business ethics definition 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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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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Business Ethics

Exchange is fundamental to business. ‘Business’ can mean an activity of exchange. One entity (e.g., a person, a firm) “does business” with another when it exchanges a good or service for valuable consideration, i.e., a benefit such as money. ‘Business’ can also mean an entity that offers goods and services for exchange, i.e., that sells things. Target is a business. Business ethics can thus be understood as the study of the ethical dimensions of the exchange of goods and services, and of the entities that offer goods and services for exchange. This includes related activities such as the production, distribution, marketing, sale, and consumption of goods and services (cf. Donaldson & Walsh 2015; Marcoux 2006b).

Questions in business ethics are important and relevant to everyone. Almost all of us “do business”, or engage in a commercial transaction, almost every day. Many of us spend a major portion of our lives engaged in, or preparing to engage in, exchange activities, on our own or as part of organizations. Business activity shapes the world we live in, sometimes for good and sometimes for ill.

Business ethics in its current incarnation is a relatively new field, growing out of research by moral philosophers in the 1970’s and 1980’s. But scholars have been thinking about the ethical dimensions of commerce at least since the Code of Hammurabi (c. 1750 BC).

This entry summarizes research on central questions in business ethics, including: What sorts of things can be sold? How can they be sold? In whose interests should firms be managed? Who should manage them? What do firms owe their workers, and what do workers owe their firms? Should firms try to solve social problems? Is it permissible for them to try to influence political outcomes? Given the vastness of the field, of necessity certain questions are not addressed.

1. Varieties of business ethics

2. corporate moral agency, 3.1 ends: shareholder primacy or stakeholder balance, 3.2 means: control by shareholders or others too, 4. important frameworks for business ethics, 5.1 the limits of markets, 5.2 product safety and liability, 5.3 advertising, 5.5 pricing, 6.1 hiring and firing, 6.2 compensation, 6.3 meaningful work, 6.4 whistleblowing, 7.1 corporate social responsibility, 7.2 corporate political activity, 7.3 international business, 8. the status of business ethics, other internet resources, related entries.

Many people engaged in business activity, including accountants and lawyers, are professionals. As such, they are bound by codes of conduct promulgated by professional societies. Many firms also have detailed codes of conduct, developed and enforced by teams of ethics and compliance personnel. Business ethics can thus be understood as the study of professional practices, i.e., as the study of the content, development, enforcement, and effectiveness of the codes of conduct designed to guide the actions of people engaged in business activity. This entry will not consider this form of business ethics. Instead, it considers business ethics as an academic discipline.

The academic field of business ethics is shared by social scientists and normative theorists. But they address different questions. Social scientists try to answer descriptive questions like: Does corporate social performance improve corporate financial performance, i.e., does ethics pay (Vogel 2005; Zhao & Murrell 2021)? Why do people engage in unethical behavior (Bazerman & Tenbrunsel 2011; Werhane et al. 2013). How can we make them stop (Warren, Gaspar, & Laufer 2014)? I will not consider such questions here. This entry focuses on questions in normative business ethics, most of which are variants on the question: What is ethical and unethical in business?

Normative business ethicists (hereafter the qualifier ‘normative’ will be assumed) tend to accept the basic elements of capitalism. That is, they assume that the means of production can be privately owned and that markets—featuring voluntary exchanges between buyers and sellers at mutually agreeable prices—should play an important role in the allocation of resources. Those who reject capitalism will see some debates in business ethics (e.g., about firm ownership and control) as misguided.

Some entities “do business” with the goal of making a profit, and some do not. Pfizer and Target are examples of the former; Rutgers University and the Metropolitan Museum of Art are examples of the latter. An organization identified as a ‘business’ is typically understood to be one that seeks profit, and for-profit organizations are the ones that business ethicists focus on. But many of the ethical issues described below arise also for non-profit organizations and individual economic agents.

One way to think about business ethics is in terms of the moral obligations of agents engaged in business activity. Who can be a moral agent? Individual persons, obviously. What about firms? This is treated as the issue of “corporate moral agency” or “corporate moral responsibility”. Here ‘corporate’ does not refer to the corporation as a legal entity, but to a collective or group of individuals. To be precise, the question is whether firms are moral agents and morally responsible considered as ( qua ) firms, not considered as aggregates of individual members of firms.

We often think and speak as if corporations are morally responsible. We say things like “Costco treats its employees well” or “BP harmed the environment in the Gulf of Mexico”, and in doing so we appear to assign agency and responsibility to firms themselves (Dempsey 2003). We may wish to praise Costco and blame BP for their behavior. But this may be just a metaphorical way of speaking, or a shorthand way of referring to certain individuals who work in these firms (Velasquez 1983, 2003). Corporations are different in many ways from paradigm moral agents, viz., people. They don’t have minds, for one thing, or bodies, for another. The question is whether corporations are similar enough to people to warrant ascriptions of moral agency and responsibility.

In the business ethics literature, French is a seminal thinker on this topic. In early work (1979, 1984), he argued that firms are morally responsible for what they do, and indeed should be seen as “full-fledged” moral persons. He bases this conclusion on his claim that firms have internal decision-making structures, through which they cause events to happen, and act intentionally. Some early responses to French’s work accepted the claim that firms are moral agents, but denied that they are moral persons. Donaldson (1982) claims that firms cannot be persons because they lack important human capacities, such as the ability to pursue their own happiness (see also Werhane 1985). Other responses went further and denied that firms are moral agents. Velasquez (1983, 2003) argues that, while corporations can act, they cannot be held responsible for their actions, because those actions are brought about by the actions of their members. In later work, French (1995) recanted his claim that firms are moral persons, though not his claim that they are moral agents.

Debate about corporate moral agency and moral responsibility rages on in important new work (Orts & Smith 2017; Sepinwall 2016). One issue that has received sustained attention is choice. Appealing to discursive dilemmas, List & Pettit (2011) argue that the decisions of corporations can be independent of the decisions of their members (see also Copp 2006). This makes the corporation an autonomous agent, and since it can choose in the light of values, a morally responsible one. Another issue is intention. A minimal condition of moral agency is the ability to form intentions. Some deny that corporations can form them (S. Miller 2006; Rönnegard 2015). If we regard an intention as a mental state, akin to a belief or desire, or a belief/desire complex, they may be right. But not if we regard an intention in functionalist terms (Copp 2006; Hess 2014), as a plan (Bratman 1993), or in terms of reasons-responsiveness (Silver forthcoming). A third issue is emotion. Sepinwall (2017) argues that being capable of emotion is a necessary condition of moral responsibility, and since corporations aren’t capable of emotion, they aren’t morally responsible. Again, much depends on what it means to be capable of emotion. If this capability can be given a functionalist reading, as Björnsson & Hess (2017) claim, perhaps corporations are capable of emotion (see also Gilbert 2000). Pursuit of these issues lands one in the robust and sophisticated literature on collective responsibility and intentionality, where firms feature as a type of collective. (See the entries on collective responsibility , collective intentionality , and shared agency .)

Another question asked about corporate moral agency is: Does it matter? Perhaps BP itself was morally responsible for polluting the Gulf of Mexico. Perhaps certain individuals at BP were. What hangs on this? Some say: a lot. In some cases there may be no individual who is morally responsible for the firm’s behavior (List & Pettit 2011; Phillips 1995), and we need someone to blame, and perhaps punish. Blame may be the fitting response, and blame (and punishment) incentivizes the firm to change its behavior. Hasnas (2012) says very little hangs on this question. Even if firms are not morally responsible for the harms they cause, we can still require them to pay restitution, condemn their culture, and subject them to regulation. Moreover, Hasnas says, we should not blame and punish firms, for our blame and punishment inevitably lands on the innocent.

3. The ends and means of corporate governance

There is significant debate about the ends and means of corporate governance, i.e., about who firms should be managed for, and who should (ultimately) manage them. Much of this debate is carried on with the large publicly-traded corporation in view.

There are two main views about the proper ends of corporate governance. According to one view, firms should be managed in the best interests of shareholders. It is typically assumed that managing firms in shareholders’ best interests requires maximizing their wealth (cf. Hart & Zingales 2017; Robson 2019). This view is called “shareholder primacy” (Stout 2012) or—in order to contrast it more directly with its main rival (to be discussed below) “shareholder theory”. Shareholder primacy is the dominant view about the ends of corporate governance in business schools and in the business world.

A few writers argue for shareholder primacy on deontological grounds, i.e., by appealing to rights and duties. On this argument, shareholders own the firm, and hire managers to run it for them on the condition that the firm is managed in their interests. Shareholder primacy is thus based on a promise that managers make to shareholders (Friedman 1970; Hasnas 1998). In response, some argue that shareholders do not own the firm. They own stock, a type of corporate security (Bainbridge 2008; Stout 2012); the firm itself may be unowned (Strudler 2017). Others argue that managers do not make, explicitly or implicitly, any promises to shareholders to manage the firm in a certain way (Boatright 1994). More writers argue for shareholder primacy on consequentialist grounds. On this argument, managing firms in the interests of shareholders is more efficient than managing them in any other way (Hansmann & Kraakman 2001; Jensen 2002). In support of this, some argue that, if managers are not given a single objective that is clear and measurable—viz., maximizing shareholder value—then they will have greater opportunity for self-dealing (Stout 2012). The consequentialist argument for shareholder primacy run into problems that afflict many versions of consequentialism: in requiring all firms to aim at a certain objective, it does not allow sufficient scope for personal choice (Hussain 2012). Most think that people should be able to pursue projects, including economic projects, that matter to them, even if those projects do not maximize shareholder value.

The second main view about the proper ends of corporate governance is given by stakeholder theory. This theory was first put forward by Freeman in the 1980s (Freeman 1984; Freeman & Reed 1983), and has been refined by Freeman and collaborators over the years (see, e.g., Freeman 1994; Freeman et al. 2010; Freeman, Harrison, & Zyglidopoulos 2018; Jones, Wicks, & Freeman 2002; Phillips, Freeman, & Wicks 2003). According to stakeholder theory—or at least, early formulations of it—instead of managing the firm in the best interests of shareholders only, managers should seek to “balance” the interests of all stakeholders, where a stakeholder is anyone who has a “stake”, or interest (including a financial interest), in the firm. Blair and Stout’s (1999) “team production” theory of corporate governance offers similar guidance.

To be clear, in a firm in which shareholders’ interests are prioritized, other stakeholders will benefit too. Employees will receive wages, customers will receive goods and services, and so on. The debate between shareholder and stakeholder theorists is about what to do with the residual revenues, i.e., what’s left over after firms meet their contractual obligations to employees, customers, and others. Shareholder theorists think they should be used to maximize shareholder wealth. Stakeholder theorists think they should be used to benefit all stakeholders.

To its critics, stakeholder theory has seemed both incompletely articulated and weakly defended. With respect to articulation, one question that has been pressed is: Who are the stakeholders (Orts & Strudler 2002, 2009)? The groups most commonly identified are shareholders, employees, the community, suppliers, and customers. But other groups have stakes in the firm, including creditors, the government, and competitors. It makes a great deal of difference where the line is drawn, but stakeholder theorists have not provided a clear rationale for drawing it in one place rather than another. Another question is: What does it mean to “balance” the interests of all stakeholders, other than not always giving precedence to shareholders’ interests (Orts & Strudler 2009)? With respect to defense, critics have wondered what the rationale is for managing firms in the interests of all stakeholders. In one place, Freeman (1984) offers an instrumental argument, claiming that balancing stakeholders’ interests is better for the firm strategically than maximizing shareholder wealth (see also Blair & Stout 1999; Freeman, Harrison, & Zyglidopoulos 2018). (Defenders of shareholder primacy say the same thing about their view.) In another, he gives an argument that appeals to Rawls’s justice as fairness (Evan & Freeman 1988; cf. Child & Marcoux 1999).

In recent years, questions have been raised about whether stakeholder theory is appropriately seen as a genuine competitor to shareholder primacy, or is even appropriately called a “theory”. In one article, Freeman and collaborators say that stakeholder theory is simply “the body of research … in which the idea of ‘stakeholders’ plays a crucial role” (Jones et al. 2002). In another, Freeman describes stakeholder theory as “a genre of stories about how we could live” (1994: 413). It may be, as Norman (2013) says, that stakeholder is now best regarded as “mindset”, i.e., a way of looking at the firm that emphasizes its embeddedness in a network of relationships. In this case, there may be no dispute between shareholder and stakeholder theorists.

Resolving the debate between shareholder and stakeholder theorists (assuming they are competitors) will not resolve all or even most of the ethical questions in business. This is because it is a debate about the ends of corporate governance. It cannot answer questions about the moral constraints that must be observed in pursuit of those ends (Goodpaster 1991; Norman 2013), including duties of beneficence (Mejia 2020). Neither shareholder theory nor stakeholder theory is plausibly interpreted as the view that corporate managers should do whatever is possible to maximize shareholder wealth and balance all stakeholders’ interests, respectively. Rather, these views should be interpreted as views that managers should do whatever is consistent with the requirements of morality to achieve these ends. A large part of business ethics is trying to determine what these requirements are.

Answers to questions about the means of corporate governance often mirror answers to question about the ends of corporate governance. Often the best way to ensure that a firm is managed in the interests of a certain party P is to give P control. Conversely, justifications for why the firm should be managed in the interests of P sometimes appeal P’s rights to control it.

Friedman (1970), for example, thinks that shareholders’ ownership of the firm gives them a right to control the firm (which they can use to ensure that the firm is run in their interests). We might see control rights for shareholders as following analytically from the concept of ownership. To own a thing is to have a bundle of rights with respect to that thing. One of the standard “incidents” of ownership is control. (See the entry on property and ownership .)

As noted, in recent years the idea that the firm is something that can be owned has been challenged (Bainbridge 2008; Stout 2012; Strudler 2017). If this is right, then the ownership argument collapses. But similar contractarian arguments for shareholder control of firms have been constructed which do not rely on the assumption of firm ownership. All that is assumed in these arguments is that some people own capital, and others own labor. Capital can “hire” labor (and other inputs of production) or labor can “hire” capital. It just so happens that, in most cases, capital hires labor. We know this because in most cases capital-providers are the ultimate decision-makers in the firm. In a publicly-traded corporation, they elect the board. These points are emphasized especially by those who regard the firm as a “nexus of contracts” among various parties (Easterbrook & Fischel 1996; Jensen & Meckling 1976).

Many writers find this result troubling. Even if the governance structure in most firms is in some sense agreed to, they say that it is unjust in other ways. Anderson (2017) characterizes standard corporate governance regimes as oppressive and unaccountable private dictatorships. To address this injustice, these writers call for various forms of worker participation in managerial decision-making, including the ability by workers to reject arbitrary directives by managers (Hsieh 2005), worker co-determination of firms’ policies and practices (Ferreras 2017; McMahon 1994), and exclusive control of productive enterprises by workers (Dahl 1985).

Arguments for these governance structures take various forms. One appeals to the value of protecting workers’ interests (González-Ricoy 2014; Hsieh 2005). Another appeals to the value of autonomy, or a right to freely determine one’s actions, including one’s actions at work (Malleson 2014; McCall 2001). A third argument for worker control is the “parallel case” argument. According to it, if states should be governed democratically, then so should firms, because firms are like states in the relevant respects (Dahl 1985; Landemore & Ferreras 2016; cf. Mayer 2000). A fourth argument sees worker participation in firm decision-making as valuable training for citizens in a democratic society (Pateman 1970).

Space considerations prevent detailed examinations of these arguments (for critical reviews see Frega, Herzog, & Neuhäuser 2019; Hsieh 2008). But criticisms generally fall into two categories. The first insists on the normative priority of agreements, of the sort described above. There are few legal restrictions on the types of governance structures that firms can have. And some firms are in fact controlled by workers (Dow 2003; Hansmann 1996). To insist that other firms should be governed this way is to say, according to this argument, that people should not be allowed to arrange their economic lives as they see fit. Another criticism of worker participation appeals to efficiency. Allowing workers to participate in managerial decision-making may decrease the pace of decision-making, since it requires giving many workers a chance to make their voices heard (Hansmann 1996). It may also raise the cost of capital for firms, as investors may demand more favorable terms if they are not given control of the enterprise in return (McMahon 1994). Both sources of inefficiency may put the firm at a significant disadvantage in a competitive market. It may not just be a matter of competitive disadvantage. If it were, the problem could be solved by making all firms worker-controlled. The problem may be one of diminished productivity more generally.

Business ethicists seek to understand the ethical contours of business activity. One way of advancing this project is by choosing a normative framework and teasing out its implications for business issues. In principle, it is possible to do this for any normative framework. Below are four that have received significant attention.

One influential approach to business ethics draws on virtue ethics. Moore (2017) develops and applies MacIntyre’s (1984) virtue ethics to business. For MacIntyre, there are goods internal to practices, and certain virtues are necessary to achieve those goods. Building on MacIntyre, Moore develops the idea that business is a practice (or contains practices), and thus has certain goods internal to it (or them), the attainment of which requires the cultivation of business virtues. Aristotelian approaches to virtue in business are found in Alzola (2012) and de Bruin (2015). Scholars have also been inspired by the Aristotelian idea that the good life is achieved in a community (Sison & Fontrodona 2012), and have considered how business communities must be structured to help their members flourish (Hartman 2015; Solomon 1993).

Another important approach to the study of business ethics comes from deontology, especially Kant’s version (Arnold & Bowie 2003; Bowie 2017; Scharding 2015; Hughes 2020). Kant’s claim that humanity should be treated always as an end, and never as a means only, has proved especially fruitful for analyzing the human interactions at the core of commercial transactions. In competitive markets, people may be tempted to deceive, cheat, use, exploit, or manipulate others to gain an edge. Kantian moral theory singles out these actions out as violations of human dignity (Hughes 2019; Smith & Dubbink 2011).

Ethical theory, including virtue theory and deontology, is useful for thinking about how individuals should relate to each other. But business ethics also comprehends the laws and regulations that structure markets and firms. Here political theory seems more relevant. A number of business ethicists have sought to identify the implications of Rawls’s (1971) justice as fairness for business. This is not an easy task, since while Rawls makes some suggestive remarks about markets and firms, he does not articulate specific conclusions or develop detailed arguments for them. But scholars have argued that justice as fairness: (1) is incompatible with significant inequalities of power and authority within firms (S. Arnold 2012); (2) requires people to have an opportunity to perform meaningful work (Moriarty 2009; cf. Hasan 2015); and requires alternative forms of (3) corporate governance (Berkey 2021; Blanc & Al-Amoudi 2013; Norman 2015; cf. Singer 2015) and (4) corporate ownership (M. O’Neill & Williamson 2012).

A fourth approach to business ethics is called the “market failures approach” (MFA). It originates with McMahon (1981), but it has been developed in most detail by Heath (2014) (for discussion see Moriarty 2020 and Singer 2018). According to Heath, the justification of the market is that it produces efficient—in the sense of Pareto-optimal— outcomes. But this only happens when the conditions of perfect competition obtain, such as perfect information, no market power, and no barriers to entry or exit. (When they don’t, markets fail—hence the market failures approach.) On the MFA, these conditions are the source of ethical rules for market actors. The MFA says that market actors, including sellers and buyers, should not create or take advantage of market imperfections. So, for example, firms should not deceive consumers (creating information asymmetries) or lobby governments to levy tariffs on foreign competitors (erecting barriers to entry).

Selecting a normative framework and applying it to a range of issues is an important way of doing business ethics. But it is not the only way. Indeed, the more common approach is to identify a business activity and then analyze it using “mid-level” principles or ideals common to many moral and political theories. Below I consider ethical issues that arise at the nexus of firms’ engagement with three important groups: consumers, employees, and society.

5. Firms and consumers

The main way that firms interact with consumers is by selling, or attempting to sell, products and services to them. Many ethical issues attend this interaction.

Many have argued that some things should not be for sale (Anderson 1993; MacDonald & Gavura 2016; Sandel 2012; Satz 2010). Among the things commonly said to be inappropriate for sale are sexual services, surrogacy services, and human organs. Some writers object to markets in these items for consequentialist reasons. They argue that markets in commodities like sex and kidneys will lead to the exploitation of vulnerable people (Satz 2010). Others object to the attitudes or values expressed in such markets. They claim that markets in surrogacy services express the attitude that women are mere vessels for the incubation of children (Anderson 1993); markets in kidneys suggest that human life can be bought and sold (Sandel 2012); and so on. (For a discussion of what it might mean for a market to “express” a value, see Jonker [2019].)

