Business ethics
Business ethics is the behavior that a business adheres to in its daily dealings with the world. The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one on- one dealings with a single customer. Many businesses have gained a bad reputation just by being in business. To some people, businesses are interested in making money, and that is the bottom line. It could be called capitalism in its purest form. Making money is not wrong in itself. It is the manner in which some businesses conduct themselves that brings up the question of ethical behavior. Good business ethics should be a part of every business.
There are many factors to consider. When a company does business with another that is considered unethical, does this make the first company unethical by association? Some people would say yes, the first business has a responsibility and it is now a link in the chain of unethical businesses. Business ethics has both normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflect the interaction of profit maximizing behavior with non-economic concerns. Business ethics refer to the moral principles which should govern business activities – Business ethics provide a code of conduct for the managers. The purpose of business ethics is to guide the managers and employees in performing their jobs.
Ethics are concerned with what is right and what is wrong in human behaviour. They lay down norms of behaviour by the business. A few examples of ethics are:
- To charge fair prices from the customers
- To use fair weights for measurement of commodities.
- To pay taxes to the Government honestly.
- To earn reasonable Profits.
- To give fair treatment to the workers.
Scope of Corporate Ethics
- Societal level: At this level, the ethical questions about the basic institutions in society are asked such as: Is capitalism a just system for allotting resources? Should the government intervene in business operations and, if yes, to what extent? Should we tolerate gross inequalities of wealth, status, and power? Such societal-level questions usually represent an ongoing debate among major competing institutions, including business.
- Stockholders level: Stockholders in a business enterprise include employees, suppliers, customers, shareholders, creditors and the rest. Here we ask questions about how a company should deal with the external groups affected by its decisions, and how the stockholders should deal with the company. For example, should a company inform its customers about the potential dangers of its products? What obligations does the company have towards the other stockholders. How should the decisions on such matters be taken? All these questions deal with business policy and are the subject of managerial decisions.
- Internal Policy Level: At this level, we ask questions about the nature of enterprise relations with its employees – both managers and workers. For instance, what kind of relations should be there between them? What rights should be employees have? What should be the mutual obligations of manages and workers? These questions, too, involve managerial decisions from the ethical viewpoint. So also, questions of motivation techniques, leadership, role, work rules, etc. are involved at this level.
- Personal Level: At this level we ask questions concerning how individual persons should treat one another within the firm. Should we be honest with one another irrespective of the consequences? What should be our roles for satisfactory mutual relations? These questions deal with day-today issues of life in any enterprise.
Corporate Ethics and Stockholders
- Customers: The customers of a business expect fair treatment. A business following social ethics will work in the interest of customers and will desist from undesirable practices such as hoarding, black marketing, adulteration etc.
- Employees: The employees have their trade unions and can pressurise the business management to pursue those policies which are conductive to healthy industrial relations. It is unethical to deny the workers good working conditions, fair wages and other benefits of employment.
- Industry: Business firms compete with each other for economic resources and for greater share of the market. Business ethics require them to follow fair trade practices resulting into healthy competition among the business units.
- Managers: Business ethics serve as a clue to the business manager as to what type of response is expected in a given situation. He can adjust his actions accordingly and live harmoniously with various groups with whom the business has interaction. This will enhance the image of the business.
- Society: Ethics are a part of the social environment of the country. If a business is careful about the ethical standards, the whole society is benefited.
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