ARGUMENTS FOR AND AGAINST BUSINESS ETHICS

Introduction:
Throughout the world, changes are taking place at all levels. The new ways of living,
working and relating have been explored and developed. The growth of awareness,
development of technology, growth of new dimensions and changes in the attitude are the
major reasons for the rapid growth of these changes. This situation has also emerged as
an opportunity for the growth of ethical principles and practices.

Arguments for business ethics:

1) Holistic approach.
2) Leadership.
3) Employee commitment.
4) Investor loyalty.
5) Customer satisfaction.
6) Business is a co-operative effort.
7) Higher profits.
8) Changing mindset of shareholders.

1) Holistic approach:
In the last two centuries, importance was given to production of goods and services and
the promotion of more and more of knowledge. In the present modern century, a lot of
significance is attached to the growth of values and ethical ideas.

2) Leadership:
Business ethics in organizations requires value-based leadership from top management.
Openness and continuous effort to improve the organization’s ethical performance are to
be directed from the leadership of the organization. The ability of a firm to plan and
implement ethical business standards depends on the involvement of the leader in these
programmees.
3) Employee commitment:
Ethics clearly contributes to the growth of employee commitment. Since the employees
spend a considerable amount of time at work, an ethical commitment to the organization
improves the loyalty to the organization.
The performance of the employees is bound to increase under ethical conditions because
of the positive environment. A trust worthy atmosphere increases efficiency and
enterprise.
According to National Business Ethics Survey (USA), when employees see good values
like honesty, respect, and trust in work place, they do not feel like compromise in work
and contribute more. The ethical climate adds to the value of efficiency.

4) Investor loyalty:
Modern investors are concerned with ethical practices, social responsibility and
reputation of companies. An ethical climate provides a foundation for efficiency,
productivity and profits. The negative factors like law suites, fines and bad practices
lower stock prices. When the value of the stock is declining, the investors divest their
stocks and bonds.
The relationship with investors should be based on dependability, trust and commitment.
Modern investors look at profit and also the performance standards of the company
which include ethical practices. The investors are communicated about company's
performance and reputation.

5) Customer satisfaction:
Long-term good relationship is essential between business and customers. Consumers
avoid the products and services of companies where the employees are treated in an
unfair way.
According to a survey 60 percent of the people focus on social responsibility ahead of
brand reputation. After the Exxon Valdez oil spill, many customers boycotted the
company. Nike, the world's largest maker of athletic shoes suspended orders at June
Textiles Company, for the use of child labor. Ethical conduct towards customers builds a
strong competitive position.
6) Business is a co-operative effort:
Since business is a co-operative activity, it requires ethics and good practices. In a
cooperative process there are many stakeholders like investors, suppliers, customers and
government. Some ethical standards are necessary for the solidarity of business and its
operations. Lack of co-operation is often due to the fall in ethical values and practices.

7) Higher profits:
Since all the stakeholders can get good benefit from the comprehensive ethical practices,
there is a vast scope for higher and consistent profits. In the long run, ethical practices
increase the size of profit. Johnson and Johnson, Xerox, MTR (Bangalore), and TVS
(India) are examples.
Many studies have found a positive relationship between corporate social responsibility
and growth of business. A study of five hundred largest public corporations in the U.S.A.
found that ethical behavior resulted in the better financial performance.

8) Changing mindset of stakeholders:

Stakeholders apply their values and standards such as ideal working conditions,
consumers' rights, environmental issues and customer care. The stakeholders want the
growth of business organization on set patterns. The stakeholders provide resources for
the success of the firm in the long-run. The stakeholders supply some useful information
and knowledge in their respective areas to the organization.

Arguments against business ethics:

1) No need for ethics separately.
2) Demand and supply forces only operate.
3) Compliance of law.
4) Conflicts of interest.
5) Profit is the object of business.
6) Poor moral standards of society.
1) No need for ethics separately:
If business firms are interested in doing their main job of business, there is no need for
teaching ethics in a separate way. A business has to prepare its business plan and execute
it and satisfy all the needs of stakeholders. Then ethics has no separate place. All good
business activities themselves will cover ethical issues.
2) Demand and supply forces:
Any market which is the heart of any business is governed by the two market forces,
namely demand and supply. The price, output and many other decisions are based on
these two market forces. Hence the scope for business ethics is very much restricted in
business.
3) Compliance of law:
Any business has to be in compliance of the law of land. For example in India the
Competition Law encourages the growth of healthy competition. Apart from this, there
are labour laws to protect the working and service conditions of labour. Similarly there
are legal provisions to take care of the customers and customer welfare. In this context,
the scope for business ethics is limited.

4) Conflicts of interest:
Business promotes conflicts of interest such as conflict between employers and
employees, conflict between sellers and buyers, conflict between owners and government
as well as conflict between the different competitors. In an atmosphere dominated by
conflicts, the possibility of ethical operations is limited.

5) Profit is the object of business:

The object of any business is to make profit and indicates its progress. While making
profit through its various operations, a business has to follow different techniques and
tactics.
Most of these business techniques are based on exploitation. Hence there may not be a
good scope for business ethics in modern days.
6) Poor moral standards of society:
Even though high ethical values are spoken and written by a small section of society, the
moral standards of society have fallen down. Frauds are taking place in all areas of
business operations like accounting fraud, marketing fraud and consumer fraud.

Conclusion:
In spite of the arguments against business ethics, the emerging society is bound to be an
ethical society with all its responsibilities and values. Ethical considerations like finance,
quality, logistics, marketing and customer care are actively practiced. Efforts are made to
incorporate values in all decision making policies. The experiments with new approaches
are increasingly introduced from the top. Many business people build a value-driven
organisation. People try to reinvent the organisations.

Questions
Section 'A'
1) Define holistic approach.
2) Define investor loyalty.
3) What is compliance?
Section 'B'
1) How business ethics can improve employee commitment?
2) How investors' loyalty can be promoted through ethical practices?
3) How ethical practices promote higher profits?
Section 'e'
1) Examine the arguments for and against business ethics.