The Rationale and Functions of Establishing Work Ethics: An Institutional Economic Approach


Work ethics is the sum of attitudes and rules that all stakeholders are expected to adopt and adhere to, in
order to do work in the most proper way. Despite similar activities, work ethics may vary in the public and private sectors, even in sub-sectors and even among employers-employees or chiefs-clerks. Although some of the rules of work ethics are covered by law and morality, there are also separate norms and rules which can be defined as work ethics. Two main reasons for the establishment of a separate rule-making field called as work ethics are discretion and moral dilemmas in business environment. The purposes of the discretionary authority are to avoid the transaction costs of making detailed legal arrangements, to ensure that the differences in individual qualifications are reflected in the work processes, to increase job satisfaction and loyalty, and to provide a gradual and secure way to manage innovations or ordinary business processes. It can be argued that work ethics decreases transaction and audit costs, enables trust in principal-agent relationships, provides predictability in the work process, increases job satisfaction, and reduces misconceptions that can be found in every business environment and the effects of misleading instructions, and ensures incremental change in business rules. That’s the reason why work ethics is
developing as a seperate rule-making field in regulating the work processes.


Business ethics public work ethics transaction cost of making rules discretion moral dilemmas