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What relevance does ethics have to business?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

Hi I am CA Intermediate | CA IPCC student. May I know, What relevance does ethics have to business?

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Business Ethics in a business organization relates to a corporate culture of values, programs,enforcement and leadership.

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Operating according to ethical values is playing an increasingly important role in business today. Companies do not operate in a vacuum, but are part of a society which expects a certain standard of behaviour from businesses. Companies require what is often called 'a license to operate'. Stakeholders want to be associated with responsible organisations. Being treated fairly, honestly and consistently is of value to a business’s customers, suppliers, investors and employees. It builds trust. According to global Ipsos MORI research in April 2013, 74% of the public within the 24 countries surveyed say that a company's social responsibility is an important factor when deciding which product or service to purchase. 84% believe that companies should do more to contribute to society. At the same time, employers cannot take for granted that their staff understand what ethical standards are expected of them in carrying out their work on behalf of the company. Provision of guidance is therefore essential for creating and sustaining an ethical culture and avoiding misconduct. Avoiding costly crises and scandals is of value to businesses. Reputation hits can be hard to recover from without a foundation of trust. Furthermore, having clearly articulated values and an ethics policy is seen to be good governance practice; it is one of the hallmarks of a well-run business. Operating with integrity is then a key part of sustainable success for business.

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**Business Ethics:** (a) Ethics in business refers to the application of day-to- day moral or ethical norms to business.Business Ethics are the principles and standards that determine acceptable conduct in business organizations. (b) Business Ethics in a business organization relates to a corporate culture of values, programs,enforcement and leadership. (c) Business ethics is a set of principles or reasons which should govern the conduct of business – at the individual firm Level or at the collective Industry Level, by the application of ethical reasoning to specific business situations and activities.

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