What is ethics?
Ethics is a branch of Philosophy which addresses questions about morale; i.e about concepts morally what is good or bad ,right or wrong etc. An ethical statement can assert that some particular thing or action is right or may be wrong. Ethics can bring about the difference between good and bad characters or dispositions. It may propound few principles which help in more detailed judgments of these sorts, might be inferred – for example that we ought always aim at the general happiness or try to minimize the total suffering of all sentient beings. That it is correct for everyone to look after themselves. Every such statement expresses ethical judgments of different degrees of generality. [J L Mackie 1977]
Business ethics is that which examines ethical principles, morala or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. http://en.wikipedia.org/wiki/Business_ethics,nd)
Origin of Ethics:
The systematic study of what is morally right or wrong can determine that ethics might have originated when humans started to lead the best way of life. This reflective stage emerged once morality creeped into the human society, usually in the form of customary standards of right and wrong conduct. Such customs lead this process of reflection, even if it found them waiting. Ethics also began to come into the picture with the invent of moral codes. [http://www.britannica.com/EBchecked/topic/194023/ethics]
The history of Business ethics can vary depending on the situation or the object under discussion. The history also depends a lot on the historian, the way he or she conceives the subject, what facts he or she seeks to discover or has at hand, and the relative importance the historian gives to those facts. The term ‘business ethics’ is used in a lot of different ways. In this broad sense the application of everyday moral or ethical norms to business can be considered as Business ethics. ( De George, nd), Many business persons are strongly influenced by their religious beliefs and the ethical norms that they have been taught as part of their religion, and apply these norms in their business activities. Business ethics focuses on the moral or ethical actions of individuals. Many people discussing business ethics, immediately resort to examples of immoral or unethical activity by individuals or by an organization. It also includes the criticism of multinational corporations which make use of child labor or pay very low wages to employees in less developed countries or who utilize suppliers that run sweat shops.
Chandra and Pai (2009) explain that for every individual there are certain factors that affect the way an individual take decisions. They feel that power, centralization of workflow, substitutability of activities, uncertainty of inputs and routinization are the various factors are responsible for controlling the ethical contingencies of any individual. A general framework was being produced by Flanagan (2009) regarding the ethical decision making process. He believes that the characteristics of the decision maker which includes motivation, locus of control, ego strength, knowledge, experience, risk taking abilities, Machiavellianism, etc. and the significant influences such as the organization, work, law, economics, professionalism, technology, family, friends or other opinion leaders are responsible for any decision outcome. These outcomes can be in the form of rewards, performance, satisfaction, feedback, promotion or learning.
Aims and objectives of the Research
- Find out the level of ethical awareness amongst the employees in private and public sector companies.
- Comparison of ethical behaviour between private and public sector employees
- Role of management in improving ethical behaviours.
- To what extent the employees in the public and private sector organisation understand the intensity of corruption.
- How can an employee define corruption in his own terms?
- what are the measures taken by the management to educate the employees about the unethical behaviour?
The Indian industrial sector opened up in late 1990s when the various developed countries entered India through modes like FDI etc ,with the relaxation of rules and modifications made in the foreign policies along with the age of outsourcing and boom in IT and BPO sectors , lot of foreign companies outsourced their processes to the developing countries especially to India and China .private sector banks were allowed to enter into India. when the banking space in India was already overcrowded with a number of public sector banks, private sector banks, and co-operative banks.
Foreign multinational banks, which were growth-constrained, were also waiting eagerly for the sector to open up further in 2009 to make a major foray into this emerging market. now there was scenario where in loans were available at a very less interest rates. The spending ability of the people increased and the spent more than what they actually earned ,by availing the easily available loans now they bought cars and pent houses which, prior to the Banking boom was just a dream for them. This at a micro level increased the corruption in the private sector banks as the executives who sanctioned the loans to these people actually amplified the income of the people on papers through fake documents who asked for loans and inturn expected a percentage of loan as kickback for themselves .this was very common at the micro level in the developing nations but as we go to the macro level there has been an absolute devastation of ethics and higher levels of corruption.
There have been many a books which have been written on ethics and corruption , everyday we read in news papers articles, journals about companies and government agencies who are found guilty in scams. With respect to literature on ethics and corruption it’s a sea out there. Where the data from which can be inculcated here in the research is very less, as there are several life experiences which can just be an eye opener, which cannot be found in books or have references.
Different ethical theories involve differing procedures, implications, and justifications. Ethical theories are based on ethical principles, they emphasize on different aspects of an ethical dilemma. They also lead to ethically correct resolution staying within the guidelines of ethical theories.
