Unit 1

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A 2.3 - Business Ethics and Corporate Governance
Unit no. 1 - Introduction to Ethics
1.1. Definition and Nature of Ethics

1.2. Distinction between Morality and Ethics
1.3. Kolhberg and Gilligan Theories
1.4. Four Critical Principles of Ethics
1.5. Concept of Belief, Values, Types & Sources of Values, Attitude, Virtue
Ethics
1.1. Definition and Nature of Ethics
Introduction:
Today, the corporate world as a whole is in the process of acquiring a moral conscience. The
new and emerging concepts in management like corporate governance & business ethics are
some of the expressions through which this emerging ethical instinct in the corporate world
is trying to express and embody itself in the corporate life to have the most important
feature of modern business i.e. Sustainability of business.
So, let us begin our study of Nature and Scope of Ethics by understanding what we mean by
moral law. And two things need to be clarified before we raise the question with which we
are concerned here.
1. First, the moral law is called ‘law’ only metaphorically ( ) or analogically ( ,
). The primary meaning of law is ‘a rule of action, promulgated ( , ) by

him/her, who is in charge of a community in view of the common good’. This is called
‘positive law’. If the legislator is considered to be God, it is divine positive law; if the
legislator is human person, and it is human positive law. Human positive law can further
be subdivided according to what the common good aimed at (e.g. civil law, criminal law,
commercial law, etc.). In a case, a positive law lays down rules to be observed by human
persons, it is prescription.
Notes for the purpose of teaching to BBA-Sem-II. Compiled by BJ Lathi, SABC, Jalgaon.
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2. Then there is another sense of ‘law’ which is quite different. In this sense, it is a formula
expressing a constant of behaviour of things & of persons. So we have physical law
(including laws studied in physics, chem., biology, etc.), psychological law, sociological
law, etc. (Since the constant of behaviour among human persons is less fixed &
foreseeable than that among things it is more of a statistical constant). As distinct from
positive law, this kind of law is called ‘natural law’. It is descriptive, it can also be called
prescriptive to the extent, if it is considered as willed by God & includes the divine
positive law, and descriptive to the extent that this divine will is the ultimate cause of the
constant of behaviour in things & human persons.
However, moral law corresponds exactly neither to the positive law nor to the natural law.
On the contrary, the sense of the ‘absolute should’ is an immediate datum ( , ) of
the moral consciousness ( , , ) itself. Secondly, in the language of Moral
philosophers, moral law includes not only general and abstract rules of action (e.g. ‘do good
and avoid evil’), or, in our language, the sense of the absolute should, but also particular and
concrete precepts ( , , ) [e.g. help the poor, obey legitimate authority, be truthful,
do not kill the innocent, adultery is wrong, etc.]. These particular and concrete precepts, we
are here calling the specifications of the moral law.
The word ‘ethics’ is derived from the Greek word ‘ethos’ (which means ‘way of living or
character’) and from the Latin word ‘mores’ (customs/habit). Ethics is a branch of philosophy
that is concerned with human conduct. It consists of a socially accepted code of conduct of
human beings living in a society, which are applicable in the immediate surroundings. It is
the general theory of conduct and considers the actions of human beings with reference to
their (actions) rightness and wrongness, their (actions) tendency to good or evil. Ethics is not
a natural science but a creation of the human mind; for this reason, it is not absolute and is
open to the influence of time, place & situation. The essence of a human being is
consciousness & the world we create around us is the expression of our consciousness. The
creative & the beautiful as well as the corrupt & degenerate are the outcome of our
consciousness.
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Definition & Nature of Ethics:

Ethics may be defined, as the ‘study of what is right and good in conduct or what is wrong
and vicious in conduct’. Similarly, the term ‘Moral Philosophy’, which means the same thing
as Ethics is derived from the Latin word ‘mores’ meaning ‘habits &/or customs’. The term
‘Right & Good’ needs a little explanation.
 The Term ‘Right’ is derived from the Latin word ‘rectus’, meaning straight or according to
rule. So the right conduct is primarily according to rule. Rules, however, have reference to
some result to be achieved by them and this fact is indicated by the second term ‘Good’.
 The term ‘Good’ is connected with the German ‘gut’, and it means valuable for some end.
Thus, particular kinds of medicine are said to be good for this or that complaint. Similarly,
when we speak of conduct as good, we may mean that it is serviceable for the end or
ideal that we have in view.
Nature of Ethics:
Ethics refers to well-founded standards of right and wrong that prescribe what humans
ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific
virtues. Thus, ethics relates to the standards of conduct and moral judgements that
differentiate right from wrong.
Ethics is principles when it comes to politics and social laws. These ethical standards set
parameters for human behavior and help in preventing misconduct and misdeeds such as
theft, rape, violence, fraud, and slander. On the other hand, these ethics help in spreading
feelings of compassion, loyalty and honesty.
Ethics is vital for a society because, a society has ways of praising such behavior while
at the same time reprimanding conducts that are against the ethical code of behavior.
Ethics examines the rational justification for our moral judgments; it studies what is morally
right or wrong, just or unjust. Together, they combine to define how individuals choose to
interact with one another. In philosophy, ethics defines what is good for the individual and
for society and establishes the nature of duties that people owe to themselves and to one
another. It aims at individual good as well as social good, the good of mankind as a whole.
 Ethics is an attempt to guide human conduct and it is also an attempt to help man in
leading good life by applying moral principles.
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 Ethics refers to well based standards of right and wrong that prescribe what humans
ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific
virtues.
 Ethics is related to issues of propriety, rightness and wrongness. What is right is ethical
and what is wrong is unethical. The words, ‘proper’,’ fare’ and ‘just’ are also used in place
of ‘right’ & ‘ethical’. If it is ethical, it is right, proper, fair & just.
 Ethics is a matter of practical concern. It tries to determine the good and right thing to do;
choices regarding right & wrong, good & evil; questions of obligation & value. Ethics is to
consider the practice of doing right actions or what we may call the art of living the good
life.
When concentrating on morality, it is more or less a personalized form of these ethics as
different people set different sets of morals for themselves. Morality refers to a set of
beliefs that people believe in and practice accordingly. Morals help a person in choosing a
course of action whenever he is in a dilemma. They become a guiding force in life and help in
leading a decent, disciplined life.
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1.2. Distinction between Morality and Ethics:

Ethics ( ) and morals ( , ) relate to ‘right’ and ‘wrong’ conduct. While they
are sometimes used interchangeably, they are different –
 ‘Ethics’ refer to rules provided by an external source, e.g., codes of conduct ( ) in
workplaces or principles in religions. It is also be defined as a code of behavior in
reference to a group, whether it is a family, community or a nation. W
 Whereas ‘Morals’ refer to an individual’s own principles ( , ) regarding right and
wrong and are more personal in nature.
Origins:
Much of the confusion between these two words can be traced back to their origins.
 The word ‘ethic’ comes from Old French (etique), Late Latin (ethica), and Greek (ethos)
and referred to customs or moral philosophies.
 ‘Morals’ comes from Late Latin's moralis, which referred to appropriate behavior and
manners in society. So, the two have very similar, if not synonymous, meanings originally.
Source of Principles:
 Ethics are external standards that are provided by institutions, groups, or culture to which
an individual belongs e.g., lawyers, policemen, and doctors all have to follow an ethical
code laid down by their profession, regardless of their own feelings or preferences. Ethics
can also be considered a social system or a framework for acceptable behavior.
 Morals are also influenced by culture or society, but they are personal principles created
and upheld by individuals themselves.
Consistency and Flexibility:

