A Research paper on An Overview of Business Ethics in Indian Businesses Authors: 1) Ms. Swenee Shah 2) Ms. Mehal Pandya 3) Ms. Chitral Patel (Faculties of Hasmukh Goswami College Of Engineering (MBA)) Submitted to: Gujarat Technological University 1 Abstract Business ethics deals with ethical rules and principles necessary for a successful business. It explains the various ethical problems that can rise in a business setting and the responsibilities of persons who are engaged in an organization. We have here shown how the Indian Businesses follows ethical practices even though they are working globally.
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We have here also taken few examples MNCS to show how are they going ahead unethically. In this research paper we have tried to show that no business can get success even though they are going globally (locally) if they don’t follow ethics and legitimate values. Our research paper reflects that true and ethical business can sustain for longer time and even can survive at toughest time. ethical training ,policies procedures will help any organization to manage their work place very well . we have shown that how ethics will help to enhance reputation of business and generate loyalty from staff members.
Our research paper will open new avenues to the ethical dilemmas 2 Table of Contents Particulars What is Business Ethics Ethics and military Overview of issues in Business Ethics Ethics in Indian context: Scope of business ethics Approaches to Business ethics. Importance of Ethics in Business. Ethics and legality (code of ethics) Issues in business ethics(Types of Morally Questionable acts) Problems in its follow up Ethical considerations in Corporate Entrepreneurship Ethics and teaching field List of Most Ethical Companies in the world Unethical Companies Conclusion Page No. 4 6 6 8 9 10 12 12 13 15 15 18 22 WHAT IS BUSINESS ETHICS? Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. 3 It is also known as corporate ethics. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Example for it deals with the ethical question in the field of business ethics. medical, technical, legal and ETHICS AND MILITARY: Today the corporate world has so many challenges.
It can immensely benefit from the army ethos that stress on dedication, justice, equality and total commitment. Col Dr. Kailash Chand Introduction The high level of transparency in the functioning of the Indian army and other government and private organizations has created so much of scope to benefit from each other. The military as an organization has very time tested ethos enabling it to keep its head very high, both during peace as well as war. The army ethos has so much of applicability in any other government and civil organization and the corporate sector in particular can benefit immensely from it.
A look at some of the military ethos: 1. The first military ethos is to live and die for each other and this creates lot of esprit de corps and camaraderie amongst everyone. 2. The second military ethos is to apply the principle of impartiality and justice to everyone across board and this creates a lot of mutual trust and confidence amongst the soldiers of Indian Army. 3. The third military ethos is to create a family feeling amongst everyone and this happens by respecting the religion, the tradition and the culture of each other.
The principle of secularism is the root of the survival of the Indian Army. Everyone, irrespective of his caste, color, and creed is soldier and that is the only religion followed by everyone. 4. The fourth military ethos is to put the interest of the country at the top most level under any circumstances and then comes the welfare of the subordinates and the welfare of the officers’ class comes only at the last. This creates a total sense of patriotism and nationalism amongst everyone and very high level of officers-man relationships gets established. Blending of military ethos in the corporate culture and other sector All above mentioned military ethos, if followed in letter and spirit, can further enhance the homogeneity and the integrity of the corporate sector and all other sectors. Ensuring of best mutual understanding and following the principle of impartiality and justice enhances the working environment of any organization. All the top and middle level managers need to connect properly with their subordination to understand them in totality and to get the maximum from them.
The subordinates in any organization only play up when they have full faith and confidence in their leaders. The real welfare of any subordinate is only ensured by giving him the best of his duties. Any kind of recruitment and promotion in the corporate world has to be based on the principle of meritocracy and impartiality. The maximum cohesion and integrity within an organization has to be ensured to create a true family feeling. Today, the corporate world has so many challenges to meet and only the best of dedication and sincerity in all the team members can help it to achieve its targets.
