Business Ethics and Corporate Governance

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BUSINESS ETHICS &
CORPORATE GOVERNANCE

BUSINESS ETHICS

Distinguishing:
• Ethics
• Ethics in Business
• Business Ethics
• Governance
• Corporate Governance
• Good Corporate Governance

In brief:

• Ethics: code of conduct for personal behaviour.
• Ethics in Business: Applying personal ethics into business. • Business Ethics: Ethics of business, what is good & bad, right or wrong for business. • Governance: Methods and practices of doing business in any organisation • Corporate Governance: Set of practices business is carried on in corporate business organisation. • Good: A code of best management Corporate practice which leads to Governance achievement of corporate mission.

Ethics – Definition

• Greek word “Ethos” – refers to character
• A code of conduct for personal behaviour
• Driving force – guide – value content
• A moral Code based on generally accepted standards
• Personal Ethics Vs. Ethics of Society
• Role of Ethics to discipline thoughts based on god and religion • Role of law to regulate external behaviour

Developing personal Code of Conduct

• For developing self-confidence/ personality/ Courage – Need to know what is Good’ & ‘Bad’ for you • For avoiding conflicts/ trauma and for achieving success • Code should be built around your personal goals

Business Ethics

• It is Ethics of Business, study of what is good or bad, right & wrong, just & unjust, fair & unfair in the business as against in personal life. • Code of conduct for businessman for carrying on business consistent with what others follows. • Different from Personal Ethics.

Historical perspective of Business Ethics

• Historically, businessman was not respected for his ethical behaviour. Example of catholic Pope and businessman, going to Christian heaven where St. Peter – 423rd Pope – 1st Businessman to show up. • Corporate Ethics Committee of 12 people - the ones did not get picked up in any important committees.

Buddha on Business Ethics

• Trader is like honey bee, sucks honey out of flower, without harm to flower • Also helps flower pollinating – process of fertilisation – when taking profit, no harm to be done in quest of personal gain. • Business Ethics is inseparable part of modern business • It is vital for long term growth of business

• Manager’s Ethics & Corporate Ethics are parts of Business Ethics.

Professional Manager

Ethical Manager:

• Ethics in Bhagwat Geeta: Krishna said “manager should look at the task set for him more for its satisfaction, the fulfillment that gives, rather than for personal gain or profit”.

• Elliot Jacques, American scholar called professional manager as “Propertyless Manager”, who manages the company successfully, but does not own any part of it as personal property. Does job not for personal gain, but for satisfaction he drives.

Objectives of Business Ethics

• Check malpractices - rapid business growth threw up many unethical practices – lust for money and economic power breeded many evils, which harmed society. • Prevent exploitation of market, society and consumers. • Drive home social responsibility to gain confidence of consumer – the king in competition. • Forge cordial relation with the society.

Importance of Business Ethics

• Drive home that business is:
i) not only for growth of businessman, also for long term growth of business itself, ii) long term creation of wealth,
iii) creation of better social image, and
iv) build investor confidence

Some principles of Business Ethics

• Take care of stakeholders, owners, employees, customers, suppliers, community and environment • Fair dealings and fair practices in business
• Avoid exploitation of consumers
• Avoid profiteering
• Encourage healthy competition...
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