Business Ethics

INTRODUCTION
Business ethics is the application of
the principles of ethics in the realm of
business, trade and commerce.

BE is the evaluation of business in

terms of certain ethical principles and
norms.
Deals with certain moral principles
that tell whether business is run in a
morally right or wrong way.

Practical application of theories,

principles and rules of ethics.

RELATION BETWEEN
ETHICS AND BUSINESS ETHICS
Firstly, ethics offer concepts and precepts
which are relevant for managers in
conceptualizing certain ethical issues in
relation to business.
Secondly, ethics provide a set of analytical
guidelines and moral standards, which can
be applied to solve business problems fairly
and satisfactorily.

Thirdly, ethics help in building up ethical

models about ethical decision making,
ethical audit, solving ethical dilemmas etc.

NATURE OF
ETHICAL ENQUIRY IN BUSINESS
Subject is analytical.
BE is diagnostic in nature.
BE is evaluative in nature.
BE is prescriptive in nature.
BE sets the moral standard in business.

SCOPE OF BUSINESS ETHICS

Business encompasses following areas

where ethical issues are involved in
business.

Different levels of activities where business

ethics works

Individual level (personal level)

Ethical responsibilities of business.

Organizational level (May or may not be a

business)

Unethical practices in HRM, finance,

marketing & IT.

Association level

Societal level (Customers, banks &

Government)

Ethical responsibilities towards employees,

customers, suppliers and other
stakeholders.

Internal policy making( Making business

strategies)

Ethical leadership and performance of social

responsibilities.

Global level (business interactions)

Ethical decision making and solutions of

ethical dilemmas.

Ethical issues in corporate governance.

Ethical business strategies.

International business ethics.

Ethical audit.

Professional ethics.

OBJECTIVES/ PURPOSES
1. Teaches ethical rules and principles relevant in
business.
2. Concerned with application of ethical standard and
values to business.
3. Teaches manager to run business in ethical lines.

4. Helps in prescribing ethical codes.

5. Help to take decisions and formulate strategies which
are morally fair, just and consistent.

IMPORTANCE OF BUSINESS ETHICS

1. Broad framework for giving guidance.

2. Company trusted by all the stakeholders.

3. Ethics improves its social image.
4. Improves and strengthens organizational culture.
5. Creates a solid foundation for all times to come.
6. Generates a sense of empowerment and security among
stakeholders.
7. Empirically found to have strong team work, commitment and high
productivity.
8. Avoid many work related conflicts.
9. Many market failures are prevented by ethically run organizations.

APPROACHES TO BUSINESS ETHICS

Profit based morality approach, positive
correlation between profit and moral activities.
Law based morality approach, laws are
mostly based on moral principles.
Natural laws and spiritual practices and
advices, based on five moral obligations
(Laczniak, 1983):
1.

Veracity (truth) principle

2.

Non-injury (no harm) principle

3.

Fairness (honesty) principle

4.

Human rights (respect) principle

5.

Autonomy (freedom) principle

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TEN POPULAR MYTHS ABOUT BUSINESS ETHICS

Myth # One: When a business house is obeying the laws of
land, it is ethical.

Myth # Two: Business ethics is best suited to philosophers but

nit to others.
Myth # Three: Business ethics is more a matter of religion than
of management.

Myth # Four: Business ethics is preaching of good persons to

bad persons, and even good persons can make mistakes and
take bad decisions.
Myth # Five: Business ethics is a new type of policing in
business and is a recent phenomenon.

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TEN POPULAR MYTHS ABOUT BUSINESS ETHICS

Myth # Six: Our employees are reasonable and good people, so
business ethics is not necessary.

Myth # Seven: Business and ethics cannot go together.

Myth # Eight: Business ethics is a personal and private matter
and not for public debate or practice.
Myth # Nine: Good business means good ethics.
Myth # Ten: Ethics in business is always relative.

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SOURCES OF ETHICAL KNOWLEDGE FOR BUSINESS

1. Philosophical system: The rational thought.

2. Legal system: Following the legal processes.

3. Codes of conduct: Employees adhere to codes.

4. Cultural experience: Culture, standard & customs.
5. Genetic Inheritance: Good/bad, attitude etc.
6. Religion and Religiosity: Guide ethical and moral
behaviour.

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