It is therefore very essential for the employees of corporate world to treat their respective companies as their homes and to render their best of loyalties to achieve the maximum in such a competitive world. The time has come for the Army and the corporate world to exchange its ethos and culture with each other to achieve the best of intermingle. The issue of maintaining the best of security by every organization & establishment of Indian Army is very well understood and suitable mechanisms need to be devised to interact and exchange ideas and information with the corporate world and any other sector ever. ithout compromising in this regard in any matter what so OVERVIEW OF ISSUES IN BUSINESS ETHICS: • This part of business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company’s main purpose is to maximize the returns to its shareholders, 5 then it should be seen as unethical for a company to consider the interests and rights of anyone else. • Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated.
Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept. shareholder concept. • • Ethical issues concerning relations between different companies: e. g. hostile take-overs, Leadership issues: corporate governance; Corporate Social Entrepreneurship • • Political contributions made by corporations. Law reform, such as the ethical debate over introducing a crime of corporate man slaughter (crime in several jurisdictions). The misuse of corporate ethics policies as marketing instruments. • ETHICS IN INDIAN CONTEXT:
SCOPE OF BUSINESS ETHICS Since business ethics is the normative science of conduct, i. e. , its function is to judge the moral worth of conduct with reference to a norm ideal or standard the scope of business ethics is wide. Business ethics covers all aspects of business as there is no business conduct which is totally free from moral consideration. As science of conduct, it is concern with the ideal or slandered to which business conducts should be conform. Scope of business ethics 6 Societal level Stakeholder’s levels Internal policy level Personal policy level ) Societal level A) Concern for poor and down trodden B) No discrimination against any particular section/group C) Concern for clean environment D) Preservation of scarce recourses for prosperity E) Contributing to better quality of life. 2) Stakeholder level A) Employee B) Customers C) Shareholder D) Bank and other landing institutes E) Government. 3) Internal policy level A) Fair practices relating to recruitment, compensation, lay off, perks, promotion, etc. B) Transformational leadership to motivate employee to aim and better and higher things in life. C) Better communication at all level. ) Personal policy level A) Not to misuse other for personal end. B) Not to indulge in politics to gain power 7 C) Not to spoil promotional chances others D) Promises keeping E) Mutual help. APPROACHES TO MANAGERIAL ETHICS ORGANIZATIONAL CHARACTERISTICS Ethical norms IMMORAL MANAGEMENT Managerial dicisions, and imply and a AMORAL MORAL MANAGEMENT MANAGEMENT Management is neither Managerial activity ethical, to or right, actions, moral nor immoral, but conforms to a standard behaviour decisions lie outside the of active judgements positive sphere to which moral behaviour. pply. conform Managers accepted standards Ethical is opposition to what Managerial activity is professional is moral. Decisions outside of a particular of accepted principles. conduct. are discordant with code. A lack of ethical leadership An awareness may ethical perception and moral commonplace on the be part of management. active negation of implied. what is moral is Motives implied. Selfish: Well-intentioned but Good: Management Management cares selfish: The impact on wants to succeed but only about its or others is not considered. only within the confines the gains.
Goals Profitability organizational success Orientation toward law at any is the and Profitability; company’s of sound ethical (fairness, precepts justice, due process). other Profitability within the confines of legal obedience and ethical standards. ethical Obedience is toward the goals not considered. price. Legal standards are Law barriers guide, preferably the letter and spirit of the management must letter of the law. The law. Law is a minimal 8 overcome wants. Strategy Exploit opportunities corners when to central question is what ethical can do Managers legally. Give for rein. anagers Personal behaviour. prefer to accomplish what it managers operate well above what the law mandates. free Live by sound ethical ethics standards. Assume position corporate gain. Cut may apply but only if leadership it managers Respond to appears useful. choose. when ethical dilemmas legal arise. Enlightened self- mandates if caught and interest prevails. required to do so. IMPORTANCE OF BUSINESS ETHICS IN BUSINESS Profit Maximization The importance of ethics in business can be understood by the fact that ethical businesses tend to make much more profits than the others.
