3/18/2025

By:
Ms. Pushpa Prajapati
Assistant Professor

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SYLLABUS: UNIT 3
BUSINESS ETHICS

 Concept and Significance of Business Ethics in Organisational

Settings
 Approaches and Practices Governing Ethical Decision Making
 Codes of Ethics
 Normative and Descriptive Ethical Theories
 Ethos of Vedanta in Management
 Role of Various Agencies in Ensuring Ethics in Corporation
 Setting Standards of Ethical Behaviour
 Assessing Ethical Performance

Corporate Governance, Ethics and Social Responsibility of Business March 18, 2025

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4 Business Ethics
 A company is constituted by various elements having continuous
communication among the stakeholders.
 Beginning from the shareholders to the people in the society are
interested in the affairs of the corporate world.
 The people in the society are the contributors, the beneficiaries as
well the victims of corporate world.
 The constituents of the business world may consists of - promoters,
shareholders, prospective investors, suppliers, customers,
employees, competitors, government and the general public.

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5 Business Ethics
 All businesses need to follow a set of rules or ethics for all
purposes.
 These fundamental rules must be followed by businesses including
offering its customers high-quality products and services at fair
costs.
 These rules include ethical practices to be observed in managing
routine day-to-day activities with all the stakeholders, namely
other similar companies, suppliers, vendors, consumers,
employees, government, and business environment.
 Additionally, it must abstain from adulteration, deceptive
advertising, and other unfair business practices.

6 Business Ethics
 Business ethics is moral principles that define right or wrong
behaviour in the world of business.
 Business ethics is the evaluation of business activities and
behaviour as right or wrong.
 A systematic study of moral matters pertaining to business, industry
or related activities, institutions, or practices and beliefs.
 Described as the "consideration and application of frameworks,
values, and principles for developing moral awareness and
guiding behavior," ethics is synonymous with terms such as "moral,
good, right, just, and honest."
 Ethical standards are often referred to as "human conduct
principles or ideals," reflecting qualities that contemporary society
deems desirable.

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7 Features of Business Ethics

 Code of Conduct: a manifestation of business ethics, delineating acceptable
and unacceptable behavior that companies are obligated to follow.
 Moral and Social Values as Foundation: a set of principles for companies to
guide their operations.
 Safeguarding Stakeholders: a protective mechanism for various stakeholders
associated with the business, including customers, employees, suppliers,
vendors, shareholders, investors, and government entities.
 Establishing a Fundamental Framework: outlining the parameters within which
a company is expected to conduct its operations. It defines the social,
cultural, economic, legal, and ecological context for the company's
functioning.
 Voluntary Nature: Business ethics is inherently voluntary and is meant to be
adopted willingly by companies operating within the broader regulatory
framework.

8 Features of Business Ethics

 Education and Training Requirements: To enforce and implement
ethical practices, businesses require adequate education, awareness,
and training. This ensures that they comprehend the significance of
ethical practices and can implement them in accordance with the
norms and regulations of their respective countries.
 Relative in Nature: Business ethics is relative, exhibiting variations
between different businesses and countries.
For example, the ethical norms prevalent in European Union nations
may differ from those in North or South American countries.

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9 Principles of Business Ethics

 Integrity: This includes maintaining the highest standards of honesty
and veracity in all business transactions.
 Trustworthiness: It entails exhibiting dependability, consistency, and
legitimacy in deeds and promises.
 Accountability: Business needs to take responsibility for all its actions
and decisions made and is prepared to take the responsibility of the
results or consequences of all these actions and decisions.
 Transparency: This includes providing complete and correct
information to all the stakeholders.
 Fairness: A business is considered to be fair when it treats all concerned
stakeholders including employees, customers and other companies
with equality, impartiality and without any kind of discrimination.

10 Principles of Business Ethics

 Respect: Treating all the people with equal dignity and respect both within
and outside the company.
 Caring: To show concern and consideration for the welfare of the people
and the society. Besides, it should be ensured that all activities of the
company are sustainable and observe ecological protection.
 Citizenship: Being an accountable and ethical member of the society as a
whole, the business community should favorably advance common good of
the community.
 Sustainability: Ensure promotion of long-term sustainability in its business
functions, practices, and strategic decisions.
 Compliance: Adherence to all legislations governing the company, rules and
regulations, and industry norms simultaneously with maintenance of highest
ethical standards.

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11 Principles of Business Ethics

 Conflict of Interest Management: Avoiding circumstances in which
relationships or personal interests could taint unbiased decisionmaking
or undermine the organization's integrity.
 Whistleblower Protection: Supporting and defending workers who bring
up unethical activity or policy infractions to notice.

