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Sandeep Singh Reader School of Management Sciences, Varanasi

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Business ethics is rules, standards, codes, or

principles which provide guidelines for morally right behavior and truthfulness in specific situations. (Lewis) Business ethics is the study of business situation, activities, and decisions where issues of right and wrong are addressed. (Crane and Matten) Business ethics refers to clear standards and norms that help employees to distinguish right Copyright Sandeep Singh, SMS Varanasi from wrong behaviour at work. ( The Ethics

Business ethics has to do with the extent to which a

persons behaviour measures up to such standards as the law, organizational policies, professional and trade association codes, popular expectations regarding fairness and what is right, plus ones own internalized moral standards. ( William Sauser) Business ethics is disciplined normative reflection on the nature, meaning and context of business activity. As such it deals with comprehensive questions about the justice of the economic context in which business operates and about the nature, function, structure and scope of business in that context, as well as with more specific issues raised by the relationship of business to government, the consumer, its employees, and society at large. ( Hoffman and Moore)
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Business ethics is a study of moral standards and how these apply to the systems and organizations through which modern societies produce and distribute goods and services, and to the people who work within these organizations. Business ethics, in other words, is a form of applied ethics. It includes not only the analysis of moral norms and moral values, but also attempts to apply the conclusions of this analysis to that assortment of institutions, technologies, transactions, activities, and pursuits that we call business. (Manuel Velasquez)

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contains four interconnected elements

Framework- Set of rules, standards, codes,

principles, philosophy etc. to be followed for ethical decision making in business. Internal development of ethical traitsDevelopment of virtues, values, morality and inner conscience. Situation- Business situations demanding ethical judgements. Behaviour- Ethical behaviour from the legal, stakeholder and humanity point of view.
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Nature of Business Ethics





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Complex because of no common consensus Dynamic because of dynamic nature of business

decision making Interdependent because ethical decision making is dependent on many factors and ones decision affect others. Subjective because the frameworks referred for ethical decision making are usually normative and are varied in nature. These frameworks differ from people to people and organization to organization. Copyright Sandeep Singh, SMS Varanasi

There may be varied arguments

regarding business ethics but one commonly accepted fact is that intensity of ethics in business will always be limited to the extent

of ethical behaviour shown by those

who are involved in business.

So the human factor is the key.

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Significant Developments in Business Credited to Business Ethics

Profit is no more considered as the sole objective

of business.
Instead of maximization of shareholders wealth

now the focus of business organizations is on stakeholder approach.

Many large business organizations are involved

in socially responsible activities.

Environmental issues are now openly discussed

by business world.

of Corporate improved considerably.



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Many business organizations have already framed

their ethical code of conduct and are strictly following it.

Business ethics is no more considered as an

undesirable transgression into the functioning of business organizations. Instead organizations themselves are taking it seriously and now consider it as good for business.

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Perceptions Regarding Business Ethics

Rules, Standards or Codes Governing an Individual or Organization

Morality, Virtues, Values Clarity of Right and Wrong Honesty, Integrity

Character, Conscience Situational and Temporal Being True to Oneself

Stakeholder Approach
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Objectives of Business Ethics

Solutions for business situations that calls for ethical Judgement s Providing ethical framework s Developing understandi ng about what is right and what is wrong

Stakeholde r approach of business organizatio ns

Objectives of Business Ethics

Ensuring Ethical Behaviou r Ensuring practical utility of business ethics

Arguments against the Business Ethics

Milton Friedman, a Nobel laureate had suggested that there is no

need for business people to bring ethical factors into their managerial decision making. He believed that when they have occupied the role of business then automatically they are supposed to throw away their role of autonomous moral agent in favour of making efforts for fulfilling the purpose of shareholders. According to Friedman there is one and only social responsibility of business and that is to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which to say, engages in open and free Copyright Sandeep Singh, SMS Varanasi or fraud. competition without deception

