Basic Principles

Aum Amriteshvaryai Namah

From last class, we saw “Ethical behaviour may

be the best long-term business strategy”

But how do we identify what is the best ethical course of

action?

Can we adopt this course of action always? What are the

other factors that come in the way of acting ethically?

Let us use some theory (“Basic Principles”) to try and

answer these questions…

“Ethics” – study of morality (this is the definition that is most suited for

us as managers)

It is an investigation where the subject is morality

Example: Morality says “don’t cheat”; When you decide whether or not to

overprice a product, you are studying this moral subject – and that is ethics; then

your decision can be ethical/unethical!

So, what then is Morality?

The standards that an individual or a group has about what is right and wrong or

good and evil

Moral standards – norms about right & wrong actions (“Tell the truth”)

and the values we place on them (“Honesty is the best policy”)

Other examples please? Just to clarify this definition

Non-moral standards are general standards of

conduct, conventions etc

It’s “child’s play” to guess which group is

moral standards … isn’t it?

Group One Group Two

Don’t lie Don’t speak harsh words

Don’t copy in exams (don’t

cheat others)

Write neatly & legibly in

your answer sheet

Don’t steal Pay your taxes

Do not kill innocent people Help poor people

Reminds one of ‘yama’ &

‘niyama’! Why is it always

“don’ts”? Can you think of some

“do’s”?

So, what are the common features of Group One?

1. Involve serious wrongs or significant benefits to (human) beings

isn’t it wrong to kill a squirrel for no purpose?? If it is not bothering you in any way … ?

Need not be a million human beings (like in Merck case) … even if it involves serious injury or benefit to ONE being, it comes under this definition

2. Are preferred to other values including self-interest, when there is a conflict

between lying in an interview and securing a good job by doing so, “moral standards” tell you NOT to lie (what you actually do is not relevant here …!)

3. Not established by law or any other authority

these moral standards are without “proprietors”, like our Vedas – no ownership!

Please note that “Legal norms (laws of the land!)” are not included within the ambit of “moral standards” (and hence, ethics as well)

Usually, what is illegal is immoral/unethical too (eg. theft)

Sometimes it’s not – Coca Cola was legally banned from operating in this country; now it’s not!

Universal & Impartially applied “Do not lie” applies equally to you & me

Conventions may not be universal – “speak harshly” may sometimes be a requirement for a policeman but not for a call center executive

Impartial: these are seen by the eyes of an “ideal observer”

sometimes, this has to be balanced with some kind of partiality, arising from legitimate care for certain individuals (more on this in next chapter)

Associated with special emotions/vocabulary “Immoral”, “wrong” behaviour; results in loss of self-

esteem

Non-moral standards: “Indecent”, “Improper”, not usually accompanied by guilt or loss of self-esteem

Let’s examine this table once again in the

light of the above:

Characteristics Moral Standards Non-moral Standards

1. Serious

injury/benefits

2. Preferred to other

values incl self-

interest

3. Not estd by authority

4. Universal &impartial

5. Special

emotions/vocabulary

Don’t lie Don’t speak harsh words

Don’t copy in exams

(Don’t cheat others)

Write neatly & legibly in

your answer sheet

Don’t steal Pay your taxes

Do not kill innocent

people

Help poor people

Ethics is the study/investigation of moral standards in particular situations how does a moral standard apply in this situation?

Is it reasonable to go by this moral standard or not?

Is one moral standard more important than another?

Ultimately, you develop a “body of morals” that you believe holds for you – and these affect the choices and decisions you make (in life as well as in business!) Comes with experience (when properly used)

Leads to personal satisfaction and a guiltless life!

Ethics is a “normative study” – an investigation that attempts to reach conclusions about what actions are right/wrong, good/bad; in short, it tells you what ought to be

A “descriptive study” just describes moral standards of a community without reaching conclusions about right/wrong and not prescribing what ought to be Example: “In India, bribery is prevalent”

Business ethics is ethics applied to business (in general, organizations of a profit or non-profit nature)

Issues that business ethics investigates: Systemic: Ethical questions raised about the economic,

political, legal and other institutions (“system”) within which business operate (eg. (i) is it okay to liberalize the economy?, (ii) is it right to have APM for petrol?)

Corporate: Ethical questions raised about a particular organization (eg. (i) was Merck’s decision fair and just to all parties it affected? (ii) Is XYZ company’s policy fair to its employees?)

Individual: Ethical questions raised about a particular individual(s) within a company and their behaviour and decisions (eg. (i) a manager giving a favourable rating to an undeserving employee (ii) a Business Unit head offering a contract to a higher priced vendor in return for personal favors)

Is it okay to just follow your boss’ orders and not care about right/wrong?

The “Loyal Agent’s Argument” is this:

As a loyal agent of his/her employer, a manager has a duty to serve the employer as the

employer would want to be served

An employer would want to be served in whatever ways will advance his/her interests

Therefore, as a loyal agent of the employer, the manager has a duty to serve the

employer in whatever ways will advance the employer’s interests

Doesn’t this sound funny, perhaps even intimidatory?!!

