Business Ethics

What is Ethics?

The term Ethics is derived from the Greek word ‘ethos’ which refers to character. The term ethics refers to a code of conduct that guides an individual while dealing with others. It relates to social rules and cardinal values that motivate people to be honest in dealing with others. Ethics direct human behavior and also differentiates between good and bad, right and wrong fair and unfair human behavior or actions.

What is business Ethics?

Business Ethics refers to the system of moral principal applied to business activities.  It deals with morality in the business.  There should be ethics behind every business activity.  This means business activities should be conducted according to certain self recognized moral standards. Business ethics refers to a code of which businessmen are expected to follow while dealing with others.  The coverage of business ethics is very wide as it deals norms relating with customers, shareholders, employees, dealers, Government and competitors. These are, in fact, different area of business ethics.

Business ethics is a part of social responsibility which the businessmen have to honour in practice. According to Wheeler “Business Ethics is an art or science of maintaining harmonious relationship with society, its various groups and institutions as well as reorganizing the moral responsibility for the rightness or wrongness of business conduct.”

According to Dr. C.B. Mamoria and Dr. Satish Mamoria, business ethics is defined 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 business.

Factors of Business Ethics:-

1.      Code of conduct;- it is the code of conduct which businessmen should follow while conducting their normal business activities.

 2.      Moral and social values:- it is based on well accepted moral and social values.  It suggests moral principles/rules of conduct for businessmen. They include self-control, service t society, fair treatment to social groups and not to harm/exploit others.

 3.      Protection of social groups:- business should give priority to social interest or social good.  Such ethical approach creates good name and status to business and facilitates its expansion.

 4.      Provides basic framework:- it provides basic framework within which business should be conducted.  It suggests legal, social, moral, economic and cultural limits within which business is to operate. It suggests what is god and what is bad in business.

 5.      Needs willing acceptance for enforcement :- it cannot be enforced by law or by any other force.  It must be accepted as self discipline by businessmen. It should come from within

 6.      education and guidance required for introduction:- businessmen should be given proper education, guidance and training in order to motivate them to follow ethical business practices.

 7.      Not against profit making:- it is not against profit making.  However, it is against profiteering by cheating and exploiting consumers, employees or investors.  It supports expansion of business activities but by fair means and not through illegal activities or corrupt practices.

 8.      Act as ‘summum bonum’ of human life:- it passes judgments of value upon human actions with reference to the moral values. Judgment of value are judgment of what ought to be.  Such judgments may be different from the judgments of facts as they are judgment of what is.

 Role of Ethics is business:-

“Good Ethics is good business”, this quotation/slogan/observation suggests the importance of ethics in business. It provides protection, justice and fair treatment to all social groups.  In addition, ethical business expansion and growth.  Ethical business is equally profitable. Businessmen should therefore support the concept of business ethics.

Business ethics is important to business community, consumers and the society at large.  Businessmen have economic power which they can use for making the life of people happy or miserable.  Businessmen should conduct business in a fair and ethical manner and make people happy.  They may earn quick profit through unethical business practices. Along with this they may also invite consumer displeasure, government control and non co-operation from the employees. 

These factors harm the future prospects of business.The slogan “Good ethics is Good business” has special significance/relevance in India. Ethical business is useful to businessmen and also to the society.  Businessmen should act as a friend and well wishers of consumers.  This is possible when they avoid the exploitation of different social groups but offer protection and support to them.  It is rather unfortunate that in todays world, moral and ethical scruples fall prey to neglect and finally decay.

It is always desirable to strike a balance between economic performance and social performance of a business unit.  Business ethics facilitates such balance.  Businessmen should decide what is socially good and what is socially undesirable and act beneficial to them and to the society at large.  Business also gets public support when it is conducted in a fair manner.

Business ethics is important as it has wider social significance. It is important as it offers advantages to businessmen, consumers and employees. It provides advantages to businessmen/management like it provides favourable social image, guidance to businessmen, social consciousness, fair business etc.  and advantages to consumers like consumer protection, control of business practices, protection to environment etc. it also provides advantages to employees such as fair deal, fair wages, fair treatment, benefit of profit sharing etc.

Need of ethics in business:-

It is a fact that many undesirable and unethical practices entered in the business field along with its growth and development. Market competition, large scale production, lust for money and economic power are some major factors responsible for the down fall of the ethical values in business. Conduct of business activities on unethical principles is harmful to the society and also to the businessmen in the long run.  Ethical principle and values should be introduced in the business. The following points justify the need of ethics in business.

1.      Checking business mal practices:- it needed to make business activities fair to consumes. It checks business malpractices and offers protection to consumers.

 2.      Improving consumers confidence:- it is needed in order to improve the confidence of consumers as regards quality, price, reliability etc. of goods and services supplied.

 3.      Making businessmen conscious of social responsibilities:- it is needed in order to make businessmen conscious as regards their duties and responsibilities towards consumers and other social groups. The old fashioned slogan that the business of business is business is no more valid.  Businessmen have to accept certain social responsibilities for their benefit and also for the welfare of the society.

 4.      Safeguarding consumer rights and social welfare:- it is needed for the protections of rights of consumers at the business level. It is also needed for raising social welfare.

 5.      Protecting other social groups:- it is needed in order to protect the interests of all those concerned with business – the employees, shareholders, dealers and suppliers.  It avoids their exploitation through unfair trade practices.

 6.      Developing cordial relations between business and society:- it is needed in order to develop cordial and friendly relations between business and society.  It is also needed for social recognition and support to business.

 7.      Creating good image of business:-it is needed to create a good image of businessmen in the society and also for avoiding public criticism. Ethical business gets public support while unethical business is criticized by all.