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BUSINESS ETHICS

UNIT-1

Meaning And Definition Of Ethics & Business Ethics


Ethics is a set of standards or code or value system, worked out from human reason & experience by which free human
actions are determined as ultimately right or wrong, good or evil.
Business ethics means the application of ethics in business
Definition of Business Ethics: Business Ethics is a specialized study of moral right and wrong. It concentrates on moral
standards as they apply particularly to business policies, institutions, and behavior.
According to Peter F. Drucker writes There is only one ethics, one set of rules of morality, one code that of individual
behavior in which the same rules apply to everyone alike.
Business ethics are nothing but the application of ethics in business. It proves that business can be and have been ethical
and still make profits. Today more and more interest is being given to the application of ethical practices in business
dealings and the ethical implications of business.
Objectives of Ethics
The objectives of ethics are as below:
1. The very basic objective is to define the greatest good of man and establish a standard for the same.
2. Set/Establish moral standards/norms of behavior.
3. An overall study of human behavior: what is moral or immoral should be assessed.
4. Apply judgment upon human behavior based on these standard and norms.
5. Suggest moral behavior, Prescribes recommendations about Dos and Donts.
6. Ones opinion or attitude about human conduct is expressed in general.
Nature of Business Ethics
The characteristics or features of business ethics are:1. Code of conduct: Business ethics is a code of conduct. It tells what to do and what not to do for the welfare of the
society. All businessmen must follow this code of conduct.

2. Based on moral and social values : Business ethics is based on moral and social values. It contains moral and social
principles (rules) for doing business. This includes self-control, consumer protection and welfare, service to society, fair
treatment to social groups, not to exploit others, etc.

3. Gives protection to social groups : Business ethics give protection to different social groups such as consumers,
employees, small businessmen, government, shareholders, creditors, etc.

4. Provides basic framework : Business ethics provide a basic framework for doing business. It gives the social cultural,
economic, legal and other limits of business. Business must be conducted within these limits.

5. Voluntary : Business ethics must be voluntary. The businessmen must accept business ethics on their own. Business
ethics must be like self-discipline. It must not be enforced by law.

6. Requires education and guidance : Businessmen must be given proper education and guidance before introducing
business ethics. The businessmen must be motivated to use business ethics. They must be informed about the
advantages of using business ethics. Trade Associations and Chambers of Commerce must also play an active role in
this matter.

7. Relative Term : Business ethics is a relative term. That is, it changes from one business to another. It also changes from
one country to another. What is considered as good in one country may be taboo in another country.
IMPORTANCE OF BUSINESS ETHICS:
It is now recognized that it is good business to be ethical. An ethical image for accompany can build goodwill and loyalty
among customers and clients.
1. Ethical motivation: It protects or improves reputation of the organization by creating an efficient and productive work
environment. At a time of mass corporate downsizing, one of the most effective ways to appeal to the fragile loyalty of
insecure employees is to promote an ethical culture, which gives employees a greater sense of control and appreciation.
2. Balance the needs and wishes of stakeholders: There is pressure on business to recognize its responsibilities to
society. Business ethics requires businesses to think about the impact of its decisions on people or stakeholders who are
directly or indirectly affected by those decisions. Companies build their image by acting in accordance with their values,

