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Business Ethics: Definition, Nature, and Application in Organizations

Explore the definition, nature, and importance of business ethics, including ethical theories and causes of unethical behavior. Understand the role of ethics in guiding business conduct, societal interests, and organizational behavior.

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Business Ethics: Definition, Nature, and Application in Organizations

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  1. UNIT - I INTRODUCTION

  2. UNIT - I INTRODUCTION • Definition and Nature of Business Ethics • Characteristics • Ethical theories • Causes of unethical behavior • Ethical abuses • Work Ethics • Code of conduct • Public good

  3. MEANING • The word “ethics” is derived from the Greek word “ethos”, which refers to character, guiding beliefs, standards or ideas that pervade a group, community or people. • All individuals are accountable to their community for their behavior • The community can exists in forms like neighbourhood, profession, city, state, etc.

  4. MEANING Ethics separate • Good and bad • Right and wrong • Fair and unfair • Moral and immoral • Proper and improper human action • In short, ethics means a code of conduct. It tells a person how to behave with another person.

  5. DEFINITION • According to webster, “Ethics is the discipline dealing with what is good and bad and with moral duty and obligations”. • According to Philip Wheel Wright, “Ethics is a branch of philosophy which is the systematic study of selective choice of the standards of right and wrong and by which it may be ultimately directed”

  6. Nature of Ethics • The concept of ethics is applied to human beings only as they have freedom of choice and means of free will. They can only decide the degree of ends they wish to pursue and the means to achieve the ends. • There was an argument whether ethics is a science or an art. But experts were of the opinion that ethics is more a science than an art. Because it is a systematic knowledge about moral behavior and conduct of human beings

  7. Nature of Ethics (contd.) • Ethics deals with human conduct which is voluntary not forced by circumstances or humans. It can be said that at ground level, ethics deals with moral judgement regarding set directed human conduct. • The science of ethics is a normative science. It is a search for an ideal litmus test of proper behavior. Normative science involves arriving at moral standards that regulate right and wrong conduct.

  8. BUSINESS ETHICS MEANING • Business Ethics refers to the application of ethics to business • To be more specific, business ethics is the study of good and evil, right and wrong and just and unjust actions of businessmen • It may be defined as a set of moral standards which people owning and managing business is expected to follow. • These standards are mean to govern the conduct of business persons.

  9. BUSINESS ETHICS - DEFINITION • According to Robert Kreitner, “Business Ethics is the study of complex business practices and behaviors that gives rise to ethical issues in organisations” • According to Andrew Crane, “Business Ethics is the study of business situations, activities and decisions where issues of right and wrong are addressed”

  10. NATURE / CHARACTERISTICS • Ethical Value • Relative Terms • Analytical in Nature • Diagnostic in Nature • Evaluative Nature • Prescriptive Nature • Interest of Society • Business-Society Relationship • Provide Frameworks

  11. OBJECTIVES (Peter Pratley) • To prevent malpractices in business, Ethics make business activities more authentic • To ensure uniformity in business practices among various business enterprises throughout the country. • To make businessmen more aware, sensible and liable to customers, other stakeholders and society and the whole

  12. OBJECTIVES (Peter Pratley) contd. • To ensure conformity of business operations with the contemporary legal framework (the Acts) • To confirm or restrict harmful operations which affect adversely long-term interests of people • To teach the ethical rules and principles that are relevant for business

  13. OBJECTIVES (Peter Pratley) contd. • To teach the manager as to how to run the business on ethical lines. • To enable a business firm to identify the areas which are not practising ethical principles and therefore can prescribe the necessary ethical code. • To help a firm to make business decisions and strategy which are morally fair, just and consistent.

  14. SOURCES OF BUSINESS ETHICS • RELIGION – One of the oldest sources of ethical inspiration • CULTURAL EXPERIENCES – Culture refers to a set of values, rules and standards transmitted among generations and acted upon to produce behaviors that fall within acceptable limits • LEGAL SYSTEM – Laws are rules of conduct, approved by legislatures that guide human behavior in any society

  15. TYPES OF BUSINESS ETHICS • GENERAL BUSINESS ETHICS • FUNCTIONAL BUSINESS ETHICS • INTERNATIONAL BUSINESS ETHICS • ETHICS OF ECONOMIC SYSTEM

  16. FACTORS INFLUENCING BUSINESS ETHICS • Value forming Institutions • Organisational Goals • Work and Career • Superiors • Peers and Colleagues • Professional Codes

  17. IMPORTANCE OF BUSINESS ETHICS • Helps to maintain a moral course in turbulent times • Cultivates strong teamwork and productivity • Supports employee growth and meaning • Helps to ensure that policies are legal • Helps to avoid criminal acts “of omission” • Promotes a strong public image • Helps to manage values

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