the importance of ethics in business essay

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What Are Business Ethics & Why Are They Important?

• 27 Jul 2023

From artificial intelligence to facial recognition technology, organizations face an increasing number of ethical dilemmas. While innovation can aid business growth, it can also create opportunities for potential abuse.

“The long-term impacts of a new technology—both positive and negative—may not become apparent until years after it’s introduced,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability . “For example, the impact of social media on children and teenagers didn’t become evident until we watched it play out over time.”

If you’re a current or prospective leader concerned about navigating difficult situations, here's an overview of business ethics, why they're important, and how to ensure ethical behavior in your organization.

Access your free e-book today.

What Are Business Ethics?

Business ethics are principles that guide decision-making . As a leader, you’ll face many challenges in the workplace because of different interpretations of what's ethical. Situations often require navigating the “gray area,” where it’s unclear what’s right and wrong.

When making decisions, your experiences, opinions, and perspectives can influence what you believe to be ethical, making it vital to:

• Be transparent.
• Invite feedback.
• Consider impacts on employees, stakeholders, and society.
• Reflect on past experiences to learn what you could have done better.

“The way to think about ethics, in my view, is: What are the externalities that your business creates, both positive and negative?” says Harvard Business School Professor Vikram Gandhi in Leadership, Ethics, and Corporate Accountability . “And, therefore, how do you actually increase the positive element of externalities? And how do you decrease the negative?”

Related: Why Managers Should Involve Their Team in the Decision-Making Process

Ethical Responsibilities to Society

Promoting ethical conduct can benefit both your company and society long term.

“I'm a strong believer that a long-term focus is what creates long-term value,” Gandhi says in Leadership, Ethics, and Corporate Accountability . “So you should get shareholders in your company that have that same perspective.”

Prioritizing the triple bottom line is an effective way for your business to fulfill its environmental responsibilities and create long-term value. It focuses on three factors:

• Profit: The financial return your company generates for shareholders
• People: How your company affects customers, employees, and stakeholders
• Planet: Your company’s impact on the planet and environment

Check out the video below to learn more about the triple bottom line, and subscribe to our YouTube channel for more explainer content!

Ethical and corporate social responsibility (CSR) considerations can go a long way toward creating value, especially since an increasing number of customers, employees, and investors expect organizations to prioritize CSR. According to the Conscious Consumer Spending Index , 67 percent of customers prefer buying from socially responsible companies.

To prevent costly employee turnover and satisfy customers, strive to fulfill your ethical responsibilities to society.

Ethical Responsibilities to Customers

As a leader, you must ensure you don’t mislead your customers. Doing so can backfire, negatively impacting your organization’s credibility and profits.

Actions to avoid include:

• Greenwashing : Taking advantage of customers’ CSR preferences by claiming your business practices are sustainable when they aren't.
• False advertising : Making unverified or untrue claims in advertisements or promotional material.
• Making false promises : Lying to make a sale.

These unethical practices can result in multi-million dollar lawsuits, as well as highly dissatisfied customers.

Ethical Responsibilities to Employees

You also have ethical responsibilities to your employees—from the beginning to the end of their employment.

One area of business ethics that receives a lot of attention is employee termination. According to Leadership, Ethics, and Corporate Accountability , letting an employee go requires an individualized approach that ensures fairness.

Not only can wrongful termination cost your company upwards of $100,000 in legal expenses , it can also negatively impact other employees’ morale and how they perceive your leadership.

Ethical business practices have additional benefits, such as attracting and retaining talented employees willing to take a pay cut to work for a socially responsible company. Approximately 40 percent of millennials say they would switch jobs to work for a company that emphasizes sustainability.

Ultimately, it's critical to do your best to treat employees fairly.

“Fairness is not only an ethical response to power asymmetries in the work environment,” Hsieh says in the course. “Fairness—and having a successful organizational culture–can benefit the organization economically and legally.”

Why Are Business Ethics Important?

Failure to understand and apply business ethics can result in moral disengagement .

“Moral disengagement refers to ways in which we convince ourselves that what we’re doing is not wrong,” Hsieh says in Leadership, Ethics, and Corporate Accountability . “It can upset the balance of judgment—causing us to prioritize our personal commitments over shared beliefs, rules, and principles—or it can skew our logic to make unethical behaviors appear less harmful or not wrong.”

Moral disengagement can also lead to questionable decisions, such as insider trading .

“In the U.S., insider trading is defined in common, federal, and state laws regulating the opportunity for insiders to benefit from material, non-public information, or MNPI,” Hsieh explains.

This type of unethical behavior can carry severe legal consequences and negatively impact your company's bottom line.

“If you create a certain amount of harm to a society, your customers, or employees over a period of time, that’s going to have a negative impact on your economic value,” Gandhi says in the course.

This is reflected in over half of the top 10 largest bankruptcies between 1980 and 2013 that resulted from unethical behavior. As a business leader, strive to make ethical decisions and fulfill your responsibilities to stakeholders.

How to Implement Business Ethics

To become a more ethical leader, it's crucial to have a balanced, long-term focus.

“It's very important to balance the fact that, even if you're focused on the long term, you have to perform in the short term as well and have a very clear, articulated strategy around that,” Gandhi says in Leadership, Ethics, and Corporate Accountability .

Making ethical decisions requires reflective leadership.

“Reflecting on complex, gray-area decisions is a key part of what it means to be human, as well as an effective leader,” Hsieh says. “You have agency. You must choose how to act. And with that agency comes responsibility.”

Related: Why Are Ethics Important in Engineering?

Hsieh advises asking the following questions:

• Are you using the “greater good” to justify unethical behavior?
• Are you downplaying your actions to feel better?

“Asking these and similar questions at regular intervals can help you notice when you or others may be approaching the line between making a tough but ethical call and justifying problematic actions,” Hsieh says.

Become a More Ethical Leader

Learning from past successes and mistakes can enable you to improve your ethical decision-making.

“As a leader, when trying to determine what to do, it can be helpful to start by simply asking in any given situation, ‘What can we do?’ and ‘What would be wrong to do?’” Hsieh says.

Many times, the answers come from experience.

Gain insights from others’ ethical decisions, too. One way to do so is by taking an online course, such as Leadership, Ethics, and Corporate Accountability , which includes case studies that immerse you in real-world business situations, as well as a reflective leadership model to inform your decision-making.

Ready to become a better leader? Enroll in Leadership, Ethics, and Corporate Accountability —one of our online leadership and management courses —and download our free e-book on how to be a more effective leader.

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Why Are Ethics Important in Business?

Business ethics can be defined in several ways. The Corporate Finance Institute says business ethics are the moral principles that a business uses to conduct itself and its transactions. Indeed says business ethics determine what’s right, what’s wrong, and what’s appropriate in a workplace.

At its heart, business ethics drives three things about a company:

• Public perception
• Employee perception
• Bottom line

Ilene Ringler , business faculty member at Purdue Global, says ethics must be ingrained in a business to be a success.

“Ethics is not a trainable thing,” she says. “Instead, many companies are educating their employees on the company values, which becomes the foundation for all decision making in the workplace.”

Read on to find out more about business ethics, why studying business ethics is important, and how strong ethics are a mark of a vital, successful business.

Proof That Ethical Behavior Breeds Success

Companies that take ethics seriously are conducting business in a new way, and, therefore, seeing success. This commitment is focused both on employees and the public, which helps a business attract and retain talent and allows a business to pursue its purpose without distraction.

Among the things some ethically successful businesses are doing:

• A big-box warehouse company raised its minimum wage to provide a better living salary for employees and to remain competitive.
• A cosmetic retailer prohibits animal testing on its products and encourages customers to recycle by offering free products for returning empty containers.
• A footwear and apparel company makes sustainable products and donates a pair of shoes to children in a developing country for each pair purchased.
• An outdoor clothing company is fighting environmental pollution and disposable fashion by encouraging customers to buy less and be more conscientious.
• A pharmacy chain ended sales of tobacco products as part of its commitment to better health for its customers and employees.

Many such companies draw praise for their practices, which attracts customers and workers who view ethics as a major consideration in their daily interactions.

According to a NielsenIQ study, 60% of consumers say they have been concentrating on environmentally friendly, sustainable, or ethical purchases since the start of the global health pandemic.

Setting an Ethical Tone Starts at the Top

Expectations of ethical behavior start at the C-suite, with buy-in from management. As employees see this ethical behavior, they then hold themselves and each other to those standards. They also hold the C-suite and management accountable.

Ethical companies tend to have more success, according to Ringler.

“As you look at the companies that have high retention rates, low turnover, and high customer satisfaction, you see that many of those businesses are more profitable,” she says. “They are promoting ethical behavior because employees understand what the expectations are and how decisions get made.”

A lack of ethical behavior can affect not only profits but also the workforce, Ringler says.

“One of the costs that doesn't get tracked as much as it should is the cost of employee turnover and employee retention,” she says. “Employees may be leaving you or not coming to you because they perceive you are not acting in accordance with who you say you are, what your purpose is, and what your values are. Top talent is not going to come to you.”

How Ethics Drive Change

When ethics are at the forefront, organizational change can succeed. According to the Project Management Institute , ethical leadership involves leading with commitment, integrity, and transparency. NOBL Collective , a change management consulting firm, says change is successful when an organization affirms that:

• Change is encouraged — Company support encourages individuals to try new things and processes
• Change is a group effort — Workers who help decide and shape change are more likely to follow through
• Change is a new normal — Adapting constantly to new external forces becomes a habit and easier to implement

Ethical leadership stands at the front of change. Ringler teaches an ethics course and a capstone based upon the principles of conscious capitalism.

Making the changes that need to be made, driven by ethics, is noticed by customers and potential customers.

“People are going to look deeper into the way that you're treating your employees and into the way that you're working with your suppliers,” Ringler says. “The web has played such a huge role in that because you didn't use to be able to find that kind of information as quickly as you do now.”

An Ethical Culture Is Deliberately Different

Studying business ethics is an important part of achieving an ethical workplace. Employees, especially those in senior positions, must take a role in both learning a company’s ethical principles and implementing them. That means keeping up with the evolution of business ethics.

Customers and employees are coming to expect more from businesses, Ringler says.

“The expectations of the people who are coming into the workplace and who are buying products are changing around what they want out of their workplace experience,” she says.

“Right now, with the Great Resignation, employees want what they want. And they want sustainability; they want good, honest people interactions; they want no discrimination in the workplace; they want no discrimination of customers.”

Ringler says commitment to ethics isn’t just a passing fad or something to make a company feel good about itself.

“These are business decisions,” she says. “Businesses have to support the environmental, social, and governance (ESG) movement and corporate social responsibility.”

Why You Should Study Business at Purdue Global

Ethics are a growing part of doing business well. Purdue Global offers the opportunity to study ethics and other relevant business issues in our online Business Degree and Certificate Programs .

Reach out today to learn more about our online business degrees and how you can be equipped for the future of business.

See Notes and Conditions below for important information.

About the Author

Purdue Global

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Building an Ethical Company

• Isaac H. Smith
• Maryam Kouchaki

Just as people can develop skills and abilities over time, they can learn to be more or less ethical. Yet many organizations limit ethics training to the onboarding process. If they do address it thereafter, it may be only by establishing codes of conduct or whistleblower hotlines. Such steps may curb specific infractions, but they don’t necessarily help employees develop as ethical people.

Drawing on evidence from hundreds of research studies, the authors offer a framework for helping workers build moral character. Managers can provide experiential training in ethical dilemmas. They can foster psychological safety when minor lapses occur, conduct pre- and postmortems for initiatives with ethical components, and create a culture of service by encouraging volunteer work and mentoring in ethics.

Create an organization that helps employees behave more honorably.

Idea in Brief

The opportunity.

Just as people entering the workforce can develop job-related skills and abilities over time, they can learn to be more ethical as well.

Why It’s Often Missed

Many organizations relegate ethics training to the onboarding process, perhaps also issuing codes of conduct and establishing whistleblower hotlines. Such steps may curb specific unethical acts but don’t necessarily help workers grow as moral people.

How to Capitalize on It

Managers can provide experiential training in ethical dilemmas, foster psychological safety when (minor) lapses occur, conduct pre- and postmortems for initiatives with ethical components, and create a culture of service by encouraging volunteer work and mentoring in ethics.

