Classification of Ethics

Ethics Systematic Study of moral Conduct

Normative ethics
Study of moral standards to determine right and wrong. Scope: General moral science

Applied ethics
Study of special issues-business ethics Scope: specific human action

Meta Ethics Cognitive Study of the ultimate principles of ethics, their origin and meaning Conceptual scope: philosophy

Applied Ethics: Business Ethics

"Business Ethics" can be defined as the critical, structured examination of how people & institutions should behave in the world of commerce. In particular, it involves examining appropriate constraints on the pursuit of selfinterest, or (for firms) profits, when the actions of individuals or firms affects others. The critical and the structured parts of those definitions are both important Critical Examining and critiquing various moral beliefs and practices. Its not just about describing peoples values or behavior, Ethics involves looking at particular norms and values and behaviors and judging them, asking whether various norms and values are mutually contradictory, and asking which ones matter more in what sorts of situations. Structured its not just about having an opinion about how people should behave. Everyone has opinions. Ethics involves attempting, at least, to find higher-order principles and theories in an attempt to rationalize and unify our diverse moral beliefs.

Meta ethics
The term meta means after or beyond, meta ethics as the study of the origin and meaning of ethical concepts. When compared to normative ethics and applied ethics, the field of meta ethics is the least precisely defined area of moral philosophy.

a) Metaphysical Issues (understand the nature of ethical properties, statements, attitudes, and judgments)
Moral values as Spirit-like-realm /Human Conviction. Plato noted moral values are absolute truth as mathematical relations 1+1=2. God wills moral principles as Murder is wrong & informs us through scriptures. Human Conviction: Moral values in fact change from society to society throughout time and throughout the world. They frequently attempt to defend their position by citing examples of values that differ dramatically from one culture to another, such as attitudes about polygamy, homosexuality and human sacrifice.

Issues in Meta ethics

Psychological Issues in Meta Ethics
Why be moral: to avoid punishment, to gain praise, to attain happiness, to be dignified, to fit in with society.

Egoism & Altruism Psychological Egoism: self-oriented interests ultimately motivate all
human actions. Even if an action seems selfless eg. Donating to charitythere are still selfish causes for this, such as experiencing power over other people. Whistle Blowing in organization, to either take revenge or become celebrity, not genuine act. Psychological altruism at least some of our actions are motivated by instinctive benevolence.

Psychological Issues in Meta Ethics contd

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Emotion and Reason

Emotion: Reason might be of service in giving us the relevant data, but, in Humes words, reason is, and ought to be, the slave of the passions.e .g although the statement it is good to donate to charity may on the surface look as though it is a factual description about charity, it is not. Instead, its a moral utterance. Reason: Rationally minded philosophers believe moral choices be backed by some reason or justification. e.g If one argue that cheating is bad, one should have reason for that: it put the cheater at risk of getting caught.

Normative ethics
Arriving at moral standards that regulate right and wrong conduct. In a sense, it is a search for an ideal litmus test of proper behaviour. Golden Rule : We should do to others what we would want others to do to us. Since I do not want my neighbour to steal my car, then it is wrong for me to steal her car. Since I would want people to feed me if I was starving, then I should help feed starving people. Three strategies will be noted here:

1)Virtue theory: Moral Education

Virtues: acquired traits-benevolence, compassion, courage, self control, toleration even Pride and shame.

We should be pride of our genuine accomplishments but not arrogant & properly shamed by our failures.
Analyzing 11 specific virtues, Aristotle argued that most virtues fall at a mean between more extreme character traits.

2) Duty /Deontological Theories

Greek work- Deon: Duty Kantian Theory Moral principles seen in view of the foundational nature of our duty or obligation. We have moral duties to oneself and others, developing ones talents, keeping our promises to others.
They are also sometimes called nonconsequentialist since these principles are obligatory, irrespective of the consequences that might follow from our actions. Bribery is wrong regardless of the consequences. Duties of Gratitude: to return favours that others do for us. Duties of fidelity: to keep promises. Duties of Justice

Immanuel Kant
Categorical Imperative versus Hypothetical imperative
Hypothetical Imperative: they tell us to do something only on condition that we have the relevant desire. If you want to lower your cholesterol level, then you ought to eat less oil. Categorical: commands us to perform actions no matter what desires we happen to have. Principle of Universalizability: If an act is right for 1 person , then it is right for all other relevantly similar persons in relevantly similar circumstances. If an act is wrong for other people, then it is wrong for any one person unless there is some difference that justifies making an exception.(at times it gives rise to double standard) Eg.: Tax Evasion: If few people do so its oK but if all do so: disastrous impact, thus tax evasion is wrong.

Treat People as an end , and never as a means to end

People should be treated with dignity and never use them as instrument.

Ex.: Stealing neighbor's car since I would be treating him/ her as a means to my own happiness. Suicide is wrong since I would be treating my life as a means to the alleviation of my misery. Slavery & exploitation of workers are forbidden.
Deontological Theories- Process orientation rather than result Orientation. Japanese style of management, imperative on business Process innovation which leads to product innovation.

