MODULE 1

ETHICS AND MORALITY

Although, the two terms, ethics and morality are used as synonyms, it is necessary to know
that both have different connotations. Morality involves individual character and
disposition, but ethics studies how one should behave in a group or society. Ethics consist a
standard or code of behaviour of a group. Often, the various types of ethics like
professional, social or corporate should be conflicting. For instance, a manager encounters a
clash between personal morality and corporate ethics. The teachings of ethics given in the
Bible, for example, are morals, while the standard behaviour prescribed by human
authorities based on ethical considerations. The Josephon institute of ethics in America has
recommended six core ethical values, such as respect, responsibility, fairness, care,
trustworthiness and citizenship. The basic distinctions between morality and ethics are
given in table 1.1
Ethical consideration arise from right or wrong practices with respect to a profession. For
instance, the fact that killing is immoral comes from the nomological axiom of the Bible’s
Ten Commandments. But professional ethics demands that the suspect needs to be
defended-even if circumstantial evidence shows that he is a murderer. There may be a
conflict between the personal morality of the lawyer and his professional ethics. In the same
way, a person consider abortion as immoral, but since it is legal in many countries, it is
regarded as medically ethical.
MORALITY ETHICS
 Prescribes right conduct for every one  Right code of behaviour for a
 Absolute and not chargeable group or profession
 Individual disposition  Subject to change and relative in
 Nomological in origin nature
 Handed over from generation to  Applied in the social system,
generation groups or professions
 It is prescriptive  Assist out of spectial
recommendation of conduct in a
particular profession
 It is developing and goes on
evolving
 It is recommended to be followed
in a profession

ETHICS AND LAW

Both law and morality are man-made. However, there are some absolute notions of
morality that remain more or less permanent in human society-in the relativist sense
morality is the product of humankind. There are some natural laws existing from time
immemorial and they are like natural justice. In contradiction to the natural laws, there are
also positive laws that are made in a state. In the ethical sense, positive laws must be in
congruence with natural laws. If there is a conflict between natural and positive law, the
former will vanquish the latter. The principle of natural law supports the theory of
objectivism in ethics. In the ethical sense, natural laws are intrinsically objective and hence
are supported by the principles of morality. Natural laws are believed to be based on a
divine commands. The existence of natural laws makes it difficult to reform such laws and
the same time such laws can be used as constraints for the application of some positive laws
which are not consistent with such laws.
Natural law may be helpful for the implementation of many ethical principles via the
positive laws. Some political laws can be based on ethics and as such can be enforced more
strongly for the popular support. If the purpose of political party is to make human life
beautiful, enjoyable and happy, then political goals can be based on ethics because all these
are also the basic objectives of ethics. Thus, in a sense, politics and ethics go together for
quite a distance.
Should laws be based on ethics? The answer to this question is absurdly simple in the sense
that almost all civil and criminal laws follow the basic principle of ethics. The laws that
prohibit killing, stealing, burglary, cheating and so on are based on ethical foundations. The
ethical principles are first line of defence for the concept of good laws. The formulation and
implementation of such morally based laws are also part of ethical principles. In many of the
cases, the legal system provide s the framework to regulate and ensure an ethical system of
behaviour in a society. Law represents a collective moral of standard of a society at a
particular juncture of history. However, the legalistic code may not always concern to the
ethical code of behaviour, and vice versa. There are some laws in some countries which are
Draconian in nature and inhuman, and totally unfair. Some laws support gender and radical
discrimination. Some laws, as in South Africa in the past, may work against the majority of
population and some are against the minorities.
In many cases, the respect for law is due to respect for the moral authority. The moral
respect of law is the foundation of human culture. There may also be the fear of
punishment or coercion. Even though law imposes some restraints on the liberty of human
beings. Still laws are obeyed because they are supposed to maximize the social welfare or
bring about an order in a society which otherwise will be full of chaos and confusions
without such laws. One of the best example is perhaps the traffic laws and rules. There is
then a definite nexus between laws and morality. In many countries and for many issues,
legal issues are based on moral dimensions. Suppose that there is prohibited area and
people from outside are not permitted to enter the area. If some journalists observe from a
distance that somebody is being molested there. Is it morally right for the journalists to
enter the place and save the victim, even if there is a notice that “Trespassers will be
prosecuted”?. Many experts may opine that it is morally right for that journalists had no
special right of access to the facility not available to the facility not available to the general
public and the violation of law is not permitted (Day, 2006, p.48).
It is imperative to understand that all moral issues cannot be or are not codified. For
instance, offenders of your sentiments, betrayal by friends, unkind behaviour, insulting
words, unilateral breaking up of long-standing relationships and so on are not legally
punished. But in spite of all these aberrations, most of the times, the basic legal obligation
are based on ethical principles. The best examples are provided by various clauses and
provisions for civil an criminal procedure codes of any country. However it does not mean
that all moral principles are taken care by laws. There are many types of social aberrations
like the marriage between two adults even without the consent of parents is legally valid,
and in the same way, the sexual relation between two consenting adults. But, these are not
morally supported activities.

