Concept of Business Ethics
‘Business houses need to go beyond the interests of their companies to the communities they serve.’
Ratan Tata, Former Chairman of the Tata group
‘A business that is in the making of only money is a poor kind of business.’
Hendry Ford, Founder of Ford Motor Corporation.
Ethics is derived from the Greek word ‘ethos’ which means a person’s fundamental orientation towards life. It governs the behaviour, derived from the moral standards which help to determine right or wrong, good or evil. Ethical behaviour is the acts consistent with the moral standards or codes of conduct established by society. It may change over time and differ from culture to culture. For example, political bribes or payoffs may be acceptable in one culture but not in other. Ethical issues are inevitable in business.
Business ethics may be defined as a set of moral standards to be followed by owners, managers and business people. These standards determine the conduct and behaviour of business people. Business ethics reflects the conduct in the context of business.
Business exists to supply goods and services to the people from social point of view but from individual point of view, the primary objective of any business unit is to make profit. The individual objective should not be in conflict with societal objective. These two objectives normally contradict each other, as one business enterprise may be good in individual objective and bad at societal objective and vice versa. This raises the question of what is right and what is wrong. The subject matter of ethics is concerned with establishing linkages between individual good and social good.
Ethical standards are often enacted into laws. For example charging fair prices to customers, using fair weights for measurement of commodities giving fair treatment to workers, earning reasonable profits etc.
All business units have realised that ethics is vitally important for the existence and progress of the business as well as the society. It is very important as it improves public image, earns public confidence, and leads to greater success. Ethics and profits go together in the long run. It enhances the quality of life, standard of living and business.