Chapter 2

The Domain and Context of Corporate

Ethics: Introducing Concepts and
Directions

Executive Summary
This chapter covers basic concepts, ethical theories, and moral paradigms
of corporate ethics for identifying, understanding, and responding to the
turbulent market challenges of today. The concept, nature, and domain of
ethics, business ethics, managerial ethics, and corporate executive ethics are
defined and differentiated for their significance. The domain, scope, and
nature of related concepts such as legality, ethicality, morality, and execu-
tive spirituality are distinguished and developed. Among normative and
descriptive ethical theories that we briefly review and critique here are tele-
ology or utilitarianism, deontology or existentialism, distributive justice,
corrective justice, and ethics of malfeasance and beneficence. Other moral
theories of ethics such as ethics of human dignity, ethics of cardinal virtues,
ethics of trusting relations, ethics of stakeholder rights and duties, ethics of
moral reasoning and judgment calls, ethics of executive and moral leader-
ship, and ethics of social and moral responsibility will be treated in a later
book. The thrust of this book is positive: despite our not very commendable
track record in managing this planet and its resources, our basic questions
are: Where are we now? What are we now? Where should we as corpora-
tions go, and why? What are the specific positive mandates and metrics to
corporate executives to reach that desired destiny? This chapter explores
responses to these strategic corporate questions.

2.1. Introduction
A typical week in USA: 10 billion shares of America’s 500 largest listed corpora-
tions will have changed hands in frenzied trading; Silicon Valley upstarts will
have wittingly or inevitably forced the downfall of many firms and could have
already unsettled some major industries. The corporate executives of these larg-
est listed firms will have been swamped by a million incoming e-mails and a
torrent of instant data about customers and their rapidly changing values and
lifestyles; in five days these firms will have bought back over $11 billion of their
own shares, not far off from what they invested a week earlier; computers buy
46 Corporate Ethics for Turbulent Markets

and dump shares in the stock markets within milliseconds. With one eye on their
smart phones and the other on their share prices, corporate bosses seem to be
the enviable captains of a hyperactive frenetic capitalism (see “Hyperactive, yet
Passive,” The Economist, December 5, 2015, p. 13).
If today is a typical day on planet Earth, writes David Orr (1990), a cele-
brated US environmentalist we cited in the Prologue, we will lose 116 square
miles of rainforest, or about an acre a second. We will lose another 72 square
miles to encroaching deserts, as a result of human mismanagement and overpop-
ulation. We will extinguish 40 100 species, and no one knows whether the num-
ber is closer to 40 or 100. Today the human population will increase by 250,000.
And today we will add 2,700 tons of chlorofluorocarbons to the atmosphere and
15 million tons of carbon. Tonight the Earth will be a little hotter, its waters
more acidic, and the fabric of life more threadbare.
The truth is that many things on which our future health and prosperity
depend are in dire jeopardy: climate stability, the resilience, and productivity of
natural systems, the beauty of the natural world, and biological diversity. It is
worth noting, says Orr (1990), that this is not the work of ignorant people. It is,
rather, largely the result of work by people with BAs, BScs, LLBs, MBAs, and
PhDs. We must reverse this trend if this planet should continue to be
inhabitable for humankind. A treatise in business and corporate ethics for turbu-
lent markets of today should provide enough ecological sensitivity and moral
determination to reverse this trend.
Laments Ciulla (2014), a much respected business ethics scholar in the USA:
In the 30 years that I have worked in business ethics, I have been delighted to
see how the field grew and developed around the world. Nonetheless, it pains
me that the battle to teach ethics courses in business schools continues, not with
the business community but with business schools. Many of them are still not
interested in investing in business ethics faculty and courses because, despite
scandals and the crash of the global financial system, they still do not think that
business ethics is important.

2.2. Toward a Strong Positive Approach to Corporate Ethics

Corporate fraud of the scale of Enron and WorldCom will not be eliminated by
simply adding ethics courses to the curriculum. Ethics is only valuable for those
who are concerned with doing what is good and just in the first place. In the
absence of a sincere concern for truth and justice, ethics easily degenerates into a
superficial exercise in logical thinking. Technical solutions do not address funda-
mental character flaws in human nature.
Given human failure of repeated scandals and systematic accounting and
financial irregularities, corporate fraud, corruption, and money laundering, a
recapture of a strong sense of business and corporate ethics is urgently impera-
tive in every business school curriculum and corporation conduct. The massive
consequences of unethical executive behavior and unethical business institutions
cannot be ignored. Recent consumer boycotts of hitherto industrial icons such
 The Domain and Context of Corporate Ethics 47

as Levi-Strauss, Gap, Home Depot, McDonald’s, Nike, Kmart, Wal-Mart, and

Shell Oil are moral wake-up calls for all corporations and their executives to
renew their moral commitment to society.
Students want more than a brain behind the classroom podium, they want
someone they can relate to and share stories and hopes with. If students are enti-
tled to more than a brain behind the podium, so, too, are we committed to edu-
cating full human beings, and to educating minds and hearts that can change
the world?
The reality is that most college students of business, as well as other chosen
disciplines, will become economically privileged. With this privilege comes
responsibility of working to bring equity and opportunity to others. Working for
equity and justice requires us to teach not only the technical aspects of business,
but also to give students the tools and experience they need to respond to cir-
cumstances of life that go beyond the mere technical aspects. Our goal must be
to have our students see the larger social picture and understand what impact
their decisions have on others. There is need for an education of hearts.
How does such training play out in the life of a business professional?
Leaders with educated hearts make business decisions based not only on profit
margins and their own private interest but also on the needs of society and of all
their employees.
We need strong corporate ethics at all levels. Bouckaert (2015) forcefully
argues that a spiritual approach to business ethics is badly needed.1 Without a
sense of greater intrinsic motivation, business ethics will be reduced to an instru-
ment for reputation and risk management while any genuine moral commitment
will be lost. It seems obvious that business gurus, students, academics, and man-
agers benefit so greatly from feeding at the trough of corporate management
education that they rarely lift their snouts far enough to see what working life is
like in the call center, burger bar or the export processing zone, and the slums of
big Indian cities. Corporate ethics is an invitation to look up and see the rest of
the world in its stark reality.
According to the Ethics Resource Center, Washington, DC, companies that
are dedicated to doing the right thing, have a written commitment to social
responsibility and act on it as a way of life, are consistently more profitable than
those who do not. If your company is ethical and socially responsible, it auto-
matically cannot make you rich and successful, but it will definitely pave the
way for you to become successful. Ethics + competence = success is a winning
equation. This is the equation of ethics for corporate advantage. On the other
hand, companies that continually attempt to test the edge of ethics inevitably go
over the edge. Shortcuts, deception, cheating, and cutting corners test the edge
of ethics and never pay off in the long run. In the long term, people and organi-
zations always lose when they live without ethics and guiding moral principles.
In 2002, the US Congress passed the Sarbanes Oxley Act (popularly known
as the SOX Act) to address the increasing wave of corporate accounting and
financial scandals. Section 406 of this Act mandates that corporations should
have a code of ethics for senior officers that must include standards that pro-
mote: (1) honest and ethical conduct, especially in handling actual or apparent
48 Corporate Ethics for Turbulent Markets

conflicts of interests between personal and professional relationships, (2) that all
public financial statements of corporations should be full, fair, accurate, timely,
and understandable, and authenticated by the CEO and CFO of each firm, who
will be held responsible for errors, and (3) compliance with applicable govern-
ment rules and regulations. Despite this Act, corporate scandals have not signifi-
cantly abated in the US or in the Western developed world. A solid course in
business ethics, managerial ethics, or corporate ethics for all MBA students and
corporate executives could reinforce the importance of and empower compliance
to the SOX Act of 2002.

2.3. Conceptual versus Operational Definitions

In this chapter we define introductory concepts such as ethics, morality, business
ethics, managerial ethics, executive ethics, and corporate ethics. In order to do
that, we need a “definition of definition” to start with. The term “definition”
comes from two Latin words (the noun finis (= limit or end) and its verb form
finire (= to finish to terminate)). Definitions define limits or boundaries within
which you include the domain of the concept or practice you are defining. There
are two basic types of definitions:

(1) Conceptual definition. This tells what the thing you want to define is; that is,
it tells “what it is.” For example, man is a rational animal; an animal is a
sentient being; a business is a buyer seller exchange; the corporation is a
listed company, and the like, are conceptual definitions.
(2) Operational definition. This tells you what the thing you intend to define
does; it tells “what it does.” For example, a man as an adult family member
is a husband, father, and a breadwinner; an animal is a multilegged mobile
creature that hunts for its living; a business is where buyers and sellers meet
to exchange goods and services; a corporation serves the public as it lives by
its capital and resources, and the like, are operational definitions.

