Basic concept of Business Ethics

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Basic concept of Business Ethics

Definition and Introduction:

Ethics tells us the way to act in a certain situation not just to achieve a particular objective but considering everything around us. Business ethics refer to a set of professional or applied ethics that review or study ethical or moral principles and ethical or moral problems that appear in any business environment. Issues regarding business ethics arise when there is a conflict between profit maximizing and the concept of social and legal responsibilities of the business. Business firms became aware of their ethical state in the ending of 1980s and early 1990s to avoid business scandals like loan and savings crisis.

Basic Concept of Business Ethics:

The basic concepts of business ethics are involved with three different types of moral or ethical issues. Some concepts focus on the issues covering the function of business within the environment where the business activates i.e. political, economic, legal and other social factors. Other concepts focus on the corporate issues, i.e. the issues pertaining to the functioning of a certain business or company. While the other concepts focus on the individual issues, i.e. the issues pertaining to the conduct or behavior of individuals within a business or company. In this discussion the following concepts will be briefly explained:

  • Businesses as a "Corporate Entity”
  • Business Ethics considered as “Good”
  • Unethical Business Practices
  • Moral Rights
  • The Concept of Justice

Businesses as a "Corporate Entity":

Business corporations in most of the nations are considered legally as entities or persons, i.e. the rights and liabilities legally applicable to persons or citizens are also applicable to business corporations.

The eventual objective of individual ethics is developing a set of ethical standards which can be held as acceptable after considering everything carefully in a particular situation. These individually accepted ethical standards can also be applied to different situations such as personal, social and even in a business. Most of the consumers agree that a business should follow the same moral standard while interacting with an individual customer as well as interacting with all customers locally, nationally or globally.

Business Ethics considered as "Good":

Business ethics considered as "Good" requires containing and following a norm of moral values keeping the expectations and rights of people ahead of the profit maximization of business. A business’s main goal is to make a profit but peoples’ rights and expectations should not be ignored. Good business ethics is beneficial for businesses in the following three ways:

  • It Discourages the breaking of laws in business activities.
  • It assists businesses to avoid steps for which the company may come under costly civil lawsuits.
  • It demotivates companies to engage in actions which can damage the image of the company. Good business ethics helps to improve businesses profitability as following ethical values prevents loss of revenue and company reputation.

Though moral standards are something which goes beyond the legal requirements, some of them are ascertained by the legal system. There are various laws against fraudulence, stealing, killing, sexual harassment, and so on.

Unethical Business Practices:

Many big companies have been fined a large amount of money for following unethical business practices. Unethical business practices go far beyond functions breaking the law. Many renowned companies are engaged in unethical and questionable practices without breaking any laws. They follow practices just to increase their profits ignoring the rights of the consumers, such as, giving less in quantity or quality, selling old or low-quality products with free gifts, etc.

The businesses have to make a profit but not at the cost of moral or ethical values. Businesses are ethically responsible for their activities as individuals are responsible for theirs.

Moral Rights:

Generally, a moral right refers to a person’s claim to something. When a person is entitled to a right, he or she is able to make a decision whether or not to claim such right without anyone’s permission. The entitlement of moral or ethical rights implies that others have particular duties towards the person bearing the right.

Negative rights enforce duties on other people not to interfere in your activities which are right for or important to you. For example, your right to make your own decisions or right to express your own opinion about anything.

Positive rights generate duties on others to give something to the person bearing the right. They state that others must contribute some benefits to the bearer of the right. For example, education, you have the right to educate yourself. If you are eligible to get yourself admitted to a varsity to get an education on a specific subject or do a specific course, the varsity has to provide you the benefit of education.

The Concept of Justice:

The concepts of justice are based on ethical principles that determine just means of allocating benefits and burdens to all people of the society. The following beliefs are utilized to distribute the benefits and burdens in a just or fair way to the people of the society.

Egalitarianism states that all human beings are equal. According to this belief, all the benefits and burdens of the society should be circulated according to this principle:

“Every person should be given exactly equal shares of a society’s or a group’s benefits and burdens.”

Utilitarianism states that a just society’s laws and institutions promote the best overall or average welfare of its members. According to this belief, the greatest benefits for all, and the society should be organized in such a way that its wealth is allocated to meet everyone’s basic needs.

Socialist justice, states

“work burdens should be distributed according to people’s abilities, and benefits should be distributed according to people’s needs.”

 It is focuses on equal justice for everyone whether they are poor, middle class or rich.

Capitalist justice states that a person should receive the benefits proportionate to his or her contribution to the society.

Libertarian justice states that the free market is naturally just, and that redistributive taxation breaches the property rights of people. This belief is founded on two principles: Principle 1 (Principle of equal liberty) and Principle 2 (Difference principle) both referring how everyone is responsible for one’s own future not regarding of what happens.

Every business person should follow the business ethics properly because studies prove that ethically correct business becomes profitable in the long run.

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