Ch 2 becg approches to ethics, Prof. shirufi

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Business & Mgmt

Published on March 10, 2014

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GTU, S.K. Mandal by prof. Shirufi , Parul Insitute

Concepts and Theories of Business Ethics Prof. Shirufi Purohit SHIRUFI PUROHIT Ethics in Business and Corporate Governance 0 Introduction SHIRUFI PUROHIT Ethics in Business and Corporate Governance Definition of Ethics Business cannot aim only at making money for a few individuals, it must lead to social well-being, national economic growth, and fair distribution of benefits to all stakeholders. SHIRUFI PUROHIT Ethics in Business and Corporate Governance  Ethics as a moral and normative science refers to principles that define human behaviour as right, good and proper.   1 “Morality”, according to philosophers, refers to human conduct and values 2 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 3 This foundation will affect  In supporting and revealing goodness or badness of actions, respectively, one has to examine the case deeper to understand few more dimensions of ethics, namely utility, rights, duties, justice, fairness and care. SHIRUFI PUROHIT Ethics in Business and Corporate Governance Employees Customer  Dealers  Suppliers  Government  Local body or even with the people affected by the business.   4 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 5 1

Supporting Example- Fair  Supporting Example- duty. If a company does not pay fair wages to employees, the employees feel that they are being discriminate or exploited. SHIRUFI PUROHIT Ethics in Business and Corporate Governance If the senior executives get disproportionately higher and unjustifiable remuneration than the others in the company, then general employees feel differentiated and differentiated and deprived.  If a company fails to adequately compensate an accident victim the employees feel it not doing its duty.  6 Supporting Example-right to defend  7 Supporting Example-care If an employees service is terminated without allowing him to defend his action, he feels that his right to defend has been denied. SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance  8 If a sincere worker, who has served the company for many years is not offered help during his long illness, he may feel uncared for that. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 9 INTRODUCTION TO ETHICAL PRINCIPLES Utility Rights  Duties  Justice  Fairness  Care These aspects form the foundation of ethical principles, which are universally applicable.  These dealings can be with the employees, customers, dealers, suppliers, the government, a local body or even with the people affected by the business.    SHIRUFI PUROHIT Ethics in Business and Corporate Governance 10 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 11 2

Moral Theories The Utilitarian Theory The Utilitarian Theory The Theory of Rights and Duties  Theory of Justice  The Ethics of Care      SHIRUFI PUROHIT Ethics in Business and Corporate Governance 12 SHIRUFI13 PUROHIT Ethics in Business and Corporate Governance Example  The utilitarian theory is broadly based on the view that any action or policy should be evaluated on the basis of benefits and costs it will impose on the society. The basic approach of this theory is that plans, programmes and actions of any organisation should be chosen to produce the greatest net benefits for the largest number of people associated with the business – which includes the society. To determine net benefits, all the costs and benefits (or damages) – be it financial or otherwise – should be taken into account. Effect of Industralization Setting up a green field industry at he cost of the environment may be justified by choosing and considering the return on investment, along with the employment generation and wealth creation, t if one considers the dreadful effect of global warming due to such damage to and depletion of the environment then the net benefit may not justify the action SHIRUFI PUROHIT Ethics in Business and Corporate Governance 14 Destruction of forest SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 15 Destruction of forest 16 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 17 3

Destruction of forest SHIRUFI PUROHIT Ethics in Business and Corporate Governance Destruction of forest 18 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 19 20 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 21 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 23 Global Warming SHIRUFI PUROHIT Ethics in Business and Corporate Governance Earthquake Earthquake SHIRUFI PUROHIT Ethics in Business and Corporate Governance 22 4

Floods due to heavy rain SHIRUFI PUROHIT Ethics in Business and Corporate Governance Icing of Niagara fall 24 Melting of polar ice SHIRUFI PUROHIT Ethics in Business and Corporate Governance 25 Heavy rain fall Kedar Nath 26 Kedar and Haridwar SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 27 Cyclone in east India 28 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 29 5