While we need both types of definitions, our emphasis is along operational

definitions given, as we shall see later, that the practical domain, nature, and
challenge of corporate ethics are to explore and determine what “it does” to a
corporation and its stakeholders. In order to critique and assess the current trou-
blesome business phenomena of home mortgage crisis in the USA, global finan-
cial crisis of 2008, ecological degradation, lack of ethical sensitivity, and current
questionable behaviors of free enterprise capitalism everywhere in the world, we
need a strong conceptual and theoretical, practical, and imperative background
of ethics and morality. We need to understand relevant concepts, models and
theories, paradigms, strategies and cases of ethics and morality in general, and
of business and corporate ethics, in particular. In the following sections we
define, distinguish, and discuss, in their historic order of appearance, four related
notions of corporate ethics for turbulent markets: spirituality, morality, ethical-
ity, and legality.
 The Domain and Context of Corporate Ethics 49

2.4. What Is Spirituality?

We start with the notion of spirituality. Numerous qualities are essential to lead-
ing effectively in an age of market turbulence and uncertainty. Depending on
which qualities one chooses to focus upon, a leadership development offering
could take on many different pedagogical frameworks, objectives, and measures.
Currently, a new wave of literature called the mindfulness practice of leadership
is emerging. Brendel, Hankerson, Byun, and Cunningham (2016) look specifi-
cally at mindfulness practice and tenets grounded in Buddhist tradition, which
often refers to an individual’s way of being that cuts across all experience
as dharma (Purser & Milillo, 2015). Based off of an extensive literature review,
which compared research and theory in the fields of leadership development
with mindfulness practice, Brendel et al. (2016) uncovered five personal qualities
that are consistent between them. These include creativity, resilience, tolerance
for ambiguity, dealing with stress, and quelling anxiety. Collectively, the quali-
ties described above comprise what they call “leadership dharma” (Brendel
et al., 2016, p. 1057).
Spirituality dawns with humankind. It is the bonding and binding spirit that
held our first ancestors together as pioneers on this planet. It is a primordial spir-
itual instinct of caring and sharing, giving and forgiving, protecting one another
from harm, and doing good to one another that characterized our proto-
genitors. As a phenomenon, accordingly, spirituality antedates morality, ethics,
or legality. It is beyond legality, beyond ethics, beyond morals, beyond any ethi-
cal theory or paradigm. Spirituality is beyond any exercise, regime, program,
regimen, project, or enterprise. It is something internal and intrinsic to human-
kind arising from being created in the “image and likeness of God.” It is a gift
from God by which we participate in the love and holiness of God. Spirituality
is native, inborn in us, and also cultivated by wisdom and virtue, renunciation
(tyaga) and service (seva), integrity and holiness.
In the Indian tradition, spirituality is dharma. “Dharma is a code of conduct
supported by the general conscience of the people. It is not subjective in the
sense that the conscience of the individual imposes it, nor external in the sense
that the law enforces it. Dharma does not force men into virtue, but trains them
for it. It is not a fixed code of mechanical rules, but a living spirit which grows
and moves in response to the development of society” (Radhakrishnan, 1936).
Dharmashastra, laws of spirituality that is manifested in transcendence and
immanence, are perhaps the oldest form of Puranashastras, while Arthshastras,
laws of economics and politics, subordinate to dharmashastras, might have
arisen thereafter (Gautam, 2016).2 These civilizations were known for their spiri-
tuality more than for their morality, ethicality, and legality.
Kautilya’s Arthashastra (c. 400 BC: Theory of administration or leadership)
written as a guide for Chandragupta I by his mentor Kautilya, who together
were founders of the Maurya dynasty and built the first empire of Bharatvarsha,
contains (Book III: ii) some “categorical imperatives” for good conduct of the
wise and kings: have vigilant control over six internal enemies of all humans
(shadaripus): lust, anger, greed, delusion, arrogance, and envy. These are
50 Corporate Ethics for Turbulent Markets

negative approaches to spirituality. A disciplined king gains true knowledge,

becomes wise, and justly treats all his people. Thus he becomes a rajarshi he is
an organic and intrinsic synthesis of the sage and the emperor. The greatest
reward of such a rajarshi is the loyalty and trust of his people.3
The Spiritual Exercises of St. Ignatius of Loyola (1491 1556), founder of the
Society of Jesus (aka Jesuits), offer a structured process of spirituality. The
Exercises enable the participant (usually called the “exercitant”) “to conquer
oneself and regulate one’s life without determining oneself through any tendency
that is disordered” (Fleming, 1991). The aim of the Exercises is to help the exer-
citant to attain greater spiritual freedom. The Exercises do this by challenging
the exercitant to look at one’s final end (telos) and the behavior, habits, and
values that lead one toward or away from that final good end.
One of the first exercises for spiritual meditation is the “Principle and
Foundation” in which the exercitant considers the overall purpose of human exis-
tence and one’s relationship with the transcendent and immanent God. The
Exercises challenge the exercitant to look beyond a narrowly self-interested set of
desires to the overarching reasons for one’s being. In this regard, the exercitant
begins to reflect and scrutinize one’s relationship with God and one’s proper
responses to God’s creative designs. The exercitant is encouraged to reflect upon the
movements of the spirit or the soul by the divine spirit and the opposite, the devil.
Spirituality is something (like perception, positive attitude, belief, energy and
power) deep down within us that is freeing than constraining, enlightening than
darkening, unraveling our conscience than mere consciousness, seeking truth
than untruth, striving for goodness than evil, pursuing grace than sin, living
hope than despair, clarifying than confusing, enriching than impoverishing,
empowering than enslaving, redeeming than burdening, understanding than
judgmental, forgiving than condemning, accepting than rejecting, embracing
than resisting, loving than hating, giving than receiving, healing than wounding,
opening than closing, inclusive than exclusive, encouraging than discouraging,
welcoming than closing doors, arriving than departing, liberating than bound-
ing, uniting than dividing, building bridges than burning them, unleashing hap-
piness than sadness in short, humanizing than dehumanizing, sanctifying than
corrupting. It is the reign or kingdom of God within us than the kingdom of
money, power, status, and popularity. If all of humanity lived this spiritual
power within us, humanity would be blessed with peace and prosperity, integrity
and harmony, and heavenly joy and ecstasy.
Spirituality is axiomatic, self-evident, and experiential; not provable or falsi-
fiable; needs no proof, theorem, or algorithm. It is human; it is divine. It is imma-
nence and transcendence conditioning our individuality and sociality. Spirituality
is the science of the heart. When we learn to connect with it we will find that
everything is there. Most amazingly we find out that we are all connected to each
other through our hearts. When we tune ourselves to the same frequency, we will
be in the same vibratory plane where we are all one. When we have less resistance
in our hearts, we let go and become a part of that journey. Then we become uni-
fied as one single entity, lost in the music. But what is the force behind this unity?
It is obviously love having no prejudice toward others.
 The Domain and Context of Corporate Ethics 51

2.5. What Is Morality?

We next proceed to a discussion on morality, as historically, morality has pre-
ceded ethics by centuries and millennia and has helped to guide and formulate
ethics. Morality could be also as old as humanity. Our first ancestors had the
same moral and social objectives as we have today: mutual existence, respect,
and peace within a group or community.
Conceptually, morality (from the Latin moralitas) is the value quality or
character of a person, family, group, or society. It is rightness or wrongness, jus-
tice or injustice in action of a person, group, or society. Morality constitutes
principles of right or wrong, truth or falsehood, and fairness or unfairness in
human conduct. Thus, operationally defined, morality covers those beliefs and
values, practices and activities of people that are considered right or wrong,
good or bad, truthful or untruthful, and fair or unfair. Morality studies the rules
and principles that govern these activities and the values that are embedded in
those activities (De George, 1999, p. 19).
Thus, morality is generally used to describe a sociological phenomenon, namely,
the existence of a society with rules and standards of social behavior. In this sense,
moralities are best understood as special forms of social control (such as corporate
governance structures and rules) and special forms of practical reasoning (Baier,
1965). These are operational definitions of morality. Thus, we speak of the moral-
ity of the Greeks, the morality of the Romans, the morality of twentieth-century
Americans, the morality of twenty-first-century Asians, the morality of the free
enterprise capitalist system, and the like. Accordingly, we do not usually speak
about the ethics of Greeks or the ethics of Romans or Americans or Indians.
As Lincoln Steffens4 aptly said, “morality is moral only when it is voluntary.”
Many of us abide by rules, laws, and social sanctions primarily for fear of being
caught violating them and publicly exposed and punished for such violations.
Such attitudes and behaviors encourage hypocrisy. Corporate morality is moral
strength when you follow organizational rules because of their intrinsic moral
values of justice, integrity, social legitimacy, and common good.
Morality does not die out in the absence of laws and injunctions; it thrives.
Moreover, racism and discrimination based on gender, caste, creed, ethnicity,
and nationality can become increasingly vicious when they are cloaked in
pseudo religion-based social and moral sanctions. Thus, morality is moral when
it is intrinsically motivated.
Corporate morality is moral when it is not driven just by law compliance or
even by observance of a code of ethical conduct. Both these behaviors, legal and
ethical, should be intrinsically motivated by one’s moral beliefs, principles, and
convictions, one’s moral and religious conscience, and by one’s sense of duty
and purpose in life.

2.6. What Is Ethicality?

Etymologically, the word ethics comes from the Greek word “ethos,” which
means custom or convention or disposition. Thus, ethics denotes customary,
52 Corporate Ethics for Turbulent Markets

conventional, or dispositional character or fundamental values peculiar to a spe-

cific person, people, culture, organization, or movement. Conceptually, ethics is
a science of values, an art, and philosophy of human and societal values.
Operationally, ethics is an action program for the management of values and value-
generation systems in an organization. Thus, from a conceptual viewpoint, ethics are
norms, codes, conventions, mores, and other value-based principles of a person,
group, or society. In this sense, ethics is a theory or system or science of moral values.
The Dictionary of Business (conceptually) defines ethics as the branch of philos-
ophy that tries to determine the good and right thing to do, and choices regarding
right and wrong. There is a big difference between what you have a right to do and
what is right to do. The former is legal, the latter is moral. There is a big difference
between law compliance, ethical conformance, and moral engagement. The first is
being legal, the second, ethical, and the third, is being moral.
Operationally defined, ethics is the way we live, experience, generate and share
values, and the way we deliberate, judge, choose, act, or behave that reveals our
underlying values, norms, principles, and standards. Defined thus, ethics is life,
life at home, life in school and college, workplace, and marketplace, and especially
in boardrooms and corporations, institutions, and governments. Ethics should
pervade all things we think and do, be, and become. Ethics is in planning and
strategizing, in market and industry scanning for new market niches, in designing
new products and services, in crafting and testing new products, in price and prod-
uct bundling, in transportation and logistics, in distribution and retailing, in pric-
ing, displaying, and promoting new brands. There should be strong ethics in
customer relations management (CRM), in employee relationships management
(ERM), in supplier chain management (SCM), in distribution partner relations
management (PRM), and ethics in regulation and compliance management. The
more ethical codes and moral principles define and humanize the corporation or
institution, the better are the long-term prospects and SCA.
On the other hand, ethics is also derived from the Greek word “ethikos” that
generally refers to the rules and norms of specific kinds of conduct or the code of
conduct for specialized groups. Thus, we speak about ethics of doctors, ethics of
lawyers, ethics of engineers, ethics of the nursing profession, ethics of commerce,
ethics of the accounting profession, ethics of business executives, ethics of corpo-
rate executives, and so on, rather than morality of doctors, morality of lawyers or
accountants or corporate executives (Boatright, 1993/2003, pp. 22 23).

