Business Ethics and Corporate Governance

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ACHARYA INSTITUTE OF GRADUATE STUDIES
SOLADEVANHALLI, BANGALORE

LECTURE NOTES
SUBJECT: BUSINESS ETHICS & CORPTORATE GOVERNACE
CHAPTER NUMBER-I
CHAPTER NAME: - INTRODUCTION
PREPARED BY: MR.SHAIKH JUNED SAOUD

In brief: -
Meaning of Ethics: -
Ethics is derived from the latin word ETHICUS and in greek it is called ETHICOS meaning character or manners. In other words ethics is said to be source of morals, moral principles and recognized rules of conduct.

Definition of Ethics: -
According to R. Wayne Mondy, ‘ethics is the discipline dealing with what is good and bad, or right or wrong or with moral duty and obligations”.

Meaning of Business Ethics: -
Business Ethics are rules of business conduct, by which the proprietary of business activities may be judged. It also relates to the behavior of managers.

Definition of Business Ethics: -
According to John Donaldson, “Business Ethics in short can be described as the systematic study of moral (ethical) matters pertaining to business, industry or related activities, institutions or practices & beliefs”.

Objectives of Ethics: -

1. To define the highest good of man and set a standard for the same. Here we have to consider ethics to deal with several interrelated and complex problems.

2. To study of human behavior, making evaluative assessment about them as moral or immoral

3. To establish morals standards and norms of behavior.

4. To make judgment upon human behavior based on ethical standards and norms.

5. To make ethics give suggestions regarding moral behavior and how to behave in organizations.

A Model of Ethics: -

Leading to Determines
ETHICAL GUIDANCE SOURCES

OUR ACTIONS
OUR BELIEF WHAT IS RIGHT OR WRONG

TYPE II ERROR

TYPE I ERROR
TYPE I ERROR
TYPE I ERROR

1. Ethical Guidance Sources: - The sources of ethical guidance should lead to our beliefs or conventions about what is right or wrong. People have a responsibility to avail themselves of these sources of ethical guidance.( Sources: Genetic Inheritance, Religion, codes of conduct, the legal system and cultural experience) 2. Type I Error: - The strength of the relationship between what an individual or an organization believes to be moral and correct and what available sources of guidance suggest is morally correct. 3. Our belief what is right or wrong: - Just by having strong beliefs about what is right or wrong and basing them on the proper sources may have little relationship to what one does. 4. Type II Error: - The strength of the relationship between what one believes and how one behaves. Everyone would agree that to do what one considers wrong is unethical. Ethical Performance In Business:-

In any business organization you will see a strong culture of integrity underpinned by principles, values & policies. All organizations sets out clear and practical guidance for ethical conduct throughout their organization. The Code of Ethics ensures that all employees understand how the organization core principles and values relate to a range of issues. With clear language and easy-to-understand examples, the document aims to provide employees with support in judgments related to ethical business at the individual, team and company-wide level. In short, it is a guide to help employees understand what is expected of them and how to make good decisions. Ethical Performance in managerial values & Attitudes

Ethical Congruence
Ethical congruence refers to a situation where one's decision is consistent with, aligns with, the applicable set(s) of values. Under these circumstances, a choice to take some action will harmonize with the decision-maker's values. The organizational state where values, behaviors and...
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