What is Business Ethics?
In a Free, Unregulated Self-Ethics Model
If business ethics and values are left to the self of business houses and entrepreneurs, society may have many dead weight losses to bear. A few producers can collectively skimp on supply to increase market prices, a few strong buyers may collectively reduce demand till prices fall and a single entity can capture the entire supply chain and refuse its services to the free market and reserve them for the best price. To top it, the labor market can unite and ask for unreasonable increases in wages and the public transport unions can stand up for price hikes. Who decides whether all this is reasonable and hence ethical, or unreasonable and thus unethical? Who says that an earner who earns lower than the minimum wages is entitled to a wage increase even by somewhat unethical measures that require some employer arm-twisting? Who decides that a person who already earns millions in profits is not entitled to reducing worker wages to earn higher margins because it is unethical? See what I mean, ethics changes depending on which side you view them from. What may be absolutely right for you may be a gross injustice for me. So, if the market is left to its own individual mechanics, the most important ethical issue of all will be that all those in strong positions will always be the ones manipulating the weaker ones. This is where business ethics comes in as a self-regulatory mechanism on the stronger players in the economy. Let us now move on to certain routine ethical issues in business that almost every business has to face.
Industry Wide Ethical Issues
Following is a list of industry wide ethical issues in businesses. The problem with these ethical issues is that they are not only routine and frequent, but they are also more widespread, i.e. throughout the whole industry rather than being confined to a particular business.
- Bribing powerful officials in order to get bids and tenders accepted and bribing competitor employees to get informational leaks is a serious ethical issue in business. In fact, it is a crime that is legally punishable in most countries today.
- Labor related issues like gender discrimination at workplace, employee harassment, minority community participation, working conditions and child labor are also some general ethical issues in business.
- Business practices like sourcing of materials, quality of inputs in production, compromising on certain aspects like product quality, safety, etc. and deception in packaging, quantity or size also fall in the purview of business ethics.
- Some industries consciously omit the details of the side effects of the usage of their products from the product packaging while some indulge in controversial practices like animal testing and these too are some of the ethical issues in businesses.
- Forcing labor to work at below minimum wages, sweatshop work conditions, violation of worker rights and not complying with health, safety and environmental standards are some common current ethical issues in business.
Company Specific Ethical Issues
Here are some company specific ethical issues in business. These ethical issues should be dealt with pretty strictly as to serve an example to the rest.
- Showing honesty, integrity and openness in consumer relationships, addressing warranty and guarantee claims in an open and transparent manner and involving the company in some kind of social welfare causes is an ethical business practice that many are yet to follow.
- Whether to accept moral responsibility of on-site mishaps, spills, leaks and disasters and whether to make product recalls if certain harmful information about them comes to light, are ethical issues that all businesses must be prepared for.
- Unethical business practices like dumping good at loss making prices just to earn market shares or to oust a new competitor from business, colluding with competitors to fix higher prices, using high pressure selling tactics, using deceptive advertising, etc. are also some things that need to be looked at.
- Some stronger ethical issues in business are related to practices that are not easily detected, like releasing products that have built-in obsolescence (to generate further demand for future products) and indulging in accounting manipulations to generate secret reserves or to show higher or lower profits as per convenience.