Importance of Business Ethics in Organizations

Executive Summary
Business ethics are essentially the backbone of the business that drives the business in the right
direction. They form the very crux of how the business is going to operate. These ethics are
defined by the set of values that guide business decisions within different levels of the business.
Ethical businesses have time and again proven to have improved customer relationships and a
positive brand positioning. This is because the ethics adopted by an organization create a sense
of trust and respect among stakeholders towards the business. This report throws light on the
importance of business ethics as well as examples of their evidence within different industries.

Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................2
Literature Review............................................................................................................................2
Discussion and Analysis..................................................................................................................4
Conclusion.......................................................................................................................................7
Recommendation.............................................................................................................................7
References........................................................................................................................................9

Introduction
Business ethics plays a fundamental role in the success as well as growth of a business. Business
ethics are moral principles that guide the way a business functions on a day to day basis. These
ethics determine the business’s actions towards its environment. These ethics must be defined at
the inception of a business and every decision made the business must be in line with the ethical
policies of the organization.
Effective ethics of a business firm help in setting the right positioning in the minds of customers.
Since these ethics help the business take appropriate decisions and hence lead to improved
growth. Ethical organizations attract investors as well as employees. Such organizations adopt
competent strategies to ensure employee retention and even employees prefer associating with
such businesses in the longer run. Not just employees, even customers tend to get attracted
towards ethical businesses. This report highlights upon the importance of ethics in any business,
the ethical challenges faced managers as well as the contribution of business ethics to an
individual or organization. Real world examples of business organization have been discussed
who have set the right examples depicting the importance of ethics in a business.
Literature Review
There are various strategic management experts who have thrown light upon the importance of
business ethics in any organization. Being an ethical organization is a difficult road to follow but
it certainly comes with its own set of advantages. Mehta, Kurbetti & Dhankar (2014) state that
the level of employee retention is directly related to the strength of business ethics adopted by a
business. An ethical business attracts competent employees who relate to the same set of ethics.
This helps the business in recruiting manpower which is proficient. Employees tend to feel safer
and more secure in a business that is ethical in nature. An unethical firm leaves the employee at
the risk of being associated with unethical actions. Therefore before joining an organization,
employees consider the ethical values of the business to be an important criterion.
Every business requires investment from several external stakeholders. These investors evaluate
the firm on the basis of various criteria before finally investing their money. One such critical
criterion includes the ethical values adopted by the business. The ethics adopted by a business