ETHICS Prof. S.K.

Chakraborty in his book “The Management

and Ethics Omnibus” cited following values which are
deep rooted in Indian Culture and Society:
The word ‘Ethics’ has been originated from the word
‘ethos’, meaning character or manners. Ethics is thus said 1. The Individual Must be Respected
to be the science of morals; a treatise on this: moral
2. Cooperation and Trust
principle; recognized rules of conduct. Ethics involves
judgment as to good and bad, right and wrong, and 3. Jealousy is Harmful for Health
what ought to be. Ethics deals with things to be
sought and things to be avoided by ways of life. An 4. ‘Chitta-Shuddhi’ or Purification of the Mind
ethical dilemma exists where two or more values are in
5. Top Quality Product/ Service
conflict, and we seek from ethics a resolution to this
conflict. 6. Work is Worship
Business ethics refers to the measurement of business 7. Containment of Greed
behavior on standards of right and wrong, rather than
relying entirely on principles of accounting and 8. Ethico-moral Soundness
management. Ethics is not only desirable but is essential
9. Self-discipline and Self-restraint
for the smooth functioning of business. If business does
not follow ethics then there will be an utter chaos and 10. Customer Satisfaction
there will be no trust and in this situation there is no
scope of business. Ethics plays a role whether it is a 11. Creativity
buyer and seller relationship or it is a competitor 12. The Inspiration to Give
relationship.
The objectives of Ethics are: 13. Renunciation and Detachment

1. Studying human behavior and makes evaluative 6.0 ETHICAL THEORIES

assessment about them as moral or immoral (diagnostic
goal). Ethical theories can be divide into two categories:
Teleological and Deontological. The teleological
2. Established moral standards and norms of behaviour. determine the ethics of an act by looking the
3. Makes judgment upon human behavior based on these consequences of the decision (the ends), while
standards and norms. deontological theories determine the ethics of an act by
looking to the process of the decision. (Means)
4. Prescribe moral behavior and makes recommendation 1. Teleological (Utilitarianism) Ethical System: The
about how to or how not to behave (therapeutic goal) teleological morality of a decision is determined by
5. Express an opinion or attitude about human conduct in measuring the probable outcome. The theory most
general. representative of this approach is utilitarianism, which
seeks end the greatest “good” (or Utility) for the greatest
6. TISCO never faced any lock out or labor problem only number. The most basic form of utilitarian analysis is
because of ethical standards followed by TATA. TATA cost – benefit analysis, where one tallies the costs and
is one of the most trusted brands of India only because of benefit of a given decision and follows the decision that
its ethical standards. provides for the greatest overall gain. Utilitarianism hold
that actions are right in proportion as they tend to
Matsushita Electric Co. follows the following value
promote happiness, wrong as they tend to produce the
system The seven ‘Spiritual’ Values reverse of happiness.