John Ladd believes that by virtue of basic nature of

business organization the possibility of ethical evaluation of its actions is ruled out. Ladd argues that there are specific goals of business which are meant to be achieved and these goals are nonmoral. So, business organizations should be evaluated from the point of view of achieving those specific goals successfully or not instead of from the point of view of ethics or morality. Another argument against the business ethics is that the organizations and corporations cant be held morally responsible for anything, simply because they dont act, its the individuals who act. According to free economy promoters, the market regulate itself without any need for externally induced controls. So let the rules of the economy Copyright Sandeep Singh, SMS Varanasi

Arguments for the Business Ethics

Those who argue for the business ethics are of the

view that the profit is not the only motive of business; business organizations deserves ethical reasoning; business does not enjoy any special status and morality is as much applicable to it as to any one else; and rules of ethics and morality are as much intrinsic to business as the rules of economy and free markets. The acts of bribery, corruption, and deception in business are strongly criticized in this view. As the organizations are run by individuals they are as much liable for ethical judgements as any Copyright Sandeep Singh, SMS Varanasi individual. They cant get away by stating their

The special status for business free from

ethical evaluation is also opposed by many economists, philosophers, academicians, and other ethicists. They argue that ethics and business cant be separated and there is no ethical relativism between business and others. Peter Drucker argues that ethical code remains same for everybody whoever he may be. It is same for rich, poor, kings, business leaders, managers, mighty or meek.

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For business to operate successfully and in

accepted manner these social interactions should provide mutual benefits and for that ethics is one key element that make these interactions mutually fruitful.
Against the argument of allowing rules of economy

and free markets to operate without ethical considerations, ethicists argue that businesses operate in a society and their actions have both direct and indirect impact on the society and so many cases of fraud, corruption, and bribery have come up in recent times doing excessive harm to the society that relevance of ethics to business is more Copyright Sandeep Singh, of SMS Varanasi than ever. Rules free markets in no way can justify

The first role of business ethics is to do three level investigation

economic systems

businesses within these economic systems

individuals within the businesses

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The second role is to develop theoretical foundations of universal nature for business ethics on the basis of three level investigation or study such as:

Standards Codes Principles

Virtues Normative Statements Models
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The third role is to test the developed theoretical foundations in various practical situations of business decision making for their applicability and effectiveness, so that solutions for simple as well as complex ethical situations in business can be found without creating any confusion and with full acceptability of the concerned objects. Without the applicability of universals to the particular situations, theoretical foundations degenerate into dogma and ideology. So this role of business ethics has complete practical application and has most significance for business.
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Importance of Business Ethics

Business ethics provides unbiased opinions about the economic systems, business practices, and individual behaviors.
Business is made aware of its obligations towards stakeholders. The actions and behavior of organizations are even questioned when any of these obligations are not met. This helps organizations in looking beyond their self interests.

Business ethics adds a new dimension of ethical reasoning in business. Unethical behaviors of business have the potential to cause lot of harm on individuals, communities, and on environment. By making people understand about the causes and consequences of these unethical behaviors, business ethics seeks to improve the human condition.

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The stakeholders ethical expectation from the business organizations are becoming more and more complex and challenging. Business ethics provides a clear framework for organizations in appreciating and understanding these expectations. Business ethics provides us with a new set of knowledge and reasoning transcending the traditional structure of business studies and brings us face to face with some of the most pertinent questions faced by the society. Business ethics seeks to improve ethical decision making and moral reasoning of business people in simple as well as complex business situations.

Business ethics helps organizations in understanding that unethical practices can provide only short term benefits. For long term success, ethics are must and are a viable long term strategy.
Business ethics help corporations in framing corporate code of ethics directly or indirectly. Even Corporate laws framed by the Governments are also influenced by business ethics

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Morality and Ethics

Morality is concerned with understanding of what is right and wrong behaviour. In the study of business ethics many people treat the concept of ethics and morality as same. There is no harm in it. However treating them as different but strongly inter-related is a better approach in enriching the field of business ethics. Morality could be considered as one of the subject matter of study in business ethics.
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Difference between Morality and Ethics

