Business Ethics: A Report on Ethical Theories and Practices

This report provides a comprehensive overview of business ethics, exploring key concepts such as ethical theories, principles, and their application in leadership and management. It delves into various ethical theories, including deontology, utilitarianism, rights, and virtue, offering insights into how these frameworks guide decision-making in business contexts. The report also examines the principles of beneficence, least harm, respect for autonomy, and justice, highlighting their significance in fostering ethical practices. Furthermore, it emphasizes the critical role of ethics in leadership and management, underscoring how leaders can cultivate a culture of ethical conduct within organizations. The report concludes by stressing the importance of maintaining ethical standards to build trust, enhance reputation, and ensure sustainable business growth. The content is contributed by a student and is available on Desklib, a platform offering AI-based study tools for students.

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Contents
Introduction................................................................................................................................1
Theories......................................................................................................................................1
Principles....................................................................................................................................2
Ethics in leadership and management........................................................................................4
Conclusion..................................................................................................................................4
References:.................................................................................................................................5
Introduction
Business ethics is concerned with properly studying the policies and practices of business that
relate to the potentially controversial issues like bribery, corporate governance, insider
trading, discrimination, CSR and fiduciary responsibilities. Ethics related to the decision
making regarding the right and wrong of business conduct. For e.g. when a person takes a
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bribe from the parties in business and earns money from an illegal source, this practice is
regarded as unethical in a business context. If a company is investing money in the good
cause of the society and fulfilling its social responsibility, then this is regarded as an ethical
business conduct.
Theories
There are some theories related to business ethics that helps in the decision making when any
dilemma about ethical or unethical behaviour occurs in the minds of business people. These
theories define some critical viewpoints from which one seeks guidance while making any
decisions. Different points are emphasised in each theory which guides different decision-
making style or different rule related to the decision. It tells how an individual can predict the
outcome and how one can follow his/her duty to reach an ethically correct decision. The
people should realise that everyone cannot make decisions in the same way because each has
his mind set and perception. Also, the same information and same kind of rules cannot be
employed in every situation. In short, a particular set of standards cannot be used in every
situation, and one cannot adhere to what is written. Suppose it is written in the rule book that
‘one cannot take a bribe in the office', this does not mean that one can take bribe outside the
office premises, but different people will understand this rule in a different way. So, one
general rule should be made that ‘acceptance and grant of the bribe are unacceptable'. There
must be some understanding of a common set of goals that are required to be taken by the
decision makers to become successful.
Principles
There are some principles of business ethics that should be known to all (Edward Freeman,
Rusconi, Signori & Strudler, 2012):
1. Beneficence- It guides that an individual should take the decision that is right and
good. When a person does ‘good’, it makes an ethical perspective and the solution to
any ethical dilemma pops up automatically. It also guides the decision maker that he
should generate the ratio of good to bad in largest number that is possible. If the
business and its people are striving to get the greatest amount of good, the benefits
will also increase from the most of the ‘good’.
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2. Least harm- The decision maker should ensure that he is choosing that option which is
causing ‘least harm’ to him and his organisation.
3. Respect for autonomy- If the people in the organisation are left autonomous and they
are able to make decisions that are applicable to their own lives, then they have
control over their lives to a greater extent than other people. The reason behind this is
that they have chosen a lifestyle for them which are very normal for them, and they
are happy to carry it out but that lifestyle might not be suitable for real situations. So it
can be ascertained that if they cannot take right decisions for their own selves, how
they will behave correct in business situations. Life experiences play a very important
role in understanding emotions, getting motivated for right and wrong things, etc.
This principle is most applicable while hiring a new talent (George, 1994). The HR
manager should always look into this aspect of the candidate before hiring him.
4. Justice- the actions taken by individuals in business should be ‘fair’ to all parties
involved. The practice of sex discrimination in organisations is very common. This is
injustice and unethical as well.