 Ethics are very consistent within a certain context, but can vary greatly between
contexts. For example, the ethics of the medical profession in the 21st century are
generally consistent and do not change from hospital to hospital, but they are different
from the ethics of the 21st century legal profession.
 An individual’s moral code is usually unchanging and consistent across all contexts, but it
is also possible for certain events to radically change an individual's personal beliefs and
values.
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Conflicts between Ethics and Morals: One professional example of ethics conflicting with
morals is the work of a defense attorney.
 A lawyer’s morals may tell her that murder is reprehensible ( , ) and
that murderers should be punished, but her ethics as a professional lawyer, require her to
defend her client to the best of her abilities, even if she knows that the client is guilty.
 Another example can be found in the medical field. In most parts of the world, a doctor
may not euthanize a patient, even at the patient's request, as per ethical standards for
health professionals. However, the same doctor may personally believe in a patient's right
to die, as per the doctor's own morality.
Definition of Morals:
Morals are the social, cultural and religious beliefs or values of an individual or group which
tells us what is right or wrong. They are the rules and standards made by the society or
culture which is to be followed by us while deciding what is right. Some moral principles are:
 Do not cheat, Be loyal, Be patient, Always tell the truth, Be generous
Morals refer to the beliefs what is not objectively right, but what is considered right for any
situation, so it can be said that what is morally correct may not be objectively correct.
Definition of Ethics:
Ethics is a branch of philosophy that deals with the principles of conduct of an individual or
group. It works as a guiding principle as to decide what is good or bad. They are the
standards which govern the life of a person. Ethics is also known as moral philosophy.
Some ethical principles are: Truthfulness, Honesty, Loyalty, Respect, Fairness & Integrity.
Comparison chart
ETHICS MORALS
What is it?  Ethics are the guiding principles or  Morals are the beliefs of the
Rules of conduct recognized w.r.t. individual or group as to what is right
a particular class of human actions or wrong i.e. Principles/habits w.r.t.
or a group/culture, which help the right or wrong conduct.
individual or group to decide what  While morals also prescribe dos &
is good or bad. don'ts, morality is ultimately a
 Response to a specific situation personal compass of right & wrong.
 General principles set by group
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ETHICS MORALS
Expression Ethics are abstract Morals are expressed in the form of

general rules and statements
Flexibility Ethics are dependent on others for Usually consistent, although can
definition. They tend to be change if an individual’s beliefs
consistent within a certain context, change.
but can vary between contexts.
The ‘Gray’ A person strictly following Ethical A Moral Person although perhaps
Principles may not have any Morals bound by a higher covenant ( ),
at all. Likewise, one could violate may choose to follow a code of ethics
Ethical Principles within a given as it would apply to a system. ‘Make it
system of rules in order to maintain fit’.
Moral integrity.
Origin Greek word ‘ethos’ meaning Latin word ‘mos’ meaning ‘custom’
‘character’
From where Social system - External Individual - Internal

they come
from?
Acceptability Ethics are governed by professional Morality transcends cultural norms.

& legal guidelines within a
particular time & place.
Consistency Ethics are generally uniform Morals may differ from society to
society and culture to culture
Governed By Individual or Legal & Professional Social and cultural norms

norms
Why we do Because society says it is the right Because we believe in something

it? thing to do. being right or wrong.
Deals with Right and wrong conduct Principles of right and wrong
Applicability in Yes No
Business
Freedom to Yes No
think & choose
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Key differences between Morals and Ethics:

1. Morals deal with what is ‘right or wrong’. Ethics deals with what is ‘good or evil’.
2. Morals are general guidelines framed by the society e.g. We should speak truth.
Conversely, ethics are a response to a particular situation, e.g. Is it ethical to state the
truth in a particular situation?
3. The term moral is derived from a Greek word ‘mos’ which refers to custom & the customs
are determined by group of individuals or some authority. On the other hand, ethics is
originated from Greek word ‘ethikos’ refers to character & character is an attribute.
4. Morals are dictated by society, culture or religion while Ethics are chosen by the person
himself which governs his life.
5. Morals are concerned with principles of right and wrong. On the contrary, ethics stresses
on right and wrong conduct.
6. As morals are framed and designed by the group, there is no option to think and choose;
the individual can either accept or reject. Conversely, the people are free to think and
choose the principles of his life in ethics.
7. Morals may vary from society to society and culture to culture, as opposed to Ethics,
which remains same regardless of any culture, religion or society.
8. Morals do not have any applicability to business, whereas Ethics is widely applicable in
the business known as business ethics.
9. Morals are expressed in the form of statements, but Ethics are not expressed in the form
of statements.
Examples:
 If the son of a big politician has committed a crime & he uses his powers to free his son
from legal consequences. Then this act is immoral because the politician is trying to save
a culprit.
 A very close friend or relative of an interviewer comes for an interview and without asking
a single question, he selects him. This act is unethical because the selection process must
be transparent and unbiased.
 A grocer sells adulterated products to his customers to earn more profit. This act is
neither moral nor ethical because he is cheating his customers & profession at the same
time.
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Conclusion:
Every single individual has some principles which help him throughout his life to cope up
with any adverse situation; they are known as ethics. On the other hand, Morals are not the
hard & fast rules or very rigid, but they are the rules which a majority of people considered
as right. That is why the people widely accept them. This is all for differentiating Morals from
Ethics.
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1.3. Kolhberg and Gilligan Theories:

Two theorists have provided us with stage theories that are related to Piaget’s theory of
cognitive development but that focus on the development of moral reasoning. Lawrence
Kohlberg (1969) proposed the first complete theory of moral development, followed by an
important alternative theory provided by Kohlberg’s colleague at Harvard University, Carol
Gilligan (1982).
Key Difference:
Gilligan’s stage theory of moral development is also important to psychology for reasons
that go beyond the issue of moral development. Her theory represents an effort to ensure
that researchers do not unintentionally portray developmental changes in boys as being
synonymous with developmental changes in humans in general. Gilligan persuasively argues
that, females sometimes deal with ethical problems differently than males do. For this
reason, when judged by standards developed from research on moral development that
primarily used boys as research participants, girls might be seen as being less advanced in
their ethical reasoning than boys. Here Gilligan provides an important alternative to this
view.
Kohlberg’s Theory of Moral Development:

Kohlberg collected data for his stage theory of moral development by presenting boys with
moral dilemmas and asking for evaluations of the people and actions involved.
The following is an example of the type of dilemma used by Kohlberg in his research:
In Europe, a lady was dying because she was very sick. There was one drug that the doctors
said might save her. This medicine was discovered by a man living in the same town. It cost
him $200 to make it, but he charged $2,000 for just a little of it. The sick lady’s husband,
Heinz, tried to borrow enough money to buy the drug. He went to everyone he knew to
borrow the money. He told the man who made the drug that his wife was dying and asked
him to sell the medicine cheaper or let him pay later. But the man said, “No. I made the drug
and I’m going to make money from it.” So Heinz broke into the store and stole the drug.
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Did Heinz do the right thing?