Fundamental flaws in the above argument:

It’s based on an unproven moral standard (“manager should serve the employer …”)

It assumes that there are no limits to the manager’s duties to serve the employer

All ‘employee contracts’ are based on a “law of agency”, which specifies the

duties of persons – “agents”

This law states that “in determining whether or not the orders of the [client]

to the agent are reasonable … business or professional ethics are to be

considered”

“in no event would it be implied that an agent has a duty to perform acts

which are illegal or unethical”

Take-away: You don’t need to obey your

boss’ orders ALWAYS

Information Technology Poses some Risks: Privacy

the first wishes i get on my birthday are from

Airtel, HDFC etc everything is tracked – your credit card usage, mobile

usage, where you eat, what you drink, where you holiday … is it all ethical? Is it not intrusion into your privacy? Do you want the whole world to know what all you are doing?

Is Social Media Marketing effective?

40% of consumers are annoyed to receive unsolicited messages from brands they don't follow

65% would stop using a brand altogether as a result of irritating social media messages (Recent research)

People do not like being bombarded with unsolicited brand messages, esp telling them what they should do about their likes/dislikes

(Intellectual) Property Rights

Software Piracy

We all know about pirated software products

Many software proposals are “copy-paste”!

Many “models” are borrowed (openly or on the sly)

from other companies/competitors

Using company’s computer resources for personal use

Personal emails, chatting, facebook

Internet browsing for non-official purposes

Globalization All of us know the benefits of globalization

But what are the downsides? World Bank reports that inequality between rich and poor countries has

increased (the same WB also says % of poor people in the developing world has come down from 52% to 25% on account of globalization!)

Infusion of Western culture at the expense of local culture

MNCs rule – they play one country against another to get cheaper labor, less stringent laws and lower taxes (“Race to the bottom”)

Eg: India faces threat from China, Philippines, Vietnam etc in the software sector

Technologies are brought in before the developing country can handle it

Example: Union Carbide disaster

Differences between nations When different countries have different rules and regulations as well

as cultural differences, what to follow (your host country or the local one)? Coca Cola’s philosophy: “Think Global, Act Local”

Recent Walmart scandal: refer link http://economictimes.indiatimes.com/news/news-by-industry/services/retail/the-inside-story-walmart-and-the-shadow-of-corruption/articleshow/18027348.cms

Which of Kohlberg’s six stages of moral

development would you say that Cynthia

Cooper had reached? Explain

Do her actions and motives support or

undermine Carol Gilligan’s views? What

would you say is unique about her or what

she did?

How does William Damon’s theory of moral

identity apply to Cynthia Cooper?

Let’s discuss these

concepts thro’ this

case!

Reasoning process by which we apply moral standards to (business) situations and issues

Kohlberg’s 3 levels of Moral Development

Level One: Preconventional Stages

Stage One: Punishment and Obedience Orientation – self-centered, fear of the stick approach

Stage Two: Instrumental and Relative Orientation – “i should not hit him so that he doesn’t hit me”

Level Two: Conventional Stages

Living up to conventional norms of family, peers etc

Stage Three: Interpersonal Concordance Orientation (phew!): Being “good” in order to conform to others’ expectations

Stage Four: Law and Order Orientation – Obeying the laws of the land (out of respect for nation/society)

some of you may recall

“Heisenberg’s Uncertainty

Principle”

Level Three: Postconventional Stages

Questioning laws, values, conventions etc of society on the basis of his/her own moral beliefs

Stage Five: Social Contract Orientation – Awareness that people have conflicting moral views

Stage Six: Universal Moral Principles Orientation – “Right action” is based on reasonable, consistent & universally applicable moral principles

Gilligan’s Theory of Female Moral Development

For men, morality is impersonal, impartial and abstract!

For women, morality is primarily a matter of caring and responsibility (is it so?)

therefore, moral development in women progresses through better ways of caring and responsibility

caring for oneself --- > caring for others --- > caring for others and oneself

Perhaps, the best perspective is men DO care sometimes and women ARE impartial at times!!

Whatever approach you may take, ETHICS starts at the later postconventional stages of moral development

This is what we aim to stimulate in ourselves through the case studies and other discussions in forthcoming chapters

don’t accept what I say – think, discuss, criticize, analyse! (let’s create some “heat”!)

Which stage are you

in?

Research on Moral Identity

William Damon: Morality is not an important part

of the self until middle adolescence

the more morality becomes part of you, the

stronger will be your motivation to do what is

morally right

Augusto Blasi: Judgement of right and wrong

depend in part on the kind of person we think we

are (or want to be)

This is NOT “rocket science” … this is not QMM

So, here is the change in our approach:

Two students would present 2-3 topics in one session

Faculty will facilitate the discussion by giving examples from his experience

After all, we are learning this together, aren’t we?

Too much …? Consider the following:

You get to do this ONLY ONCE in the whole course … why?

21 x 2 = 42 < 57 ----------------- Ah! Some maths, at last!

We will have only PLACED students do this (incl those who have opted out of placement!)

By the time “your” turn comes, hopefully (with God’s Grace) you would be placed too!

Will tell you the sections beforehand, and you’ll be exempt from a case presentation if it happens on the same day!

Let’s make the course a bit more fun, engaging!

Another concept: “Devil’s Advocate”

Each of you should be an Ethics “brand ambassador”

But, for the class, 3-5 students should play the role of a Devil’s Advocate – question, dispute whatever the faculty/presenters are saying

One person per group should play the role of Devil’s Advocate in a group presentation