The Need and Significance of Business Ethics in Modern Business World

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Ethics are understood as guidelines for desirable human behavior. Ethics are derived from traditions and customs prevailing in a society. Ethics tell us what is appropriate behavior and what is inapproprate behavior, what is good and what is bad. Ethics emphaizes on desirable virtues like honesty, truth, cooperation, discipline, empathy, ethical communication etc. Business Ethics are understood as ethics applied to business. Business is part of society as it draws its inputs like rawmaterial, machines, technology, human resources, infrastructure from the society and sells its output in form of market offering to markets a part of society. Business ethics requires business to take care and balance the interest of all the stakeholders in the business including employees, customers, investors, creditors, suppliers, community and government.

Business ethics is positively related with corporate social responsibility and corporate governance. The Corporate social responsibility initiatives of the business corporation with sound corporate governance mechanism goes a long way to earn for business organization goodwill, reputation and image of good corporate citizen.

The need and benefits of business ethics are:

  1.  Human resources of the business organization are well motivated, satisfied, committed, dedicated and take pride in their work and organization.
  2. Customers are kept satisifed by providing quality market offering, which ensures repeat customer orders, favorable word of mouth publicity, growth of new customers and higher profits.
  3. Investors, creditors, government and other stakeholders rights are well protected through effective corporate governance mechanism.
  4. Community needs are satisfied with Corpoarate social responsibility and green business or eco-friendly initiatives of the business organization.
  5. Practice of business ethics by businessmen provides favorable business environment with less restrictions, regulations in form of various laws and legislations to protect conusmer interest, environmental laws, laws regulating business monopolies, laws framed to protect the rights of employees, investors etc.
  6. Practice of business ethics can make businessmen legendary and role model for other businessmen and society in general.
  7. Ethical business organization will attract talented human resources in its work pool, will have less difficulty in retaining talented work force and will be in position to maintain harmonious industrial relations.
  8. Business ethics justifies the saying that honesty is the best policy and that truly great business can be created with the ideal of serving the society, profit is the reward for serving the society with right kind of market offerings.
  9. Business starts with the creation, maintainenance and growth of customers and ends with keeping the customers satisfied and delighted with market offering. To serve customers well organization need to keep their human resources satisfied with proper monetary and non-monetary incentives.

It is rightly said that only practice of ethics and business ethics can provide peace, harmony and prosperity to society. There are two powerful institutions in the society one is government and other is business and both need to be ethical in their conduct to ensure economic development of the nation.

 

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