Business Ethics Definition

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Business Ethics Example

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Business ethics refers to carrying business as per self- acknowledged moral standards. It is a structure of moral principles and code of conduct applicable to a business. Business ethics applies not only to the manner the business relates to a customer but also to the society at large. It is the worth of right and wrong things from a business point of view. Business ethics not only talk about the code of conduct at the workplace but also with the clients and associates. Companies that present factual information respect everyone and thoroughly adhere to the rules and regulations are renowned for high ethical standards. Business ethics implies conducting business in a manner beneficial to the societal as well as business interests. Every strategic decision has a moral consequence.

The main aim of business ethics is to provide people with the means for dealing with the moral complications. Ethical decisions in business have implications such as satisfied workforce, high sales, low regulation cost, more customers, and high goodwill. Some of the ethical issues for business are a relation of employees and employers, the interaction between organization and customers, the interaction between organization and shareholders, work environment , environmental issues, bribes, employee rights protection, product safety, etc.

Business ethics emerged from divine guidelines, experience, giant corporate house interest, and existing legal system. Consequently, it has to maintain the following principles:. Trust defined is assured reliance on the character, ability, strength, and truth of a business. For continuous improvement of a company, the leader of an organization must be open to new ideas. Ask for opinions and feedback from both customers and team members, and your company will continue to grow. Regardless of the circumstances, does everything in your power to gain the trust of past customers and clients, particularly if something has gone awry.

Re-evaluate all print materials, including small business advertising, brochures, and other business documents, making sure they are clear, precise, and professional. Remain involved in community-related issues and activities, thereby demonstrating that your business is a responsible community contributor. In other words, stay involved. Gaining control of accounting and record-keeping allows you to end any dubious activities promptly.

Mindeli and Pipiya argued that the knowledge economy is an economy of abundance [] because it relies on the "infinite potential" of knowledge and ideas rather than on the limited resources of natural resources, labor and capital. Allison envisioned an egalitarian distribution of knowledge. Scarcity is natural when it is possible to conceive of it before any human, institutional, contractual arrangement. Artificial scarcity, on the other hand, is the outcome of such arrangements. Artificial scarcity can hardly serve as a justification for the legal framework that causes that scarcity. Such an argument would be completely circular. On the contrary, artificial scarcity itself needs a justification" [] Corporations fund much IP creation and can acquire IP they do not create, [] to which Menon and others have objected.

Ethical and legal issues include patent infringement , copyright infringement , trademark infringement , patent and copyright misuse , submarine patents , biological patents , patent , copyright and trademark trolling , employee raiding and monopolizing talent, bioprospecting , biopiracy and industrial espionage , digital rights management. Napster, Inc. Ashcroft , and Disney 's lawsuit against the Air Pirates. While business ethics emerged as a field in the s, international business ethics did not emerge until the late s, looking back on the international developments of that decade.

Theoretical issues such as cultural relativity of ethical values receive more emphasis in this field. Other, older issues can be grouped here as well. Issues and subfields include:. Foreign countries often use dumping as a competitive threat, selling products at prices lower than their normal value. This can lead to problems in domestic markets. It becomes difficult for these markets to compete with the pricing set by foreign markets. In , the International Trade Commission has been researching anti-dumping laws.

Dumping is often seen as an ethical issue, as larger companies are taking advantage of other less economically advanced companies. Ethical issues often arise in business settings, whether through business transactions or forming new business relationships. An ethical issue in a business atmosphere may refer to any situation that requires business associates as individuals, or as a group for example, a department or firm to evaluate the morality of specific actions, and subsequently, make a decision amongst the choices. Some ethical issues of particular concern in today's evolving business market include such topics as: honesty , integrity , professional behaviors, environmental issues , harassment , and fraud to name a few. From a National Business Ethics survey, it was found that types of employee-observed ethical misconduct included abusive behavior at a rate of 22 percent , discrimination at a rate of 14 percent , improper hiring practices at a rate of 10 percent , and company resource abuse at a rate of percent.