12 Significance/ Importance of Business Ethics

 Build Customer Loyalty:
 Customers might be willing to take advantage of a business once, but
they will not return if they feel they have received unfair treatment, such as
being overcharged.
 Since serving an existing client does not involve marketing costs, and
obtaining a new one does, having a loyal customer base is one of the keys
to long-te
 Enhance a Company's Reputation:
A business's standing in the community for upholding moral
principles can help it project a more favorable image, which in turn
helps attract new clients through word-of-mouth recommendations.

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13 Significance/ Importance of Business Ethics

 Retain Good Employees:
 Talented people want to be appropriately compensated for their effort
and dedication, regardless of their position in the organization.
 They want to grow professionally inside the company to be determined by
the caliber of their work rather than by favoritism.
 They want to work for an organization whose management team is honest
with them about what's happening, including when layoffs or
reorganizations are being considered.
 Talented individuals are more likely to stay with companies that treat them
fairly and transparently.
 Employees who do not think the remuneration as fair may not be as
committed to their work as they should be.

14 Significance/ Importance of Business Ethics

 Positive Work Environment:
 Employees must conduct themselves ethically from the start of their
employment interviews.
 They must be truthful about their qualifications and background.
 Employees who uphold ethics are viewed as team players as opposed to
the lone individuals.
 Stealing by the employee is a severe example of unethical behavior.
 This can be quite costly for the businesses in some sectors, including
restaurants where staff members pilfer food from the freezer or storage
locker.
 Making the effort to teach the employees about the appropriate behavior
is one strategy used by ethical businesses to prevent this kind of act.

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15 Significance/ Importance of Business Ethics

 Avoid Legal Problems:
 In the quest of profit, a company's management may be inclined to cut
corners, such as not completely complying with environmental standards
or labor laws, ignoring worker safety measures, or utilizing inferior materials
in their products.
 The consequences of being caught can be significant, including legal
expenditures as well as fines or sanctions imposed by government bodies.
 Even more expensive than legal bills or fines are the potential long-term
harm to the company's reputation that could arise from the negative
publicity that follows.
Law alone cannot protect society as no regulation can go to a deep
extent where ethics can.

16 Guidelines for Ethical Behaviour

 Obey the law: Obeying legal practices of the nation is conforming to ethical
values.
 Tell the Truth: E.g., Disclosing fair accounting results to the concerned paries and
telling the truth are ethical behaviour of managers.
 Respect for People: Managers need to respect people who come in contact with
them.
 Golden Rule : “Treat other as you want to be treated.”
 Above all, do not Harm: E.g., Even if law does not prohibit the use of certain
chemicals in certain products, managers should avoid using them voluntarily.
 Practice Participation- Not Paternalism: The organisation should be democratic
and not bureaucratic.
 Act when you have Responsibility: The action which has to be taken by
managers having authority and responsibility should take prompt action for the
benefit of the organisation and its stakeholders.

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18 Descriptive Ethics
 Descriptive theories objectively describe and analyse existing beliefs
and practices without making judgments about their inherent value or
morality.
 Describes people’s moral beliefs, claims, behaviour, etc. as they exist.
 Studied primarily by psychology, sociology, anthropology and history.
 Descriptive ethics is the study of morality from a scientific point of view.
 The description and explanation of the moral life focusses on the way it
exists in one’s moral experience and society’s moral code.
 Descriptive ethics is the scientific study or the empirical knowledge of
moral phenomena in the life of an individual and in the structure and
functioning of the society.

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19 Normative Ethics
 Normative ethics are concerned with the systematic construction of a valid
ethical system (a set of moral standards of evaluation and moral rules of conduct
applicable to all mankind).
 It prescribes how people ought to act based on moral or ethical principles.
 Attempts to discover which actions are in fact right or wrong, good or bad, and
what it takes to be right or wrong.
 The objective of ethical theories is to guide us to know and perform what is
morally right and to avoid what is wrong.
 Studied primarily by philosophy, theology, etc.
 Normative ethics include things like honesty, respect, and fairness.
 There are many rules in society that we must follow because they’re considered
to be normative ethics – such as not telling a lie or not stealing.

20 Examples
 Descriptive claims concern what is, was and could be?
 Example:
 How do we genetically modify animals?
 A gang member might believe it is right to avenge one killing with another.
 Employees need to be micro-managed for effectiveness.
 The dalits are untouchables.
 Normative claims concern what should be?
 Example:
 Should we genetically modify animals?
 Should one killing be answered with another?
 Should a manager do micro-management tor effectiveness?
 Should untouchability be prevalent in the society?

