NAME- Amit Pal CLASS- BBA(III) ROLL NO.

- 2506

SUBJECT- SOCIAL AND ETHICAL ISSUES IN INDIA

TOPIC- ETHICAL ISSUES IN INDIAN BUSINESS

INTRODUCTION
Business ethics (also known as corporate ethics) is a form of applied ethics or
professional ethics, that examines ethical principles and moral or ethical problems
that can arise in a business environment. It applies to all aspects of business
conduct and is relevant to the conduct of individuals and entire organizations.
These ethics originate from individuals, organizational statements or from the legal
system. These norms, values, ethical, and unethical practices are the principles that
guide a business. They help those businesses maintain a better connection with
their stakeholders.

In this era of globalization and multinational competition, the most fundamental or

essential ethical issues that businesses must face are integrity and trust. When
customers perceive that a company is exhibiting an unwavering commitment to
ethical business practices, a high level of trust can develop between the business
and the people it seeks to serve. A relationship of trust between you and your
customers may be a key factor in your company's success.
For Example- selling tobacco and alcohol to an underage minor over the internet,
which is impossible to regulate easily and affectively.

‘Definition’ of Ethical issues in business-

“A problem or situation that requires a person or organization to chose between
alternatives that must be evaluated as right ethical or wrong(unethical)”.

ETHICAL ISSUES IN INDIA

With the growing economy and evolving global demand from India, the proactive
transformation into an ethical organization has become desirable. The various
ethical issues in India are:
 1. Bribery-
Bribery is being accepted and practiced in Indian business. In the business world,
stories of bribery are all too common. The term bribery means to give money, of
gifts, in cash or kind to someone in order to persuade them to make favorable and
biased decisions for business gains. However, in many countries, bribery may not
be considered corrupt and is viewed as the normal way business is conducted.
Bribery involves an attempt to influence the decision of someone in a position of
authority by offering them money or some other benefit (gifts, sex, whatever).
It is illegal everywhere on earth, though unfortunately common in some places.

It is unethical because it amounts to an inducement to disloyalty. Decision-makers

(e.g., government officials) are obligated to make the decision that is best for the
people they serve, and a bribe is typically aimed at getting them to make the
decision that is best for you instead.
Some people (and some legal frameworks) differentiate between bribery and
“facilitation payments,” which are small payments aimed at getting someone to do
what they are already obligated to do (e.g., install a phone for you).

2. Gifts and Hospitality-

From time to time employees may be presented with gifts from other business
organizations or they may present gifts to others including to the public officials.
Any such gifts that is offered, or is possibly offered, in the expectation of, or to
solicit, favourable consideration of any nature must be refused and the fact of its
having been offered, reported immediately to the relevant authority concerned.
Employees must not accept money, loans, services, goods, entertainment or
favours from any supplier, contractor, sub-contractor, customer or competitor for
having given company business to an outside agency and they should also not give
money, hospitality or gifts in order to obtain business for the company.

3. Conflicts of Interest-
Conflicts of interest can occur in teaching, research, and clinical practice, and they
may be obvious or subtle. No Principle or Rule of either the Code or the Issues in
Ethics statement can address all of the forms that such conflicts can take. This
Issues in Ethics statement gives guidance in identifying conflicts of interest and
suggests what should be done when a conflict is identified.
Many conflicts of interest involve commercial interests or financial arrangements.
Policies and procedures in workplace settings should be evaluated to safeguard
against biases or preferences being introduced into professional judgments. If a
professional is offered, or receives, gifts or incentives—even something as minor
as a free lunch—conflict of interest may be suspected.

Personal and family relationships complicate the ability to recognize potential

conflicts of interest. Preferential treatment in referrals, in the evaluation of
employees, or in the assessments of students and fellow faculty members should be
avoided.

4. Confidentiality and Insider Trading-

Insider Trading and Business Ethics. Many people are complaining insider trading
since it is unfair for some people who do not have confidential information about a
certain company. ... Insider trading is a huge issue among people. Insider trading
can be an unethical; yet sometimes it can be ethical.
Information which employees gain during the course of
their employment should not be disclosed to anyone not
employed by the company. It is the criminal offence to
disclose insider information which results in dealing as well
as a breach of the contract of employment.

5. Anti-Trust Compliance -
All employees have a duty to ensure that company’s business is conducted in a fair
and competitive manner. In carrying out its business, the company shall ensure
compliance of the Competition Act 2002, as amended from time to time and other
applicable provisions, which has been enacted to eliminate practices that may have
an adverse effect on competition and thereby promoting competition, protecting
consumer interest and ensuring freedom of trade.

