The History Of Business Ethics

Published Date: 02 Nov 2017

Business Ethics

Contents

Introduction

The history of business ethics is as old as the religious books like the Bible and the holy Quran. These religious books have talked about truthfulness, transparency and honesty among people. The prohibition of theft, self-interest at the cost of others, and malice in these religious sources have a direct application the world of business. The history of business ethics has evolved during the long course of time and is still in this phase of development. The application of business ethics varies in different context. There have been radical changes in the world of business which has evolved the business ethics to its current form. And with continuously changing business world we can presume that in the future business ethics will undergo more changes. It will evolve continuously. (Badaracco, 1995)

The business ethics has an immense scope touching every human living in the society. The affects the daily decision making in the society, irrespective of whether it is a big decision affecting large masses or small decision affecting just one person. Business ethics can be looked at by different perspectives. One perspective is that of organization point of view which concerns about the things that an organization should do. While the other perspective is the things that must really be done irrespective of an organization. The latter one gauges the different aspects of an organization. The literary evidence for the history and development of modern era business ethics can be traced back to 1930s. The first managerial text book on business ethics was written by Frank Chapman Sharp and Phillip D. Fox in 1937 and the title of the book was "Business Ethics". This book is the proof that many contemporary topics were also the relevant topics more than 50 years ago. While the relevant issues of business ethics during the latter half of the last century were environmental issues, human rights issues, and work practices issues in third world countries, the modern century is dealing with the issues like emerging technology issues and rampant corruption worldwide. Although the business ethics is among the hot topic in the trending charts academically, a lot of improvement is needed in the theories and practices of business ethics in the corporate world. The business environment has become excessively competitive. This cut-throat competition has made the business organizations compromise the ethical values. The rightful followers of ethical values are declining at a fast rate. (England, 2011)

What is Business Ethics?

Business Ethics, also known as Corporate Ethics is the set of moral values and standards that used to conduct the business and are widely accepted in corporate world. Academically, ethics is the branch of social science which deals with the matters of social values and moral principles. It teaches the differences between right and wrong. The formal definition of business ethics says that it is the study of proper business policies and practices regarding potentially controversial issues, such as insider trading, corporate governance, bribery, corporate social responsibility, discrimination and fiduciary responsibilities. It is also defined as the critical, structured examination of behavior of the people and the organization in the world of commerce. Business ethics provides a basic framework for the business organization to conduct business which helps them to be accepted by the public. Mostly, it is led by the law. The ethics of the different businesses may be varying. It is not just restricted to the global conduct of a business but also covers the small conducts such as one on one dealing with a particular customer. It tests the constraints put on the organization and its employees pursing profit and self-interest, as their decisions affect other people too. (Negru)

Evolution of Business Ethics

With the evolution of norms and acceptable behaviour over time, the business ethics also underwent a variety of changes. As the norms changed, the acceptable behavior became objectionable. There was a time when slavery was the involved as part of business, and it was socially acceptable. But as the norms changed the slavery was deemed unethical and laws were made to abolish slavery. The business was also involved in the colonialism, where a country would colonize other country and would declare their control over them; norms prevalent at that time deemed it ethical. But as the time passed it also came to an end. There are some significant historical events with regards to ethics. One of events dates back to ancient Greece, when Plato presented the idea of general knowledge of justice. Plato proposed that their must be a general idea of right and wrong, so as judge someone’s course of action in a particular situation. The idea of basic human rights for the people became prevalent during seventeenth and eighteenth century. These basic rights included right of a person to pursue its live with freedom and happiness. Another most significant event took place during 1800s when John Stuart Mill supported the idea that any act which benefits general masses must be recommendable and respected while the acts that caused harm to the community must be strictly prohibited. (Srinivas, 2009)

Principles of Business Ethics

There are some of the basic principles of business ethics which lead the organization to the road of success. Even a small business that has a deep-seated theme of business ethics principles within its policies and strategies will be evident among customers. There are following principles of business ethics:

Being trustful because people desire to do business with those whom they can trust

Keep an open mind and accept the changes

Fulfill the duties to the customers irrespective of circumstances.

Keeping all business documents clear, precise and professional

Remain involved to society and contribute to it

Keep strict control on accounting procedure and maintain proper records

Treat others with respect because it helps to gain respect.

Features of Business Ethics

The business ethics have some of the characteristic features which define them and make them whole. Following are the characteristic features of business ethics:

Code of conduct: It tells what to do and what not to do

Based on moral and social values: It incorporates moral and social norms to carry put business

Gives protection to social groups: It provides protection to all the stakeholders of a business organization.