The theories related to business ethics differ for individuals. The main emphasis of these
theories is on the ethical dilemma faced by the people in organisations and guides them to
reach to a conclusion that resolves the dilemma ethically as per the guidelines of ethical
theory. There are four broad categories of ethical theory that includes (Ciulla, Uhl-Bien &
Werhane, 2013):
1. Deontology- it states that individuals should adhere to the obligations and duties
assigned to them while taking any decision related to ethics. Since upholding of
one’s duty is correct ethically so, the person must follow his obligations to the
parties outside and within the business. In simple terms, keeping your promises is
what that is required in this category. When people learn to follow deontology,
they produce consistent results and take logical decisions based on his set duties.
2. Utilitarianism- it means the ability of a person to guess the outcomes of an action.
If an individual is utilitarian, then his ethically correct decision would mean that
one which is giving the greatest benefit to maximum people. It is of two kinds- act
utilitarianism where the person is concerned with the interest of most of the
people and other is rule utilitarianism where the person takes all decisions based
on law and fairness. But this should be used with caution because people use their
experiences in predicting situations which does not guarantee accuracy. Suppose a
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person is running late for a meeting and he is the CEO of the company . He
believes that he has to arrive at the meeting on time because it is ethically correct
to do that and his business and the people will benefit from his important
decisions. But he does not break any traffic rules as he doesn't want to break the
law. So here a conflict arises between two ethically correct situations (Goodpaster,
1991). These things have to be looked carefully while taking decision-related to
ethics.
3. Rights- these are endorsed by a large number of population and hence they are
considered to be ethically correct. If a person is deciphering the characteristics of
rights in society, then it will pave a way for ethically correct decisions, otherwise
not.
4. Virtue- in this theory, a person is judged by his character and not by his actions
that are uncertain in different situations and deviate from the normal behaviour of
the person. For e.g. a person is very patient and does not argue with anybody ever
but one day he was shouting on the street because he saw somebody abusing an
old age person. So his character of a patient person is more important than his
behaviour in a particular situation. Whenever a person is seen exhibiting an
irregular behaviour which is considered unethical, he is judged by his morals,
motivation and reputation.
Ethics in leadership and management
Ethics play a very important role in leadership and management in an organisation. The
reputation and credibility of an organisation is dependent on the ethical decisions of its
leaders and managers. If a person is using his leadership skills and utilising them for
appropriate business ethics, then he can make a good team culture in the organisation and can
provide benchmarks for employees that can be measured. In leading and managing people,
one should always be open while discussing the grey areas of business and how complex they
could be in the work life of people. While taking any ethical decision for the organisation, the
leader should involve others so that know how ethical decisions are taken and develop a
sense of ethics while taking some decisions on their own. A leader should help others in
learning about ethics. The employees should me made clear that the only way by which the
organisation operates is ‘ethically’ and there is no reference manual to it. It has to be imbibed
within the employees, in every strategy, every discussion and conversation. The leader should
become a role model for others and should conduct him ethically in every situation so that the
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followers develop a trust in his conduct and behave accordingly (Rost, 1995). It is important
for managers and leaders to show their stakeholders that the organisation is actively engaged
in ethical issues and demonstrate the commitment that the leader and his organisation have
for ethical behaviour. Nobody in the organisation, neither the CEO nor the manager or leader
shall be exempted from ethical conducts in the company. The standards must be set for all
and it should be ensured that they are maintained. Make people accountable for any wrong
conduct; no exceptions shall be done. Managers should talk about how positive ethics look
like when practised and how they should be carried out (Melé, 2007). The most important
thing that leaders and mangers have to do regarding ethics is integrated it into all actions of
the company, in everything that employees do, touch, speak or influence so that everything
remains vigilant.
Conclusion
In today's world, creating a reputation for the organisation is a must. This can be done by
keeping the promises made to the stakeholders, by making correct choices and by putting
ethical conduct before monetary gains. This will cause the business grow. The trust of public
is developed in the organisation and doing business will become much easier. The employees
will also feel good about the organisation and the sense of commitment towards work will
increase.
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