A Definition for Business Ethics
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Business ethics refers to the set of values upheld by the entity, which assist in the identification of the organization with and without the organization. Ethics define how insiders and outsiders of an organization view the organization in their own perspective. These values can either be in a broad sense or stricter sense. The broad sense of business ethics focuses on the structure and practice in the attempt to establish whether they are acceptable. On the other hand, the stricter sense focuses on the values expressing the vision, commitment and moral identity.
Business ethics as a concept is observed in the attempt to avoid three main things. First, a business organization carries ethical practices to avoid breaking civil and criminal law in their business undertaking. Second, business entities find it expensive to handle legal actions against them and hence, resolve to practice business ethics to avoid them. Lastly, a business image in the eyes of the society and government is immensely vital for its success and support, therefore, they practice business ethics to enhance their image.
There are three broad approaches to business ethics through which business organizations apply in developing their ethical practices. These approaches based on profit, law and the moral obligation. These approaches have their own advantages and setbacks. None of these three approaches can be said to be superior and hence, it is usually the obligation of individual, business organizations choose at it own convenient.
The profit approach to business ethics arises from the assumption that ethical practices assist in generating profits. There are usually two versions to the profit including the weak and the strong version. The weak version argues that excellent business ethics results into moral, business practices which are profitable. For example, an excellent employee dealing helps in terms of remunerations and working conditions improve their efficiency and hence the organization is likely to enjoy high profits. This approach is only applicable in the long run of the business operations and hence, not appropriate for short term business dealing. On the other hand, some moral dealings such as employee retention may not be profitable at all to the organization. This is particularly true when such employees turn old and unproductive or have developed disability and cannot function well. Such practices are economically ineffective.
The strong version of the profit approach states that a competitive and free market helps in ensuring that business enterprises undertake moral practices. In this case, consumers and the labor providers are free to identify the most ethical entity to purchase and work from respectively. If workers and consumers demand excellent working conditions and quality products, the organization in the free and competitive market will strive to provide the same. Business entities which do not adhere to these demands will only strive to survive and eventually may close down their business. This approach is immensely strong since business organizations are obliged by circumstances in the market which they cannot control on their own.
The profit approaches to business ethics have various setbacks. First, the economic interference of the government undermines the principle of free and competitive market. On the other hand, some consumers will prefer weak or inferior products provided in that they are cheap. In this case, some business entities may end up producing such inferior goods, which is ethically wrong. It is, therefore, clear that the profit driven approach of ethics is not applicable in all situations.
The second business ethics approach bases its argument from the legal obligations. In this case, business organizations strive to avoid litigation processes as a result of harassment, reckless or breach of duty of care. This approach states that any other obligation not stated as a legal requirement is optional. Such obligations become contentious and hence there are disagreements concerning them. It is, therefore, very difficult to undertake such obligations and hence, it is not an organizational obligation to fulfill them.
Some of the business ethics legal requirements intertwine with external moral requirement in the society. For example, the Muslim business world prohibits the concept of sleeping partner claiming that they enjoy gains of which they never made contributions. On the other hand, they are prohibited from earning interest from loans meant for humanitarian relief. The Chinese and the Confucians societies uphold respect to elders in their business undertakings. In these two cases, the law of the nation with these practices is not the supreme guide to business ethics; such external forces strongly influence entities.
In the western countries particularly, the society is pluralistic and hence, the business conduct code clearly exists in the law provisions and controlled by the national social group. There is the unified code of business ethics including fair advertisement, product safety and fair, human resource practices. On the other hand, the subgroups carry out their obligations depending on their beliefs and values. Those business organizations not affiliated in any subgroup take the obligation of the society where they operate, as guided by law.
Entities which move beyond the law obligation in their business ethics, undertake practices or assume corporate codes, which are optional. For example, an organization resolves to pay its employees much higher than the legal minimum remuneration. Some will undertake their business in such a way that they improve the people’s way of life in the society.
The legal business ethics approach has its own setbacks. First, it restricts the moral obligation of some corporation only to the legal provisions; therefore, it is hard to criticize unscrupulous business practices which are legal. Secondly, this approach would be effective in countries with strong legal provisions and systems; therefore, it is not effective in countries where the legal systems and practices are poor.
The third business ethics approach is the general moral obligations which derive its principles from both the legal and profit approaches. In this approach, there are principles which are unevenly acceptable and no business organization or group of people can reject them on any grounds. These principles include the harm, fairness, human right, autonomy and veracity principle. These principles are exceptionally general as they do not specify what can qualify to be harmful, unfair or against human rights. The set back of this approach to business ethics is that they are complex to apply in abstract situations.
In conclusion, business ethics is a complex issues, but immensely important for the entity, employees, customer and the government among any other individuals with an interest in the organization and its operations. It is clear that there is no perfect approach to the business ethics as demonstrated in this paper. Business organization should embrace the approach which best fits to the most if not all the stakeholder to ensure that it enjoys the optimal benefits of these practices. Business ethics practices should not be static in nature; there should be a room to adjust them as the society, technology, law and economy among others changes.
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