What is Business Ethics?

Ethics is understanding what is right. Also, sometimes people make decisions based on the laws of the land or according to what they believe is right.

" business ethics "

Ethics in the context of business is that the functions of a corporation should be conducted keeping in mind the good of everyone associated with it and the decisions should be made ensuring the same. In other words, the activities of an organization should not be such that for the success of the business the interests of others are harmed. Business ethics however plays a very vital role in the success of a business.  One can be social but that does not mean he is ethical too. A socially responsible corporate for instance doing CSR activities shows the business's concern towards the consumer and the society. So, every decision taken by a business should be an ethical decision as it directly or indirectly impacts the financial performance of the organization too.

Benefits of Introducing Ethical Practices to Employees

When the senior authority works ethically so do the employees do. The decision-making process becomes quicker when it comes to behaving ethically in every situation, as there is only one simple rule to follow, ethics. Fast decision-making makes the employees more confident and boosts their morale indirectly having an impact on corporate sustainability. Employees who are bound to practice ethics at the workplace remain honest to the organization as well. This is a key takeaway one should absorb. Under CSR the employee benefit is also given priority by the business leaders as they believe that the employees are the ones who would ultimately work towards effective application of the business model and business strategies. such type of governance in a corporate makes it favorable to the government as well as it contributes to the economic growth of a country and helping it in getting a global identification. 

Benefits of an Ethical Business

The benefits of ethics in business or functioning ethically are not limited to the rise in employee morale and loyalty. Like any other initiative taken by a business, ethical behavior also encourages long term and short-term profitability of a business. Also, an ethical business creates a good image of the company socially and amidst its stakeholders. It can be summarized in a single line as "working towards the sustainability of the environment would impact the corporate sustainability positively". Especially, if a corporation has a global reach, its active participation in corporate social responsibility would increase its corporate sustainability. The CSR strategy should however actually help increase economic development.

Ethical workings of a business help in promoting its reputation and thus helps in gaining the trust of investors, society, and other organizations making it investment-worthy. The consumer as an individual on the other hand would motivate the others too if he likes the conduct of a corporate. If a business alternatively doesn't manage to work towards environmental protection it could also be boycotted socially. The business rather doing CSR if gives birth to environmental issues it will leave a negative impact on its financial performance.

What is Ethical Dilemma in Business?

An ethical dilemma is a situation when there is a problem in decision making regarding which option to choose from the available alternatives, where neither of the options is completely appropriate from an ethical point of view. These dilemmas or ethical issues are the environmental truth and occur frequently in our daily lives but when it comes to business, the decisions are quite tough and challenging as an organization has to safeguard both its interest and social interest at the same time.

These ethical challenges are being faced by people since history and the difficult part is that such dilemmas do not have a clear solution to the problem that can be adapted absolutely. So, the philosophers have tried to find solutions that would help up to quite an extent.

  • Disapprove the dilemma: It happens when sometimes one can logically prove wrong the dilemma and chose an alternative from the two.
  • Value Theory: The value theory of ethical dilemma says that when facing a dilemma, one should choose the option that provides lesser harm and the greater good.
  • Alternative Solution: Trying to find out other best options for the problem.
" Ethical Dilemma "

Social Responsibility

It is a well-known fact that the main objective of every business is to make a huge number of profits. But, chasing profit does not mean that the business has got all the rights to harm individual and societal interests. And if a business harms or ignores the interests of the community it cannot run successfully for the longer term. Social responsibility refers to businesses working for the welfare of society along with achieving their objectives.  

There is no previously set standards as to what an organization should do for the welfare of the society in which it operates and it entirely depends on the organization what they can do to perform their part of social responsibility.

" Social responsibility "

Reasons for Embracing Social Responsibility

  • According to a recent report, 42% of people build a good or bad image of a company based on its socially responsible activities which means half of the reputation of a company depends on how actively it works for society’s betterment.
  • Doing CSR creates a more positive relationship of the business with its customers thus ensuring customer loyalty.
  • Indulging in social welfare activities or CSR actively, strengthens the company’s image and reputation amongst the investors, consumers, and other organizations too.
  • All these activities help a business to interact with their potential customers and thus get a chance to directly market the brand to the prospects.
  • The employees are also a part of the society and thus the welfare of employees also comes under CSR. People would like to work at a company that behaves socially responsible and therefore resulting in a lesser employee turnover and retention of competent employees. For example, a company providing scholarship facilities to the children of the employees.


Both Ethics and Social Responsibility are two important practices that should be undertaken by a corporation. The benefits of the two are long-term and work towards building the brand image. Business Ethics and Social Responsibility have the potential to bring vital advantages to an organization. The concept of business being answerable to society along with making profits is a well-known one and this is why CSR activities are gaining much importance. Not only a business has a social responsibility but it also has an ethical obligation towards the community and its stakeholders. However, it should be practiced as a responsibility and not as a burden.

Ethics and being socially active go hand in hand as both are associated with safeguarding the interested parties associated with a business. Though the two concepts are closely related both have their importance and one can’t fill the void by the absence of the other. The key takeaways therefore are, ethical behavior would impact the conduct of the business by increasing employee morale and the ethical practice would help the economic development of the society and its people.

Context and Applications

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for   

  • BBA
  • B.Com
  • M.Com
  • MBA

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