Unseasonal rain in Gujarat SHIRUFI PUROHIT Ethics in Business and Corporate Governance Grain Rots due to flood 30 The Theory of Rights and Duties     If an employee has the moral right to be rewarded ( financially or otherwise)for an invention of his, one that has led to patents and benefits for the companies business. But if the company denies him any benefit on the grounds that the inventor was only performing his duty, then it would be unjust and unfair. 32 SHIRUFI PUROHIT Ethics in Business and Corporate Governance Opposite example  33 The Theory of Justice In media industry whenever you join you are being informed that whatever your will produce or write. Company would own it and not the individual. And company would be benefited and not the individual and nor individual can claim it. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 31 example The theory of rights and duties holds that all people have some basic rights, concerned with the power of an individual to choose, pursue and protect his or her interests, and all such rights are associated with correlated duties. When these rights arise from legal provision or social convention, they become moral rights. If a company prohibits or denies such rights to its employees, it may be said to be unfair to its employees and its action would not be adjudged moral. SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 34 The theory of justice revolves around the fundamental principles to guarantee a just and morally acceptable decision.  It implies that the actions are guided by fairness, equity and impartiality.  SHIRUFI PUROHIT Ethics in Business and Corporate Governance 35 6

The Ethics of Care Utilitarianism- Ethics of Welfare The ethics of care refers to necessity of showing extra care and consideration to protect someone else from the adverse effect of one’s choice that can make someone vulnerable in a particular situation.  Ethics of care necessitates examining contextual details of the situation in order to safeguard and promote specific interests of those involved because they are interdependent for accomplishing their specific interests – as long as the interests are moral and legal.  SHIRUFI PUROHIT Ethics in Business and Corporate Governance The proponents were: Jeremy Benthan (1748-1832) John Stuart Mill (1806-1873)   In this form of consequentialism, the desired end is not long-term self-interest of the individual but, it is greatest happiness to the greatest number. Any action that brings greatest happiness to the greatest number of people is a desirable action and should be performed. 36 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 37 Example study page 66   Utility or benefit of an action to the society. Basically, the utilitarian approach advocates that if an action produces greater benefits to the maximum number of people , the action or decision should be considered morally right/ SHIRUFI PUROHIT Ethics in Business and Corporate Governance 38 In view of utility theory of action that help in judging its morality and rightness from the ethical standpoint. 1. 2. 3. to find the alternatives available to the given situation. to estimate direct and indirect benefits and costs to deal or action for each alternative and examine how benefits affects each person at short term as well as long term tenure. To choose a particular alternative which produces the greatest benefits and utility to the maximum number of people (affected by the action), and is also morally and ethically appropriate as per the rules of moral reasoning. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 40 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 39 1. to find the alternatives available to the given situation. 1. enforcing the law Shifting industry to a non agricultural / barren area of that district or state.  Compensate the persons concerned with immediate and long term benefits that outweigh the cost of losing their land, as well as to consider the side-effects that may precipitate due to consequent industrialization.   SHIRUFI PUROHIT Ethics in Business and Corporate Governance 41 7

2. to estimate direct and indirect benefits Supporting example 1. livelihood cost to all affected person and family members  2. escalation of living cost for the future  3. cost of acquisition. Fund allocation in a government budget Here infrastructure, highways, ports are allocated higher funds compared to other areas based on utilitarian principles.  SHIRUFI PUROHIT Ethics in Business and Corporate Governance 1. 42 Supporting example   SHIRUFI PUROHIT Ethics in Business and Corporate Governance 45 Utilitarianism (Conti..) A person may be unwilling to donate to a street beggar but same person may donate money in a NGO thinking it would benefit a larger part of society. SHIRUFI PUROHIT Ethics in Business and Corporate Governance Production incentives bonus to workers for improving productivity in a machine shop. If the cut off level to qualify for bonus is too high that is if most workers are unable to reach through sinere efforts also then its negative utility. 44 For example  43 Supporting example Formulating company policies for reward and punishment, incentives, common services( facilities), social and environment policy etc are done for benefit for all. SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 46 Utilitarian principle: an action is ethically right only if the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act the agent could have been performed in its place. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 47 8