2.7. What Is Legality?

Perhaps the most known and studied concept and paradigm, legality postdates
spirituality, morality, and ethicality. Law, legislature, judicature, and executive
law and order systems reflect highly organized societies and nations.
In general, law is the expression of the mind of the ruler; it is binding when
promulgated and enforced. It presumes that the ruler (e.g., monarchical, oligar-
chical, feudal, dictatorial, democratic, or benign) is legitimately appointed or
elected. It also presumes that the rule is just by various justice standards.
 The Domain and Context of Corporate Ethics 53

Exhibit 2.1. The Response of Legality, Ethicality, Morality, and Spirituality to

Legitimate Laws.

Legality Ethicality Morality Spirituality

• Law compliance • Law • Law reverence • Imbibe the spirit of the
• Law adherence mindfulness • Law law
• Legal game play • Law internalization • Law defiance may be
abidance • Law reflection mandatory when the
• Law legitimacy
• Law due law is unjust
check • Law
update conscience • Reformulate the law
• Law interpretation
• Law to restore and reassure
• Law manipulation • Law morality
research human dignity
• Law lobbying (US) • Humanize the law for
• Legal ethics
humanizing and
harmonizing society

Presumed thus, law can be fundamental, constitutional, relatively absolute, and

can provide citizens with certain claims, privileges, power, and immunity.
Corporate executives can obey the law with an allegiance of legality, ethical-
ity, morality, and spirituality as illustrated in Exhibit 2.1.

2.8. What Are Values?

Values deal with the central Socratic question: How should we live? A question
that is also reiterated by Bernard (1985). This question deals with human moti-
vation more than mere normative expectation or mathematical expectation.
Ethical deliberations cannot be totally inconsequential to actual human behavior
(Sen, 1990, pp. 3 4).5
Values can be identified and discerned at various levels. Thus:

• Ideologically, values are meanings, beliefs, convictions, and principles we live

and share, create and cultivate, use and diffuse in everyday life.
• Philosophically, values are ideas, ideals, ends, means, principles, doctrines,
standards, rules, and judgments that we derive from various schools of
thought that we espouse.
• Organizationally, values are vision, mission, goals, objectives, money, capi-
tal, scarce resources, talents, skills, knowledge, organizational routines,
patents, intellectual property rights, markets and opportunities, customers,
suppliers, and other stakeholders that we consider useful and valuable for
our business.
• Legally, values are rights to life, liberty, and pursuit of happiness endorsed by
the preamble, the constitution and its interpretations, governments and
bureaucracies, law and order, product safety, security and privacy, freedom
and independence, and freedom from oppression and suppression.
54 Corporate Ethics for Turbulent Markets

• Ethically, values are legacies of behavioral standards and constraints, codes of

conduct, ethical theories, normative and non-normative principled behavior
norms, mores, and customs derived from the ethical theories, industry injunc-
tions and benchmarks, and socially value-based best practices.
• Morally, values are our beliefs and experiences, meanings and convictions,
heritage and traditions that we have derived from our family and school
upbringing, college and university education, and work and corporate training
and challenges.
• Spiritually, values are fundamental beliefs about God and the cosmos, society
and cultures, nature and ecology, time and eternity, space and sky, life and
destiny that influence and affect our daily lives and journey.
• Human values are those benefits and principles that bring meaning and fulfill-
ment in our lives, both individually and socially. Such values include honesty,
integrity, compassion, authenticity, transparency, courage, audacity, trust,
responsibility, patriotism, respect, and fairness.

We are not explicitly including all values in the definition of ethics as such.
For some people, values are very relative and personal, e.g., to obtain a
degree, to get a job, to make money, to hoard wealth, to buy a home, to own
an expensive car, to marry, and to go abroad. But ethics is a science of princi-
pled moral values and principled moral behavior. The value and behavior
should stem from certain well-established moral principles, standards and
rules, or from the moral judgments of people whom we call wise and honest.
That is, values are values when certain universal moral principles back them.
Values derive value from these moral principles, and not vice versa. The power
of moral principles is that they are universal, timeless truths. When we apply
them and live by them, we generate values and best practices. Such principles
deal with meaning and truth, honesty and integrity, and not any specific reli-
gion necessarily.
For instance, we value human life because of the moral principle of funda-
mental human dignity and the inalienability of the God-given right to life, lib-
erty, and the pursuit of happiness. Nobody can take these God-given or natural
rights from us. Nor can we abdicate or abandon this right to life, liberty, and
the pursuit of happiness. Similarly, we value honesty because of the fundamental
moral principle and mandate of speaking the truth. On the other hand, all our
good works and best practices do not produce quality of life results in our
homes, institutions and corporations, countries and continents, if they are not
based on valid and solid moral principles.

2.9. Business Ethics and Managerial Ethics

Business ethics is a subset of ethics. Business ethics is a specialized study of
moral right and wrong in the business arena. It focuses on moral standards
and rules as they specifically apply to business exchanges and behaviors, employ-
ers and employees, buyers and sellers, suppliers and creditors, distributors
 The Domain and Context of Corporate Ethics 55

and retailers, products and services, promotional and pricing strategies and
choices, business policies and rules, business institutions and organizational
behavior.
Managerial ethics is a subset of business ethics. Managerial ethics focuses on
transactional moral values. Managerial ethics assures that all buyer seller
exchange processes, at all levels, create, design, and offer good, safe and healthy,
legal, ethical, and moral products and services that are profitable and growth-
oriented, but which are also affordably priced, justly distributed, that serve the
needs, wants, and desires of the entire human family, and at the same time, sup-
port the ecological and sustainable resources of the planet and the universe. This
is a tall order for managerial ethics. That is because the scope of managers in a
chaotic and turbulent market environment is wide and widening.
Where there are people, there is behavior, and where there is behavior
there is scope and demand for ethics. Where there is business, there is scope
and challenge of business ethics, and there is role and scope for managerial
ethics.
Managerial ethics is stewardship. It is responsibility and accountability to all
stakeholders such as customers, employees, suppliers, vendors and distributors,
shareholders and promoter investors, banks and creditors, governments and the
media, the local and national and global communities, the planet and the uni-
verse, and even the competition. Of course, managers should draw the specific
boundaries of their industry and markets, products and services, and hence
define and characterize their specific stakeholders, but the overall scope of ethics
and morals is the same within these bounded functionalities.
If business is basically a buyer seller exchange management process, then
business ethics is the science of social values that enables and empowers buyer
seller exchange management. Operationally, business ethics is a principled action
program of moral values that humanizes the buyer seller exchange manage-
ment process. Business ethics brings the moral values of both intellectual virtues
(e.g., prudence, wisdom, transparency, due diligence, and objective investiga-
tion) and moral virtues (e.g., temperance, fortitude, honesty, integrity, justice,
and compassion) to the marketplace, and specifically to the buyer seller
exchange system of inputs, process, and outcomes. Business ethics is the ethics
of commerce and e-commerce, the ethics of the marketplace with its produce
and products, brands and services, the ethics of building human, physical, and
money capital, and the ethics of the production, distribution, and consumption
processes that define the markets.
This book follows this latter approach of defining, operationalizing, and
assessing ethics as an actionable program of responsible values that humanize
societies. Ethics deals with human behavior. Ethics becomes relevant wherever
people interact and function together. Hence, every field of business such as
planning and strategy, accounting, finance, human resources management, busi-
ness law compliance, marketing, business research, and production management
involves ethical issues and moral challenges.
56 Corporate Ethics for Turbulent Markets

2.10. What Is Corporate Ethics?

Corporate ethics is a subset of managerial ethics. It is a field of highly profes-
sional and specialized executive ethics behavior that involves corporate-wide
decisions and choices, strategies and implementation processes, and being
accountable for the outcomes of one’s corporate-wide choices and decisions.
The scope and domain of corporate ethics is wider than in managerial ethics.
Corporate ethics embraces the corporation as a whole with all its divisions and
subdivisions, branches and affiliates, joint ventures and wholly owned subsidiar-
ies, mergers, acquisitions, and divestitures, corporate strategic alliances, pro-
ducts, brands, and services, and uses and renewals of its accumulated human,
physical, and money capital.
Hence, corporate ethics, par excellence, is an actionable program that seeks
goodness in its corporate, ethical, and moral deliberations, decisions, and
actions. Business ethics, in general, and corporate ethics, in particular, should
empower ethical reasoning, critical thinking, rational explanation and under-
standing, moral deliberation and choice, ethical judgment and decisions, and
ethical decision-making for business practitioners and business corporate
executives.
Business ethics should provide tools of ethical and moral reasoning, forti-
fied with relevant theories, models, and paradigms of ethical and moral rea-
soning and values. Every field and function of business such as business
strategy, organizational behavior, accounting, finance, human resources man-
agement, business law, marketing, business research, and production manage-
ment involves people and behavior, and, therefore, involves ethical issues and
moral challenges.

