BM2210

ETHICS AND BUSINESS

I. What is a Business?
A business is an organization or economic system where goods and services are exchanged for another or
money (Business Dictionary, n.d.). Every business requires some form of investment and enough
customers to whom its output can be sold consistently to make a profit. Businesses can be privately owned,
not-for-profit, or state-owned.

Business is "an organization or enterprising entity engaged in commercial, industrial, or professional

activities." It can be for-profit entities or non-profit organizations that operate to fulfill a charitable mission or
further a social cause. Businesses range in scale from sole proprietorships to international corporations.
Several lines of the theory are engaged with understanding business administration, including
organizational behavior, organization theory, and strategic management.

II. Nature of Business

Businesses vary in size, as measured by the number of employees or sales volume, but all businesses
share the same purpose: to earn profits. However, it should be noted that its purpose goes beyond making
a profit. It also includes the following:

• An essential institution in society

• Supply of goods and services
• Creates job opportunities
• Offers a better quality of life
• Contributes to the economic growth of the country.

Hence, it is understood that the role of business is crucial. Society cannot do without business. It needs no
emphasis that business needs society as much. This is because business improves the people's standard
of living by providing better quality and diverse goods and services at the right time and place. Besides, the
business provides opportunities to work and earn a livelihood. Thus, it generates employment in the country,
reducing poverty. When the business environment is conducive for a business organization, such business
thrives well, reducing poverty (Aremu & Adeyemi, 2011). Business improves a country's national image by
producing and exporting quality goods and services to foreign countries. Participating in international trade
fairs and exhibitions also demonstrates its own country's progress and achievements to the outside world.

III. The Morality of Profit Motive

A profit motive is the goal of most businesses. In capitalism, it is generally considered to be the main reason
most businesses exist and is closely tied to the concept of "self-interest." It has also developed a relatively
poor reputation and is considered by many to be one of the primary reasons that businesses or corporations
are not trusted or require regulation (Weisen & Bailey, 2020).

Understanding the nature and morality of profit motive starts with examining some given factors and
assumptions in which the idea of profit motive operates. These factors are the following:
1. Profit-motive in business is an ethical issue. Since business is an integral part of society, its
activities, including profit-making, must be examined from the perspective of morality.
2. Profit-motive is an ethical issue that operates within two (2) important aspects of our human
conduct: freedom and business structure. The element of freedom implies that business people
have the right to decide on the amount of profit they want to earn in selling goods and services to
customers, as shown in Table 1.

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Good Side Bad Side

It motivates people to do something It promotes rivalry among competitors. Sometimes the
meaningful. It gives human life a goal to pursue competition becomes stiff, resulting in a dog-eat-dog
and something to live for. world of business where sources are achieved by
competing with others and pushing them down so that
one's own business might succeed. This certainty
dramatizes business as an essential human activity.
It promotes ingenuity and cleverness in running It makes people focus only on making money, that is, on
a business (e.g., business leaders and selling as many goods as possible, without considering
entrepreneurs struggle to overcome obstacles whether these products satisfy consumers' and end-
to achieve success). users' needs and wants.
It makes people productive. Because of their It turns businessmen from being reflective and
desire for money, businessmen have become questioning people because it focuses their attention on
productive, and some of their products have the practical activity of making money. Thus, a life
been useful and have enhanced human life. centered on profit results in a narrow existence, deficient
in many critical human dimensions.
It generates potential capital for the business. It promotes self-interest rather than the common good. To
Profit is potential capital that can be invested to some extent, the profit motive has benefited some
establish new businesses. In this way, profit businessmen. Still, it has also created some social costs
also results in more jobs and goods and that many people, if not the majority, have to bear (e.g.,
services for the public and society. depletion of natural resources, toxic wastes being thrown
into the rivers, pollution of the environment, and disregard
for the next generation to come).
Table 1. The Good and Bad Sides of Profit Motive

IV. Ethics
Ethics is a set of principles or standards of human conduct that govern the behavior of individuals or
organizations. It can be further defined as the discipline dealing with moral duties and obligations and the
explanation of what is good or not good for others and all, as well as the moral choices that are made in
relationship with others (Crane & Matten, 2016).

V. The Relationship Between Ethics and Business

Ethics in business deals with the ethical path business firms ought to adopt. Discussion on ethics in business
is necessary because companies can be unethical, and there is plenty of evidence of today's unethical
corporate practices.

Firms and corporations operate in the social and natural environment. By existing in the social and natural
environment, business is duty-bound to be accountable to the natural and social context in which it survives.

