Term IV Elective: Business Ethics: An Introduction

Lecturer: Prabhir Vishnu Poruthiyil

vishnu@iimtrichy.ac.in
Module Credit 3

1. Introduction.
The Indian corporate landscape has changed dramatically with the provision in the Indian
Company Law 2014. It is now mandatory for large companies to spend 2% of their profits on
Corporate Socially Responsibility (CSR). The funds can be used to address entrenched social
problems like extreme hunger, poverty and illiteracy. Other desirable ends include securing
gender equity, and empowering women, reducing child mortality and securing maternal health,
combating HIV, AIDs, malaria and other disease, contributing to environment sustainability,
creating employment enhancing vocational skills, initiating social business projects, and
contributing to the states relief funds.
This law is a reflection of Indian businesses and lawmakers accepting global norms of corporate
responsibility. As addressing societal needs in developing countries became one of the core
functions of business corporations, a single-minded pursuit of profits (or the set of arguments
that favor them) was already being tempered with egalitarian goals that had not traditionally
figured in business strategy. Nevertheless, a sense of disbelief and suspicion hovers over
discussions related to social responsibility of business enterprises. Businesses, it is argued,
operates within institutional logics that force managers to charge single-mindedly towards
profitability and any attention to the damages in the process unnecessary distraction. The spate of
corporate crimes and the resulting widespread misery in the recent past has raised further doubts
about the positive contributions businesses can make to society.
2. Learning Objectives.
This course helps students in three ways to negotiate the new reality.
First, the course will introduce participants to the ethical debates regarding business involvement
in the politics of economic development. A primary purpose of this course is to help those
students who have wondered what are the assumptions and suppositions that legitimize these
contrasting beliefs and then help them develop counter arguments that suit their own worldviews,
ideologies, and vision for our society and the natural environment of which we are a part.

Second, terms such as CSR, equity, empowerment, and sustainability, are buzzwords with a
confusing array of interpretations. This course is essential for students who need more clarity on
these terms in order to use them with precision.
Third, being aware of the diverse ways of seeing the world is essential for negotiating morally
charged contexts. The course is structured in a way to encourage articulation of a diversity of
views that complement and contradict the economistic approaches that dominate management
thinking. It draws from contributions by critical scholars who have been suspicious, with good
reason, of the profit-motive and corporate sincerity of the private sector in meeting to
development goals.

3. Learning Outcomes.

When you have finished the course, you should be able to apply different value-based arguments
to real-life scenarios. You would have, for instance, become comfortable to engage with societal
actors like NGOs and labor activists, in discussions on topics related to damage caused by
businesses on society. Further, communication with European and American clients, who are
more sensitive to social and environmental responsibilities, can proceed with precision and
sophistication. Overall, working in inter-disciplinary settings becomes easier as you are better
prepared for rapid processing different economic, philosophical and strategic arguments and
capable of offering empathetic responses.

4. Course Proceedings and Teaching Strategy.

The course will rely on the classic and traditional contribution to business and society literature
and relevant discussion in development ethics. The students are expected to read the papers in
advance prior to attending the class. The primary sources are academic papers from Business
Ethics Quarterly, Journal of Business Ethics, Academy of Management Review, Journal of
Management Inquiry, Development and Change, Journal of Peasant Studies, etc. and some
chapters from selected textbooks.
The proceeding in class will be a combination of lectures, debates and group work. The first
session in the week will be a lecture introducing a philosophical perspective with references to
specific cases. In the course of the lectures the students will be stimulated to voice normative
positions to these or new cases that they may feel relevant to their interests.

Lectures are interspaced with debates - central to the course. Mutual interactions and formulation
of opposing viewpoints is an important source of learning and moral reflection. Often individual
members may not agree with the position being assigned to their group. In addition to making
you more comfortable with moral arguments, an important purpose of the debate is to generate
empathy with persons with whom you fundamentally disagree. You may for instance be in a
position of a manager of an infrastructure company confronted with concerns of
environmentalists and villagers threatened with displacement. So use the opportunity to enter
into another persons shoes and articulate a position from a different perspective. Articulating
helps strengthen our positions by weaving in arguments introduced in the lectures and through
the use of argumentation techniques.
The readings for the lectures are chosen to provide arguments for the debates. The lecture notes
will be predominantly provided as power-point presentations.
You will be assessed on the basis of the strength of the moral arguments you will make. The midterm essay will be the skeletal version. This document will have inevitable flaws. However, as
the classes proceeds your will be expected to strengthen your initial argument and provide a
more coherent paper as your final essay.