1. Kohlberg was interested in the logical process through which people arrived at their
answers to moral dilemmas. He concluded that, we pass through the THREE major levels
(Premoral Level, Conventional Level & Principled Level) of the development of moral
reasoning shown in table below.
 Nearly all children use only premoral reasoning at age 7, but conventional moral
reasoning predominates after age 11. Thus, Kohlberg sees the first two major shifts in
moral reasoning as occurring at the same times as the beginnings of the preoperational
and concrete operational stages in Piaget’s theory of cognitive development.
 According to Kohlberg, we engage in little principled moral reasoning until age 13, and
very few of us ever make it to a stage in which we reason mostly in principled ways. He
gives Mahatma Gandhi, Martin Luther and Eleanor Roosevelt as examples of persons at
the principled stage of moral reasoning (Kohlberg, 1964).
 Look carefully at the description of each of Kohlberg’s stages of moral development &
decide if Heinz did the right thing. At the premoral level, he did the wrong thing because
it would get him into trouble. At the conventional stage of moral development, Heinz
would be judged to be wrong because he clearly broke the law (the conventions of right
and wrong).
However, from the perspective of principled reasoning, it could be argued that Heinz did the
right thing. After trying to obtain the drug legally, he ignored the consequences of his action
(imprisonment), disregarded the community’s conventions (the laws against theft) &
followed what he thought was the higher moral principle of saving his wife’s life.
Does that evaluation bother you?

Not everyone would agree that this use of principled reasoning is correct because it tends to
place the individual above the law Indeed, an individual could also explain why Heinz was
wrong in terms of the principled stage of moral development i.e., an individual’s personal
principles might say that it is better for society as a whole to always respect the property
rights of others & allow Heinz’s wife to die. It is not the particular decision that differs at the
different levels of moral development but the nature of moral reasoning involved.
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Gilligan’s Theory of Moral Development (Females):

Because Kohlberg & others used mostly boys in the initial studies that led to moral
development; Carol Gilligan (1982) has suggested that Kohlberg’s theory does not always
accurately describe moral development in girls. She argues that female children pass
through somewhat different stages. Whereas male development begins with selfish self-
interest & moves toward greater reliance on abstract principles of justice, females progress
from self-interest toward a balanced concern for the welfare of self & others. Female moral
reasoning, in other words, centers on the needs of people, rather than on abstractions are of
self & others.
Specifically, Gilligan (1982) suggests that female progress through the three stages of moral
development shown in table below. How would the morality of Heinz’s actions be judged at
each of these stages of moral development? As in Kohlberg’s pre-moral stage, the kind of
immature moral reasoning that Gilligan terms the morality as individual survival stage would
judge Heinz to be wrong simply because he would be punished. At the morality as self-
sacrifice stage. Heinz might be judged to be correct in sacrificing his own welfare to save his
wife. At the morality as equality stage, one would have to equally balance the benefits to
everyone in making a moral judgment.
Gilligan’s contribution to our understanding of moral develop has been acknowledged by

Kohlberg and others (Levine, Kohlberg. & Hewer. 1985)However Kohlberg argues that
Gilligan has overemphasized gender differences in moral reasoning. Indeed, a review of
research on the subject (Walker, 1986) has shown that males and females are more similar
in moral reasoning than they are different.
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The difference between Kohlberg’s and Gilligan’s stage theory of Moral development
Kohlberg’s Stage Theory of Moral Development
Pre-moral Level Conventional Level Principled Level
Young children At this stage, children make moral At this stage, we judge
have no sense of decisions on the basis of what they actions on the basis
morality as adults think of them basis of ethical of ethical the consequences
understand it. principles rather than the others will to us (as in the first two
They make moral think of them, particularly parents & stages). The most advanced
judgments to other persons of authority. moral reasoning within this
obtain rewards & Because society’s rules/conventions stage, according to Porsons
avoid punishment. state what’s expected of them, at the Kohlberg, is based on one’s
conventional level of moral principles of morality even if
development make moral decisions they differ from the rules of
based on rules. the larger community.
Kohlberg’s Stages: Kohlberg's model consists of 3 main levels of moral progression they are:
Level 1: Pre-conventional stage - Occurring from birth to about age nine, moral judgments
during this period are egocentric, based primarily on fear of punishment &
unquestioning deference to authority.
Level 2: Conventional stage - Spanning the age range of 10 to 20, individuals at this level are
more able to view situations from the perspectives of others. They become aware of
social expectations, and the intentions behind their actions weigh into decisions.
Level 3: Post-conventional stage - Occurring from age 20+; people at this level are able to
make moral judgments based on impartial logic & universal standards of right &
wrong, that are independent of culture. People here balance their moral values against
what is best for the common good, few people reach this highest level of moral
development.
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Gilligan’s Stage Theory of Moral Development
Morality as Morality as Self- Morality as Equality

Individual Sacrifice
Survival
The young child’s The next stage of moral In the most advanced stage of moral
first sense of reasoning is attained development, the person views his or her
what is “right” is after becoming aware of own needs as equal to those of have
what is good for the needs of others, In progressed from believing that they must
him or her. Young this stage, the person always please others at the expense of their
children follow believes that, to be own wishes to a believe that everyone’s
rules to obtain approved of by others, needs should be met when possible & that
rewards for they must sacrifice their sacrifices should be shared equally when
themselves & to own needs and meet the needs of different persons cannot all be
avoid the needs of others. met. This is a stage of advocacy of for
punishment. anyone to be intentionally hurt is not right
including the person himself or herself.
Gilligan stages: Like Kohlberg, Gilligan identified several stages of moral development.
Gilligan’s three-level progression of moral development identified different values and
beliefs as accompanying each stage. Gilligan believed women’s development of a sense-of-
self played a larger role in their decision making than cognition. Her levels were defined as:
Level 1: Self-Oriented: Focus is on the needs of oneself. Here, the survival of oneself is of
sole concern e.g., a young girl's morality is oriented toward herself and individual
survival; decisions are made based on what is practical and best for her. The transition
to level 2 begins with the recognition of the conflict between one’s own needs and the
needs of others (i.e., what one owes to oneself vs. what one owes to others).
Level 2: Other Oriented: Focus is on the needs of others. Here, the self-adopts the
traditional conception of feminine goodness, the maternal morality of self-sacrifice,
whereby the good is equated with caring for others e.g., a female develops a sense of
responsibility to others. Morality is equated with goodness and self-sacrifice -- one’s
own wishes should be subordinated to the cares of others. Consequently, one’s own
needs become devalued. The transition to level 3 begins with the recognition that the
self cannot be left out, but must also be an object of one’s caring.
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Level 3: Universal Oriented: Focus is on universal obligation of caring. Here, care is a self-
chosen principle that condemns exploitation, violence & neglect and demands active
response to suffering. To achieve the highest level of moral development; a woman
realizes that her needs are equal to others. The focus shifts from being ‘good’ to
recognizing universal truths - primarily the unethical nature of violence & exploitation
of others. Caring for oneself & others is seen as intertwined because the self & others
are recognized as interdependent. Thus, all acts of caring are seen as beneficial to both
self & others.
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1.4. Four Critical Principles of Ethics:
Four fundamental ethical principles (a very simple introduction):

1. The Principle of ‘Respect for autonomy’
2. The Principle of ‘Beneficence’ ( , )
3. The Principle of ‘Non-maleficence’ (the state or quality of being kind, charitable, or
beneficial)
4. The Principle of ‘Justice’
1) The Principle of ‘Respect for autonomy’ ( ):