Utilitarianism (Conti..) Utilitarianism (Conti..)  A decision is ethical if it provides a greater utility than any other alternative decision While assessing the usefulness of utilitarianism in the organizational context , it should be understood that; Utilitarian decision-making relies on tools such as cost-benefit analysis and risk assessment to determine the greatest utility. SHIRUFI PUROHIT Ethics in Business and Corporate Governance It promotes welfare of all 2.  1. It provides a means of resolving self interest with the action of common good. 3. making 48 Limitations of Utilitarianism SHIRUFI PUROHIT Ethics in Business and Corporate Governance 49 Rule-Utilitarian Approach  The Utilitarian approach is difficult to apply when dealing with values that are difficult to measure (or estimate) in order to determine the maximum benefits to all affected persons.  This approach seems inadequate while handling situations that involve rights and justice. SHIRUFI PUROHIT Ethics in Business and Corporate Governance It provides a flexible, result oriented approach to ethical decision 50 Rule-utilitarian prescribes that an action should be judged in both contexts – ‘maximizing utility’ and ‘correct moral rules’ – and not in isolation of each other. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 51 Supporting example  Employment of a child labour as domestic help may bring more utility and benefit to both the household and the parent of the child, but it cannot be morally justified in modern civilized society. SHIRUFI PUROHIT Ethics in Business and Corporate Governance  52 Correct moral rules cannot support any activity that create or aggravate the sufferings of large number of people, which cannot be compensated by financial benefits alone. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 53 9

Example  Narmada dam Public movement against the dam on the Narmada river displacing a large number villagers, can be justified utilitarianism angle. construction of a and in doing so of villages and from the rule SHIRUFI PUROHIT Ethics in Business and Corporate Governance 54 Narmada dam SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 55 Narmada dam 56 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 57 Supporting example   The sprit of either utilitarian or rule utilitarian theory is to prevent injustice and violation of rights taking place in the guise of ‘ maximum benefits to all’    SHIRUFI PUROHIT Ethics in Business and Corporate Governance 58 Industries in mining, electroplating, lather processing are hazardous to health, they provide a special concessionmilk allowance or hazard allowance to each employee engaged in such jobs. But is it moral and ethical to expose the workers to the toxic fumes and chemicals that may cause permanent damage to their health? Yet the rule of moral correctness dies not support the action as being right. Hence, rule modifies the correctness of decisions over utilitarianism. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 59 10

Common good approach in ethics  Common good approach in ethics The society is divided into underprivileged, minority, backward class and weaker section, making difficult to identify direction in which the principle of common good should work to create a better society. SHIRUFI PUROHIT Ethics in Business and Corporate Governance  60 Supporting example     SHIRUFI PUROHIT Ethics in Business and Corporate Governance 61 Example Protection of environment Free primary education Primary healthcare Schemes and actions for poverty elimination SHIRUFI PUROHIT Ethics in Business and Corporate Governance Refers to basic rights of individuals in the society, and fulfillment of some basic requirements of individuals in the society, namely food, water, shelter, environment, health, and dignity that enables the society to better the quality of life and living.  If a company wants to spend some money for development of locality. Local people gives many option like primary education, drinking water, building roads and infrastructure. Than company has to take decision which benefits to maximum number of people and which is for common good. 62 SHIRUFI PUROHIT Ethics in Business and Corporate Governance Supporting example Rights  Monitoring 63 Rights are of two types, legal and moral. the mobile technology services and emails in the terrorist infested areas of the country. It curtails the freedom of privacy.  But considering the grave of terrorism, the common good approach will justify. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 64 Legal Rights are conveyed to a person by the statue of law or the constitution of the nation.  Legal rights are limited by the jurisdiction within which a person or a business operates.  Moral Rights devolve from social norms and moral standards, and are independent of any legal system.  Moral rights are also called human rights.  SHIRUFI PUROHIT Ethics in Business and Corporate Governance 65 11