In this theory emphasizing one’s main duty is what is considered ethically correct. This theory illustrates that, while analyzing an ethical dilemma, people should strictly follow their obligations and duties.(Rainbow C,1996,pp372) For instance, a deontologist will always keep his promises to a friend and will follow the law. A person who follows this theory will produce very consistent decisions since they will be based on the individual’s set duties. Specific people are provided with a basis for special duties and obligations in this theory. For example, an older brother may have an obligation to protect his little sister when they cross a busy road together. (http://www.bio.davidson.edu/people/kabernd/Indep/carainbow/Theories.htm ]
The utilitarian ethical theory was based on the capability of predicting the consequences of an action. To an utilitarian, the choice that is ethically correct is the option that provides the greatest benefit to the most people. (Mill S 1963)One benefit of this ethical theory is that the utilitarian can compare similar predicted solutions and use a point system to determine which choice is more beneficial for more people. This point system provides a logical and rationale argument for each decision and allows a person to use it on a case-by-case context. (Mill S 1963) There are two types of utilitarianism, act utilitarianism and rule utilitarianism. Act utilitarianism adheres exactly to the definition of utilitarianism as described in the above section. In act utilitarianism, a person performs the acts that benefit the most people, regardless of personal feelings or the societal constraints such as laws. Rule utilitarianism, however, takes into account the law and is concerned with fairness. Rule utilitarianism benefits are that it values justice and also includes the beneficence at the same time. Most people are benefitted through the fairest and most just means in rule utilitarian.
Ethical theories in private and public sector companies :
Different ethical perceptions, principles and judgments developed as a result of the differences between public and private-sector organizations. (Sampford C,1998) Unified ethic is instructional and makes possible careful analysis of the proper place of public sector ethics in the context of business, higher education, health care, and law. The public administrators are well-suited to serve as moral exemplars for other professions and for all citizens. . (Sampford C,1998) The notion that public service ought to be the model for ethical conduct in the professions (rather than the other way around) is supportable and provokes new thinking about moral agency and ethics. (Preston N,2002)They provide the necessary foundation for studying public sector ethics by focusing on traditional models arising from moral philosophy. The unified ethic illuminates ethical implications of public administration. It also constructs and culminates by offering an alternative framework for studying ethics. Reay (2009) defines ethics as “a set of principles concerning proper conduct.” But many authors believe that the definition of ethics changes from one individual to another or from one business to another and everyone has his own definition of ethics depending upon their own set of moral conducts. It is believed that the moral code is essentially one’s own sense of what is right and what is wrong, or what is acceptable and what is not acceptable. There are those who think that this moral code should be the same for everyone – but it simply cannot be, because all think differently, and all have different upbringings, backgrounds, and experiences. But ethical code of conduct matters to us in every field of life in today’s world.
The salient features of established ethics models: deontological, teleological, intuitionism and virtue theory are combined to make public administration a moral enterprise. It is a moral enterprise because its sole purpose is to serve public values and public purposes. Moral agency is a part of the profession of public administration. In other words, public administrators must strive always to do that which is morally right. This becomes more important since public administrators are under greater public scrutiny than their private sector counterparts and are more than likely to be held accountable for the decisions they make. (Preston N,2002)Both political and administrative practice are embedded with ethical theories and so are inseparable from governance. (Anne Bois C,2000) says The prime importance of Citizens and public servants are to work towards the promotion, co-operative and meaningful relationships that involve moral examination, theoretical practice, Different Ethical decision-making models prompted differing ethical perceptions and different judgments. Better communication between factions of varying types is created by awareness of the comparative difference in the moral reasoning of public- and private-sector personnel. [http://www.accessmylibrary.com/article-1G1-20583851/do-public-sector-and.html]. For example, one might expect oath-bound public administrators to be more deontological than other groups that are less constrained by oath and more motivated by collective interest, such as special interest groups or business representatives. One also might expect career officials to be more oriented to duty and principle than are elected officials who must keep consequences in mind for the sake of their own re election. Or it might mean that such personnel will administer both public and private policy with greater consistency and less capriciousness and will remain impartial in circumstances where general fairness frequently is challenged. It seeks to determine whether public- and private-sector personnel differ in their dispositions to exhibit consequentiality or deontological tendencies and, if so, the ways in which those dispositions might be manifest. To understand the nature of public administration these possibilities prove to be the decisive factors. Understanding the ethical decision-making process and its moderating factors helps to incorporate ethics in private and public institutions.
