Role of business ethics in society
Abstract: the economy of a country or state is dependent of business, trade, industries and products. Business is extremely a wide term in the business world at national as well as international level. The prosperity and development of a country is effectively measured and assessed by the business either in the form of national or international trade. It is an admitted fact throughout the history of man that every aspect and sphere of human activity should work under certain principles and rules with enforcing power. Without an effective regulation there is no guarantee, security or official cover to business and resultantly no business leading to misemployment, unemployment, hunger, famine. Thus business and mankind are strongly connected with each other, and for the betterment and welfare of the both, the concerned regulation and ordinances play a vital role. Business laws are framed to regulate, promote and provide guarantees to the business against artificial and unnatural losses. A group of people or organizations running business are made bound to respect the laws to ensure security of the other stakeholders in the business community. Breach of business laws provides remedies through court proceedings to the affected at local, national and international level.
Business ethics are moral rules and principles that the parties running business adopt themselves, and no enforcing agency works to impose such laws. Business ethics have evolved through the process of decades and centuries. The breach of business ethics provides no remedy except the moral pressure. Business ethics works well to run a business with confidence and without risk. Sedate business groups and organizations voluntarily follow the business ethics to avoid any tension and dissatisfaction. National and international well known cooperation follow the business ethics to assert and retain their good will and global worth.
Prospective: Before the formation of national currencies people used to do business through barter system that is to exchange of things or goods, one party required and in return of such things are commodities, the other party required. In every kind of business, parties had to trust upon one another. There always have been some businessmen or business concerned who had been taking undue advantage of others trust causing heavy losses to the straight forward parties. Through such practices, the cunning and greedy people have been making money, depriving the genuine businessmen. Such incidents have been occurring what made the society and nations formulate such laws as to provide security and guarantee to the business at different levels. Around the world, nations are applying their sources to provide protection to the national and international business. To control the problems and mala-fide practices in business world, different political systems have been struggling in frame functional laws.
Business law is kind of civil law that deals with breach of trust, violating the terms and conditions under taken in an agreement or business contract. It provides proper forum and procedure to recover business losses to remove the risks and doubts of investors and owners. Business ethics are the product of sedate and credible business practices through long time in self-imposing manners that is morally binding on the business community. Despite without any state enforcing agency it has proved too effective and useful.
The topic business law and business ethics claims to be explained in two parts: firstly business law and secondly business ethics separately.
The salient features of business law are illustrated by defining and explaining the different sections and aspects of law focusing on the stable run of business from the local level to the global level.
Antitrust law: It was introduced by United State of America and then European Union introduced it. It is competitive law that is to provide broad chances of competitions and opportunities to the organizations and cooperation doing the same kind of business or dealing in the same kind of services. Anti-competitive trends and practices are checked and every competitor enjoys the equal chances to doing business under the custody of law. This law effectively resolves the issues like predatory prices, tying, price gouging, refusal of deal and monopolies.
Bankruptcy: The state of insolvency of a business, cooperation, partnership and a company is called bankruptcy. This is where the business or a legal person fails to repay amounts to creditors. What is the solution in such cases? Its other aspects also clarify where an organization or business merely pretends to be a bankrupt. The relevant sections provide proper and effective procedure to deal the issue to the satisfaction to all business concern. Through legal procedure creditors and debtors are made bound to work in straight forward way and not to cause wrong and injuries to the others. The law is capable to give compensation to the aggrieved parties in the form of damages.
Blue law: This law does not work properly because it restricts the business activity in certain hours of day or on certain days in a week. It has been formed under the influence religious traditions for example avoid shopping on Sunday or on Friday in some countries. Though it is followed and respected in some countries like Canada and Saudi Arabia yet is considered a negative law by the business experts and jurists, however it provides a reasonable defence and pleas against the suits and claims in the courts where this is in practice. At global level it could not gain acceptance.
Law of contact is the most important section in the business law because all the business is done in forms of contract; it might be in oral, conventional, customary or in written form. Negotiations between parties make them bound to perform some obligations related to the business contract. Terms and conditions are settled and documented generally in the form of record by the free will of parties. Contract does not deal with illegal contracts or contracts of parties which are not entitled to legal contracts for example an insane, mad, under aged and banned in the common law to do contract. To clear this we need to understand the voidable contract. The contract which is not in accordance with general law is null and avoid with no legal status.
