Hazelle May
C. Andres
ABSTRACT
Business
is the exchange of goods or services for valuable consideration, a benefit such
as money. Yet, it can also mean an entity that offers goods or services intending
to make profits.
Ethics in general is the study
of standards of behaviour that promote human welfare and what is often called
"the good." Business ethics is
the study of those standards of business behaviour that do the same thing,
promote human welfare and the
good. A business exists with a
purpose and goal. Entrepreneurs conduct research and plan carefully for their
business startup. Thus, all aspects of establishing a business must be studied.
KEYWORDS:
Business,
Business Ethics, Ethics
INTRODUCTION
Most
entrepreneurs started their businesses with the mindset-being of the boss to
create profits. A capitalist mindset may be profitable in the startup but may
kill the business in the long run. Incorrect thinking and way of what and how a
business should be done.
The
real purpose of a business is not to create profits. A business cannot exist
outside of society, and it must meet the needs and demands to stay in business,
it has to create or add value to the community. Hence, the real purpose of a
business is to create customers and improve society.
For
a business to survive and stand out among others, it must implement appropriate
business policies and practices. It must go beyond just a moral code of right
and wrong; it must attempt to reconcile what companies must do legally against
maintaining a competitive advantage over other businesses.
Yet
nowadays, many businesses are gaining many profits, but are in news headlines
or courtrooms due to unethical practices.
What’s
a Business For?
“Businesses are organs of society. They do not exist for their own
sake, but to fulfil a specific social purpose and to satisfy a specific need of
a society,
a community, or individuals.” -Peter Drucker
The purpose of a business is
to offer value through products and/or services to customers, who pay for the
value with cash or equivalents. Minimally, the money received should fund the
costs of operating the business as well as provide for the life needs of the
proprietor.
By creating new products, spreading
technology and raising productivity, enhancing quality and improving service,
the business has always been the active agent of progress. It helps make the
good things in life available and affordable to even more people. This process
is driven by competition and spurred on by the need to provide adequate returns
to those who risk their money and their careers, but it is, in itself, a noble
cause. Businesses should make more of it. As
organizations do, measure
success in terms of outcomes for others as well as for ourselves.
What
is Business Ethics?
Business ethicists seek to
understand the ethical contours of business activity. One way of advancing this
project is by choosing a normative framework and teasing out its implications
for business issues. In principle, it is possible to do this for any normative
framework. Below are four that have received significant attention.
One influential approach to
business ethics draws on virtue ethics. Moore (2017) develops and applies
MacIntyre’s (1984) virtue ethics to business. For MacIntyre, there are goods
internal to practices, and certain virtues are necessary to achieve those
goods. Building on MacIntyre, Moore develops the idea that business is a
practice (or contains practices) and thus has certain goods internal to it (or
them), the attainment of which requires the cultivation of business virtues.
Aristotelian approaches to virtue in business are found in Alzola (2012) and de
Bruin (2015). Scholars have also been inspired by the Aristotelian idea that the
good life is achieved in a community (Sison & Fontrodona 2012), and have
considered how business communities must be structured to help their members
flourish (Hartman 2015; Solomon 1993).
Another important approach to
the study of business ethics comes from deontology, especially Kant’s version
(Arnold & Bowie 2003; Bowie 2017; Scharding 2015; Hughes 2020). Kant's
claim that humanity should be treated always as an end, and never as a means
only, has proved especially fruitful for analyzing the human interactions at
the core of commercial transactions. In competitive markets, people may be
tempted to deceive, cheat, use, exploit, or manipulate others to gain an edge.
Kantian moral theory singles out these actions as violations of human dignity
(Hughes 2019; Smith & Dubbink 2011).
