BUSINESS ETHICS AND

CORPORATE SOCIAL
RESPONSIBILITY

Shachi
Yadav
 LEARNING OUTCOMES

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1.Descriptive Business Ethics Theories and

Normative Ethics Theories
2.What is an ethical Decision?
3.Models of ethical decision making.
4.Influences on ethical decision making.
5.What is business ethics management?
6.Components of business ethics management.
7.Organizing for business ethics management.

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 Descriptive ethical theories seek to
describe how ethical decisions are
actually made in business, and what
influences the process and outcomes of
those decisions.

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 Business Ethics:
What Does It Really Mean?

Involves describing, characterizing

Descriptive and studying morality
Ethics
▪ Focuses on “What is”

Concerned with supplying and

justifying moral systems
Normative
Ethics ▪ Focuses on “What ought /
ought not to be”

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 Descriptive Vs. Normative ethical
theories

Descriptive theories provide an important

addition to the Normative theories: rather than
telling us what businessmen should do(which is
the intention of normative theory) ,

descriptive theories seek to tell us what

businesspeople actually do- and more
importantly , they will help to explain why they
do it.
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 What is an ethical decision?
To objectively decide whether a situation be assigned a
moral status in the first place, the following factors may
be considered:-

•Is the decision likely to have significant effect on

others?
•Is the decision likely to be characterized by choice, in
that alternative courses of action are open?
•Is the decision perceived as ethically relevant by one
or more parties?

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 Models of Ethical Decision Making
Models on ethical decision making ( Linda Trevino,1986
and Thomas Jones, 1991) primarily seek to represent
two things:

• The different stages in decision making people go

through in responding to an ethics problem in business
context.
• The different influences on that process.

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 Stages in ethical decision making
The Jones(1991) model, provides the most
comprehensive synthesis model of ethical
decision making. According to this model ,
individuals move through a process whereby
they:
• Recognize a moral issue(ethical content).
• Make some kind of moral judgment about
the issue.
• Establish an intention to act upon that
judgment.
• Finally act according to their intentions.
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 Ethical Decision making Process

Recognize Make Establish Engage in

moral moral moral moral
issue judgment intent Behavior

Fig: ethical decision making process

Source: derived from Rest(1986), as cited in Jones, T.M.(1991). Ethical
decision making by individuals in organizations : an issue contingent model.
Academy of Management Review,16:366-95

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 Influence on ethical decision making
• Individual factors: unique characteristics
of individuals making the relevant
decision. These include factors which are
given by birth(age, gender) and those
acquired by experience and socialization.
• Situational factors: particular features of
the context that influence whether the
individual will make an ethical decision(
reward systems, organization culture, job
role).
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 Ethical Decision making Process

Individual factors

Recognize Make Establish Engage in

moral moral moral moral
issue judgment intent Behavior

Situational factors

Fig: Framework for ethical decision making

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 Individual factors
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• Age and Gender
• National and cultural characteristics
• Education and employment
• Psychological factors
1. Cognitive moral development
2. Locus of control
3. Personal values
4. Personal integrity
5. Moral imagination
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 National and cultural characteristics
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• Individualism /collectivism
This represents the degree to which one is
autonomous and driven primarily to act for
the benefit of one’s self, contrasted with a
more social orientation that emphasizes
group working and community goals.
• Power Distance
The extent to which the unequal
distribution of hierarchical power and
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status are accepted and respected
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 National and cultural characteristics
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• Uncertainty avoidance
One’s preference for certainty, rules and
absolute truths.

• Masculinity/ femininity
Emphasis is placed on valuing money and
things(masculinity) versus valuing people
and relationships

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 Psychological factors
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• Cognitive moral development refers to
the different levels of reasoning that an
individual can apply to ethical issues and
problems.
• Locus of control
• Personal values
An enduring belief that a specific mode of
conduct or end state of existence is
personally or socially preferable to an
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opposite or converse mode of conduct or
end state.
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 Psychological factors
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• Personal integrity
Adherence to moral principles or values

• Moral imagination
Sense of variety of possibilities and moral
consequences of their decisions , the ability
to imagine a wide range of possible issues,
consequences and solutions.