Irrespective of the demands and pressures upon it, business is bound to be ethical for at least two (2)
reasons:
1. Whatever the business does affects its stakeholders.
2. Every juncture of action has trajectories of ethical and unethical paths wherein the business's
existence is justified by ethical alternatives it responsibly chooses.

The two (2) issues—an organization's social responsibility and responsiveness—ultimately depend on the
ethical standards of management:

• Ethics corresponds to basic human needs. It is a human trait that man desires to be ethical, not
only in his private life but also in his business. These basic moral needs compel organizations to
be ethically oriented.

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• Values build credibility with the public. A company perceived by the public to be ethically and
socially responsive will be honored and respected.
• The management has credibility with its employees because it has credibility with the public.
• An ethical attitude helps the management make better decisions because ethics will force the
administration to take various aspects (e.g., economic, social, and moral).
• Value-driven companies are sure to be successful in the long run, though in the short term, they
may lose money.
• Ethics is important because the government, law, and lawyers cannot do everything to protect
society.

VI. Definition of Business Ethics

Ethics is the discipline that investigates the rightness and wrongness of human actions. When this discipline
is used to explore the rightness or wrongness of business activities and conduct of the business persons
and professionals, it is called business ethics.

In its simplest form, business ethics can be defined as a systematic study of ethics applied to business
issues. It involves the application of standards of moral behavior to business situations. Concepts of right
and wrong are increasingly being interpreted today to include the more complex and subtle questions of
fairness, justice, and equity (Cortez, 2016).

According to the Stanford Encyclopedia of Philosophy, business ethics is the study of moral standards and
how these apply to social systems and organizations through which modern societies produce and distribute
goods and services and to the behaviors of the people who work within these organizations. Business
ethics, in other words, is a form of applied ethics. It not only includes the analysis of moral norms and values
but also attempts to apply the conclusions of analysis to that assortment of institutions, organizations,
activities, and pursuit of business.

VII. The Importance of Business Ethics

1. The power and influence of business in society are higher than ever before. Business ethics helps
in understanding why this is happening, its implications, and how people might address this
situation.
2. Business can potentially contribute significantly to societies (producing goods and services,
providing employment, etc.). How this contribution is made raises ethical issues that go to the heart
of the social role of business in contemporary society.
3. Business malpractices tend to inflict enormous harm on individuals, communities, and the
environment. Business ethics can be used to improve the human condition.
4. The demands placed on business to be ethical by its various stakeholders are continually becoming
more complex and challenging. Business ethics helps understand these challenges more clearly
so that firms can effectively meet these ethical expectations.
5. Business ethics can improve ethical decision-making by providing managers with knowledge and
tools.
6. Ethical violations continue to occur in business. Business ethics help by looking at the reasons
behind these violations and how managers, regulators, and others can deal with them.
7. Business ethics can allow people to assess the benefits and problems associated with the different
ways of managing ethics in organizations.
8. Business ethics provides people with the knowledge that transcends the traditional framework of
business studies and confronts people with some of the most important questions faced by society.

References:
Aremu, M. A. (2015). Nature, scope, and purpose of business. Published by Department of Business
Administration, Faculty of Management Sciences, University of Ilorin, Nigeria.
Business. (n.d.). Retrieved from http://www.businessdictionary.com/definition/business.html

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Chimecheng. (2011, June 24). Business ethics and social responsibility [PowerPoint slides]. Retrieved from
https://www.slideshare.net/chimecheng/business-ethics-and-social-responsibility
Cortez, F. G. F. (2016). Business ethics and social responsibility. Vibal.
Crane, A., & Matten, D. (2016). Business ethics: managing corporate citizenship and sustainability in the age of
globalization. Oxford University Press.
Horwitz, S. (2008, March 1). Profit: Not Just a Motive: Steven Horwitz. Retrieved from https://fee.org/articles/profit-
not-just-a-motive/
Moriarty, J. (2016, November 17). Business Ethics. The Stanford Encyclopedia of Philosophy (Fall 2017 Edition).
Retrieved from https://plato.stanford.edu/entries/ethics-business/
Salehi, M., Saeidinia, M., & Aghaei, M. (n.d.). Business Ethics. International Journal of Scientific and Research
Publication, 2(1), 1–4. doi:10.29322
Wiesen, G., & Bailey, H. (2020, January 29). What is a profit motive? [Web log post]. Retrieved from
https://www.wisegeek.com/what-is-a-profit-motive.htm

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