Business Ethics What is business ethics? Can it really make for a more ethical form of business and management – or is it largely pointless?

| December 24, 2014

Business Ethics

What is business ethics? Can it really make for a more ethical form of business and management – or is it largely pointless? Discuss this question using relevant

sources and ideas.

The world of business is changing dramatically as the time passes by. Ethical values are becoming more important both for business communities as well as societies

compared to before. Nowadays , consumers increase their voices more often towards the businesses in order to be ethical and media is also frequently publicising the

corporate misbehaviour and other frauds related to companies. As an academic field ethics in business began to develop during the 1970’s , before that business ethics

was not common ( Richard George ). But the main question here is , does performing business in ethical way leads to a win-win situation or is it just a waste of time ,

money , resources and etc ?. The subsequent essay aims to provide a general knowledge about business ethics and try to analyse its purposes by discussing the

advantages and disadvantages of ethical behaviour based on different point of views.
What is business ethics ?
First of all , before we define the business ethics it is essential that we clarify the difference between morality and ethics. According to Marinetto’s lecture notes

, morality is mostly subjective thing and relies on personal rights and wrongs whereas ethics believes that making judgements should be based on objective and mutually

accepted standards rather than moral relativism. By taking this point into account , it could be claimed that businesses have to be able to transform their moral

frameworks into the ethical principals which will make extra room for corporations to be respected and supported by the majority. Business ethics is defined by Crane

et al ( 2007 , a ) as a study of business actions , situations and choices where problems related to right and wrong are addressed. Factors such as trustworthiness ,

loyalty and teamwork is highly essential for business activities to be ethical. Today it is estimated that over 75 % of leading corporations in United States are

heavily involved in building ethics in their work places ( Andrew Stark , 1994 ). As a broad concept , it is true that every single companies primary concern is making

a profit. However , business ethics urges corporations to be socially responsible as well by protecting the rights of its workers and also ensuring that its employees

are secure. In addition , it reminds organisations to be more decisive in terms of taking actions against environmental pollution in order to reduce the level of

pollutant air and improve the life quality of people.
Although ethical values has a positive impact on corporate image , it is claimed that corporate social responsibility has a significant impact on growth and profit

making of organisations too. For instance , Simon Caulkin from The Guardian ( 2003 ) mentions about the US findings on measures such as MVA ( cash in and cash out rate

of investors ) , EVA ( Economic profit rate ) , Return on Capital employed and price vs earnings ratio. Based on this research he argues that companies which focus

more on ethical standards did much more better than their rivals in terms of MVA and EVA and had a relatively balanced P/E ratio than others. This correlation between

ethics and performance also boosts up the share values and attracts more investors all over the world due to the minimized risk.
Ethical form of Business – Is it necessary or just pointless ?
In fact , we could talk about importance of business ethics in few different ways. Many experts , writers and analysts today also have a mutual agreement on growing

importance of ethics in business. For instance , it has been pointed out by Crane et al ( 2007 , b) that , businesses has an increasing impact and influence on our

society by acting as a main source for economic development , serving us with the goods and services which are required , lowering unemployment rate and etc.

Consequently , any kind of business malpractices will have a negative impact on individuals , community and environment as well. Therefore , it is highly essential for

people who are doing business activities all over the world to receive good education and training on business ethics in order to have a proper knowledge and improved

skills which will allow them to deal with dilemmas by analysing the factors and possible outcomes of malpractices in business.
According to Freeman and Gilbert ( 1988 ) , ethics in business is important and no corporation is fully ethical unless they eliminate external motivation for

employees. What is really meant by external motivation in this case is authority , influence and control. They firmly believe that employee’s duty in workplace should

be suitable to their individual projects , making external motivation tools useless which will lead to truly ethical form of business. Nonetheless , it should be made

clear that getting rid of external motivation does not always guarantee the solution for problem. Due to the reason that , ethical demands and economic realities

frequently clash with one another.
There are also several other authors with their relevant theories which support the idea of business ethics. Escpecially theories linked to Consequentialism ( egoism

and utilitarianism ) and Dentology ( Kant’s categorical imperative ) are crucial.  For example , utilitarianism which was founded by Jeremy Bentham in 18-th century

argues that we should not only consider the effect of our decisions on ourselves but take into account the consequences of our choices to every single person in the

society ( Hoffmann and Moore ). Indeed , some utilitarians do not agree with Bentham’s hedonistic or single good view and believe that there are number of other

“goods” such as freedom , truthfulness , justice and etc in order to succeed. The primary problem about utilitarianism is that , while it believes that total welfare

should be maximized it has nothing to say about its distribution among people. For instance , from the capitalism point of view , it is true that total welfare is

increased in Capitalist systems , however this is done at the expense of poor which is totally unjust.


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