People don’t enter the workforce with a fixed moral character. Just as employees can nurture (or neglect) their skills and abilities over time, they can learn to be more or less ethical. Yet rather than take a long-term view of employees’ moral development, many organizations treat ethics training as a onetime event, often limiting it to the onboarding process. If they do address ethics thereafter, it may be only by espousing codes of conduct or establishing whistleblower hotlines. Such steps may curb specific unethical actions, but they don’t necessarily help employees develop as moral people.

• Isaac H. Smith is an associate professor of organizational behavior and human resources at BYU Marriott School of Business. His research explores the morality and ethics of organizations and the people in them.
• Maryam Kouchaki is a professor of management and organizations at the Kellogg School of Management. Her research explores ethics, morality, and the complexity and challenges of managing ethnic and gender diversity for organizations.

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What Is Business Ethics?

Understanding business ethics, why is business ethics important, types of business ethics.

• Implementing Good Business Ethics
• Monitoring and Reporting

The Bottom Line

What is business ethics definition, principles, and importance.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Business ethics is the moral principles, policies, and values that govern the way companies and individuals engage in business activity. It goes beyond legal requirements to establish a code of conduct that drives employee behavior at all levels and helps build trust between a business and its customers.

Key Takeaways

• Business ethics refers to implementing appropriate business policies and practices with regard to arguably controversial subjects.
• Some issues that come up in a discussion of ethics include corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
• The law usually sets the tone for business ethics, providing a basic guideline that businesses can choose to follow to gain public approval.

Investopedia / Katie Kerpel

Business ethics ensure that a certain basic level of trust exists between consumers and various forms of market participants with businesses. For example, a portfolio manager must give the same consideration to the portfolios of family members and small individual investors as they do to wealthier clients. These kinds of practices ensure the public receives fair treatment.

The concept of business ethics began in the 1960s as corporations became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes, and corporate responsibility. The increased focus on "social issues" was a hallmark of the decade.

Since that time, the concept of business ethics has evolved. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally vs. maintaining a competitive advantage over other businesses. Firms display business ethics in several ways.

Business ethics ensure a certain level of trust between consumers and corporations, guaranteeing the public fair and equal treatment.

Principles of Business Ethics

It's essential to understand the underlying principles that drive desired ethical behavior and how a lack of these moral principles contributes to the downfall of many otherwise intelligent, talented people and the businesses they represent.

There are generally 12 business ethics principles:

• Leadership : The conscious effort to adopt, integrate, and emulate the other 11 principles to guide decisions and behavior in all aspects of professional and personal life.
• Accountability : Holding yourself and others responsible for their actions. Commitment to following ethical practices and ensuring others follow ethics guidelines.
• Integrity : Incorporates other principles—honesty, trustworthiness, and reliability. Someone with integrity consistently does the right thing and strives to hold themselves to a higher standard.
• Respect for others : To foster ethical behavior and environments in the workplace, respecting others is a critical component. Everyone deserves dignity, privacy, equality, opportunity, compassion, and empathy.
• Honesty : Truth in all matters is key to fostering an ethical climate. Partial truths, omissions, and under or overstating don't help a business improve its performance. Bad news should be communicated and received in the same manner as good news so that solutions can be developed.
• Respect for laws : Ethical leadership should include enforcing all local, state, and federal laws. If there is a legal grey area, leaders should err on the side of legality rather than exploiting a gap.
• Responsibility : Promote ownership within an organization, allow employees to be responsible for their work, and be accountable for yours.
• Transparency : Stakeholders are people with an interest in a business, such as shareholders, employees, the community a firm operates in, and the family members of the employees. Without divulging trade secrets, companies should ensure information about their financials, price changes, hiring and firing practices, wages and salaries, and promotions are available to those interested in the business's success.
• Compassion : Employees, the community surrounding a business, business partners, and customers should all be treated with concern for their well-being.
• Fairness : Everyone should have the same opportunities and be treated the same. If a practice or behavior would make you feel uncomfortable or place personal or corporate benefit in front of equality, common courtesy, and respect, it is likely not fair.
• Loyalty : Leadership should demonstrate confidentially and commitment to their employees and the company. Inspiring loyalty in employees and management ensures that they are committed to best practices.
• Environmental concern : In a world where resources are limited, ecosystems have been damaged by past practices, and the climate is changing, it is of utmost importance to be aware of and concerned about the environmental impacts a business has. All employees should be encouraged to discover and report solutions for practices that can add to damages already done.

There are several reasons business ethics are essential for success in modern business. Most importantly, defined ethics programs establish a code of conduct that drives employee behavior—from executives to middle management to the newest and youngest employees. When all employees make ethical decisions, the company establishes a reputation for ethical behavior. Its reputation grows, and it begins to experience the benefits a moral establishment reaps:

• Brand recognition and growth
• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors

When combined, all these factors affect a business' revenues. Those that fail set ethical standards and enforce them are doomed to eventually find themselves alongside Enron, Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and many others.

There are several theories regarding business ethics, and many different types can be found, but what makes a business stand out are its corporate social responsibility practices, transparency and trustworthiness, fairness, and technological practices.

Corporate Social Responsibility

Corporate social responsibility (CSR) is the concept of meeting the needs of stakeholders while accounting for the impact meeting those needs has on employees, the environment, society, and the community in which the business operates. Of course, finances and profits are important, but they should be secondary to the welfare of society, customers, and employees—because studies have concluded that corporate governance and ethical practices increase financial performance.

Businesses should hold themselves accountable and responsible for their environmental, philanthropic, ethical, and economic impacts.

Transparency and Trustworthiness

It's essential for companies to ensure they are reporting their financial performance in a way that is transparent. This not only applies to required financial reports but all reports in general. For example, many corporations publish annual reports to their shareholders.

Most of these reports outline not only the submitted reports to regulators, but how and why decisions were made, if goals were met, and factors that influenced performance. CEOs write summaries of the company's annual performance and give their outlooks.

Press releases are another way companies can be transparent. Events important to investors and customers should be published, regardless of whether it is good or bad news.

Technological Practices and Ethics

The growing use of technology of all forms in business operations inherently comes with a need for a business to ensure the technology and information it gathers is being used ethically. Additionally, it should ensure that the technology is secured to the utmost of its ability, especially as many businesses store customer information and collect data that those with nefarious intentions can use.

A workplace should be inclusive, diverse, and fair for all employees regardless of race, religion, beliefs, age, or identity. A fair work environment is where everyone can grow, be promoted, and become successful in their own way.

How to Implement Good Business Ethics

Fostering an environment of ethical behavior and decision-making takes time and effort—it always starts at the top. Most companies need to create a code of conduct/ethics, guiding principles, reporting procedures, and training programs to enforce ethical behavior.

Once conduct is defined and programs implemented, continuous communication with employees becomes vital. Leaders should constantly encourage employees to report concern behavior—additionally, there should be assurances that if whistle-blowers will not face adversarial actions.

A pipeline for anonymous reporting can help businesses identify questionable practices and reassure employees that they will not face any consequences for reporting an issue.

Monitoring and Reporting Unethical Behavior

When preventing unethical behavior and repairing its adverse side effects, companies often look to managers and employees to report any incidences they observe or experience. However, barriers within the company culture (such as fear of retaliation for reporting misconduct) can prevent this from happening.

Published by the Ethics & Compliance Initiative (ECI), the Global Business Ethics Survey of 2021 surveyed over 14,000 employees in 10 countries about different types of misconduct they observed in the workplace. 49% of the employees surveyed said they had observed misconduct and 22% said they had observed behavior they would categorize as abusive. 86% of employees said they reported the misconduct they observed. When questioned if they had experienced retaliation for reporting, 79% said they had been retaliated against.

Indeed, fear of retaliation is one of the primary reasons employees cite for not reporting unethical behavior in the workplace. ECI says companies should work toward improving their corporate culture by reinforcing the idea that reporting suspected misconduct is beneficial to the company. Additionally, they should acknowledge and reward the employee's courage in making the report.

Business ethics concerns ethical dilemmas or controversial issues faced by a company. Often, business ethics involve a system of practices and procedures that help build trust with the consumer. On one level, some business ethics are embedded in the law, such as minimum wages, insider trading restrictions, and environmental regulations. On another, business ethics can be influenced by management behavior, with wide-ranging effects across the company.

What Are Business Ethics and Example?

Business ethics guide executives, managers, and employees in their daily actions and decision-making. For example, consider a company that has decided to dump chemical waste that it cannot afford to dispose of properly on a vacant lot it has purchased in the local community. This action has legal, environmental, and social repercussions that can damage a company beyond repair.

What Are the 12 Ethical Principles?

Business ethics is an evolving topic. Generally, there are about 12 ethical principles: honesty, fairness, leadership, integrity, compassion, respect, responsibility, loyalty, law-abiding, transparency, and environmental concerns.

Business ethics concerns employees, customers, society, the environment, shareholders, and stakeholders. Therefore, every business should develop ethical models and practices that guide employees in their actions and ensure they prioritize the interests and welfare of those the company serves.

Doing so not only increases revenues and profits, it creates a positive work environment and builds trust with consumers and business partners.

New York University Stern Center for Sustainable Business. " ESG and Financial Performance: Uncovering the Relationship By Aggregating Evidence From 1,000 Plus Studies Published Between 2015 – 2020 ."

Ethics & Compliance Initiative (ECI). " The State of Ethics & Compliance in the Workplace ," Pages 16-22.

Ethics & Compliance Initiative (ECI). " 2021 Global Business Ethics Survey Report The State of Ethics & Compliance in the Workplace: A Look at Global Trends ."

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Student’s Guide to Writing Critical Essays in Business Ethics (and beyond)

Here is some advice for writing critical essays, in business ethics but also in other fields. There is of course much more to say on the topic, but this is a start.

Writing your own critical essay:

What kinds of criticisms should you offer in your essay? There are a nearly infinite number of errors or problems that you might spot in an essay or book that you want to critique. Here are a few common ones to look for, to get you started:

• Point out one or more logical fallacies. Did the author present a false dilemma , for example? Or an argument from ignorance ? Has the author presented a false analogy or a hasty generalization ?
• Critique the scope of the author’s claim. For example, does the author claim that his or her conclusion applies to all cases, rather than just to the small number of cases he or she has actually argued for?
• Point out unjustified assumptions. Has the author made questionable assumptions about some matter of fact, without providing evidence? Alternatively, has the author assumed that readers share some questionable ethical starting point, perhaps a belief in a particular debatable principle?
• Point out internal contradictions. Does the author say two things that, perhaps subtly, contradict each other?
• Point out undesirable implications / consequences. Does the author’s position imply, perhaps accidentally, some further conclusion that the author (or audience) is unlikely to want to accept, upon reflection?

In general, a good critical essay should:

• Describe and explain in neutral terms the article or book being critiqued. Before you start offering criticism, you should demonstrate that you understand the point of view you are critiquing.
• Be modest. Your goal should be to offer some insight, rather than to win a debate. Rather than to “show that Smith is wrong” or “prove that Sen’s view is incorrect,” you should set your aims on some more reasonable goal, such as “casting doubt” on the view you are critiquing, or “suggesting reason why so-and-so should modify her view.”
• Be fair. Sometimes this is referred to as the “principle of charity.” It has nothing to do with donating money. Rather, it is about giving the other side what you owe them, namely a fair reading. Your goal is not to make the author whose work you are criticizing sound dumb. Rather, the goal is to make her sound smart, but then to make yourself sound smart, too, but showing how her view could be improved.
• Be well structured . Professors love structure. Remember: a critical essay is not just a bunch of ideas; it is an orderly attempt to convince someone (in most cases, your professor) of a particular point of view. Your ideas will only have real punch if you put them in a suitable structure. That’s not all that hard. For example, make sure your opening paragraph acts as a roadmap for what follows — telling the reader where you’re going and how you propose to get there. Make sure each paragraph in the body of your essay has a main point (a point connected to the goal of your essay!) and that its point is clearly explained.
• Stick to two or maybe three main arguments . “The three main problems with Jones’s argument are x, y, and z.”
• Be clear. That means not just that your essay should be clearly structured, but also that each sentence should be clear. Proof-reading is important: get someone with good writing skills to proof-read your essay for you. If you can’t do that before your deadline, you can proof-read your essay yourself by reading it out loud. We’re serious. It is much easier to spot errors in your own writing if you read out loud.