whatever they might be. Creating a positive public image comes from demonstrating appropriate values. Publicizing and
following a companys values allows stakeholders to understand what the company stands for, that it takes its conduct as
an organization seriously.
3. Global challenges: Business must become aware of the ethical diversity of this world because of increasing
globalization of the economy. It must learn the values of other cultures, how to apply them to its decisions, and how to
combine them with its own values. In a world where transnational corporations and their affiliates account for twothirds of the worlds trade in goods, and employ 73 million people, corporations cannot afford to ignore the reality of
multicultural ethics.
4. Ethical pay-off: They serve to protect the organization from significant risks, and to some degree help grow the
business. Risks such as breaches of law, regulations or company standards, and damage to reputation were perceived to
be significantly reduced.
5. Employee Retention: One of the major costs in business is inappropriate turnover. The loss of valuable experience and
development of new personnel is a cost companies can control. Seldom is pay the primary factor in losing an employee.
What would a company give to retain valuable employees? With a successful program, the employees work with
managers and supervisors in making decisions based on the companys values. A successful Business Ethics program
establishes a culture that rewards making the right decision.
6. Prevention and Reduction of Criminal Penalties: The United States Sentencing Commission Guidelines state that to
receive a 40% reduction in federal penalties, a company must have "an effective program to detect and prevent
violations of the law".
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a concept where an organization considers the interests of society by taking
responsibility for the impact of their activities on customers, employees, shareholders, communities and the environment in
all aspects of their operations.
This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations
voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local
community and society at large.
Social responsibility has been described as being a pyramid with four types of responsibility involved - economic (on the
bottom level), then legal, ethical and finally philanthropic.
Difference between Business Ethics and Social Responsibility
Though business ethics and social responsibility seem to be overlapping, there has always been a contradiction between the
two.
1. Business ethics provided an ethical framework for evaluating business and the corporate world.
2. It allowed critical analysis of business and development of new and different methods. (This also made business
ethicists unpopular in certain circles.)
3. Business ethics fused personal and social responsibility together and gave it a theoretical foundation.
In this way, business ethics had a somewhat broader remit than its predecessor (the social issues course) and was a good
deal more systematic and constructive.

PRINCIPLES OF BUSINESS ETHICS


According to Abraham Lincoln the 12 ethical principles are :
1. HONESTY. Be honest in all communications and actions. Ethical executives are, above all, worthy of trust and
honesty is the cornerstone of trust. They are not only truthful, they are candid and forthright. Ethical executives do not
deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other
means and when trust requires it they supply relevant information and correct misapprehensions of fact.

2. INTEGRITY. Maintain personal integrity. Ethical executives earn the trust of others through personal integrity.
Integrity refers to a wholeness of character demonstrated by consistency between thoughts, words and actions. Maintaining
integrity often requires moral courage, the inner strength to do the right thing even when it may cost more than they want to
pay. The live by ethical principles despite great pressure to do otherwise. Ethical executives are principled, honorable,
upright and scrupulous. They fight for their beliefs and do not sacrifice principle for expediency.
3. PROMISE-KEEPING. Keep promises and fulfill commitments. Ethical executives can be trusted because they make
every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret agreements in
an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping
their commitments.
4. LOYALTY. Be loyal within the framework of other ethical principles. Ethical executives justify trust by being loyal
to their organization and the people they work with. Ethical executives place a high value on protecting and advancing the
lawful and legitimate interests of their companies and their colleagues. They do not, however, put their loyalty above other
ethical principles or use loyalty to others as an excuse for unprincipled conduct. Ethical executives demonstrate loyalty by
safeguarding their ability to make independent professional judgments. They avoid conflicts of interest and they do not use
or disclose information learned in confidence for personal advantage. If they decide to accept other employment, ethical
executives provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in
any activities that take undue advantage of their previous positions.
5. FAIRNESS. Strive to be fair and just in all dealings. Ethical executives are fundamentally committed to fairness.
They do not exercise power arbitrarily nor do they use overreaching or indecent means to gain or maintain any advantage
nor take undue advantage of anothers mistakes or difficulties. Ethical executives manifest a commitment to justice, the
equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded; willing to admit they are
wrong and, where appropriate, they change their positions and beliefs.
6. CARING. Demonstrate compassion and a genuine concern for the well-being of others. Ethical executives are
caring, compassionate, benevolent and kind. They understand the concept of stakeholders (those who have a stake in a
decision because they are affected by it) and they always consider the business, financial and emotional consequences of
their actions on all stakeholders. Ethical executives seek to accomplish their business objectives in a manner that causes the
least harm and the greatest positive good.
7. RESPECT FOR OTHERS. Treat everyone with respect. Ethical executives demonstrate respect for the human dignity,
autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all
people with equal respect and dignity regardless of sex, race or national origin. Ethical executives adhere to the Golden
Rule, striving to treat others the way they would like to be treated.
8. LAW ABIDING. Obey the law. Ethical executives abide by laws, rules and regulations relating to their business
activities.
9. COMMITMENT TO EXCELLENCE. Pursue excellence all the time in all things. Ethical executives pursue
excellence in performing their duties, are well-informed and prepared, and constantly endeavor to increase their proficiency
in all areas of responsibility.
10. LEADERSHIP. Exemplify honor and ethics. Ethical executives are conscious of the responsibilities and opportunities
of their position of leadership and seek to be positive ethical role models by their own conduct and by helping to create an
environment in which principled reasoning and ethical decision making are highly prized.
11. REPUTATION AND MORALE. Build and protect and build the companys good reputation and the morale of its
employees. Ethical executives understand the importance of their own and their companys reputation as well as the

