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Business ethics: Meaning, Nature & Elements

 Business Ethics

Business ethics is the study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities. The law often guides business ethics, but at other times business ethics provide a basic guideline that businesses can choose to follow to gain public approval.

Businesses should have a balance between the needs of the stakeholders and their desire to make profits.

While maintaining these balances, many times businesses require to do tradeoffs. To combat such scenarios, rules and principles are formed in the organization.

This ensures that businesses gain money without affecting individuals or society as a whole. The ethics involved in the businesses reflect the philosophy of that organization.

One of these policies determines the fundamentals of that organization. As a result, businesses often have ethical principles. There is a list of ethical principles involved in the businesses.


Nature/Features of Business Ethics

Business ethics go hand in hand with generally accepted norms and values with very few exceptions. What is unacceptable in general, will not be acceptable in business, at least in a certain locality.

However, the other features of the business are enumerated below:

  1. Ethical values

Business ethics is concerned with morality in business in today’s business world, a community firm is a large part of society, and its action is bound to have a direct impact on the wellbeing and welfare of society.

Business affects society in terms of what products it supplies.

Therefore, the business community must conduct its activities with self-control, self-check, and self scarifies .i.e. acting with less concern for you than for the success of the joint activity.

And always keeping in mind the interest of the community at large signifies ethical values.

  1. Relative term

Ethics is a relative term in the concept of morality and immorality. It differs from one individual to another or from society to society. What is moral to one may be immoral to another.

  1. Interest of society

Business ethics implies that business should first do well to society and then to itself.

Business is an important institution and has a social responsibility to protect the interest of all those groups who are directly or indirectly related to the organization like employees, shareholders, and consumers, etc. to contribute to the real success of the business organization.

  1. Business social relationship

Business ethics set the terms and standards to understand the societal relationship of business. It indicates what society expects from business and what it thinks about the business.

  1. Provides the framework

Like an individual, business is also bound by social rules and regulations. Business is expected to restrict its activities within the limits of the social, legal, cultural, and economic environment.

  1. Facilitates protection of social groups

Business ethics gives protection to consumers and other social groups such as shareholders, employees, and society at large.

The business should give priority to social interest or social good. Such an ethical approach creates a good name, add status to business, and helps in its growth and expansion.

  1. Not against profit-making

Business ethics is not against fair profit-making.

However, it is against making a profit by cheating and exploiting consumers, employees, or investors. It supports the expansion of business activities but by fair means and not through illegal activities or corrupt practices.

  1. Needs willing acceptance

Business ethics cannot be imposed by law or by force. It must be accepted as self-discipline by businessmen. It should come from within.

Elements of business ethics:

 Following are the 6 elements of business ethics:

  1. Identification: It means that businessmen should be competent enough to rank and identify the ethical issues in order of importance.

  2. Evaluation: It means that businessmen must develop the rules and regulations in order to evaluate the ethical issues of the business.

  3. Imagination: A businessman should be imaginative enough that he should think about the society before taking any decision about the business. He must be aware of the areas towards which people are sensitive.

  4. Tolerance: Businessmen must have the quality to tolerate ethical disagreement.

  5. Obligations: Business decision taking process should be evaluate that it must fulfill the ethical obligations.

  6. Competence: A businessman should be competent enough to integrate the business ethical issues with the ethical issues of the society otherwise he has to pay the huge amount for the disagreement.



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