A few more tips:

• Cite your sources carefully. Use whichever citation method your professor says to use. If in doubt, use one of the established methods (such as APA or Chicago ). But whatever you do, make sure to give credit to the people whose ideas you use, if you want to avoid being charged with plagiarism.
• Use what you’ve learned in class. Your professor would love nothing more than to know that you’ve been paying attention. So try to make use of some of the concepts discussed in class, or in your course textbook.
• Don’t try to sound like an author. Just say what you want to say. Trying to sound like an author just leads people to use big words they don’t understand and to write complex sentences that overshoot their grammatical skills. Just write it more or less the way you would say it out loud, in short, clear sentences.
• Follow instructions. Failing to follow instructions is easily the most common way students screw up when writing critical essays. Read the assignment instructions through carefully — twice! — and then if anything is unclear, ask your professor for clarification.

Looking for essay topics? Check out Business Ethics Highlights .

See also: The Concise Encyclopedia of Business Ethics

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3 comments on “student’s guide to writing critical essays in business ethics (and beyond)”.

This is a useful resource – thanks Chris

“Shack”

Arthur Shacklock (Griffith University Queensland, Australia)

I’m currently a student at Arizona Christian University taking a Business Ethics course. I’m in the midst of completing an assignment that requires me to post on an open blog forum. It was very difficult for me to find something interesting and that pertained to my class. Then I stumbled across your blog then more specifically, this article. The purpose of this specific assignment is to share my individual and collective experiences derived from collaborative learning and expressed through the narrative, as “actionable knowledge.” Actionable knowledge reflects the learning capability of individuals and organizations to connect elements including; social, political, economic, technological.

Knowing how to write critical essays in Business Ethics is an important element of success. I enjoyed reading through these helpful tips. This is useful information that will help in college and beyond.

Supporting evidence is an important part of writing a sound paper. Like you mentioned in the blog, it can’t be based on bias or ignorance. Rather, backed up by factual evidence to help support your claim. I love the general key points as well. Describe and explain, be modest, be fair, be well structured, and be clear. I am very familiar with these key elements as we have spoken on them in class. They are very important components of business ethics. We’ve learned things about leading in the business world, Capitalism, Socialism, and Communism, Business advertising, and more. In the essay I write in this course, I will refer back to this blog.

Like any other course, it is important to cite your sources like you’ve mentioned above as well as use information that we’ve learned in class. Sound like yourself and speak from your own understanding. The last tip was to follow instructions WHICH IS THE KEY TO SUCCESS! It’s all in the fine print. Read until you understand and ask questions if you don’t.

Good luck with your studies, Deon!

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The Importance of Business Ethics

Ethics come into play when making decisions for so many individuals, businesses and organizations, yet sometimes the concept is taken for granted. We know ethics — moral principles that inform actions and behaviors — are valuable, but how do they apply to businesses, the economy, and your career?

A deeper understanding of the importance of business ethics can empower you to make morally sound decisions in your career, support your employer’s efforts to address controversial topics, and build better relationships with your customers and the community.

A closer look at the following topics can support a firmer grasp of ethics in a general sense and how they specifically apply to the world of business:

• The role of ethics in society and decision-making.
• The importance of consistent ethics in business leadership (and the damage their absence can cause).
• Key considerations for building an ethical company culture.

Ethics as a Foundation for Sound Decisions

Distinguishing between help and harm, right and wrong, and similar concepts is crucial for successful participation in society. That’s true for individuals as well as organizations. Let’s start by taking a closer look at ethical and unethical behavior:

• Ethical behavior demonstrates a commitment to considering the needs of others, as well as their basic autonomy as sentient living creatures. This sort of respect and consideration is both expected in certain contexts as well as appreciated when offered. 
• Unethical behavior shows a disregard for others — a lack of caring about their safety and security. Unethical actions can cause others to distance themselves from a person who acts in such a fashion, or for customers to stop supporting a business.

The Difference Between Ethics and Laws

Laws and regulations generally align with the basic ethical principles that most of society believes to be true. Prohibiting actions like theft, assault, and fraud through the threat of fines, arrest, and other penalties aligns with commonly held views.

However, ethics and laws are not identical, despite this connection. Ethics are principles that help guide people and groups through decisions but are not universally held or followed. They can vary from one person, organization, or location to the next. Laws are codified rules that everyone in a specific jurisdiction is expected to follow.

The St. Bonaventure University Code of Conduct offers some additional clarity on this concept in its Statement of Purpose: “As members of the St. Bonaventure University community, the University expects students to act in congruence with not only New York State and Federal Laws, but also their own personal values, and the values of our Franciscan tradition.”

In practical terms, you can view laws as a baseline — the rules to which everyone must adhere. Ethics go beyond this requirement, serving as a guide for people and businesses to make decisions in situations where a law or regulation doesn’t apply.

The Importance of Ethics in Business, and the Harm Their Absence Can Cause

For businesses, ethical decision-making encourages a holistic view of operations. That includes, but is not limited to, generating value for its owners or shareholders.

While there are many perspectives on the purpose of a company, leaders of some of the country’s largest firms have signed onto a statement that indicates their organizations will take more than financial value into account. The Business Roundtable, a nonprofit trade association, defined the core responsibilities of businesses as:

• Providing value to customers in the services or products offered.
• Investing in and supporting employees.
• Engaging in fair and ethical trading with suppliers.
• Supporting the communities and protecting the environments in which the company operates.
• Creating value for shareholders.

The Business Roundtable said it updated its definition of the purpose of a corporation to include more than only generating financial returns, as the interests of stakeholders such as employees and local communities are deeply connected to those of shareholders.

The importance of business ethics is clear in this statement of purpose: These companies now recognize their responsibility to several groups and interests, even though they are not legally obligated to do so. By identifying all of the major areas where obligations to others exist and taking steps to address those commitments, these organizations take a more ethical approach than businesses exclusively focused on generating revenue.

How Unethical Decisions Negatively Impact Businesses

While unethical decisions are not necessarily illegal, they can still cause reputational harm, boycotts by customers, increased scrutiny, and other negative outcomes. Consider these examples of activities that can be seen as unethical by some or all stakeholders:

• Poor treatment of employees.
• Avoidance of tax obligations through loopholes and similar means.
• Lack of regard or care for consumers or the natural environment.
• Irresponsible or misleading marketing.
• Business practices that, while legal, are or appear to be unfair.

Continuing controversies related to multinational corporation Nestle’s marketing of baby formula , as detailed by Reuters, is just one example. The business has faced calls to alter marketing of this product to mothers in developing nations dating back to the 1970s, with boycotts and other efforts raising awareness of the issue. In 2018, the company again faced criticism for inaccurate marketing descriptions of its baby formula and associated benefits.

Unethical activities can be completely legal, or at least adhere to the letter of the law, but still attract negative attention. A company culture that recognizes the importance of ethics in business is crucial for long-term stability and success.

Building an Ethical Business Culture

A consistent ethical culture supports key business objectives, ultimately assisting an organization in its efforts to be a good corporate citizen, generate value and support its stakeholders. How can you develop an ethical business culture?

• Clearly defining your organization’s ethical priorities supports the development of relevant and effective policies and procedures.
• Training can educate staff as well as empower them to make ethical decisions.
• Setting specific goals related to ethical behaviors, and making commitments to reach them, can guide efforts to operate ethically and better identify specific opportunities and concerns.
• Compliance and review processes can help an organization ensure that its ethical concepts and commitments are practiced.

On the individual level, businesspeople can develop a better sense of ethics through dedicated courses as part of their educational experience.

A Fuller Understanding of the Importance of Business Ethics

The advanced curriculum of a Master of Business Administration program can help you develop a firmer grasp of ethics for organizations. Our online MBA program includes two courses dedicated to business ethics:

• Legal Environment of Business (MBA 611): This course emphasizes the impact of laws on decision-making related to management and marketing. Concepts like protecting intellectual property, avoiding antitrust traps, and addressing product liability issues are featured. Businesses and their leaders can benefit from a strong understanding of applicable laws that serve as a foundation for addressing ethical questions and taking related actions.
• Business Ethics (MBA 650): This course goes beyond strict legal obligations to consider ethics in the modern corporate environment. How organizations respond to ethical concerns can directly influence their corporations, employees, officers, directors, shareholders, and broader community. A consistent ethical approach to business is vital for success.

Want to earn an MBA on a flexible schedule without relocating or pausing your career? Our fully online program offers valuable student support, multiple start dates, and the flexibility to complete coursework at the time that's right for you. You can advance your career with an MBA accredited by the Association to Advance Collegiate Schools of Business, a distinction only 5% of business schools worldwide have earned.

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What Are Business Ethics and Their Importance

Manaferra Content

In the contemporary business realm, the phrase “What are business ethics?” has garnered significant attention, reflecting a growing emphasis on ethical practices within corporate environments. As organizations adapt to changing social attitudes and stricter regulations, the need for ethical behavior is more crucial than ever. 

This blog post aims to break down the concept of business ethics and emphasize their significant role in contemporary business. It covers the basic principles, their impact on a company’s sustainability and reputation, and practical methods for integrating ethical considerations into decision-making. Exploring this topic will provide a deeper understanding of how business ethics contribute to trust, accountability, and long-term success in the business world.

The Definition Business Ethics

Business ethics refers to the set of principles and standards that guide the conduct of individuals and organizations in the business world. It involves making decisions based on moral values and principles rather than solely on legal obligations.

While legal requirements establish the minimum standards of behavior, business ethics extends beyond these mandates to encompass broader moral and social responsibilities. This includes fairness, honesty, transparency, and respect for all stakeholders, including employees, customers, suppliers, and the community. 

Ethical behavior in business not only helps in complying with regulations but also contributes to creating a positive business environment. When companies prioritize ethical conduct, they build trust and credibility with stakeholders, foster strong relationships, enhance their reputation, and ultimately contribute to long-term success and sustainability.

Why Are Business Ethics Important?

Business ethics play a crucial role in shaping a company’s reputation and fostering positive relationships with stakeholders. As an organization conducts business with integrity, transparency, and a commitment to doing right, its employees, customers, investors, and the wider community considers it more trustworthy and credible. 

Moreover, by prioritizing ethical behavior, organizations mitigate the risk of legal and reputational damage while also positioning themselves for long-term success. The success comes as ethical practices directly contribute to sustainable growth by attracting loyal customers, retaining talented employees, and attracting responsible investors.

Another crucial benefit of business ethical practices is that they cultivate the moral compass of future professionals, preparing them to navigate complex ethical dilemmas in their careers. By integrating ethics into the curriculum, students develop a deeper understanding of the importance of integrity and social responsibility, laying the foundation for personal and professional growth. In result, this will lead to a business environment that doesn’t work for the benefit of the shareholders, but all stakeholders involved. 

Ethical Principles

Understanding and adhering to key ethical principles is critical for guiding decision-making processes and promoting ethical conduct within organizations. These principles, including integrity, fairness, responsibility, and respect, serve as guiding values that shape behaviors and interactions across various contexts.

When companies and corporations conduct business with ethical principles in mind, their trust with stakeholders becomes stronger, as such, it contributes to long-term success and sustainability.  Let’s explore each of these principles in detail to understand their significance and practical application in organizational settings.

Integrity involves honesty, consistency, and adherence to moral values, even when faced with difficult decisions. It entails being truthful and transparent in all business dealings and maintaining consistency between words and actions.

For example, a company demonstrating integrity would openly disclose any potential conflicts of interest to its stakeholders, ensuring trust and credibility.

Fairness requires treating all individuals impartially and equitably, regardless of personal biases or interests. It involves providing equal opportunities and resources to all stakeholders and making decisions based on objective criteria.

An example of fairness in action would be a company implementing non-discriminatory hiring practices and offering fair wages and benefits to all employees, regardless of their age, gender, sexual orientation, race, ethnicity, or disability.

Responsibility

Another crucial ethical principle is responsibility which entails recognizing and fulfilling one’s obligations towards stakeholders and society at large. It involves considering the impact of decisions on all affected parties and taking proactive measures to mitigate any negative consequences.

For instance, a responsible corporation would implement environmentally sustainable practices to minimize its carbon footprint and protect natural resources.