Provides basic framework: It defines social, economical, cultural and legal constraints of conducting business

Voluntary: Business ethics must be voluntarily accepted by business organization

Requires education and guidance: Businesspeople must be properly guided and educate about business ethics. They must be motivated to follow ethics.

Importance of Business Ethics

Profit Maximization: - Profit Maximization is one of the most valuable fields where Business Ethics plays an important role. The Persons or customer who follows ethics are always satisfied and loyal with their product which is offering. The organization that follows ethics in business & always be honest with their customer about the ingredients that has mixed with their product so, always makes profit in their business because of customer satisfaction. Thus ultimately it creates locality in their customer and organization which cause to profit maximization.

Creates Goodwill in the Market:- For the survival of business, Business ethics are mandatory in today’s organization. The Organization which is famous for loyalty and honesty creates goodwill in the market and because of that investors and Shareholders are willing to put their money or assets in the business which is trustable. Basically ethics builds long term relationship in between customer and organization and helps in achieving the profit making goals.

Efficient Utilization of Business Resources: - The employees of the organization which are play an important role in the success of the organization. If the senior officers of the company do not take bribe or they do not cheat with the clients, suppliers, customers then it ultimately lead to profit maximization of organization. The workers too will fend from using the property of organization for personal uses. This habit will result in effective utilization of the business resources. So that Business ethics plays an important role in big as well as small organizations. (Hartman, 1998)

Necessity of Business Ethics

Stop business malpractices: - malpractices like Black marketing, hoarding, cheating in product weights measurement, high pricing, selling harmful products to customers are so common in the organization and some shameless people do it openly. So Business ethics help to prevent this kind of corruption in the business.

Survival of business: - For the survival of business, Business ethics are mandatory in today’s organization and the person or business man who does not follow business ethics is will not be able to achieve long –term success in their business. And customer will not attract to this kind of business man. So for survival of business, the business man must follow appropriate code of theory to live in the market place.

Improve customer’s confidence: -The quantity, price, and quantity are the three things where business man has to grab the confidence of customer so that customer attract to your business and will not frighten to spend money in your business.

Protecting employees and shareholders: - Business ethics are needed to protect the interest of shareholders, customers, workers, suppliers, competitors, dealers, etc. It defends them from development through unjust trade practices.

Creates good image: - Most importantly ethics in business helps to create a good image in business and market. If the person who follow all the rules of business ethics, then he will not criticized by the organization and society as well. After all society support for those who is trustworthy and honest.

Consumer movement: - There is one more reason why business ethics gaining importance day by day which is all because of increment in customer movement. Today, the customer is well aware of their rights. They have all the rights to take action against those businessmen who are not loyal to their business. So honesty and loyalty is the only way to survive in the business.

Importance of labor: - The employees of the organization which are play an important role in the success of the organization. Therefore Business ethics is the best way to deals with the employees of organization or business. The proper working condition and salaries must be given to employee to make them happy and punctual. So it is important for organizations to protect the rights of its workers and provide open communication.

Healthy competition: - The business ethics also plays an important role in dealing with the competitors. So there must be a healthy competition with the competitors. And they also give the equal opportunities to small business as well. Avoid monopoly because it is harmful to the users. (Hooker, 2003)

Business Ethics in Current scenario

To the improvement of social responsibility, business ethics and corporate governance of the business community, there is a lot of hard work need to be done. In the past, since 1970s there are some program such as the preparation and dissemination of values statements, introduction of compliance programs, the development of codes of conduct, the addition of board-level ethics members, the hiring of corporate social responsibility managers and training development are some programmed need to be review to proper implementation of business ethics in business and business men. But still there are some organizations that do not follow code of conduct and work unethically, which leads to big corporate scandals. As a consequence there is increased pressure on governments and companies to provide more integrated governance and Business ethics program. The field of business ethics is vast and consists of fair labor practices, corporate governance, accurate accounting, environmental stewardship, reputation management etc., which is problematic to understand. In reality this field addresses the entire scope of responsibility such as investors: who have invested money in the action & decision of a company like shareholders, workers, suppliers and clients in the community. In theory there is some distinction among the various domains related to ethics of business such as social responsibility, corporate responsibility, corporate compliance etc. But practically such distinctions are ambiguous. For the clarity in organization, definitions are provided related to the goal of enhancing the code of conduct such as corporate compliance, corporate responsibility, corporate governance, CSR and corporate sustainability etc. Therefore business ethics plays an important role in the business and business men. In current scenario malpractices like Black marketing, hoarding, cheating in product weights measurement, high pricing, selling harmful products to customers are so common in the organization. So business ethics play an important role in the prevention of the corruption in a business.