Honesty, integrity, fairness, justice, and trustworthiness are the basic terminologies those represents as right and good

in common parlances. Business ethics implies to the application of these ethical ideas to business conduct.

According to Crane and Matten (2010) “Business ethics is the study of business situations, activities, and decisions

where issues of right and wrong are addressed.”

While, we should understand that it means morally right and wrong, as opposed to, for example, commercially,

financially or strategically right or wrong.

©Prof. Bijaya G. Shrestha

Fair employment practices Reasonable return on invested capital

Fair wages No cheating while commercial dealings

Safe working conditions Fair supply chain arrangement

Product safety and quality Use the natural resources sustainably

Honest advertising Honesty in environmental issues

Telling the truth while serving customers

Being a good neighbor in community

Make a profit through honest pricing Respect human rights

Provide accurate financial data to stockholders

Law-abiding

Some of the common agenda of business ethics, that expect from the society, can be listed as:

©Prof. Bijaya G. Shrestha

Importance of Ethics in Business

©Prof. Bijaya G. Shrestha

Two essential facets in the process of evaluating the business organizations are: Profit (Quantitative) and Ethics (Qualitative) Ethics in business reflects organizational culture and management philosophy. Ethics in business has become a significant priority in modern-day business. The importance of ethics in business can be enumerated from two perspectives: (i) Prevent from the consequence of corporate malpractices (ii) Payback from the ethical business.

Not all, but many unscrupulous businessmen do business malpractices by involving in deceptive trade practices and different other unethical methods to make a profit. These are harmful to the consumers and entire society. Ethics in business is important to help to stop these business malpractices and promote ethical stance of an organization.

Prof. Bijaya G. Shrestha

Importance of Ethics in Business

(i) Prevent from the consequence of corporate malpractices

Ethics in business is important because, business malpractices have the potential to inflict enormous harm on individuals, on communities and on the environment.

Exposed or unexposed unethical behavior, by comparison, may damage a firm's reputation and make it less appealing to stakeholders. The media also constantly seems to be keeping the spotlight on corporate abuses and malpractices. Negative publicity associated with major misconduct leads to lowering the public’s trust in business.

Prof. Bijaya G. Shrestha

Importance of Ethics in Business

Nowadays, ethical consumerism is getting momentum. Consumers and pressure groups appear to be increasingly demanding firms to seek out more ethical and ecologically sounder ways of doing business. There are many evidences of boycotting (punishing business for unfavorable behavior) and buycotting (rewarding business for favorable behavior) in the modern marketplace.

Prof. Bijaya G. Shrestha

Importance of Ethics in Business

Ethics in business is important because, it can build a trust in customer relationship, trust in supplier relationship, and trust in employee relationship. These are three fundamental dimensions that results sustainable growth of business. To develop trust, behavior must be ethical. It can bring significant benefits to a business.

Prof. Bijaya G. Shrestha

Importance of Ethics in Business

(ii) Payback from Ethical Business

• Attract customers to the firm's products, thereby boosting sales and profits

• Make employees want to stay with the business, reduce labor turnover and therefore increase productivity

• Attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees

• Attract investors and keep the company's share price high, thereby protecting the business from takeover.

• Able to stay free from legal penalties and different interferences.

• Ethical business is a base of sustainability and source of overall happiness.

Prof. Bijaya G. Shrestha

Importance of Ethics in Business

(ii) Payback from Ethical Business