2.11. Commonality Between Ethics, Business Ethics, and

Corporate Ethics
As is apparent from the above three definitions, the first common element
between ethics, business ethics, and corporate ethics is values, actually, human
principled moral values. Moral values are our fundamental meanings, beliefs,
and principles by which we define and distinguish what is right and wrong, good
and evil, just and unjust, and truth from falsehood. These values provide guid-
ance and standards for our daily lives and career ambitions. The word “evalu-
ate” (derivative of values) implies the use of rules and standards by which we
compare different behaviors, and judge whether such behaviors meet our
standards.
Second, even though not contained explicitly in each definition, the next com-
mon element across all three branches of ethics, business ethics, and corporate
ethics is that these moral human values deal with human judgment and decisions
(ethics) that deal with business exchanges (business ethics), and human judgment
and decisions that deal with major corporate-wide exchanges (corporate ethics)
such as mergers, acquisitions, and divestitures, entering new industries and
 The Domain and Context of Corporate Ethics 57

markets, developing new products and brands, downsizing plants and labor, and
the like.
Third, business ethics and corporate ethics are interdisciplinary fields that
entail the domain of at least two or more distinct disciplines: (1) business
exchanges and decisions, (2) economics, psychology, and sociology, and (3) the
philosophy and science of ethics. It is a dynamic interdisciplinary field, as all
these disciplines are refining, changing, and expanding.
Corporate or business ethics is a treatise about ethical and moral process of
business exchange deliberations and decisions, judgments, choices, and actions.
Business and corporate ethics should empower moral deliberation, ethical judg-
ment, ethical decision-making, serious foresight of the consequences of our deci-
sions, choices and strategies, and undertaking responsibility for harmful
consequences, if any. Business and corporate ethics should provide tools of ethi-
cal and moral reasoning, fortified with relevant theories, models, and paradigms
of ethical and moral reasoning and values. Every field of business such as
accounting, finance, human resources management, business law, marketing,
business research, and production management involves ethical issues and moral
challenges today. Corporate ethics should identify, understand, and address such
ethical issues and moral challenges.

2.12. Descriptive versus Prescriptive Ethics

We also use the term ethics to denote a field of moral philosophy. Like logic,
epistemology, and metaphysics, ethics as a moral normative philosophy in the
West dates back to the time of ancient Greeks (e.g., Socrates (470 399 BC),
Plato (427 347 BC), and Aristotle (384 322 BC)). In this view, ethics as a philo-
sophical endeavor is the study of morality. Ethics studies morality; ethics pre-
supposes the existence of morality and moral people who judge right from
wrong (De George, 1999, p. 19). Such a study can be descriptive or normative.
While descriptive ethics is a scientific inquiry into the actual moral beliefs and
behaviors of people, normative ethics, based on various philosophical theories
and doctrines, prescribes what our beliefs and behavior should be. A third divi-
sion of ethics is called metaethics the study of the language, syntax, grammar,
expression, and communication of ethics.
While ethical behaviors are external in source and motivation (e.g., ethical
codes, regulation, mandates, customs, pacts and agreements, norms and conven-
tions), moral behaviors are internal in power, motivation, and dynamism (e.g.,
one’s moral upbringing at home, one’s moral conscience, one’s moral principles,
and one’s moral convictions). Ethics is the domain of the “should” while morals
denotes the domain of the “ought.” That is, ethics tells me what I should do.
While morals tell me what I ought to do. Morality is powered from within us.
Ethics is powered from without.
In this connection, a great philosopher Michael Foucault6 writes “For a rule
of (ethical conduct) is one thing; the conduct that may be measured by this rule
is another. But another thing still is the manner in which one ought to form one-
self as an ethical subject acting in reference to the prescriptive elements that
58 Corporate Ethics for Turbulent Markets

make up the code.” Foucault argued that ethics is a work of art where subjects
(individual, collective) explore different possibilities of being by experimenting
while being in their present conditions. That is, individuals develop their ethics
conforming to existing codes, but also while imagining new ways of being ethi-
cal. This process requires a continuous revision and modification of what one is
and what one thinks. In this sense, laws, ethics, morality, and spirituality are not
static but dynamic social systems of self-control and humanization.

2.13. Major Ethical Theories

The distinctive aim of any scientific theory is to provide systematic and reason-
ably supported explanation and prediction of phenomena. A theory, therefore,
is a system of hypotheses, most of which are law-like formulae deductively con-
nected with each other (Suppe, 1977). A theory is “set of propositions which are
consistent among themselves and are relevant to some aspect of the factual
world” (Alderson, 1957, p. 5). Some of these propositions are “non-observa-
tional, from which other propositions that are at least testable in principle can
be deducted” (Zaltman, Pinson, & Angelmar, 1973, pp. 78 79).
Howsoever defined, the major purpose of a theory is to increase scientific
understanding through a systematized structure capable of both explaining and
predicting phenomena. Any systematized structure that is not empirically
testable will not be able to explain and predict real-world phenomena. All scien-
tific knowledge and theories are integral part of this knowledge, must be objec-
tive in the sense its truth can be empirically testable or intersubjectively certified
by several investigators working independently. Thus, minimally, a theory
includes at least three constitutive elements: (1) a set of law-like generalizations,
(2) systematically interrelated, and (3) empirically testable, (4) such that it can
explain, predict, and control real-world phenomena.
A set of discrete law-like generalizations is not enough; all the generalizations
must be systematically related (Kaplan), deductively connected (Bergman), and
interrelated propositions (Blalock) such that they generate a theory that is inter-
nally consistent and corroborating. The empirical test can be undertaken by
both traditional quantitative methods and modern qualitative (non-number
crunching) methods. The latter are based on experiences, perceptions, feelings,
and values of people that can be expressed by symbols, images, graphics, pic-
tures, and narratives. Narratives are best subjected to qualitative analysis.
Analysis of narratives in the form of stories, vignettes, parables, proverbs, alle-
gories, and synecdoche offer tremendous scope for research.

2.14. The Ethical Theory of Teleology

Table 2.1 reviews most of the known ethical moral rules that ground moral
rule based reasoning for analyzing ethics of corporate decisions and actions.
The ethical theory of teleology (or utilitarianism or consequentialism) judges
the morality of an action primarily by its good or harmful consequences. Its
Table 2.1. Basic Moral Rule-based Reasoning for Analyzing Ethics of Corporate Decisions and Actions.

Ethical Theory Rule Based on Ethical Theory: That corporate Major Problems in the Rule Application of this
(Focus on: ) action of designing, producing, distributing, and theory: In relation to the design, production,
marketing new and old products is: distribution, and marketing of new or old products
and services:
Teleology Moral (teleologically) if it decidedly produces What is a benefit? What is a cost? To whom? One
(consequences) more benefits than corresponding costs and to the man’s meat is another man’s poison. A cost to one
greatest number is benefit to the other.
Costs and benefits are both consequences and

The Domain and Context of Corporate Ethics

outcomes. When are they known fully: before,
during, or after the executive action?
What is the greatest number: 1.2 billion in India?
Deontology (inputs Moral (deontologically) if it decidedly upholds What is a right? What is a duty? Whose? One
and processes) more rights of stakeholders than it violates man’s right is another man’s duty to respect that
corresponding duties, and in relation to the right. A duty to one is right for another.
greatest number Rights and duties are given and defined by whom?
God, state, society, or employer? Rights and duties
are both antecedents to action. When are they
known fully: before, during or after the executive
action?
What is the greatest number: 1.2 billion in India?
Distributive justice Moral (by distributive justice standards) if it What is equality? What is equity?
(inputs, processes and decidedly distributes all costs and benefits, all How is equality or equity determined by need,
outputs (IPO)) rights and duties evenly or equally or equitably want abilities, efforts, contributions, market value,
across all relevant stakeholders social status, or entitlement?

59
Table 2.1. (Continued )

60
Ethical Theory Rule Based on Ethical Theory: That corporate Major Problems in the Rule Application of this

Corporate Ethics for Turbulent Markets

(Focus on: ) action of designing, producing, distributing, and theory: In relation to the design, production,
marketing new and old products is: distribution, and marketing of new or old products
and services:
Who distributes: state, society, company, status,
caste?
What should be the goal of distribution: income
equality or economic equality or social equality or
opportunity equality, and why?
What should be equalized: income, skills, access,
opportunity, culture?
Corrective justice Moral (by corrective justice standards) if it What are just procedures: those that minimize
(IPO) decidedly sets up just procedures to bring about a harm? Those that prevent harm? Those that
just distribution among the greatest number, when protect people from harm? Those that do good to
the previous three rules have failed people?
Who sets up these just procedures, why, when, and
where: the nation, the state, the district, the
municipality, one’s company?
Ethics of human Moral (by human dignity standards) if it decidedly What is human dignity? Is there an objective or
dignity (IPO) sustains and empowers human dignity of people universal standard or a categorical imperative?
affected by the action and under all situations What does sustaining and empowering human
regardless of nationality, color, creed, gender, or dignity mean? Who defines this, and for whom,
age and by what rules or standards?
Ethics of virtue Moral (by ethics of virtue) if it is decidedly based What is virtue? What is vice? Is virtue power
(inputs and processes on the practice of at least the four cardinal virtues (“virtus” in Latin)? Is it excellence (following its
(IP)) of prudence, temperance, justice, and fortitude, Greek derivation “arête”)? Hence, is it power of
and in relation to the greatest number excellence or power of greatness? Why are cardinal
virtues cardinal (i.e., upon which all other virtues
are hinged)? Prudence should discipline
temperance, fortitude, and justice. Hence,
prudence should be the cardinal virtue. Is
prudence practical wisdom? But how does one
cultivate it? Via virtue? This is circular thinking?