MANAGERIAL INSIGHTS FROM INDIAN ETHOS

The term ethics is derived from the Greek word Ethikos meaning conduct custom or habit
Indian ethics is an admixture of and an attempt to juxtapose the possibility of the realization
of god and the goodliness in human souls. Indian Ethos is a result of hindu way of life

Managerial Insights from Mahabharata

The world’s greatest epic Mahabharata is a plethora of knowledge. Many modern day
management lessons are derived and practically applied from this knowledgeable grantha.
This book focused on Karma not only tells us the story of a king or kingdom but guides us
through the conduct in our day to day lives. ‘Mahabharata’ has acquired the status of a
comprehensive management text of great intrinsic value. The researchers with a view to
extract the essence of good management practices and develop an effective model of Indian
management system.

Managerial Insights from the Bhagavad Gita

Bhagavad Gita expounded thousands of years ago by the Super Management Guru
Bhagawan Sri Krishna enlightens us on all managerial techniques leading to a harmonious
and blissful state of affairs as against conflicts, tensions, lowest efficiency and least
productivity, absence of motivation and lack of work culture. Bhagvad Gita contains the
timeless principles that will empower leaders to be effective and authentic leaders. The
greatest need at this point in time is for those people who have been called to lead to step
forward, arm themselves with the instructions of Bhagvad Gita, and take up the Service of
Leadership. The Gita is not merely a holy book meant for reverence and ritual worship, . The
book acquaints the readers with the fundamentals of life, which include the human body
and the soul, pleasure and pain, God and nature, good and evil, the different qualities
inherent in human beings, yoga, meditation, desires and other similar aspects. The modern
management concepts like vision, leadership, motivation, excellence in work, achieving
goals, meaning of work, attitude towards work, nature of individual, decision making,
planning etc.
Managerial Insights from Arthashastra

Arthasastra is one of the most influential and important books on the art of statecraft and
ublic administration, most of the commentaries on Arthasastra highlight its political,
diplomatic and administrative insights. According to Dr. Subhash Sharma although written in
a different time-span and in different social context, Arthasastra contains a number of trans-
temporal ideas that modern managers will find useful.Kautilya’s penetrating insights in
different aspects of management and administration have relevance for efficiently
managing the large business and non-business enterprises. Let us identify some of these
management ideas from Arthasastra.

