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LECTURE 4Business Ethics
BUSINESS ETHICS
Business can be defined as a primary economic institution through which people in modern societies carry on the task of producing and distributing goods and services
Business ethics refers to the application of ethical judgments to business activities
BUSINESS ETHICS
The concept of Business Ethics has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right
RELATIONSHIP BETWEEN BUSINESS AND ETHICS
Different economists like Milton Friedman and Talcott Parsons expressed different views about the relationship between ethics and business. The result was:
Unitarian view of ethics Separatist view of ethics Integration view of ethics
DIFFERENT VIEWS OF ETHICS
The Unitarian View-Business is a part of moral structure and moral ethics . If business wants to exist flourish and survive in the long run, morality and ethics cannot be separated from the operation of the business. Business has to concentrate in the society and usher in society welfare.
DIFFERENT VIEWS OF ETHICS
The Separatist View of Ethics Classical Economists like Adam Smith and Milton Friedman held the separatist view.
These economists were of the opinion that business should concentrate on profit maximization. Business is a distinct entity and does not contain ethics and morality.
Milton maintained that business should concentrate on production and distribution of goods and services.
This view lays emphasis on business concerns like reducing production costs, optimizing labor etc
DIFFERENT VIEWS OF ETHICS
The Integration view of Ethics- Talcott Parsons (1902-1979) professor of sociology at
Harvard proposed a view called the Integration view. He was of the opinion that ethical behavior and
business should be integrated or combined in a new area called ‘Business Ethics’.
He argued that Business being economic entity has the right to make profits, but at the same time it should discharge the social obligations.
According to this view , business and morality are interrelated and are guided by external factors like government, market system, law and society
BENEFITS OF BUSINESS ETHICS TO BUSINESSES
Customer confidence and loyalty Employee satisfaction and low turnover Increased investor trust and confidence No trouble with the law Competitive edge – attracting talent,
winning new business, entering global markets
Reputation
BENEFITS TO CONSUMERS
Good product – no compromises with quality
Fair price Address consumer concerns Protect consumer rights
BENEFITS TO EMPLOYEES
Equal opportunity Growth Pride Work-life balance Employee benefits
BENEFITS TO INVESTORS
Safeguard investor rights Avoid unfair practices such as insider
trading Transparency Accountability
BENEFITS TO SUPPLIERS
Motivates them to be ethical (for example avoiding child labor/sweatshops etc.
Fuels innovation Market for innovative/sustainable
technologies Reputation
BENEFITS TO SOCIETY AT LARGE
Putting pressure on other companies to act ethically
Avoid unfair trade practices such as monopoly
Corporate Social Responsibility
BENEFITS TO GOVERNMENT
Transparency Taxes Foster a culture of good business
practices Less regulation Curb corruption in the government
itself
BENEFITS TO ENVIRONMENT
Green businesses Innovation to find more eco friendly
practices Sustainability
DISADVANTAGES OF BUSINESS ETHICS TO BUSINESSES
Higher costs/lower profits Losing to competition Possible Investor displeasure Trouble getting goods/services from
supplier