The Domain and Context of Corporate Ethics

Via experience of being wise? Then ethics of virtue
makes sense, as long we grow wise through good
experience or experience of doing good.
Ethics of trust (IP) Moral (by ethics of the virtue of trust) if it is What is trust? When do you begin to trust
decidedly based on the practice of mutually somebody? Through mutual interaction and
benefiting trust between exchange partners, and knowledge? Then how do you trust strangers?
under all circumstances of contingency How does a patient trust the doctor whom she has
never met before? All trust is a blind leap into
believing in the goodness of the other hence
vulnerability is built into trust. Does one have to
be vulnerable in order to trust?
Ethics of Moral (by ethics of moral responsibility) if it duly What is responsibility? Answerability?
responsibility (IPO) owns and is answerable to the action before the Accountability? Obligation? Duty? Liability?
act, and fulfills after the act all accountability, Acting or compensating to allay one’s guilt or
obligations, duties, and liabilities to all affected blame? When is one responsible to the action
parties in relation to the greatest number itself, rather than to its outcomes? To what extent
are our choices and actions deterministic or owned

61
Table 2.1. (Continued )

62
Ethical Theory Rule Based on Ethical Theory: That corporate Major Problems in the Rule Application of this

Corporate Ethics for Turbulent Markets

(Focus on: ) action of designing, producing, distributing, and theory: In relation to the design, production,
marketing new and old products is: distribution, and marketing of new or old products
and services:
by our freewill? Are they freely initiated and
posited or constrained? If constrained, is
responsibility exonerated proportionate to the
constraint or pressure? When do we act
voluntarily? When involuntarily? And when under
“duress”? Responsibility is a function of all three.
If so, how assessed?
Ethics of compassion Moral (by ethics of the virtue of compassion) if it What is compassion: kindness, mercy,
(IPO) decidedly treats all people with compassion, and graciousness, forgiveness, condescension, being
under all circumstances of contingency. benign? Real compassion is never judgmental,
never condemnatory, always forgiving, and always
giving. Is this real or surreal, doable and practical,
viable and desirable? If not, how can it be a rule of
moral or ethical action?
 The Domain and Context of Corporate Ethics 63

basic moral rule can be framed thus: that action is moral (teleologically) if it
produces decidedly more benefits than costs and to the greatest number.
When the emphasis is not merely on costs and benefits, but from the per-
ceived utility of such benefits at the expense of costs, the theory is called utilitari-
anism. Since in the final analysis, costs and benefits are consequences or
outcomes that come to be best known after the action, the theory is also called
consequentialism (Anscombe, 1958). Under all forms, teleology, utilitarianism,
or consequentialism, this ethical theory is very practical, pragmatic, and seem-
ingly easy to apply. Hence it commands appeal and popularity in the USA.
In applying this theory, however, several problems arise. For instance:

• What is a benefit? What is a cost? To whom? One man’s meat is another

man’s poison. A cost to one is benefit to the other, and vice versa.
• Costs and benefits are consequences or outcomes. When are they known fully:
before, during, or after the executive action? If after the action, how can tele-
ology, utilitarianism, or consequentialism be diagnostically applied before the
action?
• What is the greatest number: 1.2 billion people in India or China or 320 mil-
lion in the US? Or the majority of a country’s population?

2.15. The Ethical Theory of Deontology

The theory of deontology is the ethical theory that is primarily geared to analyze
the ethics of inputs and processes (i.e., the act), and the duties and obligations
associated with responsibility. It states: that action is (deontologically) moral if it
respects and upholds more rights than it violates corresponding duties, and in rela-
tion to the greatest number.
As in teleology, the ethical theory of deontology poses several problems in its
rule application, such as:

• What is a right? What is a duty? Whose? One man’s right is another man’s
duty to respect that right. A duty to one is right for another.
• Rights and duties are given and defined by whom? God, state, society, or
employers?
• Rights and duties are both antecedents to action. When are they known fully?
Before, during, or after the executive action?
• What is the greatest number: 1.2 billion of India?

2.16. The Ethical Theory of Distributive Justice

Justice is based on individual and moral rights, and the moral right to be treated
as a free and equal person lies behind the theory of distributive justice that bene-
fits and burdens should be distributed equally (Vlastos, 1962). Thus, distributive
justice considers both deontological and teleological aspects of human actions
and consequences. While deontological distributive justice reviews the “act” for
64 Corporate Ethics for Turbulent Markets

its proper distribution of rights and duties among people affected by the act, tel-
eological distributive justice looks at the consequences of costs and burdens, to
see if they are properly distributed among all people concerned. Thus, distribu-
tive justice is construed as considering both the “act” and “consequences” of an
(executive) act.
Justice and fairness are interchangeable terms, even though some (e.g., Hare,
1978, p. 119; Rawls, 1958, p. 67) consider the concept of fairness as more funda-
mental. Justice is fairness. It is giving each one one’s due. For instance, corpo-
rate executives act justly when they give customers and clients what they (or
their monies) deserve.
The theory of distributive justice judges the morality of an action by both the
act (for its capacity for distributing costs and benefits equitably across all people
concerned) and the consequences (for their actual distribution of costs and bene-
fits across all members of society affected by the act). A useful rule is: that execu-
tive action is moral (by distributive justice standards) if it decidedly distributes all
costs and benefits, all rights and duties evenly or equitably across all relevant
stakeholders.
Even this rule presents several problems in its concrete application. Some are:

• What is equality? What is equity?

• How is equality or equity determined by need, want, abilities, efforts, contri-
butions, market value, social status, or entitlement?
• Who distributes: government, state, society, company, status, caste?
• What should be the goal of distribution: income equality or economic equality
or social equality or opportunity equality, and why?

Rawls (1971) proposed two principles of distributive justice: (1) the equality
principle: each person engaged in an institution or affected by it has an equal
right to the most extensive liberty compatible with a like liberty for all and (2)
the difference principle: inequalities as defined by the institutional structure or
fostered by it are arbitrary unless they work out to everyone’s advantage, and
provided that the positions and offices are open to all. The first principle
requires basic equal liberty for all. The second principle admits existing
inequalities and differences, (1) if they work to the advantage of all and (2) if
the social system offers equal opportunity for all to combat or compensate for
these differences.
Rule 1: An executive action is ethical if it offers all stakeholders fair opportu-
nity for benefits (Libertarian Fair Opportunism).
The morality of this act will depend upon the correct choice of a basic struc-
ture of society that defines and ensures its fundamental system of rights and
duties. The basic structure includes the political constitution and the principal
economic and social institutions that together define peoples’ rights, duties, and
liberties and that together affect people’s life prospects and expectations.
 The Domain and Context of Corporate Ethics 65

Rule 2: An executive action is ethical if it seeks to nullify among firm’s stake-

holders the advantages stemming from the accidents of biology, geography,
and history.
This is Rawls’ (1971) Libertarian Egalitarianism. Rawls’ central thesis is that
a social arrangement should be a communal effort to advance the good of all
who are part of the society. Inequalities of birth, sex, ethnicity, color, natural
endowment, and other discriminating circumstances are “undeserved,” which
cause naturally disadvantaged members of the society, and should be progres-
sively eradicated. Those who are naturally endowed with intelligence, skills,
health, wealth or luck, and those who are born in geographically more produc-
tive zones (such as Western Europe and North America), are the more fortunate
in our society, but they do not deserve these advantageous properties any more
than the disadvantaged deserve their misfortunes.
By libertarian ethic, one should distribute all vital primary economic goods
and services (basic food, health, shelter, employment) equally, unless an unequal
distribution would work to everyone’s advantage (Beauchamp & Childress,
1989). People born into a social system at different positions, in different social
classes, and with different natural attributes have varying life prospects and
expectations determined by the system of rights, liberties, and opportunities
available in that social class. Equality of opportunity does not entail equality of
expectations the latter are inevitable in a social structure. Inequalities are just
only if the social structure allowing or generating them works out for the advan-
tage of all engaged in it, especially the least advantaged.
A corporate executive action is ethical if it offers all stakeholders (e.g.,
creditors, employees, suppliers, distributors, retailers, clients, and customers)
fair opportunity for benefits (Libertarian Fair Opportunism). This may not be
necessarily moral. An executive action is ethical if it treats all people equally
(Egalitarianism). This may be moral, even though ideal or impractical. An
executive turnaround action is ethical if it treats all stakeholders with an equal
share of all goods (Strict Egalitarianism). This is moral, even though ideal or
impractical.
Preemptive and protective justices are really subsets of procedural justice,
which, in turn, is a subset of distributive justice. Procedural justice demands that
structures and procedures be set up in society which are just and which produce
just outcomes. Structures and procedures are relative to each group, society,
state, or country. Hence, procedural justice is another instance of comparative
distributive justice.
A distinction is made between “just procedures” that ensure just outcomes
(procedural justice) and “just results” (consequential justice). In some cases, just
procedures are solely sufficient to ensure just results (e.g., state lottery proce-
dures that result in fair outcomes). In some cases, procedures may be just, but
not the results. For instance, despite excellent and objective legal jurisprudence
and procedures, one may occasionally punish the innocent or acquit the guilty.
Sometimes, just results may stem from unjust or imperfect procedures, when,
for example, a society may create a legal system that protects more the innocent
66 Corporate Ethics for Turbulent Markets

than punish the guilty. Distributive justice that looks at both the act (proce-
dures) and the results (consequences) implies both procedural justice and conse-
quential justice. The latter two forms of justice are often called “justice
principles” (Mascarenhas, 1990, p. 219).