Ethical leadership is characterized by having good characters, getting to know one’s core values and having the courage to live them in all parts life. [http://www.businessballs.com/ethical_management_leadership.htm] Foundations for various modern concepts for work, business and organizations are provided by Ethical principles. The modern concept of ethical organizations encompasses many related issues like corporate social responsibility (CSR) – or simply social responsibility, fair-trade, sustainability, social enterprise, well-being at work and life balance and many more aspects of good modern leadership. There are no clear cut definitions or rules of ethics that can define them.
The 4-V Model of Ethical Leadership explains the relationship between beliefs and values and behaviors and actions. The main purpose is the advancement of the common good. The (Grace B,1999) model based on his formal leadership research and personal passions around faith and ethics. Leaders work to create an open, two-way conversation, thereby maintaining a charitable understanding of different views, values, and constituents’ opinions. They are open to others’ opinions and ideas because they know those ideas make the organization they are leading better. By having â€œthe right valuesâ€? or being a person of â€œstrong character,â€? the ethical leader can set the example for others and withstand any temptations that may occur along the way. Without denying the importance of good character and the right values, the reality of ethical leadership is far more complex and the stakes are much higher.
In every field of business, the ethical behavior is very important. But in the field of business services, the role of ethics is even greater as it is directly related to human’s life. But Murthy (2007) reveals that for the economic and business benefits, some businessmen are neglecting their code of ethics. Although, Nundy (2000) argues that it is only a small portion of the businessmen who do not follow the code of ethics and are bringing a disgrace to the whole community of corporates but still unethical practices are going on in different sectors in various forms.
Carroll and Buchholtz (2008) explains that ethics is basically a discipline that deals with what is good and bad with moral duty and obligation and these sets of moral conducts are even true for the business systems in any part of the world. They divide the ethics into two key branches of moral philosophy as descriptive and normative ethics. They further explained descriptive ethics is a branch that is concerned with describing, characterizing and studying the morality of a people, an organization, a culture or a society. It also compares and contrasts different moral codes, systems, practices, beliefs and values. Therefore, in descriptive ethics, the key focus remains on learning. But on the other hand, the normative ethics is concerned with supplying and justifying a coherent moral system of thinking and judging. This type of ethics seeks to uncover, develop and justify basic moral principles that are intended to guide behavior, actions and decisions. It is here that the business system, particularly in the developing countries, go wrong at following the normative ethics and they violate the ethical code of conduct for their individual benefits.
Carroll and Buchholtz (2008) has explained three approaches to ethics as conventional approach (based on how normal society views ethics in today’s environment), principles approach (based upon the use of ethics principles or guidelines to direct behavior, action and policies) and ethical tests approach (based on short practical questions to guide ethical decisions guiding the behavior). But seeing the business practices as a concern, the conventional approach to ethics is essentially an approach where one can compare a decision, practice or policy with prevailing norms of acceptability and say whether the practice followed is ethical or unethical.
The conventional approach defines some of the sources of norms that come to bear on the individual and that might give an idea for the unethical behavior of the businessmen around the world today.
The various sources that may influence a businessman to follow up an unethical practice may include family, friends, law, religious beliefs, society, employer, profession, culture and fellow workers. Each of these attributes contributes in one or the other way to force the business Enterprises to follow the unethical practices for their individual benefits either business or economic. One of possible example for motivating a professionals to follow unethical practices can be an urge to earn more money to satisfy the needs of the family members. This urge of getting more money leads him to follow unethical practices to earn quick money.
But there exists a reason for the unethical behavior of the business Enterprises because whenever he or she makes a decision about what is being ethical (right, just, fair), the conventional approach comes into picture. The decision being taken consists of three elements where in the first step, the observation is of the decision, action and the existing practice in the workplace. After that the practice is compared with the prevailing norms of acceptability and then the recognition of the value judgments with the prevailing norms of acceptability. This means for the same set of actions, the two persons have different ways of looking it as they have different et of prevailing norms of acceptability
The diagram for ethical decision making gives a wider view for an individual decision regarding ethics. The diagrams depicts the business Enterprises following the unethical practices can be put in the area . This is an area where the corporates get a profit following the unethical practices but they need to be very cautious while doing the unethical work. The various business enterprises in the developing countries are ready to take such a risk because of the inefficient legal system in these countries. They take benefit of the existing lenient laws in these countries and follow the unethical practices to make quick money.
The business enterprises usually follow the principle of Smith’s Market Ethic which says that take selfish actions and be motivated by personal gains in business dealings. But as the reason of their actions for unethical behavior, they follow the Bentham/Mill’s Utilization Ethic Principle which asks an individual to determine whether the harm in an action is outweighed by the good. So, these parctioners have numerous reasons which can outweigh the unethical action by a good cause.