Other writers criticize these arguments, and in general, the attempt to “wall-off” certain goods and services from markets. Brennan and Jaworksi (2016) object to expressive or “semiotic” arguments against markets in contested commodities (cf. Brown & Maguire 2019). Whether selling a particular thing for money expresses disrespect, they note, is culturally contingent. They and others (e.g., Taylor 2005) also argue that the bad effects of markets in contested commodities can be eliminated or at least ameliorated through appropriate regulation, and that anyway, the good effects of such markets (e.g., a decrease in the number of people who die because they are waiting for a kidney) outweigh the bad.

Some things that firms may wish to sell, and that people may wish to buy, pose a significant risk of harm, to the user and others. When is a product too unsafe to be sold? This question is often answered by government agencies. In the U.S., a number of government agencies, including the Consumer Product Safety Commission (CPSC), the National Highway Traffic Safety Administration (NHTSA), and the Food and Drug Administration (FDA), are responsible for assessing the safety of products for the consumer market. In some cases these standards are mandatory (e.g., medicines and medical devices); in other cases they are voluntary (e.g., trampolines and tents). The state identifies minimum standards and individual businesses can choose to adopt more stringent ones.

Questions about product safety are a matter of significant debate among economists, legal scholars, and public policy experts. Business ethicists have paid scant attention to these questions (but see Brenkert 1981). Existing treatments often combine discussions of safety with discussions of liability—the question of who should pay for harms that products cause—and tend to be found in business ethics textbooks. One of the most careful treatments is Velasquez’s (2012). He distinguishes three (compatible) views: (1) the “contract view”, according to which the manufacturer’s duty is only to accurately disclose all risks associated with the product; (2) the “due care view”, according to which the manufacturer should exercise due care to prevent buyers from being injured by the product; and (3) the “social costs view”, according to which the manufacturer should pay for any injuries the product causes, even if the manufacturer has accurately disclosed all risks associated with the product and has exercised due care to prevent injury (see also Boatright & Smith 2017). In the U.S. and elsewhere, the law has moved in the direction of the social costs view, where it is known as “strict liability”.

There is much room for philosophical exploration of these issues. One area that merits attention is the definitions of key terms, such as “safety” and “risk”. Drop side cribs pose risks to consumers; so do trampolines. On what basis should the former be prohibited but the latter not be (Hasnas 2010)? The answer must take into account the value of these products, how obvious the risks they pose are, and the availability of substitutes. With respect to liability, we may wonder whether it is fair to hold manufacturers responsible for harms their products cause, when the manufacturers are not morally at fault for those harms. On the other hand, it may be unfair to force consumers to bear the full costs of their injuries, when they too are not morally at fault. The question may be one for society as a whole: what is the most efficient or just way to distribute these costs?

Most advertising contains both an informational component and a persuasive component. Advertisements tell us something about a product, and try to persuade us to buy it. Both of these components can be subject to ethical evaluation.

Emphasizing its informational component, some writers stress the positive value of advertising. Markets function efficiently only when certain conditions are met. One of these conditions is perfect information. Minimally, consumers have to understand the features of the products for sale. While this condition will never be fully met, advertising can help to ensure that it is met to a greater degree (Heath 2014). Another value that can be promoted through advertising is autonomy. People have certain needs and desires—e.g., to eat healthy food, to drive a safe car—which their choices as consumers help them to satisfy. Their choices are more likely to satisfy their needs and desires if they have information about what is for sale, which advertising can provide (Goldman 1984).

These good effects depend, of course, on advertisements producing true beliefs, or at least not producing false beliefs, in consumers. Writers treat this as the issue of deception in advertising. The issue is not whether deceptive advertising is wrong (most would agree it is), but what counts as deceptive advertising, and what makes it wrong.

In the 1980s, Beech-Nut advertised as “100% apple juice” a drink that contained no juice of any kind. Beech-Nut was fined $2 million and two of its executives went to prison. As of this writing (in 2021), Red Bull is marketing its energy drinks with the slogan “Red Bull Gives You Wings,” but in fact Red Bull doesn’t give you wings. There is no problem with Red Bull’s marketing. What’s the difference? We might say that Red Bull’s slogan is not warranted as true (Carson 2010). It is an example of “puffery,” or over-the-top, exaggerated praise which no reasonable person takes seriously (Attas 1999). By contrast, Beech-Nut’s statement appeared to be a claim meant to be taken at face value, but in fact is false. As these examples illustrate, advertisements are deceptive not because of the truth-value of their claims, but what these claims cause reasonable consumers to believe. Questions can be raised, of course, about what it means to be reasonable (Scalet 2003); the answer may depend on who the consumers are.

Intention is usually taken to be irrelevant to deception in advertising. That is, an advertisement may be deemed deceptive even if the advertiser doesn’t intend to deceive anyone. Some philosophers would say that these advertisements are better described as misleading . (For discussion, see the entry on the definition of lying and deception .) Regulators of advertising blur this distinction, or perhaps they don’t care about it. Their goal is to protect consumers from acting on materially false beliefs, which may be caused either by deception or by blamelessly being misled.

Many reasons have been offered for why deceptive advertising is wrong. One is the Kantian claim that deceiving others is disrespectful to them, a use of them as a mere means. Deceptive advertising may also lead to harm, to consumers (who purchase suboptimal products, given their desires) and competitors (who lose out on sales). A final criticism of deceptive advertising is that it erodes trust in society (Attas 1999). When people do not trust each other, they will either not engage in economic transactions, or engage in them only with costly legal protections.

The persuasive component of advertising is also a fruitful subject of ethical inquiry. Galbraith (1958), an early critic, thinks that advertising, in general, does not inform people how to acquire what they want, but instead gives them new wants. He calls this the “dependence effect”: our desires depend on what is produced, not vice versa . Moreover, since we are inundated with advertising for consumer goods, we want too many of those goods and not enough public goods. Hayek (1961) rejects this claim, arguing that few if any of our desires are independent of our environment, and that anyway, desires produced in us through advertising are no less significant than desires produced in us in other ways.

Galbraith is concerned about the persuasive effects of advertisements. In contrast, recent writers focus on the techniques that advertisers use to persuade. Some of these are alleged to cross the line into manipulation (Aylsworth, 2020; Brenkert 2008; Sher 2011). It is difficult to define manipulation precisely, though attempts have been made (for extensive discussion, see the entry on the ethics of manipulation ). For our purposes, manipulative advertising can be understood as advertising that attempts to persuade consumers, often (but not necessarily) using non-rational means, to make irrational or suboptimal choices, given their own needs and desires.

Associative advertising is often identified as a type of manipulative advertising. In associative advertising, the advertiser tries to associate a product with a positive belief, feeling, attitude, ideal, or activity which usually has little to do with the product itself. Thus many television commercials for trucks in the U.S. associate trucks with manliness. Commercials for body fragrances associate those products with sex between beautiful people. The suggestion is that if you are a certain sort of person (e.g., a manly one), then you will have a certain sort of product (e.g., a truck). In an important article, Crisp (1987) argues that this sort of advertising attempts to create desires in people by circumventing their faculties of conscious choice, and in so doing subverts their autonomy (cf. Arrington 1982; Phillips 1994). Lippke (1989) argues that it makes people desire the wrong things, encouraging us to try to satisfy our non-market desires (e.g., to be more manly) through market means (e.g., buying a truck) (cf. Aylsworth 2020). How seriously we should take these criticisms may depend on how effective associative and other forms of persuasive advertising are. To the extent that advertisers are unsuccessful at “going around” our faculty of conscious choice, we may be less worried and more amused by their attempts to do so (Bishop 2000; Goldman 1984).

Our judgments on this issue should be context-sensitive. While most people may be able to see through advertisers’ attempts to persuade them, some may not be (at least some of the time). Paine (Paine et al. 1984) argues that advertising is justified because it helps consumers make wise decisions in the marketplace. But children, she argues, lack the capacity for making wise consumer choices (see also E.S. Moore 2004). Thus advertising directed at children constitutes a form of objectionable exploitation. Other populations who may be similarly vulnerable are the senile, the ignorant, and the bereaved. Ethics may require not a total ban on marketing to them but special care in how they are marketed to (Brenkert 2008; cf. Palmer & Hedberg 2013).

Sales are central to business. Perhaps surprisingly, business ethicists have said relatively little about sales.

An emerging set of issues concerns refusals to sell. Normally businesses want to sell their goods and services to everyone. But not always. In 2012, Jack Phillips of Masterpiece Cakeshop declined to sell a wedding cake to a same-sex couple because he opposed same-sex marriage on religious grounds. In response, the couple filed a complaint with the Colorado Civil Rights Commission. Should Phillips have sold the wedding cake to the couple? We might say that a commercial transaction is a kind of association, and people—including business owners like Phillips—should be free to associate, or not, with whomever they choose. Or we might say, as Phillips did, that his actions were protected by freedom of religion, since they were an expression of his identity, which includes his religious commitments. Alternatively, we might claim that Phillips was discriminating against the couple, and his actions were wrong for the same reasons discrimination typically is, viz., it denies people opportunities and undermines their dignity (Corvino, Anderson, & Girgis 2017).

Questions can also be raised about the techniques advertisers use to sell. These questions are similar to the ones asked about advertising. Salespeople are, in a sense, the final advertisers of products to consumers. An early contribution to the ethics of sales is found in Holley (1986), who develops a set of obligations for salespeople derived from the point of market activity, which he says is to efficiently meet people’s needs and wants (cf. Heath 2014). In what is probably the most sophisticated treatment of the subject, Carson (2010) says salespeople have at least the following four pro tanto duties: (1) provide customers with safety warnings and precautions; (2) refrain from lying and deception; (3) fully answer customers’ questions about items; and (4) refrain from steering customers toward purchases that are unsuitable for them, given their stated needs and desires. Carson justifies (1)—(4) by appealing to the golden rule: treat others as you want to be treated. He identifies two other duties that salespeople might have (he is agnostic): (5) do not sell customers products that you (the salesperson) think are unsuitable for them, given their needs and desires, without telling customers why you think this; and (6) do not sell customers poor quality or defective products, without telling them why you think this. For the most part, (1)—(4) ask the salesperson not to harm the customer; (5) and (6) ask the salesperson to help the customer, in particular, help her not to make foolish mistakes. The broader issue is one of disclosure (Holley 1998). How much information we think salespeople are required to share with customers may depend on what kind of relationship we think they should have, e.g., to what extent it is adversarial.

For many products bought and sold in markets, sellers offer an item at a certain price, and buyers take or leave that price. But in some cases there is negotiation over price (and other aspects of the transaction). We see this in the sale of “big ticket” items such as cars and houses, and in salaries for jobs. While there are many ethical issues that arise in negotiation, one issue that has received special attention is “bluffing”, or deliberately misstating one’s bargaining position. The locus classicus for this discussion is Carr (1968). According to him, bluffing in negotiations is permissible because business has its own distinctive set of moral rules and bluffing is permissible according to those rules. Carson (2010) agrees that bluffing is permissible in business, though in a more limited range of cases. Carson’s argument appeals to self-defense. If you have good reason to believe that your adversary in a negotiation is misstating her bargaining position, then you are permitted to misstate yours. A requirement to tell the truth in these circumstances would put you at a significant disadvantage relative to your adversary, which you are not required to suffer. An implication of Carson’s view is that you are not permitted to misstate your bargaining position if you do not have good reason to believe that your adversary is misstating hers.

In simplified models of the market, individual buyers and sellers are “price-takers”, not “price-makers”. That is, the prices of goods and services are set by the aggregate forces of supply and demand; no individual buys or sells a good for anything other than the market price. In reality, things are different. Sellers of goods have some flexibility about how to price goods.

Most business ethicists would accept that, in most cases, the prices at which products should be sold is a matter for private individuals to decide. This view has been defended on grounds of property rights. Some claim that if I have a right to a thing, then I am free to transfer that thing to you on whatever terms that I propose and you accept (Boatright 2010). It has also been defended on grounds of welfare. Prices set by voluntary exchanges reveal valuable information about the relative demand for and supply of goods, allowing resources to flow to their most productive uses (Hayek 1945). Despite this, most business ethicists also recognize some limits on prices.

One issue that has received increasing attention is price discrimination. This is discrimination based on willingness to pay, or the practice of charging more to people who are willing to pay more. This might at first seem unfair or even exploitative, but in fact it is commonplace and usually unremarkable (Elegido 2011; Marcoux 2006a). Examples of price discrimination include senior and student discounts, bulk discounts, versioning, and the sort of bargaining one finds in car dealerships and flea markets. We might see price discrimination as an implication of freedom in pricing, and according to a familiar result in economics, price discrimination increases social welfare, provided that it enables producers to increase output (Varian 1985). But some instances of price discrimination have come in for criticism. Online retailers collect and purchase enormous amounts of information about consumers, and there is evidence that they are using this to personalize prices, or tailor prices to what they think are consumers’ reservation prices, i.e., the highest amounts they are willing to pay. Some believe that this practice is unfair (Steinberg 2020), though they problem may simply be that consumers don’t know what retailers are up to.

Another issue of pricing ethics is price gouging. Price gouging can be understood as a sharp increase in the price of a necessary good in the wake of an emergency which renders that good scarce (Hughes 2020; Zwolinski 2008). As the novel coronavirus spread around the world in early 2020, retailers began to charge extremely high prices for cleaning products and medical supplies. Many jurisdictions have laws against price gouging, and it is widely regarded as unethical (Snyder 2009). The reason is that it is a paradigm case of exploitation: A extracts an excessive benefit out of B in circumstances in which B cannot reasonably refuse A ’s offer (Valdman 2009). But some theorists defend price gouging. While granting that sales of items in circumstances like these are exploitative, they note that they are mutually beneficial. Both the seller and buyer prefer to engage in the transaction rather than not engage in it. Moreover, when items are sold at inflated prices, this both limits hoarding and attracts more sellers into the market. Permitting price gouging may thus be the fastest way of eliminating it (Zwolinski 2008). (For further discussion, see the entry on exploitation .)

Most contemporary scholars believe that sellers have wide, though not unlimited, discretion in how much they charge for goods and services. But there is an older tradition in business ethics, found in Aquinas and other medieval scholars, according to which there is one price that sellers should charge: the “just price”. There is debate about what exactly medieval scholars meant by “just price”. According to a historically common interpretation, the just price is determined by the seller’s cost of production, i.e., the price that compensates the seller for the value of her labor and expenses. More recent interpretations understand the medieval just price at something closer to the market price, which may be more or less than the cost of production (Koehn & Wilbratte 2012).

6. Firms and workers

Business ethicists have written much about the relationship between employers and employees. Below we consider four issues at the employer/employee interface: (1) hiring and firing, (2) pay, (3) meaningful work, and (4) whistleblowing. Another important topic at this interface is privacy. For space reasons it will not be discussed, but see the entries on privacy and privacy and information technology .

Ethical issues in hiring and firing tend to focus on the question: What criteria should employers use, or not use, in employment decisions? The question of what criteria employers should not use is addressed in discussions of discrimination.

While there is some debate about whether discrimination in employment should be legally prohibited (see Epstein 1992), almost everyone agrees that it is morally wrong (Hellman 2008; Lippert-Rasmussen 2014). Discussion has focused on two questions. First, when does the use of a certain criterion in an employment decision count as discriminatory? It would seem wrong if Walmart were to exclude white applicants for a job in their marketing department, but not wrong if the Hovey Players (a theater troupe) were to exclude white applicants for the role of Walter Younger in A Raisin in the Sun . We might say that whether a hiring practice is discriminatory depends on whether the criterion used is job-relevant. But the concept of job-relevance is contested, as the case of “reaction qualifications” reveals. Suppose that white diners prefer to be served by white waiters rather than black waiters. In this case race seems job-relevant, but it seems wrong for employers to take race into account (Mason 2017). Another question that has received considerable attention is: What makes discrimination wrong? Some argue that discrimination is wrong because of its effects on those who are discriminated against (Lippert-Rasmussen 2014); others think that it is wrong because of what it expresses to them (Hellman 2008). (For extensive discussion, see the entry on discrimination .)

Some writers believe that employers’ obligations are not satisfied simply by avoiding using certain criteria in hiring decisions. According to them, employers have a duty to hire the most qualified applicant. Some justify this duty by appealing to considerations of desert (D. Miller 1999; Mulligan 2018); others justify it by appealing to equal opportunity (Mason 2006). We might object to this view by appealing to property rights. A job offer typically implies a promise to pay the job-taker a sum of your money for performing certain tasks. While we might think that excluding some ways you can dispose of your property (e.g., rules against discrimination in hiring) can be justified, we might think that excluding all ways but one (viz., a requirement to hire the most qualified applicant) is unjustified. In support of this, we might think that a small business owner does nothing wrong when she hires her daughter for a part-time job as opposed to a more qualified stranger.

The question of when employees may be fired is a staple of business ethics texts and was the subject of considerable debate in the business ethics literature in the 1980’s and 1990’s. There are two main views: those who think that employment should be “at will”, so that an employer can terminate an employee for any reason (Epstein 1984; Maitland 1989), and those who think that employers should be able to terminate employees only for “just cause” (e.g., poor performance or excessive absenteeism) (McCall & Werhane 2010). In fact, few writers hold the “pure” version of the “at will” view. Most would say, and the law agrees, that it is wrong for an employer to terminate an employee for certain reasons, e.g., a discovery that he is Muslim or his refusal to commit a crime for the employer. Thus the debate is between those who think that employers should be able to terminate employees for any reason with some exceptions , and those who think that employers should be able to terminate employees only for certain reasons. In the U.S., most employees are at will, while in Europe, most employees are covered, after a probationary period, by something analogous to just cause. Arguments for just cause appeal to the effects that termination has on individual employees, especially those who have worked for an employer for many years (McCall & Werhane 2010). Arguments for at will employment appeal to freedom or macroeconomic effects. It is claimed, in the former case, that just cause is an unwarranted restriction on employers’ and employees’ freedom of contract (Epstein 1984), and in the latter case, that it raises the unemployment rate (Maitland 1989). The more difficult it is for an employer to fire an employee, the more reluctant she will be to hire one in the first place.

Businesses generate revenue, and some of this revenue is distributed to employees in the form of compensation, or pay. Since the demand for pay typically exceeds the supply, the question of how pay should be distributed is naturally analyzed as a problem of justice.

Two theories of justice in pay have attracted attention. One may be called the “agreement view”. According to it, a just wage is whatever wage the employer and the employee agree to without force or fraud (Boatright 2010). This view is sometimes justified in terms of property rights. Employees own their labor, and employers own their capital, and they are free, within broad limits, to dispose of it as they please. In addition, we might think that wages should be should determined by voluntary agreement for the same reason prices generally should be, viz., it allocates resources to their most productive uses, as determined by people’s wants (Heath 2018; Hayek 1945). A “wage”, after all, is just a special name for the price of labor.

A second view of wages may be called the “contribution view”. According to it, the just wage for a worker is the wage that reflects her contribution to the firm. This view comes in two versions. On the absolute version, workers should receive an amount of pay that equals the value of their contributions to the firm (D. Miller 1999). On the comparative version, workers should receive an amount of pay that reflects the relative value of their contributions to the firm, given what others in the firm contribute and are paid (Sternberg 2000). The contribution view strikes some as normatively basic, a view for which no further argument can be given (D. Miller 1999). An analogy may be drawn with punishment. Just as it seems intuitively right for the severity of a criminal’s punishment to reflect the seriousness of her crime, so it may seem intuitively right for the value of a persons’s pay to reflect the value of her work (Moriarty 2016). In this way, pay might be understood as a reward for work.

Some argue that compensation should be evaluated not only as a problem of justice but as an incentive. The question here is what pay encourages employees to do, and how it encourages them to do it. Poorly structured compensation packages for traders in the financial services industry are thought to have contributed to the financial crisis of 2007-2009 (Kolb 2012). Traders were incentivized to take excessively risky bets, and when those bets went bad, their firms could not cover the losses, putting the firms and ultimately the whole financial system in peril. Bad incentives may also help to explain the recent account fraud scandal at Wells Fargo.

