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What Is Business Ethics

Defining Ethics

What do we mean by ethics? There are two basic definitions for the word: Ethics supply the basis for decisions about what is right or wrong for humans, and ethics is also the study of morality. To behave in an ethical fashion means to make choices that embody right behavior rather than wrong behavior.

Ethics entail three facets:

  • Telling right from wrong
  • Being committed to doing what is right
  • Doing what is right

Business ethics represent the standards for right and wrong that govern how businesspeople act. It is, in this way, a form of applied ethics—that is, moral philosophy applied to questions of right versus wrong arising in practical situations. Ethical principles and the values they express are applied to actual problems or challenges in business and commerce. They shape the corporate culture of firms and influence the way that corporations deal with their stakeholders.

Can Ethics Be Taught?

Not everyone agrees that ethics can be taught to those in business or entering the workforce. By that, these skeptics typically mean that ethics training or ethics courses are of marginal value in encouraging ethical behavior and that an individual’s views of what is right or wrong is what truly matters.

Yet a stronger argument can be made that engaging in a formal consideration of ethics can make a difference in behavior. It’s important to understand the ethical issues at play. Some may be ignorant of the potential ethical downsides of their actions. Others may need to be warned of the considerable negative consequences of unethical behavior.

Any consideration of business ethics can help learners:

  • Recognize when ethical questions arise
  • Understand the interplay of the three factors of the Ethical Triangle (individual ethics, leadership, and governance/control)
  • Learn new ways to approach ethical decision-making
  • Recognize the value of professional ethical guidelines and codes of conduct
  • Become aware of an organization’s Corporate Social Responsibility (CSR)
  • Develop skills to address ethical situations and make better ethical decisions

John Hooker of Carnegie Mellon University has argued: “Business management is all about making the right decisions. Ethics is all about making the right decisions. So what is the difference between the two? Management is concerned with how decisions affect the company, while ethics is concerned about how decisions affect everything.”

Hooker added: “Management operates in the specialized context of the firm, while ethics operates in the general context of the world. Management is therefore part of ethics. A business manager cannot make the right decisions without understanding management in particular as well as ethics in general. Business ethics is management carried out in the real world. This is why business managers should study ethics.”

Applying Ethics in the Workplace

There’s no question that obeying the law represents an ethical minimum for business. But when confronting murky ethical dilemmas, what factors influence both individual and corporate decision-making? What shapes underlying ethical norms and standards? In short, what informs moral reasoning when the ethical and moral issues arrive in shades of gray?

Managers are often called upon to make personal ethical judgments when dealing with other employees, with management and with their own actions (reimbursement for expenses, the use or misuse of company property, their obligation to report wrongdoing); companies and institutions often face more wide-ranging issues involving customers, shareholders and the community.

Many companies have adopted mission statements, hired ethics officers, developed corporate mottos (Google’s is “Do No Evil”!), and established ethics codes and other policies. These actions are meant to inform and guide employee and corporate behavior. Additionally, many professional organizations (such as those in law and accounting) have established ethical guidelines for their members.

Question

1. If an individual enters the workplace with a clear sense of right and wrong, will that provide enough guidance in dealing with ethical issues that may arise? Why or why not?

Suggested/Sample Response

An individual’s personal morality may not prove adequate in dealing with all of the ethical issues in a corporate or business setting. For example, people may disagree on what is right and wrong based on their value systems. Company policies and procedures and organizational ethics codes help provide guidance for employees.

Recommended for you Ethical Fundamentals

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