Autonomy is Latin for "self-rule" We have an obligation to respect the autonomy of other
persons, which is to respect the decisions made by other people concerning their own
lives. This is also called the principle of human dignity. It gives us a negative duty not to
interfere with the decisions of competent adults, and a positive duty to empower others
for whom we’re responsible.
Corollary principles: honesty in our dealings with others & obligation to keep promises.
2) The Principle of Beneficence ( , , A professional should do Good i.e. work for

the benefit of others): We have an obligation to bring about good in all our actions.
Corollary principle? We must take positive steps to prevent harm. However, adopting this
corollary principle frequently places us in direct conflict with respecting the autonomy of
other persons.
3) The Principle of non-maleficence (a professional should not do harm or prevent harm):

The state or quality of being kind, charitable, or beneficial (from American Heritage
Dictionary of the English Language, 4th ed).
The ethical principle of BENEFICENCE requires producing net benefit over harm (Bioethics
Thesaurus). In ethics, the principle that requires avoiding the causation of harm.
(It is not ‘non-malfeasance’, which is a technical legal term & it is not ‘non-
malevolence’, which means that one did not intend to harm.)
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We have an obligation not to harm others: ‘First, do no harm’.

As the principles of beneficence & non-maleficence are closely related, they are discussed
together in this section. Beneficence involves balancing the benefits of treatment against
the risks & costs involved, whereas non-maleficence means avoiding the causation of
harm.
As many treatments involve some degree of harm, the principle of non-maleficence

would imply that the harm should not be disproportionate to the benefit of the
treatment. Respecting the principles of beneficence & non-maleficence, may in certain
circumstances mean failing to respect a person’s autonomy i.e. respecting their views
about a particular treatment e.g., it may be necessary to provide treatment that is not
desired in order to prevent the development of a future, more serious health problem.
The treatment might be unpleasant, uncomfortable or even painful but this might involve
less harm to the patient than would occur, were they not to have it.
Corollary principle: Where harm cannot be avoided, we are obligated to minimize the
harm we do.
Corollary principle: Don't increase the risk of harm to others.
Corollary principle: It is wrong to waste resources that could be used for good.
Combining beneficence & non-Maleficence: Each action must produce more good than
harm.
Nonmaleficence - which derives from the maxim, is one of the principal precepts
of medical ethics that all medical students are taught in medical school & is a
fundamental principle for emergency medical services around the world. Another way to
state it is that ‘given an existing problem, it may be better to do nothing than to do
something, that risks causing more harm than good’. It reminds the physician & other
health care providers that they must consider the possible harm that any intervention
might do. It is invoked when debating the use of an intervention that carries an obvious
risk of harm but a less certain chance of benefit. Since at least 1860, the phrase has been
for physicians a hallowed expression of hope, intention, humility & recognition that
human acts with good intentions may have unwanted consequences. A closely related
phrase is ‘Sometimes the cure is worse than the ill.’
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4) The Principle of justice:

We have an obligation to provide others with whatever they are owed or deserve. In
public life, we have an obligation to treat all people equally, fairly, and impartially.
Corollary principle: Impose no unfair burdens.
Combining beneficence and justice: We are obligated to work for the benefit of those
who are unfairly treated.
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1.5. Concept of Belief, Values, Types & Sources of Values, Attitude, Virtue
Ethics ( , , ):
Values and Beliefs:

Values ( , ) are socially approved desires & goals that are internalized through
the process of conditioning, learning or socialization & that become subjective preferences,
standards & aspirations.
They focus on the judgment of what ought to be. This judgment can represent the specific
expression of the behavior. They are touched with moral flavor, involving an individual’s
judgment of what is right, good, or desirable. Thus-
 Values provide standards of competence and morality.
 These are ideas that we hold to be important.
 They govern the way we behave, communicate and interact with others.
 They transcend specific objects, Situations or persons.
 These are relatively permanent and there is resistant to change them.
Our values are things that we deem important and can include concepts like equality,
honesty, education, effort, perseverance, loyalty, faithfulness, conservation of the
environment and many, many other concepts.
Beliefs ( , ) are the convictions that we generally hold to be true, usually without
actual proof or evidence. They are often, but not always connected to religion. Religious
beliefs could include a belief that Allah is alone and created the earth. Religions other than
Islam also have their own set of beliefs.
Non-religious beliefs could include: that all people are created equal, which would guide us
to treat everyone regardless of sex, race, religion, age, education, status, etc with equal
respect. Conversely, someone might believe that all people are not created equal. These are
basic assumptions that we make about the world and our values stem from those beliefs.
Our beliefs grow from what we see, hear, experience, read and think about.
From these things, we develop an opinion that, we hold to be true & unmovable at that
time.
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From our beliefs, we derive our values, which can either be correct or incorrect when
compared with evidence, but nonetheless hold true for us! Everyone has an internalized
system of beliefs that they have developed throughout their lives. These may stem from
religion or may develop separately to religion.
 Beliefs are concepts that we hold to be true.
 These may come from religion, but not always.
 Beliefs determine our attitudes and opinions.
It is important & lasting beliefs or ideals shared by the members of a culture about what is
good or bad and desirable or undesirable. It has a major influence on a person’s behavior
and attitude and serves as broad guidelines in all situations.
Actually, the value represents basic convictions that a specific mode of conduct or end-state
of existence is personally or socially preferable to an opposite or converse mode of conduct
or end-state of existence.
Values Definition – What is Values?

 Values defined in Organizational Behavior as the collective conceptions of what is
considered good, desirable, and proper or bad, undesirable, and improper in a culture.
 Some common business values are fairness, innovations and community involvement.
 According to M. Haralambos, “A value is a belief that something is good and desirable”.
 According to R.K. Mukherjee, “Values are socially approved desires and goals that are
internalized through the process of conditioning, learning or socialization and that
become subjective preferences, standards, and aspirations”.
 According to Zaleznik and David, “Values are the ideas in the mind of men compared to
norms in that they specify how people should behave. Values also attach degrees of
goodness to activities and relationships”
 According to I. J. Lehner and N.J. Kube, “Values are an integral part of the personal
philosophy of life by which we generally mean the system of values by which we live. The
philosophy of life includes our aims, ideals, and manner of thinking and the principles by
which we guide our behavior”
 According to T. W. Hippie, “Values are conscious or unconscious motivators and justifiers
of the actions and judgment”
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 A value is a shared idea about how something is ranked in terms of desirability, worth or
goodness. Sometimes, it has been interpreted to mean “such standards by means of
which the ends of action are selected”.
 Sometimes, it has been interpreted to mean “such standards by means of which the ends
of action are selected”.
 Thus, values are collective conceptions of what is considered good, desirable, and proper
or bad, undesirable, and improper in a culture.
 Familiar examples of values are wealth, loyalty, independence, equality, justice, fraternity
and friendliness.
 Familiar examples of values are wealth, loyalty, independence, equality, justice, fraternity
and friendliness. These are generalized ends consciously pursued by or held up to
individuals as being worthwhile in them.
 It is not easy to clarify the fundamental values of a given society because of their sheer
breadth.
Characteristics of Value:
 Values are different for each person.
 These can be defined as ideas or beliefs that a person holds desirable or undesirable.
 The variability in that statement is, first, what a person could value, and second, the
degree to which they value it.
 Values may be specific, such as honoring one’s parents or owning a home or they may be
more general, such as health, love, and democracy. ‘Truth prevails”, “love thy neighbor as
yourself, “learning is good as ends itself are a few examples of general values.
 Individual achievement, personal happiness, and materialism are major values of modem
industrial society.
 It is defined as a concept of the desirable, an internalized creation or standard of
evaluation a person possesses.
 Such concepts and standards are relatively few and determine or guide an individual’s
evaluations of the many objects encountered in everyday life.
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The characteristics of values are:

