Volumn 2


Ms. Sindhu Ghate

Asso. Prof., Faculty of Commerce

L.A.D & Smt. R.P. College for Women, Nagpur.

Maharashtra, (India)

Email  –, Mob. 9823904522


Ethics are the principles of right and wrong that are accepted by an individual, a social group, or society as a whole. When it comes to professional ethics, we take into consideration our personal values, family background, culture, education, and religion or philosophy before making important decisions. These factors provide the framework from which we base our decisions and justify our actions. Unfortunately not everything in life is so cut and dry, there often exist many gray areas that can lead to ethical dilemmas, since what one person thinks is the right course of action might not always appeal to everyone else’s ethical sensibilities. For many the words “business” and “ethics” form an oxymoron (self-contradictory). In today’s Business scenario we are frequently inundated with reports of ethical misconduct in the business world like misappropriated finances, inflated earnings, labour misconduct, and environmental recklessness are just a few of the many egregious acts to which we have become familiar. Increasing globalisation of businesses has also increased emphasis on doing business ethically. In a highly diverse and competitive environment managers are faced with difficult situations and in order for them to act ethically, they are expected to have a well-developed moral imagination. In this paper, we will explore the importance of business ethics and closely study how it relates to corporate success and competitive advantage.

Key Words: Ethics, Globalization, Business Ethics, Competitive Advantage.


In the business world today, issues of trust, respect, fairness, equity and transparency are gaining more attention. Business ethics includes organizational values, guidelines and codes, legal compliance, risk management, and individual and group behavior within the workplace. Effective leadership, with open dialogue and thoughtful deliberation, develops the foundation of an ethical workplace, is woven into the fabric of the organizational culture and is mirrored in ethical decision-making. Toward this end, all organizations have a key role in establishing corporate values and modeling ethical behavior for their workforce, organization and community.

Ethics can be defined broadly as the study of what is right or good for human beings. It attempts to determine what people ought to do, or what goals they should pursue. Business ethics, as a branch of applied ethics, is the study and determination of what is right and good in business settings. Business ethics seeks to understand the moral issues that arise from business practices, institutions, and decision making and their relationship to generalized human values. Unlike legal analyses, analyses of ethics have no central authority, such as courts or legislatures, upon which to rely; nor do they follow clear-cut, universal standards. Nonetheless, despite these inherent limitations, it still may be possible to make meaningful ethical judgments. To improve ethical decision making, it is important to understand how others have approached the task.


  • D.V.R Seshadri, Achal Raghavan, and Shobitha Hegde, in their research paper, Business Ethics: The Next Frontier for Globalizing Indian Companies”, states that the task of building an ethical corporate culture by bringing about organizational values and individual principles to life is a challenging process. Indian companies embarking on this task must understand that this is a difficult journey. There are many steps involved in creating an ethical climate that strengthens the relationships and reputations on which the company’s success depends. Merely implementing a legal-compliance-based programme that prevents, detects, and punishes legal and regulatory violations does little to tackle the problems that trigger unethical conduct.
  • John Donaldson and Irene Fafaliou, in their research paper Business ethics, corporate social responsibility and corporate governance: a review and summary critique”, states that business ethics, corporate social responsibility and corporate governance movements have been developed in recent decades as responses to a growing sense of corporate wrongdoing. Discussions of corporate social responsibility, corporate governance and business ethics have yielded many reports, and created many networks of organisations dedicated to improvement of thought and practice in the areas. There has been much survey research administered through questionnaires on how the top managers view many issues of the day, and on whether they think that codes of practice would be useful. There is much research on consumers’ buying habits, and on whether consumers would buy proposed new products, including service products, and some is addressed to managers.
  • Manjit Monga, in his research paper, “Ethics and Ethical Ideologies: An Empirical Study of Managers in North Indian Large Manufacturing Enterprises”, states thatthe issues of business ethics have become increasingly important in the globalised business environment where comparative advantage and competitive edge are central to business decision-making. In a highly diverse and intensely competitive environment, managers are faced with difficult situations and often have to take tough decisions, which are not only right, fair, and proper but also effective. Managements are faced with ethical issues frequently and with increasing pressure on individuals and businesses both for ethical behaviour they are expected to have a well-developed moral imagination


  • To understand the concept of Business Ethics.
  • To understand the need for Business Ethics in today’s Business World.
  • To study the steps to Develop an Ethics Policy
  • To study the competitive advantage due to Business Ethics.


This research paper is an attempt of exploratory research, based on the secondary data sourced from journals, research papers, articles and websites.


The study is undertaken by the use of secondary data collected which may have some deficiencies.