Distinct features of Moral Rights Legal vs Moral  Moral rights are closely interlinked with duties. Moral rights are equally and equitably applied between the concerned parties.  Moral rights may be used to justify one’s action or for invoking the protection or help of others. Legal right   SHIRUFI PUROHIT Ethics in Business and Corporate Governance Moral Right Indian can cast his or her vote only in the place he or she lives or works that is voting is jurisdiction specific. 66  A air passenger who was stuck at the emigration clearance department of a foreign country has right to be treated humanly with dignity and to be provided with food and shelter till the investigation was complete. SHIRUFI PUROHIT Ethics in Business and Corporate Governance Duties Supporting example Duty is either contractual obligation or mutually understood obligation.  However, obligations for duty cannot force an employee to do any immoral or unethical job. 67   SHIRUFI PUROHIT Ethics in Business and Corporate Governance 68 ETHICAL RULES FOR CONTRACTS AND CONTRACTUAL OBLIGATIONS Both parties in a contract must have clear understanding and full knowledge of the nature of the agreement they are entering into;  Neither party to the contract shall intentionally misrepresent the facts of the contractual situation to the other party;  Neither party to the contract must be forced to enter the contract under duress or coercion or deceit; and  The contract must not bind the parties to any immoral or illegal act. Eg karan  SHIRUFI PUROHIT Ethics in Business and Corporate Governance A person seeking medical treatment, has the moral right to go o a doctor and it is moral duty of the attending doctor to consider the patients problem and offer treatment.  Here it is the mutually understood obligation of rights and duties that brings them together. 70 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 69 Kantianism- Ethics of Duty  Proponent: Immanuel Kant (1724-1804)  This theory introduces an important humanistic dimension to business decisions, which is to behave in the same way that one would wish to be treated under the same circumstances  Two formulations of Kant are as follows: 1. Respect-for-persons principle states persons should never be used as a means to an end. Kant gives more importance to individuals. 2. To always treat other people with dignity and respect. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 71 12

Kant’s principle Kant’s principle An action is morally right for a person in a certain situation if his or 2. An action is morally right for a person if, in performing the action, a her reason to carry out that action is one which he or she would be 1. person does not merely use others as a means to advance willing to accept as good enough for other persons to adopt similarly under similar situation. “Do unto others as you would have individual interest. Example:- a pharmaceutical company must not use a patient product them do unto you” to try to produce new medicine that is being developed already. Example:- Before firing a subordinate on the spot for some mistake, A hospital should not make a patient sign a no objection and no the manager should ask himself if he himself would have liked to indemnity bond before being treated for an ailment. be fired similarly by his own boss under a similar situation. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 72 SHIRUFI PUROHIT Ethics in Business and Corporate Governance Kant’s principle Summaries Kant’s principle  If something is moral to me, it must be morally right for others too. 2. Everyone is of equal value and has equal freedom. Kant’s principle plays a dominant role in safeguarding ethics in the contractual dealings of business operations, and has particularly benefitted workers or employees in industries and business houses.  i.e. everyone in the society has a moral right to equal treatment, & everyone has the correlative duty to treat others in the same way.  His approach to moral rights & duties- known as Kant’s Principle encompasses following points: SHIRUFI PUROHIT Ethics in Business and Corporate Governance 75 Justice Principles  Justice Principles  everyone else.  74 Other Non- consequentialist theory  Kant viewed the moral rights & duties as imperative in a society where everyone should be treated as equal to 1. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 73  Distributive Justice Retributive Justice Compensatory Justice   1.  Rights Theories 2. 3. Associated with issues of rights, fairness & care. A just act respects your rights. A just act treats you fairly. Principles of justice may be divided into three typesdistributive justice retributive justice compensatory justice.  Virtue Ethics SHIRUFI PUROHIT Ethics in Business and Corporate Governance 76 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 77 13

