Concept of Business Ethics

Business Ethics

Introduction :

               The word ethics finds its origin from the Greek word ethos which means character or customs.  It is a subject of moral philosophy where we study certain values that concern human beings.  A sense of ethical values informs people’s lives, directly in deciding what to do, and in their comments, and judgments on people and actions including their own.  People try to shape their lives by reference to such values.  The subject is called indifferently, ‘moral philosophy’ or ‘ethics’, but the terms, ‘moral’ and ‘ethical’ do have slightly different resonances.  ‘Ethical’ (derived from Greek word for personal character) carries a broader conception including a concern with the value of different kinds of like and activity; ‘moral’ (derived from Latin Word for social custom) tends to narrow its interest to rules and obligation, and to the experiences and consideration most closely related to those morality deals with right and wrong conduct and also with good and bad character.  Ethics clarifies the concept or right and wrong with rationality.  It tries to define and distinguish with reasons, what is right and what is wrong.  Since beginning of history, people have lived by rules of some kind or other.  These rules were simple in the traditional village society but became more complex and more complicated as these societies grew, they formed certain moral codes.  These were often closely identified with their religion.  The ‘Golden Rule’, with its simple statement, “Do unto others as you would have them do unto you”, has remained over the centuries a basic moral code.  Society judges the human behavior in the light of the motives and actions.  Either an action it self may be right or wrong or the motive behind the action is good or bad.  Some persons do not believe in following rules or codes often these persons believe in a code for others but not for themselves.  This situation demands enforcement of more and more laws.  However there are some schools of thought who criticize government intervention and advocates less governmental control.

Concept of Business Ethics :

               When the ethics is applied to business dealing what does it mean.  Business is an economic activity which aims at earning profit by producing at optimum cost.  Therefore some people think that business and ethics are two different concepts.  They cannot be put together under any case.  As we have already explained above ethics is concerned with moral behaviour of an individual and guide individual behaviour by defining what is good or bad, right or wrong behaviour.

               Though this view is logical but one should not forget that business is a part and parcel of human life.  Business organizations do not exist and function outside society.  Therefore it is quite normal that business organizations accept the social responsibility and behave for the maximum good of the society.  The business ethics, however, should be given special attention due to the specific problems and opportunities faced by business.  We shall try to look at a few definitions of ethics and business ethics to clarify the meaning and concept.

               According to Webster dictionary – “Ethics is the discipline dealing with what is good or bad, right or wrong or moral duty or obligation.  It is as group of moral principles or set of values.  These principles and values govern the conduct of an individual or a profession.”

               According to Paul W. Taylor, ethics may be defined as a philosophical enquiry into the nature and grounds of morality.

               Ethics is related to law, but it is a much broader field because it includes more than the punishment of the individual.  An act may be lawful and yet unethical because it violates a moral consideration involving the difference between right and wrong.  Ethical rules differ from legal rules chiefly because the former are not enforced by public authority, whereas legal rules are.  If business transactions were conducted on a high ethical place there would be no need for business law.  Though the basic ethical standards are universal, the difference lies in the application of ethical principles in business situations.  Therefore Baumhart says that, the objectives, intentions, circumstances and outcomes of the actions of businessmen and the right or wrong of it is the domain of business ethics.

               To some it is very surprising that there should be a term called business ethics.  On their opinion the basic ethical standards are universal.  The business community forms such a large part of society that “ethics of businessmen”
 or “business ethics” are of social importance.  This business ethics, we may define as: “Businessman’s integrity so far as his conduct or behaviour is concerned in all fields of business as well as towards the society and other business”.

               “Business ethics’ deals with morality in the business environment it involves moral judgements based on understanding of norms of society.  Ethics extends beyond the legal question and involves goodness or badness of an act.  Therefore charging higher price by a village trader may be legally right but morally, this is not fair.

               In ethical conduct, there is an implicit awareness of the need to transcend selfishness, greed, and striving exclusively for material wealth.  The desire for profit is seldom the sole motive in managerial decisions.  As managers become more professionally oriented and as corporate social consciousness expands, the ethical foundations of managerial actions will increase its importance.”

               “Garrett has defined “ethics” and “Business ethics” in the following words, Ethics is the science of judging specially human ends and the relationship of means of those ends.  In some way, it is also the art of controlling means so that they will serve specifically human needs”.  From this point of  view, ethics involves the use of any human knowledge whatsoever which has something to tell us about the relations between men or about the suitability of the available instruments.  As an art it involves techniques of judging and decision making as well as the tools of social control and personal development.  Ethics is or should be involved in all human activities.

               “Business ethics” is concerned primarily with the relationship of business goals and techniques to specific human needs.  It studies the impact of acts on the good of an individual, the firm, the business community and the society as a whole.  Business ethics, in other words, studies the special obligations which a men and a citizen accepts when he becomes a part of the world of commerce.  Business ethics examines the impact of actions and interactions of the business people as a whole.  Business system is a means, not an end in it self.  The system is controlled by businessmen.  Business ethics attempts to develop a self monitoring mechanisms to see that fair practices prevail and business will be organized and conducted in good spirit.

(1)        Ethics relates to all human activities including business activities as an individual.

(2)        The lawful act may also be unethical.  This means the field of ethics is broader than law.

(3)        Ethical behaviour in one society may differ from another society.  Thus the behaviour which is accepted as ethical in one societal situation may be generally unethical behaviour in another.  It is the sociocultural environment that determines the behaviour as ethical or unethical.

(4)        The concept of equity is implied in ethical rules.  It provides basis of ethics.

(5)        Ethical behaviour is personal.

(6)        Ethics carries the idea of what should be, it demands the existence of sound moral character.

(7)        Business ethics is the behaviour of business man as an individual different from the business organization.  It makes businessman honest, just and responsible citizen.

(8)        Business ethics is not enforced by legislation  but by a sense of moral values and good behaviour.  It emphasizes self-imposed discipline rather than any external force.

(9)        Ethics is not simply an emotional expression such as be good and do good.  It is a rational analysis and conclusions about the fundamental elements that decides good and bad behaviour.

(10)   According to William Shaw  business ethics is the study of what constitutes right and wrong or good and bad, human conduct in business context.