Introduction to Business Ethics (Module-1)

Ethics:
The word ethics comes from the Greek word ethos meaning character or custom.
Ethics is defined as the discipline dealing with what is good and bad and with moral duty and
obligation. Ethics has been referred as the rules by which an individual lives his or her personal
life.
Philip Wheel Wright. “Ethics is the branch of philosophy which is the systematic study of selective
choice of standards of right and wrong and by which it may ultimately be directed.”
According to Mackenzie, “Ethics is the study of what is good or right in conduct.”- So, it can be
referred as the rules by which an individual lives his or her personal life.
Business ethics:
The term "Business Ethics" refers to the principles and moral values that guide the behavior and
decision-making of individuals and organizations in the business world.
According to Kirk O. Hanson, Business ethics is "the study of the standards of business behavior
which promote human welfare and the good".
According to Crane, "Business ethics is the study of business situations, activities, and decisions
where issues of right and wrong are addressed."
Example: If a company chooses not to pollute a river, even though it would be cheaper to do so, it
is following good business ethics. They’re doing the right thing, not just the profitable thing.
Importance of business ethics:
Business ethics are important because they help companies do the right thing, treat people fairly,
and build trust in society.
1. Builds Customer Trust: When a business is honest and fair, customers feel safe. They trust the
company and keep coming back. Example: A shop that sells good-quality products and doesn’t
cheat people will have loyal customers.
2. Improves Company Reputation: Companies that follow ethical practices are respected in
society. A good reputation helps attract more customers and better employees. Example: People
prefer to buy from brands that are known to treat their workers well and protect the environment.
3. Helps in Legal Compliance: Ethical businesses follow laws and regulations. This helps them
avoid fines, legal problems, or even being shut down. Example: A company that pays taxes
properly and doesn't lie in its reports won't get into trouble with the government.
4. Boosts Employee Morale: When a company treats its workers with fairness and respect,
employees feel valued and motivated. Example: If a business gives equal opportunities and
rewards hard work, employees will stay loyal and work harder.
5. Attracts Investors: Investors prefer to put their money in ethical companies because these
businesses are more stable and trustworthy. Example: A company that is honest and transparent
about its profits is more likely to attract big investors.
6. Ensures Long-Term Success: Ethical practices build a strong foundation. While unethical
companies might make quick profits, ethical companies survive and grow in the long run.
Example: A company that respects society and the environment will not face boycotts or bad
publicity in the future.
7. Reduces Business Risk: When businesses act ethically, they avoid scandals, lawsuits, and bad
media attention. This lowers risk and protects the business. Example: A business that doesn’t use
child labor won’t be punished by human rights organizations or the public.
In short, business ethics are important because they help companies become successful while being
fair, honest, and responsible.