(a) Distributive Justice Distributive Justice  Society has many benefits and  burdens that must be distributed among its members.   Benefits include income, wealth, jobs, education and leisure. Burdens include work, taxes and social and civic obligations.  The allocation of benefits and burdens raises Distributive justice says that equals should be treated equally and unequal should be treated unequally, and there should be consistency in the treatment. Distributive justice is commonly called for in business in areas like employee gradation and promotion, wage policy, eligibility for different types of perks, dealers’ commission, dividend distribution, etc. – with a view to ensuring equality, uniformity and consistency in operations. questions of distributive justice. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 78 (a) Distributive Justice (Conti..)  SHIRUFI PUROHIT Ethics in Business and Corporate Governance Supporting example The purpose of distributive justice is to ensure consistency in the  way one should treat similar situations  Egalitarianism, advocates adherence to the doctrine of equal political, economic & legal rights for all human beings  Not offering opportunity for equal living and growth in a society is unfair and injustice. SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 81 Retributive Justice Retributive justice demands that a ‘just action’ should be taken either as penalty or reward in a manner that deserves the cause for which the penalty or reward is being meted out.  It generally deals, in practice, with the conditions under which it is just to punish a person for a wrongdoing. If the qualification and capability of a woman for a job are the same as a mans then there can be no discrimination between the two. SHIRUFI PUROHIT Ethics in Business and Corporate Governance In case of compensation offered to the nearest relatives of all the victims of an accident inside a factory, justice demands that compensation is fair and equitable,. There can be difference in managerial category and factory laborers, but this should be in norms and should not changed from victim to victim in the same class or category of employment. 80 Supporting example  79  82 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 83 14

(b) Retributive Justice For Example Failing to attend to duty without prior notice may be wrong, but it would not be just if the management suspends an employee for such isolated offence.  But if the employee becomes a habitual latecomer or absentee, he or she may attract heavier punishment like suspension of duty, etc, and that would be considered just under the circumstances.  The questions are when is it just to punish someone and  what should be the nature punishment. According to Aristotle, a person is morally responsible  for his actions unless he has been forced to take that decision. Just punishment must also fit the crime. The severity of  punishment should be in proportion to the magnitude of the crime. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 84 Compensatory Justice SHIRUFI PUROHIT Ethics in Business and Corporate Governance 85 c) Compensatory Justice: Compensatory justice is that which deals with the justice of restoration for being wrongfully harmed by somebody else.  It demands that a person who has done wrong should restore or equally compensate for what has been lost or harmed.   Compensatory justice is concerned with compensating the party injured by the wrongful act.  This includes necessary medical treatment and services and goods that are needed to rectify the injury.  The compensation should be equal to the loss suffered by the injured party.  However, problems occur when it is not possible to provide complete compensation, for example, a life lost cannot be restored. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 86 SHIRUFI PUROHIT Ethics in Business and Corporate Governance Other types of Justice 1. Justice of equality Justice of Fairness states that every person working in group  should be given equal shares of the group’s benefits & burdens. 2. Justice based on contribution thereby ensure that all sections of the society or group have been treated fairly contributes to the cause or action. Justice based on needs and abilities The purpose of this approach is to safeguard the interest of minimum standard of living in a society & to fulfill basic needs & states that benefits and burdens should be distributed in proportion to what each individual 3. 87  states that the Justice of fairness is based on three basic principles burden of work should be distributed as per people’s ability, and benefits (a) principle of equal liberty should be distributed as per people’s needs. (b) principle of inequality, and (c) principle of fair and equal opportunity SHIRUFI PUROHIT Ethics in Business and Corporate Governance 88 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 89 15