Respect involves valuing the dignity, rights, and autonomy of all individuals and treating them with civility and consideration. It encompasses listening to diverse perspectives, fostering inclusivity, and honoring confidentiality

 An example of respect would be a company actively promoting diversity and inclusion initiatives and creating a supportive work environment where employees feel valued and respected.

Benefits of Practicing Business Ethics

Prioritizing ethics in business operations yields numerous advantages contributing to organizational success and sustainability. Recent research examining consumer attitudes toward brands regarding business ethics and Corporate Social Responsibility (CSR) underscores the significant impact of ethical conduct on brand attitude, emphasizing the importance of business ethics in shaping consumer perceptions. While this finding highlights the value of ethical behavior, it does not diminish the importance of CSR, which remains vital for firms and society.

Moreover, businesses prioritizing ethics often attract top talent-seeking employers with strong values, fostering a skilled and motivated workforce. Below we will discuss some of the ways ethical practices help organizations in their business. 

Ethical practices enhance employee morale

Ethical behavior can significantly enhance employee morale within an organization. Employees who perceive that their company operates with integrity and fairness feel valued and respected, leading to higher levels of job satisfaction and commitment.

This positive work environment encourages greater employee engagement and productivity, ultimately contributing to organizational success and sustainability.

Ethical practices improve innovation and creativity

Fostering an ethical organizational culture can also lead to increased innovation and creativity among employees. When individuals feel empowered to voice their ideas and opinions without fear of reprisal, they are more likely to collaborate freely and think outside the box.

This open and supportive environment cultivates a culture of innovation, where employees are encouraged to explore new possibilities and solutions to challenges. As a result, businesses that prioritize ethics not only uphold their reputation but also drive innovation and adaptability, ensuring long-term success in today’s dynamic business landscape.

Challenges in Upholding Business Ethics

While strides have been made in business ethics, maintaining ethical standards is still challenging for businesses. They encounter obstacles like prioritizing short-term financial gains, navigating the global business landscape, and balancing stakeholder interests.

Recognizing and addressing these challenges is crucial for promoting integrity and sustainability within organizations. Let’s explore the main hurdles businesses face in upholding ethical conduct.

Pressure for short-term financial results

While the evolution of business ethics is commendable, the path to ethical business conduct is challenging. One of the primary obstacles businesses face is the pressure to deliver short-term financial results, often leading companies to compromise on ethical standards in pursuit of immediate gains. The temptation to cut corners, engage in dubious practices, or prioritize profit over principles can be overwhelming, especially in competitive industries.

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This challenge underscores the importance of fostering a culture that values long-term sustainability over short-term gains and prioritizes ethical decision-making at all levels of the organization.

Complexities of the global business environment

Furthermore, the interconnected global business environment introduces complexities that demand heightened ethical awareness. Companies operating in multiple jurisdictions must navigate diverse legal and cultural landscapes, requiring a nuanced approach to ethics. This presents challenges such as ensuring compliance with varying regulatory frameworks, respecting cultural norms and practices, and addressing ethical dilemmas that may arise from conflicting cultural values.

Developing comprehensive ethical guidelines and training programs tailored to the specific cultural contexts in which a company operates can help mitigate these challenges and promote ethical behavior across borders.

Balancing stakeholder interests

Additionally, balancing the interests of various stakeholders, including shareholders, employees, customers, and the community, poses another significant challenge in upholding business ethics. Conflicting stakeholder interests may create ethical dilemmas, forcing companies to make difficult decisions that impact different groups differently.

For example, decisions related to layoffs, product pricing, or environmental policies may prioritize the interests of shareholders over those of employees or the community. Striking a balance between competing interests while upholding ethical principles requires careful consideration, transparent communication, and a commitment to stakeholder engagement and accountability.

Fostering an Ethical Business Environment

Fostering an ethical business environment necessitates developing and implementing effective strategies for establishing ethical policies in the workplace. This begins with creating clear and comprehensive ethical guidelines that outline the company’s values, principles, and expectations regarding ethical behavior.

Ethics training and education for employees are essential to ensure understanding and adherence to these policies. Providing ongoing training sessions, workshops, and resources helps cultivate ethical awareness and equips employees with the knowledge and skills to navigate ethical dilemmas. 

Furthermore, the importance of monitoring and enforcement mechanisms cannot be overstated in maintaining ethical standards. Regular audits, compliance checks, and internal controls help promptly identify and address potential ethical breaches. Implementing channels for reporting ethical concerns, such as ethics hotlines or anonymous reporting systems, encourages transparency and accountability within the organization. 

These mechanisms, when coupled with appropriate disciplinary measures for violations, help reinforce the importance of ethical conduct and ensure accountability at all levels of the organization. By integrating these strategies into the organizational culture, businesses can foster an environment where ethical behavior is valued, promoted, and upheld as a cornerstone of corporate integrity and success.

The bottom line

In conclusion, exploring business ethics reveals a crucial aspect of modern commerce. These ethics, rooted in principles like integrity, fairness, responsibility, and respect, shape organizational operations and decisions beyond legal requirements. Prioritizing ethical conduct enhances reputation and stakeholder relationships and fosters a positive business environment for long-term success. Despite challenges, such as attracting talent, boosting morale, and fostering innovation, upholding ethical standards underscores the essential role ethics play in today’s business landscape. Integrating ethical principles helps businesses navigate ethical dilemmas, build trust, and contribute to a sustainable, socially responsible business environment.

Ready to take your career to the next level? Explore POTOMAC’s comprehensive business programs today! From Bachelor of Science in Business to Master of Business Administration , at POTOMAC you gain valuable, practical skills that will help you build a successful career.

Frequently Asked Questions

How does personal morality influence business ethics.

Personal morality influences business ethics by shaping individuals’ decision-making processes and guiding their behavior toward ethical or unethical actions in business contexts.

What are examples of ethical practices in business?

Examples of ethical practices in business include:

• Maintaining transparency in financial reporting;
• Giving a fair shot in job application people from different background;
• Adhering to environmental sustainability standards.

How do business ethics vary across countries?

Business ethics can vary across countries due to differences in cultural norms, legal regulations, and societal values. While some ethical principles may be universal, the interpretation and application of these principles can differ significantly between countries.

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What is Ethical Leadership and Why is it Important?

Ethical leadership is not only the right thing to do, it is key to driving an organization's success.

Valerie Kirk

Errors, bad behavior, and poor judgment in leadership can negatively impact a company’s brand and reputation. For business success, it’s critical for organizations to fill their C-suite with ethical leaders.

Ethical leadership involves leaders and managers making decisions based on the right thing to do for the common good, not just based on what is best for themselves or for the bottom line. While profits are important, ethical leaders take into consideration the needs of customers, communities, and employees in addition to company growth and revenue when making business decisions. 

Ethical leaders encourage their team members to model this behavior, too. They help to build a workplace culture that values transparency, collaboration and inclusion, and where everyone feels safe to share their voice.

They can also help organizations recruit and retain top talent. Professionals are increasingly seeking out companies whose leaders strive to do the right thing. Generation Z, who will make up 25 percent of the workforce by 2025, demands leadership ethics more than generations that came before them. 

“Gen Z is not going to negotiate. They have really strong values and ethics, and they don’t bend them because of intimidation or because they are just getting a paycheck,” said Michael McCarthy, instructor at Harvard Division of Continuing Education’s Professional & Executive Development and host of the “ Happy at Work ” podcast. “The idea of letting harmful or hurtful behavior slide is not acceptable.”

Leaders who weigh ethical considerations before making key business decisions drive a company’s long-term success. 

The 6 Main Principles of Ethical Leadership

Having ethical leaders isn’t as simple as hiring “good” people. Companies should strive to fill their leadership ranks with people who embody the principles of ethical leadership. The six main principles include: 

Respect includes valuing others’ skills and contributions. While historically respect in the workplace may have been one-way (leaders demanding respect from employees), in an ethical work environment, respect is mutual. 

Mutual respect leads to healthier workplace relationships where both sides appreciate and support what the other is doing and feel secure in talking through issues and challenges. Healthy relationships create positive work environments, which drives increased productivity.

Current and upcoming business leaders should take mutual respect into account as workforce expectations continue to shift.  

“I tell current leadership to respect Gen Z. They have values and morals, and you’re going to have a better organization because of them,” McCarthy said. “They aren’t going to put up with the old hierarchy that doesn’t offer mutual respect.” 

2. Accountability

Ethical leaders hold themselves accountable for their actions. They make decisions based on integrity and stand behind their work. They also lead by example, communicate openly about challenges, and don’t look to place blame on others for any shortfalls.

Leaders make ethical decisions based on doing what is right for employees, customers, and the community. Because these constituents are always top of mind for ethical leaders, they often have a strong sense of service. They engage in activities such as charitable giving and volunteer work to give  back to their communities — and encourage their teams to do the same. 

Leaders who are transparent build trust amongst their organizations and amongst customers. 

To build and maintain trust, leaders must be good communicators who speak openly and honestly about issues. Regardless of the issue’s severity or unpopularity, leaders’ responsibility to be clear and candid  empowers others to make the right decisions with the information they have. 

Honesty and transparency also help to build a brand’s reputation, leading to long-term customer loyalty.

Justice is not just about following the law, but about ensuring that everyone is getting what they deserve. Ethical leaders approach situations with a focus on treating everyone fairly, and they expect their teams to treat each other and customers the same way. Through their actions, they build equitable work environments where everyone feels respected. 

6. Community

Ethical leaders view their companies as communities and consider everyone involved when evaluating situations and making decisions. By viewing their organizations this way, they build equity and inclusion into their decision-making process and create work environments that encourage collaboration across teams. 

Learn more about Harvard DCE’s Ethical Leadership program

Examples of Positive and Negative Ethical Leadership

The following three examples are of companies that were faced with ethical dilemmas and how different leadership styles led to vastly different outcomes. 

Johnson & Johnson

One of the most famous examples of ethical leadership was the case of the Tylenol cyanide poisonings in the early 1980s. Seven people died of cyanide poisoning, and the only connecting factor was that they had all taken extra-strength Tylenol. During investigation, it was discovered that the tablets were laced with cyanide.

Johnson & Johnson’s leaders acted quickly and pulled all Tylenol products off the shelves — 31 million bottles, worth over $100 million — and stopped all production and advertising. The swiftness of their decision, although costly, put customers’ well-being first and saved lives.

They partnered with law enforcement to find the perpetrator and subsequently developed the first-ever tamper-resistant packaging. They were transparent with the public about what they were doing to ensure this tragedy never happened again. 

The Tylenol brand recovered from the incident, largely because of Johnson & Johnson’s ethical leadership team’s swift action and transparent care for customers.

In 2008, JetBlue left passengers stranded on the tarmac at the John F. Kennedy International Airport for more than five hours during a snowstorm. The delay had a ripple effect — JetBlue had to cancel more than 1,000 flights over the following five days.

In response, JetBlue’s CEO wrote a letter of apology to customers. He also directed his team to draft a customer bill of rights, which outlined customers’ rights to information about flights and information about compensation in the event of delays or cancellations.

The CEO also participated in a public apology tour, taking full responsibility for the incident rather than blaming it on the weather.

His transparency and accountability created trust with customers, who stayed loyal to the airline.

Wells Fargo

In September 2016 , it was revealed that employees of Wells Fargo, one of the largest banks in the United States, opened millions of unauthorized accounts in order to meet aggressive sales targets. This widespread fraudulent activity was the result of a work culture that prioritized quantity over quality and pushed employees to engage in unethical practices.

Company leaders denied knowledge of fraudulent practices. The bank was hit with significant financial penalties, but because of the lack of accountability, they damaged the trust of their customers and investors. They reported a 50 percent profit loss in the quarter following the scandal.

Meeting the Ethical Challenges of Leadership

Companies cannot underestimate the power of different leadership styles on their growth and long term success. Those who practice ethical leadership have positive corporate cultures where employees are engaged, motivated, and feel good about coming to work. Companies without ethical leadership face lower productivity and high turnover rates, impacting the organization’s bottom line.

Ethical leaders aren’t just born with these skills — they develop them over years of experience and training. 

Harvard DCE Professional & Executive Development offers a two-day Ethical Leadership program that helps leaders develop skills to make ethical choices and lead companies through challenging dilemmas. 

