Why ethics makes good business sense

An analysis from the macro as well as micro points of view

Common unethical practices and their adverse

impact on the economy Trusteeship and the Gandhian principles of wealth management Wisdom leadership Concepts from the Indian ethos

Macro Perspective
Unethical behavior harms the national economy by hindering genuine market system,

thereby reducing productivity and wealth. Hence the need for ethical conduct. The market system calls for, among things, the following conditions: a) the right to own and control private property b) freedom of choice in buying and selling goods and services c) easily available and accurate information about these goods and services

Common Unethical Practices in Business & the impact of some practices on the economy:
Bribery and tipping / greasing / paying

speed money Deception Theft Unfair Discrimination Coercion

Bribery:
Offering, giving, receiving, soliciting of something

of value (money, service, kickback or other asset) Difficult to determine intent of gift-giver when cultural norms allow for exchange of gifts during festivals (e.g. Gift giving during Diwali). Bribery leads to reduced quality of products /services (since something that is not substandard would have existed on its own merit) + increased costs (when the cost of the bribe is loaded on to the cost of the product / service)

Deception:
Act of deceiving, intentional misleading by spoken / written falsehood, misrepresenting

data pertaining to a fact/ situation

Deception reduces customer satisfaction.

Theft:
Taking of something that belongs to another,
Stealing Property conceptual

may

be

physical

or

Theft leads to increased costs, as the genuine users effectively end up paying for those who use the products / services but dont pay.

Unfair discrimination:
Unfair treatment because of race, age , sex , religion or other group criterion A failure to treat all equally when no reasonable distinction can be made between

those favoured and those discriminated against (Relevant criteria for discrimination usually includes merit, qualification, experience, contribution to the firm)

Coercion:
Controlling people by force or threat Could be actual, direct and positive May be for a one-time transaction or a series of transactions in a business relationship Coercion leads to reduced quality of products /services + increased costs

Micro Perspective:
To function effectively, business needs trust
In turn, trust calls for ethical behavior (between stakeholders, during transactions,

as well as on a continuing basis in relationships) Hence, business needs the foundation of ethical behavior

A brief look at the dimension of

Trust implies predictability, dependability and

trust:

faith Ethical behavior is a necessary but not sufficient condition for trust in relationships. The dimension of trust gains prominence in the following relationships between the business and stakeholders:
a. b. c. d. e.

Customers and business Employees and business Shareholders and business Suppliers and business Collaborators / partners and business

Trusteeship Management
Trusteeship = holding and managing resources on behalf of the stakeholders of the firm. Therefore, trusteeship => element of equity, placing other stakeholders such as employees, customers and society on the same rung as large and small shareholders. The idea is that all wealth, including human, financial and technological resources, belongs to society and the rewards accumulating from their use must revert to society at large.

Principles:

Resources must be held and utilized for the benefit

of society. Managers are the trustees of the stakeholders and must work towards optimizing stakeholder value, not merely maximizing shareholder value. The small investor has as much a say in decisions as the large investor. Trusteeship might lead to a disincentive for efficiency and efforts: When individual and group efforts are correctly aligned with social needs, the possibility of de-motivation or deliberate inefficiency does not arise. Conviction in the utility of the concept, coupled with the commitment of top leadership, would ensure efficiency as well as effectiveness.

Gandhian philosophy:
The Indian perspective:

The wisdom of the Vedas and Upanishads point towards holistic progress, not fragmented movement in which one section gains at a cost to others. Moreover, the cycle of give-and-take is explained at great length. The Gandhian philosophy of wealth management is based on the principle that a wealthy man does not truly have the right to hoard wealth solely for the self; the only right he has is that to an honorable livelihood.

Gandhian Tradition
Overall happiness is the key to balanced human

progress. There is enough for everybodys need and not for everybodys greed. Gandhi's humanism is reflected in his deep faith in the goodness of human nature. Provides a basis for developing the idea of human character development means of preventing value erosion in modern societies. Swadeshi is a basis for economic self reliance.

Ethics and Indian Management

means
Using Indian civilization experience plus intellectual traditions

Indianism

To develop

More relevant knowledge base + culturally relevant theories

Different Indian Intellectual Traditions

Arthasa stra
OSHO

vedanti c
MAJOR INDIAN INTELLECT UAL TRADITION S

Cultural Nationli sm

LIFO

Confluen cism

Syadvada

Commo nism

Gandhia n

Arthasastra tradition:
Artha means wealth or material advancement
Artha is material well-being special wealth. It

recognizes the existence of the law of Fish known as Matsa Nyaya, where the stronger one would sallow the weak is recognized.

Vedantic / Psycophilosophical Tradition:

deals with the divine oriented view of human

nature. Gita provides an ideal of Karma Yoga, a basis for human action. Chakraborty, Swamy Jitalnanda, Ranganathananda,Swami Dayananada Sarswati, Jagdguru Chadrashekhar Bharti, and universal number of spiritual personalities have all contributed lots to this philosophy.