Ethics Morality
1. Ethics is the study of framework such as standards, behaviour Morality is right action, conduct or

principles, rules or codes and traits for ensuring right action, behaviour or conduct. 2. Ethics is the philosophical study of morality matter of ethics 3. Ethics encompasses morality of ethics
4. Ethics attempts to bring rationalization to morality through ethics

Morality is the subject Morality is the sub-field

Morality gets rationalization Morality becomes systematic

5. Ethics tries to systemize morality

through ethics

6. Ethics legitimizes morality through ethics Copyright Sandeep Singh, SMS Varanasi 7. Ethics is covert as well as overt

Morality gets legitimized Morality is overt

Rest Model of Moral Behaviour

Recogniz e moral issue

Make moral Judgeme nt

Establish moral intent

Engage in moral behaviou r

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Kohlberg Model of Moral Development

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Virtues and Ethics

The word virtue is derived from the Greek word

arete which is translated as excellence. Virtues are the good moral habits that are acquired over a period of time by repeatedly choosing the good. Virtues play an important role in the decision making process of individuals and that is why virtues are important from the ethics point of view. The foundation of morality lies in the development of virtues. Good character traits or moral habits, when learned and practiced repeatedly, gets cultured or internalized in the people and takes the form of Copyright Sandeep Singh, SMS Varanasi virtues.

Right conduct, action or behaviour of an

individual which we call morality can be temporal but through the development of virtues righteousness becomes a habit. Virtues imply that there is a set of qualities which will make people fulfill their functions as people, properly and well. Without virtue, people are unable to do justice with their tasks. For Aristotle, the difference between doing something and doing it well or excellently lies in virtues. In other words, we do not display virtue when we do something that happens to be good, but we must act with a deliberate desire to Copyright Sandeep Singh, SMS Varanasi perform our function as human beings properly.

Aristotle on Virtues
Moral Virtues
Moral virtues relates to those virtues which an individual develops or acquires through practice.

Intellectual Virtues
These virtues are developed over a period of time through experience

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Cardinal Virtues
Pruden ce
Prudence can be equated to good judgment and right reasoning

Courag e
Courage is the ability to face and to overcome difficult situations

It is the ability to control the self and acquire self mastery

Justice could be described as the conscious realization of a person about the others rights and giving them what they deserve

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Spirituality and Business Ethics

Spirituality is integral and holistic, incorporating

within itself the material, moral and cultural values. There is a misconception regarding spirituality that spiritual value is opposed to the material one. The term spiritual as also the Sanskrit substitute Atmika or Adhyatmik literally meaning any thing that pertains to the spirit (the Self or soul or atman). There are virtues and values associated with spirit (Atman) as its very nature, provided the Atman (spirit) is in natural state, freed from Copyright Sandeep Singh, SMS Varanasi impurities.

Impurity here means something that is mental it

is ego and selfishness and raga (infatuation or favoritism) and Dvesa (abhorrence or enmity). So, purity would really mean freedom from these mental impurities, and not rejection of material life. For the practice of value it is not necessary to have metaphysical (ontological) presupposition about the spirit (the Self) neither for the practice of morality, nor for the spirituality. One can practice morality, for example, even without believing in the higher Self (the higher spirit) or God. One can practice the spiritual values just with Copyright Sandeep Singh, SMS Varanasi phenomenal and limited self, present in the body,

The Budhist and the Jaina way of life is highly

spiritual and yet there is no belief in God there. In the Brahmana (Vedic) tradition too, half of the philosophical schools (Vaisesika, Samkhya and Mimamsa) do not believe in God and yet they present a moral and spiritual way of life to follow, although the definition of morality and spirituality differs from school to school. However, faith in God or the Higher Self strengthens the moral and spiritual attitude, and facilitates the ethico-spiritual living. So, faith in the metaphysical spiritual reality is also a value a supplementary value.
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Two Aspects of Sprituality