2.17. The Ethical Theory of Corrective Justice

Corrective justice is the idea that liability rectifies the injustice inflicted by one
person on another. This idea received its classic formulation in Aristotle’s treat-
ment of justice in Nicomachean Ethics (Book V:1). Aristotle speaks about correc-
tive and distributive justice as two contrasting forms of justice. Corrective justice
that deals with voluntary and involuntary transactions, today’s contracts and
torts, focuses on whether one party has committed and the other has suffered a
transactional injustice. Distributive justice deals with the distribution of what-
ever is divisible (Aristotle mentions honors and goods) among the participants
in a political community. For Aristotle, justice in both these forms relates one
person to another according to a conception of equality or fairness. Injustice
arises in the absence of equality, when one person has too much or too little rela-
tive to another.
The two forms differ, however, in the way they construe equality. Distribu-
tive justice divides a benefit or burden in accordance with some criterion that
compares the relative merits of the participants. Distributive justice, therefore,
embodies a proportional equality, in which all participants in the distribution
receive their shares according to their respective merits under the criterion in
question.
Corrective justice, in contrast, features the maintenance and restoration of
the notional equality with which the parties enter the transaction. This equality
consists in persons’ having what lawfully belongs to them. Injustice occurs
when, relative to this baseline, one party realizes a gain and the other a corre-
sponding loss. The law corrects this injustice when it reestablishes the initial
equality by depriving one party of the gain and restoring it to the other party.7
Obviously these considerations offer serious challenges and mandates to corpo-
rate ethics.
An action is moral (by corrective justice standards) if it decidedly sets up just
procedures to bring about a just distribution of costs and benefits, rights and duties,
among the greatest number.
However, as with previous three ethical theories, corrective justice also poses
new problems:

• What are just procedures: those that minimize harm?

• Those that prevent harm? Those that protect people from harm? Those that
do good to people?
• Who sets up these just procedures, why, when, and where: the nation, the
state, the district, the municipality, one’s company?
 The Domain and Context of Corporate Ethics 67

The entire process of executive inputs, process, and outputs can be further
analyzed and enhanced by the ethical theories of responsibility, which in turn
are supported by the ethical theories of human personhood, ethics of virtue,
ethics of trust, ethics of moral worth, and the ethics of moral reasoning. We will
be covering all these theories in a later sequel to this book. Specific moral rules
under each ethical theory and the associated problems are also stated in
Table 2.1. Theoretical advances cum pro and con arguments on each theory will
also be covered in a later volume on corporate ethics.

2.18. Corporate Value Ethics

Value ethics is the theory and practice of good, good action, and good life.
What we need, in order to live well, is a proper appreciation of the way in
which such goods as friendship, honor, promise, commitment, virtue, wealth,
and pleasure fit together as a whole. In order to apply that general under-
standing to particular cases, we must acquire, through proper upbringing and
habits, the ability to see, on each occasion, which course of action is best sup-
ported by reasons. Therefore, practical wisdom, as Aristotle conceived it, can-
not be acquired solely by learning general rules.8 We must also acquire,
through practice, those deliberative, emotional, and social skills that enable us
to put our general understanding of well-being into practice in ways that are
suitable to each occasion. Value ethics in the best sense, therefore, is practical
wisdom experiential and rational skills of intellectual and moral virtues that
help us to discern right from wrong, truth from falsehood, justice from injus-
tice, and give us the courageous skills of pursuing right and avoiding wrong,
seeking truth while rejecting falsehood, and striving for justice while combat-
ing against unjust structures and their harmful consequences (Mascarenhas,
1995).
Operationally, if ethics is a principled action program of deriving and
experiencing moral values, then organizational value ethics is a hierarchically or
democratically or consensually derived and guided action program in an institu-
tion that consistently seeks new values, new directions, new meanings and
imperatives, new visions and missions, new goals and objectives, and new ends
and ideals. Organizational value ethics seeks to serve humanity better through
principled institutions such as the family, the school, the college and the univer-
sity, the company and the corporation, the venture and the start-up, the govern-
ment and the nongovernmental organizations (NGOs), the media and the
marketplace, the church, the temple, the mosque, and the synagogue. We study
ethics in order to improve our lives, said Aristotle, and therefore, its principal
concern is the nature of human well-being. In this sense, wherever there are peo-
ple, there is behavior, and wherever there is behavior, it has moral and ethical
content, challenges, and implications
68 Corporate Ethics for Turbulent Markets

2.19. The Gray Area in Corporate Ethics

Thus defined, ethics bears two important implications: (1) as cultures change
over time, ethics change; hence, ethics is a dynamic and not a static concept; (2)
as values change over time, ethics change across cultures; values define what we
consider acceptable ways of working; hence, by its very definition, ethics has a
contextual or relativistic and not absolute connotation. Most societies, however,
agree there is a base level of “black and white” absolute values and ethics consis-
tent across cultures (e.g., do not kill; do not cheat; do not lie; be honest; honor
contracts, and keep promises). Treat others the way you want others to treat
you, the Golden Rule, is an absolute value too. These are absolute universal
values that define and characterize human beings and society.
Nevertheless, there is a large spectrum of gray area in ethics where values
and cultures are involved (e.g., be nonhierarchical; be inclusive; be good; be car-
ing; be compassionate; be fair; be just; do not fraud; be generous; be contribut-
ing; be cooperative). It is the gray area that tests corporations, its leaders, and
chief executives. Values such as social compliance, legal compliance, ethical con-
formance, moral obedience, industrial codes of conduct, consumer privacy, per-
sonal security, patent rights and duties, intellectual property rights and duties,
and employee rights and duties may not be similar across countries and
continents.
As also, certain questionable strategies such as aggressive competitive prac-
tices, international dumping of goods, wash trading, insider trading, and other
financial shenanigans, acceptable in certain countries and cultures, may not be
so in others, thus creating gray areas of ethical values and moral interests.
Most of the times business and corporate executives will have to operate in
this gray area that is prone to personal conflicts and choices, each of which
tests individual ethical sensitivities, decision abilities, and personality charac-
ters (see Narasimhan, 2011).
Epistemologically speaking, the “good” and the “bad”, the “true” and the
“false” are not necessarily incompatible (Bahm, 1975). A solution can be both
true and good at the same time; it can even be false but good at the same
time. A solution can be true and good from one perspective and false and bad
from another perspective. For instance, stem cell research is good when it is
based on adult cells but bad when it is solely based on embryonic cells, espe-
cially when human embryos have to be killed for saving victims of presently
incurable diseases.
A course in or book on corporate ethics should empower business executives,
management students, and other business practitioners readily to identify and
effectively to address ethical and moral problems and challenges that each func-
tional business field or discipline involves. We also need a moral awakening, a
quick recovery of ethical values of corporate integrity and honesty, and a great
sense of corporate citizenship and stewardship (Mascarenhas, 1995).
This book targets such audiences and challenges them with practical wisdom
skills for ethical reasoning, moral explanation, moral judgment and deliberation,
 The Domain and Context of Corporate Ethics 69

ethical assessment of business decisions and actions, and undertaking moral

responsibility for harmful consequences of corporate decisions.

2.20. Methodology of Corporate Ethics

In general, methodology is the science of method the science of finding the
best method for identifying, defining, characterizing, formulating, and resolving
problems in a given field or discipline. Any methodology must match its subject
matter. Thus, the methodology of studying value ethics must match its subject
matter a principled action program of deriving and experiencing moral values.
Value ethics methodology seeks constantly to identify, define, characterize, and
formulate values that can render any activity into a principled action program
for experiencing and witnessing moral values.
Similarly, the methodology of studying business ethics must match its
subject matter buyer seller exchange management processes. Its value ethics
methodology constantly strives to identify, define, characterize, and formulate
buyer seller exchange management process values that can render any market
activity into a principled action program for experiencing and witnessing moral
values in the marketplace.
The methodology of studying corporate ethics should match its subject
matter executive life of corporation-wide business choices and decisions. Its
value ethics methodology should constantly seek to identify, define, characterize,
and formulate corporate-wide buyer seller exchange management process
values that can render any corporate organizational decision and activity into a
principled action program for experiencing and witnessing moral values in the
marketplace.
At the corporate level, CEOs and most of their decisions impact the entire
corporation, often the industry, and the country that the industry dominates.
Thus, the major corporate decisions of Bill Gates, Steve Jobs, Michael Dell,
Narayana Murthy, Natarajan Chandrasekharan, and Azim Premji have affected
the IT world, especially in India. Major corporate decisions of Michael Dell,
Lenovo, and Compaq have also affected the distribution and diffusion of per-
sonal computers in the world. Major decisions and products of Apple, Sony,
and Microsoft have affected the entertainment or electronic game industries of
the world. Corporate ethics deals with such deliberations, choices, decisions, and
strategies that impact corporation-wide, industry-wide, countrywide, continent-
wide, or globe-wide.

