Business Ethics &

Corporate Governance

-Charvi Parikh

Visiting Faculty, ITM Kharghar

Charvi_Parikh@hotmail.com

Lecture : Outline
1.
2.
3.
4.

Course Approach: 15m

Slides 1-15: 30 min
Case-studies: 40m
Attendance: 5 min

Charvi Parikh

Business Ethics & Corporate

Governance

Course Approach
Learning @class: PPT + Case Studies + Videos
Learning @outside class: Textbook + additional resources
Textbook: Ethics in Business and Corporate Governance-S K
Mandal, Tata
McGraw Hill , Education Pvt. Ltd., 2nd Reprint
,2011
additional resources: as suggested during class
Assessment:
Internal 20 marks

Attendance (5)

Team Presentation (5)

Written Test (10)

External: 30 marks (Written Test)
Rules: food, drink, light, fan, AC, mobile, chatting VFM
Attendance:
Charvi Parikh

Business Ethics & Corporate

Governance

Definition
Business Ethics
The set of moral rules that govern how businesses operate,
how business decisions are made and how people are
treated
Corporate Governance
The system of rules, practices and processes by which a
company is directed and controlled

Charvi Parikh

Business Ethics & Corporate

Governance

Two Questions
We have grown up with MORAL lessons:
Ramayan, Mahabharat, Bhagvad Geeta
Fables (Panchtantra)
Moral stories (101 Bedtime stories!)
and it continues even in teens:
Chicken Soup for Soul (series!)
Inspiration talks, Motivational videos, (all with subtle moral message)
ethics is ethics at home, at school, at college, at officethey are the same
Why learn Business Ethics now?
Another question
We had Civics as a subject in school. We know all about good governance
We are all the time operating in a controlled environment (home,college)
We are not going to join corporate as a director / top management
Why learn about Corporate Governance now?

Charvi Parikh

Business Ethics & Corporate

Governance

Why Important To Learn BE&CG?

Bhopal Gas Tragedy

Global Chemical company Bankrupt in 1984
Enron Scandal
Americas most innovative company for 6 years - Bankrupt in 2001
Lehman Brothers
4th largest investment bank in USA - filed for bankruptcy in 2008
Rajat Gupta - former Goldman Sachs Group Inc director
currently serving in jail
Raju RamLingam former chairman of Satyam Computer Services
currently serving in jail

New Companies Act for India

More companies reporting on ESG data globally

Part of PGDM course, MMS course, management courses offered by

universities abroad
Research papers, textbooks and other corporate books, discussion
groups

Charvi Parikh

Business Ethics & Corporate

Governance

Learning Concepts

Charvi Parikh

Business Ethics & Corporate

Governance

What Is Business Ethics?

Ethics can be defined as guiding principles that help us decide
between what is right and what is wrong
Ethical behavior means that the individual behaves in a right way
which will be accepted by the whole society
Business ethics are the guiding principles that are acceptable
parameters in which the business firms are to operate

Business ethics can affect an individual, corporate and society as a

whole
Charvi Parikh

Business Ethics & Corporate

Governance

(non-)Ethical Business Practices

Bribery
Manipulation of market conditions
affect
Non-transparent business transactions
s
Violation of environmental laws
Deficient customer services
Exploitation of labor market
Unfair wage structures
Hazardous working conditions
Unequal opportunity based on religion,
gender, age

Charvi Parikh

Business Ethics & Corporate

Governance

Employee
Partner
Client
Customer
Supplier
Vendor
Shareholde
r
Investor
Regulator
Governmen
t
Community
Society
9

How Ethics work in Business

A company can not have feelings but its people can have the
necessary feelings , and they are expected to act with feelings
, reasoning and considerations while working for and on
behalf of the business

employe
e

compan
y

Company, like its employees, too responsible for

ethical behavior
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Business Ethics & Corporate

Governance

10

Difference between Morality & Ethics

Morality refers to adhering to certain moral standards or
conduct of behavior established in a society for good,
harmonious and fair living
vs.
Ethics refer to goodness, rightness and fairness of such
standards and conduct exhibited by an organization or people
running organizations
M

Morality and moral standards refer to individuals / people

(irrespective of independent entity or business) for their
goodness, rightness or fairness of their decisions and actions
vs.
Ethics and ethical standards refer to business, professions,
institutions, associations for their goodness, rightness or
fairness of their decisions and actions
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Business Ethics & Corporate

Governance

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Characteristics Of Moral Standards

1.

Impact others: Involve significant injuries or benefits

2.

Self-regulatory: Not established by authority figures

3.

Preference: Should be preferred to other values including

self-interest
M

4.

Impartial: Based on impartial considerations

5.

Self-inflicting: Associated with special emotions and

vocabulary

Take an example of ShahRukh Khan promoting fairness cream

for men
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Business Ethics & Corporate

Governance

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Kohlbergs Three Levels of Moral Development

1.

First Level: Pre-conventional Stages (Childhood)

Stage One: punishment and obedience orientation
Stage Two: instrumental and relative orientation

2.

Second Level: Conventional Stages

Stage One: interpersonalMconcordance orientation
Stage Two: law and order orientation

3.

Third Level: Post-conventional Stages (Principled)

Stage One: social contract orientation
Stage Two: universal principles orientation

Charvi Parikh

Business Ethics & Corporate

Governance

13

Moral Reasoning
The reasoning process by which human behaviors, institutions, or policies
are judged to be in accordance with or in violation of moral standards
Moral reasoning involves:
The moral standards by which we evaluate things
Information about what is being evaluated
A moral judgment about what M
is being evaluated
Steps:
1. Identifying what constitutes moral standards
2. Examining facts and figures concerning the policy, behavior and
actions under the specific situation
3. Arriving at a moral judgment on the basis of rightness or wrongness of
policy, behavior or actions
Take an example of Amir Khan promoting fairness cream for men

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Business Ethics & Corporate

Governance

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Guiding Principles For Moral Reasoning

1.
2.
3.
4.
5.

Application of wider perspective

Consideration of human, social and environmental factors
Assessment of acceptable moral standards based on
situation
Identification of facts
Arriving at judgment through
M right, fair, just logical and
consistent reasoning

Take an example of Amir Khan promoting fairness cream for

men

Charvi Parikh

Business Ethics & Corporate

Governance

15

Three Components Of Moral Responsibility

1.
2.
3.

Casualty: Person caused or helped cause the injury, or

failed to prevent it when he or she could and should have
Knowledge: Person did so knowing what he or she was
doing
Freedom: Person did so of his or her own free will
M

Factors that mitigate Moral Responsibility

. Minimal contribution
less involvement usually tends to less reasonability for
the outcome
. Uncertainty
doubts about facts, standards or level of seriousness
. Difficulty
difficult to avoid due to personal damage
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Business Ethics & Corporate

Governance

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The End

Any Questions or Suggestions?

(Read Chapter 1 page 30)

softwareis any set of machine-readable instructions that directs

acomputer's processor to perform specific operations

Charvi Parikh

Business Ethics & Corporate

Governance

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