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21 Difference between Descriptive Ethics and Normative Ethics

Normative Ethics Descriptive Ethics
Normative ethics is the study of Descriptive ethics is the study of people’s
ethical action. views about moral beliefs.
Normative ethics set norms, moral Descriptive ethics analyses people’s existing
standards and rules that ought to moral values, standards and behaviour. It aims
be followed by people universally. to understand and describe moral behavior as
it occurs in reality, without prescribing any
standards.
Normative ethics attempts to Descriptive ethics simply describes how
evaluate or create moral standards people behave and what types of moral
and prescribes how people ought standards they claim to follow.
to act
It is also concerned with the criteria It analyses ‘what do people think is right?’
of what is morally right and wrong.

22 Difference between Descriptive Ethics and Normative Ethics

Normative Ethics Descriptive Ethics
Normative ethics debates moral Descriptive ethics, on the other hand,
principles like justice, rights, and examines the ethical beliefs and practices
welfare, seeking to establish ethical of different cultures and societies, and
guidelines. evaluate the development of the standards
behind these practices.
In normative ethics, philosophers Descriptive ethics, conversely, analyzes how
argue about what moral actions people actually behave in moral situations
people should take in various and the factors influencing these behaviors.
situations.
Teleological and deontological Descriptive ethics involves empirical
theories are the tools that help to research into people's ethical beliefs, often
determine this concept. using methodologies from social sciences.

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23 Difference between Descriptive Ethics and Normative Ethics

Basis Normative Ethics Descriptive Ethics
Purpose Prescribe behaviour Describe behaviour
Focus What should be done What is being done
Methodology Philosophical analysis Empirical Research
Objective Establish moral norms Observe moral practices
Outcome Ethical guidance Cultural understanding
Practicality Ideal Behaviour Actual Behaviour
Engagement Often anstract Grounded in reality
with reality

24 Normative Theories

Teleological Theories Deontological Theories

a)Utilitarianism/ Universalistic - a)Act Deontology –

Good is the good of all those based on circumstances
who are affected by an action.
b)Rule Deontology –
b)Theory of Virtue Egoism - based on rules,
Good is the good of the person generalised
who is acting.

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25 Normative Theories
1. Teleological / Consequentialist Theories
 These theories hold that rightness or wrongness of action is always determined by its
tendency to produce certain consequences which are intrinsically good or bad.
 They assert that right actions are those that have the best consequences.
 They give priority to ‘good’ over ‘right’.
 All actions that maximise the good are right actions.
 What is good is independent of what is right.
 Deals with consequentialism.
 These theories emphasize on goals and ends in determining moral quality of conduct
and character.
 It refers to the rightness of actions or moral values or character.
 It uses ends and goals to justify virtues and actions.
 This theory became famous in the 18th century.

26 Normative Theories
1. Teleological / Consequentialist Theories
 Consequentialism - Meaning
 It is a theory of ethics (teleological theories) that defines
righteousness or wrongness of an action by the goodness or badness
of its results.
 It states that end results of all our actions should be good.
 Ends should justify the means.
 If the result of an action is good or right for individual’s long-term
self-interest and also for the greatest number of the society, that
action should be considered right.
 Right actions are those that have good effect on health, reputation
and economic and social well-being, environment, etc. and also on
the well-being of others.

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27 Normative Theories
1. Teleological / Consequentialist Theories
 Features of Teleological theories:
a) It gives priority to what is ‘good’ over what is ‘right’. Good is the purpose or
the goal of human actions. Human actions should bring greatest
happiness for greatest number of people.
b) All actions that contribute to ‘good’ are moral actions. An action that
brings happiness for the greatest number of people is the right action.
c) Results and consequences determine the rightness or wrongness of moral
actions. It deals with consequentialism.

28 Normative Theories
1. Forms of Teleological / Consequentialist Theories
a) Theory of Ethical Egoism:
i. In this form the desired end is the long-term self-interest of an individual.
ii. It claims that while making a moral decision, one should consider the
long-term self-interest of the decision.
iii. Short-term self-interest, if any, should be sacrificed for the sake of long-
term self-interest.
iv. If long-term self-interest can be achieved by performing an action, that
action should be performed.
v. Thomas Hobbes and Ayn Rand are associated with this thinking.
vi. The ethical egoist maintains that an action is right in as much as it
maximises one’s own good, and wrong insofar as it detracts from one’s
own self-interest.