importance of the pride and good morale of employees. Thus, they avoid words or actions that that might undermine respect
and they take affirmative steps to correct or prevent inappropriate conduct of others.
12. ACCOUNTABILITY. Be accountable. Ethical executives acknowledge and accept personal accountability for the
ethical quality of their decisions and omissions to themselves, their colleagues, their companies, and their communities.

OBJECTIVES OF BUSINESS
Business objectives are the goals, aims or purpose of the business. The business tries to achieve these goals. Profit is the
main objective of business. Objective gives direction to the business. It motivates the owners, managers and employees to
work hard. It helps in planning and decision-making. It is used to evaluate (measure) the performance of the employees.
There are Four types of business objectives, viz.,
1. Economic Objectives, 2. Social Objective, 3. Human Objectives
Every business enterprise has certain objectives which regulate and generate its activities. Objectives are needed in every
area where performance and results directly affect survival and prosperity of a business. Various objectives of business may
be classified into four broad categories as follows:
1. ECONOMIC OBJECTIVES:Business is basically an economic activity. Therefore, its primary objectives are economic
in nature. The main economic objectives of business are as follows:
(i) Earning profits:A business enterprise is established for earning some income. It is the hope of earning profits that
inspires people to start business. Profit is essential for the survival of every business unit. Just as a person cannot live
without food, a business firm cannot survive without profit. Profits enable a businessman to stay in business by main taining
intact the wealth producing capacity of its resources.
(ii) Creating customers: Profits are not created by God or by the force of nature. They arise from the businessman's efforts
to satisfy the needs and wants of customers. A businessman can earn profits only when there are enough customers to buy
and pay for his goods and services. In the words of Drucker, "There is only one valid definition of business purpose; to
create a customer.
(iii) Innovations: Business is an organ of dynamism and change. Modern science and technology have created a great
scope for innovation in the business world. Innovation is not confined to the invention of a new machine rather than go
innovative work.
2. SOCIAL OBJECTIVES-: Business does not exist in a vacuum. It is a part of society. It cannot survive and grow without
the support of society. Business must therefore discharge social responsibilities in addition to earning profits.According to
Henry Ford, "the primary aim of business should be service and subsidiary aim should be earning of profit." The socials
objectives of business are as follows:
(i) Supplying desired goods at reasonable prices: Business is expected to supply the goods and services required by the
society. Goods and services should be of good quality and these should be supplied at reasonable prices. It is also the social
obligation of business to avoid malpractices like boarding, Black marketing and misleading advertising.
(ii) Fair Remuneration to employees: Employees must be given fair compensation for their work. In addition to wages and
salary a reasonable part of profits should be distributed among employees in recognition of their contributions. Such sharing
of profits will help to increase the motivation and efficiency of employees.
(iii) Employment Generation: Business should provide opportunities for gainful employment to members of the society.
In a country like India unemployment has become a serious problem and the Government is unable to offer jobs to all.