Indian Concept: duty

Karmanye vadhikaraste ma phaleshu kadachna Karmaphalehtur bhurma te sangostvakarmani. Bhagwad Gita
You have a right to perform your prescribed duty, but you are not entitled to the fruits of action,Never consider yourself the cause of the results of your activities, and never be attached to not doing your duty.

krittam me dakshine haste, jayo me savya aahitah.

Attharva Veda May your right hand do the duty and the left hand earn success of your efforts.

Dabbawala with Richard Branson

Richard Branson wanted the picture to be placed in his office to tell his employees . Do work like Dabbawalas.

Discipline
No Alcohol during working hours. Wearing White cap during business hours. Carry Identity cards No leave without prior notice otherwise penalty of Rs. 1000, wife of the dabbawala informs group leader even at midnight: Reason Husband cant pay 1000rupees, and 1 fault means 40-50 customers will suffer.

Valid Train card- leader himself paid if card expires to avoid delay of tiffins. Commitment matters qualification doesnt.It should matter what you can do rather than what you have done.

Values and Learnings

Dump bad customers before the good ones dump you. Promote self discipline rather than discipline and dont be shy when it comes to penalizing wayward behavior. Bad behavior gets imbibed faster remember no one taught you smoking but you picked it up just by looking at your friends. Each one of us knows what is the right thing to do and people cannot be allowed to make examples in bad conduct at the cost of organization. Rules are meant to be broken surely not in this company. If one man in a team can stand up for the other with a belief that when it comes to my partner even he would do the same, you know that you are ready to take on the world.

Learnings
High salaries can attract mercenaries and pigs but not dedicated,inspired and motivated people.
Narayan Murthy of Infosys was once asked that how he retained talented people during initial phases of the company and he said Everyone was giving them a job, I was sharing my dream with them If you rest on your laurels you are probably wearing them at the wrong place. In the Jungles of Africa it does not matter if you are a Gazelle or a lion what matters is that when the sun comes up you must start running If you are lion to catch the gazelle and if you are a Gazelle to outrun the lion.

Prince Charles was asked to met the Dabbawalas at church gate station so that the deliveries for the day are not affected.

Perfetti Van Melle India has tiedup with the famous Dabbawalas of Mumbai who are the life line for many in the city. Perfetti distribute its newly launched Mangofillz candy with each Dabba, the famous tiffin in Mumbai. Dabbawalas have presented their business model to various corporate houses such as Tata, Coca Cola, Daimler Chrysler and Reliance Industries.

Dabbawalas and Ethical Theories

Parameters
Best service

Emotion
Serving customer is serving God, God Vitthal (Warkari community). Serving society Every customer is not rich.

Reason
Unhappy customers will not give business any more. Familys survival becomes a question.

Low Price

every customer is not rich.

At the time of tiffin collection and returning to respective houses only female members are there, so this is not appreciable.

No smoking & drinking in working hours

A warkari cant smoke, cant drink and it becomes ethics in business also.(Religious)

Altruism

Social messages regarding AIDS & others should be circulated for the welfare of society. Rupees 50 has to be contributed by every dabbawala every month for Puja.(feeding poor people)

Virtues Theory

Dabbawalas have to acquire these traits like Trust, honesty & authenticity, discipline, Team work, Cooperation, Commitment to work in their personality which also are the commonly accepted core values of the organization.
Work is worship. Internal Locus of Control. No blame on trains delay. If 8.30 train get delayed to 9, but at least 8oclock train will come at 8.30. No excuses- Delay of train is not in their hands but their customers should not suffer.

Deontological

Deontological

Its duty approach since more than 120 years which has helped them to achieve Six Sigma, ISO certification not other way round. Exemplified by the fact when Prince Charles, Richard Branson wanted to meet them, they said these celebrities have to come as per our free time. No compromise in duty. All met them on Church gate Footpath.

Dump bad customers before the good ones dump you.

Bad customers who are not giving tiffins on time as it increases the total time.

Rights Theories
Profounder : John Locke Rights can be understood as entitlements, To have rights is to be entitled to act on our own or to be treated by others in certain ways without asking permission of anyone or dependent on anyones goodwill. Laws of nature mandate that we should not harm anyones life, liberty & pursuit of happiness. Rights theorists maintained more specific rights , including the rights of property, movement, speech, and religious expression.

Eg. Human Rights Issues in Socialist Countries.

Rights in Business
Employers have the right to conduct business as they see fit, to make decisions about hiring and Promotion, and to be protected against unfair norms of competition. Employees: collective Bargaining and to be protected against hazardous working conditions.

Consumers & General public have rights in advertising, product safety, Protection of the environment.
Debate: Treatment of workers in less developed countries by Transnational Corporations. Beyond Business debate over Abortion, Use of Life support System.