Weaver (2009) reveals that a recent survey conducted by the American Management Association and the Human Resource Institute identified the top three factors that would cause people to break the ethical standards. The factors included the pressure to meet unrealistic objectives or deadlines, career advancement and protecting their livelihood. In case of the business Enterprises the later two reasons play a very important role for encouraging following the unethical practices. For establishing their practice in a very short span of time and for increasing the volumes of clients coming to visit them, these business Feiglstok (2009) supports the ethics in an organization by revealing that the benefits of being ethical greatly outweigh being non-ethical in business. There are plenty of reasons why being honest and truthful is the better decision to make. This includes the honesty towards work and various humanitarian reasons. He also believes that working for an organization in an ethical manner or working as individual for the profession in an ethical manner gives self satisfaction to an individual which cannot be obtained even if one earns good money by following the unethical practices.
Unethical Practices in Industry
Decade’s back, business was considered as a good profession and almost all corporates were not money minded people. But the time has changed and all wants to be established in their life very quickly and for that they will choose the short cut. (Theyyunni, 2008). So, young and inexperienced business Enterprises have started following the path of short cut by taking the unethical path which is beneficial in terms of business as well as economics. Although Watts (2008) criticizes the unethical behavior of the business Enterprises by quoting ‘Not All Money is Good Money’ but still it depends upon business Enterprises to take their own ethical decisions.
In many of the developing countries, the staff employed in the public sector may also practice privately, either on their own account or working for owners of private facilities. This may be legal or may not be strictly legal or controlled. Public offices may operate their own private offices and manage the income from them, or may allow work for private gain on their premises, as when corporates admit private clients and are paid directly by them. (Mills, Bennett, & McPake, 1997) This overlapping of the private and public sectors gives birth to the existence of certain unethical practices for the personal benefits by certain individuals.
Garrett’s principle of proportionality supports the view of the business Enterprises in developing countries around the world by saying these Enterprises have a proportional reason for the unethical practices which are very much needed along with the ethical practices that are followed. It believes one such proportionate reason is the low wage to business sector. Smith (1999) says that with reference to NHS in UK, the professional bodies and the government departments have a very little to say on these unethical practices. Nundy (2000) believes that to see how the public can be safeguarded from an inefficient and often corrupt business system and receive comprehensive health care of a reasonable quality is paramount.
Unethical Practices in India
India has been ranked a lowly 74, two steps down since last year, among 180 countries of the world on the worldwide Corruption Perceptions Index (CPI), prepared by independent international agency Transparency International.
However, corruption is much higher in Pakistan which occupies 140th place, a little below Iran, Libya and Nepal which are ranked 133, 134 and 135 respectively.
Meanwhile, China which was ranked a joint 72 with India in 2007, slided a step down to occupy a place above its neighbour this year. Among other Asian countries, Russia is placed still lower on 145, while Sri Lanka occupies the 96th position and Maldives is ranked 90. ((http://www.expressindia.com/latest-news/Corruption-index-India-ranked-74/327777/
With the fast development of various sectors in India, the unethical practices are also increasing in the business sector in India. Sharma (2004) has clearly stated that there in an urgent need to overhaul and strengthen the public sector in India. Apart from quacks and outright fakes, even qualified business practitioners know that they can get away with malpractice because clients do not know their rights. With the exponential growth of the private sector, there is an urgent need for regulation to protect users. (Sharma, 2004)
Dev and Rao (2009) support the allegations of Sharma by quoting that the recent expansion of the private sector and the increased investment in the field of the curative services and the various sophisticated business equipments have increased the corruption in the private practices in the business sector in India. They explain that the payment to touts who get the clients for offices and to the corporates who refer clients has become a common practice in India Colclough (1997) explains commission to corporates who prescribe expensive investigations and procedures which are often unnecessary as another form of unethical practice and corruption in business sector in India. Dev and Rao (2009) criticize the unethical Indian corporates in the private sector putting them responsible for kickbacks, overbilling and expensive procedures.