 These are extremely practical, and valuation requires not just techniques but also an
understanding of the strategic context.
 These can provide standards of competence and morality.
 These can go beyond specific situations or persons.
 Personal values can be influenced by culture, tradition, and a combination of internal and
external factors.
 These are relatively permanent.
 These are more central to the core of a person.
 Most of our core values are learned early in life from family, friends, neighborhood
school, the mass print, visual media and other sources within the society.
 Values are loaded with effective thoughts about ideas, objects, behavior, etc.
 They contain a judgmental element in that they carry an individual’s ideas as to what is
right, good, or desirable.
 Values can differ from culture to culture and even person to person.
 Values play a significant role in the integration and fulfillment of man’s basic impulses and
desire stably and consistently appropriate for his living.
 They are generic experiences in social action made up of both individual and social
responses and attitudes.
 They build up societies, integrate social relations.
 They mold the ideal dimensions of personality and depth of culture.
 They influence people’s behavior and serve as criteria for evaluating the actions of others.
 They have a great role to play in the conduct of social life. They help in creating norms to
guide day-to-day behavior.
 The values of a culture may change, but most remain stable during one person’s lifetime.
 Socially shared & intensely felt values are a fundamental part of our lives as well our
personalities. They are shared & reinforced by those with whom we interact.
 Since values often strongly influence both attitude and behavior, they serve as a kind of
personal compass for employee conduct in the workplace.
 These help to determine whether an employee is passionate about work and the
workplace, which in turn can lead to above-average returns, high employee satisfaction,
strong team dynamics, and synergy.
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Types of Values: The values that are important to people tend to affect the types of
decisions they make, how they perceive their environment, and their actual behaviors.
There are two types of values:

1. Terminal Values &
2. Instrumental Values.
1. Terminal Values:
 These are values that we think are most important or most desirable.
 These refer to desirable end-states of existence, the goals a person would like to
achieve during his or her lifetime.
 They include happiness, self-respect, recognition, inner harmony, leading a prosperous
life, and professional excellence.
2. Instrumental Values:
 Instrumental values deal with views on acceptable modes of conductor means of
achieving the terminal values.
 These include being honest, sincere, ethical, and being ambitious. These values are
more focused on personality traits and character.
 There are many typologies of values. One of the most established surveys to assess
individual values is the Rokeach Value Survey.
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This survey lists 18 terminal & instrumental values in alphabetical order. They are:
Sr. Terminal Values Instrumental Values
1 A comfortable life (a prosperous life) Ambitious (hardworking)
2 An exciting life (a stimulating, active life) Broadminded (open-minded)
3 A sense of accomplishment (lasting Capable (competent, efficient)

contribution)
4 A world of peace (free of war and conflict) Cheerful ( lighthearted, joyful)
5 A world of beauty (the beauty of nature and Clean (neat, tidy)

the arts)
6 Equality (brotherhood, equal opportunity for all) Courageous (standing up for your beliefs)
7 Family security (taking care of loved ones) Forgiving (willing to pardon)
8 Freedom (independence, free choice) Helpful (working for the welfare of others)
9 Happiness ( contentedness) Honest (sincere, truthful)
10 Inner harmony (freedom from inner conflict) Imaginative (daring, creative)
11 Mature love (sexual and spiritual intimacy) Independent (self-reliant, self-sufficient)
12 National security (protection from attack) Intellectual (intelligent, reflective)
13 Pleasure (an enjoyable, leisurely life) Logical (consistent, rational)
14 Salvation (saved, eternal) Loving (affectionate, tender)
15 Self-respect(self-esteem) Obedient (dutiful, respectful)
16 Social recognition (respect, admiration) Polite (courteous, well-mannered)
17 A true friend (close companionship) Responsible (dependable, reliable)
18 Wisdom ( a mature understanding of life) Self-controlled (restrained, self-disciplined)
 The values a person holds will affect his or her employment e.g., someone who has an
orientation toward strong stimulation may pursue extreme sports & select an occupation
that involves fast action & high risks e.g., firefighter, police officer, or emergency doctor.
 Someone who has a drive for achievement may more readily act as an entrepreneur.
 Several studies confirm that the values vary among groups. People in the same
occupations or categories (e.g. corporate managers-union members; parents-students)
tend to hold similar values. Although a good deal of overlap also was found among these
groups, there were also some very significant differences. These differences are
important, because executives, union members, and activists all have a vested interest in
what corporations do.
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Sources of Values:
Sources of value are a comprehensive guide to financial decision-making suitable for
beginners as well as experienced practitioners. It treats financial decision-making as both an
art and a science and proposes a comprehensive approach through which companies can
maximize their value. Generally, no values tend to be relatively stable and enduring. A
significant portion of the values we hold is established in our early years from parents,
teachers, friends, and others. There are so many sources from which we can acquire
different values, they are:
 Family: Family is a great source of values. A child learns his first value from his family.
 Friends & peers: Friends and peers play a vital role in achieving values.
 Community or society: As a part of society, a person learns values from society or
different groups of society.
 School: As a learner, school and teachers also play a very important role in introducing
values.
 Media: Media such as – Print media, Electronic media also play the role of increasing
values in the mind of people.
 Relatives: Relative also helps to create values in the minds of people.
 Organization: Different organizations and institutions also play a vital role in creating
value.
 Religion, History, Books etc.
Values and Attitudes:

We can control our behavior in a way that does not reflect our beliefs & values, which in
order to embrace a diverse culture & behavior as a successful manager. We have to adapt
our behavior in a positive manner.
Conclusion:
 Values help to guide our behavior. It decides what we think as for right, wrong, good, or
unjust.
 Values are more or less permanent in nature. They represent a single belief that, guides
actions and judgment across objects and situations. They derived from social and cultural
mores.
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What are Beliefs, Values and Attitudes?

