Application of general principles of ethics customary in a society to the areas where business operates is known as Business Ethics. That is business ethics relate to the behavior of a businessman in a business situation. They are concerned with the actions measured by ethical rules as contracted with strictly economic and financial rules.
Every businessman at the inception itself must assume these obligations i.e. when he enters into the business itself. With this introduction, we shall now proceed to examine the exact meaning of business ethics and what constitutes business ethics.
Meaning and Definition of Business Ethics
In the foregoing discussion, we have seen that ethics is concerned,with moral values or acts which a man is bound to do. Business ethics, therefore, refer to the acts, which a businessman ought to do. But such a simple definition is not sufficient to satisfy intellectuals. Hence, we shall reproduce some of the definitions developed by learned scholars.
Definition of T.M. Garrett:
Business ethics is a study of the moral rightness or wrongness of the acts involved in the production, distribution and exchange of economic goods and services.
Definition of Thomas J. Adams:
Business ethics deals with the values of what is right and wrong, good and bad and moral and immoral in business relationship.
The term business relationship is used here in a broader sense. It includes relationship with its employees, consumers, competitors, Governments, and finally the society at large.
What is ethical for a businessman?
It is simply stated that a businessman should strictly adhere to the code of business ethics. But there is no comprehensive list to specify those which are ethical and which are unethical? This question poses a serious problem to the businessman acting in a particular business situation. When there are specific legal principles, no complication will arise. He should strictly follow the laws though it is unethical in his opinion.
A businessman should not try to violate the legal provisions. If he feels that the law is unfair or unjust, he should seek to change them by employing democratic devices. He should gather public opinion against such unfair legislation and persuade the Government to change or amend it.
But in the absence of well-defined law, the businessman should face a problem in deciding what is ethical or unethical because of contradictory moral values. His act may be ethical and justifiable in a given situation. But it may do harm to a few. Those affected by his acts will consider them as unethical. Thus, drawing a line between right and wrong, black and white i.e. ethical and unethical practices is not an easy matter.
Due to this ambiguity, decisions with ethical overturns have become more complex. Arriving at a compromising solution suitable to conflicting interests is not so easy to a practical manager. Hence, there is a tendency to over simplify the matters of ethical problems in business organizations.
Why Business Ethics?
Though it cannot be clearly decided as to what is ethical and unethical for all, we cannot presume that businessman need not follow the ethical standards. Ethical considerations in business are highly important to the managers as individuals. The need for ethics in business had been a matter of great concern even in the ancient times.
The businessmen must render justice to various parties – the suppliers and the customers. They should be just and honest. Truthfulness should be the basic theme of their life. They maintain a long chain of honest tradition. This being the case the relevance of ethical code and its importance in business world is all the greater today in the context of growing industrialization and influence of the business on the society.
Today business has come to stay as dominant socioeconomic political institution next only to Government. Hence, ethical questions have become a primary concern of business managers. Besides, there are also a large number of factors, which necessitate the strict adherence of ethical behavior by the business community.
Factors which necessitate ethical behavior in business
1. Ours is an industrial society and its values tend to become those of the entire culture.
2. There is a growing awareness among the public. The society insists the business leaders to shoulder the responsibility for maintaining their welfare.
3. If an organization fails to live upon the expectations of the society, it will lose its market share, its prestige and reputation.
4. Unethical practices shall lead to Government control ultimately through legislation. Hence, prevention is better than cure.
Thus, not even for the society’s sake, but at least for his sake, the businessman, should adhere strictly to the ethical norms and the code of conduct.