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Ethics in

Business
Saikat Mondal
(PGP-16-138)

ABSTRACT
Ethics and values are integral part of daily human life but the difference is seldom
understood, even if the difference is clear it is constantly subjected to individual
past experiences. Through this course with diverse lectures ranging from
Marketing, Finance, Information Management, Business Strategy & Policy,
Corporate Governance etc. ethics as a subject was given a structured approach
with the help of four spheres framework by Dr. J.L. Badaracco. This subject also
gave way to the viewpoint that business and ethics can go hand in hand and that
we have to also think about the long term costs associated with managing the
short term business expectations. The following journal report briefly states the
topics taught during the entire course.
Introduction: Heisenbergs uncertainty principle clearly states that while measuring a system we
interact with it and while this interaction is imperative to understand the universe it also changes the
very nature of the substance and that the interaction needs to be taken care of to truly understand the
actual impact. Just like the measuring force, this subject changed and shaped my perception towards
already held but a broad notion of ethics. So with the inclusion of all the key learning that were gained
by the lectures I would also give my own interpretation, this would further give me an opportunity to
reflect further upon.

Ethics: Ethics unlike Values are a set of conventions, a set of rules perhaps that governs the
behavior of person while he interacts with a group in particular or a culture in general. While values are
principles and ideals that are internal to an individual and which helps that individual makes his
decisions, being ethical is having the ability to choose between not just the right from a set of the wrong,
but, at times, choosing right between many rights. Life is always conditional and Bayes theorem is applied in
almost every sphere of our thinking, i.e. what has happened in our past always has a bearing on our present
and thus different individual would have different values. This distinction was necessary as to acknowledge
that while an individuals values may be different and may diverge at many points, ethics could still have a
common ground and may not be that hazy because of societal element involved with ethics.

In our very first session with Dean, we were taken to a variety of fictitious situations whereby we when
confronted with two choices one with a difficult terrain but consistent with our values and ethics and
other with a relatively easy walkways but which meant cutting corners at every cross-roads. It was
conveniently shown that if we chose the easy path, in the long term nobody would believe that we could
choose the other one and the costs of such association is very high. The example of a contract was
given whereby we could chose to have the contract if we offered a bribe or a commission to the
concerned person, while this is unethical behavior to the extent and essence of what was being
transmitted, I believe I also have a responsibility towards my stakeholders, what if not getting that
contract would essentially mean that my firms employees would have to cut a portion of their salaries,
or maybe even shut the firm and lose their jobs. This example not only taught me that ethics is a
transactional matter and there is no one size fits all but also that once we take the easy path no matter
how difficult the circumstances be, it is very difficult to come back.

The second lecture started with illustration, with an example of five persons crossing a river, as to how
we stereotype personality and traits to a particular gender, this then is translated to expectations and
expected behavior. It went on to reinforce my current understanding of human behavior as guided by
Bayes theorem and conditional probability. The lecture also focused on the various schools of thought
on one hand lies Teleology as pursuing a good cause is of no consequence only the end results
matter no matter what the means are, while on the other Deontology states that results are seldom
at our disposal and that our duty is to pursue the ethical means no matter what the ends, i.e. means
justify the ends and not the end alone.

The lecture then continued to view an ethical decision through the prism of an ethical flowchart. The
flowchart basically concentrated on three dimensions of rights, just and utility. If any decision doesnt
violate rights of others, is just and maximizes utility we should always go ahead and if not we shouldnt.
The problem arises when the answer to all three is not a yes or a no.

We then gradually translated into values and Milton Rokeachs analogy of value system as sieve with
holes being the values really appealed to me. The analogy states that only those acts pertaining to his
value systems would be done by him and the rest would be sieved out. It also stated that for each
individual the sizes are different based on his value system. The companies say and show their values
artifacts by the mission and vision statements, while the hidden values that are ingrained in
companys culture. The organization is sometimes not even aware of the culture that it possesses but
they are very much there in every decision and definition and when the companies values match with
that of the individual that state is a state where a maximum pleasure is achieved both by the
organization and individual.

While interacting in a group with every individual having a different value system, and as per a
generalists theory the conflicts are bound to happen, which is then avoided by what is called
surrender of values. An individual surrenders his values in a tank called surrender value tank, but
the tank is only limited and that limit is called threshold value. Only that many values can be
surrendered as can be accommodated in the tank and after that the person feels that whatever he does
is not in line with his personality. The amount of values that can be surrendered in the tank depends
upon the power that person holds in the group. If a person is in need of high affiliation in the group the
threshold of values for that person is high, in contrast to a person who is not in need for high affiliation
for him/her the amount of values that he would be willing to surrender is less and the threshold is less.