In our various roles, our beliefs, values and attitudes are constantly interacting with those of
our peers, friends, family or teachers. We seem to instinctively 'like' the individuals who
share our core values and beliefs. Harmonizing our value systems is what makes a
relationship successful, be it personal, educational or professional.
Proponents of adult learning state that in order to achieve competence and excellence, one
needs to be able to teach and assess not only knowledge and skills, but attitudes, as well. To
achieve excellence, we must be able to identify the core values and belief systems that
underpin attitudes.
Performance improvement can only come from learning the appropriate knowledge and
skills. Possessing the right value and belief systems may influence our motivation, intention
and engagement with a specific task.
We may come across individuals who seemingly possess the knowledge and skills to a do a
task, but only with a positive attitude towards the task will there be motivation, engagement
and intention to complete the task.
The 'iceberg' diagram below shows the relationship between our hidden values and belief
systems and our outward behaviours. However, there are two factors displayed that directly
influence behaviours—one is the attitude that underpins the behaviour, the other is the
capability to express the expected behaviour.
Attitude: Description & Significance: Almost all educational theories encompass teaching &
assessment of knowledge, skills & attitudes. Attitudes have been described as hypothetical
constructs that represent a person's like or dislike for anything. Attitude is a judgment made
on the 'attitude object' (a person, place, task, event, skill, etc.). Judgments from attitude can
range from positive, negative or neutral. Attitudes arise from an inner framework of values
and beliefs, developed over time. Carl Jung, in his essay on psychological types, defines
attitude as "the readiness of the psyche to act or react in a certain way".
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Beliefs, Values & Attitudes
Beliefs Values Attitudes
 Spiritual Values are ‘global abstract

 Moral principles’ that serves as
guiding principles in people’s
 Social
lives (e.g., Freedom, Honesty,
 Intellectual
Equality, Beauty, Harmony,
 Economic
Competitiveness, Happiness,
 Political
Order & Wisdom.
Three components:
 Cognitive: What we believe?
 Affective: Our feelings
 Behavioural: Learned associations
Serve a no. of motivational functions:

 Ego - Defensive
 Value – Expressive
 Instrumental: Gain social
acceptance or avoidance
 Knowledge: Organizes social
world.
 Attitudes are comprised of 3 components: emotions, behaviours & thoughts. These 3

components can also be described as the 'ABC' model: Affective, Behavioural & Cognitive.
 The ‘Affective’ response is one's emotional response to a task/entity.
 The ‘Behavioural’ response is the displayed verbal or behavioural tendency to a task or
entity, whereas
 The ‘Ccognitive’ response is the cognitive evaluation of the entity based on an internal
belief system.
 There is considerable overlap in the semantics of beliefs, values and attitudes, however,
these are also distinct constructs (as illustrated above).
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Attitude: Based on the Behaviour of ‘Ourselves & Others’: One of the key lessons to be
learned is that we are at the mercy of expressed behaviour. Both in ourselves & in others,
we ‘assume’ attitudes based on observed behaviour e.g., someone who regularly arrives late
may be considered not very punctual or organized. However, this same person may spend
time caring for somebody who is very ill & their personal time delivering this care may
interfere with their prompt arrival to work or lessons. With this new information, they may
be viewed from a different perspective. Similarly, our attitudes toward observed behaviour
will also tint our judgements e.g., if a person arrives shoddily dressed for an interview, we
may feel they have not taken the time to prepare. However, if the said person believes their
talent & skills are what should be recognized & not the appearance—this mindset influences
their attitude toward dressing ‘smart’ & thus influences their behaviour. Behaviour may also
be ‘false’. A person may display false obeisance & ritualistic behaviour when they need a
favourable review, or feel they are being observed for performance. This may indicate a
certain attitude, but the observer needs to delineate the difference between a true attitude
& a false behaviour (implying an attitude). A person who is constantly fawning & agreeing to
everything their superior says, may not necessarily be in agreement, but may fawn in order
to carry favour. In assessing behaviour, one needs to be aware of capability. There have
been situations where a particular person may be considered ‘rude’ due to a raised voice or
lack of clear idioms & phraseology, such as saying 'thank you' & 'please'. Yet, if the person or
persons observed have never received any training to modulate their speech pattern or
learn the idioms & phraseology of the language they are communicating in, they may not
have the capability to express the right behaviour for the situation. This, in turn, may be
perceived as a ‘bad attitude’ by those that have the capability to express a more appropriate
behaviour.
Virtue ethics:
Virtue ethics is a philosophy developed by Aristotle and other ancient Greeks. It is the quest
to understand and live a life of moral character.
This character-based approach to morality assumes that we acquire virtue through practice.
By practicing being honest, brave, just, generous, and so on, a person develops an honorable
and moral character. According to Aristotle, by honing virtuous habits, people will likely
make the right choice when faced with ethical challenges. So, virtue ethics helps us
understand what it means to be a virtuous human being. And, it gives us a guide for living
life without giving us specific rules for resolving ethical dilemmas.
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Major Types of Virtue Ethical Theories:

1. Individual Character Ethics: The individual character ethics hold that the identification
and development of noble human traits help in determining both the instrumental and
intrinsic value of human ethical interactions. These noble traits are courage, self-
discipline, prudence, gratitude, wisdom, sincerity, understanding, benevolence, etc.
2. Work Character Ethics: The identification and development of reflective, practitioner,
noble traits at works such as creativity, honesty, loyalty, honor, trustworthiness, civility,
dependability, shared work pride, empathy, etc. determine the intrinsic and instrumental
ethical quality of work life.
For example, Suppose a manager is facing global competition, huge productivity
expectations and requires an effective teamwork, then his work character behavior
should be such that he is considered as a role model for task accomplishment and his
considerate relations with everyone at the workplace.
3. Professional Character Ethics: The professional character ethics hold that self-regulation,
loyalty, impartial judgment, altruism, truthfulness, public service determine the intrinsic
and instrumental ethical quality of an individual associated with some communities.
For example, if a business manager of a firm of doctors detects the double billing for the
OT’s services, then his ethical professional behavior will enforce him to inform about this
to the doctors-in-charge to get the problem solved. And in case the problem still persists,
then he will act as a whistleblower and inform about this to the public outside and will
not be silent until the problem is rectified. He does all this because of his loyalty towards
the professional code of ethics.
Thus, the Virtue Ethical Theories are based on the notion that developing a sound character
is what the life is all about. The character builds a substantive moral foundation for one’s
actions.
It is believed that a person with the strong character has imbibed emotional, intellectual,
moral and social virtues to achieve the self-discipline and do the right thing or want what is
actually good for him. Whereas, the person with weak character finds himself doing all the
wrong things, wanting what is truly harmful and making excuses for all his ill doings.
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Each moral theory holds a specific approach in how to handle life’s decisions. A moral theory
often shapes a person’s attitude toward others, belief system and life choices.
Utilitarianism: Utilitarianism is a moral theory that implements fair choices in an effort to

ensure the least amount of harm is done to all parties involved. The utilitarianism approach
requires that you decide what course of action needs to be done and evaluate the outcomes
of each action. By focusing on the outcome of each action, utilitarianism demands that you
decide on what course of action based on the benefits or harm of the actions without regard
to the cost of the action. For example, Julie walks into a hostage situation. There are 20
hostages and she is told that if she shots one hostage, she will save the lives of the other 19.
Utilitarianism would support Julie’s killing of one of the hostages because the other 19 lives
are a greater benefit, regardless of the fact that the cost would be one person’s life.
Denotology: Deontology focuses on the consequences of your actions and believes that
when faced with life choices, you should operate according to responsibility and obligations.
A deontologist believes that morality is a responsibility for everyone as well as a duty. For
example, if a man steals three loaves of bread and a gallon of milk to feed his family, it
would be supported by deontology because of the moral responsibility and obligations of
the man to care for his family. Sometimes deontologists are unable to determine certain
courses of action as moral or not. A coffee shop owner who requires his employees to dress
in black cannot be identified with the deontology theory simply because the requirement is
the owner’s preference and whatever governs such preference is neither moral nor immoral.
Virtue: Virtue is very distinct from other ethic theories in that it looks at a person’s individual
character, not necessarily his actions. When observing an unethical position, the virtue
theory considers the person's reputation and purpose for committing the act. If a high school
student is temperate, modest, witty and intelligent and plagiarized on a class writing
assignment, the virtue theory would analyze the student's past personality traits and
interpersonal skills in order to determine whether the student is truly guilty.
Relativism: Relativism is a theory that deems your moral obligations & beliefs to be based on
the individual environment e.g., in American culture cannibalism is considered taboo, while
in other cultures the act of consuming other human flesh is accepted as a sacrifice or ritual.
Relativism determines morals and ethics according to the society that is being observed.
Relativism argues that every society and culture believes differently and thus, each culture
must be evaluated according to its particular cultural patterns and influences.
End of Unit No. 1

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EXTRA Reading
Integrity: To be straightforward and honest in all professional and business relationships.