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29 Normative Theories
1. Forms of Teleological / Consequentialist Theories
a) Theory of Ethical Egoism:
vii. As with other consequentialists, the ethical egoists believe that
consequences alone make an action right or wrong, good or bad.
viii. What distinguishes the egoist from other consequentialists is that the
egoists measure only consequences to themselves i.e., their own self-
interest, and not to anyone else.
ix. An action is morally right if the consequences of that action are more
favourable than unfavourable, only to the agent performing that action.
x. This action will bring them personal satisfaction and fulfillment.
Example:
An individual could lie to gain professional advancement, even though
this may put their colleagues at a disadvantage.

30 Normative Theories
1. Teleological / Consequentialist Theories
b) Utilitarianism:
 Utilitarianism or universalistic theory is the best known teleogical
theory.
 Jeremy Bentham, John Staurt Mill and Henry Sidgwick were the famous
utilitarianists who asserted that actions should be judged on the basis
of the amount of pleasure they produce on all those who perform those
actions.
 They should bring good to all and not just those who perform those
actions.

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31 Normative Theories
1. Forms of Teleological / Consequentialist Theories
b) Utilitarianism:
i. The desired end is not long-term self-interest of the individual but greatest
happiness to the greatest number of people.
ii. Any action that brings greatest happiness to the greatest number of
people is a desirable action and should be performed.
Example:
 Redistribution of excess money from the rich to the poor.
 Donating to organizations that give people access to better
healthcare.
 Reducing existential risks like nuclear war, a global pandemic,
extreme climate change, and so on.

32 Normative Theories
2. Deontological Theories
 Deontology is a theory of ethics advocated by philosophers such as Kant,
Ross and John Rawls.
 This theory considers actions to be right or wrong regardless of their
consequences.
 Actions that have moral values are right; whether or not they are good.
 If telling lies is morally wrong, it remains wrong even if it brings happiness to
some people.
 Actions are ,thus, right or wrong depending on whether they are morally right
or wrong, irrespective of their consequences.
 What is ‘right’ has priority over what is ‘good’.

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33 Normative Theories
2. Deontological Theories
 Deontology is derived from the Greek work ‘deon’ which means
obligation or duty.
 It stresses on what is obligatory and what one ought to do, whether or
not it is good to do so.
 Specking truth may not bring good to some, but, one must speck the
truth as it is the moral duty of each one of us to speak the truth.
 They are two approaches to Deontology:
i. Act Deontology
ii. Rule Deontology

34 Normative Theories
2. Deontological Theories
i. Act Deontology:
 It claims that obligations and moral duties cannot be
generalised.
 It does not follow rules for performing specific actions.
 Actions are performed according to circumstances.
 Example: ‘In this situation, I must not break my promise’ is an
obligation that represents act deontology.
Situation – The company is in a big loss and your expertise is
required. You had promised the company that you will not turn
them down at times of misfortune.

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35 Normative Theories
2. Deontological Theories
ii. Rule Deontology:
 It claims that obligations and moral duties can be generalised.
 Moral duties and values consist of general rules and not actions
according to circumstances.
 Example: ‘We must always keep promises’ is an obligation that
represents rule deontology.
 These values, actions or duties are fundamental and do not
depend upon circumstances of particular situations.
 Actions are performed according to rules and not
circumstances.

36 Normative Theories
2. Deontological Theories
ii. Rule Deontology:
 Kant, Ross and Rawls are the prominent deontological thinkers.
 Kant – Result and consequences should not guide our actions. Our
actions should follow the moral law. If breaking a promise or telling a
lie is wrong, that action is immoral.
 Ross – we should all follow our moral duties regardless of their
consequences. One moral principle can be sacrified only for another
moral principle.
 John Rawls – Fairness is prior to goodness. Fairness of society’s rules is
more important than consequences of rules.

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Normative Theories –
37 Difference between Teleological and Deontological Theories

Deontological Theories Teleological Theories

Rightness or wrongness of an action is Rightness or wrongness of an action is
determined by its morality and not its determined by its consequences.
consequences.
Prominent thinkers are Kant, Ross and John Prominent thinkers are Bentham and Mill.
Rawls.
They give priority to right over good. They give priority to good over right.
Right action may not necessarily maximise Right action is that which maximises the
the good. good.
Right actions may or may not bring happiness Right actions brings happiness to individuals
to all people. performing the action (egoist theory) or to
greatest number of people (utilitarianism)
They are the theories of ethics that deals with They are the theories of ethics that deals with
duties and obligations. goals and end results of actions.

