What is Business Ethics

Business ethics are ethics that refer to the moral rules and regulations governing the
business world. In other words, they are the moral values that guide the way corporations or
other business make decisions. Some business ethics are imposed by law. For example, the
Securities and Exchange Commission governs the way investment bankers and stock brokers
do business, and court rules dealing with attorney client privilege dictate some ethical
decisions for attorneys. However, there are also business decisions that do not fall within the
guidelines of the law, in which ethical or moral judgments must be made.

Business ethics (also known as Corporate ethics) is a form of applied ethics or professional
ethics that examines ethical principles and moral or ethical problems that arise in a business
environment. It applies to all aspects of business conduct and is relevant to the conduct of
individuals and business organizations as a whole. Applied ethics is a field of ethics that deals
with ethical questions in many fields such as medical, technical, legal and business ethics.

Business ethics can be both a normative and a descriptive discipline. As a corporate practice
and a career specialization, the field is primarily normative. In academia descriptive approaches
are also taken. The range and quantity of business ethical issues reflects the degree to which
business is perceived to be at odds with non-economic social values. Historically, interest in
business ethics accelerated dramatically during the 1980s and 1990s, both within major
corporations and within academia. For example, today most major corporate websites lay
emphasis on commitment to promoting non-economic social values under a variety of headings
(e.g. ethics codes, social responsibility charters). In some cases, corporations have redefined
their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum"
environmental tilt).

Roles of Business Ethics

The Role of Business Ethics Today

Business and IT students spend the majority of their time at university learning about
economics, business development, software engineering and Computer programming. This is
all valuable and necessary knowledge to prepare them for the demands of employment in the
business/IT sector. However, running or working in a business will raise many difficulties that
are completely unrelated to the skills or knowledge gained in university. How do you evaluate
such problems as hiring the more qualified candidate for a job when she has a disability
requiring costly adaptations to the work environment, outsourcing production materials from
countries where child labor and sweatshops are prevalent etc.? In recent years there have been
several business scandals that caused serious damage to the credibility of the companies
involved, occasionally the entire industry in which they operate, and the numerous stakeholders
of the business. One such example is the collapse of Barings Bank - the actions of one rogue
trader incurred losses of almost US$1 billion. It has been discovered that many high profile
people (at home and abroad) are involved in tax-evasion, insider trading and fraud, Charlie
Haughey and Martha Stewart are two such examples of people with considerable wealth and
public standing who have been involved in questionable business dealings. At this stage in your
course, you are well equipped with knowledge of your subject, and this will be built on when
you go into the workplace due to on-going training and other such practices. But it is fair to
say that some of you may have never had the chance to think of the ethical issues entailed in
business and IT. During this course on business ethics it is hoped that you will be given such
an opportunity and attain a working knowledge of the different theoretical frameworks that can
be applied to business.

Why are ethics important?

Recent events in corporate America have demonstrated the destructive effects that occur when
the leadership of a company does not behave ethically. One might wonder why highly
educated, successful, and business savvy corporate professionals at Enron, Tyco, WorldCom,
and Adelphia got themselves into such a big mess. The answer lies in a profound lack of ethics.

Running a business ethically is good for business. However, "business ethics" if properly
interpreted means the standards of conduct of individual business people, not necessarily the
standards of business as a whole.

Business leader are expected to run their business as profitably as they can. A successful and
profitable business in itself can be a tremendous contributor toward the common good of
society. But if business leaders or department managers spend their time worrying about “doing
good” for society, they will divert attention from their real objective which is profitability and
running an efficient and effective organization.

Applying ethics in business makes good sense. A business that behaves ethically induces other
business associates to behave ethically as well. If a company (or a manager) exercises particular
care in meeting all responsibilities to employees, customers and suppliers it usually is awarded
with a high degree of loyalty, honesty, quality and productivity. For examples, employees who
are treated ethically will more likely behave ethically themselves in dealing with customers
and business associates. A supplier who refuses to exploit its advantage during a seller's market
retains the loyalty and continued business of its customers when conditions change to those of
a buyer's market. A company that refuses to discriminate against older or handicapped
employees often discovers that they are fiercely loyal, hard working and productive.

It is my firm belief that a “good man or woman” who steadfastly tries to be ethical (i.e. to do
the “right thing", to make appropriate ethical decisions, etc.) somehow always overtakes his
immoral or amoral counterpart in the long run. A plausible explanation of this view on ethical
behavior is that when individuals operate with a sense of confidence regarding the ethical
soundness of their position, their mind and energies are freed for maximum productivity and
creativity. On the other hand, when practicing unethical behavior, the individual finds it
necessary to engage in exhausting subterfuge, resulting in diminished effectiveness and
reduced success.
The best way to promote ethical behavior is by setting a good personal example. Teaching an
employee ethics is not always effective. One can explain and define ethics to an adult, but
understanding ethics does not necessarily result in behaving ethically. Personal values and
ethical behavior is taught at an early age by parents and educators.