Therefore, provision of adequate and full employment opportunities is a significant service to society. If unemployment
problem increases, the socioeconomic environment cannot be congenial for the growth of business activities.
(iv) Fair return to investor: Business is expected to pay fair return to shareholders and creditors in the form of dividend
and interest. Investors also expect safety and appreciations of their investment. They should be kept informed about the
financial health and future prospects of business.
(v) Social welfare: Business should provide support to social, cultural and religious organizations. Business enterprises can
build schools, colleges, libraries, dharam shalas, hospitals, sports bodies and research institutions. They can help nongovernment organizations (NGOs) like CRY, Help Age, and others which render services to weaker sections of society.
(vi) Payment of Government Dues: Every business enterprise should pay tax dues (income tax, sales tax, excise duty,
customs duty, etc.) to the government honestly and at the right time. These direct and indirect taxes provide revenue to the
Government for spending on public welfare.
3. HUMAN OBJECTIVES-: Business is run by people and for people. Labour is a valuable human element in business.
Human objectives of business are concerned with the well-being of labour. These objectives help in achieving economic and
social objectives of business. Human objectives of business are given below:
i .Labour welfare: Business must recognize the dignity of labour and human factor should be given due recognition. Proper
opportunities should be provided for utilizing individual talents and satisfying aspirations of workers. Adequate provisions
should be made for their health, safety and social security. Business should ensure job satisfaction and sense of belonging to
workers.
ii. Developing human resources: Employees must be provided the opportunities for developing new skills and attitudes.
Human resources are the most valuable asset of business and their development will help in the growth of business.
Business can facilitate self- development of workers by encouraging creativity and innovation among them. Development of
skilled manpower is necessary for the economic development of the country.
iii. Participative management: Employees should be allowed to take part in decision making process of business. This will
help in the development of employees. Such participation will also provide valuable information to management for
improving the quality of decisions. Workers' participation in management will usher in industrial democracy.
iv. Labour management cooperation: Business should strive for creating and maintaining cordial employer employee
relations so as to ensure peace and progress in industry. Employees should be treated as honourable individuals and should
be kept informed.

Unit II
The social responsibility of business means various obligations or responsibilities or duties that a business-organization has
towards the society within which it exists and operates from.
Social responsibility of business refers to all such duties and obligations of business directed towards the welfare of society.
These duties can be a part of the routine functions of carrying on business activity or they may be an additional function of
carrying out welfare activity.
Example. A drug-manufacturing firm undertakes extensive research and thus, produces drugs which are qualitatively
superior. It also provides scholarships or fellowships to the family members of its employees for studying abroad.

DIMENSIONS OF CSR (Corporate Social Responsibility)

The facets and dimensions of corporate social responsibility include the obligations a business has to its interest groups also
called stakeholders. The stakeholders in a business include shareholders / owners, consumers, employees, government,
society, etc.
1. Shareholders or investors-: Social responsibility of business towards its shareholders or investors is most important of
all other obligations. If a business satisfies its funders, they are likely to invest more money in a project. As a result,
more funds will flow in and the same can be utilized to modernize, expand and diversify the existing activities on a
larger scale. Happy financiers can fulfill the rising demand of funds needed for its growth and expansion.
2. Personnel-: Social responsibility of business towards its personnel is important because they are the wheels of an
organization. Without their support, the commercial institution simply can't function or operate. If a business takes care
of the needs of its human resource (for e.g. of office staff, employees, workers, etc.) wisely, it will boost the motivation
and working spirit within an organization. A happy employee usually gives his best to the organization in terms of
quality labor and timely output than an unsatisfied one., if personnel is satisfied, then they will work together very hard
and aid in increasing the production, sales and profit.
3. Consumers or customers-: Social responsibility of business towards its consumers or customers matters a lot from
sales and profit point of view. Its success is directly dependents on their level of satisfaction. Higher their rate of
satisfaction greater are the chances to succeed. If a business rolls out good-quality products and/or delivers better
quality services that too at reasonable prices, then it is natural to attract lots of customers.
4. Government-: Social responsibility of business towards government's regulatory bodies or agencies is quite sensitive
from the license's point of view. If permission is not granted or revoked abruptly, it can result in huge losses to an
organization. Therefore, compliance in this regard is necessary. Furthermore, a business must also function within the
demarcation of rules and policies as formulated from time to time by the government of state or nation.
Some examples of activities a business can do in this regard:
Licensing an organization,
Seeking permissions wherever necessary,
Paying fair taxes on time,
Following labor, environmental and other laws, etc.
5. Local community-: Social responsibility of business towards the local community of its established area is significant.
This is essential for smooth functioning of its activities without any agitations or hindrances. A business has a
responsibility towards the local community besides which it is established and operates from. Industrial activities
carried out in a local-area affect the lives of many people who reside in and around it.
As a service to the local community, a business can build:
A trust-run hospital or health center for local patients,