38 Descriptive Theories
 Some key aspects of descriptive ethical theories:
 Empirical Investigation: Descriptive ethics involves collecting data about
the moral practices, norms, and values of different cultures or groups.
Researchers might use surveys, interviews, participant observation, or
case studies to gather information about what specific groups consider
to be right or wrong.
 Cultural Relativity: Descriptive ethics often explores the concept of
cultural relativity, which acknowledges that moral standards can vary
significantly between cultures and that there is no absolute standard of
morality applicable to all cultures. This theory seeks to understand the
origins and variations in moral systems across different societies.
 Normative Implications: Descriptive ethics can also inform normative
ethics by providing a solid empirical foundation from which normative
theories can be evaluated or critiqued.

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39 Descriptive Theories
 Some key aspects of descriptive ethical theories:
 Psychological Basis: Some descriptive ethical theories focus on the
psychological underpinnings of moral decisions and behaviors. This
includes studies on moral development, such as Lawrence Kohlberg’s
stages of moral development, which explore how people’s ability to
reason about ethical issues evolves over time.
 Sociological Perspectives: Descriptive ethics also considers how social
structures, institutions, and class affect moral norms and practices. This
can include examining how laws, religion, family structures, and
economic systems influence moral behaviors and beliefs.
 Historical Context: Historical approaches in descriptive ethics look at
how moral concepts and practices have changed over time and how
historical events have shaped contemporary moral understandings.

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41 Decision-making
 Decision-making is the process of selecting a course of action from
among alternatives.
 Every decision-making process produces a final choice.

42 The Decision-making Process

The decision-making process involves the following steps:
1. Define the problem: If a problem exists, define the problem in terms of
what one wanted or expected and the actual situation. Problem is
defined as the difference between expected or desired outcomes and
actual outcomes. How one defines the problem determines how one
defines causes and searches for solutions.

2. Identify Alternative Solutions to the Problem: The decision-makers should

not limit themselves to obvious alternatives or what has worked in the
past but be open to new and better alternatives. They should consider as
many alternatives as they can. At least, four to five alternatives should be
considered.

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43 The Decision-making Process

The decision-making process involves the following steps:
3. Evaluate the Identified Alternatives: Decision-makers should look at the
likely positive and negative consequences of each alternatives. It is not
possible to find one alternative that would resolve the problem and is
better than all others. If evaluation is based on facts, it is likely that the
expected outcome will occur.
4. Make the Decision: Screen the non-feasible alternatives and select the
most appropriate alternative that will help to achieve the desired
objective. Alternatives can be selected based on:
 Experience: Managers follow their past actions, their successes or failures.
 Experimentation: Each alternative is put to practice and the one which is
most suitable is selected.
 Research and Analysis: Apply various mathematical models

44 The Decision-making Process

The decision-making process involves the following steps:
5. Implement the Alternative: Implementation must be properly planned.
Those who will be affected by the implementation should be allowed to
participate in the implementation process to make it effective and
fruitful.
6. Evaluate the decision: The implementation process should be regularly
monitored to know its acceptance in the organisation. Monitoring guides
to check if the objectives for which it was selected has been achieved or
not. If not, managers should make corrections whenever and wherever
necessary and if required make changes in the implementation process.

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45 Holistic Approach to Ethical Decision-making

 The contemporary business environment is governed by selfish motives.
 Managers work to maximise business profits, workers want maximum
wages, supplies want high prices for their supplies and shareholders want
maximum dividends.
 Everyone wants to maximise his/her interest.
 There is need to introduce a holistic approach to management.
 The ancient Indian thought advocates growth and prosperity for
everyone and not just one stakeholder.
 It believes in “Vasudhaiva Kutumbkam’. The whole world is seen as a
family and decision-making process is not oriented to the interest of the
companies only.
 All corporate members work together for the good of all the people.
 Holistic decision-making is ethical decision-making.

46 The Bhagavad Gita: Teachings in Management

 The Bhagavad Gita is an episode in the war of the Mahabharata which
covers dialogue between Arjuna and Lord Krishna.
 Hindus divide human efforts into four categories: Brahmanas, Kshatriyas,
Vaisyas and Sudras. Though each category is unique in itself, the quality
of individual action lies in the motive or desire that prompts the action.
 The actions are wisdom oriented and not governed by knowledge which
can be acquired by learning. Wisdom is born out of insight.

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47 The Bhagavad Gita: Teachings in Management

 The four categories of human efforts is applicable to business also.
 Every individual manager and the company have an inherent aptitude.

 Brahmanas – People engaged in R&D, Corporate Planning

 Kshatriyas – People engaged in marketing, sales, investor relations,
bench-marking, etc.
 Vaisyas – Finance, Logistics, trade-related operations
 Sudras – Service providers like receptionists, workers, etc.
 The attitude in business is reinforced by discipline, detachment and
devotion: the teaching of Gita.