The reason for this is that customers of businesses which follow ethics are loyal and satisfied with the services and product offerings of such businesses are satisfied, they will become loyal to the company and come back again for re-purchasing. . Efficient Utilization of Business Resources In an organization, people working at the junior levels often emulate the ones working at the top. The same applies with ethics too. If the management or seniors of an organization follow ethical business practices, i. , they do not bribe to get their way or they do not cheat the customers, investors, suppliers, etc. , the employees will follow suit. The employees too will refrain from using the office property or resources for personal benefits. This will result in better and efficient utilization of the business resources. Creates Goodwill in the Market 9 An organization, which is well known for its ethical practices, creates a goodwill for itself in the market. Investors or venture capitalists are more willing to put their money in the businesses which they can trust.
Shareholders too, remain satisfied with the practices of an ethical businesses. Thus, the importance of business ethics in creating goodwill and building long term relationships, can not be denied. Also, an ethical business puts greater value on its employees and thus, employees remain loyal to such an organization too. ETHICS AND LEGALITY(CODE OF ETHICS): Ethics and Laws: For the entrepreneur the dilemma of legal versus ethical is a vital one. Just how far can an entrepreneur go in order to establish his or her venture?
Survival of the venture is a strong motivation for entrepreneurs, and although the law provides the boundaries for what is illegal (even though the laws are subject to constant interpretation), it does not supply answers for ethical considerations. Major Problems Regarding Laws Reflecting Ethical Standards: 1. The moral standards of members of society may be based on a lack of information relative to issues of corporate conduct. Most people were apparently unaware of the payments of large foreign bribes until the revelations of the Lockheed case and the subsequent Securities and Exchange Commission study.
Many people now may be unaware of the magnitude of the toxic-waste disposal problem, with 231 million metric tons of waste being produced annually. It is difficult for personal moral standards to influence the law if relevant information is missing. 2. The moral standards of members of society may be diluted by the formation of small groups. People with similar norms, beliefs, and values tend to become associated in small groups, but these standards generally are not precisely similar among all members, and compromises have to be made.
Further, many small groups act from motives other than morality; economic benefits and 10 professional prestige often seem to be stressed. It is difficult for personal moral standards to influence the law if they are not conveyed accurately. 3. The moral standards of members of society may be misrepresented in the consensus of large organisations. Many organisations do share norms, beliefs, and values, but no evidence indicates each individual and each group within the organisation has equal influence, or even equal weighted influence, in determining that consensus.
This can be seen in the norms, beliefs, and values of many non-profit organizations, such as hospitals and universities; the standards of the professional personnel- the physicians and the faculty- often seem to predominate. 4. The moral standards of members of society may be misrepresented in the formulation of the laws. This is the same point made about shaping the consensus of an organization, though on a larger scale. No guarantees exist that all organizations have equal influence, or even equal influence weighted by size, in determining the law.
This can be seen in the provisions of much tax legislation; certain organizations always seem to be favoured. 5. The legal requirements formed through the political process are often incomplete or imprecise and have to be supplemented by judicial court decisions or administrative agency actions. This can be seen in both product liability cases and equal employment reviews; the meaning and the application of the law have to be clarified outside of the legislative process. It is difficult for personal moral standards to influence the law if they are considered only indirectly- if at all- in two of the means of formulating that law.
TYPES OF MORALLY QUESTIONABLE ACTS TYPE Nonrole DIRECT EFFECT Against the firm EXAMPLES Expense account cheating Embezzlement Role failure Against the firm Stealing supplies Superficial performance appraisal Not confronting expense account cheating 11 Role distortion For the firm Palming off a poor performer with inflated praise Bribery Price fixing Manipulating suppliers Investing in South Africa Using nuclear technology for energy generation Not withdrawing product line in face of initial allegations of inadequate safety Role assertion For the firm ETHICS AND BUSINESS DECISIONS:
In addition to the normal challenges of business decisions, the entrepreneur is faced with specific ethical dilemmas. The above figure illustrates four main themes of ethical dilemmas- conflict of interests, personality traits, responsibility to stakeholders, and level of openness. The conflict of interests theme deals with much of what was mentioned earlier in the chapter concerning morality and economic tradeoffs. It involves the constant tension of trying to separate the “person” from the “business decision. ” Personality traits relate more specifically to relationships and personal issues.