Ethical Theories:
Ethical theories are different ways of thinking about what is right and wrong. These theories help
people and businesses make moral decisions.
1. Utilitarianism: Developed by Jeremy Bentham & John Stuart Mill
Do the greatest good for the greatest number of people. This theory says that an action is right if it
brings the most happiness or benefits to the most people.
Example: A company decides to reduce product prices even though its profit will be less. Why?
Because more people will benefit from affordable products, and it will help the whole community.
2. Deontology (Duty-Based Ethics): Developed by Immanuel Kant
Do your duty and follow moral rules, no matter the outcome. This theory says some actions are
always right or wrong, even if the result is good or bad.
Example: A company refuses to lie in its advertisements, even if lying would increase sales.
3. Virtue Ethics: Developed by Aristotle
Be a good person by developing good character traits (virtues) like honesty, courage, and kindness.
This theory focuses on the person’s character, not just the action or the result.
Example: A business leader donates to a charity—not for publicity, but because she is truly
generous and kind.
4. Ethical Relativism: What is right or wrong depends on culture or personal beliefs. There is no
universal rule. Different people and societies have different views on ethics.
Example: In one country, giving gifts to officials is considered polite. In another country, it is seen
as bribery.
5. Justice Theory (Fairness Theory): Developed by: John Rawls
Everyone should be treated fairly and equally unless there is a reason to treat them differently.
Focuses on equality, fairness, and human rights.
Example: A company pays men and women equally for the same job.
6. Rights Theory: Developed by John Locke and others
Every person has basic rights that should always be respected. These can be human rights (like the
right to life and freedom) or legal rights.
Example: A factory ensures safe working conditions because workers have the right to safety.
7. Universalism (Ethical Universalism): Developed by: Immanuel Kant and others.
Certain moral principles are true and apply to everyone, everywhere. Some things are always right
or wrong, no matter the culture or situation.
Example: The right to life and respect is universal; all people should have these rights no matter
where they live.
 Introduction to Corporate Governance (Module-2)
Corporate Governance:
Corporate Governance is the system by which companies are directed and controlled. It involves
a set of rules, practices, and processes that ensure the company is run in a way that achieves its
objectives, manages risks, and protects the interests of its owners and other stakeholders.
"Corporate governance is concerned with holding the balance between economic and social goals
and between individual and communal goals." - Sir Adrian Cadbury.
Corporate governance is all about management practices that ensure a company is managed
effectively, ethically, and in compliance with laws and regulations.
Principles of Corporate Governance:
Corporate governance is based on some key principles to make sure companies act responsibly
and transparently:
• Transparency: Companies should provide clear and accurate information about their activities
and performance to shareholders and the public. Example: A company regularly publishes
financial reports so investors know how it’s doing.
• Accountability: The management and board of directors should be accountable to shareholders
and stakeholders for their decisions and actions. Example: If a company faces losses due to
bad decisions, the board must explain and take responsibility.
• Fairness: The board of directors must treat shareholders, employees, vendors, and communities
fairly and with equal consideration. Example: When profits are shared or decisions are made,
no group should be favored unjustly.
• Responsibility: The board is responsible for the oversight of corporate matters and
management activities. The board has a duty to act in the best interest of the company and its
shareholders, making informed decisions and avoiding conflicts of interest. The company
should obey laws and regulations, and consider the impact of its decisions on society and the
environment. Example: A factory should follow pollution control laws and avoid harming the
local community.
• Independence: The board should have independent directors who can make unbiased decisions,
separate from management influence. Example: An independent director on the board stops a
deal that would unfairly benefit the CEO’s family, ensuring fair treatment for all shareholders.

Importance of Corporate Governance in Business:

1. Builds Trust: Clear and honest reporting makes investors and customers confident in the
company. Example: A company publishes its financial results every quarter, gaining investor trust.
2. Reduces Risk: Strong governance prevents fraud and poor decisions through checks and
balances. Example: An audit committee detects irregular spending and stops it before losses grow.
3. Improves Decision-Making: Boards ensure management makes ethical and well-informed
choices. Example: Directors review a risky project proposal and decide to delay it until more
research is done.
4. Attracts Investment: Investors prefer companies with transparent, ethical governance. Example:
A multinational investor chooses to invest in a company known for strong board oversight.
5. Protects Reputation: Good governance helps maintain a positive public image. Example: A
company’s commitment to fair labor practices earns it customer loyalty.
6. Ensures Compliance: Corporate governance ensures laws and regulations are followed.
Example: The board enforces environmental standards, avoiding fines and sanctions.
7. Balances Stakeholder Interests: Governance considers shareholders, employees, customers, and
society fairly. Example: A company improves employee benefits while maintaining shareholder
dividends.
Models of Corporate Governance:
Corporate governance models are diverse, but generally revolve around maximizing shareholder
value, fostering transparency, and ensuring accountability. Some prominent models include
the Anglo-US model, the German model, and the Japanese model, each with its own characteristics
and approach to stakeholder relationships.
Anglo-US Model (Shareholder Primacy): Prioritizes shareholder value maximization and
protection of their rights.
• Individual and institutional shareholders hold significant ownership.
• Market-based approach with transparency and financial performance emphasized to attract
investors.
• Legal framework defines the rights of management, directors, and shareholders.
• Independent board structure with independent directors representing shareholder interests.
• Focuses on shareholders’ interests and market mechanisms.
• Shareholders own the company; boards represent them and ensure management
accountability.
• Emphasizes transparency, disclosures, and protecting shareholders.
Example: A publicly traded company in the US holds annual shareholder meetings where major
decisions are voted on directly by shareholders.
German Model (Stakeholder Model): Considers various stakeholders, including employees,
creditors, and local communities, alongside shareholders.
 • Two-tiered board structure with a management board and a supervisory board.
• Emphasis on long-term relationships and stable employment.
• Strong labor rights and worker participation in decision-making.
Example: A German company’s supervisory board includes employee representatives who
participate in important decisions alongside shareholders.
Japanese Model (Group-Oriented Model): The key players in the Japanese Model of corporate
governance are: Banks, Affiliated entities, Management, the government, Major shareholders who
may be invested in common companies or have trading relationships. Smaller, independent,
individual shareholders have no role or voice in this model. Together, these key players establish
and control corporate governance.
• Seen in Japan, with strong relationships between companies, banks, and employees.
• Emphasizes long-term relationships and consensus decision-making.
• Stakeholders like banks and employees have a strong influence in governance.
Example: A Japanese firm has a close partnership with its main bank, which helps oversee
company strategy and finances.
Board of Directors: The board of directors is a group of elected individuals who oversee a
company’s management and make key decisions. They ensure the company is run in the best
interest of shareholders and stakeholders.
Responsibilities:
• Set company policies and strategies.
• Hire, monitor, and evaluate the CEO and senior management.
• Ensure legal compliance and ethical standards.
• Oversee financial performance and risk management.
Example: If a CEO proposes a risky expansion, the board reviews the plan carefully, asks
questions, and may approve, modify, or reject it to protect the company’s future.
Shareholders: Shareholders are the owners of the company. They invest capital and expect a
return through dividends and stock value increase. While they don’t manage daily operations, they
influence big decisions.
Rights and Powers:
• Vote on major decisions (electing directors, mergers, etc.).
• Receive dividends and financial reports.
• Can influence company policies through shareholder meetings or proposals.
Example: In the annual general meeting, shareholders vote to approve the appointment of new
board members or changes in company policy.
Stakeholders: Stakeholders include anyone affected by the company’s actions- employees,
customers, suppliers, creditors, the community, and shareholders.
Importance:
• Stakeholders’ interests help shape company policies for long-term sustainability.
• Companies need to balance these interests to maintain good relationships and avoid
conflicts.
Example: A company may decide to improve employee safety standards even if it increases costs
because it values workers’ welfare and wants to avoid accidents and lawsuits.
 Module-3 Ethical Decision-Making

Personal Values and Moral Principles on Ethical Decision-Making:

Personal values are the individual beliefs and priorities that guide our behavior — such as honesty,
loyalty, fairness, or respect. Moral principles are broader societal rules about what is right and
wrong — like justice, equality, or non-violence.

These values and morals play a crucial role in how people make ethical decisions. When faced
with a dilemma, individuals often rely on their personal sense of right and wrong, which is shaped
by their upbringing, religion, culture, and life experiences.

How Personal Values Influence Ethical Decisions:

1. Guide Behavior: Personal values like honesty, loyalty, or compassion influence how a
person acts in ethical situations.
2. Set Priorities: When facing tough choices, people rely on their values to decide what’s
more important.
3. Shape Judgement: If someone values fairness, they are more likely to make decisions that
ensure equality.

