Paper Title:

Principles and Importance of Business Ethics in Modern Scenario

Ramapriya H.D Lecturer in department of Commerce and Management

N.D.R.K First Grade College

Introduction:

Business operates within the society. It is an organ of the society and its function must contribute to the society. It must earn social sanction for survival and maintain a proper public image by following good ethical principles. Today, the ethical issues in business have become more complicated and created its importance because of the global and diversified nature of many large corporations. The word “Ethics” was once considered irrelevant by corporate loyalists but now in the modern world discussions of, it is increasingly seen as not only important but also as critical to a company’s success. Business ethics is a subject which has suddenly gained status. Today in the competitive world, more and more importance is being given to the application of ethical practices in business dealings and the ethical implications of business decisions.

What is Ethics?

Ethics is a set of standards or a code or value system, worked out from Human reason and experience by which free human actions are determined as ultimately right or wrong, good or evil.

Definition of Business ethics –

“Business ethics may be defined as those principles, practices and philosophies that are concerned with moral judgment and good conduct as they are applicable to business situations”. - Robert Gurinner

Principles of Business Ethics

The various well known authorities on the subject have contributed much to establish the principles of business ethics. They include the name of Cantt, J.S Mill, Thomas Garrett etc... The principles of Business Ethics are:-

Principle of Sacredness of Ends and Means –

This is the first and foremost principle of Business ethics. It emphasizes that the means and techniques adopted to secure the business ends must be sacred and pure. A good object should not be obtained by evil means. Therefore, both the end and the means must be sacred. It means that a good end cannot be obtained by a wrong means even if it gives benefit to the people.

Principle of proportional judgment:-

In practice, there arise as situation (while achieving the ends through means) where the business may give some losses to others. In order to avoid such situation, the principal of proportional judgment must be observed. This principle suggests that one should make proper judgment before doing anything. So that others do not suffer from any losses or risk of evils by the conduct of business.

Principle of co-operation with others:-

This is another important principle of business ethics to co-operate with others in doing good work. It should not co-operate with those who do not deserve it or to those who do evils.

Principle of universal value:-

This principle suggests that the conduct of business men should be based on universal values. He should act with sincerity, mutual good and confidence. All his acts should be based on the accepted principles of ethics.

Principle of non violence:-

Where the business man hurts the interest and rights of the society, exploit to the consumers, over look their interests and use the community interests for the satisfaction of his own interests, this is equivalent to violence and unethical. This principle of non violence gives more emphasizes that a business man should not hurt to the property, emotions and interests of others.

Importance of business of ethics Or “Good Ethics Promotes Good Business”

Good business ethics promotes good business. Well known authorities like Raymond Baumhari, brener and Molander, Strom and Ruch, in their research findings have made it clear that only those businesses can develop on a long term basis which conducts their activities on ethical grounds. Once Robert day has said that good ethics not only promotes professionalism in management but it purifies the inner mind of every businessman.

Some of the important attributes of Business ethics are as follows:

Satisfaction of sub – conscious mind Really speaking a businessman is first an individual of the society, a businessman later. Many businessmen first behave like individuals and then work for satisfaction to their inner sub-conscious mind. A person may not take any decisions which do not give him mental satisfaction.

Goodwill of business and Businessman –

It is known fact that nobody likes to deal with a mischievous or fraudulent businessman. At the same time, people do like to deal with a good businessman. At the same time, people do like to deal with a good businessman, but introduce him with others also, for regularity in dealings.

Mutual trust and confidence – Prof.Robert Day writes, “When ethical conduct is displayed, it puts some kind of trust and confidence in relationship”. Because of this reason, people deal with a businessman.

Protects each other – Prof.Robert Day further adds, “Good ethics is sound business insurance”. It protects people in dealing with each other. In realty, businessmen act more sincerely with each other.