While defining spirituality, we have to understand

that there are two aspects of spirituality a negative aspect and a positive aspect, and the two aspects are complementary to each other. Negatively, spirituality means melting or effacing the ego, and positively it means realizing ones unity with others (or in other words, having universal love). Ego is the principle of differentiation of oneself from others; ego rests on the feeling of otherness (what in the spiritual philosophy is technically called dvaitabhava or bheda-bhava). Ego takes place when I do not consider the soCopyright Sandeep Singh, SMS Varanasi called others as me or my own and cut myself

In the ego-state we wish only the good of

ourselves and not the good of others, we impose ourselves on others and even exploit others for our own end. Selfishness and ego are like the two sides of one and the same coin. Ego is the foundation and the root cause of all evil, of all immorality. If spirituality negatively means effacement of the ego, and if the ego means separating oneself from the others and confining oneself to one's own individuality and taking into consideration only oneself and the others, then it becomes easy to understand the positive meaning of spirituality as what in the spiritual philosophy is technically called 'Advaita-bhava' Copyright Sandeep Singh, SMS Varanasi or 'Abheda-bhava' which means feeling of one's unity with all.

Spirituality is the state of consciousness in which

the feeling of otherness is gone and the feeling of affinity and unity with the so-called others is established. The feeling of unity can be explained with the help of examples. One such example is that of the loving mother. The mother feels that the children are her own or herself; the happiness and suffering of the children are the happiness and suffering of the mother. The bodies of the children are separated from the mother, and in that sense the children are 'others' to her, but in her consciousness or in her feeling they are not others. What she does good for the children, she thinks she is doing for her own self, as she feels Copyright Sandeep Singh, SMS Varanasi that the children are herself or her own. This is

Love is considered as 'the' spiritual value. But

love should be distinguished from such mental states and situations that are falsely taken to be love. For example, infatuation, possessiveness, selfish attachment, etc are not love. Love may be understood as the opposite of selfishness. In love which is the spiritual value, there is natural synthesis of what is called 'Sreya' (the good) and 'Preya' (the pleasant). Love is actually the two in one the good and the pleasant both at once. In love the good of oneself and the good of others become one, as the 'others' too become one's own. Morality becomes natural in love, as one would not exploit the beloved person and, on the Copyright Sandeep Singh, SMS Varanasi contrary, would do good to him/her.

Thus the spiritual value (love) satisfies the

demands of Dharma (morality) and Sukha (pleasure or happiness) both at once. It gives immense pleasure and satisfaction to oneself on the one hand, and on the other hand one becomes spontaneously inclined to do good to the so called others. Egolessness and love or the feeling of unity-are the two negative and positive meanings of spirituality. The two meanings are complementary to each other, or it would be more true to say that the two denote one and same state of consciousness. One cannot be loving without being egoless, because the very meaning of ego is the separation of oneself from others and more Copyright Sandeep Singh, SMS Varanasi the ego is tight, the less loving we are.

That is why Kabir, the great mystic poet, has said;

"If you want to drink the nectar of love and also want to keep up your ego, this is impossible like putting two swords in one and same sheath. Karuna (compassion), Bhakti or Bhaktiyoga (surrender to God or surrender to Truth), Jnana or Jnanayoga (Advaita-bhava or realization of one's unity with all beings), Karmayoga (doing all work with the sense of being the instrument of God or with the sense of selfless duty) all these are corelates or corollaries of the central spiritual value which negatively means egolessness and positively means love or unity of oneself with all.
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Difference Between Spirituality and Morality

In the moral consciousness, the imperative and the direction for performing a particular action come from the ethical sense; that is, we perform an action because we think it is ethically right or good, and we refrain from doing an action because we think it is ethically wrong or sinful.
In the spiritual consciousness, the incentive to perform a particular action comes not from moral consideration but from compassion or love, and morality is naturally present there, as love (true love and not the so-called love) is the natural matrix of all morality. The saints and sages are in the spiritual consciousness; the acts of a Krishna or a Buddha or a Christ are of this very type.



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Secondly, in the moral act we have to exert our will, the act is deliberate and effortful and not automatic. In the moral act there is the 'sense of doership' (Kartrtvabhimana)


Spiritual act is spontaneous or effortless or automatic. There is no Kartrtvabhimana in the spiritual act, as it is spontaneous and natural.

