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Integration of Ethical Values into Activity-Based Budgeting

Summary:

            In this article, the author states that ethics and code of ethics in the business processes are one of the most discussed areas in the business community. People do talk about these concepts to be applied in every business, but when it comes to practical integration of these concepts, the results are quite different from the described theoretical principles. This article is looking to find some gaps which are present between the principles of ethics and their practical integration into business process, especially to develop activity based budgeting. In this article, the author has discussed few points in this area of concern to help out organizations to develop framework based on ethics, distinctive course of actions, preferring different positive values and then incusing those values for activity based budgeting.

The question is that every organization has its own code of ethics, then why still organizations have failed to integrate these ethical codes into practical work. So, research studies are trying to find out the reasons and their best solutions to resolve the issue. Literature review in this article describes that human behaviors are being studies for a long period of time. Moral and ethical values have been incorporated in the societies and same happened for the business societies as well. The author describes that most important thing is ethical decision making to integrate those ethical values into the organizations. To bridge the gap between ethical principles and their practical implementation, two approaches can be used. One is creating corporate culture with ethical framework and the second is to introduce an effective ethical policy.

            The author have examined the both approaches to see that which areas have been studies in the research and which areas need more explanation to define things in detail. To develop a corporate culture of ethics, one has to identify that what are good and what are bad values. After identifying those ethics and values, then a preference order should be given to each for achieving consistent ethical values. Once these steps are done, the here comes the process to integrate those ethical values into activity based budgeting. In this article, an Italian company’s case study is also included to see that how activity based budgeting process happens. After analyzing each step, the author has concluded that five stages for important to consider for activity based budgeting in business organizations.

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