Justice of Fairness (Conti…) 1. The Ethics of Care Principle of equal liberty, states that every person’s basic liberties must  Each of us lives and exists in an environment of care and concern in the society, and we should preserve and nurture these environments and relationships;  Each of us should exercise care for those with whom we are socially and otherwise related by attending to their needs, wellbeing and desires as seen from their own personal perspective, and by responding positively to the same so as to preserve the values of those relationships;( refer case pg 94) be protected from the invasion by others & must be equal to those of others. Eg all shareholder present at the general meeting is entitled to vote. 2. Principle of inequality, states that though there could be inequality in a society, steps must be taken to improve the position of the needy & helpless in society in order to maintain justice, fairness & welfare 3. Principle of Fair & equal opportunity, states that everybody in the society should be given fair opportunity to pursue their choices, & to learn a trade or develop skills to improve their contributions to the society. ( read case pg 92) SHIRUFI PUROHIT Ethics in Business and Corporate Governance 90 The Ethics of Care (Conti..) SHIRUFI PUROHIT Ethics in Business and Corporate Governance 91 Steps in Moral Judgment Ethics of care stems from the sense of moral responsibility that we feel  about our family, relations, friends, colleagues & society. It is essential to live well & prosper in the society & at our workplace. Ethics of caring are primarily concerned with the “concept of caring for  someone” i.e. not being concerned for the self, but for the others in the society or community. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 92 SHIRUFI PUROHIT Ethics in Business and Corporate Governance Virtue Ethics (Conti…) Virtue Ethics   Virtue is a quality embedded in the personality of an individual & facilitates ethical behavior & action through the characteristics Ethics of virtue complement and add to utilitarianism, rights, behavior of the decision makers. justice and care by looking not at the actions people are  required to perform, but at the character they are required to and conscientiousness. It is not the performance that counts here, but the quality &  character required for the performance  Some typical virtuous traits in the business arena would be integrity, honesty, truthfulness, courage, loyalty, courteousness, have.  The theory of utility, rights, justice & care approaches ethics through an evaluation of actions; whereas virtue of ethics is expressed in his or her habitual behavior.  93 Virtuous traits are acquired and developed throughout our life experiences.. A moral virtue is an acquired quality that is praised and valued as a part of a person’s character. It is indicative of good moral character. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 94 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 95 16

Ethics and religion  Teachings of the Church The world’s great religions––Christianity, Hinduism, Islam & many  The Church always supports and promotes the welfare of the other religions have all left their permanent marks on morality and poor. People often think how we can relate business and ethical the conduct of people in every aspect of Human Endeavour, teachings of Church. But now the trend has changed and including business. Every religion has provided its followers its own organizations and institutions relate business with religion and set of moral instructions, beliefs, values and virtues, traditions ethics. This transition is due to the increased importance of ethics in and commitments. business. The Church's concerns and ethical teachings are found in several papal encyclicals, i.e, letters the pope writes to his followers. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 96 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 97 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 98 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 99 Rerum Novarum  Since the late 19th century, there has developed a strong tradition of reflective thought on economic issues within the Catholic Church. This concern on economic issues effectively started in May 1891, with the publication of Rerum Novarum, an encyclical by Pope Leo XIII. The central theme of the letter was the relationship among the State, employers and the workers.  It was revolutionary work & strongly laid the foundation for human dignity. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 100 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 101 17

