Ethics plays an essential role in business management. It is related to social values and moral principles. Ethics is a subject of social science. We can describe business ethics as the research of business policies and practices, possibly contentious issues, like discrimination, bribery, corporate governance, trading, insider trading, fiduciary responsibilities, and corporate social responsibilities. Ethics encourage business owners to know what is wrong and what is right. Duties of business owners include: Distributing fair salaries, Encouraging healthy competition, Not taking advantage of workers, Giving good working conditions. Online businesses should do business with basic principles like supplying good quality products and services at acceptable prices. In this article, you will find the definition of Business ethics along with the scope of business ethics, its importance, and its advantages.
Definition of Business Ethics
Firstly, we will learn the definition of business ethics. There are many definitions of business ethics. Some of the most appropriate descriptions with a little introduction of their authors are written below.
Raymond C. Baumhart wrote in his book Ethics and Business that “The ethics of business is the ethics of responsibility. The businessman must promise that he will not harm knowingly.” Raymond was a Professor of management at the Loyola University of Chicago in 1962. He became the first clergyman to receive a Business Administration doctorate from Harvard University, Cambridge.
Andrew Crane is a Professor of business and society and the director of CBOS (Center for Business, Organization, and society). Later, He became the author of a best-selling book. According to Andrew, “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.”
Scope of business ethics
Business ethics refers to conducting business with a human connection to benefit society. The scope of business ethics is described below:
Ethics in Human Resources
Human resources play an essential role in every business and help it to ascend the stairs of success. Basically, Human resources ethics are problems that can take place between the employer and the employee. It covers the issues such as employee privacy issues, safety issues, sexual harassment, salaries issues, discrimination issues, and health issues.
Ethics in Production
Business ethics in production helps with the companies’ duties to ensure that the product and the production process do not harm the business. Moreover, ethics can support production policies by assessing the business goals, objectives, and environmental elements. Some ethical issues in production are supplying defective and dangerous products, product testing, pollution, and new technologies problems. We can surely minimize these issues by implementing ethics in production.
Ethics in Compliance
Ethics undoubtedly are a crucial element in compliance. Compliance means we must obey the legal rules and stay within the established laws while doing business. It lessens the possibility of adverse actions like paying penalties and fines. Ethics in business ensures that compliance with the law is the due to the desire to obey the laws. And should not be fuelled by the fear of getting caught while doing it.
Ethics in Finance
Finance is an essential part of every business. It also plays a significant role in making the business successful. Ethics work towards handling all financial problems faced by the company and its employees. The ethical issues that arise in finance are Window dressing, insider trading, bribery, executive compensation, and overbilling.
Ethics in Marketing
Last but not least, Marketing is another vital component of the business. It helps in boosting the profitability and sales of the company. The problems that business face in marketing without ethics are price discrimination, price skimming, inappropriate advertisement content, misleading advertisement, anti-competitive practice, and black marketing. However, by implementing ethics in business, companies can prevent these problems.
Importance of Business Ethics
- Ethics in business can stop malpractice and ensure the safety of society. It will help reduce black marketing, selling duplicates, supplying harmful products, and cheating in weights and measures.
- Furthermore, it will improve the customer’s trust. Customers are most likely to have more confidence in a business that provides products that have good quality, reliability, quantity, and price.
- Business ethics can also help protect employees, shareholders, dealers, customers, competitors, etc. It will stop them from exploiting each other through unfair trade, such as fraud and cheating.
- Additionally, a business person who ethically runs a business will have a positive reputation. The businessman can create a long-lasting effect for his business.
- When an employer work based on honesty, the employees will follow in his footsteps. As a result, The whole company will become successful.
Advantages of Business Ethics
Companies that follow ethics in business can increase their success rate. Companies can attract investors as well as customers. As mentioned above, the customer will probably show more trust in businesses that provide good quality products at reasonable prices. Therefore, sales will increase, and the business will automatically attract investors. If a company has a reputation for behaving ethically, it will assist the company in creating positive recognition in the market. It will also provide aid in maintaining a good workplace environment. The employees will have a better relationship with their colleagues and work efficiently. Businesses can avoid legal investigations and issues such as paying fines and getting arrested for ignoring workers’ health hazards.
We can conclude that by ethical behavior, the companies will get less profit. Still, they will acquire customer loyalty and trust, attracting individuals to invest in your business or to work for you. Usually, patients are likely to believe physicians because they follow ethical behavior. It can be saved from the hassle of cheating and committing fraud. Ethical behavior will prevent legal actions against the company. The growth of an institution, company, or business is highly based on its honest morals. Companies can’t stay successful for a long time without following ethics. Applying ethics in business will pay in the long run. The people in the industry who follow ethics in business will be more successful than those who don’t.