In many instances, the personal issues or individual personalities cause the dilemma. The responsibility to stakeholders theme incorporates the pressure 12 of managerial rationalization discussed earlier and emphasizes the importance of having a code of conduct. Finally, the level of openness suggests that entrepreneurs need to be more public about their values and expectations. Once again, the value of a code of conduct is evident with this theme. Amid these dilemmas, the entrepreneurs are challenged by the need to make business decisions each day. Many of these decisions are complex and raise ethical considerations.
ETHICAL CONSIDERATIONS IN CORPORATE ENTREPRENEURSHIP Organizationa l obstacles LEADERSHIP ISSUES STRATEGI C PEOPLE CULTURE Ill- defined values Lack of fit Values that conflict with Unrealistic performance criteria Ethical consequences Solutions CARRERISM No top AMORAL PARADIGM role manager’s models at the INTERNAL NETWORK ISSUES SYSTEMS STRUCTURES POLICIES & PROCEDURES Managerial Dilemmas Misdirected Restricted reward systems evaluation channels Lack accountability DIRECTION Long, complex No vision Parochial from the top Lack from bias & communications approval cycles of Extensive documentation requirements f “Turf” protection senior commitment executives ASSESSMENT OF ENTREPRENEURIAL ACTIVITY + CORPORATE ENTREPRENEURSHIP TRAINING PROGRAM 13 Corporate entrepreneurs- described in the academic literature as those managers or employees who do not follow the status qup of their co-workers- are depicted as visionaries who dream of taking the company in new directions. As a result, though, in overcoming internal obstacles to reaching their professional goals they often a fine line between clever resourcefulness and outright rule breaking. Researchers Donald F. Kuratko and Michael G.
Goldsby developed a framework as a guideline for managers and organizations seeking the barriers that middle managers face in trying to be entrepreneurial in less supportive environments, the unethical consequences that can result, and a suggested assessment and training program for averting such dilemmas. The barriers include the organizational obstacles under two major categories: internal network issues and leadership issues. The specific barriers to innovate actions include systems, structures, policies and procedures, culture, strategic direction and people.
Based on these barriers and the managerial dilemmas that can be caused, the researchers advice companies that embrace corporate entrepreneurship to: (1) establish the needed flexibility, innovation, and support of employee initiative and risk taking; (2) remove the barriers that the entrepreneurial middle manager may face to more closely align personal and organisational initiatives and reduce the need to behave unethically; (3) include an ethical component to corporate training that will provide guidelines for instituting compliance and values components into state-of-theart corporate entrepreneurship programs.
However, even if corporate entrepreneurship is supported, some managers may still pose ethical risks to the company. Unfortunately, rarely will everyone in an organisation do the right thing. For this reason, it would be wise to include an ethical component in corporate training programs to insure everyone is aware of the expectations and vision of senior management. It is believed that a more complete training program and approach to corporate entrepreneurship will make for a better future for both the organization and its members and prevent future ethical crises. ETHICS AND TEACHING FIELD
Although new-paradigm researchers often teach enlarged versions of ethics, they rarely, if ever, write about the ethics of teaching interpretivist inquiry. Five problems associated uniquely with the teaching of such inquiry are identified: (a) teacher modeling of a safe psychological classroom environment for students; (b) teaching 14 students authentic collaboration; (c) fostering dialogues in racism, sexism, and classism; (d) high tolerance for “taboo” topics such as sex in the field; and (e) willingness to make judgments regarding the maturity of students to undertake field work, especially in sensitive sites.