A primary and secondary school for local children,

A diploma and degree college for local students,

An employment center for recruiting skilled local people, etc.

Such activities to some-extend may satisfy the people that make local community and hence their changes of
agitations against an establishment are greatly reduced. This will ensure the longevity of a business in a long run.
6. Environment-: Social responsibility of business with respect to its surrounding environment can't be sidelined at any
cost. It must show a keen interest to safeguard and not harm the vitality of the nature. A business must take enough care
to check that its activities don't create a negative impact on the environment. For example, dumping of industrial wastes
without proper treatment must be strictly avoided. Guidelines as stipulated in the environmental laws must be sincerely
followed.
7. Public-: Finally, social responsibility of business in general can also contribute to make the lives of people a little better.
Some examples of services towards public include:
Building and maintaining devotional or spiritual places and gardens for people,

Sponsoring the education of poor meritorious students,

Organizing events for a social cause, etc.


Such philanthropic actions create a goodwill or fame for the business-organization in the psyche of general public,
which though slowly but ultimately pay off in a due course of time.

ARGUMENTS IN FAVOUR OF SOCIAL RESPONSIBILITIES BY BUSINESS

Social Responsibility is a voluntary effort on the part of business to take various steps to satisfy the expectation of the
different interest groups. Let us consider the following points:
1. Public Image - The activities of business towards the welfare of the society earn goodwill and reputation for the
business. The earnings of business also depend upon the public image of its activities. People prefer to buy products of a
company that engages itself in various social welfare programmes. Again, good public image also attracts honest and
competent employees to work with such employers.
2. Government Regulation - To avoid government regulations businessmen should discharge their duties voluntarily. For
example, if any business firm pollutes the environment it will naturally come under strict government regulation, which
may ultimately force the firm to close down its business. Instead, the business firm should engage itself in maintaining a
pollution free environment.
3. Survival and Growth -Every business is a part of the society. So for its survival and growth, support from the society is
very much essential. Business utilizes the available resources like power, water, land, roads, etc. of the society. So it
should be the responsibility of every business to spend a part of its profit for the welfare of the society.
4. Employee satisfaction - Besides getting good salary and working in a healthy atmosphere, employees also expect other
facilities like proper accommodation, transportation, education and training. The employers should try to fulfill all the
expectation of the employees because employee satisfaction is directly related to productivity and it is also required for
the long-term prosperity of the organization. For example, if business spends money on training of the employees, it
will have more efficient people to work and thus, earn more profit.
5. Consumer Awareness - Now-a-days consumers have become very conscious about their rights. They protest against the
supply of inferior and harmful products by forming different groups. This has made it obligatory for the business to
protect the interest of the consumers by providing quality products at the most competitive price.
6. Public expectations: Social expectations of business have increased dramatically since the 1960s. Public opinion in
support of business pursuing social as well as economic goals is now well solidified.
7. Long run profits: Socially responsible businesses tend to have more and secure long run profits. This is the normal
result of the better community relations and improved business image that responsible.
8. Ethical obligation: A business firm can and should have a conscience. Business should be socially responsible because
responsible actions are right for their own sake.

