Business Ethics: Comprises principles, values, and standards that guide behavior in

the world of business

Lynn foundation: 1: everyone is responsible 2: ton at the top is essential behavior of

top management 3: honesty is the best policy 4: CSR communication 5: silence is not
expectable.

Principles of ethics: Specific boundaries for behavior that are universal and absolute -
-Freedom of speech, civil liberties

Values: Used to develop socially enforced norms-- Integrity, accountability, trust.

Organizational and Global Ethical Culture: Ethical culture describes the component
of corporate culture that captures the values and norms that an organization defines as
appropriate conduct 1: Creates shared values Goal is to 2: Minimize need for enforced
compliance 3: Maximize utilization of principles/ ethical reasoning.

Theories of Ethic: 1: Descriptive ethics: involves describing, characterizing and

studying morality – “What is” 2: Normative ethics involves supplying and justifying
moral systems– “What should be

1: Utilitarian approach – moral behavior produces the greatest good for the greatest
number 2:Individualism approach – acts are moral when they promote the individual’s
best long-term interests 3: Moral rights approach – moral decisions are those that best
maintain the rights of those affected, including free consent, life and safety 4: Justice
approach – decisions must be based on standards of equity, fairness, and impartiality;
(esp. important in HR management)

Relativism, Cultural and Moral Norman Bowie: 1. Cultural Relativism --Different

cultures have ideas about ethical behavior 2. Moral (ethical) Relativism --What is
“really right or wrong” is completely determined by the culture in which a person lives

CRITICISM OF MORAL RELATIVISM: 1.A culture thinking something is moral does not
make it moral (slavery) 2. It is not consistent with moral language which tends to be
absolute 3. All cultures tend to believe in universal principles 4. There are no separate
cultures (Bosnia, Somalia, Cambodia) 5.Cultural traditions are bounded by physical
laws (outlawing sex).

Dealing with ethical and cultural relativism: The counter-point to relativism is:
something is wrong since there is a wide variety of other beliefs and values contrary to
the action 1.Basic human Right 2.Virtue Ethics.

Theories of ethics : 1:utilitarian theory of ethics : Utilitarianism is a theory in

normative ethics, or the ethics that define the morality of actions, as proposed by
Jeremy Bentham and John Stuart Mill. ... The greatest happiness principle states that a
moral action is one that maximizes utility, or happiness, for the greatest number of
people.

2: Justice theory : A Theory of Justice is a 1971 work of political philosophy and ethics
by John Rawls, in which the author addresses the problem of distributive justice (the
socially just distribution of goods in a society

3: rights theory: The concept of rights based ethics is that there are some rights,
both positive and negative, that all humans have based only on the fact that they are
human. ... That is, natural rights are those that are moral while conventional are those
created by humans and reflect society's values.

4: Egoism theory: The concept of rights based ethics is that there are some rights,
both positive and negative, that all humans have based only on the fact that they are
human. ... That is, natural rights are those that are moral while conventional are those
created by humans and reflect society's values.

Codes of business ethics : 1: to help ensure consistence in the application of ethical

standards 2: design of codes of ethics 3: law enforcement 4: ethics written 5: voting for
right of stake holders .

Corporate Governance: The process by which corporations are made responsive to

the rights and wishes of stakeholders, the way in which organizations are directed and
controlled. Effective management of relationships among – Shareholders – Managers –
Board of directors – employees – Customers – Creditors – Suppliers – community

Difference between executive and non-executive directors : An executive

director is a member of the board of a firm (or a non-profit organization) who also has
management responsibilities. A non-executive director (NED) is a board member
without responsibilities for daily management or operations of the company or
organization

Difference between governance and management: In basic terms, governance is

the role of leading an organization and management is its day-to-day running or
operating. Governance is the job of the governing body, such as a committee or board,
to provide direction, leadership and control.

Basic concept of Code of Corporate Governance: 1. Fairness 2.Transpancy

3.Innovation 4.Siepticism 5.Independence-decision making 6.Honesty 7.Responsibility
8.Accountancy 9.Reputation 10.Judgement 11.Integrity

Highlight issues rather than the term “corporate governance” but begin to use the term
in articles and explain what it means.
Poor corporate governance can lead to: 1.Corruption and Fraud 2.Conflicts of
interest 3.Interference between family problems and the company 4.Tax evasion or
money-laundering 5.Poor treatment of employees 6.Disregard for the environment

Four Pillars of Corporate Governance

1. Accountability  Ensure that management is accountable to the Board  Ensure that

the Board is accountable to shareholders

2. Fairness Protect Shareholders rights  Treat all shareholders including minorities,

equitably  provide effective redress for violations

3. Transparency  Ensure timely, accurate disclosure on all material matters, including

the financial situation, performance, ownership and corporate governance

4. Independence Procedures and structures are in place so as to minimize, or avoid

completely conflicts of interest  Independent Directors and Advisers i.e. free from the
influence of others.

Elements of Corporate Governance:  Good Board practices  Control Environment 

Transparent disclosure  Well-defined shareholder rights  Board commitment

Good Board Practices  Clearly defined roles and authorities  Duties and
responsibilities of Directors understood  Board is well structured  appropriate
composition and mix of skills

Principle of CG:1) Right and Equitable Treatment to shareholders. 2) Interest of other

Stakeholders. 3) Role and Responsibility of the Board. 4) Integrity and Ethical Behavior.
5) Disclosure and Transparency.
(A).Effective Leadership (B).Capable Management (C).Diligent Monitoring
(D).Responsible Risk Management (E).Clear Accountability and Responsibility:

Main important points : 1: role of the board >>decision making 2: functions of the
board>> selecting evaluating and compensation the plan 3: qualification >>no board
member of more then two companies 4: independence of directors 5: size of board
>>should b appropriate but minimum 5 : committees a: audit b:management
development c: governance and public affairs d:technology and industrial affairs 6:
independence of committee members 7: self-evaluation 8: board leadership

The Federal Sentencing Guidelines for Organizations*

1.Standards and procedures capable of detecting and preventing misconduct 2.High

level oversight 3.Care in delegation of authority 4.Effective communication (training)
5.Systems to monitor, audit, and report misconduct 6.Consistent enforcement
7.Continuous improvement