1

INTRODUCTION TO ETHICS AND

ITS APPLICATION TO BUSINESS
 INTRODUCTION
2

What is ethics?
 Moral principles that govern a person's behavior.
 The branch of knowledge that deals with moral
principles.
 In simple ethics is a system of moral principles. They
affect how people make decisions and lead their
lives.
 Ethics is concerned with what is good for individuals
and society and is also described as moral
philosophy.
 INTRODUCTION
3

The term is derived from the Greek word ethos which

mean custom, habit, character or disposition.
Ethics covers the following
 how to live a good life
 our rights and responsibilities
 the language of right and wrong
 moral decisions - what is good and bad?
 Ethics
4

 Ethics is a system of moral principles and attitude that guides

our actions to be morally correct, fair and just.

 Ethics is about enforceable morality, justice and fairness of

conduct, actions and governance by individuals, institutions,
companies, organisations, societies and governments.

 However, ethics are not the law unto itself nor are they
instruments parallel to the laws of the land.
 INTRODUCTION
5

 Our acts or responses to a situation practically reflect our feelings,

thinking and judgment based on our moral principles and values.

 The ultimate aim of ethical behaviour and practice is to feel satisfied (and
not necessarily justified) about one’s conduct and behaviour or action and
its outcome.

 Acting in keeping with one’s ethics involves making an effort to know the
possible consequences of one’s action and, then, to be sure that the
action is to his or her satisfaction.
 Are Business Organisation’s
Ethical?
6

Business ethics is a broad topic, covering

everything from corporate governance to
corporate social responsibility.
However, it is easy to identify
unethical business practices in an organization,
such as employing child labor, taking bribes, or
illegally using copyrighted materials.
 Business Ethics
7

 Business ethics is a subjective term.

 When ethical guidelines are followed, trust is
developed between the employees and
management, as well as the public and the
corporation. Thus, business ethics leads to a
more productive workplace.
 Business Ethics
8

Every company should have their own moral

principles and guidelines. Following business ethics
has more benefits than you think. It will help you to
keep and attract employees, customers, and
investors.
 Business Ethics
9

For example, consider that you are an “energy

drink” manufacturing company and you have
proclaimed on the labels and advertisements that
you don’t add any preservatives to the drink, then
You should adhere to the claims you have made. If
you disobey your claims and sell the product by
adding preservatives, then it is considered as
unethical business practice. It will deteriorate your
brand and eventually, you will lose trust from the
customers.
 Ethical Principles
10

 Honesty
 Integrity
 Promise-keeping & trustworthiness
 Loyalty
 Fairness
 Concern for others
 Ethical Principles
11

 Respect for others

 Law abiding
 Commitment to excellence
 Leadership
 Reputation and morale
 Accountability
 Morality
12

 Morality and morality of actions are the yardsticks of ethics.

 ‘Morality’ is the subject matter that ethics investigates through a process

of moral reasoning.

 Moral standards include those norms that we believe are morally right or
wrong as well as the value we place on subject matters that are morally
good or bad.
 CHARACTERISTICS OF MORAL
STANDARDS
13

 Moral standards deal with subject matters that have serious implications
in society, environment and workplace, irrespective of whether the
implications are beneficial or harmful.

 Moral standards are self-regulatory.

 Moral standards are not guided by the self-interest or other non-moral

standards and values.

 Moral standards are based on impartial considerations.

 Moral standards are self-inflicting.

 Levels of development of Moral understanding-
Kohlberg
14

 Level – I: Childhood Stages

 Punishment and obedience orientation
 Instrument and relativity orientation

 Level – II: Conventional Stages

 Interpersonal concordance orientation
 Law and order orientation

 Level – III: Principled Stages

 Social contract orientation
 Universal ethical principles orientation
MORAL REASONING FOR ETHICS
15

 Moral reasoning tries to logically place or project facts and figures that
help one to judge human behaviour, institutional activities, policies,
programmes, etc. as to whether they are in accordance to, or in violation
of, acceptable moral standards.

 Distinct features of Moral or ethical reasoning:

 identifying what constitutes ‘moral standards’;
 examining facts and figures concerning the policy, behaviour and actions
under the specific situation; and
 arriving at a moral judgment on the basis of rightness or wrongness of policy,
behaviour or actions.
 Cont…
16

 To decide if an action or policy is ethical, one has to exercise moral

reasoning by examining the factual information with regard to morality
of the action or policy by analyzing:
a) the utility of the decision, rights and duties of the individuals concerned with
the decision;
b) if justice is being meted out by the decision;
c) the amount of care being shown to those who are related and valued in the
subject matter; and
d) the consistency of the decision with the past and present.
 MORAL RESPONSIBILITY
17

 ‘Moral responsibility’ means owning responsibility for doing something

knowingly and deliberately that had caused harm or injury to others.

 Establishing moral responsibility has the connotation of law or rules, in

addition to its ethical implications.

 If any one under the circumstances acted out of (a) ignorance or (b)
inability, he or she may be excused of moral responsibility.

 However, one cannot deliberately stay ignorant and claim innocence for a
wrongdoing – be it as a person or company.
 Principles to establish Moral Responsibility
18

 Ignorance of fact or consequences.

 Ignorance of moral standards.
A tentative flow sheet for Ethical Judgement
19
 HOW ETHICS WORKS IN
BUSINESS
20

 Ethics, in business practices, are reflected through the display of feelings,

reasoning, deliberations and actions of individuals in the business.

 Business organisations have the moral responsibility to ensure that their

policies, practices and behaviour (of its members) are fulfilling legal as
well as moral standards of the society and the country.

 A company’s actions and behaviour have to be equally moral and

responsible as that of an individual, so as to ensure right direction and no
wrongdoing or harm to the society, employees, investors, suppliers, etc. –
all of who are a part of the business and are interested in its beneficial
objectives/outcomes.
 Cont…
21

 With respect to business operations to establish if an action has been

moral and ethical - at least two aspects of business have to be considered:
(a) purpose of business; and (b) how and who takes decisions for the
business.

 Most aspects of ethics and moral behaviour in business arise from the
concept of rights, justice and fairness of deals with respect to its various
stakeholders.