Liberation from Oppression (LIFO)

It means liberty/freedom from domination.
Great saints have already talked on this tradition

and this reflects in their works also. Social reformers/ workers have drawn their ideas from this tradition. When work place becomes oppressive, the need for liberation from oppression becomes vital.

Syadvada:(Multiple Perspective)
The Syad or viewing from a particular view point

that is also related to other view points is essential for arriving at the final conclusion.

Hence problems should be used from multiple

perspectives.

Communism:
Considers the common man as the pillar of the

social drive. Different periods of history are to be viewed in terms of both progress and decline. History is viewed in terms of the degree of overall happiness of the common man, instead of the unidirectional criterion of economic progress. Seen from the common mans perspective in order to create the humanistic & eco-friendly civilisation.

Confluencism:
Confluence is the meeting point.
Let noble thoughts come to us from every side. In terms of give and take process between

various cultures, means a two way process of the flow of ideas.

Cultural Nationalism:
Based on the concept of a nations culture and self

dignity as a basis for the societies regeneration. Argues for restoring self pride and self-dignity of the individual society. Positive ideas could be borrowed, negative influences must be avoided for achieving social regeneration.

OSHO Tradition:
Ideas of Rajneesh, who rejected most of the

current ideas of world views about man, state and society. Every individual has full Godliness within ham is the key message of Rajneesh. OSHO literature is very vast and controversial.

Basic Framework of Normative Ethics

Deals with human conduct
Concept of ethics

Nature of Ethics
Study of Ethics Science of Ethics (Normative Science)

Normative Ethics

Normative means something that guides or controls

Aims to discover what should be the moral standards that are supported by the best reasons

Teleological Theory

Deontological Theory

Ethical Egoism

Utilitarian Principle

Kantianism

Teleological theory
Derived from Greek word telos means end
Determine ethics of an act by looking to the

consequences of the decision (The Ends)

Utilitarianism and Distributive Justice are based

on teleological approach

1. Ethical Egoism
An action is good if it produces result to

maximize persons self-interest at the expense of others. It denies that a person should help others when the person will get nothing out of it. Enlightened egoism is enlightened self interest considers the long range perspective of other or humanity on the whole.

2. Utilitarianism
Our obligation or duty in any situation is to

perform the action that will result in the greatest possible balance of good / evil. 1. Classical Utilitarianism: needs to determine the action is right if and only if it produces the greatest balance over pain for everyone. 2. Traditional Utilitarianism: Utilitarianism was not an tower of philosophy but a powerful instrument for social, political, economic and legal change.

Classical Utilitarianism

1. Universalism:

The consequences to be considered are those of every

one alike 2. Consequentialism: It is seen as the broadest term referring to ethical theories that claims what makes an action right or wrong is the consequences not the internal character of the action. 3. Hedonism: Happiness plays a fundamental role in human conduct. It shares the commitment known as Hedonism. 4. Maximalism: In the first formulation it is the principle in which it may be either good or bad principle. Secondly maxim is expressed when a more responsible decision on confidentiality might be expressed.

Strengths of Teleological Theory

It provides a relatively precise and objective

method for moral decision making. The goodness of consequences can easily be measured and compared Weaknesses of Teleological Theory

We have an obligation to keep our promises, even when

more good might be achieved by breaking them.

Deontological Theory
Derived from Greek word deon means duty This approach believes we have a duty not to do

bad Bribery is wrong by its very nature regardless of the consequences Deontological concepts promotes that of the heart and pertains to the duty orientation As per this theory people behave ethically as they find it their sincere duty towards any goal.

Kantianism- Emmanuel Kant

For Bentham it is Happiness, for Kant it is

goodwill An action is morally right only if the person performing it is motivated by a good will and viceversa. A goodwill means action done for reasons of principle from a sense of duty, nothing else. Self interest is not be the motive, but neither can kindness, loyalty, sympathy. These thoughts can be admirable.

Strengths of Deontological Theory

This theory makes more sense in cases where

consequences seem to be irrelevant

It is the way they account for the role of motives

in evaluating actions

Weaknesses of Deontological theory

Failure to provide a probable account of how our

moral obligations and resolve problems of moral conflict

There is no order of priority to guide in cases

where they conflict E.g. should we keep promise or tell the truth when doing so will harm someone?

Virtue Ethics- Aristotle

It asks What kind of person should we be? Virtue Ethics Theory does three things:

It defines the concept of virtue It must offer some list of virtues It offers some justification of that list and explain how we define what are virtues and vices E.g. Honesty is in the list of the virtues.

Aristotle defines Virtue as a character trait that manifests itself in habitual

action

For Greeks virtue means Excellence Virtue Ethics= Excellence of Human Character