Ethics and Managerial Responsibility

Running Head: ETHICS AND MANAGERIAL RESPONSIBILITY
ETHICS AND MANAGERIAL RESPONSIBILITY
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1ETHICS AND MANAGERIAL RESPONSIBILITY
Business ethics can be considered as a basic guideline that regulates and assess the
methods adopted by business organizations to carry on financial transactions and gain public
approval. The purpose of this study is to provide answer to several questions related to business
ethics. In its attempt to answer the first question this essay explains the meaning and significance
of ethics in business. Further this essay gives answer to the second question which focuses on the
reason and importance of an ethical behavior by an organization. The third answer highlights the
causes of unethical behavior by business organizations. The finals answer attempts to provide
some recommendations to ensure the responses of the business organizations to the need for
behaving ethically.
The term ‘business ethics’ refers a set of contemporary business standards, policies as
well as principles related to the controversial subjects like the governance of the corporate
activities and preventing ethical issues like insider-trading, bribery or any kind of operations that
are against moral values and may occur in an business environment. The policies related to
business ethics also applies to the corporate social responsibilities performed by business
organizations (Ferrell and Fraedrich 2015). Another reason behind the formulation of business
ethics by the originations is to regulate the fiduciary activities of several business organizations.
Hence, business ethics can be considered as a basic guideline that regulates and assesses the
methods adopted by business organizations to carry on financial transactions and gain public
approval (Ferrell et al. 2019). Business ethics help organizations to maintain a good relation with
their respective stakeholders. Business ethics are not only applicable to the entire business
organization but also to all the individuals related to that business organization. Individuals,
organizational statements or legal system of an economy can be considered as the origin of
business ethics (Crane and Matten 2016).
There are two dimensions of business ethics-normative business ethics and descriptive
business ethics. Descriptive business ethics refers to a set of moral standards in business, which
most of the organizations claim to follow. For example, when a company attempts to design an
advertising campaign for a culturally diverse target audience, before designing the marketing
campaign, the organization must look after the fact whether the theme, idea, message in the
script of the advertising show respect to the differences in the language, culture or religion of the
target audience. In this case if the idea or theme of the advertising hurts the emotions related to

2ETHICS AND MANAGERIAL RESPONSIBILITY
the culture or religion of a customer, they marketing campaign will be considered to violate the
descriptive ethics related to the business organization (Ferrell and Fraedrich 2015).
Normative ethics are basically related to the maintenance of the moral values while
conducting the business. Hence it is related to the controlling of the natural emotions like anger
selfishness in order to maintain a healthy environment for the business operation and gaining
public approval and popularity, in order to establish brand image (Kumar 2017).
The importance of business ethics can be realized from the several benefits of following
ethics in conducting business operations. Business ethics prevents the scope of malpractices by
the unscrupulous businessmen. The prevention of malpractices like- black marketing, artificial
high pricing, adulteration, cheating in weights as well as measures by a number of unscrupulous
firms, actually becomes an advantage to other firms competing in the same market as well as the
customers. Firstly, due to the abolition of such unethical business operations, the transparency in
the business environment is maintained (Boatright 2017). Secondly, the segregation of the firms
performing unscrupulous activities form a negative image of the respective brands. In this case,
the image of other competitive firms who are following business ethics, are illuminated. This
leads to an increase in the sales of the homogeneous products provided by other competitive
firms. Again, customers loses faith on the firms who do not follow ethics, they switch to other
competitive firms who conduct business operations ethically (Swanson and Frederick 2016).
Hence it can also be said that, business ethics helps the firms to retain customer loyalty. Thirdly,
a new firm entering to the market follows business code of ethics that give birth to the
confidence in the minds of the customers it is targeting (Crane and Matten 2016). Fourthly, to the
adoption of the liberalization policies most of the countries, entering to a new business is easy,
but if a firm do not follow business code of ethics and start cheating customers by charging
exorbitant price of by compromising in the quality of its products, it will not be able to survive
for long in the target market. Hence, another importance of following ethics in business is to
sustain in the market for long. Fifthly, incorporation of ethical code of conducts in business also
ensures the protection of consumer rights, gaining the confidence of the stakeholders as well as
the employees (Ferrell and Fraedrich 2015). If a company follows business ethics while
performing corporate social responsibility, it will create a positive image for the company as well
as the brand in the minds of the customers. Hence another importance of following ethic, is, this