1. National Service through Industry 2. Deontological Ethical System: A deontological system

is based on rules or principles that governs decisions. In
2. Fairness this system ethics are measured by the rightness of an act
depends little on the results of the act. According to it
3. Harmony and Cooperation moral persons is one of goodwill, and that person
4. Struggle and Betterment renders ethical decisions based on what is right,
regardless of the consequences of decision. Thus the
5. Courtesy and Humility student who refuses to cheat on exam is morally worthy
if her or his decision springs from duty. But morally
6. Adjustment and Assimilation
unworthy if the decision is merely one born of self
7. Gratitude interest, such as fear of being caught.
3. Hybrid Theory: Robert Nozick holds that justice and 6.2 MODERN DECISION-MAKING AND
fairness, right and wrong are measured not by equality
of results for all, but from ensuring equal opportunity for
ETHICS
all to engage in informed choices about their own Business decision based on moral reasoning can be too
welfare. absolute and decision based on only realities and logic
Enlightened ethical egoism says that it is important can be too harsh and inhuman. To avoid these two
to the individual that the world is a “good” world; extremes one can resort to traditional stakeholder model
therefore the individual may have a self interest in of decision-making. Stake holder theory suggests that in
curbing pollution or in community projects, even though reaching ethical decision, we respond to the following
she or he may not individually and personally benefit inquiries:
from the decision. 1. What is the moral dimension?
4. Distributive Justice and Social Contract: Prof. 2. What is ethical issue?
Rawls of Harvard University propounded this theory. 3. Who are the interested parties?
Who says that when people get together, they form 4. What values are involved?
societies and cooperation, and when they come together
their arises conflict because people do not receive a just 5. What alternative do you have in your decision?
distribution of the benefits yielded through their 6. What is the weight of the benefits and the burdens of
activities. Rawls believe that the base of all distribution each alternatives on each impacted party?
systems should be just and the primacy of justice in the 7. Are there any analogous cases?
basic structure of our system of society requires greater
equality. 8. Can I discuss the case with relevant others?
9. Can I gather additional opinion or perspectives?
5. Individual Freedom: According to this theory all
individuals must be allowed to make informed choice 10. Is the decision in line with legal and organizational
by all in society. Though choice must be within the rules?
law and the same freedom enjoyed by one individual in 11. Am I comfortable with the decision? Can I live with it?
the society, must be extended to all within the society. Philosopher Laura Nash suggest asking oneself 12
question prior to reaching a decision in an ethical
dilemma (Laura Nash “Ethics without the sermon”,
6.1 CHARACTERISTICS OF ETHICS Harward Business Review 56, no.6 (1981) pp. 80-81)
1. Ethical decision differs with the individual perspective of 1. Have you defined problem accurately?
different persons. Each person has its own perception
and believes regarding ethics. Hence ethical decision of 2. How would you define the problem if you stood on the
not have unique solutions, but have a multitude of other side of the fence?
alternatives.
3. How did the situation occur in the first place?
2. Ethical decisions are not limited only to themselves, but
affects a wide range of other situations as well. 4. Who was involved in the situation in the first place?
Similarly, unethical decision do not end in themselves,
5. What is your intention in making this decision?
but have widespread ramification.
3. Most ethical decision involves a trade off between costs 6. How does this intention compare with likely results?
incurred and benefits received. 7. Who could your decision or action injure?
4. Many times consequences of ethical decision are not 8. Can you engage the affected parties in a discussion of
clear. They are ambiguous in nature. Similarly it is not the problem before you made your decision?
clear what the consequences will be of an unethical
decision, either of an individual or of on organization. 9. Are you confident that your decision be as valid over a
long period as it seems now?
5. Ethical decisions have long term impact.
6. Every person is individually responsible of the ethical or 10. Could you disclose without qualms your decision or
unethical decision and action that he or she takes but the action to your boss, your CEO, the board of directors,
consequences of decision have to be faced by whole your family, or society as a whole?
organization. 11. What is the symbolic potential of your action if
7. Ethical decisions are voluntary human actions. A person understood?
can not escape his personal liability by quoting that he
12. Under what condition would you allow exceptions to
committed because of seniors pressure.
your stand?
 In evaluating decision two elements should be
considered: Integrity and Accountability. Integrity,
means consistency in values, would require that the
decision maker define her or his values, as well as create
a prioritization of those values. Accountability means no
matter which direction is taken, the decision maker must
be accountable to all stakeholders who are impacted by
this decision.

6.3 ETHICAL DECISION-MAKING

DILEMMA
Managers experiences the dilemma of ethical decision
making during performing their duties as:
1. I have to satisfy inspector from the electricity board to
maintain adequate power supplies in times of recurrent
shortages.
2. I have to oblige, entertain, and enrich an important
customer to keep him from switching over to
competitor.
3. I have to do manipulation in accounts statement to show
high profit figure.
4. To increase profits I have to sell same product in
three different packing at different price.
5. Without having any improvement in product I have to
advertise New and Improved.
6. I have to sign a transfer orders of an officer to satisfy
the prejudice of a higher level officer.
7. I have to oblige bank officer to get loan for the project.
American Accounting Association (AAA) published in
1988 a report on Ethics in the Accounting Curriculum
which included a “decision model” for analyzing ethical
dilemmas. Its steps are