48 5C’s and the Holistic View of Management

 In today’s worldly business, there are four types of managers:

1. Those who believe in “doing things right” and resist change (conservatives).
2. Those who relish change and believe in “doing the right things”
(Entrepreneurs)
3. Those who represent change and also get others to do the right thing
(Leaders)
4. Those who complicate the issues about being “right” (politicians)

 All these managers have to optimise their 5Cs to increase company’s

profitability and productivity.

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49 5C’s and the Holistic View of Management

 Success of business is determined by 5C’s, namely:

1. Capital (individual management of the gunas)

2. Capability (the human efforts unique to Brahmanas, Kshtriyas, Vaiyas, Sudras)
3. Connections (the rituals, dogmas and habits are the route to competitors and
supporters.)
4. Communication (the humble acceptance of the Krishna-Atman guidance)
5. Commitment (comes through discipline, detachment and devotion)

50 5C’s and the Holistic View of Management

1. Capital:
 Capital comprise of money, men, machines and methods.
 Their optimum combination is determined by the business motive and
expressed in the business vision, mission and core values.
 They have to be implemented with passion and compassion in order to
increase productivity, otherwise capital remains a mere resource.
 Every business should explore its core competence and intellectual capital.
 Unhealthy cost-cutting and cut-throat competition is harmful for all the
companies and they will find it difficult to sustain themselves in the long-run.
 Nishkam Karma will automatically reward companies.
 Managers are the trustees of capital and other resources. They should
optimally use them to the best of their ability.

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51 5C’s and the Holistic View of Management

2. Capability:
 Capability is the inner quality of the managers that makes their companies
different from others. It enables the companies to have competitive advantages
over others by developing new perspectives to do the same thing better, faster
and cheaper.
 New capabilities help in introducing change in organisational decisions in order
to service the market better.
 Every act is done with complete awareness i.e., the managers know what is right
or wrong. They should be constantly in look out for better decisions. No decision
is completely right or wrong. Managers need to unite their consciousness with
the work and be aware of what they are doing and how their decision would
impact the organisation and the society at large.
 Wise managers make business plans and strategies to review their capabilities
in the area of their core competencies. They do not depend upon external
support.

52 5C’s and the Holistic View of Management

3. Connections:
 Capital and capability are the supply-side of business while connections
examine its demand-side.
 Connections include physical links and intricate personal networks.
 They include feed forward and feedback market analysis to understand the
demand-side.
 These analysis and reviews provide an idea about the impact of decisions on
customers.
 The manager stays connected with self and his stakeholders and promotes
interest of all.
 Truth and faith are the bases of all work. Work done without faith is nothing.
 A business needs to maintain a culture of integrity in order to sustain trust,
inside and outside.

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53 5C’s and the Holistic View of Management

4. Communication:
 Applying the principles of Gita in business communication, it is important for
themanagers in business to understand ‘how things have been said and not
what is said.”
 Responses are determined by the timings and circumstances and not
content and duration of the message.
 The way, a fact is communicated , has a very strong impact on the
audience..
 It is important that the receiver, receives the information in a humble manner
irrespective of whether he is worthy or unworthy of the message.
 Positive information, at proper time and in proper circumstances gets a
positive response and promotes business dealings amongst all those who
have interest in business.

54 5C’s and the Holistic View of Management

5. Commitment:
 Commitment of managers and owners to the business is the root cause of its
success.
 A business can survive and sustain in the long-run of its managers are
committed to their duties.
 They should be committed to business decisions that are related to time
sensitive issues (important matters).
 Unimportant decisions needs commitment too, but at a reduced level.
However, unimportant matters resulting in waste of resources should be
abandoned.
 Not so urgent and unimportant issues can be delegated to subordinates.

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56 Ethos - Meaning
 Ethos are the characteristics, spirit and beliefs of community people and the
way they react to various problems and situations in life. It refers to habitual
character of a group or community. – Oxford Dictionary
 Ethos means reputation. It means personality and self-character .
 Ethos has more to do with public image than with a private self.
 A person’s ethos is created through language and action rather than pre-
existing time, place and action.
 What a person says and does and how an audience interprets that language
and action creates a person’s ethos.
 Indian ethos are deep and unseen foundation supporting the superstructure of
India.
 There is no one Indian culture, but there is one Indian ethos at the level of the
vedantic “deep structure.” This is called holistic approach.
 There is close relationship between spiritual and worldly life of a human being.
 Vedantic ethos is capable of enriching and elevating the economic and
managerial processes in organisations.

