Principle of Business Ethics, Building Trustworthy Companies

  • 9 min read
  • Apr 24, 2023
principle of business ethics

In today’s rapidly evolving business landscape, the importance of the principle of business ethics cannot be overstated. Many organizations grapple with the challenge of aligning their core values with sustainable and responsible practices.

The consequences of neglecting this vital aspect of corporate conduct can be dire, with stakeholders and the public growing increasingly vigilant and demanding of accountability. To remedy this quandary, business leaders must delve into the principle of business ethics, a vital framework for cultivating a transparent, ethical, and sustainable corporate culture.

As we delve into this topic, we shall elucidate the key facets of this crucial concept, and explore how adopting such a principle can engender positive change within organizations, benefiting all stakeholders in the long run.

Definition of business ethics

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Business ethics is the study of right and wrong behavior in the context of business situations, activities, and decisions, based on the principles, norms, and standards of conduct governing an individual or group (Tran, 2015). It is a broad and complex field that has evolved over time, and there is no single, universally accepted definition of business ethics (Adiguzel, 2021). However, it generally involves applying ethical principles and values to business practices, such as honesty, fairness, responsibility, and respect for stakeholders (Sharma et al., 2016).

Reflection in business law and corporate governance

Reflecting on business law and corporate governance can contribute to the establishment of ethical guidelines and practices that are incorporated into corporate codes of conduct and organizational goals. These practices emphasize the well-being of stakeholders, such as employees and the environment, as a priority.

Corporate governance and business ethics are essential components of a successful business, and it’s becoming increasingly clear that these two aspects are interconnected. This article explores various research articles that examine the relationship between corporate governance and business ethics, highlighting their importance and discussing their impact on different aspects of the business.

Promoting Business Ethics through Corporate Governance in Private Banks

A study focusing on a sample of private banks explores the impact of corporate governance on promoting business ethics (حمود & داود, 2012). This research demonstrates how effective corporate governance can foster a culture of ethical decision-making and responsible business practices, ultimately benefiting the organization and its stakeholders.

Business Ethics, Business Law, and Corporate Governance: Legalizing Ethics through Corporate Codes of Conduct

Business ethics are not only crucial for a company’s reputation, but they also have legal implications (Şahin, 2019). This article discusses how corporate codes of conduct play a role in “legalizing” business ethics, emphasizing the relationship between business law, corporate governance, and ethical practices.

The Power of Corporate Ethics in Improving Business Governance

Corporate ethics are essential for good business governance (Tshung & Adbale, 2022). This article underscores the significance of ethical principles in driving positive changes across various aspects of business governance. By fostering a culture of integrity and accountability as the principle of business ethics, companies can enhance their overall governance structure.

The Focus of Corporate Governance and Its Impact on Business Ethics in Multinational Companies

In the context of multinational companies, corporate governance plays a critical role in shaping the principle of business ethics (Vargas-Hernández, 2017). This article examines the influence of corporate governance on ethical practices within multinational organizations, highlighting the importance of a strong governance framework in ensuring ethical business conduct across borders.

The Interplay Between Corporate Governance and Business Ethics in Algerian Family Businesses

Family businesses in Algeria can benefit greatly from adopting ethical practices, as illustrated in a study that explores the connection between corporate governance and the principle of business ethics (SAIDANI et al., 2018). This research emphasizes the significance of adhering to ethical practices in achieving sustainable development within family-owned enterprises.

Importance of individual desire for application

Individual desire can affect business ethics in various ways. For instance, the desire for personal gain or profit may lead individuals to engage in unethical behavior, such as fraud or corruption. On the other hand, the desire for personal development or happiness may motivate individuals to act ethically and contribute positively to their workplace and society (Bernawati & Saputra, 2020; Sison, 2015; Thornton, 2021).

Additionally, the desire for a work-life balance or personal fulfillment may influence individuals to seek out companies with strong ethical values and practices (Thornton, 2021). However, it is important to note that individual desires are not the only factor that affects business ethics, as broader societal and cultural factors also play a role (Bernawati & Saputra, 2020).

Principles of business ethics in Decision-making

Business ethics is an important consideration in decision-making. This principle of business ethics and approaches to teaching and implementing business ethics. Computer-based simulation games can be used to teach ethical principles and decision-making processes (Buck, 2014). Providing students with hypothetical cases and simulated environments can help them understand the dynamics of ethical decision-making (Giacalone, 1986).

Setting the ethical climate in an organization is also important, and leaders play a crucial role in establishing ethical policies and values (Colonel & Gentemann, 1991). Business ethics proposes several principles, such as integrity, fairness, trust, openness, and truthfulness, that should be considered by companies and other entities (Şahin, 2019). Ethical standards can also be a source of liability for boards and directors (Şahin, 2019). Dialogue is also important in business ethics, as it can help overcome differences in principles and values (van Hooft, 2001).

Usefulness and applicability in managerial work

According to a study on the principle of business ethics, social psychological concepts such as attribution, cognitive distortion, and impression management can contribute to a more comprehensive understanding of processes of moral perception and judgment in work organizations (Payne & Giacalone, 1990). The study also suggests that using an organizational stakeholder model and considering the effects of cognitive and self-presentational biases of these stakeholders should allow researchers to better explain social controls and actions undertaken in cases of managerial misconduct.