5. Assessment Description.

Short essay
(mid-term)
Debates

Final Essay

Involvement
classes

Outline of the main argument you will 10% marks

make.
(~1000 words)
Debate involves both individual and group 30% marks
components. (20% for individual talk time
and 10% for cohesion in the group)
Pre-selected topics. Fleshed out version of 50% marks
the short mid-term essay.
(~5000 words)
in The number of times doubts from the 10% marks
required reading are raised is the key
criterion

6. Weekly Course Outline.

Week 1.
Session 1.1. Introduction: What is Business Ethics? What is CSR? Stakeholders who are they?
Session 1.2. On building good arguments
Week 2
Session 2.1. Moral Frameworks - Utilitarianism, Kantian Ethics, Virtue Ethics, Social Contracts.
Session 2.2. Culture and Social Responsibility
Week 3
Session 3.1. Corruption, Crony Capitalism, Corporate Philanthropy
Session 3.2. Ethics of Marketing
Week 4
Session 4.1. CSR Law and its implications
Session 4.2. Debate 1.
Week 5
Session 5.1. Human Rights, Empowerment and Participation
Session 5.2. Ethics of Displacement. Submission of mid-term essay.
Week 6
Session 6.1. Equality and Equity
Session 6.2. Human Well-Being and Meanings of Development
Week 7
Session 7.1. Debate 2
Session 7.2. Corporate Sustainability
Week 8
Session 8.1. Moral Compromise
Session 8.2. Debate 3. (Submission of power point presentations)
Week 9 and 10
Final Presentations of essays and Revision

7. Extended Course Outline

WEEK 1.
Session 1.1. What is Business Ethics? What is CSR? Who are stakeholders?
Try uttering the word business ethics to anyone you know. The usual response is a rolling of
eyes and a look of disbelief that a combination of terms business and ethics is possible. What
is the reason behind this dismissive attitude that you may encounter? Different groups often
interpret CSR differently. Quite often conflicts arise due to the definition of the term
stakeholder they prefer. This session will try to navigate the difficult terrain of meanings and
definitions.
Required Reading
Davis, K.: 1973, The case for and against business assumption of social responsibilities,
Academy of Management journal, 16(2), 312-322.
Singer, P. (2009), Can business be ethical? http://www.project-syndicate.org/commentary/canbusiness-be-ethical. Accessed Tuesday December 25th, 2013
Suggested Reading
Friedman, M. (1970), The social responsibility of business is to increase its profits. The New
York Times Magazine, September 13, 1970.
Wicks, A. C. (1996). Overcoming the separation thesis: The need for a reconsideration of
business and society research. Business and Society, 35(1), 89-118
Session 1.2 On argumentation, Writing, Referencing
Convincing others through writing is an integral part of our professional lives. In addition to
everyday communications, contributions to business policies through reports and strategy
documents are important tasks managers face. Some basic tips of argumentation can assist us in
kneading the evidence and reasons into intelligent claims that are not easily refuted.
Required Reading
Selected sections from Booth, W. C., Colomb, G.G., Williams, J.M., (2003) The Craft of
Research. The University of Chicago Press.

WEEK 2.
Session 2.1 Moral Frameworks Utilitarianism, Kantian Ethics, Virtue Ethics and Social
Contract
Scholars often use moral frameworks to strengthen their arguments. Utilitarianism is its
parsimonious principle for distribution of benefits and costs inevitable in social change. In its
most simplistic version, utilitarians argue that human beings are attracted to pleasure and reject
pain and therefore any action that result in greater pleasure and lesser pain. Utilitarianism is often
contrasted with social contract ethics of which Kantian ethics is a variant and virtue ethics.
While the former justify communitarian and socially responsible components into business
strategy, the latter makes demands on businesses to be virtuous irrespective of what is demanded
from society.
Required Reading (Any two).

