Management/Business Ethics – Introduction to Management (ITM)

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Business EthicsManagement/Business Ethics
Principles of Management (POM)
Third Semester | Second year
BSc.CSIT | Tribhuvan University (TU)

Business / Management Ethics
Business ethics can be defined as moral principles and standards that guide behavior in the world of business. It is a basis of determining right or wrong in a given situation. Ethical behavior of an individual depends upon the moral standard or codes of conduct determined by the society. Some of the standard definitions of ethics by different personnel are;

Stoner, Freeman, and Gilbert – “Ethics is the study of how our decisions affect other people. It is the study of people’s rights and duties, the moral rules that people apply in making decisions.”

R.W. Griffin – “Ethics is an individual’s personal belief about whether a behavior, action, or decision is right or wrong. Managerial ethics are the standard of behavior that guides individual managers in their work.”

Decenzo and Robbins – “Ethics commonly refers to a set of rules or principles that defines right and wrong conduct.”

From the above definitions, we may conclude that, Ethics are personal beliefs of an individual about right or wrong and Ethical behavior differs from person to person. For one person certain behavior may be ethical and for others, the same behavior may be unethical. Ethical behavior conforms to generally accepted social norms and unethical behavior does not confirm to generally accepted social norms.

Managerial ethics is the standard of behavior that guides individual managers in their work. Managerial ethics is the standard of social norms and values, truth and justice that is accepted by managers in the decision making process. It is generally accepted that business should be conducted according to certain self-recognized moral standard of the managers.

Ethical effect on organization
Managerial ethics determines management-employee relationships in an organization. Employment issues are being affected by the ethical standards of managers. Hiring, firing, promotion, rewards, welfare, and compensation are influenced by the ethical practice of managers.

The individual ethical standards of employees also affect organizations. Employees are responsible for maintaining work standards, secrecy, honesty, and information. They can use unethical methods in procurement, entertainment, travel and other expenses related in doing business.

Importance of Management Ethics

  • Promotes goodwill and image.
  • Helps maintain better relation with stakeholders.
  • Less interference from government.
  • Promotes fair competition.
  • Promotes social responsibility.
  • Improve working environment.
  • Helps to increase market share.
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