Topics covered include: 

• Making ethical decisions with conflicting responsibilities 
• Building a moral framework within yourself and the organization
• Understanding the role of employees in both their professional and personal lives 
• Navigating a slippery slope when seemingly good people do bad things
• Building a corporate culture that values moral behavior

Learn more about the ethical leadership program, including how to register.  

Leaders looking to expand their ethical leadership skills should also consider the two-day Authentic Leadership program , where they will learn how to develop mindfulness and authenticity to build trust, create engagement, and promote productivity. 

Explore all Executive Leadership and Management courses

About the Author

Valerie Kirk is a freelance writer and corporate storyteller specializing in customer and community outreach and topics and trends in education, technology, and healthcare. Based in Maryland near the Chesapeake Bay, she spends her free time exploring nature by bike, paddle board, or on long hikes with her family.

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Importance of Business Ethics

Reasons that lead to unethical behavior, cases of unethical behavior scandals, fannie mae’s accounting scandal, exxon’s mesothelioma scandal, enron’s tax evasion scandal, importance of maintaining business ethics.

The issue of ethics can be rated as one of the oldest subjects ever to be discussed. The discussion can be dated as back as 2500 years during the days of great philosophers like Socrates and Plato. This topic which tries to explain what is the right thing to do has had different perspectives with some analysts purporting that doing a good thing depends on one’s moral principles while others argue that doing a good thing depends on the situation at hand. This depends on one’s own choice. On the other hand, morals values have been considered as the guidelines that show us how we are supposed to behave while ethical principles are the statements that show the application of these values. The issue of ethics covers all walks of life. It forms the basic foundation of the family, the ground to which institutions are built, the socio-political foundations of a nation, and above all the economic cornerstone of each country. Ethical values contribute highly to the image of an organization, one thing that later defines success or failure. Being a cornerstone of any sustainable development and success, business organizations thus should observe business ethics in all circumstances to ensure that they succeed not only in a short term but for a surety of a long business life span.

What is ethics when it comes to the business realm? In business situations, ethics are referred to as business ethics. McNamara (2008) defines business ethics as the knowledge of right and wrong at the workplace and choosing the right. This decision has to be made based on the goods or services offered and the relationship to the stakeholders. This tries to give an obligation to business organizations to choose between serving the customer faithfully, taking into consideration the welfare of its workers, caring for the environment, and faithfully adhering to the statutes of the government.

Although this is the expectation, not all organizations follow the rules of ethics. There have been many instances of scandals associated with big corporations in terms of a breach of business ethics. This comes in terms of tax evasion through the wrong announcement of their profits, negligence of their employee welfare, accounting manipulations, the inclusion of poisonous substances in their products to enhance addiction, etc. the big question to be asked is, why do organizations indulge in these unethical activities? There are several reasons why corporate can indulge in unethical behavior. A study by Cai et al (2005) showed that business competition can lead to unethical behavior. Their study concluded that those business organizations that are faced with stiff competition in the market and those that are placed at a disadvantageous position stand a high chance of hiding a larger part of their profits. This means that whenever a country enacts policies that promote competition, it should also enact policies that will offer a level playing ground for all the organizations within the bracket.

Another thing that contributes to engagement into unethical activities by business organizations is lack of proper business ethics training and education (McPhail, 2002). Most of the business training centers still offer ethics as an optional course that can be learned by the managers-to-be with their own volition. From a research quoted by Barlow (2009), business students are ranked lowest when it comes to ethical issues and that they are the most likely to engage into ‘amoral’ activities.

An organization’s culture can highly influence its position in terms of unethical behavior. With most organizations upholding strict measures on whistleblowers, the workers may live under fear of dire consequences in case of blowing up an underground unethical behavior. This culture has been cultivated by the past experiences of whistle-blowers who have, in some instances failed to secure another job because other employers fear employing someone who can betray them. Barlow (2009) indicates that 68% of whistleblowers have found it difficult to secure another job. This, therefore, encourages a culture of sitting on unethical behavior as the employees fear for the future of their careers.

Finally, Barlow (2009) points out that bureaucracy can encourage unethical behavior. A business organization where the decision-making body is far distanced from the other arms of the organization can lead to such behavior. For example, a multinational with headquarters in New York can make decisions for its branch in Malaysia or South Africa without really feeling the weight of the consequences. She goes on to quote McPhail’s argument that there exists an “inverse correlation between an individual’s willingness to be cruel to someone and their proximity to their victims.” (McPhail, 2001).

The above-mentioned reasons have led to several reputable organizations to find themselves into news headlines as a result of scandals that resulted from unethical behavior. Among the scandals include Fannie Mae’s accounting scandal, Exxon’s Mesothelioma scandal, Enron’s tax evasion scandal among others. The following is a brief explanation of these scandals.

In 2004, Fannie Mae, a company that had been chartered by the federal, which deals in purchasing mortgages and selling them in form of securities found itself in a great accounting scandal (Gross, 2004). This prompted a deeper investigation by the Office of the Federal Housing Enterprise Oversight’s Freddie Mac. The result of the report showed that the company had been operating with pervasive standards of accounts misapplication. In addition to this, the company did have internal controls of a poor quality that could encourage scandals. This notwithstanding, the company’s rewarding structure was made in such a way that it encouraged unethical instincts. The executive had an offer of a reward in case of attainment of a set target figure. This is one of the things that encourage manipulation of figures to make sure that the target is achieved qualifying the responsible director for a reward.

Fannie Mae used its relationship with the federal to imply some sense of security to the investors. This was the use of inaccurate information to attract investors making them oblivious of the risks involved in the investment decisions that they were making (Gross, 2004).

This is another scandal that hi the great Exxon. This one was based on the welfare of the workers. Since 1937, Exxon has always known that their machinery and equipment contains deadly agent that causes cancer, known as asbestos. An inhalation of this substance causes the dangerous particles to line on the lungs causing a type of cancer called Mesothelioma which is incurable (Justice News Flash, 2008).

Exxon has known about this danger that its asbestos workers face but it made no effort to put in place appropriate measures to protect its workers. This went on until one Mr. Bruce Spillman lost his life. This case opened up other issues about Exxon’s awareness of the dangers exposed to its workers and also other horrible conditions that its workers underwent but they kept all undercover (Justice News Flash, 2008).

Spillman worked for Exxon fro four years before being diagnosed with Mesothelioma. He later died of the same. His family was highly compensated for the damage caused by the loss of their family member (Justice News Flash, 2008).

Enron is one of the corporations with reputation whose declaration of bankruptcy was one of the greatest news in the United State’s history (Schifferes, 2003). An investigation in the company’s operations revealed a very complex tax evasion schemes that had assisted the company evade paying taxes for some time. The schemes were so complex that it was even difficult for the Internal Revenue Services to determine what was the total amount that had been evaded by Enron in the five years of tax evasion. In addition to this, the schemes were so complex that it was difficult to prove whether they were illegal.

In the report, the company devised complex schemes with names like Apache, Condor, Renegade etc whose sole reasons were to shift income to sheltered tax categories through fake transactions by banks and other financial institutions. Through these schemes, they afforded to report to the tax authorities a loss of $3bn while their shareholders were informed of having made a profit of $2.3bn (Schifferes, 2003).

Another scandal that was spelled out at Enron was its enormous rewarding scheme for the executive (Schifferes, 2003). In 1998, the total earnings of the in terms of salary, and bonuses was $193 before they increased their earnings in 2000 to $1.4 billion. Sad to say, this was one and a half times what the company was making. The chairman of the company, Ken Lay, had his salary increased from $15 million to 168 million. The chief executive, Jeffrey Skilling had his salary increased from $12 million to $139 million. This is very ridiculous because the company was headed for the rocks.

Other inclusions into the compensatory basket were Mr. Lay’s $77 million company loan for life insurance, one of the executives was awarded as a present, personal ownership of a company jet.

As a penalty, every person who had a hand in the perpetration of the crime was to be stripped off his professional privileges. This was because they colluded in the crime while understanding the incorrectness, incompleteness and inconsistency of the information that they supported (Schifferes, 2003).

An organization that observes business ethics is bound to experience several benefits. Among them is improvement of quality of production (Flexible learning, 2009). If employees are developed in a culture of ethical strength, they are likely to be devoted to their work giving more profound returns to the organization.

The company’s image is created by its indulgence in business ethics (Flexible learning, 2009). This is important because it gives the organization a favorable outlook from the customer thus giving it a competitive advantage. This leads to more sales because more customers will more likely choose to work with an institution with honesty as compared to another. This means that although most organizations indulge in unethical activities aiming at maximizing profits, strengthening the ethical base can still increase the profit margin.

Finally, ethics can save the company from criminal activities. The company will not suffer loss from defrauding activities including petty offenses like carrying home the company stationery to large defrauding cases that may cost the company billions of money (Flexible learning, 2009).

Most organizations indulge into such activities with one solid aim: to maximize the profits. The fact remains that at some point, the company may instead end up in a loss due to loss of customer due to organization’s lack of faithfulness and dirty image. They also may be fined great sums of money which might still eat into their profits. Criminal activities might also cost the company greatly.

On the other hand, organizations that observe ethics have straight activities which encourage a greater clientele due to their honesty and quality. It is therefore evident that business ethics are a cornerstone of any sustainable development and success, business organizations thus should observe business ethics in all circumstances to ensure that they succeed not only in a short term but for a surety of a long business life span.

Barlow, C., (2009). “Explanations for the continued prevalence of unethical behavior in business.” Nottingham University Business School. Web.

Cai, H., Liu, Q., Xiao, G., (2005). “ Does competition encourage unethical behavior? Case of corporate profit hiding in China.” Hong Kong University. Web.

Flexible learning. (2009). “Organizational values.” Web.

Gross, D., (2004). “The truth about Fannie.” Slate magazine . Web.

Justice News Flash.com. (2008). “Dallas mesothelioma lawyer sees new Exxon scandal.” Web.

McNamara, C., (2008). “Guide to ethics management: An ethics toolkit for managers.” Free Management Library. Web.

McPhail, K. (2001) “The other objective of ethics education: Re-humanising the accounting profession – a study of ethics education in law, engineering, medicine and accountancy” Journal of Business Ethics , Vo. 34 (3/4) pp.279=298.

Schifferes, S., (2003). “Enron’s trail of deciption.” BBC News. Web.

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The Role of Business Ethics Essay

Introduction, stakeholders and interrelationships, forces and influences, final reflection.

The role of business ethics continues to grow every day, raising new questions with the review of moral principles and environmental changes. Currently, the notions of ethics and social responsibility are considered a vital part of development for every company (Lawrence & Weber, 2017). The challenging world of business operation is burdened by the need to balance its responsibility to various stakeholders.

Thus, the field of corporate social responsibility (CSP) has risen as a substantial portion of concerns related to managing a firm (Schrempf-Stirling, Palazzo, & Phillips, 2016). The interrelationship between external and external forces of businesses shows how companies and governments influence each other in striving to adhere to or create new CSR-oriented goals. However, both parties also weigh their decisions to satisfy the needs of stakeholders whose impact on the market is substantial.

As a result, the impact of stakeholder biases can either help organizations move forward and innovate or limit their ability to engage in CSR practices. Similarly, such biases may lead to negative interpretations of some decisions in the media and the public’s view (Wang, Chen, Yu, & Hsiao, 2015). In-depth analysis and reflection are essential in examining the underlying issues and prejudices that disrupt the enhancement of socially responsible practices. Business ethics present major concerns in establishing and managing a business and the overarching effect of this discipline on corporate decisions cannot be overstated.

The Role of Activities in Understanding Interrelationships

The completion of activities during this course has helped me to understand how impactful and complicated the interrelationship between organizations and society is. Both sides have an impact on one another, with a possibility to bling positive and negative change to the world, the environment, politics, economy, and individuals’ lives (Taghian, D’Souza, & Polonsky, 2015). First of all, the example of tobacco industries can be brought up.

In this case, manufacturers that distribute tobacco products affect the health of people, regardless of whether the latter are their customers or not. Here, the balance between accommodating the needs of stakeholders and lowering negative outcomes should be mentioned. The in-depth investigation into the actions of tobacco firm allowed me to understand how they often choose to act in order to avoid legal action, while still preserving their competitiveness and stakeholders’ interest. One can consider the issue of secondhand smoking – when non-smokers are exposed to tobacco smoke in public places. Here, such businesses need to regard the outcomes of secondary stakeholders (non-smokers), while still managing the needs of smokers, board members, employees, and other primary stakeholders.