2.21. Legal, Ethical, Moral, and Spiritual Executive Conduct

Throughout our discussions thus far we have used certain terms frequently such
as legal, ethical, moral, and spiritual. Given these discussions we should now be
able to define them more precisely and comprehensively. Clear-cut distinctions,
however, between what is legal, ethical, moral, and spiritual are not yet
70 Corporate Ethics for Turbulent Markets

emerging, much less converging. Based on the introductory discussion of major

ethical and moral theories, we may conclude the following:

• Laws promote common good, but are basically reactionary in origin, and in
general preempt injury or evil (based on the principle of nonmalfeasance).
Legality is basically law compliance; it does the “legal” thing; it is related to
liability.
• Ethicality is predicated on conformance to external (social) norms and cus-
toms; it is primarily defined by principles based on teleological (consequential-
ist) ethical theories. Ethicality safeguards, promotes, and defines social good
in terms of outputs or consequences. Decisions and actions are ethical if and
only if their social benefits clearly outweigh social costs. Ethics is normative;
it is norm-conforming; it seeks to do the “right” thing; it seeks to do the just
thing; it is related to justice.
• Morality is obedience to inner categorical imperatives. It is primarily predi-
cated on one’s inner beliefs and strengths, good reasons, intentions and moti-
vations, one’s character, personality, and (religious) conscience. Decisions and
actions are moral if and only if they stem from right intentions and motiva-
tions, regardless of consequences and circumstances. Right intentions and
motivations are defined principally by their consonance with deontological
theories of human rights and dignity and distributive justice principles of basic
human equality. Morality safeguards, promotes, and defines personal and
social rights and duties. Morality seeks to do “the right thing rightly.”
Morality is related to goodness.
• Spirituality goes beyond the legal, ethical, and moral aspects of life to include
and ground upon virtues such as honesty, integrity, wisdom, commitment,
and moral audacity, and especially, the cardinal virtues of prudence, temper-
ance, justice, and fortitude. Spirituality has several dimensions. It is all
embracing. It is best not defined and thus limited or compartmentalized but
holistically experienced. It is best not conceived, hypothesized, constructed,
theorized, and speculated. It needs to be lived, witnessed, and then written
about. It is surrender to God who alone can rescue us from our greed, selfish-
ness, and avarice and jealousy. It is experiencing God and thereby fighting
our addictions of mind, body, and matter. It believes in God, accepting God’s
reign in our life, accepting his presence, providence, and intervention into
humanity and human history. It is a journey to God with God and human-
kind, a voyage into destiny, into eternity. It is community, community-
building, mutual trust, mutual respect, mutual hope, mutual love. It is free-
dom; it is liberty; it is life; it is pursuit of happiness. It is bliss. It is an inalien-
able God-given right and duty. It is a universal call to detachment or
renunciation. It is finding God in all things good and bad, especially in turbu-
lent markets. It is experiencing God in all things good and bad; it is seeking
truth amidst darkness, risk, uncertainty, ambiguity, and chaos of today’s tur-
bulent markets. It is reverential fear of God not enslaving timidity. It is obedi-
ence to God, not slavery. It is humility, not arrogance.
 The Domain and Context of Corporate Ethics 71

• Virtue ethics deals with what is good life and what is happiness for the com-
munity. Without a theory of good life and the good society, there is no check
on legal maneuvering, political expediency, market opportunism, and business
turnaround malpractice. In a secular society, if moral rules and injunctions
are to derive their binding force, they must do so from a theory of moral law
or from the assent of virtuous individuals who choose the rules and the society
they live in as part of their self-definition (Anscombe, 1981, p. 30). According
to MacIntyre (1981), the authority of moral law is best when it is theological
(i.e., based on divine law and revelation). But in a secular society such as
ours, we must rely on the virtues of people it is only from the debate
and shared life of virtuous people that we may obtain a consensus on what is
common good and what is good life. A business turnaround or transforma-
tion situation constitutes a moral community in which the debate about com-
mon good for society should take place within the context of executive
virtues.
Hence, the following definitions and corollaries may be deduced:
• An act is legal if it fulfills legitimately promulgated laws, regulations, ordi-
nances, and written contracts.
• An act is ethical if, additionally, it conforms to publicly held norms and cus-
toms, corporate codes of conduct and unwritten social pacts, respects social
rights and fulfills social duties. In general, ethical acts are consonant with ethi-
cal universals and teleological principles.
• An act is moral if, additionally, it is grounded on good reasons, intentions
and motivations, virtuous character, clear conscience, and one’s categorical
imperatives. In general, morality is predicated on deontological and distribu-
tive justice principles.
• An act is spiritual if, additionally, being legal, ethical, and moral it is also
grounded on good reasons based on certain cardinal virtues like honesty and
integrity, wisdom and prudence, moral courage and fortitude, and on certain
transcendental principles of faith, hope, love, detachment, renunciation, com-
passion, and altruism.
• What is legal may not be ethical or moral or spiritual (e.g., some states have
legalized abortion and legalized civil unions between couples of the same sex).
• What is ethical is not necessarily moral or spiritual (e.g., some employment
rules or corporate codes of conduct may discriminate against the elderly,
women, the poor, or ignore the marginalized).

Table 2.2 summarizes the above discussion and elaborates on the domain,
definition, the predominant ethical theory, and the dilemma, mandate, and aspi-
ration of legality, ethicality, morality, and spirituality. All these four concepts
can also be distinguished in relation to their source of empowerment, predomi-
nant virtue challenge, grounding responsibility, assessment criteria, and their
formula of executive success. Corporate executives need to excel in all four
domains of law, ethics, morals, and spirituality.
Table 2.2. Distinguishing Legality, Ethicality, Morality, and Spirituality (LEMS Analysis).

72
Dimension of Legality: Doing the Ethicality: Doing the Morality: Doing the Right Spirituality: Doing the Right

Corporate Ethics for Turbulent Markets

LEMS Legal Thing Right Thing Thing Rightly Thing Rightly for the Right
Distinction Reasons
Domain Law, legislature, Ethics; codes of conduct; Morals, moral principles, Virtues; integrity, honesty,
jurisprudence, mores, customs; pacts and moral rules, moral trust; wisdom, prudence; moral
enforcement all agreements imperatives universal and courage timeless and eternal
local and national organizational and nonreversible imperatives values, attitudes, and beliefs
values executive values
Definition Law compliance Compliance with Internalization of moral Experiencing and witnessing
professional codes of rules, standards, and high levels of virtues such as
conduct, mores, and principles integrity, honesty, wisdom,
conventions prudence, and moral courage
Predominant Teleology of costs and Distributive justice Deontology of rights and Virtue ethics, especially based
ethics theory benefits duties on trust and wisdom
Dilemma Legal dilemma: Ethical dilemma: Moral dilemma: conflicting Spiritual dilemma: conflicting
conflicting laws conflicting ethical codes moral principles and duties demands of virtues, drives, and
and pacts habits
Mandate Do not just ask what Ask what is the right Ask further how to do the Go further, and do the right
is the legal thing to do thing to do? Do what is right thing rightly? Do what thing rightly for the right
right. Do what is ethical. is moral. reasons. Do what is right
rightly with virtue, trust, and
good intentions. This is being
spiritual.
Aspiration Legal compliance Ethical excellence Moral goodness and Spiritual quest and trust
imagination
Source of Laws, ordinances, Mores, conventions, Moral rules, precepts; Cardinal virtues of prudence,
empowerment acts, bills, legal rights, codes of conduct, ethical moral convictions; moral wisdom, courage, and fortitude;
sociality rights, immanence, beliefs; religious conscience; personality/character; spiritual
individuality moral rights; moral rights; spiritual transcendence
transcendence
Predominant Prudence, Honesty, transparency Moral integrity, wisdom, Integral spirituality; compassion
virtue frugality temperance, Accountability moral courage and trust; unconditional love
challenge fortitude courage

The Domain and Context of Corporate Ethics

Responsibility Legal responsibility, Social responsibility, Moral responsibility, Spiritual responsibility; do good
do not harm, law of prevent harm, preemptive protect from harm, unto others; beneficent justice;
malfeasance, justice, procedural justice protective justice virtuous justice; building trust
compensatory justice
Assessment Are laws: Fair or Are mores and codes: Are intentions: Right or Underlying character: Virtue or
criteria unfair? Just or unjust? True or false? Correct or wrong? Good or evil? vice? Wise or unwise?
incorrect? Courageous or cowardly?
Success Reactive legal Proactive/competent Interactive acceptance of Prophetic and charismatic
equation or compliance and compliances of pacts, and adherence to living and witness of great
formula greening of America codes, and agreements for universally binding moral virtues and moral values that
global sustainability principles, especially, the flow from an abiding moral and
Golden Rule spiritual character

73
74 Corporate Ethics for Turbulent Markets

Any action, system, law, code, policy, or procedure can be tested for its legal-
ity, ethicality, morality, and spirituality (LEMS) meaning and impact. We will
be developing and applying this LEMS concept and technique throughout this
book. In a market-turbulent world, mere legality, even ethicality, may not be
enough. We must pass the litmus test of morality and spirituality for long-term
survival, growth, and sustainability.

2.22. The Dynamics of Corporate Ethics

Thus, business ethics and corporate ethics are interdisciplinary fields and prac-
tices that entail the domain of at least two distinct disciplines: (1) business
exchanges and decisions and (2) the science of ethics as science of values and
principles. It is a dynamic interdisciplinary field, as both disciplines are refining,
changing, and expanding. The field of business is expanding into new areas such
as revenue management, motivation management, sustainability management,
social analysis, e-business, e-advertising, Internet marketing, cyber surveys and
marketing research, social electronic networking, globalization, social entre-
preneurship, greening and global ecology, and steadily contracting from tradi-
tional areas such as classic micro- and macroeconomics, international trade
theory and abstract quantitative methods, statistical methodologies, and high-
powered management science.
Ethics is currently also shrinking from the classical philosophical ethics and
absolute values of ancient Greek and Medieval philosophers and dogmatic theo-
logians. While expanding into modern and postmodern ethics of consensual
values and moral principles, corporate ethics should enhance critical thinking
and moral reasoning, ethics of dynamic business exchanges, rights and duties,
moral worth and obligation, executive spiritual development, corporate and
social responsibility, distributive and corrective justice, virtue ethics, relational
ethics, ethics of trust, cyber ethics, ethics of cyber safety and privacy, ethics of
terrorism and ethics of war on terrorism, ethics of global poverty, disease and
inequality, and ethics of global ecology and sustainability.
Moreover, the veteran concept of business management, as represented by
the over 110-year old MBA curriculum and structures, is radically changing
from the traditional silos of accounting, finance, marketing, operations research
and management, decisions sciences, human resources management, business
law, and economics into modern integrated business management that views all
fields of business as networked and interdependent, interacting and synergizing
business solutions to simple, complex, unstructured, and “wicked” business pro-
blems of current markets. Specifically, with a significant majority of domestic,
international and global businesses, industries, markets, and trade regions floun-
dering or disappearing from the business radar, there has emerged a new
discipline business turnaround and transformation management that
researches and applies new integrated business management solutions to pro-
blems of underperformance, business downturns and recessions, corporate cash
 The Domain and Context of Corporate Ethics 75

flow crisis, financial distress, financial turbulence, worker apathy, insolvency,

and imminent bankruptcy (Mascarenhas, 2011).
Every part and discipline of business (e.g., accounting, finance, marketing,
OB, HR, production, and business law) implies ethics. Every stakeholder of
business (e.g., customers, producers, employees and employers, suppliers and
creditors, distributors and promoters, domestic and international governments,
local and global communities) involves moral rights and duties, moral and ethi-
cal responsibilities and obligations that, in turn, invoke ethical values and moral
principles. A comprehensive and integrated course in corporate or business
ethics should include every part of business, as also every stakeholder of busi-
ness. This book relates to corporate ethics that deals with major moral corporate
executive leaders, their specific skills, personality, and critical thinking inputs,
their moral reasoning processes, their decisions and choices, their mental models
and business models, their strategies and actions, and above all, executive moral
obligations regarding the consequences of their decisions.