ARGUMENTS AGAINST THE SOCIAL RESPONSIBILITIES BY BUSINESS


1. Violation of profit maximization: This is the essence of the classical viewpoint. Business is most socially
responsible when it attends strictly to its economic interests and leaves other activities to other institutions.
2. Dilution of purpose: The pursuit of social goals dilutes businesss primary purpose: economic productivity.
Society may suffer as both economic and social goals are poorly accomplished.
3. Costs: Many socially responsible activities do not pay their own way. Someone has to pay these costs.
Business must absorb these costs or pass them on to consumers in higher prices.
4. Too much power: Business is already one of the most powerful institutions in our society. If it pursued social
goals, it would have even more power. Society has given business enough power.
5. Lack of skills: The outlook and abilities of business leaders are oriented primarily toward economies.
Business people are poorly qualified to cope with social issues.
6. Lack of accountability: Political representatives pursue social goals and ar6e held accountable for their
actions. Such is not the case with business leaders. There are no direct lines of social accountability from the
business sector to the public.
7. Lack of broad public support: There is no broad mandate from society for business to become involved in
social issues. The public is divided on the issue. In fact, it is a topic that usually generates a heated debate.

SOCIAL RESPONSIVENESS AND SOCIAL RESPONSIBILITY


Corporate Social Responsibility is a concept whereby companies integrate social and environmental concerns into
their business operations and in their interaction with their stakeholders (employees, customers, shareholders,
investors, local communities, government), on a voluntary basis.
Corporate social responsibility (CSR) is:
1. An obligation, beyond that required by the law and economics, for a firm to pursue long term goals that are
good for society
2. The continuing commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as that of the local community and
society at large
3. About how a company manages its business process to produce an overall positive impact on society
4. Corporate social responsibility means:
5. Conducting business in an ethical way and in the interests of the wider community
6. Responding positively to emerging societal priorities and expectations
7. A willingness to act ahead of regulatory confrontation

Corporate Responsiveness
While the term 'social responsiveness' broadly refers to the act of contributing to the welfare of others, it is often
applied in the context of corporate businesses. Although corporations are not legally required to contribute to the
welfare of others, in many ways there exists a kind of ethical self-regulation that encourages, among other things,
charitable giving.
For example, large corporations like the clothing company Timberland reserve one or more days each year where
their employees engage in volunteer projects to clean, rebuild, or otherwise give back to the community. These
activities are funded by the company, which supports such projects that contribute to the communities in which
they are located or have large market shares.
A less direct example would be a company that enforces a strict adherence to environmental standards or social
policies, like maternity leave. Though they are not making a direct intentional effort to go out and volunteer, they
are making a concerted effort to reduce their environmental footprint by causing as little harm to the environment
as is possible.

Unit-III
Ethics in Managing Enterprise Mission, Institutionalizing Ethics, Code of ethics and its implementation.
ETHICAL THEORY
For individuals, the ethical theory they employ for decision making guidance emphasizes aspects of an ethical dilemma
important to them and leads them to the most ethically correct resolution according to the guidelines within the ethical
theory itself. Four broad categories of ethical theory include deontology, utilitarianism, rights, virtues etc.
DEONTOLOGY THEORY -: The deontological class of ethical theories states that people should adhere to their
obligations and duties when engaged in decision making when ethics are in play. This means that a person will follow his
or her obligations to another individual or society because upholding ones duty is what is considered ethically correct. For
instance, a deontologist will always keep his promises to a friend and will follow the law. A person who adheres to
deontological theory will produce very consistent decisions since they will be based on the individuals set duties.
Deontology contains many positive attributes, but it also contains flaws. One flaw is that there is no rationale or logical
basis for deciding an individuals duties. For instance, a businessperson may decide that it is his/her duty to always be on
time to meetings. Although this appears to be something good, we do not know why the person chose to make this his duty.
Ask students what reasons they might provide for this behavior. Sometimes, a persons duties are in conflict.

