Business Ethics: Definition, Principles, Features

Business EthicsEthics can be defined as a systematic attempt that would govern the sense of right or wrong and the values worth pursuing in life.

What is Business Ethics?

Business Ethics refers to carrying business as per self- acknowledged moral standards. It is a structure of moral principles and code of conduct applicable to a business.

Business ethics applies not only to the manner the business relates to a customer but also to the society at large.

It is the worth of right and wrong things from a business point of view. Business ethics not only talk about the code of conduct at the workplace but also with the clients and associates.

Companies that present factual information respect everyone and thoroughly adhere to the rules and regulations are renowned for high ethical standards.

Business ethics implies conducting business in a manner beneficial to the societal as well as business interests. Every strategic decision has a moral consequence.

The main aim of business ethics is to provide people with the means for dealing with the moral complications.

Ethical decisions in business have implications such as satisfied workforce, high sales, low regulation cost, more customers and high goodwill.

Some of the ethical issues for business are a relation of employees and employers, the interaction between organization and customers, the interaction between organization and shareholders, work environment, environmental issues, bribes, employee rights protection, product safety, etc.

Principles of Business Ethics

Business ethics emerged from divine guidelines, experience, giant corporate house interest, and existing legal system.

Consequently, it has to maintain the following principles:

  1. Be Trustful

Recognize customers want to do business with a company they can trust; when trust is at the core of a company, it’s easy to recognize. Trust defined, is assured reliance on the character, ability, strength, and truth of a business.

  1. Keep an Open Mind

For continuous improvement of a company, the leader of an organization must be open to new ideas.

Ask for opinions and feedback from both customers and team members and your company will continue to grow.

  1. Meet Obligations

Regardless of the circumstances, does everything in your power to gain the trust of past customers and clients, particularly if something has gone awry.

Reclaim any lost business by honoring all commitments and obligations.

  1. Have Clear Documents

Re-evaluate all print materials including small business advertising, brochures, and other business documents making sure they are clear, precise and professional.

Most importantly, make sure they do not misrepresent or misinterpret.

  1. Become Community Involved

Remain involved in community-related issues and activities, thereby demonstrating that your business is a responsible community contributor. In other words, stay involved.

  1. Maintain Accounting Control

Take a hands-on approach to account and record-keeping, not only as a means of gaining a better feel for the progress of your company but as a resource for any “questionable” activities.

Gaining control of accounting and record-keeping allows you to end any dubious activities promptly.

  1. Be Respectful

Treat others with the utmost respect. Regardless of differences, positions, titles, ages, or other types of distinctions, always treat others with professional respect and courtesy.

Recognizing the significance of business ethics as a tool for achieving your desired outcome is only the beginning.

A small business that instills a deep-seated theme of business ethics within its strategies and policies will be evident among customers. Its overall influence will lead to a profitable, successful company.

By recognizing the value of practicing admirable business ethics, and following each of the 7 principles, your success will not be far off.

Nature/Features of Business Ethics

Business ethics go hand in hand with generally accepted norms and values with very few exceptions. What is unacceptable in general, will not be acceptable in business, least in a certain locality.

However, the other features of the business are enumerated below:

  1. Ethical values

Business ethics is concerned with morality in business in today’s business world, a community firm is a large part of society and its action is bond to have a direct impact on the wellbeing and welfare of the society.

Business affects society in terms of what products it supplies.

Therefore, the business community must conduct its activities with self-control, self-check, and self scarifies .i.e. acting with less concern for you than for the success of the joint activity.

And keeping always in mind the interest of the community at large signifies ethical values.

  1. Relative term

Ethics is a relative term in the concept of morality and immorality. It differs from one individual to another or from society to society. What is moral to one may be immoral to another.

  1. Interest of society

Business ethics implies that business should first do well to society and then to itself.

Business is an important institution and has a social responsibility to protect the interest of all those groups who are directly or indirectly related to the organization like employees, shareholders, and consumers, etc. to contribute to the real success of the business organization.

  1. Business social relationship

Business ethics set the terms and standards to understand the societal relationship of business. It indicates what society expects from business and what it thinks about the business.

  1. Provides the framework

Like an individual, business is also bound by social rules and regulations.

Business is expected to restrict its activities within the limits of the social, legal, cultural, and economic environment.

  1. Facilitates protection of social groups

Business ethics gives protection to consumers and other social groups such as shareholders, employees and the society at large.

The business should give priority to social interest or social good. Such an ethical approach creates a good name, add status to business and helps in its growth and expansion.

  1. Not against profit-making

Business ethics is not against fair profit-making.

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

  1. Needs willing acceptance

Business ethics cannot be imposed by law or by force. It must be accepted as self- discipline by businessmen.

It should come from within. Businessmen should go for ethical trade practices on their own and not by force of law.

Business Ethics and Social Responsibility of Business

Business ethics is a form of applied ethics that examines just rules and principles within a commercial context; the various moral-ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in commerce.

Generally speaking, business ethics is a normative discipline, whereby particular ethical standards are advocated and then applied.

It makes specific judgments about what is right or wrong, which is to say, it makes claims about what ought to be done or what ought not to be done.

While there are some exceptions, business ethicists are usually less concerned with the foundations of ethics (meta-ethics), or with justifying the most basic ethical principles, and are more concerned with practical problems and applications, and any specific duties that might apply to business relationships.

Business ethics can be examined from various perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole.

Very often, situations arise in which there is a conflict between one and more of the parties, such that serving the interest of one party is a detriment to the other(s).

For example, a particular outcome might be good for the employee, whereas, it would be bad for the company, society, or vice versa. Some ethicists see the principal role of ethics as the harmonization and reconciliation of conflicting interests.

Ethical issues can arise when companies must comply with multiple and sometimes conflicting legal or cultural standards, as in the case of multinational companies that operate in countries with varying practices.

The question arises, for example, oughta company obey the laws of its home country, or should it follow the less stringent laws of the developing country in which it does business?

To illustrate, United States law forbids companies from paying bribes either domestically or overseas; however, in other parts of the world, bribery is customary, “accepted” way of doing business.

Similar problems can occur in child labor, employee safety, work hours, wages, discrimination, and environmental protection laws.

Business ethics should be distinguished from the philosophy of business, the branch of philosophy that deals with the philosophical, political, and ethical underpinnings of business and economics.

Business ethics operates on the premise, for example, that the ethical operation of a private business is possible those who dispute that premise, such as libertarian socialists, (who contend that “business ethics” is an oxymoron) do so by definition outside of the domain of business ethics proper.

The philosophy of business also deals with questions such as what, if any, are the social responsibilities of a business; business management theory; theories of individualism vs. collectivism; free will among participants in the marketplace; the role of self-interest; invisible hand theories; the requirements of social justice; and natural rights, especially property rights, in relation to the business enterprise.

Business ethics is also related to political economy, which is economic analysis from political and historical perspectives. Political economy deals with the distributive consequences of economic actions.

It asks who gains and who loses from economic activity, and is the resultant distribution fair or just, which are central ethical issues.