Singer, P.(1972). Famine, affluence, and morality. Philosophy and Public Affairs 1(3),
229-243.
Hartman, L. P., Shaw, B., & Stevenson, R. (2003). Exploring the ethics and economics of
global labor standards: A challenge to integrative social contract theory. Business Ethics
Quarterly, 13(2), 193220
Arnold, D.C. and Bowie, N. (2003), Sweatshops and respect for persons, Business Ethics
Quarterly, 13(2):221-242
Solomon, R.C. (2003), Victims of circumstances? A defense of virtue ethics in business,
Business Ethics Quarterly, 13(1):43-6.

Session 2.2 Culture and Social Responsibility.

What role does culture play in legitimizing traditional practices (discrimination on the basis of
gender, caste, and sexuality) and what kind of business culture requires justification? A number
of cultural norms are written by the dominant members of the society (persons belonging to
upper echelons, usually men) and severely undermines fundamental needs of the weaker sections
(women, lower castes, minorities, etc.). To what extent must business take into account cultural
traditions when formulating strategies?
Essential Reading.
Mitra, R. 2012. "My Countrys Future: A culture-centered interrogation of corporate social
responsibility in India. Journal of business ethics 106 (2): 131-147.
Suggested Reading

Galtung, J. 1990, Cultural Violence, Journal of Peace Research 27(3), 291-305.

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Gasper, D. (1996). Culture and development ethics: Needs, womens rights, and Western
theories. Development and Change, 27(4), 627661.

WEEK 3
Session 3.1. Corruption, Crony Capitalism, Corporate Philanthropy.
Businesses in developing countries tend to wield considerable influence on politics and
regulatory authorities. Lobbying efforts by businesses often lead to regulatory changes that
benefit businesses but may damage public good. What are the fallouts of business lobbying in
developing countries and how can businesses contribute to good politics.
Required Reading
Gandhi, A., & Walton, M.: 2012. Where Do Indias Billionaires Get Their Wealth?,Economic
& Political Weekly, 47(40), 11-14.
Petras, J. (2008). Global ruling class: billionaires and how they Make It. Journal of
Contemporary Asia, 38(2), 319329.
Suggested reading.
Barley, S. R. (2007). Corporations, democracy, and the public good. Journal of Management
Inquiry, 16(3), 201214.
Session 3.2. Ethics of Marketing
Is it okay sell anything to anyone who asks for it? How about selling cigarettes or credit cards to
teenagers? Should we exploit the insecurity and cultural anxiety of women and men to sell
fairness creams? What are the problems involved in marketing to the vulnerable?
Required reading.
Brenkert, G. G. (1998). Marketing and the vulnerable. Business ethics quarterly, 7-20.
Karnani, A. (2007). Doing well by doing goodCase study: Fair & Lovely whitening cream.
Strategic management journal, 28(13), 1351-1357.
Suggested reading.
Karnani, A. (2007). The mirage of marketing to the bottom of the pyramid: How the private
sector can help alleviate poverty. California Management Review, 49(4), 90111.

WEEK 4
Session 4.1. CSR Law and its implications.
This law emerged in a peculiar institutional complex that also gave rise to corporate scams
perpetrated by white-collar criminals, large-scale violations of human rights and destruction of
the environment to satisfy commercial interests, wide-spread corruption involving senior
government officials and bureaucrats that is a hostile context for a law of this progressive
nature to emerge. Nevertheless, the government of India has taken an unprecedented action by
mandating of CSR spending through a corporate governance measure. The main question we ask
here is can CSR by definition be made mandatory?
Required Reading
Venkatesan, R.: (2013). Ordering Corporate Responsibility. A misplaced faith, Economic&
Political Weekly, 48(38), 26-28.
Suggested Reading
Deegan, C., & Shelly, M. (2014). Corporate Social Responsibilities: Alternative Perspectives
About the Need to Legislate. Journal of Business Ethics, 121(4), 499-526.
Newell, P. (2008). CSR and the limits of capital. Development and Change, 39(6), 10631078.

Session 4.2. Debate 1.