Another possible issue deals with the fact that tobacco products’ manufacturers need to advertise this product while keeping in mind that cigarettes and similar items can cause damage to one’s health. In this scenario, the concept of ethical behavior is tested by the advertising decision of each specific company. A similar problem occurs in situations where distributors discover that their products can cause negative consequences during their advertising campaign. Here, the example of Merck can be presented; the company selling a new drug had to navigate an issue where their drug was found to cause cardiovascular problems (Lawrence & Weber, 2017).

In both instances, firms have to measure to what extent their business tactics affect society. At the same time, the examples differ in that one is a case of a company which intentionally frames a potentially harmful product as desirable, while another presents a seemingly useful drug with side-effects. These reflections allowed me to see that business ethics is a complicated subject that can help navigate such concerns and bring awareness to the fact that each particular example shows business-society interrelationships in a new light.

The activities also demonstrate how companies’ relationship with society can bring positive change and inspire future growth of ethical practices. The case of Hewlett-Packard (HP) as a participant in green manufacturing is an example of a company that puts significant effort into restructuring itself in order to highlight the importance of addressing environmental concerns. HP’s policies and activities to lower waste production and increase the rate of recycling and repurposing reveal the deep connection between business development and societal view of contemporary problems. (Lawrence & Weber, 2017) Moreover, it shows how businesses can engage all levels of stakeholders in the process of reformation. Employees, executives, and clients need to be interested and involved in the activities in order to bring meaningful change to the industry and the business.

In contrast, the effect of ignoring people’s needs and concerns can be significant for both businesses and societies. The growth of interrelationships can form new economies and bring positive consequences for the environment, but it can also reveal biases if the firm fails to consider all stakeholders (Kolk, 2016). Here, the disaster of the Deepwater Horizon can be considered as an example of unethical decisions that bring negative effects to the economies and nature of multiple states. The company had focused on financial gain; thus, their innovation and growth were staggered and the performance of the company declined. The analysis of this situation demonstrates the crucial role of journaling as a way of understanding the underlying causes of disasters and other prominent issues.

Challenges of Dealing with Conflicts

Businesses have to cater to various groups of stakeholders who can have varying needs and expectations. Therefore, the occurrence of some conflict situations is virtually inevitable. In the mentioned above example of Merck and its advertisement of a new drug, the company encounters a financial and ethical problem of selling medicine that can cause health problems. Merck has to make a decision that affects multiple stakeholder groups, including, employees, customers, supply chain partners, and executives. In the discussed case, the company has chosen to withdraw the products, thus highlighting its desire to protect clients from harm (Lawrence & Weber, 2017).

This decision has resulted in the firm losing substantial amounts of money which were spent on research, manufacturing, and advertisement. Nevertheless, the company’s representatives examined the situation and chose this approach as the one with the least long-term negative effects for the business and people. Here, the perspective of the company was based on that of its clients – such stakeholders as board members and employees were not considered as those who would suffer the most significant consequences.

This case also presents some ways in which the company tried to appeal to multiple stakeholders’ needs at first. When the dangerous side effect of the drug was discovered, Merck did not recall its products, adding a small note about the potential risks instead. This move shows that the firm was searching for a compromise in managing its expenses and revenue from a product. The business’s perspective, namely its owners and investors, is represented in this choice, while the needs of other stakeholders are not present (Helmig, Spraul, & Ingenhoff, 2016).

If Merck were to neglect the new findings and continue selling the medicine, it could face additional ramifications apart from suffering financially. The company’s brand image would be damaged if it refused or postponed its decision to stop manufacturing. Moreover, people consuming the product could be affected medically; the company would be partially responsible for these persons’ health. Such consequences can be substantial in eliminating Merck as one of the major competitors on the market.

The improvements implemented by HP could be a reason for the company entering a different conflict based on financial stability. As HP attempted to innovate its practices and change many internal systems as well as its suppliers, the problem could arise with its supply chain members (Quarshie, Salmi, & Leuschner, 2016). The company likely needed to reevaluate the quality and source of its parts which disrupted the established ties with other firms. Suppliers can be considered stakeholders because their impact on the quality of the final product can not only change the overall selling possibility of the business but also bring in new companies and clients.

In this particular case, HP focused on its goals, thus making ethical principles the foundation of present and future business relations (Fernández-Guadaño & Sarria-Pedroza, 2018). As a result, the conflict was resolved not through compromise but the urge to innovate and move forward, maintaining the focus on the business’ perspective. If the company failed to find a supplier with fitting ethical standards, its path towards improvement would be disrupted.

Circles of Reflection

The reflection circle represents a process of learning about ideas and assessing their contents and implications. In the first assignment, the use of this approach is visible; it gives one an opportunity to think about the controversial problems connected to the tobacco business.

The first step in the circle is to consider how the problem affects oneself (Lawrence & Weber, 2017). This particular stage is the easiest one, as a person can usually determine to what extent an issue is linked to them. For instance, I do not smoke, but I know how secondhand smoking can affect my life and what I can and cannot do to eliminate this concern. However, this is also the least significant part of the reflecting process – the circles encourage people to think about other communities, each being more distanced from oneself than the other.

The second circle represents one’ family; here, the effect of the problem is still often considered to be personal. My family members also do not smoke; thus, they are only exposed to secondhand smoking in their daily life. This part of the thinking process encourages me to consider to what degree the issue impacts my family’s lives. As a result, the problem may arise in a different light, highlighting additional points – my younger relatives’ exposure to tobacco, their view of smoking as positive, and other potential risks. Similar notions can be attributed to other small or large groups such as one’s peers or communities.

The next circle shows a more generalized approach, outlining the major effects that a problem can cause for a whole country. Governments have a way of controlling or negotiating with industries in order to protect or impact its citizens (Knudsen, Moon, & Slager, 2015). Therefore, an issue’s influence on the country presents some additional considerations. In the case of tobacco smoking, it can ban tobacco distributing to people of certain ages or develop rules for selling points to be removed from schools and territories with a high concentration of children. These measures influence both the public and the industry, dictating the rules that restrict consumption and construct a system of legal punishments.

Therefore, secondhand smoking can also be reformed from being a personal or family issue into a violation of the law. As a result, the effects that such decisions have on the country also differ; a business which does not comply with selling or advertising guidelines can be fined or closed. The role of the government presents an additional set of concerns that one does not think about when considering only the personal level of impact.

One can see how strongly the approach of reflection circles can change the thinking process. It invites people to analyze the bigger picture and imagine the thoughts and ideas that other persons may have. Moreover, it informs the perspective by adding some information from sources which might otherwise be ignored. Seeing an issue from different sides broadens one’s understanding of it and puts one’s personal opinion in a system of causes and effects, adding complexity and insight.

Ethics and Social Responsibility

Internal and external forces in businesses dictate the ways in which all operations and procedures are performed. External influences include the spreading effect of globalization, the continuously changing economics of nations, political issues and ideologies, and the surrounding environment. For example, the external regulations established by a country’s government can restrict or increase competitiveness, increase prices, or demand specific working conditions (Dahan, Doh, & Raelin, 2015). Internal forces include customers’ rights, the industries’ concern about diversity, corporate citizenship, and others. If CSR activities are encouraged or simply viewed favorable by the clients, their implementation process will differ from that which is enforced by the government.

In the example of Merck, FDA acts as an external influence, being a political authority, since it develops rules to which companies need to adhere. While Merck decides to withdraw its products out of its own volition, it can be assumed that FDA’s impact is still present. The firm anticipates the internal influences such as the customers’ protection and the external ones, including a governmental response.

The case of HP pursuing eco-friendly and sustainable practices demonstrates how the combination of such forces drives the innovation forward. The industry of technology has changed its focuses which shifted towards strategic leadership (Burgelman, McKinney, & Meza, 2017). As an outcome, HP was able to improve its systems as well, being stimulated by the socially-oriented mechanisms of the business sector.

Here, the external force of the environment provided with an opportunity to integrate new business ethics into their structure effectively. Another mentioned factor is the relationship with the government which HP utilized to develop corporate regulations that are based on financial responsibility and environmental protection. By collaborating with the government agencies, HP was able to enhance the quality of their products and further support their goals of a sustainable business.

The company also was influenced by some internal factors during its renovation. For instance, HP redefined its corporate citizenship principles, highlighting the need to preserve the environment and protect the planet from pollution (Burgelman et al., 2017). Therefore, it reviewed its connections with the members of the supply chains, setting different standards for firms dealing with materials, components, and software. The structure of the company itself was updated as well to benefit workers and consider their rights and opportunities.

A separate example of external and internal forces being neglected by a business entity is the disaster of the Deepwater Horizon. Here, the owner of the oil drilling facility, BP, failed to consider the external aspects such as the environment and internal factors, including CSR. As a result, BP’s decisions led to one of the most disastrous environmental catastrophes which endangered multiple species, changed the climate, and affected all living beings in the proximity of the blowout (Beyer, Trannum, Bakke, Hodson, & Collier, 2016). The economic and political spheres were impacted by this event as well. It is clear that the company could have prevented this outcome if it considered the potential risks of its choices and increased its attention to CSR practices as opposed to financial cuts.

Personal View of Workplace Ethics

Journaling has strongly affected my understanding of business ethics and CSR. This approach to reflection forced me to look at various problems, both small and prominent, from different points of view. For example, the first assignment was mostly based on the impact of a situation on my life and the lives of my relatives. The following activities, however, considered the problems that affected communities, populations, and the whole planet.

The discussed case studies have shown how critical business ethics can be for a company and the world as a whole. For instance, in the second assignment, I analyzed the catastrophe of the Deepwater Horizon and the involvement of businesses in the matters of other countries. During my investigation into these topics, I was able to evaluate my understanding of philosophical notions concerning one’s responsibilities and actions.

I brought up the utilitarian theory and implemented it to talk about universal rules for all businesses. My opinion about business ethics did not shift as a result of such activities as I always thought that business ethics have an important place in managing companies. Nonetheless, I enhanced my understanding and considered the details of each choice made by corporations.

The crisis at the Deepwater Horizon demonstrates the significance of corporate ethics for the industries. If the company in charge updated its policies and thought about the possible negative outcomes of their actions, it could have prevented a serious problem and save both the environment and itself. It is clear that financial problems or political pressure were not among the core reasons for the catastrophe to take place (Beyer et al., 2016; Chell, Spence, Perrini, & Harris, 2016). Instead, one can see that the neglect of safety-encouraging practices, anticipation of environmental risks, and concern about the employees was the major issue for BP. As a result, people died, nature was damaged significantly, and the company lost its brand image, status, prospects, and money.

However, apart from the negative sides of ignoring business ethics, I was also able to examine how CSR and innovation are closely connected in the current state of businesses. The example of HP described a company which used its opportunities not only to advance its development and financial growth, but also to create a meaningful relationship with the stakeholders. In this case, CSR acted as a supporting framework for the firm to upgrade its structure and principles. The readings for the course and assignments provided multiple opinions, where each of them considered a particular benefit which business ethics can bring.

McIntyre and Ortiz (2016) showed that the growth of a company such as HP is not accidental or based on the quality of the manufactured product alone. The culture ingrained in the process of creation and distribution, attention to detail, and a position of environmental protection and sustainability contribute to one’s betterment as well. Thus, business ethics is vital in establishing a company and ensuring its stability without sacrificing the environment or people’s rights.

Interrelationship Between External and Internal Forces

While both internal and external forces have an impact on businesses, they are dependent on each other as well. The influence of the external factors is difficult to deny – political and economic systems often have an impact on the rights of workers and social responsibility. For instance, in the study of the pharmacological company Merck, the FDA is brought up as an official entity that monitors the adherence of companies to standards of products quality and people’s health.

Therefore, this external force (the government) is monitoring the level to which the internal forces (CSR) are effective for the business. Workers’ rights can be enhanced or limited depending on the external influences. If the political principles of a country do not have any information about employees’ protection, it may limit their power to contribute to the workplace and bring any changes to the system (López-Rodríguez, 2016). As a contrast, a collaboration between governments and organizations in placing regulations for workers can enhance the experience of the staff and establish their rights as well as opportunities.