The pay of any employee can be evaluated from a moral point of view. But business ethicists have paid particular attention to the pay of certain employees, viz., CEOs and workers in factories in developing countries, often called “sweatshops.”

There has been significant debate about whether CEOs are paid too much (Boatright, 2010; Moriarty 2005), with scholars falling into two camps. Those in the “managerial power” camp believe that CEOs wield power over boards of directors, and use this power to extract above-market rents from their firms (Bebchuk & Fried 2004). Those in the “efficient contracting” camp believe that pay negotiations between CEOs and boards are usually carried out at arm’s-length, and that CEOs’ large compensation packages reflect their rare and valuable skills. (For a recent survey of relevant empirical issues, see Edmans, Gabaix, & Jenter 2017).

There has also been a robust debate about whether workers in sweatshops are paid too little. Some say ‘no’ (Powell & Zwolinski 2012; Zwolinski 2007). They say that sweatshops wages, while low by standards in developed countries, are not low by the standards of the countries in which the sweatshops are located. This explains why people choose to work in a sweatshop; it is the best offer they have. Efforts to increase artificially the wages of sweatshop workers, according to these writers, is misguided on two counts. First, it is an interference with the autonomous choices of employers and workers. Second, it is likely to make workers worse off, since employers will respond by either moving operations to a new location or employing fewer workers in that location (cf. Kates 2015). These writers sometimes appeal to a principle of “nonworseness,” according to which a consensual, mutually beneficial interaction (of the sort sweatshop owners and workers engage in) cannot be worse than its absence. Other writers challenge these claims. While granting that workers choose to work in sweatshops, they deny that their choices are truly voluntary (Arnold & Bowie 2003; Kates 2015). Given their low wages, this suggests that sweatshop workers are wrongfully exploited (Faraci 2019). Moreover, some argue, firms can and should do more for sweatshop workers, on grounds on fairness or beneficence (Snyder 2010). These writers invoke a principle of “interaction,” according to which people involved in a certain relationship (of the sort sweatshop owners and workers are engaged in) must live up to certain standards of conduct (which exploitation is alleged to fall below). In response to the claim that firms put themselves at a competitive disadvantage if they do, writers have pointed to actual cases where firms have been able to secure better treatment for sweatshop workers without suffering serious financial penalties (Hartman, Arnold, & Wokutch 2003). (For further discussion, see the entry on exploitation .)

Smith (1776 [1976]) famously observed that a detailed division of labor greatly increases the productivity of manufacturing processes. To use his example: if one worker performs all of the tasks required to make a pin himself—18, we are told—he can make just a few pins per day. However, if the worker specializes in one or two of these tasks, and combines his efforts with other workers who specialize in one or two of the other tasks, then together they can make thousands of pins per day. But according to Smith, there is human cost to the detailed division of labor. Performing one or two simple tasks all day makes a worker “as stupid and ignorant as it is possible for a human creature to become” (Smith 1776 [1976]: V.1.178).

To avoid this result, some call for work to be made more “meaningful”. In this sense, a call for meaningful work is not a call for work to be more “important”, i.e., to contribute to the production of a good or service that is objectively valuable, or that workers believe is valuable (cf. Michaelson 2021; Veltman 2016). Instead, it is a call for labor processes to be arranged so that work is interesting, requires skill, and gives workers substantial decision-making power (Arneson 1987; Roessler 2012; Schwartz 1982).

Smith’s insight that labor processes are more efficient when they are divided into meaningless segments leads some writers to believe that, in a competitive economy, firms will not provide as much meaningful work as workers want (Werhane 1985). In response, it has been argued that there is a market for labor, and if workers want meaningful work, then employers have an incentive to provide it (Maitland 1989; Nozick 1974). According to this argument, insofar as we see “too little” meaningful work on offer, this is because workers prefer not to have it—or more precisely, because workers are willing to trade meaningfulness for other benefits, such as higher wages.

The above argument treats meaningful work as a matter of preference, as a job amenity that employers can decline to offer or that workers can trade away (cf. Yeoman 2014). Others resist this understanding. According to Schwartz (1982), employers are required to offer employees meaningful work, and employees are required to perform it, out of respect for autonomy (see also Bowie 2017). The idea is that the autonomous person makes choices for herself; she does not mindlessly follow others’ directions. A difficulty for this argument is that respect for autonomy does not seem to require that we make all choices for ourselves. A person might, it seems, autonomously choose to allow important decisions to be made for her in certain spheres of her life, e.g., by a coach, a family member, a medical professional, or a military commander.

A potential problem for this response brings us back to Smith, and to “formative” arguments for meaningful work. The problem, according to some writers, is that if most of a person’s day is given over to meaningless tasks, then her capacity for autonomous choice, and perhaps her other intellectual faculties, may deteriorate. A call for meaningful work may be understood as a call for workplaces to be arranged so that this deterioration does not occur (Arneson 2009; Arnold 2012; Yeoman 2014). In addition to Smith, Marx (1844 [2000]) was concerned about the effects of work on human flourishing.

Formative arguments face at least two difficulties, one empirical and one normative. The empirical difficulty is establishing the connection between meaningless work and autonomous choice (or another intellectual faculty). More evidence is needed. The normative difficulty is that formative arguments make certain assumptions about the nature of the good and the state’s role in promoting it. They assume that it is better for people to have fully developed faculties of autonomous choice (etc.) and that the state should help to develop them. These assumptions might be challenged, e.g., by liberal neutralists (Roessler 2012; Veltman 2016). Yeoman (2014) seeks to surmount this challenge—and make meaningful work safe for liberal political theory—by conceptualizing meaningful work as a fundamental human need, not a mere preference.

Suppose you discover, as Tyler Shultz did at Theranos in 2015, that your firm is deceiving regulators and investors about the efficacy of its products. To stop this, one thing you might do is “blow the whistle” by disclosing this information to a third party. While scholars give different definitions of whistleblowing (see, e.g., Brenkert 2010; Davis 2003; DeGeorge 2009; Delmas 2015), the following elements are usually present: (1) insider status, (2) non-public information, (3) illegal or immoral activity, (4) avoidance of the usual chain of command in the firm, (5) intention to solve the problem. In the above example, Shultz was a whistleblower because he was (1) a Theranos employee (2) who disclosed non-public information (3) about illegal activity in the firm (4) to a state regulator (5) in an effort to stop that activity.

Debate about whistleblowing tends to focus on the question of when whistleblowing is justified—in the sense of when it is permissible, or when it is required. This debate assumes that whistleblowing requires justification, or is wrong, other things equal. Many business ethicists make this assumption on the grounds that employees have a pro tanto duty of loyalty to their firms (Elegido 2013). Against this, some argue that the relationship between the firm and the employee is purely transactional—an exchange of money for labor (Duska 2000)—and so is not normatively robust enough to ground a duty of loyalty. (For a discussion of this issue, see the entry on loyalty .)

One prominent justification of whistleblowing is due to DeGeorge (2009). According to him, it is permissible for an employee to blow the whistle when his doing so will prevent harm to society. (In a similar account, Brenkert [2010] says that the duty to blow the whistle derives from a duty to prevent wrongdoing.) The duty to prevent harm can have more weight, if the harm is great enough, than the duty of loyalty. To determine whether whistleblowing is not simply permissible but required, DeGeorge says, we must take into account the likely success of the whistleblowing and its effects on the whistleblower himself. Humans are tribal creatures, and whistleblowers are often treated badly by their colleagues. (Shultz and his family were hounded by Theranos’s powerful and well-connected lawyers, at a cost to them of hundreds of thousands of dollars.) So if whistleblowing is unlikely to succeed, then it need not be attempted. The lack of a moral requirement to blow the whistle in these cases can be seen as a specific instance of the rule that individuals need not make huge personal sacrifices to promote others’ interests, even when those interests are important.

Another account of whistleblowing is given by Davis (2003). Like Brenkert (and unlike DeGeorge), Davis focuses on the wrongdoing that the firm engages in (not the harm it causes). According to Davis, however, the point of whistleblowing is not so much to prevent the wrongdoing but to avoid one’s own complicity in it. He says that an employee is required to blow the whistle on her firm when she believes that it is engaged in seriously wrongful behavior, and her work for the firm “will contribute … to the wrong if … [she] [does] not publicly reveal what [she knows]” (2003: 550). Davis’s account limits whistleblowers to people who are currently firm insiders. Many find this counterintuitive, since it implies that people often described as whistleblowers, like Jeffrey Wigand (Brown & Williamson) and Edward Snowden (NSA), are not actually whistleblowers.

7. The firm in society

Business activity and business entities have an enormous impact on society. One way that businesses impact society, of course, is by producing goods and services and by providing jobs. But businesses can also impact society by trying to solve social problems and by using their resources to influence governments’ laws and regulations.

“Corporate social responsibility”, or CSR, is typically understood as actions by businesses that are (i) not legally required, and (ii) intended to benefit parties other than the corporation (where benefits to the corporation are understood in terms of return on equity, return on assets, or some other measure of financial performance). The parties who benefit may be more or less closely associated with the firm itself; they may be the firm’s own employees or people in distant lands.

A famous example of CSR involves the pharmaceutical company Merck. In the late 1970s, Merck was developing a drug to treat parasites in livestock, and it was discovered that a version of the drug might be used treat Onchocerciasis, or river blindness, a disease that causes debilitating itching, pain, and eventually blindness in people. The problem was that the drug would cost hundreds of millions of dollars to develop, and would generate little or no revenue for Merck, since the people usually afflicted with river blindness were too poor to afford it. Ultimately Merck decided to develop the drug. As expected, it was effective in treating river blindness, but Merck made no money from it. As of this writing in 2021, Merck, now in concert with several nongovernmental organizations, continues to manufacture and distribute the drug throughout the developing world for free.

The scholarly literature on CSR is dominated by social scientists. Their question is typically whether, when, and how socially responsible actions benefit firms financially. The conventional wisdom is that there is a slight positive correlation between corporate social performance and corporate financial performance, but it is unclear which way the causality goes (Vogel 2005; Zhao & Murrell 2021). That is, it is not clear whether prosocial behavior by firms causes them to be rewarded financially (e.g., by consumers who value their behavior), or whether financial success allows firms to engage in more prosocial behaviors (e.g., by freeing up resources that would otherwise be spent on core business functions).

Many writers connect the debate about CSR with the debate about the ends of corporate governance. Thus Friedman (1970) objects to CSR, saying that managers should be maximizing shareholder wealth instead. (Friedman also thinks that CSR is a usurpation of the democratic process and often wasteful, since managers aren’t experts in solving social problems.) Stakeholder theory (Freeman et al. 2010) is thought to be more accommodating of prosocial activity by firms, since it permits firms to do things other than increase shareholder wealth.

We do not need, however, to see the debate about CSR a debate about the proper ends of corporate governance. We can see it as a debate about the nature and scope of firms’ moral duties, i.e., what obligations (e.g., of rescue or beneficence) they must discharge, whatever their goals are (Hsieh 2004; Mejia 2020).

Many writers give broadly consequentialist reasons for CSR. The arguments tend to go as follows: (1) there are serious problems in the world, such as poverty, conflict, environmental degradation, and so on; (2) any agent with the resources and knowledge necessary to ameliorate these problems has a moral responsibility to do so, assuming the costs they incur on themselves are not excessively high; (3) firms have the resources and knowledge necessary to ameliorate these problems without incurring excessively high costs; therefore, (4) firms should ameliorate these problems (Dunfee 2006a).

The view that someone should do something about the world’s problems seems true to many people. Not only is there an opportunity to increase social welfare by alleviating suffering, suffering people may also have a right to assistance. The controversial issue is who should do something to help, and how much they should do. Thus defenders of the above argument focus most of their attention on establishing that firms have these duties, against those who say that these duties are properly assigned to states or individuals. O. O’Neill (2001) and Wettstein (2009) argue that firms are “agents of justice”, much like states and individuals, and have duties to aid the needy (see also Young 2011). Strudler (2017) legitimates altruistic behavior by firms by undermining the claim that shareholders own them, and so are owed their surplus wealth. Hsieh (2004) says that, even if we concede that firms do not have social obligations, individuals have them, and the best way for many individuals to discharge them is through the activities of firms (see also McMahon 2013; Mejia 2020).

Debates about CSR are not just debates about whether specific social ills should be addressed by specific corporations. They are also debates about what sort of society we want to live in. While acknowledging that firms benefit society through CSR, Brenkert (1992) thinks it is a mistake for people to encourage firms to engage in CSR as a practice. When we do so, he says, we cede a portion of the public sphere to private actors. Instead of deciding together how we want to ameliorate social ills affecting our fellow community members, we leave it up to private organizations to decide what to do. Instead of sharpening our skills of democracy through deliberation and collective decision-making, and reaffirming social bonds through mutual aid, we allow our skills and bonds to atrophy through disuse.

Many businesses are active participants in the political arena. They support candidates for election, defend positions in public debate, lobby government officials, and more. What should be said about these activities?

Social scientists have produced a substantial literature on corporate political activity (CPA) (for a review, see Lawton, McGuire, & Rajwani 2013). This research focuses on such questions as: What forms does CPA take? What are the antecedents of CPA? What are its consequences? CPA raises many normative questions as well.

We might begin by asking why corporations should be allowed to engage in political activity at all. In a democratic society, freedom of expression is both a right and a value (Stark 2010). People have a right to participate in the political process by supporting candidates for public office, defending positions in public debate, and so on. It is generally a good thing when they exercise this right, since they can introduce new facts and arguments into public discourse. People can engage in political activity individually, but in a large society, they may find it useful to do so in groups. The firm might be seen as one of these groups. Indeed, we might think it is especially important that firms engage in (at least some forms of) political activity. Society has an interest in knowing how proposed economic policies will affect firms; firms themselves are a good source of information.

But political activity by corporations has come in for criticism. One concern focuses on what corporations’ goals are. Some worry that firms engage in CPA in order to advance their own interests at the expense of their competitors’ or the public’s. This activity is sometimes described, and condemned, as “rent-seeking” (Jaworski 2014; Tullock 1989). Questions have been raised about the nature and value of rent-seeking. According to a common definition, rent-seeking is socially wasteful economic activity intended to secure benefits from the state rather than the market. But there is disagreement about what counts as waste. Lobbying for subsidies, or tariffs on foreign competitors, are classic cases of rent-seeking. But subsidies for (e.g.) corn might help to secure a nation’s food supply, and tariffs on (e.g.) foreign steel manufacturers might help a nation to protect itself in a time of war (Boatright 2009; Hindmoor 1999). One person’s private rent-seeking is another’s public benefit.

A second concern about CPA is that it can undermine the ideal of equality at the heart of democracy (Christiano 2010). Some corporations have a lot of money, and this can be translated into a lot of power. In 2010, the state of Indiana passed a law—the Religious Freedom Restoration Act (RFRA)—that appeared to give employers the freedom to discriminate against LGBTQ people on religious grounds. In response, Salesforce and Angie’s List cancelled plans to expand in the state, and threatened to leave it altogether. Indiana quickly convened a special session of its legislature and announced that the new law did not in fact give employers this freedom. By contrast, if the average Indianan told the legislature that they might leave the state because of the RFRA, the legislature would not have cared. This objection to CPA is also an objection to political activity by powerful groups like the National Rifle Association (NRA) or the American Civil Liberties Union (ACLU) and individuals like Charles Koch or Tom Steyer.

A third objection to CPA is more narrowly targeted. According to it, corporations are not the right type of entities to engage in political activity (Hussain & Moriarty 2018). The key issue is representation. Organizations like the NRA and ACLU are legitimate participants in the political arena because they represent their members in political debate, and people join or leave them based on political considerations. By contrast, business organizations have no recognized role to play in the political system, and people join or leave them for economic reasons, not political ones. On this criticism, corporate political activity should be conceptualized not as a collective effort by all of the corporation’s members to speak their minds about a shared concern, but as an effort by a small group of powerful owners or executives to use the corporation’s resources to advance their own personal ends.

Traditionally CPA goes “through” the formal political process, e.g., contributing to political campaigns or lobbying government officials. But increasingly firms are engaging in what appears to be political activity that goes “around” or “outside” of this process, especially in circumstances in which the state is weak, corrupt, or incompetent. They do this through the provision of public goods and infrastructure (Ruggie 2004) and the creation of systems of private regulation or “soft law” (Vogel 2010). For example, when the Rana Plaza collapsed in Bangladesh in 2013, killing more than 1100 garment industry workers, new building codes and systems of enforcement were put into place. But they were put into place by the multinational corporations that are supplied by factories in Bangladesh, not by the government of Bangladesh. This kind of activity is sometimes called “political CSR,” since it is a kind of CSR that produces a political outcome (Scherer & Palazzo 2011). We might call it CPA “on steroids”. Instead of influencing political outcomes, corporations bring them about almost single-handedly. This is a threat to democratic self-rule. Some writers have explored whether it can be ameliorated through multi-stakeholder initiatives (MSIs), or governance systems that bring together firms, non-governmental organizations, and members of local communities to deliberate and decide on policy matters. Prominent examples include the Forest Stewardship Council (FSC), the Roundtable on Sustainable Palm Oil (RSPO), and the Extractive Industries Transparency Initiative (EITI) (Scherer & Palazzo 2011). Critics have charged that MSIs, while effective in producing dialog among stakeholders, are ineffective at holding firms to account (Hussain & Moriarty 2018; Moog, Spicer, & Böhm 2015).

There is another kind of corporate political activity. This is political activity whose target is corporations, known as “ethical consumerism” (for a review see Schwartz 2017). Consumers typically make choices based on quality and price. Ethical consumers (also) appeal to moral considerations. They may purchase, or choose not to purchase, goods from retailers who make their products in certain countries or who support certain political causes. These can be described as political activities because consumers are using their economic power to achieve political ends. It is difficult for consumer actions against, or in support of, firms to succeed, since they require coordinating the actions of many individuals. But consuming ethically may be important for personal integrity. You might say that you cannot in good conscience shop at a retailer who is working, in another arena, against your deeply-held values. One concern about ethical consumerism is that it may be a form of vigilantism (Hussain 2012; cf. Barry & MacDonald 2018), or mob justice. Another is that it is yet another way that people can self-segregate by moral and political orientation as opposed to finding common ground.

Many businesses operate across national boundaries. These are typically called “multinational” or “transnational” firms (MNCs or TNCs). Operating internationally heightens the salience of a number of the ethical issues discussed above, such as CSR, but it also raises new issues, such as relativism and divestment. Two issues often discussed in connection with international business are not treated in this section. One is wages and working conditions in sweatshops. This literature is briefly discussed in section 6.2 . The second issue is corruption, which is not discussed in this entry, for space reasons. But see the entry on corruption .

A number of business ethicists have developed ethical codes for MNCs, including DeGeorge (1993) and Donaldson (1989). International agencies have also created codes of ethics for business. Perhaps the most famous of these is the United Nations Global Compact, membership in which requires organizations to adhere to a variety of rules in the areas of human rights, labor, environment, and anti-corruption. In his important work for that body, Ruggie (2004, 2013) developed a “protect, respect, and remedy” framework for MNCs and human rights, which assigns the state the primary duty to protect human rights and remedy abuses of them, and firms the duty to respect human rights (cf. Wettstein 2009). A striking fact about much of this research is that, while it is focused on international business, and sometimes promulgated by international agencies, the conclusions reached do not apply specifically to firms doing business across national boundaries. The duty to, e.g., respect human rights applies to firms doing business within national boundaries too. It is simply that the international context is the one in which this duty seems most important to discharge, and in which firms are some of the few agents who can do so.

There are issues, however, that arise specifically for firms doing business internationally. Every introductory ethics student learns that different cultures have different moral codes. This is typically an invitation to think about whether or not morality is relative to culture. For the businessperson, it presents a more immediate challenge: How should cultural differences in moral codes be managed? In particular, when operating in a “host” country, should the businessperson adopt host country standards, or should she apply her “home” country standards?

