Ethics refers to moral principles that control or influence a person’s behavior. Ethics are generally defined in the context of individual.
However, business ethics is a combination of ethics of its individual managers and employees. In the corporate world, falsifying accounting books is not a new practice. From Waste Management in 1998 to Lehman Scandal in 2008, quite a few big and well-known companies have altered their book. These types of unethical behaviors seem to benefit a few people for a short time. However, they always end up in a bad result. Sometimes they end up in bankruptcy.
What constitutes ethical behavior varies from one person to another person. Since, individual ethics are determined by family and peer influences, experiences, personal values and morals.
Business ethics is also known as managerial ethics. In general, it is a company’s attitude and conduct towards its employees, customers, community, and stockholders.
The issue of business ethics has come to the fore in view of the episodes of violations of securities laws, shading of quality, misrepresenting performance of products, misleading advertisements, etc.
It includes areas such as hiring and firing, wages and working conditions, and employee privacy. For example,
- A manager paying an employee less than he/she deserves, simply because of the gender might be unethical.
- A manager having an affair with a coworker is generally seen as unethical.
- Inflating expense bills.
- Disclosing company secrets by employees.
- Employing underage children.
- False claim on advertising.
The below tweet from Elon Musk, the CEO of Tesla, has made
The concept of social responsibility implies that business should be actively concerned with the welfare of society at large.
It used to refer to the task of a more fortunate individual to assist less fortunate members of society, also known as charity principles. But, now, it is widely known as stewardship principles, which views business as stewards or caretakers, holding society’s property in trust for the benefit of society.
Social responsibility mainly refers to be responsible to the ecology and society in which the company operates. Like, saving the environment, or respecting the culture and religion of its operating region.
Time and again, Nike has suffered boycott by using controversial subjects in their ad. In the recent commercial, Nike featured Colin Kaepernick, a controversial San Fransico 49ers quarterback, who kneeled down during NFL national anthem. And the public boycott took off. One of the Nike long time fan burning his Nike shores. (see below)
First the @NFL forces me to choose between my favorite sport and my country. I chose country. Then @Nike forces me to choose between my favorite shoes and my country. Since when did the American Flag and the National Anthem become offensive? pic.twitter.com/4CVQdTHUH4— Sean Clancy (@sclancy79) September 3, 2018
Isn’t the main goal of a business is to make profit to its shareholder? Then, why deviate from its goal to conserve the environment or promote the culture at the expense of its shareholder?
Well, this is the daunting question with a vague answer. I will not claim to know the answer. However, the wider public will surely be in against the company which does not respect the environment or culture. This is an issue of a brand.
Companies spend millions and billions to uplift their brand image. Therefore they (at least a sensible ones) cannot afford to ruin its brand for some money or by poking a small sect of its customers or public.
Also, there is no shortcut to being ethical and being virtuous, whether its an individual or a company.