Objectivity: To not allow bias, conflict of interest or undue influence of others to override
professional or business judgements, and having the resolve to ensure those judgements are
ethical.
Professional competence and due care: To maintain professional knowledge and skill at the
level required to ensure that a client or employer receives competent professional service
based on current developments in practice, legislation and techniques, and act diligently and
in accordance with applicable professional standards.
Confidentiality: To respect the confidentiality of information acquired as a result of
professional and business relationships and, therefore, not disclose any such information to
third parties without proper and specific authority, unless there is a legal, professional, or
ethical right or duty to disclose, nor use the information for the personal advantage of the
professional accountant or third parties.
Professional behaviour: To take personal responsibility for demonstrating, and leadership by
adopting, the highest standards of professionalism, by complying with relevant laws and
regulations and accepting the moral obligation to act in a professional manner in the public
interest, avoiding any conduct that discredits the profession.
Moral Courage: To exhibit fortitude and determination to exert professional scepticism, to
challenge others who are behaving inappropriately, and to resist the exploitation of
professional opportunity for private benefit rather than the public interest. Moral Courage –
The Sixth Fundamental Ethics Principle? The proposed additional principle of moral courage
builds on the work by the late Dr David Molyneaux in his ICAS research report “What do you
do now? Ethical issues encountered by Chartered Accountants”. In his report, Dr Molyneaux
said that ‘courage’ is not usually a term associated with the accountancy profession. He
noted: ‘Lord Moran in his study, the Anatomy of Courage, which drew on his extensive
personal observations during both world wars of persons of every rank (from private to
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Prime Minister) defined fear as “the response of the instinct of self-preservation to danger.”
“Courage” is the “will-power” to cope with that instinctive reaction.’ 2 For accountants,
‘ethical’ or ‘moral’ courage is required to counter the ‘fears’ that they face, such as
reputational fears and livelihood fears. Being pressurised to meet expectations, or to
manipulate results; these are the kinds of pressures, or ‘dangers’, that accountants face in
their daily lives. If individual accountants do not resist these pressures, they risk
compromising the fundamental ethical principles of their profession, resulting in potential
reputational damage not only for themselves but also for the entity for which they work, and
for the profession as a whole. It can be difficult to stand up against others and to take the
ethical stance, and it requires an inner resolve to do so. Each individual professional
accountant needs to have moral courage in order to be able to maintain the highest
standards of ethical behaviour, not only to preserve their own personal reputation, but also
to ensure their responsibilities to their profession and the public interest are upheld. There
has been some debate as to whether moral courage should be a new additional principle, or
whether it is inherent within the current principles. However, the Ethics Committee believes
that, in today’s world, ethical leadership needs both professional behaviour and moral
courage. The fundamental ethics principles are the foundations of a professional
accountant’s career – professional accountants need to lead and must champion these
fundamental ethical values. The Ethics Committee therefore believes that moral courage
should be highlighted as a sixth fundamental ethics principle: moral courage is the fortitude
required to be able to uphold the other five.
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Gilligan’s Theory of Moral Development

Because Kohlberg and others used mostly boys in the initial studies that led to Kohlberg’s
theory of moral development. Carol Gilligan (1982) has suggested that Kohlberg’s theory
does not always accurately describe moral development in girls. She argues that female
children pass through somewhat different stages.
Whereas male development begins with selfish self-interest and moves toward greater
reliance on abstract principles of justice, females progress from self-interest toward a
balanced concern for the welfare of self and others .
Female moral reasoning, in other words, centers on the needs of people, rather than on
abstractions are of self and others.
Specifically, Gilligan (1982) suggests that females progress through the three stages of moral
development shown in table below. How would the morality of Heinz’s actions be judged at
each of these stages of moral development? As in Kohlberg’s premoral stage, the kind of
immature moral reasoning that Gilligan terms the morality as individual survival stage would
judge Heinz to be wrong simply because he would be punished. At the morality as self-
sacrifice stage. Heinz might be judged to be correct in sacrificing his own welfare to save his
wife. At the morality as equality stage, one would have to equally balance the benefits to
everyone in making a moral judgment.
Gilligan’s contribution to our understanding of moral develop has been acknowledged by

Kohlberg and others (Levine, Kohlberg. & Hewer. 1985)However Kohlberg argues that
Gilligan has overemphasized gender differences in moral reasoning. Indeed, a review of
research on the subject (Walker, 1986) has shown that males and females are more similar
in moral reasoning than they are different.
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The framework of Kohlberg’s theory consists of three general levels of moral development
& divided into six stages arranged sequentially in successive tiers of complexity.
Level 1: Pre-conventional level - At the pre-conventional level, morality is externally

controlled. Rules imposed by authority figures are conformed to in order to avoid
punishment or receive rewards. This perspective involves the idea that what is right is what
one can get away with or what is personally satisfying. Level 1 has two stages.
 Stage 1: Punishment/obedience orientation - Behaviour is determined by consequences.
The individual will obey in order to avoid punishment.
 Stage 2: Instrumental purpose orientation - Behaviour is determined again by
consequences. The individual focuses on receiving rewards or satisfying personal needs.
Level 2: Conventional level - At the conventional level, conformity to social rules remains
important to the individual. However, the emphasis shifts from self-interest to relationships
with other people and social systems. The individual strives to support rules that are set
forth by others such as parents, peers, and the government in order to win their approval or
to maintain social order.
 Stage 3: Good Boy/Nice Girl orientation - Behaviour is determined by social approval.
The individual wants to maintain or win the affection and approval of others by being a
“good person.”
 Stage 4: Law and order orientation - Social rules and laws determine behaviour. The
individual now takes into consideration a larger perspective, that of societal laws.
Moral decision making becomes more than consideration of close ties to others. The
individual believes that rules and laws maintain social order that is worth preserving.
Level 3: Post-conventional or principled level - At the post-conventional level, the individual

moves beyond the perspective of his or her own society. Morality is defined in terms of
abstract principles and values that apply to all situations and societies. The individual
attempts to take the perspective of all individuals.
Stage 5: Social contract orientation - Individual rights determine behaviour. The individual
views laws and rules as flexible tools for improving human purposes. That is, given the right
situation, there are exceptions to rules. When laws are not consistent with individual rights
and the interests of the majority, it does not bring about good for people
and alternatives should be considered.
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Stage 6: Universal ethical principle orientation - According to Kohlberg, this is the highest
stage of functioning. However, he claimed that some individuals will never reach this level.
At this stage, the appropriate action is determined by one’s self-chosen ethical principles
of conscience. These principles are abstract and universal in application. This type of
reasoning involves taking the perspective of every person or group that could potentially be
affected by the decision.
Kohlberg’s stages of moral development
Kohlberg identified three levels of moral reasoning: pre-conventional, conventional, and

