Business ethics and codes of conduct are essential aspects in the business field, and are the requirements in the contemporary setting and stipulations of business activities that ought to be fulfilled. The concept tries to inculcate the kind of mentality that involves the wiping away of stereotype way of thinking that was based on profit making only, without having any concern on the welfare of the customers and any other party that is associated with a business.
The idea behind business ethics and codes of conducts revolves around the fact that business people should balance their aim of making money with the concern they have with the customers or clients they do business with. This is not only beneficial to the customers but also makes an organization that is doing business to have a good rapport with the environment, which basically creates a good reputation for the business. This paper will comprehensively give a report that answers very important questions involving business ethics and codes of conduct in the private sector and how it relates with such kind of business organizations.
Business ethics refers to the conduct or the manner in which a business should operate in carrying out its day to day business operations. This ethics have a diversified perspective and they touch on all the areas that business dwells on, in the sense that they not only focus on how a business should relate with the world in general, but also with specific people such as their customers who are associated with the organization1.
In the past years when the issue of ethics was not well defined, many businesses had little time dealing with issues concerning their relationship with the customers and the world at large. These made most of the businesses to acquire a very bad reputation since their conduct or behavior did not favor the environment, hence tarnishing their name. This came to a point whereby it was deemed necessary to review the procedure that was followed in operating businesses which had a capitalistic motive2.
The review process came up with the idea of business ethics which were to be adopted by all types of legal business enterprises. The idea of business ethics was meant to restructure the past key reason of doing business which was targeted at making money but having little or no reason for minding the way their dealings affected the world, and also the individual customers who relied on the business3.
Therefore, business ethics introduced the dos and don’ts that are supposed to be checked by the business owners so as to survive in the present world that has so much interest in the manner an enterprise or an organization performs its operations. Morals are incorporated in the daily operations of business which controls the way an organization does its activities, and mainly touches on the customers and any stakeholder or associate to the business.
Business ethics makes business people to produce commodities that are of high quality and fit to be used by their consumers. These ethics have also ensured that companies sell their goods and services at considerable prices which correspond to the value of the product and at the same time provide a normal profit margin. Business ethics have also been integrated in service providing institutions which have direct contacts with the clients such as hospitals and schools. In such setups, ethics have made the institutions to offer quality services and also helped to make sure that the rights of clients are not infringed.
All these are relevant examples that illustrate what business ethics are and how they are significant in the business world. An ethical business can also be described as an organization that does rigorous dealings and is responsible for anything wrong that happens in their account4.
Ethical Dilemmas Regularly Faced by Businesses
There are a number of instances that mainly concern the ethical perspective of a business, and thus make a business to be between a hard place and a rock. This happens mostly when there is an ethical issue which if not carefully handled can make a business to be in dilemma5. For instance, a business might be suffering from an economic recession due to various factors, such climatic conditions which makes it to start running at loss. Therefore, it becomes necessary for such business to see it right to raise the price of its products so as to be in a position of covering the losses. On the other hand, raising prices might violate the right of customers.
Another factor can also involve the increase in cost of production which might be due to some unavoidable circumstances. In such scenario, the business will also be left with the option of making a decision that will possibly help in meeting the costs and definitely result to hiking the price of products. These situations make businesses which are deeply rooted in ethical grounds to have a hard time deciding on what to do when faced by challenges of this kind. The reason why they are in dilemma is due to the fact that they fear criticism from their customers and also mind a lot about their reputation.
The Value of Business Having an Ethical Policy
There are a number of advantages that come as a result of a business having an ethical policy that is incorporated in its operations. One of the most important benefits is about the relationship that a business develops within its perimeters. This rapport creates a favorable environment for people who are employed in the organization to work in. This can be described by the way the staff relate with one another and at the same time the manner in which they are treated by their bosses. If the conduct of all these parties has a positive effect on each other, then the business is able to run smoothly without any chaos. Another good example that illustrates the importance of ethical policy in a business is the good rapport that a business develops with its external associates, customers, and the world at large6.
A good relationship with these parties makes a business to have a good reputation which facilitates the smooth running of its operations. This makes a business to have reliable associates, loyal customers and clients, and at the same time the world in general develops a positive attitude towards the business, hence promoting its products. These make a firm to enjoy a good time doing business and at the same maximize its profits.
Business ethics also makes a business that adheres to them to have the mentality of conserving the environment. The initiative of taking care of the surrounding has mutual benefit in the sense that once the environment is protected, the resources that it harbors remain available for companies that need them for production. For instance, a timber processing factory has to plant more trees so as to make sure that the source of its major raw materials can sustain its operations.
Mandatory Codes of Conduct
Business stakeholders, shareholders, the community, and the environment in general are increasingly demanding to be provided with high quality products which should conform to the minimum social and environmental health standards. Achieving that goal may at times be difficult since it may be bureaucratic and therefore require a lot of money. Most businesses, therefore, avoid some of the strategies or steps in producing a commodity or offering services to the clients. This can therefore be referred to as the abuse of the conducts. In avoiding such incidences, mandatory code of ethics were implemented.
