1. What Is the Relationship between Business Ethics and the Law
Because of some of the Wall Street scandals of the early 2000s, laws such as the Sarbanes-Oxley Act of 2002 were introduced to establish ethical accountability for corporate financial behavior. This has made lawmakers more familiar with the idea of telling companies how to act, rather than just telling them how not to act. The field of business ethics has flourished thanks to the creation of consulting firms that help companies develop ethical guidelines and monitor compliance with regulatory standards. Business law began to merge with business ethics. One example of a situation where business ethics and law overlap is the area of business contracts. Morality or ethics dictate that if two or more parties agree on something, they must abide by the agreement unless there is some form of mitigating circumstance that makes it excessively difficult, if not impossible, to execute the agreement. However, this is not always the case, as some parties to an agreement often find a way to free themselves from the execution of an agreement. Fortunately, this type of act is not only ethically reprehensible, but also a violation of contract law, and the aggrieved party can remedy the situation in a competent court. How do business law and ethics relate to each other? This is not to say that every business decision is a matter of good versus evil. Sometimes unethical behavior can be minor, such as: when a customer service representative distorts sales figures to counter the pressure imposed by monthly quotas to keep a job, or when a business owner falsifies records to keep a business running and save hundreds of jobs. We can conclude that ethics is part of business law. The rules and regulations mentioned in the law are the result of moral values that must be followed by every individual or a company that cares about society. They are the spirit of the law, as opposed to the letter of the law.
It is about creating an environment of personal responsibility within the company where there is none under the law. Business ethics laws and regulations prescribe a standard of conduct that represents going beyond what is legally just and acting morally right. The word itself, “ethics,” is derived from the Latin word “ethos,” which defines the moral values and characteristics of a society. Business law is a set of rules that must be followed by each group of companies. It also contains the measures to be taken in case of violation of the rules. Business ethics, also known as moral behavior, contains a set of moral principles that each company must follow individually and towards society. Business law determines the minimum standards of conduct expected of companies and sole proprietorships. Business ethics go beyond mere legality. They describe how a company should behave – how a company does what it is legally obliged to do. Ethics is not so much a specific code of conduct as values that must be respected and put into practice.
Business ethics and law are two interdependent terms that may exist independently when it comes to business, but overlap in various important aspects. The reason for this overlap can be attributed to the fact that ethical considerations are usually also legally enforceable. However, this is not always the case, as some ethical considerations in business are more like an unwritten code based on a basic morality that is believed to be universal. It`s easy to think that business law and business ethics are interchangeable. This is not the case. At best, they should shade and complement each other, but this is not often the case. Companies often take legal but unethical measures. Understanding what business law and business ethics are will help clarify the differences. A supplier and a retailer have a long-standing relationship. Previous contracts between them have always provided for standard payment “within 30 days of delivery”. A new contract between them contains no reference to payment terms. What would a court most likely rely on to decide that payment is due within 30 days of delivery? Ethical conclusions may depend on the philosophical lens through which the company looks at the world.
Compare and contrast the different moral philosophies in business ethics that can guide the ethical conduct of business. The two words law and ethics are linked in modern scenarios. According to the definition, ethics is the moral behavior that each company must follow towards itself and society. The rules implemented by law are based on the moral principles of society. Let`s look at an example to fully understand this. A nuclear industry wants to establish itself in a region. It is their ethical value that they should not be installed in residential areas when releasing hazardous chemicals. Now, if it does not respect its ethical rule, the law has imposed a basic protocol for the establishment of nuclear industries, which it must follow. Business ethics and law also overlap in the area of misrepresentation, where someone falsely presents an important fact to another party, with the intention of causing the person to part with something valuable. An example of this is when a car salesman presents a used car to a customer as if the car were new, causing the customer to pay the price of a new car for the used car. It is clear that such an action is punishable both ethically and legally.
This is just one of the different cases where business ethics and law have a confluence. An important reason for the introduction of laws and regulations on business ethics is that many companies are multinational corporations and have employees or deal with manufacturers or suppliers in countries that may not share the same cultural, religious or philosophical ethic. In addition, public opinion itself within a society may be volatile and exceptions may be justified on the basis of economic, political or environmental factors. One company notes that employees are involved in many road accidents that cause damage to its fleet of vehicles, even if they have training and driving instruction. Instead of fully insuring its equipment, the company chooses to insure its vehicles with a deductible of $1,500 per vehicle. What approach to risk management does this plan reflect? Applying ethical standards to business practices means applying the moral standards of a culture that rises above legal status to determine whether decisions or behaviors are appropriate and right, good or bad, not only for the company, but also for society as a whole. It`s about having a moral compass to guide practices that can increase a company`s ledger bottom line, but have impacts that have unfair or dangerous effects. For example: It has been said that the relationship between ethics and law assumes that the consciousness of the guardians in the individual (ethics) is for the rules that the community has developed for its own preservation (law).
There are limits to the law. The law cannot make people honest, caring or just. For example, lying or betraying a trust is not illegal, but it is unethical. Although not all physiotherapy acts require compliance with a code of ethics, not all require compliance with the law. Business ethics also shape the perspective that the public uses to look at a company. Values such as honesty, integrity, confidentiality, respect – these are values that are part of business ethics. While the law doesn`t require you to tell the whole truth in a corporate situation, for example: if a manufacturer uses the term “stamp” to describe an object, honesty with the product will earn a company a reputation for ethics. People want to work with companies or make purchases from companies they believe are ethical. Without established institutional regulations that serve as standards of ethical practice, it can be difficult for leaders to develop rules that protect society without conflicting with the traditional concept of the “hidden hand” found in long-standing corporate philosophy.