BREACH OF CONTRACT
In a contract or agreement parties make themselves bound to perform certain duties and obligations are avoid some actions and practices regarding business. All this is structured and documented and signed by the parties’ agrily. If afterwards, one or the other does not respect or perform under terms and conditions of the contract, the aggrieved parties entitle to initiate legal proceeding against the breaches. The court after looking into the issues may impose fine, damages or losses to be paid. Regarding breach of contract following three points are important to consider:
Minor breach of contract
Major breach of contract
Fundamental breach of contract
During court proceedings the effected may claim certain kinds of breach to strengthen their plaints. Following are the legal requirements for a valid contract:
Agreement is created between at least two parties on reciprocal demands and performances for example to pay money at certain time and to provide services of certain kind. Consideration should be substantial and factual and possible. No imaginary consideration is allowed in contract act. And without any consideration a contract is completely null and void with no legal implementations.
Duress and coercion:
While creating or forming the contract or an agreement free will of parties is a pre requisite. Any duress, threats and coercion measures would definitely make a contract invalid and illegal.
Cheating, concealment and fraud:
A contract formed by using cheating, concealment of facts or under the fraudulent act carries no legal validity. Hence such contracts are unable to provide any remedy to the effected to initiate civil as well as criminal proceedings against the liable elements or parties.
Remedies are available in the form of court proceedings to the agreed parties. Where the court looks into the matter and circumstances, and then decides the liability. Generally the aggrieved parties are compensated to recover the losses. The court passes the decree in the favour of plaintiff and orders the respondent to pay damages. The verdict is binding on the parties
Business law is alternative term for corporate law. Corporate law discusses and defines the responsibilities and liabilities of all the stakeholders for example owners, employees, investors, creditors, debtors and customers. Actually it covers the rights and duties of every stakeholder for the development smooth run of business. Any stakeholder when feels that his rights have been violated him is entitled to seek remedies at the proper forum. Through protecting the rights of all stakeholders this law creates a balance and sense of responsibility among all the stakeholders in a business or an organization.
DISPUTE RESOLUTION ACT
This act is formed to resolve the dispute and issues among different business units and entities. Other than the personal disputes, the company or industry disputes are solve following the procedure given in this law. The conflict of interest and disputes of assets of industry and trademark and goodwill issues among the companies and corporation are solved by different provisions of the corporate law in order to remove the unrest and dissatisfaction among the business and industrial entities judiciously. This deters the organization, firm, corporation and companies from laying a hand on the properties, assets and capital of the others. Thus the parties have to show their responsible behaviour and prove their right on certain property, asset or capital.
Out of the court when two or more parties in some Sub-Judis matter agree to point an arbitrator for their facilitation this is defined as arbitration. The act or function of an arbitrator is settle some dispute under the permission of court the arbitrator give an award. Once the award has been given by an arbitrator, it is binding upon the parties. However during the proceeding, on sufficient cause the parties may move an application in the court to change the arbitrator.
Arbitration law aim at facilitation of the parties basically because generally an arbitrator is well conversant under the dispute and its background as well as the social status and credibility’s of the parties. Moreover, before an arbitrator, parties are better able to present their cases directly without their counsels in an informal environment.
This law provide job securities, workers’ rights, benefits, duties and compensation. Labour law, compensation law and industrial law are other names of the same term. The relation between employees and employer has been addressed in this law.The Issues regarding wages, pension, gratuity and compensation in case of injury, serious injury and fatal injuries. The issues of leaves and medical benefits as well as children benefits have been defined init. This law effectively deals the matters regarding terms and conditions of jobs for example warning, show cause notice, suspension order, termination from service and inquiries. For aggrieved employee remedies are available in this law.
INTERNATIONAL TRADE LAW
Now a day the world has become a global village. The instant means of communications keep us every moment alive to the changes occurring in every part of the world. The advertising industry, in an organised manner, is successfully advertising the products from different business concerned all over the world. To deal the issues at global level arising in the business relation the international trade law came into existence through an evolutionary process to provide security and protection to the international business. Businessman, trader and investor always desire security and protection before investing capital on a project.
Most of the countries in the world have joined the world trade organization (WTO). Thus they have signed the treaty of WTO. So it is in the common interest of every nation to promote business and trade at international level. International business provides more and more foreign capital and avenues to business places. To dispose of international business disputes, international courts are working in U.K, E.U and Geneva. Before the creation of international trade law, international law has been working successfully dealing with the incidents, occurring across the world. Different international organization has been working for the propagation and implementation of international law. Now it is giving results. In the jurisdiction of international trade law the business community never hesitates to do investment on the global business. Now a day many multinational companies running business with good profit. Infect, international trade law encourages and promotes the global business directly and enhance the economic stability creating more job opportunities.
