BUSINESS ETHICS –‘THE NEED OF THE DAY ‘

CASIRJ Volume 5 Issue 7 [Year - 2014] ISSN 2319 – 9202

International Research Journal of Commerce Arts and Science http://www.casirj.com 31

BUSINESS ETHICS –‘THE NEED OF THE DAY ‘

Mr.Amit Gupta SBS Global Academy, JHU

[email protected]

ABSTRACT

Business Ethics relates to the behavior and obligations of business professionals. Its prime focus

on how an individual should conduct themselves in fulfilling the ethical requirement of business.

Business Ethics suggest a manager should be honest with stakeholder’s interest, society,

environment and themselves.

Commitment to ethics is most valuable asset firm can possess, it is most difficult to acquire and

maintain. Several companies have developed programmers’ and institutionalized them. Business

Ethics and profit go together in the long-run, for sustenance of organization. If a company want

to survive and grow, it has to discharge its obligations to the society. “In my view, this tide can

be turned only by deliberate and conscious actions of management at all levels. Each manager

needs to understand his/her own personal code of ethics for successful implementation of ethical

level for any business. So corporate have to pave the way for a stronger ethical foundation.


International Research Journal of Commerce Arts and Science http://www.casirj.com Page 132

INTRODUCTION

The word Ethics has origin in Greek word “Ethics” which means character, norms, morals and

ideals prevailing in a group and society. Ethics is a mass of moral principles or sets of values

about what conduct ought to be. Ethics is a fundamental, personal trait which one adopts and

follows as a guiding principle or basic Dharma in one’s life. It implies moral conduct and

honorable behavior on the part of an individual.

Business Ethics are rule of business conduct by which the propriety of business activities may be

judged. Ethical principles are dictated by the society and underlie broad social policies. These

principles when known, understood and accepted, determine generally the propriety or

impropriety of business activities.

In the word of Carter McNamara “Business Ethics is generally coming to know what is right or

wrong in the work place and doing what is right-this is in regard to effect of products/ services

and in relationship with stakeholders.”

In short Business Ethics can be strong preventing medicine as it relates to the behavior of

manager. It focus is on people, how individuals should conduct themselves in fulfilling the

ethical requirement of business.

Thomas Donaldson believes that there is a growing realization all over the world that ethics is

vital for almost all type of organization and even for the progress of any society. Ethics makes

for an efficient economy, its ethics that can protect the society neither the government nor the

law. In a long rum ethics is a synonyms to profit as an ethically responsible company is the one

which develop a culture of caring for people and for the environment thus led to more

satisfaction among the man power.

CONCEPTUAL MODELS OF BUSINESS ETHICS

The conceptual model of

Business Ethics explains

that the problems

associated with Business

Ethics can broadly be

divided in two separate

areas:

The Moral

Business Ethics

Moral ProblemsMicro Level

Macro Level

ManagerialMischief



Problems: The manager faces many different moral problems while making decision in the

company these problems can be categories in two different section

1. Micro Level Problems: The problems faced by the front line managers while dealing with

individuals working in the company are taken as micro level problems. Some of such

problems are as follows:

i) Fairness in performance appraisals.

ii) Accepting gifts from subordinates.

iii) Unbiased treatment of employee’s grievances

iv) Maintaining Confidentiality of company’s information

2. Macro Level Problems: The problems faced by the top managers while dealing with

working environment in the company are taken as macro level problems. Some of such

problems are as follows:

i) Corporate social responsibility.

ii) Laying ethical standard such as code of conduct, KRA etc...

iii) Laying policies and practices for ethical decision making.

Managerial Mischief: Any unethical or questionable and illegal practices of individual or

mangers in the company are mounted as managerial mischief. Some of such problems are as

follows:

1. Fraud, Kickbacks, bribery, improprieties, illegal disposal of hazardous materials,

intentional violations of work place safety, stealing expense account cheating.

2. Dumping intoxicant, providing money or sexual flavor to buyers etc…

Apart from the above listed problems Business Ethics also faces an issue of Ethical Dilemma.

This is explained in the following part of the article.

ETHICAL DILEMMA?

Ethical Dilemma is a complex judgment on the balance between the economic performance

and the social performance of an organization. According to Rush worth kidder, in Ethical

Dilemma, the toughest choices are Right verses Right. He further added that dilemmas are

genuine precisely because each side of the dilemmas is firmly rooted in one of our basic, core

values. Four such dilemmas are so common to our experiences that they stand as models,

patterns or paradigms. They are

Truth versus loyalty

Individual versus community.

