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Ethics is a part of social science, which deals with morality and social values. In our daily life, we have some sort of set, defined morals, principles which we follow. These moral guidelines govern our behavior. These are simply known as ethics. These ethics guide us to do good and avoid bad. Ethics tell us about right and wrong. Ethical behavior is behaving what is right morally. Ethics are not legally imposed. In business too, there are some systems of laws and guidelines. There are certain defined moral principles which guide the way the business has to behave. These are the same as apply on individuals. Ethics determine what is right and what is wrong so that one can make a good choice. Business ethics are also known as corporate ethics. These ethics involve the application of ethical values to the business behavior. Application of business ethics in business behavior is considered as good business practice. Business ethics examines moral and ethical principles. Business ethics involves the study of business policies regarding controversial issues. These controversial issues include corporate governance, bribery, CSR, insider trading, fiduciary responsibilities and discrimination. Business ethics ensure a level of trust with the customers and other market participants. Business ethics govern the business operation, business decisions and the behavior within the business organizational environment. Business ethics include critical, structured evaluation of how the people and the business bodies should treat and behave in the corporate environment.
Andrew Crane has defined business ethics as:
“Business ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed.”
In the words of Raymond C Baumhart,
“The ethics is business is the ethics of responsibility. The business man must promise that he will not harm knowingly.”
According to Kirk O Hanson,
“Business ethics is the study of the standards of business behavior which promote the human welfare and the good.”
Business ethics highlight the philosophy of business. This aims at the determination of fundamental purposes of the business. Business ethics are essential for sustainable business. If the decisions are taken without being ethical, it can lead to serious consequences. Even poor ethics can harm the business in a long term. Decision taken with lack of ethics can misinform and misguide and thus can lead to moral violation. Business ethics include both the written and unwritten moral standard which is critical to the current activities in accordance with the future aspiration of the company. Some business ethics are universal and are followed in all corporate organizations while many business ethics varies depending on the cultural perspectives, operational framework strategic orientations. In general terms, business ethics is the wisdom which tells the difference between right actions and wrong decisions and thus addresses the moral features of any commercial activity.
Characteristics of Business Ethics:
Characteristics of business ethics are listed below:
- Code of Conduct: Every business ethics is a code of conduct. Code of conduct tells what to and what not to do which is for the social welfare. Every business has to follow code of conduct. It is set of rule which outline the proper practices, responsibilities for the individual or any organization.
- Based on Moral and Social Values: Business ethics are based on morals and social values. There are set moral and social principles which govern the business operations. Moral and social values can include many things such as consumer practices, social and consumer welfare, social service, fair treatment to society, self control etc.
- Gives Protection to Social Groups: Business has to take care of everyone who is associated to it directly or indirectly. It should take care and give protection to various social bodies such as employees, other businesses, consumers, government, creditors, shareholders etc.
- Provides Basic Framework: Business ethics gives a basic framework, a structure to operation business including social culture, legal limits, economic and other limitations. Every business has to take care of these limitations.
- Voluntary: Business ethics should be voluntary are thus are to be accepted and followed on own. These should not be imposed and should be taken as self disciplines. There should be no involvement of law for application of business ethics.
- Education and Guidance: Business ethics should be introduced with proper education and guidance. Everyone should be comfortable with the business ethics. The business holders should be motivated and should motivate others too. They should inform others about the advantages of using these ethics.
- Relative Term: Business ethics vary from one place to other, one business to other. They depend on the cultural and social structure of any particular place.
- Modern Concept: Business ethics is a modern concept and is followed everywhere. But still, many countries are lacking behind in this concern. Poorly developed and developing countries don’t follow them strictly.
- Flexibility: Business ethics should not be hard so that people find themselves helpless. Business ethics should be good so that everyone can follow them and feel themselves comfortable following the ethics.
Globalization has given a new definition to business ethics. It has given a new urgency of business ethics in terms of international business. Business ethics become more important and crucial when the business is to be operated in an off – shore market. International business raises a number of social and corporate issues; dealing with them is really a difficult job. Internal business often invites norms conflict as of different social and cultural structures. Thus while operating business internationally; it is mandatory to list down all the rules, regulations and guidelines which can govern the international business. The Nike Company is famous of such cases where it was found that the company wrongfully exploits the work and wage condition in poorly developed nations.
Organizations can run an ethics management program so that they can manage ethics. Business ethics are needed to build better customer loyalty. It is a well known fact that customer loyalty is a key factor to long run of any business. Thus, business must make decisions which don’t harm the customers anyhow. Within the organization, business ethics helps in retaining good employees. Employees also get motivated and work hard if the organization behaves morally. There should be no chance where they find lack of attention by the organization towards them. Business ethics builds positive work environment in the organization. It creates a sense of responsibility and motivation among the employees and thus helps in developing good positive relationships with coworkers. It builds better relations based on trust. Business ethics avoids legal issues. Business ethics also offer better competitive advantages to the organizations. Business ethics enables a positive influence on the surroundings of the organizations thus more customers are attracted.
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