Business ethics refers to the professional morals/ethics that examine the principles that should be applied in a business environment. It, therefore, refers to policies that organizations refer to in polemic issues including good corporate governance, incidences of insider trading, instances of bribery and discrimination and corporate social responsibilities framework (Shaw, 2013). Understanding the scope of business ethics helps in examining the role/importance of business ethics in any given organization.
Firstly, business ethics as morals that guide behavior in organizations see to it that the businesses are conducted with transparency, integrity, and excellence (Ferrell & Fraedrich, 2014). Thus, business ethics is responsible for the creation of a corporate culture that is characterized by good governance. This increases customer loyalty in both the short run and the long run leading to increased profitability of the business.
Business ethics, also, guide the behavior of the top management. This in turn influences the level of employee motivation. It is also a key ingredient in shaping the reputation of the organization, and the result is that the business gains a competitive advantage over its rivals while maintaining sustained growth. In a nutshell, business ethics contribute to improved customer satisfaction, development of investor loyalty through creating a climate of efficiency, productivity, and profitability and also enhanced employee loyalty through job satisfaction, fair remuneration and safe working environment (Griseri & Seppala, 2010).
Implementation of ethics in a business is not without challenges. Most important is the attitude that prevail within the organization. Codification of ethics in outlined guidelines may be viewed as restrictions and limitations by the employees. Further, the attitude of the management may in such a way that it is imposed on the employees through rules and procedures that may result in defiance. Also, structural barriers may exist such that satisfying the owner of the business and business ethics become conflicting issues. Similarly, businesses are driven by social being who have personal ethics that may sometimes not be in congruence with those of the organization.
Organizations that aim at ensuring business ethics while maintaining profitability can do so by first, changing the attitude of the stakeholders and most important the employees (McMurrian & Matulich, 2011). Where an attitude of indifference exists leading to violation of ethical behavior, the management should guide an organizational change of attitude by helping the employees understand that the profitability of the organizations through benefits of ethical conduct has a positive impact on personal lives. Further, organizations should change their strategies of making profits such that ethics comes before profit. If such a culture is cultivated, then more profits will be generated through ethical and legal compliance as discussed above.
Shaw, W. (2013). Business ethics: A textbook with cases. Cengage Learning.
Ferrell, O. C., & Fraedrich, J. (2014). Business ethics: Ethical decision making & cases. Cengage learning.
Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility.
McMurrian, R. C., & Matulich, E. (2011). Building customer value and profitability with business ethics. Journal of Business & Economics Research (JBER), 4(11).