How Moral Principles Influence Ethical Decisions:

1. Provide a Moral Compass: Principles like justice, respect for others, and non-maleficence
(do no harm) guide people in making ethical choices.
2. Act as Rules: They function like internal rules that help people avoid unethical actions
even when there's pressure.
3. Promote Consistency: Following moral principles helps in making decisions that are
consistent and universally acceptable.
Ethical Dilemma:
An ethical dilemma occurs when a person, group, or business must make a decision involving two
or more values or moral principles that are in conflict. These situations do not have a clear right or
wrong answer. Instead, the decision-maker must choose between competing “rights” or “wrongs”
— for example, honesty vs. loyalty, profit vs. fairness, or individual rights vs. community good.
Ethical dilemmas are especially challenging in business, where decisions often affect multiple
stakeholders — such as employees, customers, investors, and society.
Ethicist Rushworth M. Kidder (1995) described ethical dilemmas as:
"A right versus right decision—where two core moral values are in conflict."
This means that in an ethical dilemma, both choices can be morally justified, but choosing one
often sacrifices the other. For example, being loyal to a friend may conflict with being honest to a
boss.
Imagine you are a manager in a company. One day, you discover that your close friend, who also
works in your team, is stealing office supplies and selling them outside.
Now you face an ethical dilemma:
Option 1 (Loyalty): Stay silent to protect your friend.
Option 2 (Honesty): Report the friend to the company, which may result in them losing the job.
• Both are right in different ways — being loyal is a value, but so is being honest. That’s
why this is an ethical dilemma.

➢ Suppose, you are a marketing manager at a pharmaceutical company. You discover that a
new drug your company is about to launch has some serious side effects that have not been
clearly communicated to the public. Senior management insists on promoting the drug
emphasizing only its benefits to maximize sales. You are faced with the decision of whether
to follow this directive or to disclose the risks to customers.
Question:
Identify the ethical dilemma involved in this case. As the marketing manager, what actions should
you take and why? Support your answer with ethical principles.
 Module 4: Corporate Governance Structure and Mechanisms of Bangladesh

Internal Corporate Governance Mechanisms:

Internal corporate governance means the rules and systems inside a company that help it run
properly, honestly, and fairly. These systems make sure that everyone in the company—from top
management to regular employees—follows the rules and does the right thing.
Importance:
1. Board of Directors: They supervise the CEO and managers to make sure they work for the good
of the company and not for personal gain. Example: If a CEO is making bad decisions, the board
can stop them or remove them.
2. Audit Committee and Internal Audits: They check company accounts and financial reports to
prevent cheating or lying about money. Example: If there are mistakes in financial reports, internal
auditors will find and fix them before it becomes a big issue.
3. Code of Conduct (Ethical Rules): These are the rules that guide employees on how to behave
properly at work. Example: If an employee takes a bribe, the company’s ethical code can be used
to punish them.
4. Whistleblower Protection: Employees can report wrongdoing without fear of losing their job.
Example: If a worker sees fraud and reports it, the company protects that person and investigates
the issue.
5. Performance-based Pay: When managers are paid based on company performance, they work
harder and make better decisions. Example: A manager will try to increase profits if their bonus
depends on it.

Key Provisions of BSEC Corporate Governance Code:

The Bangladesh Securities and Exchange Commission (BSEC) introduced the Corporate
Governance Code in June 2018 for listed companies.
Main Provisions:
1. Board of Directors:
• A company must have 5 to 20 directors.
• 1 out of every 5 directors must be Independent (not involved in daily business).
Example: If a company has 10 directors, 2 must be independent.
2. Separation of Chairman and CEO: The Chairman (leader of the board) and the CEO
(manager of the company) should be different people. This prevents too much power in
one hand.
 3. Audit Committee:
• Must have at least 3 members, including one Independent Director.
• They check whether the company’s financial reports are correct. Example: The audit
committee ensures that profit reports are not fake.
4. Nomination & Remuneration Committee (NRC): Recommends who should be hired as
directors and how much salary they should get.
5. Annual Report Requirements: Companies must give details about their performance,
risks, CSR, etc. in their annual reports.
6. Auditor Independence: External auditors must be changed every 3 years and cannot do
other business with the company. This avoids biased reporting.
Role of BSEC in Advancing Corporate Governance:
BSEC is the main authority to regulate the capital market in Bangladesh.
1. Making Rules: BSEC creates laws like the Corporate Governance Code to ensure fair
practices.
2. Monitoring Compliance: BSEC checks whether listed companies are following the code.
Example: It may inspect if a company has the right number of independent directors.
3. Imposing Penalties: Companies that do not follow rules may be fined or their shares may
be suspended.
4. Educating Companies: BSEC arranges training and seminars for board members and
auditors.
5. Protecting Investors: Ensures investors are not cheated and receive proper information
before investing.
Challenges in Implementing Corporate Governance in Bangladesh:
1. Lack of Awareness: Many companies do not understand the importance of good
governance. Example: Some owners think only profits matter, not ethics or transparency.
2. Family-Owned Business Culture: Boards are often filled with family members, which
reduces independence. Example: In many Bangladeshi firms, the father is CEO, and the
son is CFO.
3. Weak Enforcement by BSEC: BSEC does not have enough power, staff, or technology
to check every company regularly.
4. Lack of Qualified Independent Directors: Very few people are trained or willing to work
as independent directors.
5. Corruption and Political Pressure: Political influence can stop action against dishonest
companies. Example: A politically backed company may not face punishment despite
violations.
 Module 5: Corporate Social Responsibility (CSR)
Definition:
Corporate Social Responsibility (CSR) is the idea that businesses have duties beyond just
making profits. Companies should also consider their impact on society and the environment, and
actively contribute to social welfare and sustainable development. It means that businesses operate
ethically, respecting human rights, environmental protection, and community development.
CSR is about balancing economic goals with social and environmental responsibilities. When
companies act responsibly, they help build stronger communities, protect natural resources, and
create trust with customers, employees, and stakeholders.
Archie B. Carroll (1991): “CSR is the social responsibility of business that includes economic,
legal, ethical, and philanthropic expectations society has of organizations.”
Explanation: Carroll describes CSR as four layers of responsibility: making profit, obeying the
law, acting ethically, and voluntarily helping society.
Philip Kotler and Nancy Lee (2005): “CSR is a company’s voluntary commitment to improve
community well-being through its business practices and use of corporate resources.”
Features of CSR

• CSR activities are done voluntarily, not because of legal obligations.

• CSR benefits shareholders, employees, customers, communities, and the environment.
• CSR involves doing the right thing morally and respecting human rights.
• CSR aims for long-term positive impacts on society and the planet.
• CSR is part of the company’s business strategy, not a separate activity.
• Companies openly communicate their CSR efforts to stakeholders.

Importance of CSR:

1. Enhances Corporate Reputation and Customer Loyalty:

Responsible actions improve a company’s public image and build trust among customers.
Example: BRAC Bank is highly respected for its social initiatives, gaining customer
loyalty.
2. Improves Employee Morale and Retention:
Employees feel proud and motivated to work for a socially responsible company.
Example: Grameenphone’s CSR programs increase employee engagement.
 3. Promotes Sustainable Economic Growth:
Supporting local businesses and farmers contributes to the nation’s economy sustainably.
Example: Square Group trains farmers to improve agricultural productivity.
4. Reduces Environmental Impact:
Adopting eco-friendly practices helps protect natural resources and reduce pollution.
Example: ACI Limited runs tree planting drives and sustainable manufacturing.
5. Strengthens Community Relations:
Good community relationships lead to smoother business operations and mutual support.
Example: Robi Axiata provides disaster relief and community support.
6. Ensures Long-Term Business Success:
Integrating CSR helps companies build sustainable foundations for future growth.
Example: Walton Group’s CSR strategies contribute to its stable and sustainable business
growth.