Case let-Social Justice or Union Thuggery

Damodar Patil runs a successful interior decoration business in Mumbai. He got a proposal for a job to be done in the newly built house of a wellknown personality from Kerala. Patil accepted it he thought he can mix leisure with work in Gods own land: because of its natural beauty, vibrant culture & traditional hospitality. Patils men arrived with the material in 2 trucks at the designated place in Kerala. As the truck was ready to unload, a small group of men had surrounded the trucks & started yelling at the workers who were unloading, they could not understand as men were speaking Malyalam.

What was the Problem?????

Case Let Contd..

A reasonable looking man told Mr. Patil , that this was a local labor issue. Workers bought from outside would deprive the local workers of their rights. The workers have to be compensated for loss of their rights.

Reading Patils mind he added for good measure, that communism is way of life in the state.
He made a queer gesture, as if to say that Patil either put up with it or reload and go back.

Question: Its social Justice through Communism or Union Thuggery?

Consequentialist /Teleological Theories

Greek Word telos: refers to an end Actions are justified on teleological theories by virtue of the end they achieve, rather than some feature of the actions themselves. An action is morally right if the consequences of that action are more favorable than unfavorable.

Utilitarianism
Propounders: Jerry Bentham & John Stuart Mill The seeking of pleasure and avoidance of pain i.e. happiness is the only right & universally desirable end of human action. It is not merely agents own happiness but that of all concerned. Sarv jan Hitay, Sarv jan Sukhay Welfare for all, Happiness for all.

 The Utilitarian principle assumes that we can somehow measure and add the quantities of benefits generated by an action & deduct from it the measured quantities of harm that act produced, and determine thereby which action produces the greatest total benefits or the lowest total costs.

Cost Benefit Analysis Approach.

Net Pleasure has to be calculated for every decision Action A-Pleasure- pains= + Pleasures Action B- Pleasure- Pains= - Pleasures Issues of child labor Closing a polluting plant: Workers who loose job, consumers, Owners. Non Profitable SOEs in China. Development versus dislocation: China V/s India policy

Case let
Shikher is a poor man. His wife suffers from cancer and needs immediate medicine. The medicine is very costly and Shikher cannot afford it. The chemist is unwilling to lend to him on credit. Shikher breaks open the store, steals the drug, and administers it to his wife.

Stockholder/Shareholder Theory
Acc. to theory business are merely arrangements in which one group of people namely shareholders advance capital to another group namely managers to realize certain ends beneficial to them.

In this arrangement managers (including BODs) act as agents for shareholders.

This fiduciary relationship binds the managers not to spend the available resources on any activity without the authorization from their owners, regardless of any social benefits that can be accrued by doing so. Milton Friedman asserted that there is one & only one social responsibility of business- to use its resources & engage in the activities designed to increase its profits in open & free competition without fraud. Adam Smith Invisible hand: each individual though acts in self interest yet in the process promotes the interest of the society more efficiently then when he really intends to promote it.

Stockholder theory contd..

Deontological aspect: Stockholders provide their capital to managers on the condition that they use in accordance with their wishes. If the managers spend it to realize some social goals, unauthorized by stockholders-its a breach of the agreement. Many ethicists discard the theory as an outmoded relic of the past. Robert Solomon in his Ethics and Excellence finds its pathetic understanding of stockholder personality as Homo Economicus.

False Analogy: If govt. spends tax payers money without taking his/her consent then business can also carry out social activity without concern of shareholders.

Stakeholder Theory

Stakeholder Theory Contd..

Synthesis of Economics, behavioral science, business ethics and stakeholder concept. In its empirical form, the stakeholder theory argues that a corporates success in the market place can best be assured by catering to interest of all its stakeholders, namely shareholders, customers, employees, suppliers, management and the local community. To achieve its objective, the corporate would have to adopt policies that would ensure 'the optimal balance among them.

Criticism of Stakeholder theory

It is not a realistic assessment of the power relationships between the corporation and other entities. Path to corruption and chaos, it offers agents the opportunity to divert wealth away from shareholders to others. To assume that all stakeholders who are impacted by a contract have a moral right to bargain over distribution of its effects means they have right to participate in the decision making process of business as well, which is absurd.

The Social Contract Theory

All businesses are ethically duty bound to increase the welfare of the society by catering to the needs of customers and employees without in any way endangering the principles of natural justice.
Assumption: There is an implicit agreement between society and business unit, in which society recognizes the existence of a condition that it will serve the interest of the society in certain specified ways. When society gives legal recognition to business to exist, engage in any economic activity, earn profit by using companys resources(land, skilled labor, raw materials) it obviously implies that the firm owe an obligation to the society. Social Contract breaks when: Company deplete the irreplenishable natural resources Pollute environment Poison water bodies Misuse political power through money power. Employees treated as cogs in the wheels of production.

Criticism of Social Contract theory

Social Contract no contract at all.

Contract is an agreement between two or more persons that is legally enforceable provided certain conditions are observed.
Social contract Theorists: the moral force of the contract is not derived from the consent of parties, productive organizations have to behave if they had struck a deal.