Short term verses long term

Justice verses mercy



There are four classical approaches in resolving ethical dilemmas –

a) Ends-Based Thinking (Utilitarianism): It is a theory in normative ethics holding that the

proper course of action is the one that maximizes utility, usually defined as maximizing

total benefit and reducing suffering or the negatives.

b) Rule-Based Thinking (Kantian theory): It refers to a deontological ethical theory ascribed

to the German philosopher Immanuel Kant. The theory, developed as a result

of Enlightenment rationalism, is based on the view that the only intrinsically good thing

is a good will; an action can only be good, therefore, if its maxim – the principle behind

it – is duty to the moral law. Central to Kant's construction of the moral law is

the categorical imperative, which acts on all people, regardless of their interests or

desires.

c) Care-Based Thinking: care base approach says that you have an obligation to care those

with whom you have valuable and close relationships. However the critics of the theory

suggest that this can degenerate into unjust favoritism and sacrifice of own needs to care

the kin and natives only.

d) Virtue Ethics: in virtue ethics an action is considered morally right if in carrying out the

action the person performing the action exercise, exhibits or develops a morally virtuous

character.

Hence to conclude, ethical decisions are not simple choices between right and wrong. They are

complex judgments on the balance between the economic performance and the social

performance of an organization.

BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY (CSR)

It is now a widely held view that a new era has dawned in which businesses must adopt a new

conception of their mission, purpose and conduct, by endorsing and implementing corporate

social responsibility. The primary role of business is to act as a vehicle for economic progress.

This role depends upon business enterprises operating within the framework of a competitive

market economy. If we ask businesses to achieve broader social goals, we risk undermining the

very system in which business activity leads to opportunity and prosperity.

The material prosperity created by the activities of business is threatened by the "global

Salvationist consensus" that has arisen in recent years and which seeks to change the role of

business via the doctrine of corporate social responsibility and this consensus is based upon a set

of fallacious beliefs about the nature of capitalism, profiteering and business ethics.

In the contemporary business world only thing that seems to be constant is change and the nature

of the competition is such that companies need to leverage on the way they manage change to

gain a competitive advantage. Moreover, the types of changes the companies experience vary in

http://en.wikipedia.org/wiki/Normative_ethics

http://en.wikipedia.org/wiki/Utility

http://en.wikipedia.org/wiki/Deontology

http://en.wikipedia.org/wiki/Ethical_theory

http://en.wikipedia.org/wiki/Immanuel_Kant

http://en.wikipedia.org/wiki/Age_of_Enlightenment

http://en.wikipedia.org/wiki/Will_(philosophy)

http://en.wikipedia.org/wiki/Maxim_(philosophy)

http://en.wikipedia.org/wiki/Moral_absolutism

http://en.wikipedia.org/wiki/Categorical_imperative



nature as well, for instance, as industries consolidate, there are increasing number of mergers and

acquisitions, the pressures on organization to compete in a more global arena are leading to

different competitive pressures and more strategic alliances. Furthermore, rapid technological

changes are forcing organizations to embrace new technologies and change the way they work

and interface with suppliers and customers this lead to the emerging need for Business Ethics in

the modern era more than in traditional era.

NEED OF BUSINESS ETHICS IN MODERN ERA

Business Ethics is growing

with the emerging trend of

the society. The need of

Business Ethics is growing

and is one of the most vital

components of the modern

business environment. The

significance can be

explained as now-a-days

the society changes

drastically and so do the

perception and vision of the

people changes. The mind

set of individual of the

modern society has more inclination towards the concept of Quick Money rather than adopting

the fair means. The youth is getting divesting from the ethical part of their social obligation.

The Business houses need to take several small and big decisions on the cost of their social

ethical commitment in order to off shoot the cut throat competition in the short run goal

accomplishment.

The graph shows that, the difference between the actual and expected business ethics is directly

related with the time period as the time changes the difference also increases therefore the

modern manager has to figure it out the diverging gap of business ethics in order to maintain a

strong image in the market by understanding the concept of ethical decision making which assure

their strong indispensible image in the corporate world



IMPROVING ETHICAL DECISION MAKING

An ethical decision making process

involves a combination of three most

important pillar of Business Ethics

namely the ethical responsibility, the

economical responsibility and the

legal responsibility. The combination

of the above mention three effects

any managerial decision in any

organization.

