs the behaviour
of a person, established by a group or culture. Ethics
describes a generally accepted set of moral
principles.
 Values refer to the beliefs for which a person has an
enduring preference. Values describes individual or
personal standards of what is valuable or important.
 Morals describes the goodness or badness or right
or wrong of actions

ETHICS: summary
• As a branch of philosophy, ethics investigates the
questions:
• "What is the best way for people to live?" and "What
actions are right or wrong in particular circumstances?"
• In practice, ethics seeks to resolve questions of human
morality by defining concepts such as good and evil,
right and wrong, virtue and vice, justice and crime.

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Nature of Ethics:

Systematic Knowledge Normative Science

Nature of Ethics

Unrealistic in Nature Intrinsic in Nature

Nature of Ethics:
• Nature of Ethics: Applied to human beings only.
1) Systematic Knowledge : Ethics aims at systematic
knowledge. So, ethics is a science. As a science it
deals with certain judgments that we make about
human conduct. It deals with systematic explanation
of rightness or wrongness.
2) Normative Science: Ethics is a normative (Value
Based) science because it involves a systematic
search for moral principles & norms that justify our
moral judgments. Ethics is considered a Normative
Science because it is concerned with the systematic
study of the norms of human conduct.

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Nature of Ethics:
• 3) Unrealistic in Nature: Ethics is not a practical
science. Practical science deals with means for the
realization of an end or ideal. It teaches us to know how
to do. As for instance, medical science is a practical
science.
• 4) Intrinsic in Nature : Ethics is not an art. Ethics does
not teach us an art as to how to lead a moral life.
Rather it helps us to justify rightness or goodness which
can lead to the supreme goal of human life that is to
realize the core of human life.

Nature of Ethics

Standards of Behavior tells us how to behave

Not same as Feelings
Ethics is not religion but it is advocated by religion
Ethics is not law but law contains ethics
Vary from society to society
Ethics is not just science
Ethics changes over the time, as culture change influence by
globalization, modernization, westernization, etc.

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Need for Business ethics

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Need for Business ethics

1) Employees Often Cross Ethical Boundaries : Employees often cross ethical boundaries
in workplace to cheat, sabotage, steal etc.
2) Correlation between Organisational Injustice and Unethical Work Behaviour : There
exists positive correlation between organisational injustice and unethical work
behaviour.
3) Theft : Theft at work comes in a variety of forms, and often times employees do not
view it as unethical behavior, believing no one gets hurt by the action.
4) Vendor Relationships : Businesses that buy from and sell products to other
businesses are sometimes subject to unethical behavior.
5) Bending the Rules : Bending the rules in a business situation is often the result of a
psychological stimulus.
6) Ignorance about the Company's Policies :
7) Tendency by organisations to engage in malpractices

Need for Business ethics

• 8. Improve consumers confidence
• 9. Survival of business
• 10. Protecting consumer rights
• 11. Protecting employees, shareholders
• 12. Develops good relations between business and society
• 13. Creates good image of business
• 14. Smooth functioning of business
• 15. Consumer movement
• 16.Consumer satisfaction
• 17. Importance of labour
• 18. Healthy competition

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Importance of business ethics

Ethics Programs Help Maintain a Moral Course in Turbulent Times

Ethics Programs Cultivate Strong Teamwork and Productivity

Ethics Programs Support Employee Growth

Programs are an Insurance Policy they help Ensure that Policies are
Legal

Ethics Programs help avoid Criminal acts "of Omission" and can Lower
Fines

Help Manage Values Associated with Quality Management, Strategic

Planning and Diversity Management

Ethics Programs Promote a Strong Public Image

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Causes of unethical behaviour

Greed
Environment
Career advancement
Pressure
Misguided loyalty
Lack of knowledge

Causes of unethical behaviour

• Personal:
• Personal greed Decline of personal ethical sensitivity,
• No sense of service when working in public or private institutions
• Low awareness or lack of courage to denounce corrupt behavior
• Cultural:
• Cultural environments that condone corruption: Misguided loyality, Pressure
• Lack of transparency, especially at the institutional level
• Institutional Regulations and inefficient controls.
• Slow judicial processes.
• Organizational Lack of moral criteria in promotions
• Downplaying or reacting mildly to corruption charges

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Measures For Preventing Unethical Practices in Organizations

Hiring The Right Employees

Regularly Checks and Audits of Unethical

Behaviour

Implementation Of Policies Into Their

Practices

Incentives and Punishments

Open and Transparent Business Practices

Code of Ethics
• A Code of Ethics is a set of principles and guidelines designed to help
individuals and organizations conduct their activities with honesty, integrity,
and professionalism.
• Guidelines for Behavior: It outlines the ethical standards and expectations for
behavior within an organization or profession.
• Decision-Making Framework: It serves as a guide for making ethical decisions
and resolving ethical dilemmas.
• Purpose:
• Promote Integrity: Ensures that all actions align with the organization’s core values and
ethical principles.
• Build Trust: Helps build trust with stakeholders, including employees, customers, and
the public.
• Compliance: Ensures adherence to legal and regulatory requirements.

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Code of Ethics
• Components:
• Core Values: Lists the fundamental values such as honesty, fairness, and respect.
• Behavioral Guidelines: Provides specific guidelines on issues like conflicts of interest,
confidentiality, and professional conduct.
• Enforcement: Includes mechanisms for reporting violations and enforcing the code.
• Types
• Compliance-Based: Focuses on adherence to laws and regulations.
• Value-Based: Emphasizes the organization’s core values and ethical principles.
• Professional Codes: Specific to certain professions, guiding professional conduct &
responsibilities.
• A well-crafted Code of Ethics is essential for fostering an ethical culture and
ensuring that everyone in the organization understands and adheres to the
same ethical standards.

Guidelines for developing Code of Ethics

• 1. Identify Core Values
• List Key Values: Determine the fundamental values that your organization
stands for, such as integrity, honesty, fairness, and respect.
• Consult Stakeholders: Engage employees and other stakeholders to ensure
the values reflect the collective ethos of the organization.
• 2. Define the Purpose
• Clarify Objectives: Clearly state the purpose of the Code of Ethics. This could
include promoting ethical behavior, ensuring compliance with laws, and
fostering a positive work environment.

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Guidelines for developing Code of Ethics

• 3. Draft the Code
• Memorable Title: Give the code a memorable and specific title.
• Table of Contents: Include a table of contents for easy navigation.
• Introduction: Provide an introduction that explains the importance of the code and
its relevance to the organization.
• Core Values and Principles: List and explain the core values and ethical principles.
• Guidelines for Behavior: Outline specific guidelines for behavior in various
situations, such as conflicts of interest, confidentiality, and interactions with clients.
• 4. Review and Revise:
• Seek Feedback: Get feedback from employees and other stakeholders to ensure the
code is comprehensive and practical.
• Legal Compliance: Ensure the code complies with relevant laws and regulations.

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