Donaldson is a leading voice on this question, in work done independently (1989, 1996) and with Dunfee (1999). Donaldson and Dunfee argue that there are certain “moral minima” that must be met in all contexts. These are given to us by “hypernorms”, or universal moral values and rules, which are themselves justified by a “convergence of religious, philosophical, and cultural” belief systems (1999: 57). Within the boundaries set by hypernorms, Donaldson and Dunfee say, firms have “free space” to select moral standards. They do not have the liberty to select any standards they want; rather, their choices must be guided by the host country’s traditions and its current level of economic development. Donaldson and Dunfee call their approach “integrative social contracts theory” (ISCT), since they seek to merge norms derived from hypothetical contracts with norms that people have actually agreed to in particular societies.

ISCT has attracted a great deal of attention and many critics. Much of this criticism has focused on hypernorms, the criteria for which are alleged to be ad hoc (Scherer 2015), ambiguous (Brenkert 2009), and incomplete (Mayer & Cava 1995). Dunfee (2006b) collects and analyzes a decade worth of critical commentary on ISCT. For a more recent elaboration and defense of the approach, see Scholz, de los Reyes, and Smith (2019).

A complication for the debate about whether to apply home country standards in host countries is that multinational corporations engage in business across national boundaries in different ways. Some MNCs directly employ workers in multiple countries, while others contract with suppliers. Nike, for example, does not directly employ workers to make shoes. Rather, Nike designs shoes, and hires firms in other countries to make them. Our views about whether an MNC should apply home country standards in a host country may depend on whether the MNC is applying them to its own workers or to those of other firms.

The same goes for responsibility. MNCs, especially in consumer-facing industries, are often held responsible for poor working conditions in their suppliers’ factories. Nike was subject to sharp criticism for the labor practices of its suppliers in the 1990s (Hartman et al. 2003). Initially Nike pushed back, saying that those weren’t their factories, and so wasn’t their problem. Under mounting pressure, it changed course and promulgated a set of labor standards that it required all of its suppliers to meet, and now spends significant resources ensuring that they meet them (Hsieh, Toffel, & Hull 2019; Wokutch 2001). This is increasingly the approach Western multinationals take. Here again the response to the Rana Plaza tragedy is illustrative. What lengths companies should go to ensure the safety of workers in their supply chains is a question meriting further study (see Young 2011).

A businessperson may find that a host country’s standards are not just different than her home country’s standards, but morally intolerable. She may decide that the right course of action is not to do business in the country at all, and if she is invested in the country, to divest from it. The issue of divestment received substantial attention in the 1980s as MNCs were deciding whether or not to divest from South Africa under its Apartheid regime. It may attract renewed attention in the coming years as firms and other organizations contemplate divesting from the fossil fuel industry. Common reasons to divest from a morally problematic society or industry are to avoid complicity in immoral practices, and to put pressure on the society or industry to change its practices. Critics of divestment worry about the effects of divestment on innocent third parties (Donaldson 1989) and about the efficacy of divestment in forcing social change (Hudson 2005). Some believe that it is better for firms to stay engaged with the society or industry and try to bring about change from within—a policy of “constructive engagement”.

It is not hard to see why philosophers might be interested in business. Business activity raises a host of interesting philosophical issues: of agency, responsibility, truth, manipulation, exploitation, justice, beneficence, and more. After a surge of activity 40 years ago, however, philosophers seem to be gradually retreating from the field.

One explanation appeals to demand. Many of the philosophers who developed the field were hired into business schools, but after they retired, they were not replaced with other philosophers. Business schools have hired psychologists to understand why people engage in unethical behavior and strategists to explore whether ethics pays. These scholars fit better into the business school environment, which is dominated by social scientists. What social scientists do to advance our understanding of descriptive ethics is important, to be sure, but it is no substitute for normative reflection on what is ethical or unethical in business.

Another explanation for the retreat of philosophers from business ethics appeals to supply. There are hardly any philosophy Ph.D. programs that have faculty specializing in business ethics and, as a result, few new Ph.D.’s are produced in this area. Those who work in the area are typically “converts” from mainstream ethical theory and political philosophy. Some good news on this front is the recent increase in the number of normative theorists working on issues at the intersection of philosophy, politics, and economics (PPE). Many of the topics these scholars address—the value and limits of markets, the nature of the employment relationship, and the role of government in regulating commerce—are issues business ethicists care about. But PPE-style philosophers hardly cover the whole field of business ethics. There remain many urgent issues to address.

I hope this entry helps to inform philosophers and others about the richness and value of business ethics, and in doing so, generate greater interest in the field.

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How to cite this entry . Preview the PDF version of this entry at the Friends of the SEP Society . Look up topics and thinkers related to this entry at the Internet Philosophy Ontology Project (InPhO). Enhanced bibliography for this entry at PhilPapers , with links to its database.

• Marcoux, Alexei, “Business Ethics”, The Stanford Encyclopedia of Philosophy (Fall 2016 Edition), Edward N. Zalta (ed.), URL = < https://plato.stanford.edu/archives/fall2016/entries/ethics-business/ >. [This was the previous entry on business ethics in the Stanford Encyclopedia of Philosophy — see the version history .]
• A History of Business Ethics , by Richard T. De George (University of Kansas), an important early contributor to the field.
• Society for Business Ethics , the main professional society for business ethicists, especially of the normative variety.

agency: shared | corruption | discrimination | economics [normative] and economic justice | ethics: virtue | exploitation | feminist philosophy, topics: perspectives on class and work | information technology: and privacy | intentionality: collective | justice: distributive | justice: global | Kant, Immanuel: moral philosophy | loyalty | lying and deception: definition of | manipulation, ethics of | markets | moral relativism | perfectionism, in moral and political philosophy | privacy | property and ownership | Rawls, John | responsibility: collective | rights | rights: human

Acknowledgments

For helpful suggestions on this entry (and the previous version), I thank Dorothea Baur, George Brenkert, Jason Brennan, Matt Caulfield, David Dick, Anca Gheaus, Keith Hankins, Edwin Hartman, Laura Hartman, Lisa Herzog, David Jacobs, Woon Hyuk Jay Jang, Peter Jaworski, Xavier Landes, Chris MacDonald, Emilio Marti, Dominic Martin, Pierre-Yves Néron, Eric Orts, Katinka Quintelier, Sareh Pouryousefi, Amy Sepinwall, Kenneth Silver, Abraham Singer, Alejo José G. Sison, Cindy Stark, Chris Surprenant, Kevin Vallier, and Hasko von Kriegstein.

Copyright © 2021 by Jeffrey Moriarty < jmoriarty @ bentley . edu >

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Library of Congress Catalog Data: ISSN 1095-5054

What Are Business Ethics? Definition, Principles, and Types

• December 16, 2022

Table of Contents

What are business ethics, why are business ethics important, accountability, respect for others, compliance with rules, environmental concern, transparency, respect for laws, corporate social responsibility, technology ethics, personal responsibility, the bottom line.

There are some principles and rules you must follow in order to manage a successful business. These standards are referred to as business ethics. Today’s businesses place a high value on ethics because it might damage their reputation and performance.

But what are business ethics, why are they important, and what are the types of business ethics? As we delve further into understanding corporate ethics, this guide will provide the answers to these queries.

Cambridge dictionary defines business ethics as “the rules, principles, and standards of deciding what is morally right or wrong when working.” So, business ethics refers to the implementation of appropriate business practices and policies in the workplace.

It deals with controversial topics such as corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities. This way, through business ethics, there is a basic level of trust between consumers and the company.

Nonetheless, business ethics is not there only to differentiate between wrong and right; it also deals with reconciling what legal actions should be taken and maintaining a competitive advantage over other businesses.

While doing business is essential to the company, carrying out work correctly is critical. It affects the business’s reputation since investors are less likely to buy stock or invest in a company that operates unethically. Therefore, the ethical operation is directly linked to short-term and long-term profitability.

With strong business ethics, a company is sure to work legally, protecting both its workers and clients. These principles preserve manufacturing standards, keep businesses honest and fair, and stop misleading or unfounded product claims. A strong ethical business culture also supports better performance and reduces employee burnout, among other things.

Principles of Business Ethics

Long-term success can be attained more sustainably and steadily by succeeding legally and ethically, so here are 11 important principles of business ethics.

Ethical workers understand and take personal accountability for the morality of their actions toward themselves, their coworkers, their businesses, and their communities. Accountability necessitates a complete dedication to the ethics of all decisions, acts, and relations.

Respect is shown by a complete commitment to the human rights, dignity, freedom, interests, and privacy of every staff member. It entails accepting that everyone deserves to express their thoughts and opinions without fear of retaliation or other discrimination. Executives who uphold ethics treat everyone with respect and dignity, regardless of gender , ethnicity, or national origin.

Leadership is a commitment to excellence through ethical decision-making. Companies and business executives strive to set a good example through their actions and by supporting the development of a culture that values moral reasoning and ethical decision-making.

Everyone on staff must be dedicated to speaking the truth in all interactions and all acts. This never includes intentionally making false assertions, exaggerations, misrepresentations, or selective omissions. Regardless of the news, positive or negative, an ethical employee will treat them with equal sincerity.

Companies can create more specialized policies by starting at the macro level and using these industry rules as a framework. Companies must establish methods to carry out and enforce these principles in addition to writing a code of ethics. Additionally, consider adding scenarios that team members can discuss and work through into regular training on the company’s procedures.

Being loyal to coworkers, clients, business partners, and suppliers, as well as never disclosing information that has been acquired in confidence, are ways to demonstrate loyalty. Loyal employees avoid conflicts of interest, contribute to preserving and enhancing the company’s good name, and lift the spirits of their coworkers.

Business owners, staff members, and customers should continue to pay attention to the global climate situation. Making decisions that limit or reduce your negative influence on the environment is part of ethical business practices. Examples include:

• lowering carbon emissions
• reducing the amount of garbage produced
• promoting energy-saving measures

Making corporate information and policies accessible to the relevant parties is necessary if an organization is committed to transparency. It involves, for instance, disclosing the standards for pricing increases, salaries, hiring, issuing promotions, dealing with violations at work, and terminating personnel.

Strong integrity can affect your honesty and commitment to laws and regulations, which is true whether you work with others or alone. Organizations and individuals exhibit integrity by acting and speaking consistently, which fosters confidence and trust. Additionally, integrity entails maintaining promises, upholding obligations, meeting deadlines, and refraining from dishonest behavior in personal and professional endeavors.

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Treating others fairly and as you would like to be treated must be the cornerstone of all trades and relations. Fairness entails treating everyone with respect and on an equal footing, never abusing your position of authority, and never taking advantage of someone else’s flaws or errors to further your own or your company’s interests. Fairness in the workplace fosters a community where workers feel at ease, which raises engagement.

Organizations are required to abide fully by all local, state, and federal regulations and laws. Businesses and employees who follow the law also follow any other mandatory organizational rules, practices, and processes.

Types of Business Ethics

Corporate social responsibility, or CSR, requires that firms act responsibly. All stakeholders, including workers, clients, suppliers, and the communities where enterprises operate, have their interests protected. Humane employment behavior, environmental protection, and charitable activities are a few examples of CSR.

Technology ethics are rules that can be applied to technology and include things like risk management and individual rights. With companies adopting e-commerce procedures, customer privacy, personal information protection, and ethical use of intellectual property are all part of technology ethics.

Any company employee will be required to demonstrate personal responsibility, whether at the executive or entry level. This could entail carrying out the tasks your business manager has given you or just performing the duties listed in your job description. When you make a mistake, you accept responsibility for it and take the necessary steps to correct it.

Favoritism is a serious ethical violation. Every person has some biases of their own. However, preferences and personal convictions shouldn’t be allowed to influence decisions in the workplace. The company must guarantee that everyone has an equal opportunity for advancement.

Companies construct business ethics to encourage moral behavior among their workforce and win over important stakeholders like customers and investors. The best course of action if you want to run a successful business is to implement these business ethics as soon as possible.

Bay Atlantic University

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Introduction

Chapter outline.

Ethics consists of the standards of behavior to which we hold ourselves in our personal and professional lives. It establishes the levels of honesty, empathy, and trustworthiness and other virtues by which we hope to identify our personal behavior and our public reputation. In our personal lives, our ethics sets norms for the ways in which we interact with family and friends. In our professional lives, ethics guides our interactions with customers, clients, colleagues, employees, and shareholders affected by our business practices ( Figure 1.1 ).

Should we care about ethics in our lives? In our practices in business and the professions? That is the central question we will examine in this chapter and throughout the book. Our goal is to understand why the answer is yes .

Whatever hopes you have for your future, you almost certainly want to be successful in whatever career you choose. But what does success mean to you, and how will you know you have achieved it? Will you measure it in terms of wealth, status, power, or recognition? Before blindly embarking on a quest to achieve these goals, which society considers important, stop and think about what a successful career means to you personally. Does it include a blameless reputation, colleagues whose good opinion you value, and the ability to think well of yourself? How might ethics guide your decision-making and contribute to your achievement of these goals?

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Access for free at https://openstax.org/books/business-ethics/pages/1-introduction

• Authors: Stephen M. Byars, Kurt Stanberry
• Publisher/website: OpenStax
• Book title: Business Ethics
• Publication date: Sep 24, 2018
• Location: Houston, Texas
• Book URL: https://openstax.org/books/business-ethics/pages/1-introduction
• Section URL: https://openstax.org/books/business-ethics/pages/1-introduction

© Mar 31, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

Business Ethics

(9 reviews)

OpenStax College

Copyright Year: 2018

ISBN 13: 9781947172579

Publisher: OpenStax

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Ingrid Greene, Clinical Assistant Professor, Loyola Marymount University on 6/6/23

I think that the subjects that are covered are thorough and they use great examples. But, I also feel that the textbook is missing a lot of key topics such as the role of technology and a deeper dive into the role of governments and non-profits. I... read more

Comprehensiveness rating: 3 see less

I think that the subjects that are covered are thorough and they use great examples. But, I also feel that the textbook is missing a lot of key topics such as the role of technology and a deeper dive into the role of governments and non-profits. I understand that it is important to include a lot about philosophy, but I think that there is a lot of room for improvement with a deeper dive of some other key parts of the curriculum. The philosophy part has many sources outside of a traditional textbook since this topic is has been studied for thousands of years, and doesn't need to be covered as thoroughly here. More time could be spend on other topics like non-profits and governance. I think that it is missing key parts about the role of a Board of Directors, how they are elected, and their responsibilities.

Content Accuracy rating: 5

Everything looked accurate and detailed properly.

Relevance/Longevity rating: 4

Yes, updates will be possible, and they link to relevant articles or cases that are very up-to-date. Again, I would just add more about technology and the role of non-profits.

Clarity rating: 4

I like the book, but the slides could be more clear and complete. Many of the slides have only a small photo and very limited text. They do not include much of the text material. I needed to create my own slides, and/or skip much of the material.

Consistency rating: 5

The book is very professional, and easy to read. There are key diagrams, and highlighting of key ideas. The slides, again, could use some help to coordinate better with the book.

Modularity rating: 5

It is very easy to read. I assigned the book to an 8th grader, and she was able to move through it easily and it engaged her interest. I took this as a good sign that it is good as an introduction to ethics for someone who is not familiar with the topic.

Organization/Structure/Flow rating: 5

The topics are well organized, but I would add a lot more about the world of non-profits. The external references to HBR cases is great. The frequent cases are also great.

Interface rating: 5

This is great. No problem with viewing it on multiple devices and computers.

Grammatical Errors rating: 5

Cultural Relevance rating: 5

Since this book centers a lot around culture, it would be hard to not give it a 5.

As I mentioned, it is important to have slides that really include much of the text, and I found the teacher resources for this very weak. I am hopeful that this could be improved. I did not have a chance to test the integration with our CMS, but I am hopeful that it could be helpful. I like that they include quizzes since this too can be time consuming for students. Lastly, I very much recommend that they include the work of non-profits in the discussion with business since this is a key player when we talk about doing things ethically, and getting input from key stakeholders.

Reviewed by Alysa D Lambert, Professor of HRM, Indiana University - Southeast (New Albany) on 2/21/23

The text covers a wide breadth of ethics and addresses all major and then some secondary topics in ethics. It also provides some of the history of ethical frameworks and their origins. It provides brief cases and critical thinking questions for... read more

Comprehensiveness rating: 5 see less

The text covers a wide breadth of ethics and addresses all major and then some secondary topics in ethics. It also provides some of the history of ethical frameworks and their origins. It provides brief cases and critical thinking questions for students to deepen their knowledge.

Content Accuracy rating: 4

I saw very few errors. The tone of the book reads as unbiased and covers all major theories of ethics.

Updates will be required but only as related to current ethical issues in business. As technology and business change, globalization continues to grow then the ethical issues will change and need to be updated. The ethical frameworks and the history of ethics will not change very much.

The book was clearly written with understandable examples. The resources are clear, relevant and recent.

Consistency rating: 4

The framework, format and vocabulary used were consistent and did not require extra explanation. For example, the "Link to Learning" boxes were great for giving students the chance to learn more about a topic. These will have to be checked frequently to ensure they are still live links which relates to the how relevant the book is in the future.

Modularity rating: 3

This could be improved. More headings, more sub-headings and more short case examples would increase the modularity of the text. Have short ethical dilemmas as conversation starters would also be a great addition.

I saw no issues with the organization of the material. My only suggestion would be to consider changing the "epilogue" chapter. It is titled, "Why ethics still matters?" I would hope after reading some much about ethics that much of this discussion would be obvious so breaking these points out and including them throughout may be one way to keep the relevance of studying ethics at the forefront of the course.

I did not see anything of concern here.

Cultural Relevance rating: 4

Culture has a prominent place in the book. I selected a 4 rating because there is always room for growth, but I believe the text does a really good job of reminding students of the cultural implications related to ethics. More examples could be added on LGBTQ+ issues, in particular the ethical implications related to inclusion and protecting those in the workplace who are in transition or who have transitioned.

Reviewed by Elizabeth Collier, Christopher Chair in Business Ethics, Dominican University on 5/2/22

This book includes the standard theories covered in most business ethics textbooks, along with a few additional frameworks that include cross-cultural opportunities for discussion and a broadening of what students may consider as they develop... read more

This book includes the standard theories covered in most business ethics textbooks, along with a few additional frameworks that include cross-cultural opportunities for discussion and a broadening of what students may consider as they develop their understanding of ethics. It covers a wide range of topics and cases and could be used in a general undergraduate course to cover a lot of ground. The many opportunities for critical thinking and the deeper discussion questions allow for this to be used at a general graduate level MBA course as well. If used in an MBA course, additional materials or lectures would need to be added because book moves at a quick clip and has just the basics on each topic, while covering many different topics.

The materials are accurate and there are many critical thinking questions provided that allow for deeper engagement with the frameworks and cases through assignments and discussions.

Relevance/Longevity rating: 5

The content includes traditional cases that all students should be aware of and also many recent cases that explore issues not covered in the past. The ability for sections of these types of books to be updated semi-regularly means that the book should not be obsolete any time soon and could be augmented/updated very easily in the future with new cases that have arisen.

Clarity rating: 5

The book is well written, clear, very concise, and includes references and a glossary for each chapter.

The book maintains consistency throughout in format, cases, questions, glossary, photos, videos and opportunities for engagement.

In addition to the book being easily broken up by week into a quarter or semester, there are optional Canvas and Blackboard downloads that are comprehensive, along with resources for assignments aiding an instructor in maintaining the modularity, clarity and organization.

The book has a clear organization that it maintains throughout.

Interface rating: 4

There is an "errata" function on the OpenStax site that explains all issues related to this category and the book seems to be updated every spring to address issues with links, quiz questions and other minor corrections.

I did not find any grammatical errors.

This book does make use of examples that are inclusive of a variety of races, ethnicities and other aspects of diversity in the workplace.

This is an excellent option for those looking to include OER materials into the business classroom. Many people from a wide range of academic disciplines contributed to or reviewed the text. There are very few resources for OER business ethics texts, so the comprehensiveness of this text, along with the many supplemental resources for faculty, are really a great resource at this time.

