Business Ethics And Corporate Social Responsibility

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
Semester: Third Semester
Name of the Subject:
Business Ethics And Corporate Social
Responsibility
Unit 1

Definition of Values
• They are the ideas and beliefs about life that guide us
to do what we do and be what we are…
• They can be about:
– Politics Family
– Sex Friends
– Religion Dishonesty
– Being of service Taking Risks
– Education Respect
– Money Leisure

Different kinds of Values
• Moral Values:
– Values you hold for yourself but don’t force on others such
as right vs. wrong, honesty vs. dishonesty, being of service
to others
• Aesthetic Values:
– Personal standards of beauty as seen in nature, art, music,
personal appearance
• Performance Values:
– Benchmarks you set for yourself such as accuracy, speed,
reward for achievement, self-discipline and overall
accomplishment

• Instrumental Values:
–Objectives used to reach goals such as being
responsible, obedient, loving, ambitious,
independent, honest
• Intrinsic Values:
–Personal happiness, a comfortable life,
personal freedom, true friendship, a
successful career

Changing Society, Changing Values
• Values are changing, caused by:
• Demographic changes caused by much immigration from
other countries
• Globalization of the world economy
• Growing environmental concerns
• Political polarization
• Breakup of the family
• Computer technology and the Internet
• The Feminist movement
• Terrorism
• All of these, and many more, will greatly affect the values of
the individual.

Ethics
• An ethic is a moral principle or set of moral
values held by an individual or a group.
• Ethical behaviour is behaviour which is
considered to be right and moral.
• Business ethics are the values and principles
which operate in the world of business. They
form the moral framework of the organisation.

Ethical issues are faced by
business
• Should firms use child labour?
• Is animal testing needed in products and ingredients?
• What wages should firms pay to poor countries?
• To what extent should firms seek to be environmentally
friendly?

Two sides to every story
• Companies often find it difficult to please all of its
stakeholders, as they have different interests.
• Being ethical depends on an individual view of what
is right and wrong. What might be considered good
behaviour to one individual, may seem bad to
another.
• Ultimately companies aim to make a profit and
sometimes this can conflict with acting in a
responsible way.

ETHOS
• simply mean the disposition, character, or
fundamental values peculiar to a specific
person, people, culture, or movement. The
Ethos refers to the spirit which motivates the
ideas and customs

PRINCIPLES
• There are 6 basic principles , which come to
light in the holy books applicable in today’s
management world.
Each Soul Is
perfect soul
Holistic approach
Equal importance
to subjectivity/
Objectivity
Karma Yoga

Ethical Decision Making
• Ethical decision-making refers to the process
of evaluating and choosing among alternatives
in a manner consistent with ethical principles.
In making ethical decisions, it is necessary to
perceive and eliminate unethical options and
select the best ethical alternative.

• The process of making ethical decisions
requires:
• Commitment: The desire to do the right thing
regardless of the cost
• Consciousness: The awareness to act
consistently and apply moral convictions to
daily behavior
• Competency: The ability to collect and
evaluate information, develop alternatives,
and foresee potential consequences and risks

Steps of ethical decision making
Stop and
think
Clarify
goals
Determin
e facts
Develop
options
Consider
consequenc
es
Choose
Monitor
and
modify:

Define Knowledge
• Knowledge is a familiarity, awareness, or
understanding of someone or something,
such as facts, information, descriptions, or
skills, which is acquired through experience or
education by perceiving, discovering, or
learning.

WISDOM
• Wisdom or sapience is the ability to think and
act using knowledge, experience,
understanding, common sense, and insight,
especially in a mature or utilitarian manner.

Comparison Between Knowledge
and Wisdom

Stress Management
• Stress management is a wide spectrum of
techniques and psychotherapies aimed at
controlling a person's level of stress, especially
chronic stress, usually for the purpose of
improving everyday functioning.

Consequences of Stress

Stress Management Techniques

Concept of Karma
• The concept of Karma is India's unique
contribution to the world. Hinduism,
Buddhism and Jainism, the major religions of
the world which originated in India, all
acknowledge the universality of the law of
karma in their own individual ways.