1. Philosophy of Arthasastra: Arthasastra is defined as a science which is the means of

acquisition and protection of the earth. Artha is regarded an one of the important foals of
human existence; the other being dharma, Kama and Moksha. Artha is usually “understood
to stand for material well-being as well as the means of securing such well-being,
particularly wealth”. The Arthasastra views the pursuit of artha, as the primary goal of
human existence.
2. Leaders as Achievers/Vijigsu: Arthasastra views the man in leadership position as a
vijigsu, i.e. desirous of vijaya (victory/ achievement). Vijigsu is an all-encompassing phrasa,
denoting the “overall achievement orientation” of the leader. However, this achievement
orientation is not guided by the narrow self-interest, but by the yogakshema i.e. well-being,
prosperity, happiness and security of the ‘subjects’ or the organizational members.
3. Leaders Use of Autority/Power/Danda: On the use of authority or power to punish
(danda), Kautilya cautuons his ‘ideal king’ to use it judiciously. Further, he advises to use it
to protect the weak from the stronger. “For the (king), severe with the Rod, becomes a
source of terror to beings. The (king), mild with the Rod, is despised. The (king), just with the
Rod, is honoured”. Thus, the leader is advised not to misuse his power and authority.
Kautilya prefers the use of power to in still the order and protect the weak.
4. Concern for People: Arthasastra brings out the concern for people as one of the main
ideas. It is suggested that the actions of the leader should be guided by this concern. The
concept of yogakshema reflects this concern. “In the happiness of the subjects lies the
happiness of the king and in what is beneficial to the subjects lies the happiness of the in
and in what is beneficial to the subjects is his own benefit. What is beneficial of himself is
not beneficial to the king, but what is dear to the subjects is beneficial to him”.
5. Kautilyan Theory of Motivation: According to Dr Subash Sharma Arthasastra identifies
four different methods of motivation, viz. sama, danda and behead. As a group they can be
referred to as ‘motivation means’ and their various combinations as ‘mans-mix’, sama is the
persuasion method of motivation, dama is the ‘incentive system’ or the reward method of
motivation, dama is the ‘internal competition’ method of motivation, and danda is
punishment method of motivation by use of power/authority/force or to use the current
terminology from management literature, the ‘Theory X’ of motivation. Arthasastra also
suggests the sequencing of the use of above stated means. The ‘natural method’ is to use
the sama (persuasion) and the dama (incentive) first, creating internal competition comes
next and the use of force comes as the last method. Arthasastra also suggests that different
situations require different types of motivation means-mix.
6. Analysis of Power: Power as Prime Mover: According to Dr. Subhash Sharma Arthasastra
refers to three types of power, viz. power of knowledge, power of authority, and the power
of personal energy and drive. Corresponding to these three types of powers, there are three
types of success, viz. success attained through the power of counsel, success attained
through the power of authority, and success attained through power of personal drive or
energy.
7. Mandala Theory of Organizations: The mandala theory was developed by Kautilya in the
context of power relationships in the context of inter-state relations. The ideas presented in
the theory can also be used in organizational analysis, particularly in the analysis of power
relationships within various organizational units and with respect to various organizational
members. Mandala means a circle with a centre or nucleus. Within an organization, a
number of mandalas may exist. In decentralized structures, each decentralized unit can be
thought of as a mandala.
8. Financial Information and Control Systems: In addition to the individual responsibility for
profits, a detailed information and control system was also recommended. The purpose of
this system was to monitor the progress on t periodic bases and was based on the concept
of periodic monitoring. The frequency of monitoring is given due consideration. Further,
Both revenues as well as expenditures were classified according to various parameters, such
as head of income, course, period, quantity, etc. A classification system for the surpasses of
expenditure reporting was also recommended (Sharma)
Managerial Insight from Vedas
Vedanta is one of the world’s most ancient religious philosophies and one of its broadest.
Vedanta is universal in its application and is equally relevant to all countries, all cultures, and
all religious backgrounds. Swami Parthasarathy in his book Vedanta Treatise says, ‘Vedanta
literally means the end of knowledge. It is a systematic knowledge which explains the
relation between man and God. A knowledge that is founded on its own authority. Vedanta
trains you to think for yourself. To analyse, investigate and realize the essence of life. Not to
rely on outside forces to do your thinking. Not to submit yourself to blind faith, superstitious
beliefs and mechanical rituals. We generally depend on western management thought. But
Indian philosophy and culture has also much to contribute to build up Indian management
thought. Vedanta has many things to contribute in different areas of management like
motivating, leadership, communication, management of men, development of proper work
culture etc.
CONCEPT OF BUSINESS ETHICS
The study and examination of moral and social responsibility in relation of business practice
and decision making in business is known as business ethics.
BENEFITS OF BUSINESS ETHICS
The many benefits that arise from managing ethics in the workplace are:
•Attention to business ethics improves society. 
•Ethical practice contributes towards high productivity and strong team work.
•Changing situations require ethical education. 
•Ethical practices create strong public image. 
•Strong ethical practices act as insurance.

