BUSINESS ETHICS

Business Ethics is the " Art and discipline of applying Ethical principles in business situations."
Application of Ethical Values and Ethical ideas in Business Practice.
Moral Principles that guide the way a business behaves.
Tells us to do Good things and Avoid Bad things.
Concentrates on the benefit of all the Stakeholders, both Internal and External.

Feature of Business Ethics

Code of Conduct: Tells us what to do and what not to do for the welfare of society.
Based on moral and social values.
Gives protection to various stakeholders of the business.
Provides basic framework: Gives us the Social, Cultural, Economic, Legal limits or boundaries of the business.
Voluntary: Businessmen must accept Ethics voluntarily.
Requires education and guidance: Businessmen must be informed/educated about the advantages of adopting Ethics in business.
Relative term: It changes from one Business to another, and also from one country to another.
Not against profit-making: Business Ethics is not against real or fair profits; it is only against Profits made through unnecessary or illegal practices.

Morality v/s Ethics

Morality is the social, cultural and religious beliefs or values of an individual or group which tells us what is right or wrong. Ethics is a branch of philosophy that deals with the principles of conduct of an individual or group.
Morality is rooted in Religion and handed over throughout generations. Ethics are developed by groups or professions and is still evolving.
There maybe conflict between personal morality and professional ethics.

Values

A general belief of an individual or group.
Guides actions in personal and social life.
Related to Culture, Society or Custom.
Values change from Person to Person, Culture to Culture and from Country to Country.
Values help to influence and motivate others as well.

Ethics and Values

Ethics and Values are central to any organisation.
Ethical behaviour and Ethical Practices will lead to Creation of Values in the organisation.
If the Corporate engages in Unethical Practices, it leads to Dilution of the Value System of the Organisation.
Those Corporates which adopt ethical practices through good corporate governance gain values and become popular.

History and Development of Business Ethics

And continues to evolve even now.

Before 1960s, Ethics was discussed through Religious Perspective.
Religious leaders raised questions about Morality in Capitalism, Labour Practices, Workers’ Rights and Unfair Wages.
In 1962, The Consumer’s Bill of Rights was introduced by US President John. F. Kennedy.
It had 4 Basic rights- Right to Safety, Right to be informed, Right to Choose and Right to be heard.
In 1970s, Business professors began to write and teach about Social responsibility and to protect the rights of stakeholders.
Companies became more and more concerned about their public image.
The Watergate Scandal focused on the importance of ethics in administration and government.
In 1980s, Centres of Business Ethics provided publications, courses, conferences, seminars etc. on business ethics.
The Defence Industry Initiative’s principles had a significant impact on Business Ethics.
In 1990s, Ethics was introduced in various fields.
Companies were forced to implement their own corporate practices and implement them seriously. Thus business ethics became institutionalised.
Many business houses, still involved in various Scandals.
In 2002, The US Congress passed the Sarbanes Oxley Act, which stiffened penalties for corporate fraud.
Top Executives are now required to sign and certify their reports and are subject to fines and Imprisonment if there is misrepresentation in their financial statements.
Ethical practices have helped many business houses to improve their reputation and image.

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