The ethical issues associated with honesty are widespread and vary greatly in business, from the misuse of company time or resources to lying with malicious intent, engaging in bribery , or creating conflicts of interest within an organization. Honesty encompasses wholly the truthful speech and actions of an individual. Some cultures and belief systems even consider honesty to be an essential pillar of life, such as Confucianism and Buddhism referred to as sacca , part of the Four Noble Truths.

Many employees lie in order to reach goals, avoid assignments or negative issues; however, sacrificing honesty in order to gain status or reap rewards poses potential problems for the overall ethical culture organization, and jeopardizes organizational goals in the long run. Using company time or resources for personal use is also, commonly viewed as unethical because it boils down to stealing from the company.

The misuse of resources costs companies billions of dollars each year, averaging about 4. In accordance with this, the Foreign Corrupt Practices Act was established in to deter international businesses from giving or receiving unwarranted payments and gifts that were intended to influence the decisions of executives and political officials. Many aspects of the work environment influence an individual's decision-making regarding ethics in the business world. When an individual is on the path of growing a company, many outside influences can pressure them to perform a certain way.

The core of the person's performance in the workplace is rooted by their personal code of behavior. A person's personal code of ethics encompasses many different qualities such as integrity, honesty, communication, respect, compassion, and common goals. In addition, the ethical standards set forth by a person's superior s often translate into their own code of ethics. The company's policy is the 'umbrella' of ethics that play a major role in the personal development and decision-making processes that people make in respects to ethical behavior.

The ethics of a company and its individuals are heavily influenced by the state of their country. If a country is heavily plagued with poverty, large corporations continuously grow, but smaller companies begin to wither and are then forced to adapt and scavenge for any method of survival. As a result, the leadership of the company is often tempted to participate in unethical methods to obtain new business opportunities. Additionally, Social Media is arguably the most influential factor in ethics. The immediate access to so much information and the opinions of millions highly influence people's behaviors.

The desire to conform with what is portrayed as the norm often manipulates our idea of what is morally and ethically sound. Popular trends on social media and the instant gratification that is received from participating in such quickly distort people's ideas and decisions. Political economy and political philosophy have ethical implications, particularly regarding the distribution of economic benefits.

For example, Rawls has been interpreted as offering a critique of offshore outsourcing on social contract grounds. Laws are the written statutes, codes, and opinions of government organizations by which citizens, businesses, and persons present within a jurisdiction are expected to govern themselves or face legal sanction. Sanctions for violating the law can include a civil penalties , such as fines, pecuniary damages, and loss of licenses, property, rights, or privileges; b criminal penalties, such as fines, probation, imprisonment, or a combination thereof; or c both civil and criminal penalties.

Very often it is held that business is not bound by any ethics other than abiding by the law. Milton Friedman is the pioneer of the view. He held that corporations have the obligation to make a profit within the framework of the legal system, nothing more. The reduction of ethics to abidance to laws and customs, however, have drawn serious criticisms. Counter to Friedman's logic it is observed [ by whom? Crime precedes law. Law against crime, to be passed, the crime must have happened. Laws are blind to the crimes undefined in it. As per liberal laws followed in most of the democracies, until the government prosecutor proves the firm guilty with the limited resources available to her, the accused is considered to be innocent. Though the liberal premises of law is necessary to protect individuals from being persecuted by Government, it is not a sufficient mechanism to make firms morally accountable.

As part of more comprehensive compliance and ethics programs, many companies [ who? These policies can be simple exhortations in broad, highly generalized language typically called a corporate ethics statement , or they can be more detailed policies, containing specific behavioral requirements typically called corporate ethics codes. They are generally meant [ by whom? It is hoped [ by whom?

An increasing number of companies [ who? Some companies [ who? Many companies [ who? A competitive business environment may call for unethical behavior. Lying has become expected in fields such as trading. An example of this are the issues surrounding the unethical actions of the Salomon Brothers. Not everyone [ who? Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment. Others [ who? Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly.

