The term’ ethics’ origins from the Greek word Ethos meaning human character and

it refers to the philosophical science that deals with the rightness and wrongness of
human actions.

Ethics is a set of standards or code or value system, worked out from

human reason & experience by which free human actions are determined as
ultimately right or wrong, good or evil.
Business ethics means the application of ethics in business
Definition of Business Ethics: Business Ethics is a specialized study of
moral right and wrong. It concentrates on moral standards as they apply
particularly to business policies, institutions, and behavior.

Need or Importance of Business Ethics

1) Stop business malpractices : Some unscrupulous businessmen do business malpractices by indulging in

unfair trade practices like black-marketing, artificial high pricing, adulteration, cheating in weights and measures,
selling of duplicate and harmful products, hoarding, etc. These business malpractices are harmful to the
consumers. Business ethics help to stop these business malpractices.
2) Improve customers' confidence : Business ethics are needed to improve the customers' confidence about the
quality, quantity, price, etc. of the products. The customers have more trust and confidence in the businessmen
who follow ethical rules. They feel that such businessmen will not cheat them.
3) Survival of business : Business ethics are mandatory for the survival of business. The businessmen who do not
follow it will have short-term success, but they will fail in the long run. This is because they can cheat a consumer
only once. After that, the consumer will not buy goods from that businessman. He will also tell others not to buy
from that businessman. So this will defame his image and provoke a negative publicity. This will result in failure
of the business. Therefore, if the businessmen do not follow ethical rules, he will fail in the market. So, it is
always better to follow appropriate code of conduct to survive in the market.
4) Safeguarding consumers' rights : The consumer has many rights such as right to health and safety, right to be
informed, right to choose, right to be heard, right to redress, etc. But many businessmen do not respect and
protect these rights. Business ethics are must to safeguard these rights of the consumers.
5) Protecting employees and shareholders : Business ethics are required to protect the interest of employees,
shareholders, competitors, dealers, suppliers, etc. It protects them from exploitation through unfair trade
practices.
6) Develops good relations : Business ethics are important to develop good and friendly relations between business
and society. This will result in a regular supply of good quality goods and services at low prices to the society. It
will also result in profits for the businesses thereby resulting in growth of economy.
7) Creates good image : Business ethics create a good image for the business and businessmen. If the businessmen
follow all ethical rules, then they will be fully accepted and not criticised by the society. The society will always
support those businessmen who follow this necessary code of conduct.
8) Smooth functioning : If the business follows all the business ethics, then the employees, shareholders,
consumers, dealers and suppliers will all be happy. So they will give full cooperation to the business. This will
result in smooth functioning of the business. So, the business will grow, expand and diversify easily and quickly. It
will have more sales and more profits.
9) Consumer movement : Business ethics are gaining importance because of the growth of the consumer
movement. Today, the consumers are aware of their rights. Now they are more organised and hence cannot be
cheated easily. They take actions against those businessmen who indulge in bad business practices. They boycott
poor quality, harmful, high-priced and counterfeit (duplicate) goods. Therefore, the only way to survive in
business is to be honest and fair.
10) Consumer satisfaction : Today, the consumer is the king of the market. Any business simply cannot survive
without the consumers. Therefore, the main aim or objective of business is consumer satisfaction. If the
consumer is not satisfied, then there will be no sales and thus no profits too. Consumer will be satisfied only if
the business follows all the business ethics, and hence are highly needed.
11) Importance of labour : Labour, i.e. employees or workers play a very crucial role in the success of a business.
Therefore, business must use business ethics while dealing with the employees. The business must give them
proper wages and salaries and provide them with better working conditions. There must be good relations
between employer and employees. The employees must also be given proper welfare facilities.
 12) Healthy competition : The business must use business ethics while dealing with the competitors. They must have
healthy competition with the competitors. They must not do cut-throat competition. Similarly, they must give
equal opportunities to small-scale business. They must avoid monopoly. This is because a monopoly is harmful to
the consumers.

12 Ethical Principles for Business Executives

Ethical values, translated into active language establishing standards or rules describing the kind of
behavior an ethical person should and should not engage in, are ethical principles. The following list

of principles incorporate the characteristics and values that most people associate with ethical behavior.

1. HONESTY. Ethical executives are honest and truthful in all their dealings and they do not deliberately
mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any
other means.

2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of their convictions by
doing what they think is right even when there is great pressure to do otherwise; they are principled,
honorable and upright; they will fight for their beliefs. They will not sacrifice principle for expediency, be
hypocritical, or unscrupulous.

3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust. They are candid
and forthcoming in supplying relevant information and correcting misapprehensions of fact, and they make
every reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not
interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-
compliance or create justifications for escaping their commitments.

4. LOYALTY. Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons and
institutions by friendship in adversity, support and devotion to duty; they do not use or disclose information
learned in confidence for personal advantage. They safeguard the ability to make independent professional
judgments by scrupulously avoiding undue influences and conflicts of interest. They are loyal to their
companies and colleagues and if they decide to accept other employment, they provide reasonable notice,
respect the proprietary information of their former employer, and refuse to engage in any activities that take
undue advantage of their previous positions.

5. FAIRNESS. Ethical executives and fair and just in all dealings; they do not exercise power arbitrarily,
and do not use overreaching nor indecent means to gain or maintain any advantage nor take undue
advantage of another’s mistakes or difficulties. Fair persons manifest a commitment to justice, the equal
treatment of individuals, tolerance for and acceptance of diversity, the they are open-minded; they are
willing to admit they are wrong and, where appropriate, change their positions and beliefs.

6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and kind; they like
the Golden Rule, help those in need, and seek to accomplish their business objectives in a manner that
causes the least harm and the greatest positive good.

7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity, autonomy,
privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat
all people with equal respect and dignity regardless of sex, race or national origin.

8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their business
activities.

9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their duties, are
well informed and prepared, and constantly endeavor to increase their proficiency in all areas of
responsibility.
10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of their
position of leadership and seek to be positive ethical role models by their own conduct and by helping to
create an environment in which principled reasoning and ethical decision making are highly prized.

11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company’s good
reputation and the morale of its employees by engaging in no conduct that might undermine respect and by
taking whatever actions are necessary to correct or prevent inappropriate conduct of others.

12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for the ethical
quality of their decisions and omissions to themselves, their colleagues, their companies, and their
communities.