Key feature of the encyclical  Indian Ethical Traditions Directs the State and organizations to perform their duties to the  working class  The Hindu scriptures such as the Gita and the Upanishads speak of the performance of right duty, at the right time in the right manner. Because when man is deprived of dignity and equality he will indulge in unethical practices. Mutual support in the society and  productivity and profit. The rich Indian tradition has always emphasised the dignity of human life and the right to live in a respectful manner. organization will help individuals to perform their best for  The rich values that once prevailed in India are now disappearing from the mainstream.  Indian traditions are copied & followed by Western countries in their social welfare & organizational conduct. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 102 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 103 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 104 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 105 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 106 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 107 Gandhian Principles of Trusteeship  Implies that an industrialist or businessman should consider himself to be a trustee of the wealth he possesses.  The wealth belongs to the society & should be used for the greatest good of all.  Gandhiji also advocated Sarvodaya, meaning welfare for all. He was of the firm view that there should be a family atmosphere & harmony in work place 18

Birla Temple in Kolkatta Practicing Gandhian Principles  In the recent past, social involvement by business has, for the most part, taken the shape of public charity. This has included the building of temples, hospitals and educational institutions.  A few examples include the Birla Temple in Calcutta, the Shree Vivekananda Research and Training Institute set up by Excel Industries in Mandvi, the L&T Welfare Centre in Bombay, the Tata Institute of Fundamental Research, and the Voltas Lifeline Express, which is very much in the spirit of trusteeship. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 108 110 Voltas Lifeline Express SHIRUFI PUROHIT Ethics in Business and Corporate Governance 109 Tata Institute of Fundamental Research L&T Institute of Technology SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 111 Voltas Lifeline Express 112 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 113 19

Voltas Lifeline Express Voltas Lifeline Express The Lifeline Express or Jeevan Rekha Express is a mobile hospital train  It was developed in collaboration with the Indian Railways and Health Ministry and has been funded by Impact UK, international charitable sources, Indian corporate houses and individuals. so far the service has benefitted 400,000 Indians in the remotest rural parts of the country   The Lifeline express was started to provide onthe-spot diagnostic, medical and advanced surgical treatment for preventive and curative interventions for disabled adults and children for outreach into inaccessible rural areas where medical services are not available; offered using the Indian Railway Network which is the largest in the world comprising about 63,500 kilometres of tracks.  SHIRUFI PUROHIT Ethics in Business and Corporate Governance 114 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 115 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 117 Righteousness as the way in Gita  The Bhagawad Gita cites numerous instances of how moral values and ethics can be incorporated in one's work life.  Many of its verses are directly significant for the modern manager who may be confused about his direction and struggling to find an answer to ethical dilemmas.  The Lord repeats that work or karma is the driving force of life, and that this work has to be ethical. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 116 Gita’s message in an organization Message of the Gita: Chapter II, Verse 47  “You have a right to perform your prescribed duty, but you are   doing your duty”.  This stanza implies that the performer of an action has only to perform the prescribed duty and not think about the result of the When applied to an organization where one is only worried of the result, he is likely to fall into improper activities. not entitled to the fruits of action. Never be attached to not On the other hand, if he is ready to do his duty to the utmost of his ability and set aside the result, he will be an ethical person in the organization action, because the result is beyond his control. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 118 SHIRUFI PUROHIT Ethics in Business and Corporate Governance 119 20

Business and Islam  Shariah and Interest on Capital For Islam, all principles covering business originate from the Holy  Shariah bans the taking of interest, because according to this law, Quran, as they are explained and amplified in the Hadith (collection investors can make profit only from transactions based on the of the Prophet’s sayings) exchange of assets, not money alone, and therefore, interest is banned.  The Prophet Mohammed ordained that businesses should  Thus lending money at interest is against Shariah law. promote ethical and moral behaviour and should follow honesty,  Interest is forbidden, but sharing profit & loss is acceptable truthfulness and fulfilment of trusts and commitments, while eliminating fraud, cheating, cut-throat competition, lending money at interest to people in need and false advertising. SHIRUFI PUROHIT Ethics in Business and Corporate Governance 121 SHIRUFI PUROHIT Ethics in Business and Corporate Governance SHIRUFI PUROHIT Ethics in Business and Corporate Governance 122 123 21

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