Reviewed by Rebeca Book, Professor, Pittsburg State University on 4/19/22

The textbook is very comprehensive and covers many areas. Good background in providing the foundation and history of ethics and the different perspectives. Thought the different links to current stories and interviews also was beneficial. Was... read more

The textbook is very comprehensive and covers many areas. Good background in providing the foundation and history of ethics and the different perspectives. Thought the different links to current stories and interviews also was beneficial. Was very comprehensive in that with the OpenStax and this particular textbook, the instructor has access to importing information (to me it was the Canvas Learning Management System) such as tests, powerpoints, etc. This additional information could also be downloaded and separate from a Learning Management System if needed.

Content was accurate and did not find any errors. Felt some areas might be a little biased, but in ethics this can easily happen and information was discussed in a relevant and thoughtful manner.

Interesting to think if it would become obsolete because I could relate to some of the interviews and stories, but later in a few years they might become obsolete but not the actual content or purpose of the information. Student might not relate as well to the stories later if they don't recognize the names or companies. Since the textbook is OpenStax I would think that the authors and audiences that use the textbook might update or bring in discussions to bring more current stories to the textbook.

The text is very lucid and easy to understand and read. Information is clearly explained and there are even portions of each area with key terms, summary and assessment. The textbook even has outlined expected outcomes for each chapter.

The text is consistent in terminology and framework.

The text can be divided into different reading sections easily. For my own purposes I do not devote a whole semester to ethics, so because there is so much good content and thought provoking insights, it will be hard to decide what to assign or use. But if the textbook were to be used entirely for a course, everything is well laid out.

I do believe the text is laid out in a logical and clear fashion.

I did not find the text itself to have interface problems. Was pleasantly surprised that I could even download the textbook onto my Kindle! The only problems that I had were using it with Canvas, but the problems were on my end and not with the textbook itself. I wonder in the future if there could be problems with links if they are discontinued or websites change, but hopefully there won't be any issues.. I didn't have any problems with the links when I used them in going through and reading the textbook.

The book, being on ethics, is very careful of cultures. It attempts in a very thoughtful way to help navigate and be sensitive to different races, ethnicities, and backgrounds.

Reviewed by Elissa Magnant, Visiting Instructor, University of Massachusetts Lowell on 6/29/20

This textbook is comprehensive. In fact, it provides more than enough information for either an undergraduate course in Business Ethics or a more in-depth analysis for seminar or graduate students if the video case studies are utilized fully. ... read more

This textbook is comprehensive. In fact, it provides more than enough information for either an undergraduate course in Business Ethics or a more in-depth analysis for seminar or graduate students if the video case studies are utilized fully. Because of the depth of content, for undergraduates the text might be best assigned by specific page numbers to cover specific topics, instead of full chapters all at once.

The text is well researched by astute world renown faculty who use peer reviewed materials.

One reason to use this book is that it is up to date. It covers more recent business ethics dilemmas than print or print/digital texts because by virtue of being open source and fully digital, it is kept more up to date than other textbooks I have used.

This book is well written and easy for the student to comprehend. It also provides instructor support material of a test bank which is also well designed.

This book is compatible with the humanistic ethics framework, including a focus on dignity, fairness and collaboration.

This textbook implements short case studies called "Cases from the Real World," opportunities for students to think and reflect on ethics questions as well as multiple headings/sub-headings for ease of division and assignment.

I like the organization of this textbook as it starts with the basic philosophical frameworks and moves to modern day real business ethics challenges so that the student progresses through stages, understanding how topics build upon each other as the book evolves.

Students really enjoy the option of buying a paper version of this book, which is made available on our campus for under $20. They also enjoyed the easily downloadable version of the text with clickable links, especially because they can download it or view it from any device. It makes it very easy to ask them to read and then evaluate their ethical considerations of the material in class or online.

I am unaware of any grammatical errors in this text.

This text does an exceptional job of providing students with a balanced understanding of ethical globalization. It is liberal toward US government ethics and could perhaps provide more balanced nuances when addressing those topics.

I used two other popular Business Ethics textbooks prior to making the change to this textbook. I am so happy I did. It provides a no-cost option to those who use it digitally, a low-cost option to those who want to also have access to a professionally printed version, and it covers more up-to-date business ethics topics than either of the previous texts I used. I look forward to the updates as they help to keep the class relevant and challenging for all.

Reviewed by Kerry Dolan, Accounting/Business Department Chair, TRAILS on 11/22/19

The content is of the book is more than enough to support a full semester 200-level business ethics course and it does a good job of covering the basic ethics principles as well as specific examples that are relevant to the contemporary business... read more

The content is of the book is more than enough to support a full semester 200-level business ethics course and it does a good job of covering the basic ethics principles as well as specific examples that are relevant to the contemporary business world.

I'm not an expert in the field of business ethics, but given my background in general business and accounting, I did not encounter any information in the textbook that appeared to be inaccurate.

Relevance is always an issue with business-related textbooks because real-world examples quickly become outdated. However, this issue does not appear to be more pervasive with this text, nor would it be difficult to update or supplement any outdated examples. The basic concepts presented are not subject to obsolescence.

The text is very clear and understandable for lower-level college students that are encountering the basics of business ethics for the first time.

Text appeared to be consistent throughout. Clear organization and presentation.

I really liked how the book was organized with chapters and sections making it easy to assign partial chapters and/or specific sections and a manageable number of chapters and sections.

The text starts with broad concepts and moves to specific applications in business. The organization makes the presentation of the information clear to those who are being exposed to this discipline for the first time with this textbook.

Interface rating: 3

When reading this on a Kindle device, there were some areas where it was hard to decipher a picture caption from the string of text as as a result of digital page breaks and adjusted text sized, but once you got through the first chapter and were more familiar with the organization of each chapter it was not a distracting issue.

I didn't notice any grammatical errors.

The textbook did not appear to go out of its way to make sure that all races, ethnicities, and backgrounds were included, but there was a range of diverse images and examples. I did not see any culturally insensitive or offensive examples or images from my perspective.

Reviewed by Lou Cartier, Adjunct Instructor, Business and Management, Aims Community College on 8/1/19

At 367 pages, with 10 integrated, substantive chapters, constructive “end notes” and assessments on the evolution of ethical reasoning, leadership, and the challenges of “becoming an ethical professional” and “making a difference in the business... read more

At 367 pages, with 10 integrated, substantive chapters, constructive “end notes” and assessments on the evolution of ethical reasoning, leadership, and the challenges of “becoming an ethical professional” and “making a difference in the business world,” this is a comprehensive text, suitable for undergraduate business students and instructors not necessarily trained in philosophy. It is a great fit for single semester course, whether offered in conventional blocks of 15 weeks, 10 or eight. Topical case studies, video links, “what would you do” scenarios and assessments, chapter glossaries, and a helpful index reflect a breadth of industry, organizational, and cultural perspectives. The Preface, outlining the book’s purpose, architecture, contributing authors and student and instructor resources (i.e., “Getting Started” guide, test bank and PPts) appears responsive to both a student’s critical eye and an instructor’s operational check list. Moreover, the test banks (10) appear solid, with multiple choice and short essay answer questions linked to the Bloom’s Taxonomy grid (plus instructor’s answer guide). Power Point slides (15-25 per unit) offer critical thinking and discussion prompts. Collectively, these components illuminate the principles, practices, and historical seeds of business ethics and corporate social responsibility in a compelling presentation.

I encountered no obvious error or mischaracterization. The authors evidently have taken pains to document their content, including graphic and video links. In citations, I appreciate both the hard information and informal context provided. In Ch. 6, for example, minimum wages in every state rely upon 2017 data from “the National Conference of State Legislatures, U.S. Dept. of Labor and state websites” (Fig. 6.9), while in the next (Fig. 6.10), under the colorful graphic, we have this: “Right-to-work states have typically been clustered in the South and Southeast, where unions have been traditionally less prevalent.” That attribution references “Copyright Rice University, Open Stax, under CC BY 4.0 license,” sufficient for “educational use,” it would seem. Faculty also will appreciate the ease of flagging and correcting three kinds of errata: factual, typo, broken links.

As other reviewers have noted, this text – like most in “applied ethics” – relies on contemporary examples of business practice, including articles and video segments drawn from the business press and government oversight venues that may grow less compelling in another five years or so (think Enron and its accounting partner, Arthur Andersen, 2000-era exemplars of white collar crime not referenced here). Yet this text does a serviceable job of setting cases as old as Ford Motor Company’s fraught introduction of the Edsel (1958) and the “Chicago Tylenol Murders (1982) and as fresh as United Airlines forced removable of a ticketed passenger from a seat needed by an airlines employee (2017) amid sufficient historical, theoretical, and organizational context to grasp the key lessons of Unit 3.2: “Weighing Stakeholder Claims.” There is little danger of obsolescence, particularly since the open textbook network makes it so easy to correct errors and substitute current examples for the somewhat dated.

The clarity and quality of writing is superb, likely a reflection of lead collaborators Stephen Byars, who teaches “oral and written communication” as well as business ethics, and Kurt Stanberry, whose “legal and leadership” credentials are exercised in his continuing education seminars with CPA’s, attorneys, and business execs … nice fits for this subject. Students still ln high school, or in the growing cadre of “co-enrolled” in community college may struggle with this text, yet the publisher’s clear attention to content “building blocks” may comfort even the less mature and experienced student. For example, in any given chapter, readers 1) begin with an outline, learning objectives, and 500 – 1,000 word introduction, 2) encounter “cases from the real world” and “what would you do” tests of comprehension, and 3) close with a narrative summary, glossary of key terms, and short set of “assessment” questions. “Links to learning” include such clever questions as whether Coca-Cola’s soft pedaling of its huge demands for water in arid climates amounts to “greenwashing” (Ch. 3) or whether certain animals ought to be off limits for human consumption because of “sentience,” their ability to think and/or feel pain, (Peter Singer, Ch. 8). In addition “key terms” for every chapter are short and clear, i.e. “Integrity … because there is unity between what we say and what we do.”

Like two previous reviewers, I found the prose and organization to be coherent and consistent. Depth, attention to detail, terminology, and overall framework are consistent, linked by “key terms” and succinct introductions and summary reviews of each chapter. In the main cases, scenarios, and references to events are compelling, current or sufficiently grounded in context to be evergreen. Videos, on the other hand, come in all types, lengths, and flavors, from five minutes to more than an hour, from sit-down interview to taped panel discussion to challenging presentation in front of a group. The resourceful or determined instructor might guide students to a time code? This is not necessarily a weakness, though uneven production values should be expected.

Yes, this material lends itself to modularity, this despite a carefully constructed progression from “why this subject matters” to “how our forebears have grappled with responsibility” to “who has a stake in these decisions” to “what we owe each other” in specific manifestations of corporate and professional enterprise. It appears that in every chapter, its major units could be assigned separately, within an instructor’s unique unifying paradigm. Individual “features” could backstop of enrich discussions in class or online. There are no “enormous blocks of text” to impede easy snipping, and thoughtful subheadings appear to break up the challenge to comprehension and endurance.

The inherent logic of this text is apparent. Authors move from a philosophical foundation (“Why ethics matters?” and approaches to “intention v. outcomes” over time) to exploration of the stakeholder theory to close examination of ethical issues in business, the professions, and organizations in the voluntary and public sectors. A unifying feature is the Introduction, key terms, “assessment questions” and “end notes” for each chapter. Personal interviews or video clips from business owners and other stakeholders, supplemented by relevant documents such as ethics policies, training materials, and previews of business development … such as New Belgium CEO Kim Jordan’s (and “contemporary thought leader”) rationale for an east coast brewery in Asheville NC (opened May 2016) help cement understanding of such integral topics in corporate social responsibility as “sustainability.”

This textbook is available online, in pdf or web view, and in print (presumably suitable for loose leaf binder for nominal cost, which instructors may facilitate through campus bookstores, if appropriate). While some are not fond of “text boxes interspersed with the main text” my students using other similar e-texts have not reported problems. That said, I did not experience the online version of this text on Kindle or my phone, which might be instructive. On the other hand, while not “distorted” I found some of the power points unhelpful, to the point of distracting or annoying the viewer. Some seem busy, with narrative text blocks under anecdotal photos or graphics in print too small for comfortable display in class. Moreover, the “what would you do?” questions in this mode seem to me presumptive, less helpful than, say, bullet references to facts, principles, or events. Instructors and overseers of “access and accessibility” may care to note that not all videos are followed by transcriptions. Overall, the heading and body styles are consistent. Selection of fonts (style and size) maximize on screen legibility. Text blocks are in contrasting color to distinguish it from background, with minimal highlighting that does not appear arbitrary. On the whole, I found layout and design mechanically sound, with pages and links numbered and labelled consistently and - to the extent sampled -- no broken links.

None observed.

There is plenty to commend on this criteria. For one thing, Ch. 5, “The Impact of Culture and Time,” engages fundamental faith beliefs globally as well as the authority of religion tradition, and challenges students to explore the “universality “of values in business ethics. For instance this text does not shrink from illustrations of both “honor and shame” in business. In Appendix C, “A Succinct Theory of Business Ethics, the authors plainly and forcefully state their underlying thesis: that business ethics ought be grounded in deontology more than in utilitarianism, that “ends” are insufficient justification for questionable “means” in formulating and executing business strategy. Illustrations of demographic and behavioral diversity and inclusion – including animal rights and the implications for research and recreation – are plentiful, addressed in Ch. 8, “Recognizing and Respecting the Rights of All,” as well as the succeeding chapter on various professions.

This is an excellent “open educational resource” for business ethics and corporate social responsibility, one I intend to tap personally. The “closing parts” especially – including “Succinct Themes in Business Ethics” – are attractive guides to curriculum development and standalone discussion prompts in the classroom or online. “Lives of Ethical Philosophers (500 to 1,000 word summaries), and “Profiles in Business Ethics: Contemporary Thought Leaders,” adds a valuable philosophical heft that, for community and junior colleges especially, our accrediting and articulation partners will be pleased to see. I further value the selection of relevant supplemental material from independent consultants that range from the very basic, i.e., “Five Questions to Identify Key Stakeholders” to those that verge on the proprietary. These include descriptions of systems to monitor and “manage” customer and other stakeholder involvement, corporate codes of conduct … even a link to free personality test (Sec. 7.3), for which “bonus” I am grateful to Steve Custer of Oakland City University for pointing out.

Reviewed by Debra Sulai, Instructor, Bloomsburg University of Pennsylvania on 3/12/19

This book provides a comprehensive introduction to the key elements of ethical theory (Aristotelian virtue, Kantian deontology, utilitarianism, Rawls' theory of justice); the social, political, and cultural contexts of business; and the importance... read more

This book provides a comprehensive introduction to the key elements of ethical theory (Aristotelian virtue, Kantian deontology, utilitarianism, Rawls' theory of justice); the social, political, and cultural contexts of business; and the importance of ethics to business, while going into greater philosophical depth than comparable textbooks. It addresses most of the key topical areas of business ethics but avoids the listicle approach of other business ethics textbooks in which every topic under the sun is stitched together with little overarching context. It also includes things like a discussion of ethics and organized labor, which other books overlook. I would, however, like to see more dedicated attention to the ethical issues raised by technology, perhaps by engaging with a philosopher of technology.

The index at the back and the detailed table of contents will make information easy to find. Each chapter's glossary will be helpful to students who are new to the subject. I particularly like the profiles of the four philosophers in the appendix: so often, ethics is taught in a disembodied and ahistorical manner, which makes it harder for students to see the relevance of the ideas being taught. These supplementary contextual elements would make this a good textbook for an instructor whose primary training was not in philosophy.

As an added advantage, the number of chapters does not exceed the number of weeks in a standard semester, and at 10 chapters plus an epilogue could also fit within a quarter system.

As far as I can tell, the content is accurate and clear. It was reviewed by dozens of faculty from a wide variety of institutions.

The book's use of contemporary examples means that it will date, but no more than any other textbook in applied ethics. As many of the examples are set out in textboxes or as links to external resources, it would be a relatively simple matter for an instructor to substitute recent examples when necessary. Chapter 10 on changing work environments and future trends is the chapter most likely to date quickly. The other applied sections will probably last 5-10 years; the ethical theory sections will remain relevant for a longer period of time.

I think this is appropriate for a general-education course in business ethics. I found it to be clear, although a student new to the subject or to philosophy may find that concepts are introduced at a quick pace. It does not suffer from unnecessary jargon; it is, as Aristotle said, as clear as the subject matter allows.

The prose and organization is consistent; it could have been single-authored.

Modularity rating: 4

It would be possible to use some portions of the text and not others, but it is not fully modular in that it was carefully constructed to provide the necessary philosophical and social context for business ethics prior to considering particular applied topics in business ethics. As it presents a sustained argument about business ethics (and this is a strength; philosophy is, after all, largely about making good arguments), it isn't the sort of thing that one could simply cut up and reassemble willy-nilly. However, I can easily see how an instructor could use various chapters to supplement or introduce other material. Chapters are internally divided into sections that could be read, assigned, or discussed separately.

Many business ethics textbooks combine three or four different courses in one: a book about ethics, a book about management and stakeholder theory, and a book about work and vocation, and give the impression of fairly disparate topics somewhat awkwardly and haphazardly stitched together. This book is logically organized to take students from basic moral theory through the application of those theories to key issues in business ethics, before circling back again to ethics in the epilogue.

Rather than being organized into chapters according to common areas of ethical problems in business (finance, accounting, affirmative action, greed, advertising and marketing, sexual harassment, sustainability, stakeholder theory, etc.) with few connections made between, this book addresses those issues under a relatively small number of chapter headings, and presents them through an ethical and social framework that is developed in the early chapters. I find this to be a more cohesive approach to the subject than is present in other textbooks.

I experienced no problems with the interface. The book is professionally produced. I personally do not like the use of text boxes interspersed with the main text, but I recognize that this is a common textbook feature.

I saw no grammatical issues. This book has been professionally edited.

This book includes a Confucian look at virtue ethics and attends to the cultural context in which the philosophers worked. It also contains a chapter on business ethics across time, place, culture and religion, a more comprehensive approach than the usual "business in a global context" topical chapter of other books. A chapter on respecting the rights of all addresses disability, gender inclusivity, religious diversity, animal ethics, and income inequality. In the following chapter there is a section on the business of health care, which I have not seen in any other similar text.

This is an outstanding introductory text in business ethics, with a level of philosophical sophistication and organizational coherence that exceeds most comparable texts. The chapter summaries, glossaries, and review quizzes are helpful aids to student learning, and the embedded links to interviews, videos, and case studies make it easy to adapt to active learning or on-line instruction. The amount of philosophical context makes it a particularly good choice for instructors of business ethics whose primary training is in business, management, law, or a related field, rather than in ethics or philosophy, or for a philosopher whose primary area of expertise is outside business ethics.

It does read as though it is a written version of excellent lectures in business ethics, which is not necessarily a weakness. The most significant drawback to this text, in my view, is that it includes no primary sources. As a philosopher teaching applied ethics, I know that business ethics may be the only course in philosophy that my students take. I also know this may be my students' primary or sole opportunity to read the classics of the western tradition. Therefore, I think this book could be enhanced by presenting some primary source readings. These could be added as an appendix or at the beginning or end of each chapter, or taken from other sources by the instructor.

I currently use an Oxford anthology for my business ethics course. However, if I were to assign a traditional textbook, I would switch to this book without reservation, and I am very likely to try this book in future courses.

Reviewed by Steve Custer, Associate Professor, Oakland City University on 2/25/19

The Business Ethics textbook is comprehensive in that it covers a broad range of ethical issues as well as delving into the history of ethics. The online format enhances the easy of use for the index. read more

The Business Ethics textbook is comprehensive in that it covers a broad range of ethical issues as well as delving into the history of ethics. The online format enhances the easy of use for the index.

I found the textbook to be accurate. I did not find any outstanding errors in the book. It is very well written and easy to understand.

From Toyota to Samsung and Starbucks, excellent examples of business ethics abound. Additionally, this textbook is quite effective in bringing to life many current events.

The book exceeds expectations in clarity. The key terms and assessment questions at the end of each chapter give extra help to those seeking to know the material in depth.

The dictionary defines consistency as a "condition of adhering together." I feel that this textbook accomplished that purpose. Moreover, it brought together principles of business ethics in a well-developed manner.

The online format enhances this textbook's modularity. The online links to learning are a welcome addition and add a nice touch.

The book is organized very well, and the online format makes keyword searches very easy to navigate.

The Business Ethics textbook is easy to navigate and understand. Nothing is wasted that takes away from the material.