IMPORTANCE OF BUSINESS ETHICS

 BE provides a broad framework for giving guidance to all those who run the
business. This guidance is based on certain moral principles that we deceive from
ethics. Without such a framework, business may go haywire.
 A company based on ethical principles is trusted by all the stakeholders like
customers, suppliers, employees and the public.
 A business based on ethics improves its social image which gives it a long standing
goodwill and financial pay off at the end. A better public image brings about many
types of positive externalities and consequences.
 Business ethics improves and strengthens organisational culture at all levels both
within and without.
 A company which ethically strong and committed generate a sense of
empowerment and security among its employees and stakeholders.
 Ethics-based companies are empirically found to have strong team work,
commitment and higher productivity than similar other firms which have no ethical
foundations.
 A company run on the basis of business ethics can avoid many types of work-related
conflicts both within and outside the firm.
 Many types of market failures that arise from misleading information, lack of
transparency, non- absorption of harmful externalities of firms can be prevented by
ethically run organisation.
 A firm works under ethical principles can save a lot of money
 Business Ethics helps to protect consumer’s right.

References: Business Ethics and Corporate Governance by B N Ghosh

THEORIES OF ETHICS
THEORY OF CONSEQUENTIALISM
A consequentialist philosophy is based on consequences of action. Some human action
which are good for society at large are regarded as good action. It is the outcome of the
action on the society which is important. A consequentialist theory is end based (teleology).
If the consequences and end are good, then it can be recommended for implementation;
otherwise not. Consequentialism embodies in itself two important schools of moral
philosophy. These two schools are utilitarian and teleological thought.
UTILITARIANISM
Utilitarianism is a teleological theory regarding what we ought to do. It is a normative
ethical principle of judging the right or wrong of a human action. According to this theory
social welfare is the sum of the well-being of all individuals. It considers the utility of rules or
law, and is therefore, more concerned with policy formulation. Utilitarianism states that
man worldly happiness is the only good. This is a normative positive test of all policies,
actions and institutions.
The concept of utilitarianism has many loose ends and it means many things to many
people. The following are the basics meanings of utilitarianism:
 Greatest good of the greatest number
 Maximization of pleasure
 Minimization of pains
 Maximization of happiness
 Satisfaction of desire
Although there are various meanings and versions of utilitarianism, there is one common
philosophy underlying all these notions. They are basically concerned with the
consequences of an action or judgement. The philosophy is anti-kantian, in the sense that
unlike the Kantian idea, it does not emphasize the intention of the moral action but on its
end –result, the consequences. It is a philosophy which is the same as that of
consequentialism. In the case of utilitarianism, the end justifies the means. Theory of
utilitarianism is sometime interpreted in terms of cost and benefit analysis.
There are basically two variants of utilitarianism- Act Utilitarianism and Rule Utilitarianism.
The Act utilitarianism is concerned with those action which will bring greatest happiness to
greatest number of people. However, in case of act utilitarianism, the problem arises
because some acts are by themselves not socially acceptable like stealing. Hence act
utilitarianism has to be supplemented with rule utilitarianism which give direction to the
former.
Limitation of Utilitarianism
 The theory is incoherent because you cannot maximize two number at same time
(greatest happiness and greatest number).
 Utility is essentially a subjective concept.
 In the case of utilitarianism the end justifies the mean.
 Utilitarianism does not consider the individuals or minorities.
 There is a critical question that utilitarianism does not answer. Suppose some actions
are by nature morally wrong, but their consequences are good. Utilitarian will
support those actions. But then this will not prima facie entitle the theory to be a
moral.
TELEOLOGICAL THEORY
Greek philosophers, in particular Aristotle, popularized the teleological theory. The word
teleology derived from’ telos’ which mean the end or the consequences. Thus the theory of
consequentialism is directly associated with the teleological theory. There are indeed many
variation of the theory of teleology. At one extreme of the teleological theory there may be
egoism and the other end there is utilitarianism as suggested by Bentham and J S Mill.
Utilitarianism provides a concrete decision making process to choose an action or policy. An
action is taken only if it maximizes the net utility or benefits from a given benefits or
circumstances.
Egoism which is a form of teleology accepts any decision which produces individual gain or
benefit. These benefits include pleasure, power, fame and name. An egoist will choose a
situation which will increase his personal gain or satisfy his ego. The basis of egoism is self
interest. They will go to any extent to maximize their personal gain or objective function.
They are short sighted and unethical in principle. However there are another variety of
egoism known as enlightened egoism, which is socially better than pure egoism. Enlightened
egoism takes into account a long term perspective and also allowed for the welfare of
people and society, but in every case self interest remains the primary consideration.
Teleological theories do give a definite perspective to make moral choises by comparing the
competitive alternatives, and the relative impact on people. Teleological theories are,
however criticized on the ground that they rely too much on unknown and uncertain results,
and neglect the right need of minorities. These rights and need may be in conflict with those
of the majority.
KANTIAN DEONTICISM
The greek word “deon” means duty. Deontology refers to a particular type of ethical
behavior based on rights and duties and not merely its consequences- it is the intention or
motive that matters rather than the consequences of the overt action. Thus, deontologist
are non-consequentialists which is governed by certain dos and do nots. As per the principle
you should not steal or kill even if they lead to maximum gain or happiness. The principle of
deontology is based on the idea of correctness or rightness of moral behavior. However,
there are certain moral behavior pattern that are recognized universally as good behavior,
like respect your parents and elders.
According to deontologists, the nature of moral principles is permanent and stable. The
performance of these principles into action determines the degree of ethical behavior of an
action. The deontological theory emphasize the means.
Kant is the leading founder of the principle of universalism. This is also known as
deontological ethics. It is a kind of non-consequentialist ethics. The basic idea of ethical
principle is that the end can never justifies the means of an action. Universal ethical
principle is based on justice, rights, fairness, honesty and respect. Kant make it clear that:
 Morality is impartial. It applies equally to everybody.
 Morality is concerned with our in intention and not necessary with the consequences
of our actions.
There are two types of deontologists: Act deontologist and rule deontologist. Act
deontologist believe that the ethicalness of a ethicalness of aperson can be known
by his over action which should be based on justice, fairness, benevolence, equity
and kindness. Act deontologist s observe that deontological rule provide only
guidelines. In other words, act deontologists insist that people should have some
knowledge about certain rules which are right and act accordingly without any
reference to deontological rule.
References: Business Ethics and Corporate Governance by B N Ghosh
VALUES OF MANAGERS AND EXAMPLE OF INDIAN VALUE SYSTEM
Values of managres
 Values reflect one’s personal attitudes and behavior
 Value literally means something that has a price
 The concept of right or wrong good or bad are determined by the individuals
value system
TYPES OF VALUES
1. Terminal value
2. Economic value
3. Aesthetic value
4. Social value
Values for managers
 Managers with values
 Shape the working environment
 Align the belife’s perception of employes
 Build the right attitude for work/ meeting organizational goals