Some corporations [ who? In the case of Citi , they call this the Ethics Hotline. Sometimes there is a disconnection between the company's code of ethics and the company's actual practices [ who? Thus, whether or not such conduct is explicitly sanctioned by management, at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool. Jones and Parker wrote, "Most of what we read under the name business ethics is either sentimental common sense or a set of excuses for being unpleasant.

For instance, the US Department of Commerce ethics program treats business ethics as a set of instructions and procedures to be followed by 'ethics officers'. Corporate codes have certain usefulness and there are several advantages to developing them. First, the very exercise of doing so in itself is worthwhile, especially if it forces a large number of people in the firm to think through, in a fresh way, their mission and the important obligations they as a group and as individuals have to the firm, to each other, to their clients and customers, and to society as a whole. Second, once adopted a code can be used to generate continuing discussion and possible modification to the code.

Third, it could help to inculcate in new employees at all levels the perspective of responsibility, the need to think in moral terms about their actions, and the importance of developing the virtues appropriate to their position. Following a series of fraud, corruption, and abuse scandals that affected the United States defense industry in the mids, the Defense Industry Initiative DII was created to promote ethical business practices and ethics management in multiple industries. Subsequent to these scandals, many organizations began appointing ethics officers also referred to as "compliance" officers.

These guidelines, intended to assist judges with sentencing, set standards organizations must follow to obtain a reduction in sentence if they should be convicted of a federal offense. Following the high-profile corporate scandals of companies like Enron , WorldCom and Tyco between and , and following the passage of the Sarbanes—Oxley Act , many small and mid-sized companies also began to appoint ethics officers.

Often reporting to the Chief Executive Officer, ethics officers focus on uncovering or preventing unethical and illegal actions. This is accomplished by assessing the ethical implications of the company's activities, making recommendations on ethical policies, and disseminating information to employees. The effectiveness of ethics officers is not clear. The establishment of an ethics officer position is likely to be insufficient in driving ethical business practices without a corporate culture that values ethical behavior.

These values and behaviors should be consistently and systemically supported by those at the top of the organization. Many corporate and business strategies now include sustainability. In addition to the traditional environmental 'green' sustainability concerns, business ethics practices have expanded to include social sustainability. Social sustainability focuses on issues related to human capital in the business supply chain, such as worker's rights , working conditions, child labor , and human trafficking.

As mentioned, initiatives in sustainability encompass "green" topics, as well as social sustainability. There are however many different ways in which sustainability initiatives can be implemented in a company. An organization can implement sustainability initiatives by improving its operations and manufacturing process so as to make it more aligned with environment, social, and governance issues. Dell has integrated alternative, recycled, and recyclable materials in its products and packaging design, improving energy efficiency and design for end-of-life and recyclability.

The board of a company can decide to lower executive compensation by a given percentage, and give the percentage of compensation to a specific cause. This is an effort which can only be implemented from the top, as it will affect the compensation of all executives in the company. This is not usually the case for most companies, where we see the board take a uniform step towards the environment, social, and governance issues. This is only the case for companies that are directly linked to utilities, energy, or material industries, something which Alcoa as an aluminum company, falls in line with.

Instead, formal committees focused on the environment, social, and governance issues are more usually seen in governance committees and audit committees, rather than the board of directors. Similar to board leadership, creating steering committees and other types of committees specialized for sustainability, senior executives are identified who are held accountable for meeting and constantly improving sustainability goals. Introducing bonus schemes that reward executives for meeting non-financial performance goals including safety targets, greenhouse gas emissions , reduction targets, and goals engaging stakeholders to help shape the companies public policy positions.

Companies such as Exelon have implemented policies like this. Other companies will keep sustainability within its strategy and goals, presenting findings at shareholder meetings, and actively tracking metrics on sustainability. Best Practices. Companies such as Coca-Cola have actively tried improve their efficiency of water usage, hiring 3rd party auditors to evaluate their water management approach. FIFCO has also led successfully led water-management initiatives. Implementation of sustainability projects through directly appealing to employees typically through the human resource department is another option for companies to implement sustainability.