WEEK 5.
Session 5.1. Human Rights, Empowerment and Participation.
Inclusion of weaker sections affected by corporate activity (like indigenous groups, workers,
suppliers, etc.) is now integral to any corporate social strategy. What are the barriers to corporate
strategies to empower individuals to voice their concerns? What does it mean to allow
stakeholders to participate in deliberations organized by corporations? This session will
introduce some attempts by business ethicists to render business activity more democratic and
acceptable by empowering a larger group of affected individuals to participate and influence
corporate strategy.
Required Reading
Hartman, L. P., Shaw, B., & Stevenson, R. (2003). Exploring the ethics and economics of global
labor standards: A challenge to integrative social contract theory. Business Ethics Quarterly,
13(2), 193220
Suggested reading
Wettstein, F. (2012). Silence as complicity: Elements of a corporate duty to speak out against the
violation of human rights. Business Ethics Quarterly, 22(1), 3761.
Session 5.2. Ethics of Displacement
Following up from the previous session, we discuss a specific aspect of large projects the
trauma of displacement of populations. It may be the case that some development projects are
essential for the society (schools, hospitals, power stations, etc.) and sacrifices from individuals
may be justified for the larger public interest. However, public interest is a broad term that is
often misused. We will discuss ways to ensure that businesses become party to only those forms
of displacement which result from responsible development projects.
Required Reading.
Levien, M. (2013).Regimes of dispossession: from steel towns to special economic zones.
Development and Change, 44(2): 381407.
Suggested Reading

Dwivedi, P. (2002) Models and methods in development-induced displacement, Development

and Change, 33(4):709-732.

Submission of mid-term essay at the end of this week.

WEEK 6.
Session 6.1. Equality and Equity
We often assume equality is a good thing. However, sometimes equality could mean perpetration
of social injustice. How does one balance the morally desirable equality with social justice? Here
we differentiate the notions of equality from equity. The latter concept allows us to determine the
extent of deviation from equality. We will also discuss two related concepts efficiency and
effectiveness that are implicit when justifications for resisting equitable distribution are made.
Required Reading
Utting, P. (2004) CSR and Equality. Third World Quarterly, 28(4): 697-712
Suggested reading
Blanchard,O. (1986) Evaluating social equity: What does fairness mean and can we measure it?
Policy Studies Journal 15(1), 29-54.

Session 6.2. Human Well-Being and Meanings of Development

Though a diversity of alternate conceptions of well-being is staggering and often contested, the
absolute priority of human dignity (for which wealth-acquisition is considered an inadequate
indicator) and a conviction in the definability of universally applicable goals are presupposed in
most formulations. This session gives a brief introduction to the various contributions made by
scholars to identify indicators of well-being which form the basis of much of debate on the role
of business in society.
Required Reading.
Gasper, D. (2004). Human well-being: Concepts and conceptualizations. United Nations
University, WIDER, Discussion paper. (Read Pages 1 - 7).
Mishra, P. (2013), Which India matters? The New York Review of Books

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WEEK 7
Session 7.1. Debate 2

Session 7.2. Corporate Sustainability

All human activities involve varying degrees of intervention to nature. Though each person taken
as discrete units may only have a negligible impact on the environment, our cumulative impact
on the world is immense and increasingly irreversible. This is largely the basis for justifications
for transforming our life-styles. When it comes to large-scale infrastructure, the interventions are
of large magnitude causing concerns among scholars for serious attention to curbing activities
that hasten the destruction of the environment. What justifications can be made to include the
environment as a stakeholder?
Required Reading.
Van Marrewijk, M. (2003). Concepts and definitions of CSR and corporate sustainability:
Between agency and communion. Journal of business ethics,44(2-3), 95-105.
Suggested reading
Randeria, S. (2003). Glocalization of law: Environmental justice, World Bank, NGOs and the
cunning state in India. Current Sociology, 51(3/4), 305328.

(Finalization of Essay Topics)

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WEEK 8
Session 8.1. Moral Compromise
Compromises arise when one cannot fulfill all values and principles upon which one operates.
On Googles role in China, Sergey Brin is quoted as having said And we decided in the end that
we should make this compromise. Is this a form of moral dissolution? That is can this be called
a fall from ethics (Googles motto is Do no evil). Under what circumstances are moral
compromise justifiable, if at all such conditions exist? These are the questions we will debate in
this session.
Required reading
Brenkert, G. G. (2009). Google, human rights, and moral compromise. Journal of Business
Ethics, 85(4), 453-478.
Suggested readings.
Identify instances of moral compromises from religious or cultural texts of your choice. (Gita,
Bible, Quran, Torah, etc.)

Session 8.2. Debate 3.

Power point presentations for the following week must be submitted by the end of this week.

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WEEK 9.
Session 9.1. Presentations of essays.
Session 9.2. Presentations of essays.

WEEK 10.
Session 10.1 &10.2. Revision.

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