6. Tax Evasion-
Tax takes many forms: income tax, corporate tax, land tax, capital gains tax, death
tax, inheritance tax, sales tax, customs and excise tax, and value-added tax are all
available to governments. Plus many more. Paying our taxes to fund public policy
initiatives and investments is a central necessity of most societies – and most of us
do meet these expectations.
But while there are those who seek to criminally evade their tax liabilities, or
fraudulently deceive the government, we also see varying levels of non-compliance
by others in society, raising questions about the ethics of minimising how much tax
you pay. This is loss to the nation arising from tax evasion.

7. Corruption-
Corruption is the single greatest challenge that erodes and defeats efforts made by
many nations, especially in the developing world, towards sustainable development
and towards the promotion and strengthening of democratic institutions and values.

Corruption is an obstruction to development; it undermines stability and security

and it erodes public trust and confidence. Some pernicious effects of corruption are
the lack of quality essential services, the lack of public infrastructures and, above
all, poor management of resources, or, more generally, bad governance. The
consequences of corruption are borne by the poor. The most corrupt areas
according to sources are the police and the legal system.

8. Employee Behaviour-

Ethical issues for dealing with individual employees is difficult because managers
on the front line are responsible for various accounts such as hiring and firing
disciplining and performance evaluation also during all these procedures managers
are responsible for employee supervision because managers are role models for
their employees in their department it is critical the managers are able to ethically
resolve problems within the organization but unfortunately it is not always the
case. Employee behavioral problems that occur in the workplace can have a
dramatic effect on the overall atmosphere. It is the manager’s responsibility to
correct these problems in a morally right way.

9. Fraud-
Fraud means and includes any of the acts committed by a party to a contract or
with his connivance, or by his agents, with an intention to deceive another party
thereto his agent, or to induce him to enter into a contract. Corporate fraud defined
by CIMA is a type of fraud that essentially involves using deception to make
personal gain for oneself dishonestly or create a loss for others. The scale and size
of corporate frauds in India have increased in the last 15 years with over half the
cases of fraud dealing with transfer of funds by promoters/top management and
defrauding the lenders.

10. Small Business Ethics-

Although there are ethical issues like discrimination that apply to all business, each
business area has its own ethical concerns.
Many other ethical issues are -
11. Supply Chain Issues
12. Employee contributions to outside organisations
13. Fair employment practice
14. Employee working conditions
15. Political support

REASONS FOR UNETHICAL PRACTICES IN INDIAN

COMPANIES/ INDIA

In today’s time, people have to fac lot of problems. Some of the reasons which are
responsible for degradation of ethical and moral values among Indian people are
mentioned below:
1. Reducing spiritual values-
While western countries are adopting more of family values from east and
practices like yoga, meditation, spirituality, the Indians are adopting more and
more of incorrect things in their culture. India has been faced a tough past with
instances of violence throughout its history.

2. Lack of Government Regulation-

Government is also to be blamed for not banning serious semi porn and porn
content in some general magazines, TV channels etc. Tightening the laws and
providing for class action suits will help to fight against fraudulent business
practices.

3. Influence of western culture-

Today, westernization has penetrated so much into Indian minds that people have
rendered their culture. Now there were drastic changes in the lifestyle of the people
which led to conflicts and competition. Today, traditional lifestyle mean the
average, middle-class, urban or semi urban mode of living.

4. Illiteracy-
Though India has been growing at a healthy rate of around 9% per annum, around
50% of the population is still illiterate. Illiteracy results in degradation of value
system. India with its strong religious background has had a good value system but
the presence of few traditions like sati, child marriage etc. has led to the
degradation of the value system of India.

5. Defective Education System-

Formal education as is being imparted today, does not give proper importance to
the building of moral and ethical aspects of human personality. The major stress is
to create job-worthy individuals. Students who come out of the system are trained
to work but are not trained to think.

6. Social Issues-
Most of the violent/ criminal/ anti-social incidences that have happened in our
system could have been prevented if the people had a good value system, a
thinking mind and thought about their actions and their implications. Also, most of
the continuing social issues like poverty, hunger, unemployment can be tackled if
more thinking individuals enter into the system to fight against these issues.

7. Value placed on the sex of the child-

It is very unfortunate that in India, parents differentiate between their son and
daughter. Sons are preferred to daughters in our society. Going to market alone,
laughing in public places, wearing western clothes are considered disgraceful for
girls but these are not equally applied for boys. This unnecessary freedom to boys
make them think that they are superior and can do whatever they want.

