What is Business Ethics?

Concept Of Business Ethics:

“Business ethics is an art and science of maintaining a proper harmonious relationship with society’s various groups and institutions as well as recognizing the normal responsibility for the rightness or wrongness of business.”

The word “ethics” is derived from the Greek word “ethos” which refers to the character or ideal standard of behavior.

Webster defines ‘ethics’ as, “the discipline dealing with that which is good and bad and with moral duty and obligations.”

The term “ethical” is defined as conferring to a professional standard of conduct.

According to common usage, the terms moral, good, right. just, honest, etc. well are synonymoUS with ethics.

In general, ethics deals more with good than with evil. However, the same action may be moral or immoral, depending upon the school of moral thought.

Different Conclusion of Ethics:

1. Ethics differ from society to society: For instance, artificial birth control is mandatory in Russia and China, but a taboo i.e. ban or restriction in Catholic Christian societies.

2. Ethics differ from religion to religion: For instance, in some religions, meat-eating is strictly prohibited and regarded as highly unethical.

But in some other religions meat-eating is considered most ethical according to religious standards and values.

3. Ethics differ from time to time: For instance, in ancient times, doing jobs by women in business and other enterprises was regarded as unethical, but in modern times, women taking up outside jobs are most welcome in society.

Concept of Business Ethics:

To some, it is very surprising that there should be a term called “business ethics”. They are of the opinion that what is sauce for the goose is the sauce for the gander.

It means that the norms of conduct that apply to common men should also apply to the businessmen.

Thus, business ethics are just an extension of the general concept of ethics. This business ethics we may define as “Businessman’s integrity so far as his conduct or behavior is concerned in all fields of business as well as towards the society and other businesses.” 

Characteristics of Business Ethics:

The following characteristics emerge from the analysis of the above definitions :

I)  Business ethics are, in a way, a type of self-imposed discipline.

II) They are moral principles that guide business behavior.

III) They imply an idea of honesty which guides the businessmen as to the rightness or wrongness of there decisions and actions.

IV) The basic philosophy of business ethics is maximum social welfare through the functioning of business enterprises.

Principles/elements of Business Ethics:

There are certain basic principles of business ethics which may be stated as below:

1. High business values: Human value grows with the increase in the size of business to which it applies.

Some examples of high business values may be the supply of quality products, producing goods or services required by common men of society, producing low-cost goods, etc. High business values are an important part of the business.

2. Service first and profit next: This is the slogan which businesses should follow in practice.

In other words, “business must be held in trust legally and morally for the benefit of the people when the business wants to serve.”

This is why the present business now has adopted the view of serving the community.

3. Ethical evaluation of management decisions: An important principle of business ethics is that before implementing any business decision, the management must undertake the ethical evaluation of such decision to see that it does not have adverse effects on the interests of any group.

4. Discharge of social responsibilities: A business enterprise must contribute to the well-being of the community.

The business has to contribute to man’s material happiness and to his mental, moral and spiritual growth.

5. Optimum utilization of resources: Every business has an obligation to make the fullest and best possible use of its inputs — material and human so that the output produced aids in removing poverty and people’s distress and raises their standard of living.

6. Upholding cultural and religious values of society: A business enterprise must not indulge in such activities as degrading the cultural and religious heritage of society.

Upholding cultural and religious values of society is an important element of business ethics.

7. Ethical cooperation: A business enterprise must cooperate with others in fare activities. It must refuse to indulge in anti-social or evil things.

 Need For Business Ethics:

Following are the needs of Business:

 1. publication of a code of ethics is likely to improve the confidence of customers clients, employees, etc. in the quality of service they may expect.

2. Business codes govern the interrelationship of the members. Businesses cannot be carried on without trust in ethical standards.

3. The interest Of all those who deal with business, i.e., stockholders, employees, customers, competitors, dealers, and suppliers need to be protected from the unethical ways of dealing and exploitation.

4. The consumer’s right can be saved and his interests served well only when there are some types of moral binding on the business community.

5. Business today is confronted with major groups of social issues like environmental protection, energy crisis. people-oriented management etc.

These issues being interrelated, need that business should feel some obligation for meeting these issues.

Different Unethical Business Behaviour:

Corruption and unethical behavior go together and exist side by side.

Corruption is encouraged because business cannot wait and has to be kept going as an existing concern section while government red-tape takes time.

The various societies practice unethical behavior for the fulfillment of their own goals and interests.

Some examples are given below:

(a) Unethical Behaviour to Workers:

(i) Overlooking industrial safety norms in order to get work done.

(ii) Denying legitimate promotion.

(iii) Discrimination among workers on the basis of caste. sex or religion.

(iv) Inhuman treatment to poor workers.

(b) Unethical Behaviour to Consumers:

(i) Indulging in vulgar and false advertising to attract consumers.

(ii) Neglecting after-sales service.

(iii) Supplying lesser weight at higher prices etc.

(c) Unethical Behaviour to Investors/Shareholders:

(i) Withholding meaningful information.

(ii) Indulging in unhealthy speculation.

(iii) Withholding payment of dividends etc.

(d) Unethical Behaviour to Government:

 i)keeping two sets of books to evade taxes.

(ii) Supplying wrong or misleading information to government departments.

(iii) Deliberately non-cooperating with the state in implementation of its economic and social policies etc.

(e) Unethical Behaviour to Society at Large:

(i) Bribing public officials to obtain undue favors.

(ii) causing environmental pollution such as air, water, sound pollution, etc.

(iii) Black marketing and hoarding of goods.

(iv) Production of things injurious to the health of people etc.

Factors Affecting Business Ethics:

  Different factors affecting Business Ethics:

1. The individual’s personal code of behavior: The personal code of behavior is the result of the complex environment that influences one’s life.

2. The ethical standards imposed on a manager: By his superiors also influence him in his decisions as to the mortality of behavior.

If the superior does unethical activities, the subordinate is encouraged to look upon this activity as an acceptable practice.

3. The policies of the company: It also influence the determination of ethical conduct. When a policy is enforced, the employees know that honesty is the best policy in the company.

4. The ethical climate of a country: Business has the obligation to see adheres to an ethical atmosphere.

However, considerable differences occur among managers as to what is ethical or unethical; and business truly lacks a code of ethics.

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