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Dear Friends.
Welcome to the annual meet of Chamber of Commerce and industry, Chennai. Today
we are going to share our thoughts ion Business Ethics in corporate world.
Discussion on ethics in business is necessary because, business can go unethical, and there
are plenty of evidences as in today on unethical corporate practices. Even Adam Smith, in
whose name neo-liberal laissez-faire is advocated opined that 'People of the same trade
seldom meet together, even for merriment and diversion, but the conversation ends in a
conspiracy against the public, or in some contrivance to raise prices' Business does not
operate in vacuum. Firms and corporations operate in the social and natural environment. By
virtue of existing in the social and natural environment, business is duty bound to be
accountable to the natural and social environment in which it survives. Irrespective of the
demands and pressures upon it, business, by virtue of its existence is bound to be ethical, for
at least two reasons: one, because whatever the business does affects its stakeholders and two,
because every juncture of action has trajectories of ethical as well as unethical paths wherein
the existence of the business is justified by ethical alternatives it responsibly chooses One of
the conditions that brought business ethics to the forefront is the demise of small scale, high
trust and face-to-face enterprises and emergence of huge multinational corporate structures
capable of drastically affecting everyday lives of the masses.
Ethics represent the eternal and prevalent moral standards, personal values, corporate code of
conduct and are generally part of the cultural tradition of a country. Business ethics are moral
principles that guide the way a business behaves. The same principles that determine an
individual’s actions also apply to business. The conduct of an individual citizen or a
corporate citizen involves the destiny of one or more individuals or corporate bodies in the
society and affects others. It is like the state taking taxes from the people, only to ensure their
own prosperity in return; just as the sun takes up the moisture only to give back in thousand
fold measure.
One should devote oneself to perform with a spirit of dedications; the pursuit of excellence
through efficiency in work is held out as the highest form of yoga and improves the quality of
life. In this context, ethics can be defined as a self-generated system of moral standards in the
realm of business, to which a substantial majority of executives give voluntary assent;
genuine differences of opinions and dissidence should not be stifled as indiscipline.
The concept such as ‘work is worship’, ‘action is the duty-fruit is not thy concern’, ‘trust
begets trust’ and other ideals should be practiced by institutions and not discarded as
theoretical slogans.
Business ethics can be denoted as written or unwritten codes of morals, values, and principles
that governs actions and decisions in a company. In the business world, standards are set for
determining good and bad behavior and decision-making. Business ethics is a broad topic,
covering everything from corporate governance to corporate social responsibility.
Business ethics is a subjective term. However, it is easy to identify unethical business
practices in an organization, such as employing child labor, taking bribes, or illegally using
copyrighted materials.
When ethical guidelines are followed, trust is developed between the employees and
management, as well as the public and the corporation. Thus, business ethics leads to a more
productive workplace.
Acting in an ethical way involves distinguishing between “right” and “wrong” and then
making the “right” choice. It is relatively easy to identify unethical business practices. For
example, companies should not use child labour. They should not unlawfully use copyrighted
materials and processes. They should not engage in bribery.
However, it is not always easy to create similar hard-and-fast definitions of good ethical
practice. A company must make a competitive return for its shareholders and treat its
employees fairly. A company also has wider responsibilities. It should minimise any harm to
the environment and work in ways that do not damage the communities in which it operates.
This is known as corporate social responsibility.
Business thrives on (good) reputation. Treating one’s client unfairly strikes at the root of
one’s reputation. Deterioration in reputation leads to decline in the number of clients a
business organisation has, with adverse implications for its top and bottomlines. Yet, bad
treatment of customers continues.
Every company has spoken and unspoken rules about how to act within a company
environment. Give lucid explanations about what is okay and what is not okay. This includes
behavior towards other employees, customers, and the public. Sometimes these guidelines are
different for different companies.
It is the duty of the Human resource department to ensure that the employees are equipped
with adequate tools which enable them to behave ethically in the organization.
Strengthening the behavior in an employee is an easy task. Offering awards and recognition
is one of the best ways to encourage the ethical behavior you want to reinforce in an
employee. To create a strong ethical culture in an organization, there has to be a constant
communication about ethical values among the members. You can also specifically explain
about the behaviors you do not want to inculcate
Create workshops which improve the ethical culture in the company. It is the duty of the
organization to build and develop ethical skills among the members rather than just stating
the behaviors which you encourage and behaviors which you do not. This should also
develop ethical behavior and problem-solving skills in an employee.