I found the Business Ethics textbook to be free of any outstanding grammatical errors.

There are many examples this book gives on cultural relevance: #metoo, transgender ethics, environmental ethics, animal ethics, and diversity and inclusion.

I really enjoyed the link to the free personality test. That was a great bonus feature. "It is nice to be important, but more important to be nice." What a powerful sentiment and an appropriate quote to be included! This is a great textbook and I plan to utilize it in an upcoming business ethics course.

Table of Contents

Chapter 1: Why Ethics Matter

• 1.1 Being a Professional of Integrity
• 1.2 Ethics and Profitability
• 1.3 Multiple versus Single Ethical Standards

Chapter 2: Ethics from Antiquity to the Present

• 2.1 The Concept of Ethical Business in Ancient Athens
• 2.2 Ethical Advice for Nobles and Civil Servants in Ancient China
• 2.3 Comparing the Virtue Ethics of East and West
• 2.4 Utilitarianism: The Greatest Good for the Greatest Number
• 2.5 Deontology: Ethics as Duty
• 2.6 A Theory of Justice

Chapter 3: Defining and Prioritizing Stakeholders

• 3.1 Adopting a Stakeholder Orientation
• 3.2 Weighing Stakeholder Claims
• 3.3 Ethical Decision-Making and Prioritizing Stakeholders
• 3.4 Corporate Social Responsibility (CSR)

Chapter 4: Three Special Stakeholders: Society, the Environment, and Government

• 4.1 Corporate Law and Corporate Responsibility
• 4.2 Sustainability: Business and the Environment
• 4.3 Government and the Private Sector

Chapter 5: The Impact of Culture and Time on Business Ethics

• 5.1 The Relationship between Business Ethics and Culture
• 5.2 Business Ethics over Time
• 5.3 The Influence of Geography and Religion
• 5.4 Are the Values Central to Business Ethics Universal?

Chapter 6: What Employers Owe Employees

• 6.1 The Workplace Environment and Working Conditions
• 6.2 What Constitutes a Fair Wage?
• 6.3 An Organized Workforce
• 6.4 Privacy in the Workplace

Chapter 7: What Employees Owe Employers

• 7.1 Loyalty to the Company
• 7.2 Loyalty to the Brand and to Customers
• 7.3 Contributing to a Positive Work Atmosphere
• 7.4 Financial Intergrity
• 7.5 Criticism of the Company and Whistleblowing

Chapter 8: Recognizing and Respecting the Rights of All

• 8.1 Diversity and Inclusion in the Workforce
• 8.2 Accommodating Different Abilities and Faiths
• 8.3 Sexual Identification and Orientation
• 8.4 Income Inequalities
• 8.5 Animal Rights and the Implications for Business

Chapter 9: Professions under the Microscope

• 9.1 Entrepreneurship and Start-Up Culture
• 9.2 The Influence of Advertising
• 9.3 The Insurance Industry
• 9.4 Ethical Issues in the Provision of Health Care

Chapter 10: Changing Work Environment and Future Trends

• 10.1 More Telecommuting or Less?
• 10.2 Workplace Campuses
• 10.3 Alternatives to Traditional Patterns of Work
• 10.4 Robotics, Artificial Intelligence, and the Workplace of the Future

Chapter 11: Epilogue: Why Ethics Still Matter

• 11.1 Business Ethics in an Evolving Environment
• 11.2 Committing to an Ethical View
• 11.3 Becoming an Ethical Professional
• 11.4 Making a Difference in the Business World

Ancillary Material

About the book.

Business Ethics is designed to meet the scope and sequence requirements of the single-semester business ethics course. This title includes innovative features designed to enhance student learning, including case studies, application scenarios, and links to video interviews with executives, all of which help instill in students a sense of ethical awareness and responsibility.

About the Contributors

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• Business Ethics
• Business Ethics Education
• Business Ethics Journals
• Codes of Ethics
• Conflict of Interest
• Corporate Citizenship
• Corporate Culture
• Corporate Governance
• Corporate Personhood
• Corporation
• CSR (Corporate Social Responsibility)
• Environmental Ethics
• Ethical Consumerism
• Ethical Theory: Kantianism
• Ethical Theory: Overview
• Ethical Theory: Utilitarianism
• Ethical Theory: Virtue Theory
• Ethics in Advertising
• Ethics of Wages and Working Conditions
• Executive Compensation
• Globalization
• Human Rights
• Professions
• Regulatory Capture
• Shareholders
• Stakeholder
• Sustainability
• Whistleblowing
• White Collar Crime
• CEBE PressBook
• The Authors

Business ethics  can be defined as the critical, structured examination of how people and institutions should behave in the world of commerce. It is a  critical discipline in that it is interested in determining what ethical standards are best and most well-justified, rather than in cataloging the views that people actually happen to have. It is a structured pursuit in that it involves providing reasoned arguments, rather than simply stating opinions or feelings, about particular issues. In particular, it involves examining appropriate constraints on the pursuit of self-interest, or (for companies) of profit, when the actions of individuals or companies affect others.

In practical settings, business ethics may be thought of, rather than as a topic of intellectual inquiry, as a name for proper behaviour in the world of commerce. In this sense, we might say informally, for example, that a company has “good business ethics,” or that “business ethics requires that a company do such-and-such.”

In many contexts, terms such as CSR , corporate citizenship, or even sustainability , may be used equivalently to “business ethics.” Whether these are reasonably synonymous is a matter of controversy.

See also in CEBE:

• Corporate Social Responsibility

Further Reading:

• Chris MacDonald, “Doing the Right Thing: A Brief Guide to the Jargon” , July 7, 2011 (The Business Ethics Blog)
• George G. Brenkert and Tom L. Beauchamp, eds., Oxford Handbook of Business Ethics (OUP, 2009)

By Chris MacDonald and Alexei Marcoux © The Journal Review Foundation of the Americas

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Essay on business ethics: definition, factors and objectives.

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After reading this essay you will learn about:- 1. Definition of Business Ethics 2. Factors Influencing 3. Objectives.

Essay on the Definition of Business Ethics :

Business Ethics is the application of ethical principles and methods of analysis to business. Business ethics deals with the topic of study that has been given its due importance in business, commerce and industry since last three decades.

Most of ethical questions are divided in two types:

1. Overt and

These two types, their meanings and examples are detailed in Fig. 8.6 below:

The overt ones are generally deplored. The business avoids overt unethical practices. In business most activities are covert. The covert activities are bad and harm business.

The characteristics that make a business decision ethical are:

(i) Equitable:

The decision be just and equal.

(ii) Right:

Morally correct and due.

(iii) Proper:

That which is appropriate to the situation and generally acceptable.

Which highest good for highest number of concerned people.

Which is honest and due.

Justice is done to all and it should appear that justice is given to due.

Ethics means different meaning to different people. It is abstract and does not have universal standards or acceptance due to the fact that ethics depend on morals and morals on value system of people.

(1) Moral standards change depending on value system.

(2) Ethical standards depend on moral standards.

(3) Value system is built by in family, upbringing, background and experience.

(4) Ethical practices differ in different organisations. Experiences in turn alter ethical practices.

Many business men do not agree that ethics is necessary in his business dealings. They also say that business and ethics are opposite terms and hence, combining them is not proper. In the keep competition in the market place earning money is most important and how it is done is of secondary or no importance.

The golden rule is that a person should have gold to rule. There is lot of misconceptions or myths about business ethics and business should be done with ethics in mind. Myths are popular unexplained beliefs but not truths.

There are 5 myths:

Business and ethics do not go together:

Business runs on scientific management principles whereas ethics is religious.

Myth No. 2:

Ethics in business is relative:

Ethics is in the thinking and eyes of the man who sees business. One customer see business ethically excellent other customer see it is poor. The experiences are contradictory and cannot be measured as so many kilos.

Good business makes good ethics:

Ethical means may be or may not be always in the interest of business or better profits. Whatever the profit or business of a company, CEO of the company has to act ethically. The company should be prepared to pay costs for instituting and maintaining ethical values in the company.

MIS is amoral:

Management information systems (MIS) is neither immoral nor moral. While MIS is good management productive tool and positive dimensions, there are dark usage areas. MIS may be misused. Information and computing can be put to bad use. There are violations of privacy and questionable use of data or putting the MIS in wrong perspective.

Ethics is an individual matter:

The right or wrong thinking is based on religious belief of individuals. Business ethics is not for individuals. Individuals make ethical choices for their individual or own family life as well as for business. The choices in organisational decision making are based on data, discussions, purpose and directions in the organisation.

Organisations that do not act in a socially responsible ways often pay penalties. In all the 5 myths it may be seen that business ethics is seen in simplistic and unrealistic light. Box 8.2 below gives dilemmas of Director Finance. The 5 myths can be discussed for the case-let.

Essay on the Factors Influencing Business Ethics:

Business Ethics is quality of being useful or desirable. It is commonly used to all things which people regard as good, desirable and just. We generally make value judgments on many matters like good, skilled, unskilled, bad etc. The statements are comparative. We have few terms generally used with different meaning at times not correctly.

These words and their means are:

Norms of expectations of a proper behaviour in a society. These are not requirements or must. Example: We in India treat elder with respect. When we address our teacher we say ‘Sir’.

(ii) Beliefs:

Ethical codes of thought. Belief is an abstract thinking process. Here there is no action as in norms. Beliefs support norms. Example: Thinking saving money, or energy.

(iii) Ethos:

Characteristics of a community or of a culture. Code of values by which a group or a society lives. Example: Generosity of a group.

(iv) Moral:

Concerns regarding principles of right and wrong. Example: It is always right to tell truth.

(v) Morality:

It is the standard that an individual or a group that knows that is good, what is right and which is proper. Example: Since last decade political morality is decreasing in India.

(vi) Moral norms:

Are expectations of society a level of morals in the society. Example: Do not harm innocent man.

(vii) Moral values:

Are desired level of morals. Usually these are statements, regarding describing moral features. Example: Honesty is best policy.

(viii) Moral behaviour:

Moral behaviour is a study of right and wrong in human behaviours.

Values of managers:

Business is driven by values. Values guide what a business manager should do and how the stakeholder reaction to these action. Following a set of good values a value system can be built in the organisation business thus can create good, services, employment of larger value.

A manager while accepting the values the considerations are:

(a) The values should be universal.

(b) Maximum good to greatest number of people.

The manager should be pragmatic in his approach. This comes by his experience and skill in knowing as to how a decision works in a given situation. Manager should have a feel of what is good for highest number. Manager should also evaluate the value built up in his control.

The manager has to choose values in his day to day business decisions. Basic values cut across culture time and type of industry. Some values appear overlapping. Selection of values by a manager is given in Fig. 8.7. The selection values show a person’s judgment, prejudices and a view of the world of the person.

Essay on the Objectives of Business Ethics :

The Objectives of Ethics are to evaluate the human behaviours and calling up on the moral standards. The ethical standards also prescribe how to act morally in specified situations.

The objectives of business ethics are:

(i) Personal level:

At personal level the policy should be set that not to misuse the properties of the others or of the organisation keeping the promises and extending the mutual help, not to seek quick gains and not to indulge in politics to gain power.

(ii) Internal policy level:

The business organisation should follow fair practices in dealing with employees and other stakeholders. The organisation should have open and better communication at all levels. The organisation leadership should motivate employees for better productivity and for common good.

(iii) Societal level:

The social concerns like no discrimination concerned for the down trodden be the prime concerns of the business organisations. Optimal use of scarce resources, clean environment and ensuring better quality of life to all the stakeholders should be stressed in the internal policies.

(iv) Stakeholder’s level:

The organisation should take care of the maximum number of stakeholders and follow ethical means with shareholders, customers, suppliers, employees, banks and financial institutions, government and all others that are connected with the organisation.

Related Articles:

• Business Ethics: Notes on Business Ethics
• Business Ethics: Meaning, Sources and Importance

Business Management , Ethics , Business Ethics

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Ethical Research in Business Ethics

• Editorial Essay
• Published: 29 November 2022
• Volume 182 , pages 1–5, ( 2023 )

Cite this article

• Gazi Islam 1 &
• Michelle Greenwood 2  

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In this editorial essay, we argue that business ethics research should be aware of the ethical implications of its own methodological choices, and that these implications include, but go beyond, mere compliance with standardized ethical norms. Methodological choices should be made specifically with reference to their effects on the world, both within and outside the academy. Awareness of these effects takes researchers beyond assuring ethics in their methods to more fully consider the ethics of their methods as knowledge practices that have broader institutional consequences. Drawing from examples in published research, we examine five ways in which authors can formulate their methodological approaches with purpose, care and reflexivity.

Avoid common mistakes on your manuscript.

Business ethicists are accustomed to confronting the “hard cases” of ethical choices in organizational life. We believe that business ethics scholarship must be equally sensitive to ethical nuances in the design and implementation of research methods in our own activities. In the complexities of research practice, ethical considerations around method and design exceed the standardized templates of methods textbooks. Where research designs begin and end and whom they implicate as protagonists, who receives voice, protection and authority, and what is rendered visible and invisible within the field of study. These are thorny questions that are not amenable to check-list style compliance guidelines, even where such guidelines also have an important role (cf., Greenwood, 2016 ).

In our exchanges with authors and within the editorial team, we have confronted a plethora of hard cases that highlight the challenges of research ethics beyond rule compliance. To what extent should the mode of data collection (such as crowdsourced data or social media platforms) answer to ethical quandaries around digital labour and online surveillance? When should organizations or individuals engaging in ethically problematic practices be named, and when must they be anonymized? To what extent should the relationships between researchers and participants be problematized within methods sections, including financial and power relationships between funders, researchers and participants? What are the respective roles of institutional ethics boards and journal editorial teams (along with other actors in the research ecosystem) in validating the ethical permissibility of a design? When should hard ethical questions lead a study to be rejected at the review stage, rather than passed along to the research community to make its own judgment? Such questions (and many, many more) have filled our days with deep reflection, and the current editorial aims to share some of these reflections with the Journal of Business Ethics community, albeit in necessarily schematic form. Specifically, we aim to both expand thinking about research ethics to include elements that are often considered outside of methods, and situate conventional methodological ethics in relation to this broader vision. The result will be a plea for a research ethics based on purpose, care and reflexivity.

Between Prescriptive and Evaluative Research Ethics

In a previous editorial essay (Islam & Greenwood, 2021 ), we borrowed a distinction by Williams ( 1985 ) between prescriptive and evaluative ethics; the former refers to what one should do, while the latter to what the world should look like. Mapped onto methods, this analytical distinction differentiates between specific methodological practices (e.g., one should design measures that fit the core constructs, one should gather informed consent) and the broader social and practical implications of research (e.g., the goals of science to innovate, educate or emancipate). We emphasize that this is an “analytical” distinction because, in practice, these aspects of ethics are deeply intertwined, and we distinguish them primarily to show how they spill into each other. Actions should be prescribed, at least in part, for the worlds they contribute to making, although in the fog of situated practice, we are often unaware of, or unable to, clearly link our actions to those future worlds.

From this distinction, it is easy to differentiate heuristically between ethics in research methods, that is, the ethical norms and practices internal to research design and execution, and the ethics of research methods, that is, whether those methods should be used in the broader evaluative sense. In many cases, these ethical levels align, with ethical practices working toward an evaluatively desirable world. Gathering informed consent is important because it is desirable to promote a world of autonomous choice (e.g., Hansson, 2006 ). Hypothesizing after the results are known is problematic because promoting false positive statistical results reduces replicability and thus scientific certainty about the world (Kerr, 1998 ). To take the previous example, however, some have argued that “HARK”ing is less ethically problematic when research is transparently exploratory (Hollenbeck & Wright, 2017 ); in this case, what is ethically problematic is not the practice per se, but the lack of transparency between a given practice and its exploratory (rather than confirmatory) intent. As for informed consent, in cases where a signed form substitutes for, rather than expresses, true participant autonomy (cf., Dubois et al, 2012 ), it can obscure rather than clarify the ethics of a research project. To begin with, the presentation of a priori formulated protocols for consent presumes that the identified participant is the only stakeholder in the research who is affected by the research in a manner that would require their consent. Moreover, this protocol may preclude collaborative models in which participants actively construct research protocols with researchers (Hansson, 2006 ). In both of these examples, a practice is justified on the basis of a deeper evaluative motive, but the mapping between the two is imperfect and situation-dependent.

Tensions may appear between prescriptive and evaluative dimensions of research methods, giving rise to ethical polemics or dilemmas. To give one example, we have had recent debates around the ethics of online data crowdsourcing from platforms such as Amazon MTurk (e.g., Newman et al., 2021 ). Much discussion has been given to best practice in terms of construct validity and similar “internal” considerations of research design as well as issues such as “bots” or fraudulent respondent activity that affect validity. However, broader considerations in terms of labour exploitation on online platforms (e.g., Shank, 2016 ) bridge internal and external research ethics, given internal norms for participant autonomy and external considerations of the public good. Less discussed are the systematic effects of widespread use of online data collection for disembodying researchers from participant communities, entrenching economies of digital labour and surveillance, and reifying a context-free individual as the object of social scientific study. These, we would argue, are methodological outcomes that may contribute to undesirable worlds, and thus are materially relevant for ethical consideration.

Other examples illustrate the opposite tension between prescriptive and evaluative research ethics. In a provocative article, Roulet et al. ( 2017 ) describe the potentials of “covert” research, where normally unacceptable practices of researcher concealment are weighed against laudable goals such as revealing workplace abuse or unethical organizational practices. In such cases, practices that are prescriptively problematic (e.g., collecting data without consent, concealing researcher identity) are defended on the grounds that the ethical goods, in terms of creating a better world, legitimate such practices. While the example of online platforms seems more defensible at the level of practice but questionable at the level of broad systemic implications, that of covert research seems more problematic at the level of practices while (possibly) defensible in terms of its ethical purposes.

More than simply a conflict between means and ends, however, such tensions reveal discrepancies between ends that are “localized” as specific practices (e.g., the goal of conducting a valid study according to current norms) and the more broad-based ends of research (e.g., creating a better world through socially reflexive knowledge production). Our challenge at the Journal of Business Ethics as editors, and our counsel to authors, reviewers and editors is to reflexively seek equilibrium between the practical ethics of research design and execution and the broader promotion of the public good that is the ultimate end of science.

Guiding Ethical Research in Business Ethics

Situating research ethics within the relationship between concrete ethical practices and evaluative goals of social improvement adds complexity to ethical decisions, forcing researchers, reviewers and editors to confront real ethical dilemmas that cannot be dissolved in mere compliance practices. We think the recognition of this complexity is salutary. It emphasizes that the review process is one moment in the broader network of evaluative practices that includes—but is not limited to—institutional ethics approval processes prior to submission, ethical and legal considerations of publishing houses and scholarly societies that administer academic production, and reception of research after publication. Each of these moments bring into light different ethical stakes, and we see our editorial role as an important but not exhaustive evaluative moment. From our perspective, our role is not to present a hurdle over which only the most flawless research can pass, but to curate a conversation with the greatest potential for scholarly generativity and progress. This makes our goal a collective one, and we judge research for its ability to promote the field, by being rigorous, by being interesting, by being reflexive, or by some combination of these epistemic virtues. From the research ethics we have outlined we derive certain guiding principles for evaluation.

Showing Links Between Methodological Design and the Broader Purpose of the Study

Business ethics scholarship should clarify its purpose through clearly articulated research questions and hypotheses, while explaining in its methods why specific research practices are important for a broader purpose, and why that purpose is itself ethically relevant. Specifically, the methods discussion should reflect how the ethics-related purpose of the study is consistent with the methodological approach adopted, both in terms of the broad design and specific practices. In short, integration of methods with the wider purpose of the study, and alignment between the two, is a mark of ethically sensitive research.

In their recent study of child labour in Indian cottonseed oil farms, D’Cruz et al. ( 2022 ) demonstrate an exemplary integration of methods and purpose to explore a topic that is notoriously difficult to study methodologically. Drawing on analyses of children’s drawings, together with detailed conversational extracts, the authors paint a powerful picture of the experience of violence in a population of working children. Rather than staying only at the level of lived experiences, however, the authors use those experiences to understand how processes of embedding and disembedding labour within society are manifested at the micro level. Thus, their visual and discursive methods become powerful tools to link everyday suffering with macro processes of economy and society.

