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Types of Business Ethics – What are Ethical Principles in Business?

(Last Updated On: April 16, 2021)

There are several types of business ethics that professionals should be familiar with. Also known as corporate ethics, business principles govern businesses and provide guidance for behaving in positive, ethical ways. Businesses and companies develop business policies by defining the underlying ethical principles of the business and then developing those policy guidelines.

What are Business Ethics?

In general, ethics is a set of ethics and principles that define what is good and bad. Ethics guides its members to work in society by controlling their behavior and the way members interact with one another. Overall, the most important thing in ethics is to help us decide whether a given task is good or bad. These established rules of good or bad society allow it to work smoothly.

Under the umbrella of ethics, there is a special branch called business ethics. This form of ethics deals with the ethical questions that arise in business settings.

The implementation of business ethics begins above. Business leaders, directors and CEOs have a responsibility to demonstrate good business ethics. The employees in charge will follow their lead. Their boss adheres to the ethics, so they will be. And the opposite is also true: If leadership positions do not use policy as their driving force, then the employees below them do not.

By setting a good example and determining the consequences of being unethical, you should inspire everyone in your company to have a good policy.

Types of business ethics
Types of business ethics

Personal responsibility

It refers to a man’s personal ethics code. If a person is honest, he will be very honest and straightforward. According to Walton, “a morally responsible executive is someone who knows the different types of value systems that can be employed in a particular situation and has no idea what the ambition (priority or priority) is on others in a conflict.” Walton defines this definition as a rather simplistic one. A business person may think that he is acting morally but others may not consider his behavior as moral. It is one of crucial types of business ethics.

Economic Responsibility

According to Milton Fried, “the sole social responsibility of business – its resources is to engage efficiently and to engage in activities designed to increase profits without fraud or fraud.” Therefore, every business should contribute to the general welfare of the society by using efficient and profitable resources at their command. This type of morality guides the individual action towards the economy in using its disposed resources.

Technical ethics

The state of technology plays an important role in determining which products and services will be produced in any country. The technology environment affects companies in terms of investment in technology, consistent application of technology, and technology impact. A director who has technical ethics will refuse to compromise on quality. Every organization that is actively involved in the advancement of technological development will create more challenging situations for companies as they are not ready to accept lower standards.

Legal Responsibility

The legal environment provides the framework with which the business must work. The effectiveness of a business depends on the expertise that can meet the challenges arising from the legal framework. It is one of crucial types of business ethics .

Representative or official responsibility

The manager’s actions often represent his position of office or his position in the office, rather than his personal beliefs. This is because the manager represents the business. He or she must follow the rules and regulations of the business, e.g. A manager may want to do something, but the rules may prohibit him from doing so and so his hands are tied and he can’t do it.
Types of business ethics with examples

Personal loyalty

Sometimes personal loyalty is so strong that moral values ​​are not enforced when acting toward a particular individual. Individual loyalty includes a subordinate’s loyalty to a subordinate to its superior and superior loyalty to its subordinate.

Subordinate loyalty to superiors: If a subordinate has strong personal loyalty to his superior, they turn a blind eye to the wrongs committed by their superiors and try to protect their wrongs and commissions. For example, if a bank’s branch manager approves a loan without any protection and part of it may bring harmful financial problems to the company, then his subordinates may be subject to financial irregularities due to the high moral character and strong personal loyalty to the branch manager who had close contact with the head office. Don’t inform them.

Loyalty to the Superior Subordinate

If a superior person has strong personal loyalty to their subordinates, they turn a blind eye to the wrongs committed by their subordinates. This is done because the superior does not want to hurt the feelings of his subordinates due to personal contact. For example, if subordinates who are close to the manager does not do their job correctly, the manager will not blame them for their poor performance. He can, rather, protect his bad deeds with his superiors because of his personal attachment to his subordinates.

Funnel Arrow Showing Types Of Business Ethics
Funnel Arrow Showing Types Of Business Ethics

Corporate Responsibilities

Everyone in the community has a moral obligation to it. Corporations are “artificial” companies, so they have a moral responsibility to society as well. The moral responsibilities there are not necessarily in line with the personal moral codes of the executives who govern them. Every corporation must have a moral code that will help determine the issues related to shareholders, employees, creditors, customers, government and society.

Organizational loyalty

Some employees have a deep sense of loyalty to the organization. Their loyalty to their organization is so strong that they even ignore their own interests for the organization.

What are the elements of business ethics?

There are several components to business ethics that govern how businesses and companies should operate. Some components include the following:

Credibility and solidarity.
Respect and responsibility.
Fairness and equality.
Care and dialogue.

These key elements should be considered when developing a business ethics plan. They will build a strong foundation for your business so you can lead the way.

Bringing the loyalty and integrity of all your communications and actions will encourage your customers to continue to deliver your business. Your customers will be appreciated when you take responsibility for your actions and act in a fair and caring manner. Keeping your word proves your credibility.

All members of the business should know that they are important and have the opportunity to succeed. But employees should prove that they have integrity through words and actions. Business letters matter.

When interacting with customers and employees, it must be fair and just. Don’t treat others’ mistakes, and treat everyone equally.

Lastly, taking care of business ethics means that you do no harm to others and always take your employee’s morale into account.

Far more than a legal agreement, business principles are a social contract that pays everyone, including respect for shareholders, customers, and employees.

What are the benefits of business ethics?

The benefits of business ethics go beyond just being a moral business. Being a moral business has great economic impact. The relationships you create encourage people to invest your time and resources into your company. You will be less conflicted because managing the relationship between your employees will cost less. And you will attract customers with your good reputation.

Understanding business ethics and having high ethical standards can also produce other benefits:

Employees with high morale.
Buyer loyalty.
Positive impact on the community.
Negative press risk is negative.

What is the importance of business Ethics?

This is important for business ethics, as they can have a wide-ranging impact worldwide. Businesses have the responsibility of influencing their lives in a positive way for workers, shareholders and customers. If a company takes an action that can have a negative impact on others, they also have the responsibility to correct that mistake.

Related: How to improve work ethics in office or business

Respect for business ethics is not just a moral obligation; This is a legal one. Many countries, including the United States, have civil and criminal laws that a business must follow in order to operate ethically. Having no morals can lead to moral bankruptcy, erode the trust of your customers within you, and ultimately kill your business.

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