Sources of Business Ethics-
Ethics in general refers to a system of good and bad, moral and immoral, fair and unfair. It is a code of conduct that is supposed to align behaviors within an organization and the social framework. But the question that remains is, where and when did business ethics come into being?
Primarily ethics in business is affected by three sources - culture, religion, and laws of the state. It is, for this reason, we do not have a uniform or completely similar standards across the globe. These three factors exert influences to varying degrees on humans which ultimately get reflected in the ethics of the organization. For example, ethics followed by Infosys are different than those followed by Reliance Industries or by the Tata group for that matter. Again ethical procedures vary across geographic boundaries.
Religion
It is one of the oldest foundations of ethical standards. Religion wields varying influences across various sects of people. It is believed that ethics is a manifestation of the divine and so it draws a line between the good and the bad in the society. Depending upon the degree of religious influence we have different sects of people; we have sects, those who are referred to as orthodox or fundamentalists, and those who are called moderates. Needless to mention, religion exerts itself to a greater degree among the orthodox and to a lesser extent in the case of moderates. Fundamentally however all the religions operate on the principle of reciprocity towards one's fellow beings!
Culture
Culture is a pattern of behaviors and values that are transferred from one generation to another, those that are considered as ideal or within acceptable limits. No wonder therefore that it is the culture that predominantly determines what is wrong and what is right. It is the culture that defines certain behavior as acceptable and others as unacceptable.
Human civilization in fact has passed through various cultures, wherein the moral code was redrafted depending upon the epoch that was. What was immoral or unacceptable in certain cultures became acceptable later on and vice versa.
During the early years of human development were ones who were the strongest were the ones who survived! Violence, hostility, and ferocity were thus acceptable. Approximately 10,000 years ago when human civilization entered the settlement phase, hard work, patience, and peace were seen as virtues, and the earlier ones were considered otherwise. These values are still pt in practice by the managers of today!
Still further, when human civilization witnessed the industrial revolution, the ethics of the agrarian economy was replaced by the law pertaining to technology, property rights, etc. Ever since a tussle has ensued between the values of the agrarian and the industrial economy!
Law
Laws are procedures and codes of conduct that are laid down by the legal system of the state. They are meant to guide human behavior within the social fabric. The major problem with the law is that all the ethical expectations cannot be covered by the law and especially with the ever-changing outer environment the law keeps on changing but often fails to keep pace. In business, complying with the rule of law is taken as ethical behavior, but organizations often break laws by evading taxes, compromising on quality, service norms, etc.
Scope of Business Ethics
Ethics In Compliance
Business ethics play an efficient role in the compilation of business activities with legal rules and regulations. It ensures that business adheres to all established laws and any of its operations don’t go unlawful. It reduces any chance of facing any unfavorable action by authorities like payment of fines and penalty. Business following ethics in their operations frame strategies and policies in accordance with established rules and regulations. All activities are monitored and ensured that they go in accordance with framed policies.
Ethics In Human Resource
Human resources are the key element of every business and have an important role in its success. Ethics helps in improving the employer-employee relations and overall productivity of the business. Ethics related to human resources are introduced and implemented by Human resource management in business. HRM covers all ethical issues related to employer-employee affecting their relationship.
The various issues covered are Discrimination issues, sexual harassment, employee’s privacy issues, salaries, and wage issues, safety, and health issues. Ethics aims at overcoming all these issues so that employees are happy and motivated towards their roles. This booms the overall performance and reduces the risk.
Ethics In Finance
Finance is a crucial part of every business and is needed for its successful operations. Finance should be properly managed by every business otherwise it may have adverse effects. Ethics aims at controlling and handling all finance issues faced by companies and employees. The various ethical issues included are accounting related like window dressing and improper window dressing, insider trading, fake reimbursements, overbilling, bribery, kickbacks, etc.
Ethics In Production
Ethics in business helps in monitoring and controlling the overall production activities. It ensures that production processes do not adversely affect the business. Ethics frames production policies by considering organization goals, objectives, and various environmental factors.
Nature of Business Ethics
Contains Rules And Principles
The nature of Business Ethics defines the code of conduct for every business. It tells various rules and principles that every business should implement in its operations. Business is easily able to decide what is wrong and what is right for its growth and goodwill by adopting these ethics. Business ethics are applicable and required to be followed by every individual working in the business organization.
Voluntary
Business ethics are moral principles and social values that are not enforceable by law. These ethics are required to be adopted by businessmen by their own will. Business ethics brings self-discipline within the business environment. Businessmen should understand the relative importance of these ethics and adopt them hassle-free.
Avoids Cheating And Frauds
Ethics in business keeps an eye on every activity of the business. It ensures that no malpractices take place within the business organization. Rules and principles provided by these ethics focus on that business does not indulge in any unfair practices like black marketing, adulteration, misleading advertisement, inaccurate weight measures, misleading advertisement, etc. Every employee working with a business need to respect these ethics, failure of which leads to a penalty.
Education And Training Required
Proper education and training should be provided to businessmen and people working with business before ethics implementation. A proper explanation should be provided to all so that they are fully aware of the benefit of these ethics. Once they are informed about these ethics advantages, they will be self-motivated to adopt these. There should be an active role in the commerce chamber and trade associations in this regard.
Dynamic Concept
Business ethics is a dynamic concept and changes from time to time for the welfare of the business. Ethics differs from business to business as per the nature and type of business. It also differs from region to region and country to country. Business ethics are designed in accordance with the culture, traditions, and religions of a particular area. The same business ethic may be good for one region and a taboo for another region.
Social Welfare
Ethics in business provides a framework for the welfare of society and peoples associated with it. These ethics ensures that business should not exist for its growth only but should also work for the upliftment of its stakeholders. The business should provide fair wages and better working conditions to its employees, fair payment of taxes to the government, transparency of information to shareholders, and taking part in various amenities for society.
New Concept
Business ethics is a new concept. It is not mandated by any law to be followed by every business. In developed countries, business ethics are followed strictly. Whereas in poor and developing countries these are not followed properly.