Phadke (2009) reveals though the client knows about the malpractice but he is afraid to bargain or to show lack of trust because of the fear that this might adversely affect the person’s attitude towards the client and in turn, may affect the quality of the service provided. The picture of the business sector gets more clear while having a look at the PEST Analysis done by Holtz (2008) who alleges the lower annual per capita ($ 20) spending of the Indian government on of the public sector i.e the healthcare and the under-developed private health insurance in India which spends only 1% of the total spending on healthcare as major political reasons for the unethical practices in India
Sharma (2004) critically argues the claims made by the other authors and says that majority of the population in the various developing countries is uneducated about the governmental structure of business sector and moreover, the inaccessibility of the services in a rural area with densely populated areas can be treated as primary reasons for the increased importance of the business Enterprises which further leads to following up of unethical practices by few individuals. Holtz (2008) shares a different view and feels that low wages to employees and staff in government services are the primary reasons responsible for the existence of the unethical practices in the business sector. Cygnus Business Consulting & Research Pvt. Ltd. (2008) criticizes the governments for having access to less high-tech equipments with them as compared to private organizations. One of the other important factors responsible for the unethical practice is due to lack of job satisfaction as claimed by Wells (2007). Hertzberg (1959) has formulated a two-factor theory, which proposes motivators and hygienes as the two factors responsible for job satisfaction and dissatisfaction. The presence of motivators in the workplace caused enduring states of motivation in employees but their absence did not lead to dissatisfaction.
Wells (2007) establishes that the factors that are included as the Motivators are responsibility, recognition, promotion, achievement and intrinsic aspects of job while the factors the form the Hygienes are supervision, salary, work environment, company policies and the relationship with colleagues.
The lack of the government motivation to the corporates and the parabusiness staff in the business sector can be considered as one of the most important factors for the use of unethical factors in treatment of clients in India. (Dev & Rao, 2009) . To what extent the business Enterprises are following unethical practices and what are reasons for their unethical behavior is still the subject of research. So, this dissertation will try to find the answer of these questions. Moreover, in the existing research, it is still unclear whether which particular specialty is more unethical and demands for maximum commission. This dissertation will also try to establish such a relationship which can explain about the extent of commission practice existing in the business sector.
The most disquieting aspect of the widespread corruption in India is the fact that it is not anymore confined to politicians or the government machinery alone. It is prevalent amongst almost every section of the society at every level.( N.S. Venkataraman, 2002). the fact is that most of the Indians are involved in corrupt practices in one way or the other, either due to greed or due to so called compulsion. In any case, the willingness to sacrifice for the sake of not getting involved in corrupt dealings is conspicuous by its absence amongst the most.
Indian IT majors Satyam and Wipro , who were barred from World Bank projects for offering their stock to Bank officials, represent a miniscule problem compared to the kickbacks and commissions that go to government officials for approval of Bank projects. (Steve Berkman, 2009). Emergence of political elite who believe in interest-oriented rather than nation-oriented programmes and policies. Artificial scarcity created by the people with malevolent intentions wrecks the fabric of the economy. ( KOHLI, SURESH, 1975) say that Corruption is caused as well as increased because of the change in the value system and ethical qualities of men who administer. The old ideals of morality, service and honesty are regarded as an achronistic. Tolerance of people towards corruption, complete lack of intense public outcry against corruption and the absence of strong public forum to oppose corruption allow corruption to reign over people. (John B, 1966) say that Vast size of population coupled with widespread illiteracy and the poor economic infrastructure lead to endemic corruption in public life. In a highly inflationary economy, low salaries of government officials compel them to resort to the road of corruption. Graduates from IIMs with no experience draw a far handsome salary than what government secretaries draw.
Measures to combat corruption
( John B, 1966) suggests that Foolproof laws should be made so that there is no room for discretion for politicians and bureaucrats. The role of the politician should be minimized. Application of the evolved policies should be left in the hands of independent commission or authority in each area of public interest. Decision of the commission or authority should be challengeable only in the courts. Cooperation of the people has to be obtained for successfully containing corruption.
( KIMBERLY ANNED, 1997) People should have a right to recall the elected representatives if they see them becoming indifferent to the electorate. Funding of elections is at the core of political corruption. Electoral reforms are crucial in this regard. (SUSAN, 1999)Several reforms like: State funding of election expenses for candidates; strict enforcement of statutory requirements like holding in-party elections, making political parties get their accounts audited regularly and filing income-tax returns; denying persons with criminal records a chance to contest elections, should be brought in.Responsiveness, accountability and transparency are a must for a clean system. (BRIAN E,1995) points at Bureaucracy, the backbone of good governance, should be made more citizen friendly, accountable, ethical and transparent. More and more courts should be opened for speedy & inexpensive justice so that cases linger in courts for years and justice is delivered on time. (HEATHER ,2003) Local bodies, Independent of the government, like Lokpals, Lokadalats, CVCs and Vigilance Commissions should be formed to provide speedy justice with low expenses. (MARIANNE M ,2003) shows us A new Fundamental Right viz. Right to Information should be introduced, which will empower the citizens to ask for the information they want. Barring some confidential information, which concerns national and international security, other information should be made available to general public as and when required. Stringent actions against corrupt officials will certainly have a deterrent impact.
Scams and Scandals
A typical case of Aes corporation ,shell ,e