The Importance of Business Ethics

Ethics is a set of moral judgments about right and wrong. Business ethics or corporate ethics is a form of professional conducts that focus on ethical principles, morals or problems that emerge in a business climate. Business ethics apply to all the aspects of an organization and is important for the conduct of all individuals. It has two dimensions, normative and descriptive, although the field is mostly normative. The amount and range of ethical issues gives us valuable insight about the interaction between non-economic concerns and profit-maximizing behaviors. Many major enterprises of today focus on non-economic values and promote them as social responsibility charters or ethics codes.

Social responsibility and an ethical conduct are highly beneficial for a business. On the other hand, an unethical conduct or a lack of social responsibility can cause irreparable damage to the reputation of a business, thus making it less appealing to stakeholders and causing the profits to fall. Business ethics is an integral part of everything a company does, along with good corporate governance. Stakeholders are an essential part of a successful business, and treating them correctly is in the best interests of the corporation. Other benefits an ethical behavior brings are:

  • Attracting potential customers to the firm’s products, thus increasing sales and profits;
  • The employees are more satisfied and want to stay with the company, thus lowering job turnover and increasing productivity;
  • More people want to work for the business, therefore the most talented employees are hired and the recruitment costs reduced;
  • Attracting investors and maintaining a high share price, thus shielding the company from takeover.

The importance of business ethics is visible in every area the fact that it brings tremendous benefits to any organization is undeniable. A company is more likely to become successful when it deals honestly with its customers, vendors, employees and shareholders.  Basically, the way we created society, it is important to have some standards and principles, whether you’re just a simple individual, or an important businessman with a lot at stake. For example, one should almost never let their personal political views affect their business dealings; this means you shouldn’t discriminate against someone because they don’t believe in the national Democratic Party like you, or offer them more favors when they do. In business, there are entirely different factors you should consider, otherwise you’re acting unprofessionally. It is true that this is more valid in theory than in practice, and that capitalism favors nepotism, but it is up to each of us to make things right. So whether you adhere to the national Democratic Party or to the Republican one, don’t let your views interfere with your business dealings.Although the term ethics is subjective and some people interpret it in a different manner, it still plays an important role in all types of business settings. Moreover, the first employees must be aware of the company’s ethics practices and values, so that they become a tradition as the company grows.

Nevertheless, the importance of business ethics surpasses the relationship between the management team and the employees, stretching out to how the firm approaches the local community. A business with strong ethics becomes a member of the community and receives support in return. Local charities, assisting with community events, donating funds and being honest when dealing with other businesses are great ways to gain the respect of the community.

The importance of business ethics in financial matters becomes clear when the business is dealing with shareholders and vendors. A dishonest company will probably have a hard time conducting business and getting the needed materials from vendors, as they will be less willing to supply and extend credit. Shareholders might lose interest and decide not to invest money. Although the initial profits might be considerable, in the long run a corrupt company with ethical problems may be heading towards bankruptcy. Customers who feel like they are being mistreated can share negative information on social networks much more easier than they could a few years ago, and it does not take much negative publicity to bring the sales down. On the other hand, customers who are pleased with the services provided are more likely to recommend the company to their friends.

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