Principles of Karma Yoga
Think Well
Have Pure
Motives
Be duty
Bound
Give your
Best
Forgo Your
Result
Serve all
Be
Disciplined

Nishkam Karma & Saksham Karma
• Nishkam Karma (sanskrit IAST : niṣkāmakarma), self-
less or desireless action, is an action performed
without any expectation of fruits or results, and the
central tenet of Karma Yoga path to Liberation.
• Nishkam Karma means free or without desire.
Karma comes from the root word “kama”
which means desires. Karma comes from the
root word "kriya" which means to do.

• In the act of Nishkam Karma you have no selfish
expectation, you are only giving. Give with love,
devotion and happiness. Whatever you can! But
observe your limitations, don’t overdo it!

Nishkam Karma means doing Seva (selfless service),
without the expectation of receiving
acknowledgement, reward or a word of thanks.
When you have even just one thought that someone
should have said "Thank you", this is not Nishkam
Karma. In Vedic culture there is no tradition of saying
'Thank you', only 'Blessing

• Sakam karma means to act selfishly, or with personal
gain and self-interest in mind. From Sanskrit, sakam
means “together,” “jointly" or "simultaneously.”
• When acting out of sakam karma, an individual is
acting with the expectation and motivation that good
will be returned to him/her in this life. This concept
is a central theme in the Bhagavad Gita and an
important philosophical issue in Karma yoga.

Total Quality of Management
• (TQM) describes a management approach to long–
term success through customer satisfaction. In a
TQM effort, all members of an organization
participate in improving processes, products,
services, and the culture in which they work.

Elements Of TQM
Customer-
focused
Total employee
involvement
Process-
centered
Integrated
system
Strategic and
systematic
approach
Continual
improvement
Fact-based
decision making
Communications

Success
• Success means different things to different
people. For some, it is financial, for others it is
freedom, and for some it is being able to lead
a certain lifestyle, while it is a combination of
things to others. Therefore, there are many
ways to achieve success, because it depends
on what success means to each individual

Principles Of Success
Take Risks
Capitalize on
unexpected
opportunities
Build positive
relationships
Discipline
yourself
Learn to focus
Celebrate
success

Business
Gurus

R. H Macy
Most people are familiar with this large department store chain, but Macy didn't
always have it easy. Macy started seven failed business before finally hitting big
with his store in New York City

Honda
The billion-dollar business that is Honda began with a series of failures and
fortunate turns of luck. Honda was turned down by Toyota Motor Corporation
for a job after interviewing for a job as an engineer, leaving him jobless for quite
some time. He started making scooters of his own at home, and spurred on by his
neighbors, finally started his own business.

Akio Morita
You may not have heard of Morita but you've undoubtedly heard of his company,
Sony. Sony's first product was a rice cooker that unfortunately didn't cook rice so
much as burn it, selling less than 100 units. This first setback didn't stop Morita
and his partners as they pushed forward to create a multi-billion dollar company

Harland David Sanders
Perhaps better known as Colonel Sanders of Kentucky Fried Chicken fame, Sanders
had a hard time selling his chicken at first. In fact, his famous secret chicken recipe
was rejected 1,009 times before a restaurant accepted it.

Inventors

Orville and Wilbur Wright
These brothers battled depression and family illness before starting the bicycle shop that
would lead them to experimenting with flight. After numerous attempts at creating flying
machines, several years of hard work, and tons of failed prototypes, the brothers finally
created a plane that could get airborne and stay there.

Thomas Edison
In his early years, teachers told Edison he was "too stupid to learn anything." Work was
no better, as he was fired from his first two jobs for not being productive enough. Even as
an inventor, Edison made 1,000 unsuccessful attempts at inventing the light bulb. Of
course, all those unsuccessful attempts finally resulted in the design that worked.

Writers and
Artists

Emily Dickinson
Recluse and poet Emily Dickinson is a commonly read and loved writer. Yet in
her lifetime she was all but ignored, having fewer than a dozen poems published
out of her almost 1,800 completed works

Charles Schultz
Schultz's Peanuts comic strip has had enduring fame, yet this cartoonist had
every cartoon he submitted rejected by his high school yearbook staff. Even
after high school, Schultz didn't have it easy, applying and being rejected for a
position working with Walt Disney

Louisa May Alcott
Most people are familiar Alcott's most famous work, Little Women. Yet Alcott
faced a bit of a battle to get her work out there and was encouraged to find
work as a servant by her family to make ends meet. It was her letters back
home during her experience as a nurse in the Civil War that gave her the first
big break she needed.

