Business ethics may be defined as a set of moral standards which people owning and managing business are expected to follow. These standards are meant to govern the conduct of business persons. business ethics indicates what is right conduct in business matters. It is the application of moral standards to business decision. Making
Nature of Business Ethics
The main characteristics of business ethics are as follows :
(i) Ethics is important in all types of business – large or small, manufacturing or services.
(ii) Business ethics is above law. It requires behavior which is socially desirable even if not legally binding.
(iii) Ethics is a dynamic term and may change over time.
Elements of Business Ethics
The main elements of business ethics are given below :
1. Value: Values are the moral beliefs held by an individual, an organisation and a society. Values represented moral convictions and are relatively permanent. For example, a company may charge reasonable prices due to its value systems in spite of its monopoly position in the industry.
2. Rights: Rights are the claims of the individual or organisation. For example, every citizen of India enjoys certain rights under the country’s Constitution.
3. Duties: Duties are the obligations of a person or an organisation. For example, every citizen has the duty to follow the country’s law.
Levels of Business Ethics
1. Societal: At this level, questions about the basic institutions in a society are asked. The problem of apartheid and debate over the merits of capitalism are examples of such questions.
2. Stakeholders: This level is concerned with relations between a business enterprise and its stakeholders such as employees, customers, shareholders, Government, supplies, etc. Insider trading is one example of such relations.
3. Internal Policy: At this level, relations between an organisation and its employees are analysed. Rights and obligations of the two towards each other are important.
4. Personal: Here questions about how people should treat one another within an organisation are asked. These questions deal with the day-to-day issues of life.