In addition, understanding the perceptions of men and women on their own sex’s ethics and those of the other sex can have important implications for both researchers and managers (Ambrose & Schminke, 1999). Therefore, the principle of business ethics can be useful and applicable in managerial work by providing a framework for understanding moral perception and judgment, and by helping managers to navigate ethical dilemmas and understand the perceptions of different stakeholders.

Concept of the ethics screen

The idea of a business ethics screen might not be immediately evident in recent discussions, but a deeper dive into the subject reveals its undeniable significance. As we explore various facets of business ethics, we’ll uncover its importance in Islamic banking, the relationship with Islamic ethics and small and medium enterprises (SMEs), the call for an integrative framework for epistemic ethics in business, and how the influential book “After Virtue” by Alasdair MacIntyre has shaped the study of business ethics. Furthermore, we’ll examine the growing need to emphasize the “ethics” aspect in business ethics education.

Principle of Business Ethics and Islamic Banking

Islamic banking has a strong foundation in ethical principles, which play a crucial role in shaping its operations. The importance of business ethics in Islamic finance stems from the fact that it strives for fairness, social justice, and responsible investments. As a result, these values set Islamic banking apart from conventional financial systems and establish its ethical credibility.

Business Ethics, Islamic Ethics, and SMEs

When it comes to small and medium-sized enterprises (SMEs), Islamic ethics also plays a significant role. By intertwining business ethics with Islamic values, SMEs can promote responsible practices that benefit both stakeholders and the community. As these companies grow and thrive, a strong foundation in ethics enables them to make positive contributions to society, aligning their business goals with a higher moral purpose.

Integrative Framework for Epistemic Ethics in Business

The need for an integrative framework for epistemic ethics in business has become increasingly evident. By establishing a comprehensive structure, businesses can more effectively address ethical dilemmas and prioritize social responsibility alongside profit-driven objectives. A well-rounded framework ensures that ethics remains a core consideration in decision-making processes, ultimately benefiting businesses, stakeholders, and society at large.

The Influence of “After Virtue” on Business Ethics Studies

Alasdair MacIntyre’s “After Virtue” has had a profound impact on the study of business ethics. His ideas on virtue ethics have offered a new perspective on the subject, stressing the importance of moral character and integrity in ethical decision-making. This shift in focus has prompted further exploration into the role of virtues in business, encouraging organizations to prioritize ethical behavior as a core component of their identity.

Reclaiming the “Ethics” in Business Ethics Education

There is a growing call to refocus business ethics education on the “ethics” aspect. With increasing instances of corporate misconduct and scandal, there is a dire need to reinforce the significance of ethical principles in business practices. By placing greater emphasis on ethical values and behaviors, business ethics education can help shape future leaders who prioritize social responsibility and make ethical decisions that benefit all stakeholders.

Although the concept of a business ethics screen might not be explicitly mentioned, its underlying importance is evident when examining various aspects of business ethics. As we’ve explored, understanding the impact of business ethics on Islamic banking, SMEs, and the development of an integrative framework is essential for promoting responsible practices and nurturing ethical leaders. In a world where ethical considerations are more critical than ever, it is crucial to recognize the value of ethical principles in driving positive change in the business world.

Religious Perspectives on business ethics

Based on information from the book entitled “Religious Perspectives on Business Ethics: An Anthology,” edited by Thomas O’Brien and Scott Paeth (O’Brien & Paeth, 2007). Religion plays an important role in shaping ethical values and principles in society. Business ethics is no exception, and there are several religious perspectives on business ethics, including Islamic and Christian perspectives.

The book is a collection of essays from various religious perspectives, including Judaism, Catholicism, and other Christian denominations, Islam, Buddhism, and Confucianism. The book aims to fill the gap in business ethics literature by providing a religious perspective on ethical practices and behaviors in business (O’Brien & Paeth, 2007). This work is particularly useful for those who want to understand the state of the academic dialog on philosophy, religion, and business ethics (O’Brien & Paeth, 2007).

Religious Perspectives on Business Ethics: An Anthology is divided into three parts. Part, one discusses religious ethics and normative theories, including Kant’s categorical imperative and Dilbert’s business principle. Part two discusses religious approaches to economic life, including Zen in the workplace and Confucian trustworthiness in business in China. Finally, it discusses religion and contemporary business questions, including Jewish environmental ethics and Roman Catholic discourse on wage justice (Blosser, 2009).

Importance of integrating ethical principles in business operations

Integrating ethical principles in business operations is crucial for several reasons. Firstly, it helps to build trust and credibility with stakeholders, including customers, employees, and investors. Ethical behavior can enhance a company’s reputation and brand image, which can lead to increased customer loyalty and sales (Călugăreanu & Antoci, 2022). Secondly, ethical behavior can help to mitigate legal and financial risks. Companies that engage in unethical practices may face legal action, fines, and reputational damage, which can negatively impact their bottom line (Călugăreanu & Antoci, 2022). Thirdly, ethical behavior can help to attract and retain employees. Employees are more likely to work for companies that share their values and are committed to ethical behavior (Saunders et al., 2022).

Integrating ethical principles in business operations can be achieved through various means. One way is through education and training. Business schools can instill social responsibility values in students through teaching, research, and service (Saunders et al., 2022). Companies can also provide ethics training to employees to help them understand the company’s values and expectations. Another way is through the development of ethical codes of conduct. These codes can provide guidance on how to behave ethically in various situations and can help to ensure that employees are held accountable for their actions (Călugăreanu & Antoci, 2022). Companies can also establish ethical committees or appoint ethics officers to oversee ethical behavior within the organization (Krstić & Živanović, 2020).


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