UTILITARIANISM THEORY -: Utilitarian ethical theories are based on ones ability to predict the consequences of an
action. To a utilitarian, the choice that yields the greatest benefit to the most people is the one that is ethically correct. There
are two types of utilitarianism, act utilitarianism and rule utilitarianism. Act utilitarianism subscribes precisely to the
definition of utilitarianism a person performs the acts that benefit the most people, regardless of personal feelings or the
societal constraints such as laws. Rule utilitarianism takes into account the law and is concerned with fairness. A rule
utilitarian seeks to benefit the most people but through the fairest and most just means available. Therefore, added benefits
of rule utilitarianism are that it values justice and includes beneficence at the same time. Both act and rule utilitarianism
have disadvantages. Although people can use their life experiences to attempt to predict outcomes, no one can be certain that
his/her predictions will be accurate. Uncertainty can lead to unexpected results making the utilitarian decision maker appear
unethical as time passes, as the choice made did not benefit the most people as predicted. Another assumption that a
utilitarian decision maker must make concerns his/her ability to compare the various types of consequences against each
other on a similar scale.
RIGHTS THEORY -:In ethical theories based on rights, the rights established by a society are protected and given the
highest priority. Rights are considered to be ethically correct and valid since a large population endorses them. Individuals
may also bestow rights upon others if they have the ability and resources to do so. For example, a person may say that her
friend may borrow her laptop for the afternoon. The friend who was given the ability to borrow the laptop now has a right to
the laptop in the afternoon. A major complication of this theory on a larger scale is that one must decipher what the
characteristics of a right are in a society. The society has to determine what rights it wants to uphold and give to its citizens.
In order for a society to determine what rights it wants to enact, it must decide what the societys goals and ethical priorities
are. Therefore, in order for the rights theory to be useful, it must be used in conjunction with another ethical theory that will
consistently explain the goals of the society. For example in America people have the right to choose their religion because
this right is upheld in the Constitution. One of the goals of the Founding Fathers of America was to uphold this right to
freedom of religion.
VIRTUE THEORY -:The virtue ethical theory judges a person by his/her character rather than by an action that may
deviate from his/her normal behavior. It takes the persons morals, reputation, and motivation into account when rating an
unusual and irregular behavior that is considered unethical. For instance, if a person plagiarized a passage that was later
detected by a peer, the peer who knows the person well will understand the persons character and will judge the friend
accordingly. If the plagiarizer normally follows the rules and has good standing amongst his colleagues, the peer who
encounters the plagiarized passage may be able to judge his friend more leniently. Perhaps the researcher had a late night
and simply forgot to credit his or her source appropriately. Conversely, a person who has a reputation for academic
misconduct is more likely to be judged harshly for plagiarizing because of his/her consistent past of unethical behavior.
KANTIAN DEONTOLOGY THEORY -: It is first introduced by a philosopher from Germany named Immanuel Kant.
This theory is based on morality must follow a set of rules without any exceptions. Therefore, this school of thought looks at
categorical principles whereby they are imperatives and instructions are given on the way one must act. Besides that,
Kantianism also emphasizes on treating each other with respect. A person should not be used as a mean to get to an end.
This means that an individual is bound or obligated to their duty to follow a set of maxim in order to determine whether
their actions are ethically right. However, there have been arguments on Kantian deontology mostly due to the narrowness
and inadequacy of this theory to handle various moral problems or dilemmas. For example, there is no moral guidance or
solution when an individuals rights and duties crosses path.
According to Kant there are several problems with consequentialism
o According to the consequentiality, no act (no matter how evil or cruel) is right or wrong in itself
o

If we are already inclined to do an act because we naturally seek to produce good consequences (e.g., pleasure,
happiness), then we are not acting freely and therefore not morally responsibly

Because of differences in their experiences and backgrounds, people differ as to what are good consequences;
therefore, we can never achieve agreement on the end of moral behavior or on an ulitmate criterion for making such
decisions

The consequences of our actions are often out of our control, so we cannot be held responsible for those consequences
or have our actions judged based on them

DISTINCTION IS OFTEN MADE BETWEEN DEONTOLOGICAL AND TELEOLOGICAL


Deontological approaches to decision making look at the action and decide whether it is right or wrong. Teleological
approaches, however, look at the consequences of an action to see if it is at least as good as any available alternative.