2.23. Concluding Remarks

In general, the ethical moral reasoning advocated in this book involves a five-
dimensional ethical appraisal: (1) a teleological analysis of positive/negative
effects of executive decisions, (2) a deontological analysis of the moral principles,
rights and duties underlying these decisions, (3) a distributive social justice based
analysis of the spread of costs and benefits and rights and duties of corporate
executive decisions, (4) a distributive corrective justice based on setting up pro-
cesses and procedures whereby current and past wrong distributions of costs and
benefits and rights and duties of all stakeholders may be rectified, and (5) a vir-
tue ethics analysis of the physical, functional, and moral well-being effects of
corporate decisions and strategies. Other things being equal, teleology relates
primarily to executive actions; deontological theory relates primarily to execu-
tive inputs and processes; distributive ethics and corrective justice, ethics of
human dignity, human virtue, human trust, ethics of moral worth and moral
responsibility relate to all three stages of executive action: inputs, processes, and
outputs. Figure 2.1 captures this anatomy of corporate executive action and the
application of ethical principles.
Ethics has meant different things to different generations. While to the Greek
philosophers Socrates, Plato, and Aristotle, ethics was a science of human values
derived from certain philosophical concepts and theories, and as lived by exem-
plary peoples and societies, over the centuries and millennia, ethics to modern
generations has come to mean something more practical, livable, applicable, and
demonstrable in human conduct. Ethics is currently reckoned as a responsible
action program for the betterment of humankind represented by individuals,
groups, organizations, and societies. Ethics empowers us to chart and live a new
value-laden direction and meaning in life.
Business ethics, however, should go beyond certain pragmatic values that
most business executives, business management students, and business
76 Corporate Ethics for Turbulent Markets

Distributive Justice Principles:

Ethics of Distributive and Corrective Justice

INPUTS: PROCESS: OUTPUTS:

Personal and Business Management Business or Market
Corporate Inputs and Corporate Consequences
Governance Processes:
Executive Reasoning,
Decisions & Strategies

Teleological
Principles:
Deontological Principles: Ethics of Costs and
Ethics of Rights and Duties Benefits

Ethics of Responsibility; Ethics of Compassion;

Ethics of Human Personhood; Ethics of Virtue; Ethics of Trust;
Ethics of Moral Worth; Ethics of Moral Reasoning

Figure 2.1. The Anatomy of Corporate Executive Act and the Application of
Ethical Principles.

institutions work for. Most top B-school students consider a course in business
or managerial ethics as not “value-adding” as it may not support their desired
set of pragmatic values. Most of these values (e.g., revenue maximizing skills,
cost-containment skills, profit maximization skills, graduating with honors,
securing a job in a multinational company, and striving up the executive success
ladder) are instrumental and temporary, and are means and not ends. Real
human and humanizing values go far beyond these mundane goals and objec-
tives. B-school students who focused only on pragmatic values are ill-prepared
to meet the tough challenges of today’s uncertain, ambiguous, and chaotic mar-
kets and economies, and hence, often fraudulent and corrupt world.
While conceptually ethics is a science of principled moral values and princi-
pled moral behavior, operationally, ethics is life itself, is living, experiencing,
and sharing moral values. The value and behavior should stem from certain
well-established moral principles, moral standards and rules, or from the moral
judgments of people whom we call wise and honest. That is, values are real
values when certain universal moral principles ground and support them. Values
 The Domain and Context of Corporate Ethics 77

derive value from these moral principles, and not vice versa. The power of moral
principles is that they are universal, timeless truths. When we apply them and
live by them, we generate values, we create values and best practices that
become legacy and posterity. Such principles deal with meaning and truth, hon-
esty and integrity, wisdom and justice.

NOTES
1. Luk Bouckaert (1941 ) is Professor Emeritus of Ethics at the Catholic University of
Leuven, Belgium. He is a philosopher and an economist by training. His research and
publications fall within the fields of economics and business ethics and spirituality.
2. In Indian traditions, social and political conditions must exist for the pursuit of the
four great ends of life: the purusharthas ethical goodness (dharma); wealth and power
(artha); pleasure (kama); and spiritual transcendence (moksha) (Gautam, 2016, p. 14). One
of the oldest human civilizations is that of Mohenjodaro and Harappa of the Indus Valley
possibly dating from 5000 BC. Puranashastras are documents that described the customs,
mores, meanings and beliefs, codes and practices of these people. According to Gita, kama
esha kroda esha rajo guna samudbhava (lust and anger all spring from rajo guna) or the
tamasic guna (which is a source of laziness and laxity). Spirituality is the subjugation of the
tamasic guna and the activation of the rajasic guna (energizing power) via sattwa guna (or
vigilance power) on the part of a king for controlling shadaripus (Chakraborty, 2013).
3. Harshavardhana, the next greatest emperor of the Hindu Empire and Culture in sev-
enth century AD, presumably followed the same Arthashartra of Kautilya, was a king of
nonattachment and humility. His father died when he was young and Harsha was very
reluctant to ascend the throne. But considerable persuasion made him accept kingship. The
best proof of his rajarshi leadership lay in the two strongest pillars of Bharat’s sanatan cul-
ture and society: tyaga and seva (renunciation and service). Every five years of his 35-year
reign, Harsha gave away in great charity (mahayajna) almost all his wealth in terms of gold,
pearls, garments, food, clothes, and jewelry first 20 days to selected Buddhists and
Brahmins, and then for the next 40 days to the poor, orphans, and the destitute from far
and near. This is spirituality at its best all the accumulated wealth in the king’s coffers
was so exhausted that occasionally Harsha had to borrow some clothing from his sister
Rajyasri for the closing event (Majumdar, 1954). Possibly Swami Vivekananda (see
Vivekananda, 1962) and Mahatma Gandhi (see Gandhi, 1998) might have done the same.
4. Lincoln Steffens (1866 1936) was the most famous of the American Muckraker
journalists of the period 1903 1910. His exposés of corruption in government and busi-
ness helped build support for reform. Lincoln Steffens was born on April 6, 1866, in
Sacramento, California. A New York reporter, he launched a series of articles in
McClure’s, called Tweed Days in St. Louis, which was later published together in a book
titled The Shame of the Cities.
5. Sen (1990, p. 2) comments on the surprising feature of modern economics to make it
value-free or nonethical. Historically, he observes, the evolution of modern economics has
largely been an offshoot of ethics. The subject of economics was for long considered as a
branch of ethics. At the very beginning of The Nicomachean Ethics, Aristotle relates the
subject of economics to human ends or ethics. Aristotle in his Politics connected both pol-
itics and economics to ethics. Smith (1776), the father of modern economics, was a
Professor of Moral Philosophy at the University of Glasgow. Until recently, economics
was taught at Cambridge as part of moral science. Kautilya, an advisor and minister of
the Indian emperor Chandragupta, the founder of the Mauryan Dynasty (and grandfather
78 Corporate Ethics for Turbulent Markets

of Ashoka), wrote around 400 BC his Arthashastra (“Instructions on Material Prosperity”)

that includes four distinct fields: (1) metaphysics, (2) ethics (as the science of right and
wrong), (3) the science of government, and (4) the science of wealth. This book also dealt
with related engineering problems. In fact, modern economics has a definite logistic and
engineering approach as evidenced in the writings of William Petty, David Ricardo,
Augustine Cournot, and Leon Walras. However, modern “positive” economics has dis-
tanced itself from ethics, thereby impoverishing itself seriously (Sen, 1990, pp. 7 14).
6. Paul-Michel Foucault (1926 1984), a French philosopher and historian, was one of
the most influential and controversial scholars of the post-World War II period (see
Foucault, 1984). Foucault continued to travel widely, and as his reputation grew he spent
extended periods in Brazil, Japan, Italy, Canada, and the USA. He became particularly
attached to Berkeley, California, and the San Francisco Bay area and was a visiting lecturer
at the University of California at Berkeley for several years.
7. Aristotle likens the parties’ initial positions to two equal lines. The injustice upsets
that equality by adding to one line a segment detached from the other. The correction
removes that segment from the lengthened line and returns it to the shortened one. The
result is a restoration of the original equality of the two lines. More recently, it has
become central to contemporary theories of private law.
8. Aristotle follows Socrates and Plato in taking the virtues to be central to a well-lived
life. Like Plato, he regards the ethical virtues (justice, courage, temperance, and so on) as
complex rational, emotional, and social skills. But he rejects Plato’s idea that training in
the sciences and metaphysics is a necessary prerequisite for a full understanding of the
good or human well-being. The good of human beings cannot be answered with the exac-
titude of a mathematical problem since mathematics starts with general principles and
argues to conclusions. Aristotle conceptualized ethical theory as a field distinct from the
theoretical sciences.