Relevance of values for mangers

 Resolve ethical issues

 Helps in setting high standards
 Effectiveness at work depends on ethical and moral values
Work place values

The importance of work place values

1. Being accountable
2. Making on difference
3. Focusing on details
4. Delivering Quality
5. Keeping promises
6. Being completely honest
7. Being reliable
8. Being positive
9. Show tolerance
10. Hepling others

Example of values at TATA COMPANY

Tata has been values driven.there values continue to direct the growth and business of the
companies.The 5 corevalues underpinning the way we do business are:
 Integrity: We must conduct our business fairly with honesty and transparency
 Undersatanding: We must be caring show respect companion and humity for our
colleagus and customers around the world
 Excellence: We must constantly strive to achive the highest possible standards in our
day to day and qulity of the goods and services we provide
 Unity: We work cohesively with our collegues across the group and with our
customers and partness around the world.
 Responsibility: We must continue to r responsible sensitive to the countries.
APPROACHES OF BUSINESS ETHICS
Ethics is the study of what is right or good human conduct. Ethics is considered as the
science of morality or simply, ethics is moral philosophy which deals with moral conduct,
judjment, habit, character, rules or principles.
The basic approaches of business ethics are:

1. Teleological approach:

Also known as consequentiality approach, it determines the moral conduct on the basis of
the consequences of an activity. Whether an action is right or wrong would depend upon
the judgement about the consequences of such an action. The idea is to judge the action
moral if it delivers more good than harm to society. For example, with this approach, lying
to save one’s life would be ethically acceptable.

Some of the philosophers supporting this view are nineteenth century philosophers John
Stuart Mill and Jeremy Bentham. They proposed that ethics and morality of an act should be
judged on the basis of their ultimate utility.

An act would be considered moral if it produced more satisfaction than dissatisfaction for
society. It must be understood that this satisfaction or happiness should be for the society in
general and not to the people committing the act or the people who are directly involved in
the act.