I am quite certain that well-educated business professional like Kenneth Lay, Martha Stewart,
Dennis Kozlowski or the former CEO of General Motors who received a multi-million dollar
salary and bonus package in 1987 at a time when the company was closing plants and was
laying off thousands of people know and understand ethics. They either were too far removed
from the “nitty gritty” that ethical standards did not resonate with them or they simply did not
care.

People at the top of an organization are expected to share the burden of cost reductions and
belt-tightening during difficult times. Senior executives of companies who freeze their salaries
or take a personal pay cut in a problematic year rather than lay off employees to cut costs
deserve our utmost respect. However, this does not mean that a company should lose flexibility
in adjusting its cost structure during bad economical times, replace old factories by new ones,
or change technology in ways that would require fewer people to do the work. Decisions like
that should be made with empathy and support (financially) to those who will be affected by
it.

Conclusion
Ethics are important not only in business but in all aspects of life because it is an essential part
of the foundation on which of a civilized society is build. A business or society that lacks ethical
principles is bound to fail sooner or later.

Running a business requires adequate consideration to a number of issues outside the traditional scope
of making money, of which ethics is most certainly one. As our business grows and becomes more
significant, we impact on the lives and circumstances of people in ways we can only imagine -
through bringing jobs, creating wealth and inspiring others to grow their businesses. An important
part of engaging in this process is understanding your business ethics, which if not up to scratch can
leave you with a bad reputation and can even ruin your business, not to mention alienating employees,
suppliers and the local community.

Ethics is something of a subjective topic, but it is nevertheless of immense importance across all areas
of business. From the way in which sales and marketing is handled through to product development
and customer service, and even to some extent finance, ethics has a significant role to play in ensuring
business success and ultimately living up to the corporate social responsibility. Thus adopting a
ethics-specific approach to doing business is critical towards ensuring a legitimate business model
with long term potential.

Business ethics is especially important in dealing with customers. Maintaining integrity in the
customer facing side of your business is crucial to building client relationships, to assisting the overall
branding efforts. Likewise, it's an important step in minimizing returns and protecting business
goodwill, which will have a tangible effect on the success or otherwise of your business.

Ethics wise, it's also important to consider how you deal with customer issues and customer service.
While some businesses are prepared to sacrifice customer service for pound signs, there is not only a
sensible business reason for providing adequate support but also strong ethics and moral reasons for
providing help and assistance to your customer base.

On the administrative and strategic side of your business, it's also important to adopt an ethical
approach which takes account of your various responsibilities as a business - to shareholders,
employees and the community at large. Embracing these concepts of ethics as part of the way you do
business is vital to ensuring your run an honest, successful business with the potential to grow and
develop over time, and is one way of ensuring that you develop relationships across all aspects of
your business that are conducive to success and profitability over the long term.

Ethics is no doubt an important business subject for any entrepreneur to study, but it also has a wider
application throughout organizations. One man's concept of what is ethical and for the best may be
completely different from another man's concept, and so it's important to establish a collective set of
ethics that represent the entire organization rather than just adopting a piecemeal approach. This can
be installed through training, through creating business policies and even through careful selection at
the HR stage, although it's important that there are also enforcement mechanisms within the business
concerned, and that ethics remain a forefront consideration in day-to-day trade to ensure a unified,
morally sound approach to doing business.

Explain various theories of B.E

Descriptive ethics, also known as comparative ethics, is the study of people's beliefs about
morality. It contrasts with prescriptive or normative ethics, which is the study of ethical theories
that prescribe how people ought to act, and with meta-ethics, which is the study of what ethical
terms and theories actually refer to. The following examples of questions that might be
considered in each field illustrate the differences between the fields:
 Descriptive ethics: What do people think is right?
Normative (prescriptive) ethics: How should people act?
Applied ethics: How do we take moral knowledge and put it into practice?
Meta-ethics: What does 'right' even mean?

What are descriptive ethics?

Descriptive ethics is a form of empirical research into the attitudes of individuals or groups of
people. Those working on descriptive ethics aim to uncover people's beliefs about such things
as values, which actions are right and wrong, and which characteristics of moral agents are
virtuous. Research into descriptive ethics may also investigate people's ethical ideals or what
actions societies condemn or punish in law or politics.

Because descriptive ethics involves empirical investigation, it is a field that is usually

investigated by those working in the fields of evolutionary biology, psychology, sociology or
anthropology. Information that comes from descriptive ethics is, however, also used in
philosophical arguments.

Value theory can be either normative or descriptive but is usually descriptive.

Lawrence Kohlberg: An example of descriptive ethics

Lawrence Kohlberg is one example of a psychologist working on descriptive ethics. In one
study, for example, Kohlberg questioned a group of boys about what would be a right or wrong
action for a man facing a moral dilemma: should he steal a drug to save his wife, or refrain
from theft even though that would lead to his wife's death?[1] Kohlberg's concern was not which
choice the boys made, but the moral reasoning that lay behind their decisions. After carrying
out a number of related studies, Kohlberg devised a theory about the development of human
moral reasoning that was intended to reflect the moral reasoning actually carried out by the
participants in his research. Kohlberg's research can be classed as descriptive ethics to the
extent that he describes human beings' actual moral development. If, in contrast, he had aimed
to describe how humans ought to develop morally, his theory would have involved prescriptive
ethics.