DESCRIPTION OF BUSINESS ETHICS
Business ethics are not part of common law or the product of proper legislation. These have been evolved from the business activities. Business ethics lay certain moral boundaries and restrictions on the business concern for the welfare of employees and workers of the society. The notion businesses for society: ‘’society is not for business’’ reflects the spirit of business ethics. Business ethics means to keep the business under the expectations and welfare of society because society provides the place for business so business should be made bound not to violate the basic of society. The purpose of a business should be contribution in bringing prosperity and harmony in society. An unethical business works under the motive of making money, giving birth to so many destructive factors that may shake the foundations of society. Unethical business leads to illegitimate practices and illegal actions resultantly the business quarter gathers criminals around it. Business ethics keeps the businessmen and related business within bounds eliminating pride imprudence, rudeness, black marketing and blackmailing through illegal use of capital. Observance of business ethics is compulsory is social stability.
GENERAL BUSINESS ETHICS
Important features of business ethics are detailed as under
If the main objective of the company or organization is to earn more and more profit by hook or by crook it is unethical. Because it has element of greed and lust for money even depriving the other stakeholders from their fundamental rights.
Ethical values develop a balance between companies and society.
Issues regarding companies and its stakeholders: fiduciary, responsibility, stakeholder’s concept and shareholder’s concept.
Among different companies ethical issues and hostile take-over and industrial espionage.
Corporate governs, corporate social entrepreneurship and issues of leadership.
Legal reforms, such as ethical debates over introducing a crime of corporate manslaughter.
The abuse of corporate ethics as a marketing tool.
ETHICS OF FINANCE
Basically the finance is a social science discipline. It shares its borders with behavioural science, sociology, economics, management and ecology. Finance being a discipline concerned technical issues the optimal mix of loan and equity financing, divided policy and evaluation of alternative investment projects and more recently in the evaluation of option and other derivative security. Often it is mistaken to be discipline free from ethical burden. However frequent economic melt downs that could not be explained by the theories of the business cycle alone have broad ethics of finance to the forefront. Finance ethics is overlooked for some other reasons. In finance issues generally discussed as a matter of law rather than ethics of business. Looking closer into the literature concerning finance ethics one can be convinced that as it is the case with other operational areas of business, the ethics in finance too is vehemently disputed.
ETHICAL MANAGEMENT OF HUMAN RESOURSE
Human resource management deals with department of activity including selection, recruitment, performance, training and development, industrial relation and health and physical safety issues are addressed by the ethics of business. The element of discrimination and favouritism in the human resource management is an open violation of business or labour ethics. Rights of employees and duties are determined under the ethical norms. The employees have the right of privacy, right of defence and right to get proper wages relative to his work. The self-respect of employee should not be tarnished at any stage. The acceptance of the rights of workers and employees and security is recognition of their importance in the business activity. Ethics does not allow using the employee as a disposable; it means that employees are always at the mercy of employer. Whenever the employer wants, he may terminate the job even without any reason. To take part in trade union and struggle for the welfare of employee is a basic right of employees. The decline in trade union, the employees have become more vulnerable and less scored. To treat the workers as slaves is thoroughly unethical and inhuman. HRM renders two visions soft and hard to manage the employee. The soft vision has proved to be more productive and creative without posing any tension. It meets the employees’ social and economic needs while on the other hand hard vision aims at the control and profitability. The studies and research work has proved that the worker who have been treated humanely by their officers, directors and employers are more efficient and more energetic than the others who have been dealt with hard vision.
THE ROLE OF BUSINESS ETHICS IN SOCIETY
Business ethics are capable of covering all the aspects of business activity, its fundamental achievements is the identification of lust for money through exploitation of employees and putting behind the moralities and human values. The awareness among workers has prevailed and they can struggle to get their rights against the administration and even protesting against the government. The legislation in the legislature under the ethical norms thus the tyrannical measures against the employees has been removed. The society on the whole has the benefit of this change. This has been become possible after the long struggle of long centuries. The role and contribution of employees in industry and business has been recognised by the employer and they are no longer treated shabbily by their employers. Ethical trends make the employees more responsible and sensible in their duties and resultantly the local, national and international business keep growing smoothly and rapidly.