Business Ethics

Business Ethics – Introduction

Ethics is related with the subject of moral principles and social values. Business Ethics is all about the business policies and practices with respect to issues in business like bribery, discrimination, and social responsibility of the organization.

There should be some basic principles involved in conducting business. Quality goods and services must be provided at reasonable prices. Adulteration, misleading advertisements, and other malpractices should be avoided. There are also other duties to the business such as distributing fair wages, providing good working conditions, not exploiting the workers and encouraging competition.

Defining Business Ethics

There are various definitions to Business Ethics but the following are considered the most appropriate according to various writers.

According to Andrew Crane, “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.”

Raymond C. Baumhart defines business ethics as, “The ethics of business is the ethics of responsibility. The business man must promise that he will not harm knowingly.”

The 8 Features of Business Ethics

  • It is a Code of Conduct: It acts as a code of conduct for business, which lets us know what to do and what not to do.
  • It is based on Moral and Social Values: Business ethics offers moral and social rules for conducting a business.
  • Protects Social Groups: It protect various social groups such as employees, consumers, businesspersons, government, shareholders, creditors, and other stakeholders.
  • It offers a Basic Framework for proper business and defines limits in which the business must operate. (Social, cultural, legal, economic limits).
  • Voluntarily practiced: It is supposed to be self-practiced and not enforced by law.
  • It requires Education & Guidance: Proper education and guidance should be provided to the businesspersons by the concerned authorities.
  • Relative to the business: Business ethics changes according to the business.
  • It is a relatively newer concept and the success of its application varies according to business and country.

The Principles of Business Ethics

The principles of business ethics are applies to the set of people including consumers, employees, investors, and the community. The important rules are as follows:

  • Avoid Exploiting the Consumers: Avoid activities such as artificial price rise and adulteration.
  • Avoid business activities such as black-marketing, hoarding, selling banned goods, etc. to earn profits.
  • Encourage Healthy Competitive atmosphere that offers certain benefits to the consumers.
  • Ensure Accuracy in weighing, packaging and quality of goods.
  • Pay Taxes and other duties to the government regularly.
  • Manage Proper business records and accounts.
  • Ensure employees are treated fairly and wages, facilities and incentives are provided according to the norms.
  • Keep the Shareholders and Investors informed of the important decisions of the company.
  • Avoid all kinds of Injustice and Discrimination (Discrimination based on gender, race, religion, language, nationality, etc.).
  • No Bribe and Corruption
  • Service should always come before Profit
  • Businesses should be fair, humane, efficient and dynamic and should offer certain benefits to the consumers of the business.
  • Avoid Monopoly and concentration of economic power.
  • Fulfill Customers’ Expectations by adjusting your business activities according to their demands and expectations.
  • Respect the Consumers Rights.
  • Accept the Responsibilities towards the society.
  • Ensure optimum utilization of resources in order to remove poverty and to increase the standard of living.
  • Avoid Illegal and evil means of business.

Woodrow Wilson’s rules

There are four important principles of business ethics termed as the Woodrow Wilson’s rules.

They are:

  • Rule of publicity: The business must clearly state what it tends to do.
  • Rule of equivalent price: Make sure the customers get proper value for their money.
  • Rule of conscience in business: The businesspersons should have a conscience i.e. a morale sense of judging about what is right and wrong.
  • Rule of spirit of service: Importance should be given to the service motive.