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 Situational factors
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There are two main types of situational
influences:
• Issue related factors- nature of the
ethical issue itself
• Context related factors- which prompts us
to seek guidance from those around us.

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 Issue related factors
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• Moral intensity: how important the issue
is to the decision maker.

• Moral framing: how the issue is actually

represented in the organization( some
issues will be presented as important
ethical issues while others are not.

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 Moral intensity( proposed by Thomas
Jones, 1991)
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• Magnitude of consequences: sum of harms
or benefits.

• Social consensus: the degree to which

people are in agreement over the ethics
of problem.

• Probability of effect: likelihood that the

harms or benefits are actually going to
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happen.
 Moral intensity( proposed by Thomas
Jones, 1991)
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• Temporal immediacy: speed with which
the consequences are likely to happen

• Proximity: the feeling of nearness of

decision maker for those affected.

• Concentration of effect: heavily on few or

lightly on many.

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 Moral framing
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• Moral muteness: people are reluctant to
ascribe moral terms to their work.
1. Harmony –moral talk would disturb
organizational harmony.(confrontation,
finger pointing)
2. Efficiency moral talk could cloud issues,
making decision making more difficult
and time consuming.
3. Image of power and effectiveness-could
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be seen as idealistic and utopian.
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 Context related factors
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• System of reward
• Authority
• Bureaucracy
• Work roles
• Organizational norms and culture
• National and cultural context.

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 What is Business Ethics Management?

Business ethics management is the direct

attempt to formally or informally manage
ethical issues or problems through specific
policies, practices and programmes.

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 Components of Business Ethics
Management
• Mission or value statements
• Code of ethics
• Reporting/advice channels
• Risk analysis and management
• Ethics managers, officers and
committees.
• Ethics consultants
• Ethics education and training
• Auditing accounting and reporting.
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 Mission or Value Statements

These are general statements of corporate

aims, beliefs and values.
Whilst virtually all large and many small
and medium sized organizations now have a
mission statement of some kind , there is
little evidence to suggest that they have
much impact on employee
behavior(Bart,1997)

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 Code of Ethics
Ethics &
These are explicit outlines of what type of
conduct is desired and expected of
CSR

employees from an ethical point of view

within a certain organization, profession or
industry.

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 Benefits of Ethics Codes

1. Legal protection for the company

2. Increased company pride and loyalty
3. Increased consumer / public goodwill
4. Improved loss prevention
5. Reduced bribery and kickbacks
6. Improved product quality
7. Increased productivity
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 Content of Codes of Conduct

▪ Employment practices
▪ Employee, client, and vendor information
▪ Public information / communications
▪ Conflicts of interest
▪ Relationships with vendors
▪ Environmental issues
▪ Ethical management practices
▪ Political involvement

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 How Codes of Conduct Influence Behavior

Codes of Conduct act as a…

1. Rule book 5. Shield

2. Signpost 6. Smoke detector
3. Mirror 7. Fire alarm
4. Magnifying glass 8. Club

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 Reporting /advice channels
Gathering information on ethical matters is an
important input into effective management and
providing employees with appropriate channels for
reporting or receiving advice regarding ethical
dilemmas can be a vital means of identifying
potential problems and resolving them before
they escalate or become public.

Eg., ethics hotlines

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 Ethics education and Training

1. Increase the manager’s sensitivity to ethical problems

2. Encourage critical evaluation of value priorities
3. Increase awareness of organizational realities
4. Increase awareness of societal realities
5. Improve understanding of the importance of public image
6. Examine the ethical facets of business decision making
7. Bring about a greater degree of fairness and honesty in the
workplace
8. Respond more completely to the organization’s social
responsibilities

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 REFERENCES

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• Sinha, M., 2012. Business ethics and Corporate Social

Responsibility, MBAFT-6301 Management. Faculty of Management
Studies, unpublished.
• Bakan, J.2004. The Corporation: the pathalogical pursuit of profit
and power.london:Constable and Robinson
• Friedman,M.(September13,1970). The social responsibility of
business is to increase its profits. The New York Times Magazine.
• Scholte,J.A.2000.Globalization: A critical Introduction.
Basingstoke:Palgrave

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 TA ETIHIKA…….

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