Nature & Scope of Business Ethics


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 for 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 the profitability and productivity of a business and improves its goodwill in the market. Scope of business ethics can be described as given below:

Scope of Business Ethics

Scope of Business Ethics
Scope of Business Ethics

Ethics in Compliance

Business ethics play an efficient role in the compilation of business activities with legal rules and regulation. It ensures that business adheres to all established laws and any of its operations don’t go unlawful. It reduces any chance of facing any unfavourable action by authorities like payment of fines and penalty. Business following ethics in their operations frames strategies and policies in accordance with established rules and regulations. All activities are monitored and ensured that they go in accordance with framed policies.

Ethics in Human Resource

Human resources are the key element of every business and have an important role in its success. Ethics helps in improving the employer-employee relations and overall productivity of the business. Ethics related to human resource are introduced and implemented by Human resource management in business. HRM covers all ethical issues related to employer-employee affecting their relationship.

The various issues covered are Discrimination issues, sexual harassment, employee’s privacy issues, salaries and wages issues, safety and health issues. Ethics aims at overcoming all these issues so that employees are happy and motivated towards their roles. This booms the overall performance and reduce the risk.

Ethics in Finance

Finance is a crucial part of every business and is needed for its successful operations. Finance should be properly managed by every business otherwise it may have adverse effects. Ethics aims at controlling and handling all finance issue faced by companies and employees. The various ethical issues included are accounting related like window dressing and improper window dressing, insider trading, fake reimbursements, overbilling, bribery, kickbacks etc.   

Ethics in Production

Ethics in business helps in monitoring and controlling the overall production activities. It ensures that production processes do not adversely affect the business. Ethics frames production policies by considering organisation goals, objectives and various environmental factors.

Attempts are made to minimise the degree of risk and danger. The various ethical issues covered are defective and dangerous products, environmental ethics and pollution issues, Issues arising out of new technologies and product testing issues. Implementation of ethics controls these issues and fosters overall productivity.

Ethics in Marketing

Marketing is an important part of every business organisation. It is the means through which it improves the sales and profitability of the business. Marketing practices should be ethical and should avoid the adoption of any unfair means.

Implementation of ethics ensures that all marketing programmes are moral-ethical. The various ethical issues covered are pricing issues like price discrimination and price skimming, misleading advertisements, black marketing, anti-competitive practices, wrong advertisement content etc.

Nature of Business Ethics

Nature of Business Ethics
Nature of Business Ethics

Contains Rules And Principles

Nature of Business Ethics defines the code of conduct for every business. It tells various rules and principles that every business should implement in its operations. Business is easily able to decide what is wrong and what is right for its growth and goodwill by adopting these ethics. Business ethics are applicable and required to be followed by every individual working in the business organisation.  


Business ethics are moral principles and social values that are not enforceable by law. These ethics are required to be adopted by businessmen by their own will. Business ethics brings self-discipline within the business environment. Businessmen should understand the relative importance of these ethics and adopt them hassle-free.

Avoids Cheating And Frauds

Ethics in business keeps an eye on every activity of the business. It ensures that no malpractices take place within the business organisation. Rules and principles provided by these ethics focus on that business does not indulge in any unfair practises like black marketing, adulteration, misleading advertisement, inaccurate weight measures, misleading advertisement etc. Every employee working with a business need to respect these ethics, failure of which leads to a penalty.

Education And Training Required

Proper education and training should be provided to businessmen and people working with business before ethics implementation. A proper explanation should to be provided to all so that they are fully aware of the benefit of these ethics. Once they are informed about these ethics advantages, they will be self-motivated to adopt these. There should be an active role of commerce chamber and trade associations for in this regard. 

Dynamic Concept

Business ethics is a dynamic concept and changes from time to time for the welfare of the business. Ethics differs from business to business as per the nature and type of business. It also differs from region to region and country to country. Business ethics are designed in accordance with culture, traditions and religions of a particular area. Same business ethic may be good for one region and a taboo for another region.

Social Welfare

Ethics in business provides a framework for the welfare of society and peoples associated with it. These ethics ensures that business should not exist for its growth only but should also work for upliftment of its stakeholders. Business should provide fair wages and better working condition to its employees, fair payment of taxes to the government, transparency of information to shareholders and taking part in various amenities for society. 

New Concept

Business ethics is a new concept. It is not mandated by any law to be followed by every business. In developed countries, business ethics are followed strictly. Whereas in poor and developing countries these are not followed properly.