Deontological ethics take account of the motives and intentions of the individual engaging in the act, whereas teleological
theories are far more relative, considering outcomes and purposes. For instance Kant, an absolute deontological thinker,
would argue that it is always wrong to lie, no matter what the consequence may be. However, a utilitarian (a teleological
form of ethics) such as Jeremy Bentham would argue that the outcome that produced the most happiness is the most
favorable outcome. This could mean, for instance, that it would be acceptable in the eyes of Bentham to lie to save
someones life if this produced maximum utility for society - hence for a teleological form of decision making the emphasis
is clearly on consequences, leading to the name consequentiality being used interchangeably with teleological ethics.
Situation ethics, which has the absolute rule of agape, would equally focus on the consequences of an action.
Deontological ethics are absolute, whilst teleological ethics are far less so. Deontological theories such as Kantian ethics or
situation ethics all have absolute rules that must be followed. For instance, Natural law theory (partially deontological) has
the five primary precepts (Such as preservation of innocent life, or maintaining an ordered society), which are absolute
rules and therefore cannot be broken under any circumstances.

CODE OF ETHICS AND ITS IMPLEMENTATION


A corporate Code of Ethics may be regarded as the main instrument to institutionalise ethics within organisations. The Code
of Ethics states the rights, duties and responsibilities of the company towards all its stakeholders. It contains behaviour
principles and rules of conduct enriching the decision-making processes and orientating corporate activity. The Code of
Ethics expresses the "ideal social contract" between the company and its stakeholders, which puts into practice, through
principles and rules of conduct, the ethical criteria for balancing stakeholders' expectations and interests. For this reason the
Code of Ethics is both a governance tool for the organisation's relations with its stakeholders and a strategic management
tool as it provides guidance for decision-making. Moreover, the corporate Code of Ethics provides to external stakeholders a
reference parameter on which they can reasonably form their opinions concerning the company's reliability and reputation.
Twofold meaning of the Code of Ethics:

The code represents the company's constitutional charter, a "charter of moral rights and duties" that defines the
responsibilities of each participant in the organisation, stating the ethical principles and rules of conduct through
which the principles are put into practice, guiding individual behaviour;
The code constitutes a governance and strategic management tool for the organisation: by identifying the guiding
criteria for the fair and efficient governance of the organisation's relations with its stakeholders, the Code of Ethics
promotes relations based on trust, induces co-operation with the stakeholders, and thereby upholds the company's
reputation and its moral legitimisation.

A good Code of Ethics is characterized by the presence of implementation mechanisms associated with it. These include
activities that the organization needs to set up (or revise) in order to support the diffusion and knowledge of the code, to
foster the sharing of values and rules of behaviour, and to monitor the effective implementation of the code and manage its
periodic review. Such activities are for example:

Introduction of Ethics Training activities;


Appointment of an Ethics & Compliance Officer;
Creation of an Advisory Board with tasks of supervision and specific decision powers, e.g. in terms of sanctions
(Ethics Committee);
Creation of a "whistle-blowing" mechanism (for employees as well as external stakeholders to send warnings or to
report unethical activities);
Setting up an internal Ethical Auditing function, which broadens the financial and management auditing activities in
order to check the ethical nature of the company's behaviour and procedures;
Developing corporate reporting activities (social accounting, social and ethical accountability, sustainability
reporting), with which the organisation periodically communicates a measure of the social, environmental and
economic impact of its activities to the outside, as well as an evaluation of the results obtained in relation to the
commitments undertaken the Code of Ethics.