Businessmen observe business ethics on account of the consequences that would result due to
their non-compliance. Here, some of the regulations are presented briefly:
1. Legislative Measures
Enforcing the legislative measures is one of the ways of making businessmen to follow
business ethics. The purpose of enforcing the Acts is to protect the public interests including
the business and the businessmen. The Companies Act, Consumer Protection Act, M.R.T.P.
Act, Environmental Pollution Act, and the like are some of the legislative measures.
2. Goodwill of Business Unit
Generally, businessmen work hard to earn goodwill by adopting the principles of business
ethics. Thereafter, they follow the same practice to maintain the earned goodwill.
3. Social Status of Businessman
Businessman thinks that he gets recognition from the public in a place where he does
business. It is always ethical for a businessman to keep social status. Then, he enjoys social
status continuously by avoiding unjust or immoral business activities.
4. Trade Union
There are a number of trade unions functioning in India. A trade union may be a registered or
unregistered one. Trade union has to suffer a break if business ethics are not properly
followed. Trade union acts as a watchdog to ensure observation of business ethics.
5. Business Association
Business association also guides the business as how to observe business ethics, stating the
reasons for doing so. A business unit may be isolated from the business association if the
particular business unit fails to comply with ethics.
6. Consumer Movement
Now-a-days, the consumer movement has developed so much to protect consumer interests.
As a matter of fact, business ethics deals with morality in the business environment.
Nevertheless, consumer movements take active part in the adoption of business ethics.
For example, if a purchased product is not up to the standards as specified, the consumer
movement claims damages or takes steps to replace the product to the consumer and insists
the business unit to maintain the quality as specified by it.
A survey undertaken by Prof. Monappa of 115 business executives, attending the middle and
senior management programme of the I.I.M., Ahmedabad and belonging to different
industries, ages, educational standards, religious affiliations and income groups, has revealed
some notable results regarding Indian managers’ attitude towards “Business Ethics“.
The findings are given below. A new realization has been dawned upon businessmen about
their responsibilities towards the employees, shareholders, etc.
Most of the Indian business managers believe in good business ethics; various circumstances
like unnatural competition, Policy of the company and a excessive rules and regulations often
prevent the mangers from putting this belief into practice.
1. ‘Buying business’ by way of bribes as gifts and personal favor are a major concern for
managers. Personal problems also caused anxiety, but mostly due to a conflict of the head
and heart when emotions came in the way of responsible decision-making.
2. Before executing an action, managers generally analyze the ethical implication of decision
making.
3. Managers emphasis the importance of company policy primarily in influencing ethical
action. A man’s personal code of conduct is considered secondary.
4. The influence of supervisors, through whom the company policy is most often transmitted,
was considered important in influencing ethical action.
5. Dishonest methods used by competitors and the unethical climate in the industry were
often cited as deterrents to the honest transaction of business.
6. Corruption and greed of government officials, red-tapism, nepotism, and suffocating
regulations were considered obstacles to ethical business behavior.
7. The attitudes and reactions of the older business managers to situations demonstrated a
greater ethical awareness than those of younger ones.
8. The size of the company, by and large, had no discernible influence on ethical decision
making by managers.
9. Managers were dissatisfied with the idea that profits should be the only guidelines for a
businessman in decision-making.
10. Formal education and training to managers did not seem to have stimulated the desire to
act honestly.
11. The ethical attitudes of the managers who belong to a religion which was more organized
were no better than those in whose religion there is no much scope for guidance.
12. Certain areas (construction, engineering, research and development, banking, investment
and insurance) seemed more prone to encouraging unethical practices than others.
13. A majority of the managers welcomed the idea of a code of conduct and felt it would help
to improve the ethical climate in the country.
14. Managers felt that the management of each company (i.e., self-regulation) would be the
authority best suited to enforce the code.
To conclude In a welfare-oriented democratic polity like ours, the government cannot remain
a mere spectator. A system of online filing of complaints will improve complaint registration
and empower unorganised customers against unethical business practices.
Further, India needs tough regulators for high complaint sectors, like real estate and travel
and tourism. Tightening tort laws and providing for class action suits will dent fraudulent
business practices.
However, tough regulation alone will not be enough. Attitudinal changes are needed if one
wants value for one’s money. Aggrieved customers must raise their voice against deficiency
in services at all forums, starting from social media to consumer courts.
Above all, businesses must realise that the key to sustained growth in top and bottom line is
ethical business practice. They can ignore it at their own peril in an intensely competitive
business environment.