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Thirdly, in the purely moral state of consciousness there may be dichotomy or opposition between the good (Sreya) and the pleasant (Preya) or between the good of oneself and the good of others. In the spiritual consciousness this dichotomy ceases to exist there the good (Sreya) and the pleasant (Preya) are naturally one, the good of oneself and the good of others become one.


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In the general Western tradition, morality is accepted

as the highest value. (However, there are strong exceptions also, for whom spirituality is the highest value.). But in the Indian tradition, spirituality is taken to be the highest or the ultimate value. This is not because the moral value is underrated - not at all; the moral value (Dharma) is rated very high and is taken to be absolutely necessary for lifeboth individual and social. But spirituality is placed even above morality (or above mere morality) because spirituality (Adhyatma) naturally incorporates morality (Dharma) within itself; it is the state of natural morality. Moreover, the morality present in spirituality is free from its possible minus points, namely (i) the ego, (ii) the effort or exertion of the will, and (iii) the dichotomy of Sreya and Preya. Mere morality, although valuable Copyright Sandeep Singh, SMS Varanasi in itself, is a dry value, in order to be more effective

Understanding Moral and Spiritual Impurity

There are two types of impuritythe moral impurity and the

spiritual impurity. Unscrupulous life of deceit, dishonesty, corruption including various kinds of crime, etc. all these come under the category of moral impurity. There may be persons who are free from these impurities (the moral ones) and yet they may be suffering from another kind of impurity which is equally bad, sometimes even worse. This is what is called 'Ahamkara' (ego). Ego is the spiritual impurity. The moral impurity harms and hurts others; ego too hurts, sometimes even more deeply. Therefore, it is necessary to free oneself not only from the moral impurities but also from ego. One cannot be called pure-hearted unless one is free from both these The life of values cannot become perfect with Copyright impurities. Sandeep Singh, SMS Varanasi moral perfection alone; the spiritual value of egolessness

Spiritual Lessons for Business Leaders

Acquisition of material wealth (Artha) and

satisfaction of desires (Kama) become unhealthy only when they are done selfishly and egoistically. Remove the feeling of possessiveness (mamatva) towards the wealth and become unattached (Anasakta) with the wealth. Then enjoy the wealth in an unattached manner, and in the unattached state of consciousness. Then you will find that you enjoy the wealth far better. The psychology of relishing or enjoying is that if we are strongly attached, the degree of relishment or enjoyment is very low; whereas if we are unattached, the enjoyment is much better.
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It can be safely proposed that only an unattached

person can really enjoy the world; the attached (Asakta) person accumulates and possesses but does not enjoy. The purity of money means that it is spent not only for your good but for the good of all (of course, including yourself). The society has share in your earning because you are indebted to the society, and you can clear your debt to the society by parting with the extra money and giving the society their share. One who appropriates all money for oneself without giving others their due share, is virtually a thief ( yo bhunkte stena eva sah ) or "... such a person is a thief and deserves punishment " ( sasteno dandamarhati ) or, "those who cook only for Copyright Sandeep Singh, SMS Varanasi themselves, eat sin" (bhunjate te tvaghnan papa ye

Spiritual Lesson for Corporate Social Responsibility

Serve the people not in charity but

in love Charity is moral act but service with love is spiritual act. The act of charity may generate ego, but the service done out of love reduces or melts the ego.
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Make Material Life Spiritual

By cultivating proper attitude towards Nature and

the world, the material life itself can be made spiritual and the so-called dichotomy between the material and the spiritual be abolished. Really there is no dichotomy between the two, we have created the dichotomy by vitiating the world of matter. It is we who have made the material life impure by our ego and selfishness. If the material life is freed from the ego and selfishness, it itself would become spiritual; in fact, originally it 'is' spiritual, the impurity is introduced from our side. Copyright Sandeep Singh, SMS Varanasi

" Love gives and forgives, selfishness gets and forgets".

(Sai Baba)
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