Normative ethics is the branch of philosophical ethics that investigates the set of questions
that arise when we think about the question “how ought one act, morally speaking?” Normative
ethics is distinct from meta-ethics because it examines standards for the rightness and
wrongness of actions, while meta-ethics studies the meaning of moral language and the
metaphysics of moral facts. Normative ethics is also distinct from descriptive ethics, as the
latter is an empirical investigation of people’s moral beliefs. To put it another way, descriptive
ethics would be concerned with determining what proportion of people believe that killing is
always wrong, while normative ethics is concerned with whether it is correct to hold such a
belief. Hence, normative ethics is sometimes said to be prescriptive, rather than descriptive.
However, on certain versions of the meta-ethical view called moral realism, moral facts are
both descriptive and prescriptive at the same time.

Broadly speaking, normative ethics can be divided into the sub-disciplines of moral theory and
applied ethics. In recent years the boundaries between these sub-disciplines have increasingly
been dissolving as moral theorists become more interested in applied problems and applied
ethics is becoming more profoundly philosophically informed.

Traditional moral theories were concerned with finding moral principles which allow one to
determine whether an action is right or wrong. Classical theories in this vein include
utilitarianism, Kantianism, and some forms of contractarianism. These theories offered an
overarching moral principle to which one could appeal in resolving difficult moral decisions.

In the 20th century, moral theories became more complex and were no longer concerned solely
with rightness and wrongness, but were interested in many different kinds of moral status.[citation
needed]
This trend may have begun in 1930 with W. D. Ross in his book, The Right and the Good.
Here Ross argues that moral theories cannot say in general whether an action is right or wrong
but only whether it tends to be right or wrong according to a certain kind of moral duty such as
beneficence, fidelity, or justice (he called this concept of partial rightness prima facie duty).
Subsequently, philosophers have questioned whether even prima facie duties can be articulated
at a theoretical level, and some philosophers have urged a turn away from general theorizing
altogether, while others have defended theory on the grounds that it need not be perfect in order
to capture important moral insight.

In the middle of the century there was a long hiatus in the development of normative ethics
during which philosophers largely turned away from normative questions towards meta-ethics.
Even those philosophers during this period who maintained an interest in prescriptive morality,
such as R. M. Hare, attempted to arrive at normative conclusions via meta-ethical reflection.
This focus on meta-ethics was in part caused by the intense linguistic turn in analytic
philosophy and in part by the pervasiveness of logical positivism. In 1971, John Rawls bucked
the trend against normative theory in publishing A Theory of Justice. This work was
revolutionary, in part because it paid almost no attention to meta-ethics and instead pursued
moral arguments directly. In the wake of A Theory of Justice and other major works of
normative theory published in the 1970s, the field has witnessed an extraordinary Renaissance
that continues to the present day.

What Is an Ethical Dilemma?

Ethical dilemmas, also known as moral dilemmas, have been a problem for ethical theorists
as far back as Plato. An ethical dilemma is a situation wherein moral precepts or ethical
obligations conflict in such a way as to make any possible resolution to the dilemma morally
intolerable. In other words, an ethical dilemma is any situation in which guiding moral
principles cannot determine which course of action is right or wrong.
 Examples of Ethical Dilemmas
1. One well-known and frequently discussed example of an ethical dilemma is given by
Jean-Paul Sartre. Sartre asks us to imagine a young man who lives with his mother; he
is her only happiness in life. But the young man lives in occupied France during
World War II and feels obliged to fight in the war. What does the young man do?
Another dilemma is a situation where three family members are being held captive.
The captives give one the choice of which of the other two will die. If there is no
choice, they all will be killed. Obviously this is worse than choosing one person to
die, but how does one choose?

Moral Uncertainty
2. Some moral dilemmas are the result of uncertainty about what kinds of actions one
should take in order to reach the best outcome. This can be because the future results
of each decision are unknowable, or because uncertainty about facts that can influence
certain outcomes are not available. For example, if Sartre's young man knew he would
help turn the war effort around, and that he would survive it to return to his mother,
he'd be better equipped to make a decision. But he cannot know this, so his situation
remains uncertain.

Self-Imposed Dilemmas
3. Sartre's young man is the result of a self-imposed dilemma; he projects two
obligations upon himself that cannot be reconciled. Self-imposed moral dilemmas are
the result of two actions that one feels one must take, but which cannot be reconciled
to each other.

World-Imposed Dilemmas
4. World-imposed ethical dilemmas are of the type described in the second example,
where a family member must choose which of two other members must die. He is not
instigating the decision, it is being forced upon him from the outside, and he is bound
by it to make a decision.

Prohibition Dilemmas
5. Ultimately, ethical dilemmas always require choices, and often in an ethical dilemma
refraining from action is itself a moral decision. Indeed, in some moral dilemmas one
must choose whether to disobey a particular prohibition, such as a law, when
compliance results in immoral consequences. In this case, not acting is obeying the
law, but the result is morally reprehensible.