post-conventional. Each level is associated with increasingly complex stages of moral
development.
Level 1: Preconventional - Throughout the preconventional level, a child’s sense of morality

is externally controlled. Children accept and believe the rules of authority figures, such as
parents and teachers. A child with pre-conventional morality has not yet adopted or
internalized society’s conventions regarding what is right or wrong, but instead focuses
largely on external consequences that certain actions may bring.
 Stage 1: Obedience-and-Punishment Orientation - Stage 1 focuses on the child’s desire
to obey rules and avoid being punished. For example, an action is perceived as morally
wrong because the perpetrator is punished; the worse the punishment for the act is, the
more “bad” the act is perceived to be.
 Stage 2: Instrumental Orientation - Stage 2 expresses the “what’s in it for me?” position,
in which right behavior is defined by whatever the individual believes to be in their best
interest. Stage two reasoning shows a limited interest in the needs of others, only to the
point where it might further the individual’s own interests. As a result, concern for others
is not based on loyalty or intrinsic respect, but rather a “you scratch my back, and I’ll
scratch yours” mentality. An example would be when a child is asked by his parents to do
a chore. The child asks “what’s in it for me?” and the parents offer the child
an incentive by giving him an allowance.
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Level 2: Conventional - Throughout the conventional level, a child’s sense of morality is tied
to personal and societal relationships. Children continue to accept the rules of authority
figures, but this is now due to their belief that this is necessary to ensure positive
relationships and societal order. Adherence to rules and conventions is somewhat rigid
during these stages, and a rule’s appropriateness or fairness is seldom questioned.
 Stage 3: Good Boy, Nice Girl Orientation - In stage 3, children want the approval of
others and act in ways to avoid disapproval. Emphasis is placed on good behavior and
people being “nice” to others.
 Stage 4: Law-and-Order Orientation – In this stage, the child blindly accepts rules and
convention because of their importance in maintaining a functioning society. Rules are
seen as being the same for everyone, and obeying rules by doing what one is “supposed”
to do is seen as valuable and important. Moral reasoning in stage four is beyond the need
for individual approval exhibited in stage three. If one person violates a law, perhaps
everyone would—thus there is an obligation and a duty to uphold laws and rules. Most
active members of society remain at stage four, where morality is still predominantly
dictated by an outside force.
Level 3: Post-conventional - Throughout the post-conventional level, a person’s sense of

morality is defined in terms of more abstract principles and values. People now believe that
some laws are unjust and should be changed or eliminated. This level is marked by a growing
realization that individuals are separate entities from society and that individuals may
disobey rules inconsistent with their own principles. Post-conventional moralists live by their
own ethical principles—principles that typically include such basic human rights as life,
liberty, and justice—and view rules as useful but changeable mechanisms, rather than
absolute dictates that must be obeyed without question. Because post-conventional
individuals elevate their own moral evaluation of a situation over social conventions, their
behavior, especially at stage six, can sometimes be confused with that of those at the pre-
conventional level. Some theorists have speculated that many people may never reach this
level of abstract moral reasoning.
P a g e | 37
Stage 5: Social-Contract Orientation - In stage 5, the world is viewed as holding different

opinions, rights, and values. Such perspectives should be mutually respected as unique to
each person or community. Laws are regarded as social contracts rather than rigid edicts.
Those that do not promote the general welfare should be changed when necessary to meet
the greatest good for the greatest number of people. This is achieved through majority
decision and inevitable compromise. Democratic government is theoretically based on stage
five reasoning.
Stage 6: Universal-Ethical-Principal Orientation - In stage 6, moral reasoning is based on

abstract reasoning using universal ethical principles. Generally, the chosen principles are
abstract rather than concrete and focus on ideas such as equality, dignity, or respect. Laws
are valid only insofar as they are grounded in justice, and a commitment to justice carries
with it an obligation to disobey unjust laws. People choose the ethical principles they want
to follow, and if they violate those principles, they feel guilty. In this way, the individual acts
because it is morally right to do so (and not because he or she wants to avoid punishment), it
is in their best interest, it is expected, it is legal, or it is previously agreed upon. Although
Kohlberg insisted that stage six exists, he found it difficult to identify individuals who
consistently operated at that level.

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A 2.3 - Business Ethics and Corporate Governance

Unit no. 1 - Introduction to Ethics

1.1. Definition and Nature of Ethics

1.1. Definition and Nature of Ethics

). The primary meaning of law is ‘a rule of action, promulgated ( , ) by

Definition & Nature of Ethics:

1.2. Distinction between Morality and Ethics:

Consistency and Flexibility:

Expression Ethics are abstract Morals are expressed in the form of

From where Social system - External Individual - Internal

Acceptability Ethics are governed by professional Morality transcends cultural norms.

Governed By Individual or Legal & Professional Social and cultural norms

Why we do Because society says it is the right Because we believe in something

Key differences between Morals and Ethics:

1.3. Kolhberg and Gilligan Theories:

Kohlberg’s Theory of Moral Development:

Did Heinz do the right thing?

Does that evaluation bother you?

Gilligan’s Theory of Moral Development (Females):

Gilligan’s contribution to our understanding of moral develop has been acknowledged by

Kohlberg’s Stage Theory of Moral Development

Pre-moral Level Conventional Level Principled Level

Gilligan’s Stage Theory of Moral Development

Morality as Morality as Self- Morality as Equality

1.4. Four Critical Principles of Ethics:

Four fundamental ethical principles (a very simple introduction):

1) The Principle of ‘Respect for autonomy’ ( ):

2) The Principle of Beneficence ( , , A professional should do Good i.e. work for

3) The Principle of non-maleficence (a professional should not do harm or prevent harm):

We have an obligation not to harm others: ‘First, do no harm’.

As many treatments involve some degree of harm, the principle of non-maleficence

4) The Principle of justice:

Corollary principle: Impose no unfair burdens.

Values and Beliefs:

Values Definition – What is Values?

The characteristics of values are:

There are two types of values:

Sr. Terminal Values Instrumental Values

1 A comfortable life (a prosperous life) Ambitious (hardworking)

2 An exciting life (a stimulating, active life) Broadminded (open-minded)

3 A sense of accomplishment (lasting Capable (competent, efficient)

4 A world of peace (free of war and conflict) Cheerful ( lighthearted, joyful)

5 A world of beauty (the beauty of nature and Clean (neat, tidy)

7 Family security (taking care of loved ones) Forgiving (willing to pardon)

9 Happiness ( contentedness) Honest (sincere, truthful)

10 Inner harmony (freedom from inner conflict) Imaginative (daring, creative)

11 Mature love (sexual and spiritual intimacy) Independent (self-reliant, self-sufficient)

12 National security (protection from attack) Intellectual (intelligent, reflective)

13 Pleasure (an enjoyable, leisurely life) Logical (consistent, rational)

14 Salvation (saved, eternal) Loving (affectionate, tender)

15 Self-respect(self-esteem) Obedient (dutiful, respectful)

16 Social recognition (respect, admiration) Polite (courteous, well-mannered)

17 A true friend (close companionship) Responsible (dependable, reliable)

18 Wisdom ( a mature understanding of life) Self-controlled (restrained, self-disciplined)

Values and Attitudes:

What are Beliefs, Values and Attitudes?

Beliefs, Values & Attitudes

Beliefs Values Attitudes