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57 Features of Indian Ethos (The Indian Ethos)

1. Individual is the focal, nucleus point in Indian ethos and is called the foundation
and basis of Indian ethos. If you are good, the world is good. Such a thought
ensures the wholesome quality of work life.
2. Indian ethos emphasises on duties and responsibility, it rarely speaks of rights
and privileges of an individual.
3. Balance is the key of Indian thought. There has to be synthesis and harmony
between the dual concept of desire and desirelessness and between
materialism and spiritualism.
4. Divine values are based on wisdom and character is based on divine values. A
good manager must inculcate these values for effective management.
5. Main emphasis is on wisdom which comes through experience.

58 Features of Indian Ethos (The Indian Ethos)

6. Materialism without spiritualism is not acceptable to Indian ethos. Such a state of
affairs is Anartha (devoid of goal). Artha has two meanings: goal (of human
activity) and wealth. Artha Shastra means the science dealing with the wealth of
a nation (ECONOMICS).
7. Dharma should be upheld at all times while the goals of life – PURUSHARTHA (the
purpose of being a human) – i.e., Dharma, Artha, Kama and Moksha, should be
achieved through means which are consistent with dharma.
8. Indians need to articulate their own home grown, artha niti governed by Indian
tradition evolved over several million years, from the vedic times.
9. In an economic system, governed by Indian traditional ethos, universal
humanism will be governing economic engine for creation of wealth (artha) and
for utilisation of wealth for common welfare.

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59 Indian Ethos and Management

 Each society has to draw lessons on ethics from its own culture specific areas – its
own psychological make-up. It cannot draw ethical lessons from another society.
 The body of knowledge, which derives solutions from the rich and huge Indian
system/culture of ethics is known as Indian Ethos in Management.
 Management is behavioural science and it has to be culture specific.
 The cultural basis of India is the basis of Indian Ethos in Management.
 As a country’s culture has its root in its religion, it draws its lessons from the religions
of the land, be it Hinduism, Buddhism, or any other.
 Indian Management do not preach morality. Even a ten year old knows what is
right and what is wrong. The problem is to implement good values in real life and
yet become a great achiever.
 This is the crux of many problems, and all Indian Management does it to show the
path towards that Indian Ethos.

60 Indian Ethos and Management

 The Mahabharata talks ablout 4-types of dealing with people. One has to
judiciously use these methods to deal with people.
1. Saam (treating equally)
2. Daan (rewarding)
3. Dand(punishment)
4. Bhed (Discrimination)
 According to our scriptures, people are oriented towards three character sets:
1. Tamasik (The Simpleton)
2. Rajasik (The forceful/ambitious)
3. Satwik (The Wise)

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61 Indian Ethos and Management

 Conduct of 4 types of transactions with the 3 character sets.

Method Tamasik Rajasik Satwik

Saam Guide Inform Consult
Daan Reward Empower Recognise
Dand Criticise Challenge Silence
Bhed Control Warn Monitor

62 Indian Ethos and Management

 The major business houses that follow the Indian ethos to name a few are:
 The Excel Industries, Poona
 Yash Paper Mills, Ayodhya
 The Vivek Group, Chennai
 The Alacrity Foundations Pvt. Ltd., Chennai
 Vijay Wires and Filaments, Mysore, etc.
 Over years, most of the leading management schools including the IIMS have
introduced Indian Ethos and Management in their curriculum.

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63 Ethical Corporate Practices

 Alacrity Foundation, Chennai India:
 Alacrity Foundation is a housing development company which is a good
example of ethics.
 It adopted honesty and fair practices as its values and discouraged its
employee to pay and bribe while dealing with government officials.
 Their projects got delayed for few months but, it earned a strong goodwill
for the company later on in terms of more business and reputation as a
provider of housing units.

64 Ethical Corporate Practices

 Maruti Udyog Ltd. (MUL):
About 50,000 Maruti 800s sold between January to April, 1997 were
recalled.
In January 1997, Sona Steering’s raw material supplier, Mukund
Limited, supplied it low alloy steel dubbed SCM 415 for
manufacturing the pinions.
But, due to an error at Mukund’s stockyard, the batch of raw
material consignment dispatched to Sona Steering was of a
different grade of steel, which was not meant for pinion
manufacturing.
It was detected during the gruelling test drives the cars are subject
to, and the whole batch of 50,000 cars was recalled at the
companies expense.