Common CSR Practices in Bangladesh

• Poverty Alleviation: Helping poor people through microfinance, skills training, and small
business support. Example: BRAC’s microfinance programs empower poor communities.
• Healthcare: Organizing free health camps, awareness programs, and providing medical
support. Example: Square Pharmaceuticals conducts health awareness campaigns.
• Education: Supporting schools, scholarships, and digital learning initiatives. Example:
Grameenphone promotes digital education in rural areas.
• Charity Activities: Donating to orphanages, old age homes, and disaster relief funds.
Example: Beximco Group regularly donates for social causes.
• Cultural Enrichment: Sponsoring arts, music, festivals, and preserving local culture.
Example: Robi Axiata supports cultural events and festivals.
• Youth Development: Running leadership and skill-building programs for young people.
Example: Banglalink organizes youth workshops for skill development.
• Women Empowerment: Supporting women entrepreneurs and promoting gender
equality. Example: Nestlé Bangladesh runs programs for women’s entrepreneurship.
• Sports and Music Patronage: Sponsoring sports tournaments and music events. Example:
Walton Group sponsors cricket tournaments and music festivals.
Sustainability and Triple Bottom Line (TBL)
What is Sustainability?
Sustainability means using resources in such a way that we can meet our present needs without
harming the ability of future generations to meet their own needs. It focuses on taking care of the
environment, ensuring fairness and well-being for people, and making sure businesses grow in a
responsible way.
Three Main Areas of Sustainability (3 Pillars):
Environmental Sustainability:
- Protecting nature and the environment.
- Using resources wisely so they don’t run out.
- Example: Planting trees, reducing plastic use, saving water.
Social Sustainability:
- Making sure people live happily, safely, and fairly.
- Protecting human rights, promoting education, healthcare, and equality.
- Example: Providing equal job opportunities, safe workplaces, fair pay.
Economic Sustainability:
- Running businesses in a way that helps the economy grow but does not harm people or the
environment.
- Long-term financial planning for stability and profit.
- Example: A company making good profits by selling eco-friendly products and treating workers
fairly.
What is Triple Bottom Line (TBL)?
Triple Bottom Line (TBL) is a concept that helps organizations and businesses focus on more than
just money. It looks at three key areas together:
Three P's of TBL:
People (Social) – Workers, community, human rights.
Planet (Environmental) – Nature, resources, pollution.
Profit (Economic) – Money, growth, long-term success.
Example
- People: The company pays fair wages to coffee farmers.
- Planet: The company uses recyclable packaging and plants trees.
- Profit: The company makes good money by selling quality coffee.

This way, the company is successful but also helps people and the environment.
Why is TBL Important for Sustainability?
- It makes companies more responsible.
- Helps protect the environment.
- Ensures people are treated fairly.
- Supports long-term business growth.
- Builds trust among customers and society.

Environmental Degradation:

Environmental degradation means damaging the environment through actions like cutting down
too many trees, polluting rivers, burning fossil fuels, and wasting resources.
Climate Change:
Climate change refers to long-term changes in weather patterns, especially due to global warming
caused by human activities like burning coal, oil, and gas. It leads to rising temperatures, floods,
droughts, and stronger storms.
Ethical Implications of Environmental Degradation and Climate Change:

Ethical implication means whether something is right or wrong from a moral point of view. When
people destroy nature or worsen climate change, they are doing something that is harmful, not just
to themselves but to others, future generations, animals, and the planet.
• Responsibility to Future Generations
If we destroy the environment today, future generations will suffer. Example: If we keep cutting
trees and polluting rivers, our children might not have clean water, fresh air, or enough food.

• Responsibility to Poor and Vulnerable People

Poor people suffer the most from climate change, even though they often contribute the least to
pollution. Example: A rich country burns a lot of fossil fuels, causing global warming. A poor
farmer in Bangladesh suffers floods and loses his home and crops.

• Responsibility to Nature and Animals

Destroying forests, polluting oceans, and harming wildlife are unethical because animals and
nature cannot defend themselves. Example: Dumping plastic into the ocean kills fish and turtles.

• Responsibility to Act Now, Not Later

Ignoring climate change today makes it harder to fix tomorrow. Example: Governments know
burning fossil fuels causes harm but still do it for money.