Athletes

Tom Landry
As the coach of the Dallas Cowboys, Landry brought the team two Super Bowl
victories, five NFC Championship victories and holds the records for the record
for the most career wins. He also has the distinction of having one of the worst
first seasons on record (winning no games) and winning five or fewer over the
next four seasons

Corporate Social Responsibility
A company's sense of responsibility towards
the community and environment (both
ecological and social) in which it operates.
Companies express this citizenship (1)
through their waste and pollution reduction
processes, (2) by contributing educational
and social programs, and (3) by earning
adequate returns on the employed
resources. See also corporate citizenship.

Dimensions of CSR

Corporate governance
Corporate governance broadly refers to the mechanisms through which corporations'
objectives are set and pursued in the context of the social, regulatory and market
environment. Governance mechanisms include monitoring the actions, policies and
decisions of corporations and their agents (which include board of directors, managers,
shareholders, creditors, auditors, regulators, and other stakeholders). In other words
Corporate Governance includes quality, transparency and dependability of the
relationships between the shareholders, Board of Directors, Management and Employees
that define the authority and responsibility at each level for the sustainable growth of
organisation

the system by which business corporations are directed and controlled
specifies the distribution of rights and responsibilities among different
participants in the corporation, such as the board, managers, shareholders and
other stakeholders
spells out the rules and procedures for making decisions on corporate affairs
provides the structure through which the company objectives are set, and the
means of attaining those objectives and monitoring performance

Management vs. Governance
Management deals with daily operations, while
Governance is about the underlying ethics of a corporation.
Poor management can affect governance
Weak governance undermines the financial and operational
performance of a corporation
Weak governance affects investors’ faith in the company.

CIPE © 2008 50
Corporate Governance Business Ethics
CORE VALUES
Transparency
Fairness
Accountability
Responsibility
Guide for behaviorStructure of decision-making

Elements of Corporate Governance
Good Board practices
Control Environment
Transparent disclosure
Well-defined shareholder rights
Board commitment

Four Pillars
of Corporate Governance
Accountability Fairness
Transparency Independence

Why is it important
Proliferation of financial scandals and crisis
Loss of trust of investors
Globalization lead to increasing cross-border investment opportunities but investors
may not have knowledge about the regulatory framework of overseas investees
Investors are not willing to invest in countries/companies that are corrupt, prone to
fraud, poorly managed and lacking sufficient protection for investors’ rights
Securities and company law protection may help, but not enough
Corporate Governance supplements the legal framework

Corporate Governance Structure
Corporate Governance structure in each country has certain charaterstics
elements like
Key players in the Corporate Environment
State Ownership pattern in the country
Composition of Board Of Directors
Regulatory Framework
Disclosure Requirements of Companies
Corporate Actions requiring Shareholders approval
Interaction among Key players

Traditional Models
• Models Of Corporate Governance
Anglo-US Model Japanese Model German Model

New Approaches
• OECD Model has tried to recognise the synergy between macroeconomic
& structural policies in achieving fundamental policy goals,by providing
set of revised principles on corporate governance.
• Ensuring the Basis for an Effective Corporate Governance Framework
• The Rights of Shareholders and Key Ownership Functions
• The Equitable Treatment of Shareholders
• The Role of Stakeholders in Corporate Governance
• Disclosure and Transparency
• The Responsibilities of the Board

Indian Scenario
Corporate Governance in India gained prominence in the wake of liberalization
during the 1990s and was introduced by the industry association Confederation of
Indian Industry (CII) as a voluntary measure to be adopted by Indian companies.
Initial Corporate Governance framework is primarily based on Anglo –Sexon
model of governance. It has been observed that measures related to Corporate
Governance are commonly viewed in India only from compliance perspective and
not from a business strategy view point. Till Companies Act 2013 came into being
regulations pertaining to corporate governance were not across the companies act
and their enforcement through the Indian legal system was also weak.

Companies Act 2013- Corporate Governance
2.Higher
Auditor
Responsibil
ity
1.Increased
Reporting
Framework
3.Emphasi
se On
Investor
Protection
4.Wider
Director &
Managemen
t
Responsibilit
y
6.Inclusive
CSR
Agenda
5.Easier
Restructurin
g

Business Ethics And Corporate Social Responsibility

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