LIST OF MOST ETHICAL COMPANIES IN THE WORLD Aerospace • • • Harris Corporation Rockwell Collins Inc. The Aerospace Corporation Apparel • • • Comme Il Faut Nike Patagonia Auctions • Automotive • • • Barrett Jackson Auction Company Cummins Ford Motor Company Banking • • Johnson Controls Business Services • • • • • Rabobank Standard Chartered Bank Westpac Banking Accenture Noblis Pitney Bowes Dun & Bradstreet Paychex • Corporation Chemicals • • Ashland Dow Corning Corporation Ecolab Construction and Engineering • • • Computer Hardware • Hewlett-Packard Company • • Flint Hills Resources Computer Software • • Adobe Systems Salesforce. com Symantec CH2M Hill CRH Fluor 15 • Teradata • • Granite Construction Parsons Consumer Products • • • • Consumer Electronics • • Henkel Kao L’OREAL Ricoh Xerox Diversified Industries • Mattel Electronics and Semiconductors • • General Electric Co. Freescale Semiconductor Texas Instruments Energy and Utilities • • • • • Duke Energy FPL Group National Grid Sempra Energy Wisconsin Energy Food and Beverage • • • • Environmental Services • Waste Management Corporation Financial Services • • • American Express The Hartford The Principal Financial Group
Campbell Soup Company General Mills PepsiCo Food Service ARAMARK Sodexo Forestry, Paper and Packaging • • • • Solae Food Stores Trader Joe’s Wegmans Whole Foods Market Healthcare • • • • Cleveland Clinic Hospital Corporation of America J M Smith Corporation Johns Hopkins International Paper Stora Enso Oyj Svenska Cellulosa Weyerhaeuser • Premier Hotels, Travel & Hospitality Industrial Manufacturing • Rezidor Hotel Group • Caterpillar 16 • • • Deere & Company Eaton Milliken and Company Rockwell Automation Timken Wyndham Worldwide • • • Insurance • • • Aflac Swiss Re Wisconsin Physicians Internet • • Google Zappos
Service Media, Publishing and Entertainment Thomson Reuters Time Warner Pharmaceuticals AstraZeneca Novo Nordisk Medical Devices Becton, Dickinson and Company Royal Philips Real Estate Jones Lang LaSalle Specialty Retail Restaurants and Cafes • • • • • • Best Buy Gap IKEA Target Starbucks Coffee Company Telecom Hardware • • Ten Thousand Villages Telecom Services • • Avaya T-Mobile Vodafone Group Cisco Systems Transportation and Logistics • Nippon Yusen Kabushi Kaisha UPS • UNETHICAL COMPANIES: COCA-COLA 17 Coca-Cola is the largest soda provider in the world. Although it is widely consumed, many people are unaware of its labor violations.
The company has come under fire in the last few months for the way in which its workers are treated in Guatemala. The primary source of all the violence is the workers’ union. On February 25, 2010, Coke was sued by those Guatemalan laborers, who claim that they, “endured a campaign of violence” from the people who worked for the bottling or processing plants owned by Coke (Business Week). This violence took place in Guatemala City. The perpetrators were employed by Incasa, which operated the bottling plant (Business Week). One of the plaintiffs is Jose Palacios, who faced violence after rejoining the workers’ union in 2004.
Not only was he shot at and threatened at the bottling plant, but armed men broke into his home and threatened his family (Atlanta Business News). A few weeks after this invasion, in 2005, he was fired without a cause (North American Congress on Latin America). Another plaintiff in the case is Jose Chavez, a prominent union leader. In 2008, after he participated in collective-bargaining activities in Guatemala City, returned home to his waiting family. Upon his arrival, Chavez’s son and nephew were brutally murdered in front of his eyes and his 16 year old daughter was gang-raped (North American Congress on Latin America).
This violence was a response to his activity in the union. Coca-Cola has faced legal action by workers before. In 2001, it was sued by union laborers in Colombia for violence against unionized workers. In a statement at Coke’s annual meeting of shareholders in 2005, the company claimed, “Our Company and our bottling partners have been accused of complicity in the murder of union members and the ongoing intimidation of union members and of the suppression of union activity in Colombia. The allegations are not true” (PBS).