Acknowledging the Web of Relationships Within Which Research Methods are Embedded

Each aspect of the research process, from protocol design to data collection to peer review, involves multiple actors who collectively construct the meaning of scholarship (Greenwood, 2016 ). While it may not be possible to make this network entirely visible, the ability to do so increases the transparency and value of a scholarly inquiry.

In his study of external funding on research freedom, Goduscheit ( 2022 ) uses qualitative interviews, program materials and observations to understand how funding bodies shape research outcomes. He shows how expectations from funding bodies can shape the types of topics studied, the ways in which research questions are answered and the forms of research output that are produced. Rather than simply deeming such influences to be unethical, he analyses the positive and negative features of the evolving relationships between researchers and funding bodies and their implications for developing scholarship.

Similarly acknowledging relationships but on a very different topic, Allen et al. ( 2019 ) describe the role of reflexivity in sustainability research, where ecological responsibility can result from acknowledging the multiple relationships between humans and the environment. Promoting an “ecocentric radical-reflexivity”, they point to how methods such as participatory action research and arts-based methods can help identify organizational actors as embedded in ecological relationships. In this example, as in the previous one, research is recognized as more than simply the execution of accepted standards. Rather, ethical research depends on developing sensibilities towards the complex economic and ecological relationships in which scholarship is situated.

Complementing Compliance with Purpose

Ethics should be explicitly discussed as an aspect of methodology, but this is best done when a focus on compliance with standards is complemented by a consideration of core ethical issues and a transparent discussion of how decisions were made in response to those issues. Doing so reveals those decisions as tailor-made for the case at hand and not imposed upon the case without regard for its specificities (Greenwood, 2016 ). In other words, compliance is not a sufficient criterion for ethical research methods, and a methodological approach focused exclusively on ethical compliance criteria may miss the “bigger picture” of the role of the methods in the broader scientific and social goals of the study.

Nielsen’s ( 2016 ) paper on ethical praxis and action research elaborates on how research involves ethical decision making and situated, pragmatic choices that go beyond simply ticking the correct ethical boxes. Describing these from an Aristotelian perspective, he elaborates how researcher-participant interactions give rise to emergent research concerns that are both knowledge-related problems and problems for practice. The ethics of action research in this context is about facing unique problems that cut across the researcher-practitioner divide and can draw upon but are not limited to pre-existing ethics templates.

Adopting an Explanatory Versus a Justificatory Orientation

Methodological descriptions of ethics often have the tone of justification claims legitimizing authorial choices in terms of sample, data collection or analysis. Such justifications are warranted, and are good practice, but we believe that value is added when authors are more forthright about their ethical difficulties and dilemmas. Specifically, we value their attempts to work out those dilemmas transparently for a scholarly audience, that is thereby given access into the workings of scientific decision-making process and not simply presented with a black box labeled “method”. There is more value in showing the path taken to an ethical judgement than simply defending that the end decision was a good one. This also implies that wrong turns, changes of track, and similar ethical revisions should be described and contribute to the value of a paper.

Litz’s and Turner’s ( 2013 ) study of unethical practices in inherited family firms provides an interesting case of how researchers can productively describe the dilemmas they face methodologically. Given the difficulty of gathering data about the unethical practices of family members, they candidly ask “how does one approach a question so laced with shame and stigma?”(p.303). Rather than presenting their method in terms of templates used to justify their choices, they recruit the readers directly into their dilemma and walk them through their choices, which involved confronting participants with dramatic scenarios that allowed them to disclose intimately held views more safely. Ultimately building this technique into a validation exercise and a quantitative analysis, the latter are given credibility by their grounding in the initial researcher dilemma that led to the methodological approach.

Transparency and Reflexivity in Writing and Link Between Methods and Results Sections

Because transparent and reflexive description of methods integrates theoretical considerations within the methods itself, such description allows the method to operate more organically within the broader argument of the paper. Doing so allows authors to establish links between the methods and discussion sections, to describe what went right or wrong, what the limitations and possibilities of the method were, and how future research could remedy possible shortcomings or harms of the given method.

For example, Bontempi et al. ( 2021 ) study of CSR reporting inspired by the case of the Ethiopian Gibe III dam is exemplary of how methods can be used to reflexively and transparently link methods and results. Engaging in a “counter reporting”, the study draws upon conceptual literature, archival and theoretical research, and activist on-the-ground engagement to build an alternative view of reported social engagement around hydroelectric dams. Alternating between inductive and deductive approaches, these authors were particularly reflexive and deeply transparent in their methodological description, including detailed and publicly available information from their codebook in the article’s supplementary materials. The result went beyond the standard critique of CSR discourses to actively create a counter-discourse that was both scholarly and activist in orientation. The resulting discursive struggle continued onto the blogosphere, with methodological debate between the authors and the company itself over methods. Footnote 1 We see such interaction and engagement as key to the social relevance of research.

Purpose, Care and Reflexivity

Research ethics have conventionally been concerned with the procedural aspects of scholarship, in particular the methods. Gold standard in this regard has been to not merely treat ethical standards as hurdles but as aspirations. In this sense an ethical researcher is one who does not only comply but who also cares. We suggest that care requires researcher to actively reflect on and take responsibility for their ethical practices and their research goals, and to situate their practices reflexively within a broader collective process of scholarly inquiry. Thus, we extend the notion of care to embrace the reflexivity of the researcher with regard to their own positionality (and privilege) and with regard to the purpose of research, treating ethics as central to the entire research endeavor. Complementing ethical theorizing that draws data from orthodox empirical methods, we encourage scholars to take up new forms of ethical empirical research in which connections between the conduct of the research and the motivation of the research are deeply and actively formed. The guiding principles we outline in this editorial are aimed at integrating organic, particularized and reflective narratives about the ethical conduct and goals of research in the methods section and throughout the manuscript. Editors, reviewers and authors can all contribute to treating research ethics more centrally in business ethics research.

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Islam, G., Greenwood, M. Ethical Research in Business Ethics. J Bus Ethics 182 , 1–5 (2023). https://doi.org/10.1007/s10551-022-05301-z

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A Level Philosophy & Religious Studies

Business Ethics

This page: full notes      a* summary notes       c/b summary notes, introduction.

This topic is about the relationship between capitalism and ethics. It is about whether businesses should be required to follow ethical principles in their dealings, or whether ethics even has or should have any relevance to business at all.

The idea that good ethics is good business is the view that good business decisions are good ethical decisions.

Proponents of CSR argue that good ethics is good business, because it’s profitable to have a good public image and avoid government regulation.

Utilitarians and Kantians believe there should be some restrictions on business. Not all good business decisions which maximise profit will be ethically good. Not if they go against the general happiness or violate duty.

Libertarians economists like Milton Friedman think business and ethics have nothing to do with each other. Businesses only responsibility is to maximise profit which is ethically good because it is the result of freedom and enables economic growth.

This topic includes three sub-issues:

• Corporate social responsibility: the idea that a business has responsibility to the environment and its community.
• Globalisation: the issue that businesses are now global entities, giving them tremendous power.
• Whistleblowing: the ethics around going public to reveal secret unethical business practices.

Corporate social responsibility (CSR)

CSR is the theory that a business has ethical responsibilities to towards the environment and the communities it is part of or affects. There are two main types of CSR.

Environmental CSR. The responsibility a business has towards the environment.

• Reducing negative impact on the environment such as pollution and non-recycled products.
• Increasing the reliance on ‘green’ renewable and sustainable energy and products.
• Offsetting negative impact done to the environment for example by donating to pro-environment groups that will make conservation efforts. E.g. a business aiming to be ‘carbon neutral’ might release some carbon dioxide through industry but donate for trees to be planted that might absorb the same amount of carbon their industry released.

Community CSR. The responsibility a business has to its social community, respecting human rights and avoid exploitation.

• Respecting human rights and avoiding exploitation.
• Avoiding being supplied by any business which involves exploitation, sweatshops or child labour.
• Responsible treatment of employees e.g. minimum wage, health and safety provisions.
• Philanthropy. Donating money to charitable causes.

A more contemporary version of CSR is ESG, Environmental, social and governance. The ‘governance’ term adds the requirement of avoiding political corruption such as bribery.

CSR and ESG is often promoted as a way of linking good business and good ethics. If a business is discovered to have illegal environmental harm human rights violations in its supply chain then that can cause governments to step in and regulate it. That can be very bad for profit. Committing to CSR/ESG can allow a business to maximise its profits by minimising those risks and thus do well by doing good.

It is also an opportunity for improved public relations (PR). The company appears better in the eyes of the public for the good that it does. It can essentially be used as a selling point for advertising, which can also increase profits.

Utilitarianism on CSR

Free market capitalism is the idea that the only responsibility of a business is to maximise profit for its shareholders. Bentham and Mill think that the free market is generally the best way to maximise happiness. They would likely accept environmental CSR because of how damaging climate change can be to happiness. However, regarding community CSR, they would probably reject philanthropy as a responsibility of business. Bentham did favour some regulations for employees like minimum wage. Ultimately, Mill and Bentham think the free market generally works for producing human flourishing and happiness. They would generally be against restrictions and responsibilities laid on business which would interfere with that.

Kantian ethics on CSR

The second formulation would require that market interactions do not involve the treatment of people as mere means. Labour should not be treated merely as a commodity. A basic level of respect must be given to employees and all stakeholders.

• Avoiding exploitation (community CSR). This includes paying workers enough, perhaps a minimum or even living wage.
• Providing a safe work environment (community CSR).
• Avoiding fraud or deceptive advertising (community CSR).
• Avoiding polluting the environment or having a net negative impact on the environment (environmental CSR).

Examples of CSR and critique of CSR as hypocritical window-dressing

Innocent smoothie advertises on every bottle that they give 10% of all their profits to charity. Pret-a-manger gave away their left over food away to charities at the end of the day. On the label of each sandwich they sell, they advertised this fact and stated ‘it’s the right thing to do’.

CSR is typically a centrist or centre-left position. Those further left often regard CSR as hypocritical window dressing, meaning making something appear good while overall it is bad. A business which engages in CSR for public relations purposes might be doing so to distract from their unethical practices.

This can apply to capitalism in general, because by encouraging a slightly healthier version of capitalism, people might feel less motivation to address the problems of capitalism or they might even be deceived that capitalism is not the cause of the problems to begin with.

Anand Giridharadas summed up this self-serving hypocrisy well in this article title: “Jeff Bezos wants to start a school for kids whose families are underpaid by people like Jeff Bezos.” The subtitle was “A free crash course in why generosity is no substitute for justice”.

Anand’s point is that businesses like Amazon, who don’t pay taxes and bust unions, are the actual cause of the problem that they then give a tiny amount of their profits to ‘address’. Corporate social responsibility is a sham. It’s not businesses giving away their profits for the good of society, it is a cold calculation that it would be more profitable for them to give away a fraction of their profits in order to give a good impression of themselves to the public, purely in order to avoid the greater loss to their profits if the public became more focused on their inequality, tax avoidance and union busting. That ‘class consciousness’ might cause the public to vote for more left-wing political parties which would institute policies that would cause businesses to give far more than they do for corporate social responsibility.

“We don’t need you to do more good. We need you to do less harm.”

It’s not simply gaining PR, it is an attempt to disguise the fact that businesses are part of the cause of economic problems like inequality, by giving the impression that businesses can be part of the solution. The amount ‘given back’ through CSR is nothing compared to the profits gained through avoiding taxes and busting unions.

This hypocritical window-dressing can also simply done for public relations (PR) purposes, to make the business look good, regardless of whether the overall impact of the business is negative.

For example, Tim Cook the CEO of Apple made a speech where he talked about how his platform would be against white supremacy, yet Apple continues to exploit people in third world countries.

This brings into question whether CSR even has a good ethical outcome. However even in cases where it does, some would be sceptical and suggest these businesses only do this so they can advertise themselves attractively to customers. The question is whether those intentions matter ethically.

Globalisation

Globalisation is the phenomenon where businesses are now global entities spanning multiple countries and continents and its impact on stakeholders. Globally, economies, industries, markets, cultures and policymaking are integrated (connected).

The problem with globalisation is that it can cause the violation of corporate social responsibilities and even undermine the free market itself.

Becoming global entities has given businesses an unprecedented level of money, and money is power. A business will do whatever it can to increase profit. If its new levels of power allow it to pressure peoples, cultures and governments, then it will do that. Businesses may be less likely to violate CSR in western countries, but globalisation certainly allows them to violate CSR in developing countries instead.

Offshore outsourcing – where businesses build products in factories in third world countries. This moves jobs from western countries to those countries which has made many industry workers unemployed.

The issue of monopolies. If a business gains enough power over a market, they can essentially fix or rig the system, altering the way the market functions, to reduce or eliminate competition and ultimately benefit themselves. This is called a monopoly, when a business has such dominance or power over a market that the market ceases to have competition. Without competition, a market no longer creates innovation and economic progress.

Even Freidman accepted that “It’s always been true that a business is not a friend of a free market”.

Corporations, power, globalisation and monopolies. Since money = power, and some businesses can be so large thanks to globalisation, perhaps they are becoming more powerful than governments, which could be problematic since they aren’t accountable to anyone as they aren’t democratically elected. This gives corporations the power to affect laws by financing the election campaigns of politicians. They can also make offers or threats to a government or state to change regulations and laws in ways that would favour their business. Example of amazon and new York.

This allows businesses to manipulate a market for its own benefit, turning it into a monopoly. Adam Smith may have been right that free market competition is generally good for the progress and prosperity of society. However, a particular corporation would rather not have to compete and if it can use its massive profits to simply buy other companies or affect laws that would give it an unfair advantage, then it will do so. E.g. Facebook acquiring Instagram. Amazon copying products that do well. Uber temporarily lowering its prices, running at a loss in cities it wants to expand into, in order to put other cab companies out of business at which point it can increase its prices and not face competition.

Utilitarianism on globalisation

Utilitarianism would be against the aspects of globalisation which undermine free markets, such as the power it has given business over policy making.

However, Utilitarianins might accept off-shore outsourcing so long as happiness is maximised.

Kant on globalisation

Globalisation seems problematic for Kant in that it can cause all of the corporate social responsibilities to be violated.

Whistleblowing

Whistleblowing is when someone, usually an employee, leaks information about the wrongdoings of a company. This could be bad business practices regarding employees, customers, society or the environment.

Facebook case study. Frances Haugen worked for Facebook (which owns Instagram) and leaked internal documents which came to be known as ‘The Facebook Files’. One quote from the files in the leak acknowledged that “we make body issues worse for one in three teenage girls”. The leak also shows that the Facebook algorithm promoted posts that caused anger or outrage.

The upside to whistleblowing is that the negative business practice is brought to light which gives it a better chance of being brought to an end.

The downside is that the company might suffer financial losses or even go bankrupt, causing some of or all of its staff to lose their job. In cases where the company was doing good, that could also be stopped.

Utilitarianism on Whistleblowing

Act utilitarianism holds that whistleblowing is morally right depending on the situation. If whistleblowing causes more happiness than not whistleblowing, then it is morally good; if it causes less happiness then it is morally wrong. For example, if the business is causing a lot of happiness, then whistleblowing about some suffering it is causing, e.g. through exploitation, might be wrong.

Kant on Whistleblowing

Kant thinks lying cannot be universalised and is therefore always wrong. So, he would certainly also be against lying to cover up negative business practises, even if that truth being brought to light resulted in the failure of the businesses and employees who may have done nothing wrong nonetheless losing their jobs. It is your duty never to lie.

Kant would also regard the treatment of people as mere means to be wrong due to the second formulation of the categorical imperative. Most if not all cases of whistleblowing seem to involve exploitative or deceptive business practices that treat people as a mere means. This would be another reason that Kant would be in favour of whistleblowing.

Sweatshops are an issue which is relevant to CSR, globalisation and whistleblowing.

A sweatshop is a shop or factory which employs workers, sometimes children, for very low pay, long hours in unsafe conditions. They are seen as a classic case of exploitation . This is because they exploit the lack of choice and opportunity many people have, giving them little choice but to accept terrible working conditions.

Sweatshops & CSR. It is typically considered the responsibility of a business to ensure that none of the products or services in its supply chain are sourced from or make use of sweatshops (community CSR).

Sweatshops & whistleblowing. If a company is discovered to source products from sweatshops without that being public information, it might be thought to be a valid reason to whistle blow.

Sweatshops & globalisation. Sweatshops are often a result of offshore outsourcing which is a consequence of globalisation.

The Utilitarian defence of sweatshops as having good consequences. William MacAskill argues that although sweatshops are ‘horrific’, thinking that boycotting western companies which sell products produced in sweatshops will help the workers there assumes that they have a better opportunity to make a living elsewhere, but “sadly that’s just not the case”. If you boycott sweatshop produced goods “all you are doing is taking away the best working opportunity that these people in very poor countries have”.

The argument is that many people in third world countries are in danger of starvation. If a sweatshop opens then they will at least earn some money. Even though the working conditions are terrible and dangerous, it is still better than nothing. It is a step up on the economic ladder.

If we demanded that businesses sacrifice profit to treat their sweatshop employees non-exploitatively, then businesses will lose their profit incentive to open a sweatshop and will simply stop opening them in third world countries. Then, people in the third world will lose a potential step up the economic ladder. The only reason a business opens a sweatshop in a third world country is because it is cheaper than opening a properly regulated factory in a developed country. In many cases a Utilitarian would therefore be in favour of globalisation, against CSR and against whistleblowing.

Primark case study. Primark were found to be supplied by exploitative factories in the third world that used child labour and paying people very little for extremely long hours. In response to this, Primark cut ties with those suppliers.

In some cases, sweatshops provided a better quality of life to its workers than they previously had and made those in developed countries happy at having products for a lower price. In those cases , a Utilitarian would therefore be in favour of this effect of globalisation, against CSR and against whistleblowing.

Critical comparison of Utilitarianism with Kant: Utilitarianism justifies bad actions (e.g. exploitation). Utilitarianism is incompatible with the basis for human rights which are deontological. This is because a ‘right’ is something which must be respected regardless of the consequences.

The idea of human rights was strongly influenced by Kant’s formula of humanity. Kantian ethics would be against sweatshops regardless of their positive consequences, because they treat workers as a mere means.

Mill’s harm principle seems to solve this problem because it suggests that society will be happiest if the rule of not harming others is followed. The question then is whether exploitation counts as harm. So long as the workers are free to leave any time, technically they accept the risk of harm in the sweatshop because their risk of harm from starvation without the sweatshop is greater. Arguably sweatshops, except in particular circumstances, do not count as harm, therefore. So, sweatshops are permissible

Perhaps it’s not permissible for children to work in them though. The Bangladesh factory case study might be something Mill would prohibit too, since it threatened to withhold pay if people didn’t work, which is borderline forced-labour.

A factory in Bangladesh evacuated because of health and safety concerns, however it then said it would not pay its employees for a month if they didn’t return the next day. So the employees returned, and the next day the factory collapsed on them killing over a thousand of them.

This seems like a better approach than Kant, who famously said he would not value consequences even when life was at stake – claiming that lying even to save a life is wrong. Similarly, Kant would not allow exploitation even if it is generally life-saving when compared to not allowing the exploitation (since without sweatshops there would be more starvation than there would be work-related deaths with sweatshops).

The issue of calculation: Util vs Kant

Utilitarianism faces the issue of calculation, but Kant does not.

Utilitarianism seems to require:

• That we know can the future consequences of all the possible actions we could take
• That we can make incredibly complex calculations about the range of possible actions, sometimes under time-constraints.
• That these calculations include the objective measuring of subjective mental states like pleasure and pain.

All three of these conditions are plagued with difficulty, and yet each seems absolutely necessary if we are act on the principle of utility.

Application of this issue to Business ethics:

CSR: The effects of CSR are difficult to predict, both in terms of how much they might negatively cost a business and how much it might positively affect society or the environment.

Globalisation: the effects of globalisation are very difficult to predict. It’s hard to say how much poverty it might prevent through off-shore outsourcing, or conversely how much it might corrupt markets due to creating monopolies and buying off politicians.

