Ethics is a subject of social science that is related with moral principles and social values. ‘Business Ethics’ can be termed as a study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.
Businesses must abide by some basic principles. It should provide quality goods and services at reasonable prices to their consumers. It must also avoid adulteration, misleading advertisements, and other unfair malpractices.
A business must also perform other duties such as distributing fair wages, providing good working conditions, not exploiting the workers, encouraging competition, etc.
Business Ethics – Definition
There are many definitions of business ethics, but the ones given by Andrew Crane and Raymond C. Baumhart are considered the most appropriate ones.
According to Crane, “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.”
Baumhart defines, “The ethics of business is the ethics of responsibility. The business man must promise that he will not harm knowingly.”
Features of Business Ethics
There are eight major features of business ethics −
- Code of Conduct − Business ethics is actually a form of codes of conduct. It lets us know what to do and what not to do. Businesses must follow this code of conduct.
- Based on Moral and Social Values − Business ethics is a subject that is based on moral and social values. It offers some moral and social principles (rules) for conducting a business.
- Protection to Social Groups − Business ethics protect various social groups including consumers, employees, small businesspersons, government, shareholders, creditors, etc.
- Offers a Basic Framework − Business ethics is the basic framework for doing business properly. It constructs the social, cultural, legal, economic, and other limits in which a business must operate.
- Voluntary − Business ethics is meant to be voluntary. It should be self-practiced and must not be enforced by law.
- Requires Education & Guidance − Businessmen should get proper education and guidance about business ethics. Trade Associations and Chambers of Commerce should be active enough in this matter.
- Relative Term − Business ethics is a relative term. It changes from one business to another and from one country to another.
- New Concept − Business ethics is a relatively newer concept. Developed countries have more exposure to business ethics, while poor and developing countries are relatively backward in applying the principles of business ethics.