What is Business Ethics

Business ethics is the study of proper business policies and practices regarding potentially controversial issues such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may follow to gain public 

BREAKING DOWN Business Ethics

Business ethics ensure that a certain required level of trust exists between consumers and various forms of market participants with businesses. For example, a portfolio managermust give the same consideration to the portfolios of family members and small individual investors. Such practices ensure the public receives fair treatment..The concept of business ethics arose in the 1960s as companies became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes and corporate responsibility. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally versus maintaining a competitive advantage over other businesses. Firms display business ethics in several ways.

                             MARKETING

Case Studies of Business Ethics

In the case of a company that sells cereals with all-natural ingredients, the marketing department must temper enthusiasm for the product versus the laws that govern labeling practices. Some competitors' advertisements tout high-fiber cereals that have the potential to reduce the risk of some types of cancer. The cereal company in question wants to gain more market share, but the marketing department cannot make dubious health claims on cereal boxes without the risk of litigation and fines. Even though competitors with larger market shares of the cereal industry use shady labeling practices, that doesn't mean every manufacturer should engage in unethical behavior.

Business Ethics Survey

The National Business Ethics Survey comes out every two years. In the 2013 edition, respondents saw an all-time low in unethical behavior. Around 41 percent of employees saw misconduct on the job, compared to 45 percent in 2011. The survey concluded that possibly an uncertain economic climate led to less risk-taking in for-profit businesses leading more managers and executives to act more ethically. The survey found that 60 percent of misconduct on the job occurred among managers, and 24 percent of employees blamed senior-level managers for unethical behavior.

                      ETHICS IN FINANCE

Ethics in general is concerned with human behavior that is acceptable or "right" and that is not acceptable or "wrong" based on conventional morality. General ethical norms encompass truthfulness, honesty, integrity, respect for others, fairness, and justice. They relate to all aspects of life, including business and finance. Financial ethics is, therefore, a subset of general ethics.

Ethical norms are essential for maintaining stability and harmony in social life, where people interact with one another. Recognition of others' needs and aspirations, fairness, and cooperative efforts to deal with common issues are, for example, aspects of social behavior that contribute to social stability.

HUMAN RESOURCE MANAGEMENT 

Human Resource management deals with manpower planning and development related activities in an organization. Arguably it is that branch of management where ethics really matter, since it concerns human issues specially those of compensation, development, industrial relations and health and safety issues. There is however sufficient disagreement from various quarters.