2. Business Ethics

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Business Ethics


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INTRODUCTION

•Business ethics is the application ofthe principles of ethics in the realm of

business, trade and commerce.

• BE is the evaluation of business in

terms of certain ethical

principles and

norms.

“Deals with certain m oral pr incip les

that tel l whether bus iness is ru n in a

mo ral ly r ight or wrong way .”

“ Pract ical app l icat ion o f theories,

principles and rules of ethics.”


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RELATION BETWEENETHICS AND BUSINESS ETHICS

• Firstly, ethics offer concepts and precepts

which are relevant for managers in

conceptualizing certain ethical issues in

relation to business.

• Secondly, ethics provide a set of anal

ytical

guidelines and moral standards, which can

be applied to solve busines

s problems fairly

and satisfactorily.

• Thirdly, ethics help in buildi

ng up ethical

models about ethical decision making,

ethical audit, solving ethical dilemmas etc.


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NATURE OFETHICAL ENQUIRY IN BUSINESS

• Subject is analytical.

• BE is diagnostic in nature.

• BE is evaluative in nature.

• BE is prescriptive in nature.

• BE sets the moral standard in business.


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SCOPE OF BUSINESS ETHICS

Different levels of activities where business

ethics works

Business encompasses following areas

where ethical issues are involved in

business.

• Ethical responsibilities of business.

• Unethical practices in HRM, finance,

marketing & IT.

• Ethical responsibilities towards employees,

customers, suppliers and other

stakeholders.

• Ethical leadership and performance of social

responsibilities.

• Ethical decision making and solutions of

ethical dilemmas.

• Ethical issues in corporate governance.

• Ethical business strategies.

• International business ethics.

• Ethical audit.

• Professional ethics.

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• Individual level (personal level)

• Organizational level (May or may not be a

business)

• Association level

• Societal level (Customers, banks &

Government)

• Internal policy making( Making business

strategies)

• Global level (business interactions)


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IMPORTANCE OF BUSINESS ETHICS8

1. Broad framework for giving guidance.

2. Company trusted by all the stakeholders.

3. Ethics improves its social image.

4. Improves and strengthens organizational culture.

5. Creates a solid foundation for all times to come.

6. Generates a sense of empowerment and security among

stakeholders.

7. Empirically found to have strong team work, commitment and high

productivity.

8. Avoid many work related conflicts.

9. Many market failures are prevented by ethically run organizations.


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APPROACHES TO BUSINESS ETHICS

• Profit based morality approach, positivecorrelation between profit and moral activities.

• Law based morality approach, laws aremostly based on moral principles.

• Natural laws and spiritual practices andadvices, based on five moral obligations

(Laczniak, 1983):1. Veracity (truth) principle

2. Non-injury (no harm) principle

3. Fairness (honesty) principle

4. Human rights (respect) principle

5. Autonomy (freedom) principle

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Myth # One: When a business house is obeying the laws of

land, it is ethical.

Myth # Two: Business ethics is best suited to philosophers but

nit to others.

Myth # Three: Business ethics is more a matter of religion than

of management.

Myth # Four: Business ethics is preaching of good persons to

bad persons, and even good persons can make mistakes and

take bad decisions.

Myth # Five: Business ethics is a new type of policing inbusiness and is a recent phenomenon.

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TEN POPULAR MYTHS ABOUT BUSINESS ETHICS

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Myth # Six: Our employees are reasonable and good people, so

business ethics is not necessary.

Myth # Seven: Business and ethics cannot go together.

Myth # Eight: Business ethics is a personal and private matter

and not for public debate or practice.

Myth # Nine: Good business means good ethics.

Myth # Ten: Ethics in business is always relative.

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TEN POPULAR MYTHS ABOUT BUSINESS ETHICS

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SOURCES OF ETHICAL KNOWLEDGE FOR BUSINESS1

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1. Philosophical system: The rational thought.

2. Legal system: Following the legal processes.

3. Codes of conduct: Employees adhere to codes.

4. Cultural experience: Culture, standard & customs.5. Genetic Inheritance: Good/bad, attitude etc.

6. Religion and Religiosity: Guide ethical and moral

behaviour.

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2. Business Ethics

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