Business Ethics in the Scenario of Corporate Governance

7 Pages Posted: 15 May 2011

See all articles by Pallavi Mahajan

Pallavi Mahajan

affiliation not provided to SSRN

Date Written: May 13, 2011


Business ethics is a kind of applied ethics. It is the application of moral or ethical norms to business. Ethics is a set of principles or standards of human conduct that govern the behaviour of individuals or organization. Business ethics comprises the principles and standards that guide behaviour in the conduct of business. Businesses must balance their desire to maximise profits against the needs of the stakeholders.

The various ethical philosophies which help in explaining ethics and its vitality in business are under the heads of deontological theory, teleology theory, relativism, enlightened egoism, fairness, justice, utilitarianism and virtual justice theory. The scope of business ethics can be understood as in the field of compliance, finance, human resource, marketing and production. More and more companies recognize the link between business ethics and financial performance. Companies displaying a clear commitment to ethical conduct consistently outperform companies that do not display ethical conduct.

A company must have an effective ethics programme to ensure that all employees understand its values and comply with the policies and codes of conduct that create its ethical climate. Most of the companies begin the process of establishing organizational ethics programs by developing codes of conduct. Commitment to ethical professional conduct is a must for every employees of the company in all of its business. The code consists of imperative formulated as statements of personal responsibility, identifies the elements of such commitment.

Ethics is the first line of defence against corruption while law enforcement id remedial and reactive. Good corporate governance goes beyond rules and regulations that the government can put in place. It is also about ethics and the values which drive companies in the conduct of their business. It is therefore all about the trust that is established over time between companies and their different stakeholders.

Suggested Citation

Mahajan, Pallavi, Business Ethics in the Scenario of Corporate Governance (May 13, 2011). Available at SSRN: or

Pallavi Mahajan (Contact Author)

affiliation not provided to SSRN ( email )

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