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Determinants of Business Ethics

Business ethics develop as a result of constant interaction among a multiplicity of factors. The following are the main factors influencing the ethical behavior of those managing business:

(1)    Social Factors.
Ethics are basically concerned with social morality. In other words, ethical business conduct is that which is socially moral. Accordingly, it is the social values, norms, traditions and customs, etc., which prescribe business ethics and govern business conduct. And as societal norms and value undergo changes, business ethics are also adapted to the changed social environment.

(2)    Economic Factors.
The level of economic development also influences the nature and spread of business ethics. In general, business ethics assume liberal character with the development in economic spheres, particularly business activities. Consider, for example, the advertisement on mint: you don’t have a hole in your head. So why have one in your mint?” (Indicating the competitor’s product and its punch line ‘A mint with the hole’). Today, this type of advertisement is not considered unethical but surely it would have been an immoral advertisement had it been issued during the 1950s or 1970s.

(3)    Cultural Factors. The code of conduct for individuals as well as organizations develops under constant influence of cultural values. And the sources of these cultural values are historical heritage, family system, religion, education, government, etc.The constant influence of these factors determines the form and nature of social ethics of behavior.

(4)    Political Factors. Business ethics are also influenced by the ideology and philosophy of the political party in power. Through appropriate legislative measures, the government enforces business firms in respect of such important aspects as business location, maintenance of quality, fair prices, fair treatments to the workers, safety measures. Prevention of pollution, etc.

(5)    Organization Factors. Organizational factors like philosophy and policy of the firms, attitudes of the managers and superior-subordinate relations have great impact on ethical perception and judgment of business managers and subsequent behavior.

(6)    Institutional Codes. Business conduct is also governed by codes of conduct prescribed by various sectoral institutions. The codes of ethical behavior have been prescribed by the professional bodies like the Institute of Chartered Accountants of India, the Institute of Costs and Works Accountants of India, the Institute of Company Secretaries of India, and All India Management Association for their respective members. Organizations like Chambers of Commerce and Industry and Trade Associations have also formulated codes of conduct for business enterprises. Such codes of conduct act as trend-setters and create a conducive environment for business firms to adopt ethical behavior.

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