Paragraphs on Business Ethics!

Business is usually associated with questions of ethics as to if they are indeed ethical in their handling of business situations.

In every business questions are raised regarding ethics and morality. Are business meant to being the business of doing business or are they responsible for ensuring fairness and transparency in their operation.

Often answers to these are in the verge of extremes with theories on both sides. The business derives their resources from the society and the society needs to be compensated of the resources taken away by business for third wealth maximization endeavour.


Economists argue that since society could have utilized these resources for its own benefit it is natural that the businesses compensate the society. The other end of argument is that businesses are doing a compensating the society by the mere act of taking these resources for the business purposes and that society is compensated by the mere fact that the otherwise underutilized resources of the society are utilized to win a more efficient way. Hence, benefiting the society.

The wealth maximization paradigm of business assumes that businesses need to make profit for the endeavour undertaken and product produced. Hence the price of the product sold by the business can be considered to constitute two components, one being the cost involved in manufacturing the product and the other being the profit component that the businesses keeps for itself for having produced the product for consumption of the consumer.


Now consumer on most occasions pays the price determined by what is termed as the equilibrium price for the product which is the value of the product determined on the basis of the demand and supply of the product perceived in the market.

One could alternately argue that the profit accrued in this can be considered as the sum of two components, one which is the legitimate component which is compensation for the business for having produced the product and the other being the illegitimate component which is the increase in price due to shortage of supply for the product in the market.

One could argue that the legitimate part is of the profit that the business deserves and the illegitimate part is the extra amount the consumer is willing to ‘bribe’ the business for having to give him the preference in having to provide him with the product produced. No matter how small this ‘bribe’ component could be we cannot deny the existence of this component and it is very difficult to measure.

The difficulty to measure adds a dimension to the level of complexity in evaluating the illegitimate profit with the legitimate profit made by the businesses. The businesses for which this ‘bribe’ component is less are considered more ethical businesses than other businesses.

Hence, the ethics gets into varied shades of gray areas in terms of measuring the impact in business scenarios. It’s most often seen that the wealthy pay their way through life. They pay extra for not having to stand in queue. They pay extra for having to get the best seat in concert or to get a better product.

It can be argued that they are bribing their way through the system. It can also be said that they are paying for the better quality of service. The rules of the society are often vague in Identifying issues relating to ethics. Due to greyness of the measurement system and inability of system to measure the actual legitimate profits that can be made in a business; any system of measurement cannot be considered as accurate. They are inaccurate precisely for the reason that it is impossible to measure it and draw the line between two shades of grey.


Hence, one needs to accept the fact that businesses inherently are associated with unethical behaviour and business claiming to be a good corporate citizen is doing a eyewash.

When a businessman identifies an opportunity in the market and exploits it for his benefit in order to make money, it is termed as legitimate. While if an employee in the same business finds an opportunity in the control structures and exploits it for his personal benefit it is considered unethical.

These lines of boundary are drawn and defined by the society. The society accepts the capitalistic model of wealth maximization as being beneficial for the society and organizations have put in place control structure and code and conduct for its employees so that they behave in order to meet the organizations goals to be achieved.

Business often travel in the narrow grey areas of comfort for the society and society is concerned about the ethical behaviour of these ‘virtual beings’ created by law. Think of it, they virtual beings don’t have life of their own and are constantly working towards wealth maximization in single minded pursuit.


Just to think of some person working like these ‘virtual beings’ would make us think that this person must be insane. But to really find that these organisations constantly are working feverishly in goal pursuit. Sometimes creates a scare for the society as to their single minded pursuit is going to be beneficial for society.

Hence, the greater need to build in flesh, blood and emotions into organizations so that they act with compassion, lot of emotions and love organizations which are completely dispassionate in their pursuit of business goals are going to be a danger to the society clearly from a heuristic perspective of metaphorical analysis.