Professionalization of management – Prof. Day writes that management cannot become a profession so far as it does not follow good ethics. Really speaking, an important feature of a profession is that it has a laid down code of conduct, which remains on the principles of “Service of Humanity”. Therefore, it is the first condition for professionalization to develop and follow ethics.

Perpetual succession – Ethical conduct of business leads to development and perpetual succession of success. The business may prosper in the shadow of ethics. Learned writes – a sincere a person who does hard work becomes ethical and always succeed in his efforts, but an unethical person cannot.

Essential to the modern Situation – It is the need of the hour for ethical conduct of business. The following situations compel a business to follow the ethical principles:

Increased competition. Enlarged and Stringent legislator provisions. Birth of consumer movement. Development of labor unions Development of buyer-oriented marketing strategy.

Case Study – Infosys Technologies

Starting in 1981 in Bangalore, India with seven colleagues who dared to dream and who were lucky to be among the first in economic liberalization of India in 1990’ S.The Company has maintained a consistent growth and built a global company. There are many businesses succeed – the unique factor about Infosys is in just over two decades it has built a brand known for ethical standards both inside and outside in the market place.

Infosys Technologies:

In many public addresses, the chief mentor of Infosys has tried to set benchmarks in the Business Environment. In his address at the CII leadership summit in Sept

2003, he said “CEO compensation is an issue that has to be decided be the board and shareholders. Three factors to be considered for this – “Fairness, Transparency and Accountability”. Company established a philanthropies foundation in 1996, which is mostly engaged in social, health and education programs in India.

Company’s believes that sound corporate governance is critical to enhance and retain investor trust. Accordingly, they attain the performance rules with integrity. They disclosures always to attain the best practices in international corporate governance. The Image of a non- compromising attitude on ethical issues builds up the confidence of the stakeholders. Infosys has built a state of the art office complex in Bangalore with all modern facilities which helps in giving its employees a sense of belonging. Action speaks louder than words and leaders must speak in a way that inspires integrity and a vision for the company.

Infosys operations are driven by key values –

Customer Delight – A commitment to our customer expectations. Integrity and Transparency – A commitment to be ethical, sincere and open in our

dealings. Fairness – A commitment to be objective and transaction – oriented, there by earning

trust and respect. Pursuit of Excellence – A commitment to strive relentlessly, to constantly improve

ourselves, our teams, our service and products, so as to become the best.

Infosys Ethical philosophy is based on the following principles:

Satisfy the spirit of the law and not just the letter of the law.

Be transparent and maintain a high degree of disclosure levels.

Communicate externally, in a truthful manner, about how the company is run internally.

Comply with the laws in all the countries in which the company operates.

Have a simple and transparent corporate structure driven solely by business needs.

Infosys Technologies: - The Best among Indian Corporates As per the credit Lyonalnais Securities Analysis (CLSA), the corporate governance

ratings of the software firms are higher than those of other Indian Firms.

ISO 9001 certified company offering information technology consulting and software

services.

Respected across the country, with very strong systems, high ethical values and a

nurturing working atmosphere.

Level 5 of CMM in 1999.

First Indian registered company to list in NASDAQ in 1999.

ICSI National Award for Excellence in Corporate Governance

Best Governed Companies

Conclusion:

While fashions and buzzwords may change, ultimately certain ethical principles or values remain constant. In the global competition, importance for Business ethics has gained status. Business ethics proves that business can be and have been ethical and still make profits. Infosys Company by practicing high standard of ethics had created a global image by complying with the laws in all the countries in which the company operates. Therefore, Good Ethics Promotes Good Business. “Non-co-operation with the evil is as much a duty as is co – operation with good”. – Mahatma Gandhi

[“Satyam Vada Dharma Chara”]

Forever speak the truth and follow the dharma

Bibliography:

Corporate Governance and Social Responsibility –V. Balachandran and V. Chandrasekaran

Corporate Governance – A.C Fernando www.ethicsworld.org Business Ethics – An Indian Perspective Business ethics and Corporate Governance

Source - ICFAI Center for Management Research www.infosys.com