The company paid more attention to the problem only after an international boycott began in 2003 (Business Week). Ultimately, Coca-Cola and its bottlers were found not guilty and cleared of any wrong-doing by Colombian courts (PBS). When the case was brought to the United States, Coca-Cola fought to have its name removed from the lawsuit and got its wish. 18 Although this has not been widely publicized, the labor violations of Coca-Cola are a prominent issue. Consumers of Coke, and other items produced by corporations with foggy labor practices, have to ask themselves how they can make a difference.
Students at colleges across the United States, one being Rutgers University, have started boycotts of the soda. Rutgers students were successful in their activism, and the university has switched its contract to Pepsi (Killer Coke). A new documentary was released in 2009 called “The Coca-Cola Case. ” It was filmed by German Gutierezz and Carmen Garcia to highlight “the reality of union busting at Coca-Cola bottling plants in Colombia, Guatemala and Turkey” (Green Muze).
This movie reveals the practices of just one of the many multi-national corporations and upon watching it, the consumers will hopefully be inspired to better inform themselves about the products they consume (Green Muze). Here is a link to the trailer for this documentary: The Coca-Cola Case. Coca-Cola is one of the most powerful corporations in the world. Its business practices have to be questioned by the consumer to ensure that labor violations are not being committed. There was a suicide done by a girl in the Infosys, Mysore girl’s hostel. The news came from of the employees working in that campus.
The possible reason told by the employees could be due to excessive pressure of training that she could not handle. Moreover the HR person there asked the other employees not to disclose this incident to secure the repo of the company. Infosys sacks techies for ‘unethical behaviour’ Infosys Technologies has sacked a software engineer, Abhishek Gupta, for making a hoax call to budget carrier GoAir at Delhi airport Oct 25 to avoid missing his Bangalore-bound flight, a company official said here on Tuesday. “Yes, we have sacked Gupta for indulging in unethical behaviour.
We have a very strict code of conduct. We take strict action against those who do not adhere to it,” Infosys board member and head of HRD and education and research T. V. Mohandas Pai told media. The 25-year-old Gupta caused a bomb scare by telling GoAir staff that there was some suspicious object on the plane after he failed to convince them earlier to delay the flight. 19 “He thought the hoax call will delay the flight and he could reach the airport in the meantime to catch the flight,” a Delhi police official said after Gupta was taken into custody and jailed.
The IT bellwether has also suspended another software engineer, Pallav Chakraborty, after he was arrested with his wife Sinchita by the Bangalore police Dec 29 for allegedly torturing their 15-year-old domestic maid. “Though Chakraborty joined the company 15 days before his arrest, we suspended him after an inquiry into the child abuse, which is a very sad thing to have happened,” Pai said. As the police were investigating the case and the accused was in the judicial custody, Pai said the company would take strict action against him after the law had taken its course. We do not condone such acts. We are saddened by such an inhuman act. We have 109,882 employees on rolls. I think as we grow bigger, we are not the sample but part of the universe,” Pai said on the margins of a media briefing on the company’s financial performance for the third quarter. Pallav and Sinchita, who hail from Kolkata, brought the girl from West Bengal for household chores. A social organisation rescued the girl after raiding the house following a tip that a young domestic maid was in a bad state with injuries on her back and cut marks on her lips.
The police did not name the victim to protect her privacy and not to hamper investigation. The company was also forced to suspend another engineer, Krishnamurthy, working at its Mysore development centre, after the police arrested him Dec 3 on the charge of molesting a French woman. “Krishnamurthy remains suspended as police inquiry is still on. We will not spare anyone if (his or her) behaviour is not in line with our code of conduct,” Pai said. The three incidents occurred at a time when the company was recovering from the impact of a year-long global tech meltdown. 0 CONCLUSION Ethics in business is necessary. Business does not operate in a vacuum. Firms and corporations operate in the social and natural environment. Because of Irrespective of the demands and pressures upon it, business by virtue of its existence is bound to be ethical for at least two reasons: one, because whatever the business does affects its stakeholders and two, because every moment of action has courses of ethical as well as unethical paths wherein the existence of the business is justified by ethical alternatives it responsibly chooses. 21