Ethics and Business


As a part of ADMAP initiative we were shown a movie Munna Bhai - MBBS and had a series of
specializations lectures related to application of ethics mixing it up with Dr. J.L.Badaraccos four
spheres framework we sum up the learnings as follows:

Responsibilities as an Individual:

1. From the movie Munnabhai MBBS:

i. Respecting Individual and his work no matter how


lower in hierarchy he does his work, as his work is
important for the organization.
ii. Showing gratitude to anyone should be an
indication of the reverence and respect and should be
heartfelt.
iii. What is past should remain in past and should hold
limited bearing to the present.
iv. We shouldnt be venting out our frustration on the
meek and the marginal.
v. This also showed us that by violating certain rules if
he could reach an end where he could justify his
means is also acceptable and uses a proper balance
of both schools of thought- Teleology and Deontology- to make decisions in appropriate manner.

2. From Strategic IT session:

People involved are cyberbullying, squatting, hacking, plagiarism, spamming, phishing etc. Some individuals
even use spyware to spy on others and get access to their information for personal benefit creates insecurity
in minds of people and is in direct conflict with individuals values and tantamount to fraud and deceit with
violation of others rights hence unethical.

3. From marketing session:

The Robin safety systems case showed that while misrepresenting facts to the consumer can come in direct
conflict with an individuals moral code of lying and deceit.
Responsibilities as organizational leaders:

1. From Corporate Governance session:

How the four pillars of Accountability, Transparency, Fairness and Responsibility helps managers achieve
equilibrium of taking care of shareholders both internal and external and achieve stable company growth.
The initiative such as E-Choupal by ITC would also go the distance to create the impact beyond firms
boundaries

2. From Operations management:

Human life should be valued, not from a monetary aspect but from a humanistic viewpoint by creating a
good and safe workplace, minimizing hazards and striving for best industry practices related to safety and
manufacturing.

3. From Management accounting session:

Biggest scandals ever were through manipulations of the accounting records as is evident by the Enron and
Satyam case and that the accountants and leaders should always follow law and proper accounting
procedures like GAAP even if the figures look unacceptable. The failure on the part of top management was
finally faced by the stakeholders in the organization who faced stiff issues of restructuring and finally
company failure.

4. From Business Policy & Strategy session:

The Bausch & Lomb case showed that the leaders too were involved in fraudulent practices and distortion of
books even when the sales are not made, this behavior is then finally transmitted to the bottom of the
hierarchy and then the company becomes completely unethical and beyond redemption, this could perhaps
be one of the reason that in spite of a strong positive leadership change afterwards there couldnt be any
significant change in the operations of the company.

Responsibilities as economic agents:


1. From marketing session:

While Bobby had a sales target to meet and thus deliver his duties as an economic agent he could have
pursued some extensive market research to actually find faults with competitors brands and thus create a
win-win solution for both as an economic agent and as an individual. The key learning is that there is always
some way to make things happen and taking the easy path often always is short term.

2. From Management Accounting session:

While it is important to deliver the required return to shareholders doing that by violating the law and ethics
of the company has a far reaching consequence and may actually destroy the company shareholders value.

3. From Business Policy & Strategy session:

The sales force are required to meet the targets but selling it into gray markets, just to meet the targets, is
finally eroding the value to the established players in the market and as such hampers the economic
profitability of the company through lower sales. The top management should also be aware of the targets
and the goal setting should be realistic and not dump the products at heavy discounts which finally erodes
the bottom-line in spite of a good topline.
Responsibilities beyond firms boundaries:

1. From Management accounting session:

The cooking of books would finally result to a loss in shareholders values and would impact the society at
large, as was evidenced by the too big to fail scenario of the US, whereby the entire nation and with it the
entire world was up on heels to tackle the failure of few investment banks. With Satyam

2. From Strategic IT session:

Involving in unethical practices like snooping of NSA may erode value for the people at large as the distrust
created may have far reaching consequences like aggrieved nation leaders, and thus hampering of world
peace, or loss of trade and mutual understanding and partnership.

Conclusion:

In conclusion I would like to say that the world is more connected today than it ever was in the past and that
today the world is run with rational expectations. We as leaders and individuals either reinforce those
expectations or dilute them and that is easily communicated by our actions and thoughts. Ethics probably
plays a more significant role in governing those actions. This course gave me the requisite exposure to show
the interconnectedness of the world and the far reaching consequences that our actions could have in the
world at large. This course also gave me the insight to balance the dilemma of maintaining short term
expectations with long term values of organization and creating a win-win solution for all.

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