Business Ethics: Understanding, Benefits, and Application!

In managing a business, entrepreneurs often encounter situations involving others, both within and outside the company. Decision-making by business actors in any situation must not be arbitrary without consideration. 

Several factors need to be considered, especially if they involve the interests of multiple parties. This is where the importance of business ethics comes into play, which should be possessed by business actors, both owners and employees.

Understanding Business Ethics

Source: Freepik.com

Before delving deeper, it's best to understand business ethics. Simply put, business ethics refers to the rules about conducting business activities fairly and by applicable laws, regardless of the individual's or company's position in society. 

Therefore, business ethics is a principle that must be adhered to when acting in business. Here are some definitions of business ethics according to several experts in the field as quoted through tirto.id:

According to Charles Hill and Gareth Jones, Hill and Jones argue that business ethics are guidelines for distinguishing right and wrong actions, providing a basis for every corporate leader to make strategic decisions related to complex moral issues.

According to Sumarni, business ethics relates to the evaluation of business activities and behavior that refer to the truth or honesty of the company.

According to Kees Bertens, Business ethics even goes beyond the provisions set by the law and is a higher standard than the minimum standards set by the law. This is because in business activities, we often face situations not covered by legal provisions, and various gray areas require additional moral consideration.

Principles of Business Ethics

Source: Freepik.com

As previously stated, business ethics is the foundation of principles that must be followed by business actors in operating their business. However, what are the principles actually encompassed in the concept of business ethics? There are several opinions regarding the principles of business ethics according to experts, let's take a look!

• Bertens (2013)

Bertens formulated 3 perspectives in business ethics, including:

The economic principle states that a good business generates profit without causing harm to others.

The legal principle emphasizes that a good business operates following applicable legal regulations.

The moral principle explains that a good business is in line with moral principles.

• Sonny Keraf (1998)

According to Sonny Keraf, 5 principles can be used as guidelines for running a business:

The autonomy principle reflects independence, freedom, and responsibility. Autonomous individuals can make decisions and act according to their own beliefs, free from external pressure or influence.

The honesty principle prioritizes the principle of being truthful, both between words and actions. It also emphasizes the importance of complying with contracts, commitments, and agreements that have been made.

The justice principle encourages fair treatment of all parties, without distinguishing based on economic, legal, or other factors.

The mutually beneficial principle emphasizes the importance of providing mutual benefits in every business transaction.

The moral integrity principle emphasizes the importance of not harming others in making business decisions and actions, by respecting the dignity of every individual as a human being.

Benefits of Business Ethics

Source: Freepik.com

After understanding the concept of business ethics and the principles that must be applied in running a business, it is also important to understand the benefits of applying business ethics. Here are some points explaining the benefits of business ethics:

Good self-control in business

One important aspect of running a business is the ability of business actors to control themselves properly, according to the time and conditions at hand. This self-control encompasses all parties involved in the company, with the hope that it will ensure smooth business operations and encourage mutual respect among all parties.

Means for growth

The proper application of business ethics in a company is expected to have a significant impact on the company, such as in the preparation of mature business concepts so that the business can run smoothly.

Promoting healthy competition

In the business world, interaction with internal and external parties of the company is unavoidable. Competition, both on a small and large scale, will always exist. Therefore, it is important to understand the principles of business ethics so that competition can proceed healthily and not harm the parties involved.

Fostering trust

Trust is a crucial element in a team, aimed at creating a positive business environment. Imagine if team members do not trust each other, the work environment will become non-conducive and team performance can be disrupted.

Achieving common interests

In business ethics, it is important not to harm the interests of others for one's own gain. As business actors, achieving business goals must be done by considering common interests rather than individual interests alone.

Creating a comfortable business environment

When the principles of business ethics are applied properly, the resulting work environment tends to be healthy and comfortable. This comfortable condition can encourage business actors to work optimally, which in turn contributes to achieving positive outcomes such as meeting deadlines.

Application of Business Ethics

Source: Freepik.com

After understanding the concept of business ethics, you also need to know the application of business ethics below. Indeed, business ethics may seem very simple, but the impact of its application is very influential in the corporate environment.

Maintaining Confidentiality

Maintaining the confidentiality of company trade secrets and personal data of employees or customers.

Remembering Names

Speaking to someone using their name can increase their sense of respect and comfort. More than that, remembering someone's name can also strengthen relationships from the outset. Although it seems like a simple behavior, it can provide a more concrete and meaningful dimension to interactions, by giving a feeling of "acknowledgment."

Honesty in Communication

Providing information honestly and transparently to all parties involved, such as employees, customers, and business partners.

Expressing Gratitude

Although simple, saying "thank you" has a significant meaning. Besides being a form of appreciation, these words also show appreciation for the actions of others. Moreover, expressing gratitude has the power to increase happiness when expressed sincerely.

Fairness in Treatment

Treating all employees without discrimination (being fair to all), and providing equal development opportunities.

Well, those are the understanding, principles, benefits, and application of business ethics. Now you understand what business ethics is and how you can apply it in your company environment.

By applying the above business ethics, the company will have a good reputation, win customer trust, and create a positive work environment. So, don't underestimate business ethics to foster a healthy and beneficial business!