Globalization is another factor that significantly changed the way people perceive CSR. The case of clean open stoves would not be discussed at a time when the information about other nations’ living arrangements was available. Furthermore, the decision to change the situation in Kenya is not based on human compassion alone but also on notions of social responsibility – people’s cooking practices affect the planet’s climate, thus leading to changes in the ecosystems of all nations.

The accessibility of such information and the ability to engage different parts of the world in international issues is an example of people adapting their CSR beliefs to the present times. The contemplation about a uniting set of rules for all countries can have a similar effect on CSR and other internal forces, changing the ideologies which do not promote similar customer protection or workers’ rights.

Globalization can also influence workplace diversity as discussed in the journaling assignment about undocumented immigrants. The availability of positions offers both benefits and concerns to the receiving employers. Immigrants can contribute to the economy, but their undocumented status disrupts the usual tax system which distributes funds according to the societal needs. Here, political decisions formulate CSR and workers’ protection – governments can influence the hiring process and grant some people more freedoms in choosing their occupation (Dahan et al., 2015). The connection between external and internal forces is visible here, as politics mold the standards of employees’ rights.

Political systems can also establish rules to protect the environment, thus affecting internal forces once again. Overall, the connection between the two categories of impact shows that external forces are powerful in dictating the rights and opportunities of individuals, while internal forces form according to people’s cultures and ideologies at any given moment.

The Role of the Government in Business and Society

As it is discussed above, governments play a significant role in the establishment and existence of businesses and societies. A government can be an external force, influencing the world through policies regarding the economy, the political landscape, and international concerns. Some governments are rigid; their decisions may stagger the economic growth of companies and the quality of people’s lives (Dahan et al., 2015). Others can be more flexible, changing the procedures and policies according to the current state of people’s needs and wants.

In the case of Merck, the FDA is a government entity that monitors pharmaceutical companies’ adherence to set rules. Its impact on this industry is substantial, although the firms still compete with each other in prices and products ranges. Nonetheless, the government influences businesses in order to ensure society’s safety, thus acting as an external influence.

Governments can also be examined through the lens of globalization. Their international affairs may involve customer- and employee-related concerns such as in the case of developing a uniting framework of business ethics. By enforcing standards for businesses located on other territories, state influence not only national CSR but also the societies where such firms are active (Dahan et al., 2015). For instance, if another government chooses to support the financing initiative supplying the stores of Kenya with cookstoves, it will inevitably change the purchasing decisions of the local communities, thus expanding its influence on the global market. If the Kenyan government decides to act in the same way, it may collaborate with other nations and change global relations as a result.

In the other hand, governments can be viewed as internal influences, participating in the fight for workers’ rights and customer protection. Again, the ethical guidelines for businesses located abroad can come from governmental institutions. Here, the internal and external influences are intermixed, as the local government can come into an agreement with a company and its country of origin in order to negotiate employees’ duties and rights.

Finally, a government can be considered a stakeholder of a business, as the latter has an impact on the national economy. Governments are interested in industries having high profits and giving people jobs. Therefore, governments can make decisions that support working environments and encourage companies to innovate. In the example of the Deepwater Horizon, both American and Canadian governments can be viewed as affected parties and stakeholders of the responsible business.

BP’s activities affected the governments in many ways, and the countries were impacted by the catastrophe. The event disrupted flora and fauna of multiple regions and contaminated the water. As an outcome, both states had to review their budget with means that their performance and financial stability depended on BP’s decision is some capacity. In a similar way, the US government can be considered a stakeholder for such businesses as HP. Here, the government is impacted by the way HP manufactures and distributes its products as it concerns the national environment and the country’s recycling efforts.

The Impact of Journaling Activities

By participating in the journaling activities, I was able to understand how my personal and other biases can affect the sphere of business ethics. One’s individual beliefs often inform people’s decisions; it is vital to analyze such thoughts in order to separate biases from researched conclusions. For example, the discussion about tobacco advertising and secondhand smoking can lead to varying findings depending on who is presenting their opinion. As a non-smoker, my stance regarding public smoking is negative – people should not be exposed to the negative effects of tobacco, and I would not want to ingest it as well. On the other hand, a smoker’s decision is based on their desire to smoke regularly, and their idea of public restrictions may be different. Therefore, our propositions for rules about smoking in public will be different since they are informed by our perceptions.

Companies also show some biases since their primary interest is not the delivery of goods or clients’ satisfaction but the aggregation of profit. While many firms declare that customer’s positive feedback and enjoyment of their products is the main goal, the core purpose of businesses is financial gain. In the case of tobacco industries, this idea is applicable as well; companies continue to advertise their products such as cigarettes, even though these items may be dangerous to people’s health.

The study of Merck can be compared to that of tobacco manufacturers. While Merck made the decision to withdraw their product and it appeared to be an ethical decision, one could argue that the bias of investors to gain profit was still in place. Although the firm lost some money on research and distribution, the recall most likely supported the business’ long-term goal of preserving its place in the market. Thus, one may assume that the biases were not ignored or eliminated with this move.

The case of Deepwater Horizon demonstrates the tendency of money-based priorities clearly, showing how a company’s biased decision-making led to a catastrophe. It is possible that the main acting stakeholder group was represented by the business’ investors or executives, and other involved persons did not have any authority over BP’s actions. As a result, the bias supporting high profits outweighed the company’s need to analyze potential risks. If these approaches managing a business were absent, the firm might have updated its technology, protected workers, and ensured that everyone was following safety protocols. One can perceive how a differing approach to quality assurance led to the business suffering from unethical decisions.

Specific biases can also influence the opinions of the public and the media. Returning to the case of tobacco, one may presume that advertising shapes the audience’s opinion. Therefore, the media’s portrayal of smoking is impactful, and its effects depend on whether it is positive or negative. Fulmer et al. (2015) find that advertising campaigns increase the rates of smoking teenagers. The authors also note that favorable smoking characters in movies and shows can positively impact the growth of smokers. Therefore, a biased portrayal is highly effective in changing the opinions of the public. In turn, peer pressure and example are among the other ways to change someone’s beliefs. One can see that exposure to such biases has consequences, especially if the audience is vulnerable to manipulation.

The Most Significant Learning

This course has provided me with a chance to assess various issues not only from an individual perspective but also by using the academic information which represents findings, informed conclusions, and other communities’ opinions. I consider the implementation of circles of reflection as the most important learning because it established a foundation for all other knowledge received through the readings and journaling activities. It is a process that is simple to understand and integrate into one’s practice. Nonetheless, it offers many possibilities for learning and contributing to research.

Business ethics concern different levels of people engaged in a company’s processes. CSR also includes many stakeholders whose input and contribution are valuable for innovation and growth. Thus, it is crucial for a person dealing with ethics to have a way of investigating the needs, wants, and concerns of these individuals and groups. Circles of reflection that were utilized in the assignments broadened my thinking from my perspective and systematized my activities in researching a problem.

When thinking about smoking prior to the first assignment, I did not attempt to dissect the issue with a similar degree of attention, simply considering it at a level of my friends and myself. However, the idea and countrywide solutions can significantly alter the situation and bring new solutions was somewhat new to examine. The readings also enhanced my understanding of the consequences of such interventions.

Other cases may be discussed in a similar way, revealing the usefulness of this thinking method. The impact of the Deepwater Horizon well blowout, for instance, was not very impactful for me personally. Therefore, some people with similar experiences may underrepresent the significance of this event. Nevertheless, the consideration of this catastrophe as a national and global environmental problem lead to completely different results.

The accident can be described as tragic in regards to its effect on marine life, flora, and fauna, as well as the lives of workers who were employed at the site. The impact of this catastrophe is major for the environment, as it contributed to the change in climate and pollution. The utilized analysis for this discussion assisted me in understanding the importance of business ethics in that particular situation as well as all others.

The subject of business ethics gains more and more attention as companies shift their focus from pure profits towards customer experiences, workers’ rights and duties, and environmental preservation.

The current changes in climate encourage various companies to review their practices, and social responsibility is being modified to include such concerns. The role of business ethics is the relationship between business and societies is essential – corporate responsibility encourages the development of policies protecting people on both sides of any business activity. The ability of a company to change and adapt to the current state of the market leads to increased innovation and meaningful collaboration with other members of the supply chain. HP is a business that can be provided as an example of such active participation.

On the other hand, firms that fail to consider the ethical aspects of their business, focusing on profits instead, may face problems similar to those of BP, causing environmental catastrophes and losing not only money but also workers, resources, and status. Here, the role of business ethics is highlighted again since it can act as a measure to predict such risks and protect the company from them. In order to successfully implement the principle of CSR, companies should understand and use business ethics, removing biases and reflecting on the potential problems and consequences for themselves, their communities, and their country.

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Essay on ethics: meaning, need and importance | business.

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After reading this essay you will learn about:- 1. Meaning of Ethics 2. Definitions of Ethics 3. Need 4. Importance 5. Nature 6. Scope.

Essay on the Meaning of Ethics :

As per Oxford Dictionary the meaning of ethic is a “system of moral principles, rules and conduct.” Ethics is a “science of morals.” The words ethics has emerged from Latin ‘Ethicus’ or in Greek ‘Ethicos’.

The origin of these two words is from ‘ethos’ meaning character. Character unlike behaviour is an intrinsic or basic factor which derives from inner most. Ethics in simple words is a treatise or science of morals, moral principles and social conduct rules.

‘Right’, ‘Fair’ and ‘Proper’ are three terms normally used to express the social behaviour of the people. When we tell these words, there are right and wrong behaviour towards others; fair and unfair actions taken against someone or for someone; or some fair or unfair decisions.

The beliefs what is right, what is fair and what is proper are our beliefs and our moral standards. The beliefs differ from individual to individual, place to place and time to time. What is right in one place or situation may be wrong in other situation. The moral standards also differ based on moral value an individual attaches.

Any action can be termed good or right or bad or wrong are relative and moral judgments. The problem has one more side that who is making the judgment. From different sides the problem is seen in different light and accordingly the judgment. The distinctions are made as ‘us’ and ‘others’ or ‘benefits’ and ‘obligations’.

Vedanta or Indian ethos suggests that ‘Atman’ is the intrinsic man. The ethical problem is as old as mankind. Righteousness (Dharma) and the social concerns have changed from time to time or evolved.

Ethical values change from situation to situation and as pr place, time. Sage Ved Vyasa in Mahabharata cries with his arms up for a righteous life and society “I cry with my arms uplifted, yet none hears. From righteousness (Dharma) flow forth pleasure and profit. Why then do we not follow Dharma?”

Definition of Moral :

The word has been derived from Latin ‘Moralis’ which means character. This word is used many times in place of ethics by mistake. These two words are different.

Behaviour is Set of Actions :

Behaviour is external that is the response one makes with in interaction with others. The behaviour reflects the character of the individuals. Purity in behaviour is reflections of good character of the individual. The character is within and hence core being of an individual whereas behaviour is external.

Behaviour is short term whereas character is long term. Personal have different shades of characters weak to strong levels. Similarly the behaviour exhibited by individuals differs from weak to strong. Fig. 8.1 shows a Behaviour character matrix how people are placed.

Mahatma Gandhi, the Father of India nation had been a person with a high standard of character and high behavioural instinct/responses.

Gandhi, in national context or JRD Tata in the organisational context are people with certain set of qualities as follows:

(1) Honesty in all actions

(2) Transparency and settings standards

(3) Sincerity

(4) Generosity

(5) Truthfulness in all situation

(6) Integrity

(7) Cooperation

Any behaviour cannot be rationally notified. No behaviour is inherently right or wrong. Each person may obtain his own choice based on his choice of ethical principles. Nazi rules were justified by Hitler.

i. Morals are principles of right and wrong. It comes by teaching and experience. Moral habits are standards of behaviour.

Example: “Do not tell lie”

ii. Beliefs are the feelings of trust confidence of what is real and what is true.

Example: Buddha and Gandhiji believed in ‘Ahimsa’ or no harm or killing

iii. Values which are ends and goals of individuals. Values are essentially subjective

Example: Happiness or health

Essay on the Definitions of Ethics:

(i) As per Philosopher Epicurus “Deals with things to be sought and things to be avoided with ways of life and with telos.” (Telos is the chief aim or end in life).

(ii) A science of morals.

(iii) A treatise or science of morals, moral principles and social conduct rules.

