Ethics refer to the rules and principles that define right and wrong conduct. In other words, ethics refer to the discipline that deals with defining what is good and what is bad, and what is moral duty and obligation.
Managerial ethics represent an ethical approach towards attaining corporate goals in an environment that involves other people. It is the set of standard behaviour that guide the individual manager in their work to make managerial decisions.
IMPORTANCE OF MANAGERIAL ETHICS:
- Promotes goodwill and image: Goodwill and image are gained through the trust of society towards the organisation. the supply of goods and services by considering quality, quantity, time and price expected by the customers facilitates gaining their trust.
- Helps to maintain good relations with stakeholders: Stakeholders are the parties who are directly or indirectly related to the company such as employees, customers, suppliers, lenders etc. Ethical behaviour helps to maintain relations with them.
- Less interference from govt: In case, a business is not ethical, violates the govt rules, will attract interventions of govt. but an ethical businessman never performs any business activity by violating govt rules and regulations.
- Promotes fair competition: Business ethics helps to promote fair competition among business firms. It discourages them to involve in unfair, trade practices like an artificial shortage, black marketing, adulteration etc.
- Promotes social responsibility: Business ethics guide managers to involve in social welfare programs like participating in education, healthy sports, environment protection etc.
- Improves working environment: It guides a manager to motivate employees by introducing a feeling of justice, equality, freedom and ownership.
- Helps to increase market share: By gaining prestige and reputation in society, it helps to increase the market share of a business firm.