The various combination of the above

listed pillar may also effect the

managerial decision to understand

let’s look on the abstract from the

Venn diagram

Citation from the Venn diagram

1: This area from the Venn diagram shows a perfect combination of the ethical responsibility, the

economical responsibility and the legal responsibility. So a manager should go for such decision.

It’s seems to be the most ideal situation for any business decision.

2a: This area from the Venn diagram shows a combination of economical and legal

responsibility a manger should precede in taking the decision but extra concern and care should

be taken.

2b: This area from the Venn diagram shows a combination of ethical and economical

responsibility but lacks in the section of legal responsibility, a manager should proceed to the

decision depending on the issue at stake.

3: This area from the Venn diagram shows a combination of ethical and legal responsibility but

lacks in the section of economical responsibility, a manager should find the ways for incurring

profit while taking such decisions.



MAKING ETHICAL JUDGMENTS

Furthermore the concept of

ethical judgment reflects the

ability of an individual in

framing an ethical decision.

The ethical judgment en-lights

a symbiotic relationship

between the behavior, norms

of acceptability and the value

judgment ability of the

observer.

Thing which may appear immoral to one may not be conceive the same by the others.

The perception and the value judgment is the most vital element in making an ethical

judgment.

Society directly or indirectly affects the norms of acceptability of an observer. The kind

of background, social interface and custom in which one belongs make its attitude

towards the acceptability of the norms.

The behavior of an individual is the pure blend of the above mentioned two elements.

What one percept and what one can accept makes the behavior of a person. A strong

behavior can be build with a strong perception and acceptance

A person with strong behavior can take a strong ethical judgment which help in maintaining a

strong ethical environment in any organization.

CONCLUSION

“Role of Ethics in Corporate Social Responsibilities”

Social responsibility is an idea that has been of concern to mankind for many years but over the

last two decades however it has become an increasing concern to the business world which has

resulted in growing interaction between governments, business and society as a whole.

In the word of Anderson, Jerry “the modern business must reflect legal, ethical, moral and social

consequences of their decisions.” Corporate Social responsibility is no longer defined by how

much money a company can contributes for charity; however it is an overall involvement of

companies in activities that improve the quality of people’s lives

Prevalling norms of

acceptibilty

Behavior or act to be

committed

Value judgement &

perception of observer



Ethics of multi- Corporation involves actions that are morally upright. It is quite common that

most of the activities that corporation are engaged in, may not meet the required ethical

standards. This is because much business tends to merely focus on profit making rather than any

other aspect.

Business Ethics is an upcoming issue mainly due to the sheer number of person’s involved.

Certain action may seem safe on small scale but it could be devasting when seen on large scale.

Corporate social responsibility makes it clear that its certainly unethical for the company to be

making profit at the expense of environment and other aspect of human life’s.

CSR ensures that corporate should therefore find better ways to handle their social obligation

towards the mankind.

Awareness and ethics are the critical factor that should be considered in the designing of CSR

programs. Beside education, the ethical parameter should be highlighted in making strategies for

the corporate social programs.

In Conclusion it will be correct to say that social responsibility investment combines investor’s

financial goals with their obligation and dedication to factors that ensure the overall well being

of society. These factors are not only aspects of corporate social responsibility but also a

showcase of the ethical standards of the society. From the above it can be concluded that social

corporate responsibility and the maintenance of high business ethical standards is not an option

but an obligation for all business.

REFERENCES

[1] Barth, Steven R. Corporate ethics: the business code of conduct for ethical employees.

[Boston]: Aspatore, 2003.

[2] Boatright, John Raymond. Ethics and the conduct of business. Upper Saddle River, N.J.:

Prentice Hall, c2000.

[3] Bhatia, SK. Business Ethics and corporate governance [New Delhi]:2007

[4] Sethi, S. Prakash and Oliver F. Williams. Economic imperatives and ethical values in global

business: the South African experience and international codes today. Notre Dame, IN:

University of Notre Dame Press, 2001.

[5] Gunther, Marc. Faith and fortune: the quiet revolution to reform American business. New

York: Crown Business, c2004.

[6] De George, Richard T. The ethics of information technology and business. Malden, MA:

Blackwell Pub., 2003.

BUSINESS ETHICS –‘THE NEED OF THE DAY ‘

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