Make your Decision

Assess the consequences

Compare values and alternatives

for a clear decision

Specify the alternatives

Identify major principles, rules

and values

Define the Ethical Issue

 Figure 6.1: Decision Model for Analyzing Dilemmas with their philosophies.
6.4 SOURCES OF ETHICS 5. Legal System: In society take the activities as hoarding
Sources of ethics are as follows: the stock, black marketing, cheating, giving wrong
information etc as unethical and there is law to restrain
1. Genetic Inheritance: There are persuasive evidence and all these activities. There even laws against exploitation
arguments suggesting that the evolutionary forces of of labour, sexual harassment etc and all this activities are
natural selection influences the development of traits considered as unethical.
such as cooperation and altruism that lie at the core of
ethical system. The very first school of ethics is the 6. Code of Conduct: Steiners and Steiner identify three
home. More ethical the parents will be higher the primary categories of such codes. First Company codes,
chances that children will be following the same ethics. ordinarily belief and highly generalized. Second
Ethics are passed on generation from one generation to company operating policies often contain an ethical
second generation and process goes on. dimension. As policies regarding, customer complaints,
hiring and other decisions serve as a guide to conduct
2. Religion: Religion plays a critical role in deciding ethics.
and as a shield by which the employee can protect
Before effective law system it is the religion that has
against unethical advances fro m those outside the firm.
played a role of restriction on unsocial activities. Today
Third many professional and industry associations have
also a common man tries to abide by the ethics describe
developed codes of ethics, such as in India Association
by the religion.
of advertising agencies have develop a code of conduct
3. Culture: Culture also begets ethical standards. Culture for themselves. Council for Fair Business Practices
refers to rules, customs and standards transmitted (CFBP) established in 1966 adopted following code of
through generation to generation. Though culture fair business practices:
changes with region but their ethical standards remain
(a) To charge only fair and reasonable prices and take
same. Different places may have different cultures
every possible step to ensure that the prices to be
regarding dress sense but no culture believes in
charged to the consume are brought to his notice.
dishonesty, or in the deceiving others in the name of
others. There are three aspect of culture: (b) To take every possible step to ensue that the agents or
dealers….do not charge prices higher than fixed.
(a) Universal, trans-cultural human values and ideas: These
are universal ideals. Which is expected from sages, saints (c) In times of scarcity, not to withhold or suppress stocks
etc. As in its ideal form it is culture to spend a part of life of goods with a view to hoarding or profiteering.
in vanprastha, that is in forest after fulfilling worldly
duties, or to chant sacred mantras in the morning or to (d) Not to produce or trade in spurious goods of standards
meditate in tapovans. lower than specified.

(b) Culture specific, operative human values that translate (e) Not to publish misleading advertisement.
the ideals into actionable conduct in a given culture: It is
(f) To invoice goods exported or imported at their correct
the cultural values expected from common man it is all
prices.
about day to day operations and believes. As in India
‘mother’ image being most dominant in relation to (g) To maintain accuracy in weights and measures of good
woman in India, we have the operational value that even offered for sale.
a father cannot touch his daughter’s body once she
attains puberty. (h) Not to deal knowingly in smuggled goods.

(c) Culture Specific, operative human values that derive for (i) Providing after sales service where necessary or possible.
certain altogether different human ideals: This (j) Honoring the fundamental rights of the consumer-
predisposition contributes to purity of mind and is check right of safety, right to choose, right to information and
against permissive and incest. In India it is translated into right to be heard.
practical conduct through the tradition of a son or a
daughter bowing down and touching the feet of his/her (k) Discharging social responsibilities and the
parents or by a student doing the same to a teacher. responsibilities to protect the environment and nature’s
infrastructure.
4. Philosophical System: Philosophical system also
influences the ethics. Aristotle, Pluto, Shri Aurbindo, (l) Ensuring that the product warranty is offered in
Vivekanand, Subhash Chandra Bose, Swami Dayanand, simple, unambiguous and concise language,
Mahatma Gandhi have left lasting impact on the ethics highlighting the rights of the consumer under it
6.5 ETHICS AND PROFIT
Ethics and profit both go together. It may be possible that
in short run an organization can get an edge or good
profits because of unethical means but it is the ethics
which lasts. As an organization may get good initial sales
by communicating false message about product but he
will not get repeat sales and he will earn bad name too.
People want to do business with honest person that
means with ethical companies attract more supplier, and
business contracts
Even the dishonest people love to work for those who
believe in ethics. Ethical companies attract more and
good quality human resource, it has low executive
turnover, they less labour problem and lock out. All this
decreases the cost and increases the production, which
results in high revenues and profits.
In totality we can say that ethics give sale, good relation
with industry and better human resource all this results in
higher profits and long-term eminence.