Ethical theory, including
virtue theory and deontology, is useful for thinking about how individuals
should relate to each other. But business ethics also comprehends the laws and
regulations that structure markets and firms. Here political theory seems more
relevant. Several business ethicists have sought to identify the implications
of Rawls's (1971) justice as fairness for business. This is not an easy task,
since while Rawls makes some suggestive remarks about markets and firms, he
does not articulate specific conclusions or develop detailed arguments for
them. But scholars have argued that justice as fairness: (1) is incompatible
with significant inequalities of power and authority within firms (S. Arnold
2012); (2) requires people to have an opportunity to perform meaningful work
(Moriarty 2009; cf. Hasan 2015); and requires alternative forms of (3)
corporate governance (Berkey 2021; Blanc & Al-Amoudi 2013; Norman 2015; cf.
Singer 2015) and (4) corporate ownership (M. O’Neill & Williamson 2012).
A fourth approach to business
ethics is called the “market failures approach” (MFA). It originates with
McMahon (1981), but it has been developed in most detail by Heath (2014) (for
discussion see Moriarty 2020 and Singer 2018). According to Heath, the
justification of the market is that it produces efficient—in the sense of
Pareto-optimal— outcomes. But this only happens when the conditions of perfect
competition obtain, such as perfect information, no market power, and no
barriers to entry or exit. (When they don’t, markets fail—hence the market
failures approach.) On the MFA, these conditions are the source of ethical
rules for market actors. The MFA says that market actors, including sellers and
buyers, should not create or take advantage of market imperfections. So, for
example, firms should not deceive consumers (creating information asymmetries)
or lobby governments to levy tariffs on foreign competitors (erecting barriers
to entry).
Selecting a normative
framework and applying it to a range of issues is an important way of doing
business ethics. But it is not the only way. Indeed, the more common approach
is to identify a business activity and then analyze it using “mid-level”
principles or ideals common to many moral and political theories. Below I
consider ethical issues that arise at the nexus of firms’ engagement with three
important groups: consumers, employees, and society.
12
Principles of
Business Ethics
1.
Leadership:
The conscious effort to adopt, integrate, and emulate the other 11 principles
to guide decisions and behaviour in all aspects of professional and personal
life.
2.
Accountability:
Holding yourself and others responsible for their actions. Commitment to
following ethical practices and ensuring others follow ethics guidelines.
3.
Integrity:
Incorporates other principles—honesty, trustworthiness, and reliability.
Someone with integrity consistently does the right thing and strives to hold
themselves to a higher standard.
4.
Respect
for others: To foster ethical behaviour and environments in the workplace,
respecting others is a critical component. Everyone deserves dignity, privacy,
equality, opportunity, compassion, and empathy.
5.
Honesty:
Truth in all matters is key to fostering an ethical climate. Partial truths,
omissions, and under or overstating don't help a business improve its
performance. Bad news should be communicated and received in the same manner as
good news so that solutions can be developed.
6.
Respect
for laws: Ethical leadership should include enforcing all local, state, and
federal laws. If there is a legal grey area, leaders should err on the side of
legality rather than exploiting a gap.
7.
Responsibility:
Promote ownership within an organization, allow employees to be responsible for
their work, and be accountable for yours.
8.
Transparency:
Stakeholders are people with an interest in a business, such as shareholders,
employees, the community a firm operates in, and the family members of the
employees. Without divulging trade secrets, companies should ensure information
about their financials, price changes, hiring and firing practices, wages and
salaries, and promotions are available to those interested in the business's
success.
9.
Compassion:
Employees, the community surrounding a business, business partners, and
customers should all be treated with concern for their well-being.
10. Fairness: Everyone should have the same opportunities
and be treated the same. If a practice or behaviour would make you feel
uncomfortable or place personal or corporate benefit in front of equality,
common courtesy, and respect, it is likely, not fair.
11. Loyalty: Leadership should demonstrate confidentially
and commitment to their employees and the company. Inspiring loyalty in
employees and management ensures that they are committed to best practices.
12. Environmental concern: In a world where resources are
limited, ecosystems have been damaged by past practices, and the climate is
changing, it is of utmost importance to be aware of and concerned about the
environmental impacts a business has. All employees should be encouraged to
discover and report solutions for practices that can add to damages already
done.
