Business Ethics and Cost Management in SMEs: Theories of Business Ethics and Cost Management Ethos

Business Ethics and Cost Management in SMEs: Theories of Business Ethics and Cost Management Ethos

Sorinel Căpusneanu (Dimitrie Cantemir Christian University, Romania) and Dan Ioan Topor (1 Decembrie 1918 University, Romania)
Copyright: © 2018 |Pages: 19
DOI: 10.4018/978-1-5225-3773-1.ch007

Abstract

This chapter illustrates aspects of business ethics and cost management applicable to small and medium-sized entities. The main objectives of this chapter are to identify and clarify ethical issues and business ethics theories applicable to small and medium-sized entities as well as to identify the functions and principles underpinning the cost management of small and medium-sized entities. Based on the literature, the authors also identify the factors that generate the ethical behavior, the organizational culture, the factors that influence the cost management of small and medium entities. There are also highlights of sustainable development and corporate social responsibility through which small and medium-sized entities align with the expectations and requirements of customers, the population and investors. Through the authors' contribution, a new conceptual and empirical framework is created to discuss other issues encountered in the business environment of small and medium-sized entities.
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Background

Ethics is a system of rules of human conduct which allows the appreciation of what is good or bad in terms of moral and social criteria in relations between peers in order to establish useful relations that generate stability and coexistence based on reciprocity (Popa and Filip, 1999). Ethics fulfills both the role of moral judgment and decision-making in terms of balancing problems that can lead to conflict.

The majority of authors devoted to this field considered business ethics to be a field of study still young with no history of it (De George, 1987, Stark, 1993, Bos, 2007, Zhenzhong, 2009). The importance of business ethics is due to the events that have taken place (business scandals, economic growth status) and has been reflected in the formation and teaching of ethics in different stages of its evolution (Brenkert, 2010, Cuillla, 2011). A number of specialists have tried to classify and review literature in the field of business ethics (De George, 1987; Zhenzhong, 2009; Calabretta et al., 2011). The areas covered by the ethical responsibilities of small and medium-sized entities and the issues involved are as follows:

  • Customers (product and service quality, product content, price, responsibilities and after-sales services, complaint handling);

  • Employees (equal treatment in employment, promotion, dismissal, wages, awards, sanctions);

  • Owners (profits, risks, promotion of their interests, accurate information about the existing situation);

  • Suppliers (conditions of payment, information exchange, product quality);

  • Competitors (methods of competition, mutual respect);

  • Community (environmental protection, money support and material for health services, education, education, culture). Knowledge of business ethics helps Managers in solving ethical problems or dilemmas appearing in activities.

In other words, ethics is studying morality, and morality addresses the values, norms and rooted beliefs of society. Business ethics is part of the culture that takes place within societies and cultural environments and is governed by a set of values, laws, regulations, rules and policies (Scholtens and Dam, 2007). Ethical dilemmas are defined as situations in which individuals can justify their behavior or situations based on the aid of two or more ethical theories (Razmyar and Muzhapaer, 2012).

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