This involves integrating sustainability into the company culture, with hiring practices and employee training. General Electric is a company that is taking the lead in implementing initiatives in this manner. Bank of America directly engaged employees by implement LEED leadership in Energy and Environmental Design certified buildings, with a fifth of its building meeting these certifications.

Establishing requirements for not only internal operations but also first-tier suppliers as well as second-tier suppliers to help drive environmental and social expectations further down the supply chain. Starbucks has led efforts in engaging suppliers and local communities where they operate to accelerate investment in sustainable farming. By revealing decision-making data about how sustainability was reached, companies can give away insights that can help others across the industry and beyond make more sustainable decisions. Nike launched its "making app" in which released data about the sustainability in the materials it was using.

This ultimately allows other companies to make more sustainable design decisions and create lower impact products. As an academic discipline, business ethics emerged in the s. Since no academic business ethics journals or conferences existed, researchers published in general management journals and attended general conferences. Over time, specialized peer-reviewed journals appeared, and more researchers entered the field. Corporate scandals in the earlier s increased the field's popularity. As of , sixteen academic journals devoted to various business ethics issues existed, with Journal of Business Ethics and Business Ethics Quarterly considered the leaders.

The International Business Development Institute is a global non-profit organization that represents nations and all 50 United States. It offers a Charter in Business Development that focuses on ethical business practices and standards. The Charter is directed by Harvard , MIT , and Fulbright Scholars, and it includes graduate-level coursework in economics, politics, marketing, management, technology, and legal aspects of business development as it pertains to business ethics.

In Sharia law, followed by many Muslims , banking specifically prohibits charging interest on loans. This article stresses how Christianity is capable of establishing reliable boundaries for financial institutions. One criticism comes from Pope Benedict by describing the "damaging effects of the real economy of badly managed and largely speculative financial dealing. Businessmen are supposed to maintain steady-mindedness, self-purification, non-violence, concentration, clarity and control over senses.

Books like Bhagavat Gita [ citation needed ] and Arthashastra [] contribute a lot towards conduct of ethical business. Business ethics is related to philosophy of economics , the branch of philosophy that deals with the philosophical, political, and ethical underpinnings of business and economics. The philosophy of economics also deals with questions such as what, if any, are the social responsibilities of a business; business management theory ; theories of individualism vs. Business ethics is also related to political economy , which is economic analysis from political and historical perspectives. Political economy deals with the distributive consequences of economic actions. From Wikipedia, the free encyclopedia.

Application of ethical principles to the area of business activities. Management accounting Financial accounting Financial audit. Business entities. Corporate group Conglomerate company Holding company Cooperative Corporation Joint-stock company Limited liability company Partnership Privately held company Sole proprietorship State-owned enterprise. Corporate governance. Annual general meeting Board of directors Supervisory board Advisory board Audit committee. Corporate law. Commercial law Constitutional documents Contract Corporate crime Corporate liability Insolvency law International trade law Mergers and acquisitions.

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Retrieved January Business ethics : ethical decision making and cases. Fraedrich, John. Eleventh ed. Boston, MA. ISBN OCLC Chicago, Illinois: University of Chicago Press, p. Edward; Worrell, Dan L. Journal of Business Ethics. S2CID Retrieved on Encyclopedia of Race and Racism. Capitalism and Slavery. Political Economy. A Handbook of Economic Anthropology.

Velasquez, Business Ethics: Concepts and Cases. The New York Times Magazine. Archived from the original on March 17, Retrieved March 11, Painter-Morland and P. Boston, Springer. The Economist. For example:. You will probably note the link between business ethics and corporate social responsibility CSR. The two concepts are closely linked:. A common approach is to implement a code of practice. Ethical codes are increasingly popular — particularly with larger businesses and cover areas such as:. Company Reg no: VAT reg no Main menu.

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