There is no denying that one can often do well by doing good. An ethical company is more likely to build a good reputation, which is more likely to bring financial rewards over the long term. It is certain that “one can do well by doing good,” meaning that one can succeed in business by being ethical. But good behavior cannot be grounded in tangible reward alone. People who are interested only in reward will behave ethically when it suits their purpose, but they will go astray whenever the incentives change. There is a deeper confusion here, too. To look to ethics for motivation is to misunderstand what ethics is all about. It is like studying finance to find a reason to make money. Finance does not teach one to want to be rich. It teaches one how to be rich, assuming one wants to be rich. So it is with ethics. Ethics teaches one how to be good, assuming one wants to be good. It is important to know that one can normally do well by doing good. Otherwise ethical people could go into business only with a high risk of failure. Business ethics, however, addresses the opposite question: how can one do good by doing well?It begins with the premise that managers want to do something good with their lives and investigates how to accomplish this through business. In other words, it treats profit and business success as means to a greater end: making the world a little better.

Leading a company to success is like steering a vehicle to the destination. Roadmaps are being created and constantly updated in many business sectors in order to encompass the broadening aspects of the modern business world. As corporate leaders steering the crew to your destination, they must watch out for any new signposts along the road, detailing changes or challenges in the external environment, e.g. the globalisation of market, the advancement of technology, etc. By mastering these changes well, successful leaders can transform challenges into opportunities and enhance competitive edge of their companies. However, moving along the business highways, strong leadership is very important to avoid enticing short cuts and to stay steadily on the right route to reach the ultimate destination of their companies. In today’s modern business world, the road to success requires more than merely technical skills, practical knowledge and a good product. Business ethics, above all, are the guiding forces to achieve and sustain success. The public of today has high demands of those behind the steering wheel of modern business. Greater accountability and transparency, up-to-the-minute market information, reliable financial and market data, etc. are essential gauges for investment decisions. Business ethics become the fundamental building blocks that link up all these expectations. As leaders of today and tomorrow, one should hold on to such beliefs and strive to put ethics into practice in your corporation.

It is not just philanthropy that motivates corporations to operate in ethical manner, but also consideration of the long term sustainability of Business. There are good business reasons/need for a strong commitment to ethical values:

  • Ethical companies have been shown to be more profitable.
  • Making ethical choices results in lower stress for corporate managers and other employees.
  • Business reputation, good or bad, endures.
  • Ethical behaviour enhances leadership.
  • The alternative to voluntary ethical behaviour is demanding and costly regulation.
  • The code of ethics is clearly communicated to employees.
  • Employees are formally trained in it.
  • They are told how to deal with ethical challenges.
  • The code is implemented strongly.
  • The code is contemporary.
  • The company leadership adheres to the highest ethical standards.


  • Establishing a code of ethics: In most Indian companies, ethics is seldom formally addressed as an important management agenda. It is dealt with on a case-to-case basis as and when problems arise. While instincts alone may have sufficed in the past to address ethical issues, in today’s complex and demanding global business environment, a welldefined code of ethics acts as a behavioural compass for employees, helping them to make decisions within the business, legal and ethical boundaries.
  • Communicating the code:While drawing up the code of ethics is a significant task in itself, it just marks the beginning of the journey to build an ethical culture. The organization must have processes to effectively communicate, implement, and update its code of ethics. At a minimum, this includes the following steps:
    • Making sure that every employee has a copy of the code of ethics or access to the same.
    • Ensuring there is no ambiguity in understanding the code of ethics. The document should have adequate number of diverse examples about the code’s deployment and utility.
    • Conducting training programmes to allow employees to review the code’s provisions, to understand how the provisions apply to the individual’s specific job responsibilities, to inform the specific behaviours and decision making processes the organization would like the employee to use when confronting ethical challenges, etc. Ultimately, training efforts must result in employees feeling an increased level of confidence and comfort when actually having to make ethical business decisions.
    • Communicating the policy repeatedly: Starting all meetings by highlighting the code of ethics is a good way to bring ethics to the centre stage of the organization’s working.
    • Creating a habit of routinely talking about ethics at all levels: If an employee or a team in the company chooses to do something right even though it is difficult to do so, capturing such instances and using them as living examples to illustrate desired behaviour goes a long way in reinforcing what is an ethically acceptable behavior in the organization. Using organizational newsletters to communicate such instances and stories of ethical conduct to everyone in the company is another powerful tool to reinforce ethical behaviour in the organization.
  • Going public with the ethics statements: Going public with the company’s code of ethics would demonstrate to employees the commitment of the organization towards its stated values and ethical standards. It would enable customers, vendors, and other stakeholders to know what to expect when interacting with the company’s employees, making it easier for the company’s employees to follow the codes. Moreover, circulating these codes helps to build trust and loyalty among various external stakeholders such as suppliers, customers, partners , governmental agencies, etc., and differentiates the company from its competitors.
  • Establishing robust processes for handling ethical issues: Establishing and making widely known processes which the employee can use for bringing up matters of ethics for resolution are an essential part of ethics implementation. This includes taking swift and fair action on reported violations, after due investigation of the allegation. The processes should be transparent and encourage an on-going dialogue to enable individual employees to understand the ethics policy better and help them to take ownership of the same. Mature management processes that allow employees to challenge the policies in a positive spirit to ensure their continued relevance through periodic review and reevaluation are essential. At the same time, there should be processes to track and come down hard on cynics.
  • Providing support structures: Mechanisms for reporting violations such as ethics hotlines and mailboxes must be instituted. The reporting mechanism must be secure, confidential, and available to all employees. Someone senior with high credibility should handle this hotline, with direct reporting to the CEO; alternatively, it could be the CEO’s office itself.
  • Reviewing the codes :It is essential to review the ethics codes at regular intervals to meet the changing needs of the organization, marketplace, and regulations.


