Meaning of Business Ethics
Business ethics refers to moral principles and social values that business should adopt in its code of conduct. These are rules that business must accept and follow in its day to day operations for the welfare of society and all its stakeholders. Business is termed as social organ and therefore it should not indulge in any activity that is harmful to the interest of all its stakeholders. It should not only focus on objectives like profit maximisation, higher growth but should work for upliftment of its surrounding also. These ethics helps the business in deciding what is right and what is wrong for the business taking into account its circumstances.
Business ethics helps the business to maintain better and harmonious relations with society, customers, employees and concerned industry sector. Ethics adopted by the business should be followed strictly by each and every person working with the business. There should be a reward-punishment system linked with business ethics for those violating these ethics and one who properly abide by these ethics. Business ethics have an important role in raising profitability and productivity of business and improve its goodwill in the market. Characteristics of Business ethics are described clearly as given below:
Characteristics of Business Ethics
Defines Code of Conduct
Business ethics defines the code of conduct for every business. It clearly defines the activities that business should adopt in its code of conduct. Ethics states what is right or what is wrong for a business and what a business should do or what it should not do for its growth and welfare of society. It provides basic framework for doing a business. Ethics defines social, cultural, economic, legal and other limits of business and they should operate within these limits.
Protects Social Group
Business ethics provide protection to different social groups associated with business. Implementation of ethics in business ensures that it does not operate only for its growth but should also consider the welfare of social group. Needs and rights of customers, employees, government, shareholders, creditors, small businessmen etc. are given equal importance along with their own goals by business. Business adopting and following ethics therefore gives protection to all social groups.
Control Business Malpractices
Business ethics monitors and keeps a check on any malpractices in business. It ensures business performs all activities ethically without getting involved in any unfair trade practices. Business ethics avoids adoption of unfair trade activities like adulteration, black marketing, frauds and cheating in product, improper weights and measures etc. Controlling of all these malpractices by ethics helps in maintaining the legality of business.
Related to Moral and Social Values
Ethics in business are based on moral principles and social values. These ethics states that business should operate morally without exploiting others. Business should not only focus on its profitability or growth but also work for the betterment of its stakeholders. Ethics in business includes self-control, providing service to society, consumer welfare and protection, treating social groups fairly, not exploiting others, etc.
Requires Willingness to Accept
Implementation of business ethics requires the willingness to accept by businessmen. This is the basic requirement for successful adoption of ethics by any business. Ethics are voluntary in nature and are not enforceable by any law. These ethics must be adopted like self-discipline by businessmen at their own choice.
Creates Good Image
Business ethics has an important role in improving the goodwill of the business. Ethics defines rules and regulation that it need to adopt in its operations. It ensures that business maintain certain standards in their code of conduct. They should use better technology and resources for their production processes. Providing quality products at fair prices helps in serving and satisfying customers in a better way. This enhances the overall goodwill of business organisation in the market.
Business ethics is a relative term and it changes from business to business. Business ethics are not the same for every organisation. It changes from organisation to organisation and from country to country. Business ethic that may be good or moral in one country may be treated as taboo in other countries.
Requires Education and Guidance
For proper adoption of business ethics, it is required to educate and guide businessmen about them. Before introducing ethics businessmen should be properly taught about the benefits of these ethics. They should be motivated to implement these ethics by explaining their advantages. Trade Associations and Chambers of Commerce should take an active role in educating businessmen.
Features of Business Ethics
Maintains Legality Of Business
Business ethics ensure that business does not involve in any illegal activities. Ethics in business clearly defines the rules and principles that business needs to adopt in its code of conduct. These ethics avoid the adoption of unfair trade activities like adulteration, black marketing, frauds and cheating in the product, improper weights and measures etc. This all helps in maintaining the legality of the business.
Reduce Risk And Cost
Ethics in business helps in improving the productivity and overall efficiency of the organisation. These ethics bring self-discipline within the organisation and aims at reducing the risk and expenses. All the people working in an organisation are strictly required to follow these ethics and are imposed to a penalty in case of any failure. Employees are required to strictly required to focus on their defined roles for achieving higher efficiency.
Providing Quality Products
Quality products are a must for keeping the customers happy and satisfied. Ethics in business defines certain standards for the production of better products for customers. Businesses are required to use better technology and resources for manufacturing their products. They should not comprise with product quality and should meet the standards level set by these ethics.
Unhealthy competition in the market makes the condition worse for the existence of the small business. Every business should adopt fair market practices for healthy competition in the market. They should cooperate with their business partners and other business organisation existing in the market. Ethics in business focuses on that any business organisation does not aim at creating its monopoly in the market by exploiting other ones existing in the market.
Business ethics are not against the profit earning objective of business. The aims that business should not earn profit by unfair means. Businessmen should remain honest and not cheat its customers, investors and employees. Involvement in any fraudulent activities for raising profit should be avoided.
Good Employer-Employee Relations
Implementation of ethics in business makes the employer and employee relations better. These ethics ensure that business should not operate for its own growth only but also work for the welfare of its employees. All employees should be provided better and timely wages and salaries, proper working conditions and various other amenities. It helps in developing better relations and understanding among employer and employees.
Long Term Growth
Ethics in business focuses on the survival of business organisations for long term. Business cannot exist for long term if any of its operations leads to exploitation of its stakeholders. These ethics ensure that business works for the welfare of all its stakeholders and tries to achieve their support. With the support of all its stakeholders business can easily touch the height of great success and can continue its operations for the long-term.