(iv) Relate to morals, treating of moral questions, morally correct: honourable.

(v) Ethics describe what is ‘right’ what is ‘fair’ and what is ‘proper’.

(vi) Ethics differentiates what is right and what is wrong in human conduct – standards of behaviour.

(vii) Standards generally accepted by the society.

(viii) Rules that govern behaviors. The rules tell use what is right and what is wrong.

(ix) It is a field of social science of systematic knowledge of human moral behaviour and conduct.

(x) Ethics makes moral judgment of human conduct.

(xi) Ethics is diagnostic tool that establishes moral standards and norms of behaviour. Prescribes and makes judgments on moral behaviour. It expresses opinions and attitudes about human conduct.

(xii) A branch of philosophy that deals with values as they relate to human conduct.

(xiii) The study of what is good and right to the people. The basic questions ethics asks are how a man should act, especially when the actions have direct or indirect effect on others.

Need for Ethics: 

In early 50’s the public view in India was that the profits and ethics do not go together. They are mutually opposite and company that makes profit was not considered an ethical company. The normal understanding of the people was “profit is a dirty word”. Since then the management education, widening of markets and consumerism worldwide have given profits its important place in business.

Today it is considered profit is a must for any business for its existences and growth. In fact not making profit is considered unethical today. Business ethics in simple terms is application of ethics in businesses. Business has to go with its economics as well as social obligations.

Any managerial decision has to distinguish between good and bad, right and wrong, just and proper. It is also seen that the ethical companies which took care of their social responsibilities have survived competition and growing. Ethical issues occur in decision making in industry, education.

A case-let giving the ethical issues of medical bond are detailed in Box 8.1 below:

Essay on the Importance of Ethics :

The business organisations which act legally and ethically not only save lot of money but also gain public support and reputation in whatever new ventures the organisation takes. The importance of ethics in business is many folds.

(1) Part of Society:

Business is part of society. Whatever ethical principle apply in society apply to business. Example tax evasion is considered unethical in society. If a company deliberately evades tax payments the company is treated unethical.

(2) Expectations of Public:

All stakeholders have an eye on the culture and behaviour of a business organisation due to dominance of economics in the society. The public expects a high level of ethical behaviour from the business organisations.

‘Doing the right thing’, ‘Do no harm’ and ‘Good to all’ are the expectations of general public from business. Example: a company manufacturing a tobacco based products say ‘pan masalas’ and making advertisements appealing to college students in not respected. Whereas a company that recalls unsafe product is respected.

(3) Trust of Employees:

High level of morale and productivity can be easily obtained in companies that treat their all employees with equality, encourage good team and work culture, and with ethical practices. The employees in the company as well as those connected feel good and develop a mutual trust. Employees get attraction to ethically and socially responsible companies.

An ethical organisation command trust and respect of all its stakeholders. The organisation builds image for itself. Ethical good image is important because all stakeholders stand to gain.

Deterioration of relationships, damage to reputation and reduction of employee productivity, loyalty that come out of unethical practices cost companies. An uncaring employer will find it difficult to employ good professions for his business.

(6) Pride of Best Companies:

The ethically managed companies command respect from public as well as government organisations. ‘Fortune’ magazine publishes yearly best companies. Similarly Indian will managed companies are published by ‘Business India’. These companies have a brand value and accepted as leaders in the industry. The company policies with regards to profit sharing bonuses, social responsibility, balance of work and social life are quoted.

(7) Overall Benefit:

Ethical behaviour of an industry or business gives a win-win situation to all the stakeholders and general public. The governments also encourage such companies. The integrity and ethical practices become all-pervading in the organisation and increase organisational effectiveness.

Essay on Nature of Ethics :

Ethics deals with human beings only. It is only human beings who have the freedom of choices. Ethics is a normative science. Normative science is judging the situations, analyse the facts, weigh the consequences in terms of an idea and take judgment. The judgments are taken many times based on what the end results should be. Ethics deals with human conduct.

The human conducts are sometimes voluntarily, sometimes forced depending on the situations and the end expectation of results. In other words ethics deals with moral judgment regarding voluntary human conduct. Fig. 8.2 below gives the various aspects of decision making in ethics.

Any decision in situational ethics takes it into account, the goals, the motives, the methods and the consequences and their sub-factors as detailed in the figure:

Business ethics is application of ethics in business. Business itself is considered ethics as profit can be made by ethical means. Discussions are held regarding the profit maximisation and social responsibilities as opposite ends. By a proper management decisions these two ends can be made to give better results by following ethical business practices.

Essay on Scope of Ethics :

The question is debated since the industrialisation period. The management thinkers like Adam Smith and others were of opinion that business has nothing to do with ethics. The church or temple only can think and evaluate ethical portion. The churches or temples had say in all spheres of human activity including business.

Whether business is part or separate from society has different viewpoints:

(1) The Unitarian View:

The business is considered a sub set of a society. Hence business has in it the morals of the society. In medieval era the churches prescribed that business must do well to the society.

The Unitarian view may be seen in Fig. 8.3 below:

(2) The Separatist View:

Celebrated economists Adam Smith and Friedman were of view that business should concentrate in business activity of production, profits and costs. The social issues are left to others like governments and society.

The Separatist view of ethics and business is shown in Fig 8.4 below:

Thinking much of ethics in business may perhaps take up to olden church and temple days. The efficiency of industry of business will go down. Business should only obey laws of the land and achieve its economic goals. Business goals should not dominate the social values.

(3) The Integrated View :

The view was proposed by Parsons. Parson considered integration of ethics and business. The business exists as an economic entity. It has to make profits for its own survival and growth. Otherwise it will die.

The business or industry exists in society. It has to be responsible and meet its obligations to the society. Business that is making profits should be with ethical means.

The Integrated view of proposal of Parsons is represented in Fig. 8.5 below:

Society has a number of subsystems some are interlinked, interdependent and overlapping. Business and ethics overlap as may be seen in Fig. 8.5 above. Business serves society by producing quality goods and services for the society which needs them. It helps society. Business hence becomes ethics in society even when it makes profit.

Related Articles:

• Business Ethics: Notes on Business Ethics
• Business Ethics: 7 Characteristics of Business Ethics

Essay , Business Management , Ethics , Meaning of Ethics

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Entrepreneurship • April 25, 2023

The Crucial Role of Ethics in Entrepreneurship

The world as we know it might be in danger.

The need for entrepreneurs to make ethical choices has never been more critical, especially in the age of artificial intelligence (AI).

Experts in AI believe that rapid advancements in the field, without proper ethical guidelines in place, could endanger our society. Max Tegmark, a professor at the Massachusetts Institute of Technology and a machine learning researcher, issued a call to action urging AI labs to pause the development of AI systems more powerful than GPT-4 for at least six months.

Professor Tegmark , also the president of the Future Life Institute , a non-profit organization aiming to prevent AI from becoming a threat to our civilization, wrote the letter to raise awareness about the dangers of unregulated AI development. The letter garnered support from tens of thousands of people, including notable figures like Apple Co-Founder Steve Wozniak as well as the author and professor Yuval Noah Harari.

The proposed pause in AI development seeks to encourage companies like OpenAI , the creators of ChatGPT-4, to halt their progress on powerful AI systems temporarily. This would provide AI experts and policymakers with the necessary time to collaborate and develop ethical guidelines for AI development, as well as establish proper AI governance systems, ensuring that such technology benefits humanity.

This situation exemplifies the importance of ethical business practices. Entrepreneurs must consider the societal impact of their endeavors, particularly when developing advanced artificial intelligence systems.

Read on to discover the essential role of ethical entrepreneurship and to learn from inspiring stories of ethical business leaders. By understanding and embracing ethical principles, entrepreneurs can help shape a brighter future where technology and innovation are harmoniously integrated into society.

The Crucial Role of Ethics in Entrepreneurship: Why It's More Important Than Ever

Entrepreneurs and business leaders are responsible for ensuring their businesses have a positive impact on the world.

What are the ethics of an entrepreneur?

Being an ethical entrepreneur means making decisions and taking actions that are firmly rooted in a strong sense of morality. This moral compass guides entrepreneurs through the rollercoaster of building and managing a business while shaping the way they connect with the people who matter most, such as customers, employees, investors, and the broader community.

Why is ethics important in entrepreneurship?

Ethics play a crucial role in the long-term success and sustainability of a business. By adhering to ethical principles, entrepreneurs can foster trust, nurture employee morale, and provide a competitive advantage in the market.

In this section, we will explore the various reasons why ethics is essential for entrepreneurship and the positive impact it can have on stakeholders, customers, and the broader community.

Trust and reputation: When entrepreneurs act ethically, they forge trust and build a solid reputation, which is essential for nurturing lasting relationships with stakeholders. According to research by the Edelman Trust Barometer, 76% of respondents consider “trust” a key factor when making purchases.

Employee morale and retention: Ethical leadership sets the stage for a positive work atmosphere, leading to happier employees who stay with the company. A Gallup report showed that businesses with high employee engagement experience a 59% lower turnover rate.

Competitive advantage: Embodying ethical values can help a company stand out from the competition and attract a loyal customer base. A 2020 Accenture study found that 62% of consumers prefer to support businesses that align with their personal values and beliefs.

Long-term success: Entrepreneurs who look beyond immediate gains and consider the broader social and environmental consequences of their actions are more likely to create sustainable business models and achieve enduring success.

Who is an example of an ethical entrepreneur?

Yvon Chouinard, the visionary behind the outdoor clothing and gear company Patagonia , is a prime example of a business leader who prioritizes ethics in entrepreneurship practices. Chouinard has always placed environmental and social responsibility at the heart of his business, from using sustainable materials to donating 1% of their global sales to environmental causes through their “ 1% for the Planet” initiative. In 2012, Patagonia became a Certified B Corporation , voluntarily adhering to high social and environmental performance standards.

Implementing Ethical Guidelines: The Path to Sustainable Entrepreneurship

Incorporating ethical guidelines into a business framework is a crucial yet difficult step for entrepreneurs who aim to create sustainable and responsible ventures. This practice ensures businesses operate in harmony with societal values and environmental concerns and refrain from creating technologies that might threaten the future of our civilization.

One approach to implementing ethical guidelines is by adopting the principles of the Triple Bottom Line (TBL) framework , which was introduced by John Elkington in 1994. The TBL framework emphasizes three dimensions of performance: social, environmental, and financial, often referred to as people, planet, and profit. By balancing these three aspects, businesses can create long-lasting value for both their investors and the environment.

For instance, Unilever, one of the world's leading consumer goods companies , has successfully integrated the TBL framework into its business strategy through its Sustainable Living Plan. This plan focuses on improving health and well-being, reducing the company's environmental impact, and enhancing livelihoods across its supply chain. As a result, Unilever has achieved a substantial reduction in waste and greenhouse gas emissions while also improving the lives of millions of people.

Another effective way to implement ethical guidelines is by obtaining a B Corporation certification. B Corps are businesses that meet the highest standards of social and environmental performance, public transparency, and legal accountability. By pursuing this certification, companies like Patagonia and Allbirds have demonstrated their commitment to prioritizing ethics in entrepreneurship practices, which has resonated with both customers and investors.

A Path to Pursuing Ethical Entrepreneurship

The pursuit of ethical entrepreneurship starts with a single step in the right direction

Ethical entrepreneurship is an essential component of sustainable and responsible business practices. By integrating ethical values and considering the broader environmental consequences of their actions, entrepreneurs and business leaders can create a better future for our society.

Meridian University provides you with the knowledge and tools to cultivate ethical business practices and navigate the complexities of today’s entrepreneurial world. Our MBA in Creative Enterprise is designed to develop crucial skills for success in dynamic organizational settings by merging social, technological, and cultural innovation to create impactful, experience-driven leaders.

The curriculum is built around five integrated areas of study: transformative innovation , purpose-driven organizations, regenerating the commons, living systems theory, and generative entrepreneurship. This unique, comprehensive, and holistic approach equips our students to deal with the complexities of the business world.

You can gain specialized expertise by choosing from a variety of concentrations, including:

• Complexity Management
• Developmental Coaching
• Generative Entrepreneurship
• Organizational Development
• Transformative Leadership

Take the first step in your journey of cultivating ethical business practices and positively impacting our world by Emailing an Admission Advisor.

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