Business ethics should become part of corporate codes, and if implemented in the line of business as a corporate philosophy it should help achieving a competitive advantage for the firm. While short-term competitive advantage is obtained by appealing to customers in targeted external markets in the context of globalization, long-term sustainable competitive advantage is the result of exploiting an enduring core of relevant capability differentials cultivated by responsible management of tangible and intangible internal skills and assets. Business ethics of a firm has been defined as one of the invaluable intangible assets for competing. In general, intangible assets are assuming increasingly competitive significance in rapidly changing domestic and global markets. As the speed of comparable tangible assets acquisition accelerates and the pace of imitation quickens, firms that want to sustain distinctive global competitive advantages need to protect, exploit and enhance their unique intangible assets, particularly integrity. Sustainable global competitive advantage occurs when a company implements a value-creating strategy which other companies are unable to imitate. For example, a company with superior business leadership skills in enhancing integrity capacity increases its reputation capital with multiple stakeholders and positions itself for competitive advantage relative to companies without comparable leadership performance. Companies could perceives stakeholder interdependence, demonstrate ethical awareness, and respond effectively to moral issue management put themselves in a position of a competitive advantage in comparison to other companies without those internal resources, by providing a more comprehensive list of ethics capacities. The marketplace with globalization is becoming increasingly aware of, and increasingly discriminating against, corporations that fail to meet the criteria of ethical business operations and ethical management principles. Furthermore, sustaining advantage requires change. It demands that a corporation exploit, rather than ignore industry trends. It also demands that a company invest to close off the avenues along which competitors could attack. Business ethics as competitive advantage involves effective building of relationships with a company’s stakeholders based on its integrity that maintains such relationships. Business relationships, like personal ones, are built on trust and mutual respect


Many consumers and social advocates believe that businesses should not only make a profit but also consider the social implications of their activities. Business ethics relates to an individual’s or a work group’sdecisions that society evaluates as right or wrong. From an ethical perspective, for example, we may be concerned about a health care organization or practitioner overcharging the provincial government for medical services. The most basic ethical and social responsibility concerns have been codified as laws and regulations that encourage businesses to conform to society’s standards, values, and attitudes. At a minimum, managers are expected to obey these laws and regulations. Most legal issues arise as choices that society deems unethical, irresponsible, or otherwise unacceptable. However, all actions deemed unethical by society are not necessarily illegal, and both legal and ethical concerns change over time. Business law refers to the laws and regulations that govern the conduct of business. Many problems and conflicts in business can be avoided if owners, managers, and employees know more about business law and the legal system. Business ethics and laws together act as a compliance system requiring that businesses and employees act responsibly in society.


  • John Donaldson, Irene Fafaliou, “Business ethics, corporate social responsibility and corporate governance: A review and summary critique”, European Research Studies,Volume 6, Issue 2, 2003.
  • Manjit Monga, “ Ethics and Ethical Ideologies: An Empirical Study of Managers in North Indian Large Manufacturing Enterprises”, School of International Business University of South Australia.
  • Margaret Lindorff, “The Ethical Impact of Business and Organisational Research: the Forgotten Methodological Issue?” The Electronic Journal of Business Research Methods, Volume 5, Issue 1, 2007.
  • D.V.R Seshadri, Achal Raghavan, and Shobitha Hegde, “Business Ethics: The Next Frontier for Globalizing Indian Companies”, Vikalpa, Volume 32, Issue 3, 2007.
  • Richa Gautam, Anju Singh, “Corporate Social Responsibility Practices in India: A Study of Top 500 Companies”, Global Business and Management Research: An International Journal, 2010

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