These codes of conducts force businesses to follow the codes that have been implemented and failure to conform to the set codes leads to serious consequences. One of the institutions that have adopted the set code of conducts is the ISPAC (International standard of professional accountancy)7
Mandatory Codes of Conduct and Ethical Codes of Conduct
A code of conduct is the term that is given to a set of principles and rules that govern the behavior in the social institutions. It is a two way process that presides over the way the business will behave towards the stakeholders and the way the stakeholders will retaliate towards the business and to one another. The name can be denoted by different names but all refers to the same thing; for instance it can be substituted by code of ethics, principles and responsibilities, and statement of ethics.
It is also very vital to fathom the place of codes in a business set up. The code is therefore of the many set objectives in a business, in which both the business and the employees are subject to. Businesses are always subjected by code of conducts which are prescribed by the legislation. A concrete example of such includes the Canadian Business Operations and the income tax Act. To some extent, some businesses may also be subjected under the industrial specific legislation, for instance the Bank Acts8.
Codes of conducts are ubiquitous and this makes it hard to provide a description that will describe everything that fits into them. Some codes may be described as being mandatory. For example, those that are adopted by institute of certified codes of conduct which governs the behaviors of public accountants. This means that one has to be subjected to what they call for and in case one goes against them consequences befalls.
In contrast to this, other codes are voluntary, for instance, those that are adopted by the banks, in particular the Canadian bank. In terms of what they contain, codes are typically pronounced statements about the ethical conduct of both the business and its employees. This may entail things such as acting with honesty and having self- esteem towards others9. Moreover, the codes of conduct may also refer to the procedural way a business adopts in solving a dispute in the organization.
Sometimes, a distinction between the codes of ethics and moral codes is necessary when solving disputes in an organization. The former may succinctly refer to or relate to the organization life, whilst the latter may apply to the society, the culture and the religion in general. It is also very important to note that even though some codes of conduct may not have a legal binding nature, they may impose some impacts (positive and negative) on the practices and general behaviors of both the public and private business set ups, their employees, and the organizations.
At times the biding may even exceed those that have the legally binding measures. Whether a code of conduct is used in the private or the public institution is not an issue as long as the organizations are confined to performing as per the conduct. As mentioned earlier, there may be no clear distinction between the code of ethics and the moral codes. Therefore, the same case applies here, the codes of conducts used in the private sectors are similar to those used in the public sectors and the only distinction is the liability attached to them. In the latter the liability might be very strong as compared to the former.
Business ethics and codes of conduct are important in any business setting. The above arguments extensively explained the reason for the existence of ethics and codes of conduct in the world of trade, which apparently touches almost every facet of people’s lives. It is with no doubts that failure to understand, incorporate, and embrace moral ethics in all business firms can cause harm to the society since the community solely depends on what these firms provide. Basically, people ought to willingly adopt ethics and codes of conduct in their business operations to ensure that the welfare of every party that is directly and or indirectly affiliated to the organization is safeguarded. This is quiet beneficial as far as the reputation of the corporation is concerned, therefore it becomes a necessity for business owners to uphold moral ethics.
Asgary, N. and M. C. Mitschow. 2002, Toward a Model for International Business Ethics. Journal of Business Ethics, 36(3): pp. 239-246.
Ashkanasy, N. M., Falkus. S, and V. J. Callan. 2000, Predictors of Ethical Code Use and Ethical Tolerance in the Public Sector. Journal of Business Ethics, 25(3): pp.237-253.
Beauchamp, T., Bowie, N., and Arnold, D. 2008, Ethical Theory and Business, 8th Ed.Chicago: Prentice Hall.
Bowman, J. S. 1981, The Management of Ethics: Codes of Conduct in Organizations. Public Personnel Management, 6(1): pp. 59-66.
- Beauchamp, T., Bowie, N., and Arnold, D. 2008, Ethical Theory and Business, 8th Ed.Chicago: Prentice Hall, p.15.
- Asgary, N. and M. C. Mitschow. 2002, Toward a Model for International Business Ethics. Journal of Business Ethics, 36(3), p. 245.
- Beauchamp, T., Bowie, N., and Arnold, D. Ethical Theory and Business, p. 25-30.
- Bowman, J. S. 1981, The Management of Ethics: Codes of Conduct in Organizations. Public Personnel Management, 6(1): p.59-66.
- Beauchamp, T., Bowie, N., and Arnold, D. Ethical Theory and Business, p. 45-52.
- Ashkanasy, N. M., Falkus. S, and V. J. Callan. 2000, Predictors of Ethical Code Use and Ethical Tolerance in the Public Sector. Journal of Business Ethics, 25(3): pp. 237-253.
- Bowman, J. S. 1981, The Management of Ethics, p. 59-66.
- Beauchamp, T., Bowie, N., and Arnold, D. Ethical Theory and Business, p.45-60.