8. Conflicting Cultural Influences-

The Indian society today is being exposed to conflicting cultural influences. On
one hand, there is traditional Indian culture, whereas on the other hand, the
industrialized western culture of individualism. This fragmentation of cultural
identity is responsible for the dilution of Indian’s traditional moral and ethical
values.

9. The Role of Media-

As the electronic media, serials, western programmes are unrestrictedly free on the
television, they have created a great intolerable desire to live and adopt a lifestyle
as is shown there. For example, the rich and exotic dresses worn by celebrities on
television are not those which they would wear in ordinary day to day life. TV has
thus created a false glamour in the minds of the general public and people try to
emulate this in their day to day lives.

10. Cultural and Social reasons for unethical behaviour-

It includes economic and cultural factors, cultural logic, corruption, capitalism etc.

HOW TO PROMOTE ETHICAL CULTURE IN INDIAN

COMPANIES

There are different ways of promoting an ethical climate in the workplace:

1. Create a Code of Conduct-

A code of ethics reflects an organization’s principles and values and provide
guidelines for employees to follow. A few things that needs to be considered while
developing a code of ethics include support and assistance from the management
and ensuring that all employees are aware of and understand the code of ethics. A
work ethics assessment will help you in identifying those individuals whose
principles and values are aligned with those of your organization.

2. Continuous review of the code-

Keeping the code updated is an important step in keeping a company’s ethics alive
in the minds of the employees. The company must share and communicate share
copies of the code of ethics or lectures every year. In doing so, the company will
be able to set up an atmosphere that promotes values and ethics in the organization.

3. Lead by Example-
Employees follow the business owners and managers for direction on how they
should conduct their behaviour and activities in the organisations. Leaders should
talk about the importance of policies and processes, incentives, communications
and openness which helps in promoting the staff to behave ethically who have
behaved unethically otherwise.
 4. Appreciation to the employees-
Human Resources professionals play an important role in building an
organizational ethos, designing and implementing best practice policy, fostering
trust, and advocating and guarding ethics. Human Resources have to ensure a
transparent and fair recruitment process, prompt selection and promotion
processes, and performance appraisal processes with compliance and honesty. So,
the business owners and managers must show appreciation to the employees for
their hard work and fruitful results on a regular basis to encourage loyalty.

5. Reward system-
It is necessary for the organisations to incorporate reward systems which promote
ethical means of achieving the specified objectives. The system should ensure
rewards for the employees who show good judgmental capabilities or take
proactive and ethical decisions that benefit the organization.

6. Ethics training-
Organisations can give ethics training, which can include group discussions, case
studies, and one-to-one meetings with senior managers, to emphasis the
importance of ethics. A work ethics assessment is also an effective tool as it helps
you understand a candidate’s likelihood of engaging in counterproductive work
behaviour. Ethics assessments provide the necessary framework for conducting
training and mentoring session that can help the attitude of employees to improve.

7. Communication and Meetings-

Communications plays a role in influencing ethics as well, although it generally
must be supported by actions. Managers also communicate ethical standards and
expectations from the employees though company or staff meetings.

8. Immediate correction and coaching-

When an employee makes a poor ethical decision, it is the duty of the manager to
quickly address and correct the incident or decision. Coaching the employee on a
more ethical approach is a key follow-up.

9. Whistleblowing-
It is an act whereby an employee of an organization informs the higher authorities
or public about unethical practices taking place in his/her organisations.
Whistleblowers help organisations in tracking and curbing unethical practices,
which would otherwise change the reputation of the organisations and can also
cause harm to the well-being of the employees.
 10. Human Resources Role-
Human Resources professionals play an important role in building an
organisational ethos, designing and implementing best practice policy, fostering
trust, and advocating and guarding ethics. Human Resources have to ensure a
transparent and fair recruitment process, prompt selection and promotion
processes, and performance appraisal processes with compliance and honesty.
Other ethical culture to promote Indian companies are:
11. Reinforce consequences
12. Hire for values
13. Build a culture of transparency, openness and communication
14. Empower employees
15. Implement work ethics assessments

CONCLUSION-
Therefore, Ethics are important not only in business but in all aspects of life
because it is an essential part of the foundation on which of a civilized society is
build. A business or society that lacks ethical principles is bound to fail sooner or
later. A business is a collection of different proprietorships. Ethics is issues of
right, wrong, fairness, and justice. Therefore, business ethics places it focus on
ethical issues that arise in the commercial world.