Importance
of Business Ethics
Businesses
that practice business ethics guide
them through decisions about finances, negotiations and deals, corporate social
responsibility, and more. It ensures customers, employees, and other stakeholders that a
company obeys the rules and does the right thing. When a brand loses trust, it
can jeopardize sales and harm employee retention. It brings about more scrutiny
from government agencies and has vendors questioning whether it's worth doing
business with you. If other businesses don't trust you, they can buy products
elsewhere or give their good deals to other buyers. Business ethics are
critical to good financial planning and positive earnings.
Businesses need to operate with good business ethics to avoid
legal and regulatory problems. However, it's also vital to exhibit strong
ethical behaviour to maintain a positive reputation, both with the public and
employees.
When a
business enjoys a good
reputation in the marketplace, attracts and retains a strong customer base, and
maintains a talented workforce, it often sees a payoff in steady or increased
revenues. Most people want to do business with a company that operates fairly
with others. Just as the negative press can drive away customers, the positive
press can draw in new customers
Business
Ethics in the Modern Era
Business ethics are becoming
more and more prevalent in today’s business world. Wherein
it helps businesses to understand the ethical principles and moral or ethical problems that arise in a
business environment.
There are an array of issues
that have come under scrutiny, including community responsibility, pollution,
whistle-blowing, and sustainability. Business ethics is the conduct that a business
adheres to in its daily transactions with the world. The ethics of a particular
business can be different. They pertain not only to how the business interacts
with the world at large but also to their one-on-one transactions with a
consumer. Many businesses have obtained a bad reputation just by being in
business.
To most people, businesses are
only concerned with making money, and that is the bottom line. Making money is
not wrong in itself. It is the behaviour in which some businesses conduct themselves
that brings up the issue of ethical behaviour.
Good business ethics should be
a component of every business. There are many factors to consider. When a
company does business with another that is considered unethical, they are
usually considered unethical by association. The company has a responsibility
to investigate the companies that they do business with.
Many worldwide businesses,
including most of the major companies that we do business with, can be viewed
as not practising good business ethics. Many major companies have been fined
millions for breaches of ethical business laws. Money is the driving factor. If
a company does not comply with business ethics and breaks the laws, they
usually end up being fined
CONCLUSION
In today's modern era, many businesses are
just focused on providing goods and services just for the sake of making
profits. Many, tend to intentionally and/or unintentionally commit unethical
practices due to their short-sightedness.
For
a business to remain in the business, and to have a competitive advantage, it
must widen its range of study, research, and implementation, and must give
importance to business ethics. In that way, a business will able to establish a
good reputation with its customers and society. Aside from that, it will also
be able to retain and attract new talents, and will also limit the risk of
going out of business.
Overall,
business ethics is good for business. It is helpful for the growth of the
business, and business owners to make ethical decisions, generate bigger profits,
and lengthen and strengthen the existence of the business.
REFERENCES
Alan Weiss
(2013, January 30). The Purpose
of A Business. Retrieved from: https://alanweiss.com/the-purpose-of-a-business/
Alexandra
Twin (2022, September 14). Business
Ethics: Definition, Principles, Why They're Important.
Retrieved from https://www.investopedia.com/terms/b/business-ethics.asp
Charles Handy
(2002, December). The Magazine: What’s
a Business For?. Retrieved from: https://hbr.org/2002/12/whats-a-business-for
Jeffrey Moriarty
(2021). Business Ethics.
Retrieved from: https://plato.stanford.edu/entries/ethics-business/#ImpoFramForBusiEthi
Peter F. Drucker (1981). What is business ethics? Retrieved from: https://edisciplinas.usp.br/pluginfile.php/4221491/mod_resource/content/0/What%20is%20business%20ethics%20-%20Peter%20Ducker.pdf
Wayne
Norman (2016). Business Ethics. Retrieve from: https://www.hbs.edu/faculty/Shared%20Documents/conferences/2016-newe/Norman%2C%20Business%20Ethics%2C%20IntEncycEthics.pdf
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