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65 Ethical Corporate Practices

 TATA Group companies, The Aditya Birla Group, HDFC, Infosys
Technologies Ltd., Hero Group, Choksi’s Asian Paints, the TVS Group are
some of the examples of ethical corporate practises.

66 Unethical Corporate Practices

 Chiso Corporation Case at Minimata Japan:
 The company dumped mercury in the water along with effluents which
got absorbed by fishes and finally eaten by human beings leading to eye
and birth defects.
 While the lawyer could establish in the court that there was no violation of
norms prescribed by the Government.
 However, the corporation was held responsible on moral grounds and had
to suffer the consequences.

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67 Basic Principles of Indian Ethos in Management

 There is an increasing awareness and effort by a few business
corporations, management scholars and consultants to discover and
create principles based on the Indian ethos rooted in Indian history,
mythology and spirituality. This will help our young managers to bring
meaningful solutions to India’s problems.
 Curriculum are being reqritten to include the teachings of VEDAS,
PURANAS and UPANISHADS.

68 Basic Principles of Indian Ethos in Management

The management principles based on ancient Indian wisdom include :
1. Each soul is potentially divine: We have to unleash the infinite potential of the self. You are
that (Supreme). Each one of us have immense potential. We are born with a super
computer(our brain), stereo system (the ears), audiovisual unit and the best camera (the
eyes).
Mahatma Gandhi, Mother Teresa, etc. discovered their potential and translated that
potential to performance (TAT TVAM ASI)
Each soul has immense power for self development. Productivity management is not just
getting things from others. It is helping others to produce extraordinary results.

AHAM BRAHMASMI TAT TVAM ASI

[I have immense potential [You are that (supreme) –
and I can make the every body can make
impossible possible] himself a genius]

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69 Basic Principles of Indian Ethos in Management

The management principles based on ancient Indian wisdom include :
2. Holistic management: “Atmano Mokshaya Jagat Hittayace”
(For one’s own development and for the good of the humanity)
 Holistic view of ethics looks at things in totality.
 The empirical side of it looks at the immediate causes and effects.
 Holistic principles of ethics demands all point of view.
 It considers the broader view of business and tries to offer a
comprehensive view point.

70 Basic Principles of Indian Ethos in Management

The management principles based on ancient Indian wisdom include :
3. Principle of cooperation and competition:
 If these two principles are followed, then principle of competition will be a barrier against
progress.
 Competitions are only momentary, unnecessary and extraneous efforts. Even when all
competitions have ceased, this perfect nature behind will make us go forward. – Swami
Vivekananda. So, competition is not necessary to progress.
 Also, Principle of Co-operation does not seem to work in reality, and the feeling can be
developed if ego is managed.
 “Lok Sangharaha” and “Nishkam Karma” are the two concepts of ego-less cooperation.
 There must be a balance between cooperation and competition.
•“Lok Sangharaha”
SELF MOTTO
•“Nishkam Karma”
From To

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71 Basic Principles of Indian Ethos in Management

The management principles based on ancient Indian wisdom include :
4. Combining Subjective and Objective:
 Knowledge gives insight and wisdom and will free us from mis-concepts,
eliminate false behaviours and actuate a withdrawal from wrong ways of
living.
 “Sukshma” or the subjective, intangible factors are equally important than
“sthula” or gross, concrete tangible factors.
 Lord Shiva has a third eye of wisdom and intuition. A manager must
develop third eye-vision, foresight and insight.
 Management is NOT getting things by others but helping ordinary people,
to produce extraordinary results.
 Men’s capacity is more important than plant capacity.

72 Basic Principles of Indian Ethos in Management

The management principles based on ancient Indian wisdom include :
5. Karma Yoga:
 The path of union through action.
 Karma means activity and Karma Yoga means the path where Karma is
the means employed for the spiritual practice which leads to the UNION
with the ultimate reality.

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Refer – Notes

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75
Book Bank
 Dr. Neeru Vasishth & Dr. Namita Rajput, Business Ethics and Values, Taxmann’s,
2021

Suggested Readings (Latest Edition):

o Fernando, A.C., Business Ethics, Pearson Education
o Balachandran, V., Corporate Governance, Ethics and Social Responsibility, PHI
o Mandal, S.K., Ethics in Business and Corporate Governance, Mc Graw Hill
Education Company
o Kumar, S.,Corporate Governance. Oxford, England: Oxford University Press.
o Sherlekar, S. A., Ethics in Management. New Delhi: Himalaya Publishing House
o Cullen, Business, Ethics and Society: Key Concepts, Current Debates and
Contemporary Innovations, Sage Publishing

Corporate Governance, Ethics and Social Responsibility of Business March 18, 2025

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