Ethics comes from the Greek word “ethos”. Ethos means character or customs. Now-a-days the meaning of the word is wide. Ethics imply individual character and also indicate the set of rules which determine the right and wrong. Broadly Ethics means what is called moral and unethical means immoral. Unethical means bad or wrong actions.
According to William H. Shaw “Business ethics is the study of what constitutes right or wrong or good or bad of human conduct in a business context, Morality also is concerned with business ethics. Morality has priority over other standards including self-interest. If anyone accepts a moral principle it involves motivation to follow that principle. Morality also rises above self-interest.
Utilitarianism propounded by Bentham stresses the need for action those produce greatest possible good over bad, Good means happiness. Mill (1806-1873) after Bentham expanded this idea. According to Bentham if any action increases the happiness of the community then it is an improvement.
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The six points about utilitarianism are:
(a) The greatest happiness of greatest number
(A) Actions affect different people in different degrees
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(c) Action are judged by its ultimate impact
(d) Utilitarians want to maximise happiness in the long run also
(e) The future implications of all actions cannot be predicted
(f) Utilitarianism never says to disregard our own pleasure. Utilitarianism helps to formulate an effective organisational policy which helps to promote general welfare.
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Kant’s theory provides us a non-conserentialist approach to ethics. Like utilitarianism it does not apply to effects of actions rather it says when we do our duty then our action will have moral worth. An action according to Kant is morally right if it follows the principle of universal law. Suppose a person makes a promise but he does not keep it then no principle which can universalize the action and such promises have no meaning.
The categorical imperative according to Kant is binding on everybody. Every human being should treat others in the same way as he wants to be treated. What is morally right for a single individual that is right for everybody?
A right action always considers human beings not as a means but as an end. When Physicians use patients as subjects in medical experiment as a means without their (Patient’s) consent it is unethical though such experiments may result in great benefit for mankind but doing such experiment without the consent is inhuman.
Kantian philosophy holds this organisation should follow and consider the matters connected with moral obligations. The theory provides a ground that any business decision which is taken after discussion in an open-minded manner that will be morally acceptable.
Ethical issue in business sometimes do not get adequate weight age. Sometimes many immoral activities take place. In the cases of merger and acquisitions it has been seen, there are many unethical aspects, lack of transparency in M&A activities. When Mr. M. Chaabaria tookover Dunlop there was lot of furore and there were many doubts in people’s mind.
P. Rajarathinam’s taking over bid of Garware Paints, Bank of Benaras with a remarkable speed created a wave of doubt in people’s mind. Internationally, merger of AT&T with TCI a large premium in share value was paid (over 48% above the market value). For Deutsche Bank’s merger with Banker’s Trust premium paid was 42% over the market price.
In case of mergers, the possible anomalies and unethical activities can be listed as follows:
(a) Swap ratios for shareholders go in favour of predator companies
(b) Executives in predator companies get relative advantage.
(c) Managerial personnels of smaller companies get less importance in merged company.
(d) Employees face fresh challenges in the question of targets to be achieved.
(e) Many people are retrenched in the new entity.
(f) Nonperforming assets of predator companies receives sustenance through the surplus efficiency of the prey company.
(g) In the case of swap of shares the shareholders of prey company gets a raw deal.
In real world there are various cases of ethical lapses. In the marketing of commodities it has been observed, various companies speaking highly about the quality to deceive the consumer. The sellers discriminate in age, sex, location, caste, complexion, religion with the customers.
They also indulge in violation of copyright, patent, offer bribes, deprive the customers of expected benefits, corner higher profits in case of any scarcity by charging higher prices. In the operation of business there are many lapses and indication relating to lack of ethics.
We may list them in the following manner.
i. Not upgrading skills or technological standard of production
ii. Remaining indifferent to standards of global environment
iii. The employee’s working place is not comfortable
iv. Indifferent about well-being of the employee Giving inadequate dividend to shareholders
v. Not giving due recognition to the employees.
vi. Not encouraging creativity among employees.
vii. Sacrificing personal values to achieve goals.
viii. Sacrificing norms for higher profit
ix. Unsrupulous sales and corporate mission.
x. No consistent policy towards corporate functioning.
xi. Adopting double standards in the corporate policy affairs.
xii. Not observing government guidelines or socially desirable policies in corporate management.
xiii. Not giving adequate attention to the social causes.
The ethical environment and issues are a major part of modern business, without ethics business remains no longer a generic organisation. All success stories in business have deep ethical dimension. This aspect is followed as a ground rule in all progressive organisations of the world.
The company would not enjoy such a high degree of popularity and consistency in terms of demand of its product unless there was high ethical standard in the company’s corporate culture. In this era of globalisation corporate culture must be sound and quality of product should be consistent, otherwise that company would not be able to exist.