For example, not paying the money to someone whom you owe may make you happy but it
disrupts the social system of fairness and equity thus making the society as a whole
unhappy. Accordingly, this would not be considered as a similarly, a party who breaks a
contract may be happy because it is beneficial to it, but it would damage the society’s legal
framework for conducting business in an orderly fashion. Hence, it would not be an ethical
act.

2. Deonotological approach:

While a “teleologist” focuses on doing what will maximize societal welfare, a

“deonotologist” focuses on doing what is “right” based and his moral principles.
Accordingly, some actions would be considered wrong even if the consequences of these
actions were good. According to DeGeorge:

“The deonotological approach is built upon the premise that “duty” is the basic moral
category and that the duty is independent of the consequences. An action is right if it has
certain characteristics or is of a certain kind and wrong if it has other characteristics or is of
another kind”.

This approach has more of a religious undertone. The ethical code of conduct has been
dictated by the Holy Scriptures. The wrongs and rights have been defined by the word of
God. This gives the concept of ethics a fixed perception. Since the word of God is considered
as permanent and unchangeable, so then is the concept of ethics.
Holy Scriptures like those of the Bible, the Holy Quran, Bhagwad Gita and Guru Granth Sahib
are considered to be the words of God and hence must be accepted in their entirety and
without question. In similar thinking, though based upon rationality, rather than religious
command, Emmanuel Kant, an eighteenth century German philosopher suggested morality
as universally binding on all rational minds.

According to him, “Act as if the maxim of thy action were to become by thy will a universal
law of nature.” This mode of thinking asks whether the rationale for your action is suitable
to become a universal law or principle for everyone to follow. For example, “not breaking a
promise” would be a good principle for everyone to follow. This means that morality would
be considered unconditional and applicable to all people at all times and in all cases.

This approach suggests that moral judgments be made on the determination of intrinsic
good or evil in an act which should be self evident. For example, the Ten Commandments
would be considered as one of the guidelines to determine what is intrinsically good and
what is intrinsically evil.

3. Emotive approach:

This approach is proposed by A.J. Ayer. He suggests that morals and ethics are just the
personal viewpoints and “moral judgements are meaningless expressions of emotions.” The
concept of morality is personal in nature and only reflects a person’s emotions.

This means that if a person feels good about an act, then in his view, it is a moral act. For
example, using loopholes to cheat on income tax may be immoral from societal point of
view, but the person filing the income tax returns sees nothing wrong with it.

Similarly, not joining the army in time of war may be unethical and unpatriotic from the
point of view of the society and the country, but the person concerned may consider war as
immoral in itself. According to this approach, the whole idea about morality hinges on the
personal view point.

An extension of Emotive theory puts focus an the integrity of the person. While the person
is looking for his own “long term” benefit, he must have a “virtue ethics perspective” which
primarily considers the person’s character, motivations and intentions.

Character, motivations and intentions must be consistent with the principles accepted by
society as ethical. The advantage of this approach is that it allows the ethical decision maker
to rely on relevant community standards, “without going through the complex process of
trying to decide what is right in every situation using deontological or teleological
approaches.”

4. Moral-rights approach:

This approach views behaviour as respecting and protecting fundamental human rights,
equal treatment under law and so on. Some of these rights are set forth in documents such
as Bill of Rights in America and U.N. Declaration of Human Rights. From ethical point of
view, people expect that their health and safety is not endangered by unsafe products.
They have a right not to be intentionally deceived on matters which should be truthfully
disclosed to them. Citizens have a fundamental right to privacy and violation of such privacy
would not be morally justifiable.

Individuals have the right to object and reject directives that violate their moral or religious
beliefs. For example, Sikhs are allowed to wear turbans instead of putting on a hat as
required by Royal Canadian Police, because of their religious beliefs.

5. Justice approach:

The justice view of moral behaviour is based on the belief that ethical decisions do not
discriminate people on the basis of any types of preferences, but treat all people fairly,
equitably and impartially, according to established guiding rules and standards. All mankind
is created equal and discriminating against any one on the basis of race, gender, religion,
nationality or any such criteria would be considered unethical.

From organizational point of view, all policies and rules should be fairly administered. For
example, a senior executive and an assembly worker should get the same treatment for the
same issue, such as a charge of sexual harassment.