Whistleblowing: It’s possible that whistleblowing might cause a company to go bankrupt, causing unhappiness for its employees, or the business might not. It’s very hard to predict that, but then it’s very hard to know whether whistleblowing would maximise happiness.

Critical comparison with Kant: Kant does not have this issue. In fact, Kant makes this criticism himself when defending himself against the murderer at the door scenario, claiming that we cannot predict or control consequences and therefore cannot be responsible for them. All we are morally responsible for is doing our duty, therefore.

Arguably Kant’s blanket ban on all actions which treat people as a mere means is the better approach than Utilitarianism’s seemingly futile suggestion that we try and calculate which cases will have good or bad consequences.

Bentham’s response to issues with calculation. Bentham claims that an action is right regarding “the tendency which it appears to have” to maximise happiness. So, we actually only need to have a reasonable expectation of what the consequences will be based on how similar actions have tended to turn out in the past.

Mill’s response to issues with calculation. Mill’s version of Utilitarianism seems to avoid these issues regarding calculation. We do not need to know the future, nor make incredibly complex calculations, nor measure subjective feelings. We only need to know the secondary principles that our civilisation has, through its collective efforts and experience, judged to be those best conducive to happiness. We then need to simply follow those principles as best we can. For Mill, the moral rightness of an action depends on maximise happiness, but because of the immense complexity of that, our only moral obligation is to just do our best to follow the principles geared towards producing happiness of our society, which are themselves only the best current principle that our current stage of civilisation and culture has managed to develop.

In cases of a conflict of rules, Mill adopts the same approach as Bentham and says we must judge the individual action by the principle of utility, though Mill adds that we should consider the quality not only quantity of the pleasure it could produce. He agrees with Bentham’s point that when judging individual actions, we can base our calculations on what we know of the ‘tendencies’ actions have. We do not need to exactly predict their consequences.

The issue of the value of consequences: Util vs Kant

Kant and the issue of failing to appreciate the value of consequences. Kant faces this issue, but Utilitarianism does not. Sometimes actions have very good or bad consequences and Kant seems wrong for not thinking that morally relevant.

The murderer at the door example attempts to show the downside of Kant’s rejection of consequences having moral significance.  

Whistleblowing – some cases of whistleblowing have very bad consequences – at least resulting in misery but sometimes even resulting in death (if the workers lose their job and starve). Just like with lying, Kant would say we must always tell the truth, even if it ends up killing people.

Imagine that a business employed a genius but sadistic scientist who was likely to cure some terrible disease that affected millions. However, they were treating their workforce in some horrible way, but there was no way to gain the valuable research without allowing the exploitation. A Utilitarian might reason that we should allow the exploitation because the happiness gained would far outweigh the suffering, just like lying to the murderer at the door is justified for its good consequences.

Globalisation & CSR can each have very good consequences, even when allowing exploitation. First world countries get very cheap products and third world countries get jobs.

Kant’s response: we cannot predict/control consequences.

However: we can to some degree and therefore to that degree we are morally responsible for consequences and they do matter ethically to the rightness or wrongness of an action.

The issue of intentions: Util vs Kant

Utilitarianism faces the issue of intentions and character, but Kant does not.

Utilitarianism only views the consequences of actions as good, not the intention or character (integrity) of the person who performs them. This goes against the intuition that a person can be a good person and can have good/bad intentions. Consequentialist theories seem unable to accept that because for them, it is only consequences which are good or bad, not intentions/character.

It is part of Kant’s theory that your moral intention is relevant to the goodness of your action, so he does not face this issue.

Application of this issue to business ethics:

CSR: Applying this to business ethics, it looks like Utilitarianism would not care about a business merely engaging in CSR for PR out of greed for profit or even for deception to distract from their other unethical practices. So long as the business and its CSR activities overall have good consequences, Utilitarian reasoning seems to be committed to it being morally good.

Globalisation: Globalisation could

Whistleblowing: A person whistleblowing might only do it in order to bring down a rival company

Kantian ethics would not have this issue because for Kant good intention is essential. We must act out of duty (“ duty for duty’s sake” ) in order for our action to be morally good.

Mill responds firstly that a person’s character does matter because it will determine their future actions. The stabber should be condemned for his motive because that will prevent them stabbing others in future. The priest should be forgiven because he’s not likely to do anything bad in the future as his character is good. Secondly, Mill argues that having a good character helps you become happy. Motives and character therefore do matter ethically, though not intrinsically but only insofar as they result in good consequences, in line with consequentialism.

So, Mill might argue that if the intention behind CSR involved greed or deception then that might have bad consequences overall or in the future and therefore can be thought of as morally wrong.

Kant would not be satisfied by this response, however, as he would maintain that it was the greed and deceptiveness itself that should be regarded as morally deficient.

Leads to the critique of Kant – that it is impractical to think humans can act without emotion. Utilitarianism does not have this issue – in fact it accepts that avoiding negative feelings and achieving positive feelings is our ultimate desire/end.

Adam Smith, the ‘father’ of capitalism

Adam Smith was an economist and philosopher sometimes called the father of capitalism. Smith’s argument is that when people follow their rational self-interest competing in a free market, the result is economic prosperity which benefits society and general happiness. In a free market, people gain money by providing a product or service that others are willing to pay for. Competition encourages productivity and innovation resulting in economic growth. Free market capitalism harnesses self-interest for societal gain, as if guided by an ‘invisible hand’. This is the origin of the view that good business decisions have positive social results and is thus linked to good ethics.

Utilitarianism on capitalism & business ethics

Bentham was influenced by Adam Smith. Bentham and Mill mostly agreed with Smith’s reasoning, accepting that in general happiness is maximised by leaving markets free. However, they both thought that restrictions needed to be placed on the market in some cases to direct it towards maximising happiness where it failed to. Bentham thought the government should guarantee employment and impose a minimum wage. Mill thought that the government should step in to aid in cases of market failure by providing their own products or service, such as education, to encourage competition if the market failed to. Mill even thought that worker-owned co-ops were long-term the best model for ownership structure.

The Utilitarian view then is that CSR is generally good and if globalisation detracts from CSR then it is generally bad.

Kant on capitalism & business ethics

Kant was influenced by Adam Smith and agreed that the division of labour was important for progress. Capitalism is based on autonomous market interactions and contracts between employers and employees. It involves individuals pursuing their rational self-interest. Kant’s ethics accords with this as it depicts the rational individual as the centre of moral responsibility. When contractual arrangements and market interactions involve the treatment of people by each other as ends, they are good.

However, when either business practices or the macro effects of capitalism result in people being treated as mere means or otherwise violate duty, it seems that Kant would think that immoral, even if it was good for the profit of the business.

The Kantian view then is that CSR is our duty and globalisation which undermines CSR is wrong.

M. Friedman vs Kant & Utilitarianism on CSR and globalisation. Milton Friedman (libertarian) claims that the only responsibility of a business is to “make as much money for their stockholders as possible”.

Friedman therefore rejects the approach of both Kant and Utilitarianism. He would not accept that restricting markets or businesses is acceptable, whether to maximise the general happiness or to ensure the treatment of stakeholders as ends.

Free market capitalism is the result of freedom, voluntary co-operation. Any attempt to control markets, even with the best of intentions, requires force and power. Friedman argues that no one is angel-like enough to wield that power without becoming corrupted.

The only escape from extreme poverty is capitalism and largely free trade. Societies which depart from that are worse off. Evidence which supports Freidman’s case is that the percentage of the world in extreme poverty dropped from 70% in 1960 to 17% in 2012.

Freidman further argues that free market capitalism is best for economic growth. Reducing profits only reduces the incentive to innovate.

Evidence for Friedman’s point is that northern Europe might be more equal than the USA, but it is less innovative. There’s a reason silicon valley is in America.

The problem for Freidman is that he thinks freedom is good, yet freedom leads to monopolies, especially under globalisation. Monopolies actually end up undermining innovation and freedom. The only way to ensure that the market remains free is government intervention and control. Friedman accepted this, but in that case, he has to accept giving the government power.

A free market is an inherently unstable thing. Money is power. Successful corporations will use their money to rig the market in their favour. The only way to prevent governments from being corrupted is by preventing businesses from having the power to corrupt governments.

Adam Smith’s arguments made much more sense in his time when capitalism was just starting out. The macro-effects of globalised capitalism are disastrous for the environment and for the free market itself.

So, it looks like Kant and Utilitarianism are right that some restrictions should be placed on markets.

Possible exam questions for Business ethics

Easy How useful is utilitarianism in dealing with issues in business ethics? Assess whether Kantian ethics applies successfully to business ethics What does it take for business to be ethical?

Medium Does the principle of utility lead to ethical business? ‘the categorical imperative leads to ethical business’ – Discuss. Is Corporate social responsibility just ‘hypocritical window-dressing covering the greedy profit motive of business. Can human beings flourish in the context of capitalism and consumerism? Assess whether corporate social responsibility makes business ethical To what extent is whistle-blowing ethical? How successful is Kantian ethics at dealing with the issue of (CSR/Whistleblowing/Globalisation)? How helpful is Utilitarianism at dealing with the issue of (CSR/Whistleblowing/Globalisation)?

Hard Assess whether globalisation encourages or discourages the pursuit of good ethics as the foundation of good business. Is good ethics good business? Should whistle-blowing be considered good ethical business practice?

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Business Ethics Essay

• Author Kimberly Ball
• Category General Essays

Disclaimer: This paper has been submitted by a student. This is not a sample of the work written by professional academic writers.

Any opinions, findings, conclusions or recommendations expressed in this work are those of the authors and do not necessarily reflect the views of StudySaurus.

Introduction

Business ethics or corporate ethics is a form of moral ethics that examines the conduct of people and individuals in a business set up (Weiss, 2014). These norms are the key guidelines to the way things are done in individual and communal businesses, and it helps in improving the relationship of the business with its stakeholders. The core purpose of any company is to maximize shareholder returns, and this is only made possible by having the business impress its customers effectively and treat them fairly such that the net sales remain at a high level (Ferrell & Fraedrich, 2015). It is common to find various ethical issues arising in a business, situations where the management has to decide on the suitability or morality of actions that will be taken in the business. During such ethical dilemmas, the officials are expected to make the best decision that is aimed at winning the affection of the customers (Weiss, 2014). Taking the example of ford, the car producing company that was faced with an ethical dilemma due to the production of defective products, the decision made in such a scenario, if proper business ethics are adhered to, could make the company maintain its high clientele, of which the opposite also applies.

Case Analysis

One of the known business ethics cases of the international companies is the ford pinto case, in which ford’s design of the Pinto’s fuel tank is defective, in a way that it makes the Pinto to be highly susceptible to fire accident. Rear-end collisions for the Pinto, whether minor or major leads to ultimate accidents, making it very unsafe for the Pinto users. The moral action for Ford in this case is to repair the design to make it suitable for every vehicle, but apparently this would be very expensive as it would cause the company over $137 million. If the company chose to turn a blind eye on the case, the cost of paying for the resulting damages including insurance due to deaths caused would not exceed $47.5 million.

The Who-How Framework for Business Ethics in Dealing with the Case

Under the Who-How framework of business ethics, the person in which the ethical action is performed for or against is first evaluated and the protocols are then evaluated (Hoffman et al., 2014). That is the Who and the How respectively. In this case, it is evident that Ford chose an unethical decision, taking down lives and health of people for the sake of their profit maximization. The ‘who’ in this case is the customers affected by the defect and the ‘how’ is the means in which the business reasons out either compensating or doing away with these customers (Weiss, 2014). The principle of utilitarianism, where the decision is made basing on the idea that brings about the common good for the larger percentage of the individuals is also used in this approach. If ford decides to take the more expensive option and make the necessary changes, they would save the health and the lives of millions of their users. If they would decide to take the second option, which is paying for upcoming damages and save the cost of the manufacture changes, they benefit is felt by only a small fraction of the stakeholders, the owners of the company. In the long-run, however, these beneficiaries would be losers since all the affected customers would be lost and the reputation of the company lost for a long time. The best ethical decision for ford is therefore to accept the mistake very fast, spend a lot of cash in correcting it and it would do them good in future.

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Business Ethics: Term Definition Essay

Leaders and decisions, responsibilities of the federal sentencing guidelines, ethical issues and accounting practices, morality in business, responsibilities of coso and enterprise risk management, enterprise risk management, works cited.

“Business ethics is the study of business situations, activities and decisions where the issues of right and wrong are addressed” (By Andrew Crane and Dirk Matten). Business ethics usually gives the ability to evaluate both the problems and benefits associated with different methods of managing the ethics in the organization. (Crane and Matten, p.5).

Duties of board members

Board members of the organization should be first of all committed to the public and also to the mission fixed by the board. They should have good expertise in dealing with the values, vision and long term objectives of the business. The board members should also have the ability to take part successfully and positively in the discussions. They should be ready to make others also participate in the discussions and in taking decisions. They should have the willingness to share power and they should also involve in fair negotiations. They should make independent judgments and should have courage and good faith.

There are mainly four duties for a board member

• Duty of attention

This means that the board members should find enough time to prepare and also to participate in the meetings and discussions. They should review related materials and ask questions in order to solve problems, if any.

• Duty of loyalty

The board members should always be loyal to the public and also should act in the best interest of the public. They should disclose everything to the other members and also to the staff. They should avoid conflict of interests between the staff and the members.

• Duty of care

They should take decisions with good faith and honesty. They should act prudently and should take good decisions. Adequate records should be made about the board actions so that they could be used for future reference.

• Duty of obedience

The board members have to stick to administrative rules and regulations and should support the board decisions and policies. (Characteristics of Good Board Members).

The federal sentencing guidelines are applicable to all organizations of any nature, whether public or private. It is applicable to all corporations, partnerships, labor unions, pension funds, trust, non profit entities and also to the governmental units. An effective ethics and conformity program will in turn reduce punishment if there are any legal violations. The guidelines make clear that organization will be held liable if its employees commit any illegal actions. These guidelines provide a powerful encouragement to the employees to prevent them from taking unethical actions. The organization must provide an effective training program for its employees so that they can be made aware and might reduce the possible fines and punishment they might get in the future. So training is an important aspect that should be considered and must be provided to the members of the concerned authority, high level personnel, and employees of the organization. The guidelines also help the organizations in establishing standards and procedures so as to reduce criminal conducts. It also places responsibility among the high level authority and also the board members so as to comply with the organizational ethics. Persons who are engaged in unethical actions are prevented from serving the organizations. It also helps to make effective monitoring and auditing of the effectiveness of the program. (2004 Federal Sentencing Guidelines Requires Employers to Periodically Train All Employees on Work place Ethics).

According to Taylor, moral norms are relative to particular cultures, and rules of conduct applicable in one society will not be acceptable in another society. It is assumed that each community has its own norms and morality with standard rules acceptable in that community.

The achievement of desirable economic outcome justifies a particular approach to an accounting rule. “The deontological point of view is that moral rules apply to the actual actions, the means where by an end is pursued. The teleological point of view is that an action should be judged on the basis of moral worth of the outcome.” (Gowthorpe, Blake and Pilkington, p.11).

List of provisions of Sarbanes-Oxley act and its impact on corporate governance and boards:

“ The Sarbanes-Oxley Act’s major provisions include the following :

• Creation of the Public Company Accounting Oversight Board (PCAOB)
• A requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting, and that independent auditors for such companies “attest” (i.e., agree, or qualify) to such disclosure
• Certification of financial reports by chief executive officers and chief financial officers
• Auditor independence, including outright bans on certain types of work for audit clients and pre-certification by the company’s Audit Committee of all other non-audit work
• A requirement that companies listed on stock exchanges have fully independent audit committees that oversee the relationship between the company and its auditor
• Ban on most personal loans to any executive officer or director
• Accelerated reporting of insider trading
• Prohibition on insider trades during pension fund blackout periods
• Additional disclosure
• Enhanced criminal and civil penalties for violations of securities law
• Significantly longer maximum jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements, although maximum sentences are largely irrelevant because judges generally follow the Federal Sentencing Guidelines in setting actual sentences
• Employee protections allowing those corporate fraud whistleblowers who file complaints with OSHA within 90 days to win reinstatement, back pay and benefits, compensatory damages, and congressional page abatement orders, and reasonable attorney fees and costs.” (Sarbanes Oxley: Provisions).

Sarbanes-Oxley Act induced many changes in financial procedure of companies making them more transparent. In the long run, this is proved to be good for the companies. However, the Act created positive as well as negative impact on companies. This Act made it compulsory for the public companies to certify the accuracy of the yearly financial statement by CEO and CFO. It is applicable to all the public companies irrespective of their size. The Act required encouraging employees to reveal any information regarding fraudulent acts. This act also affects certain private companies which have dealing with public companies and other nonprofit firms. “The Sarbanes-Oxley Act made a significant impact on public companies. The Act affected not just the accounting firms but also ‘Certified Public Accountants’ that work as auditors for public companies. The Act was formulated to keep a check on the fraudulent working of companies in the financial sector.” (How the Sarbanes Oxley Act of 2002 Impacts The Accounting Profession).

Committee of Sponsoring Organizations (COSO) and control environment and elements.

According to COSO, “Internal control is a process effected by an entity board of directors, management and other personnel. It is designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, compliance with applicable laws and regulations.” (Hallock).

Control environment is an environment in which the employee takes the major responsibility and which is affecting the company’s activities. It involves integrity and ethical values of employees, commitment, etc.

Responsibilities of COSO are as follows:

• To ensure companies’ actions are based on policy and principles.
• To ensure fair and equal treatment of employees during the investigation,
• To establish both internal and external communication guidelines.
• To establish ramifications to those involved in fraud if it is discovered.

Enterprise Risk Management is designed to save companies from issues and effects. Integrated framework of enterprise risk management, assist in ensuring effectiveness of operational and financial compliance with the internal controls.

• Characteristics of Good Board Members. 2008.
• Crane, Andrew., and Matten, Dirk. What is Business Ethics . Business Ethics. 2007.
• Gowthorpe, Catherine., Blake, John., and Pilkington, Catherine. The Ethical Perspective: As Taylor Observes. Ethical Issues in Accounting. 1998. Web.
• Hallock, Micah. Ethical ns Internal Control. U S Business Review. 2007.
• How the Sarbanes Oxley Act of 2002 Impacts The Accounting Profession. BNET: The Go to Place for Management. 2008.
• Johnson, Michael W. 2004 Federal Sentencing Guidelines Requires Employers to Periodically Train All Employees on Work place Ethics. Brightline Compliance: A Global Compliance Company. 2004.
• Sarbanes Oxley: Provisions. Compliance Home: Regulatory Compliance Portal. 2008. Web.
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IvyPanda. (2024, March 9). Business Ethics: Term Definition. https://ivypanda.com/essays/business-ethics-term-definition/

"Business Ethics: Term Definition." IvyPanda , 9 Mar. 2024, ivypanda.com/essays/business-ethics-term-definition/.

IvyPanda . (2024) 'Business Ethics: Term Definition'. 9 March.

IvyPanda . 2024. "Business Ethics: Term Definition." March 9, 2024. https://ivypanda.com/essays/business-ethics-term-definition/.

1. IvyPanda . "Business Ethics: Term Definition." March 9, 2024. https://ivypanda.com/essays/business-ethics-term-definition/.

Bibliography

IvyPanda . "Business Ethics: Term Definition." March 9, 2024. https://ivypanda.com/essays/business-ethics-term-definition/.

• Internal Organizational Problems: COSO and COBIT Frameworks
• The Sarbanes-Oxley Act and COSO's Internal Control Framework
• COSO and COBIT Committees in a Field for Corporate Auditions
• California, US: San Andreas Fault and Coso Volcanic Field
• The COSO ERM Framework
• The Committee of Sponsoring Organizations: Managing Framework
• Sarbanes-Oxley Act and Corporate Governance
• Sarbanes-Oxley Act and Nonprofit Organizations
• The Sarbanes-Oxley Law Conference
• E-Commerce: Sarbanes-Oxley Act Implications
• Ethical Marketing: Koffum Filters
• Marketing Research Ethics, Values and Norms
• Multinationals and Ethically Sound Business Practice
• Asda Company's Business Ethics.
• John Kline’s “Ethics for International Business”

• Call to +1 844 889-9952

Business Ethics: Terms and Definitions

According to ‘Business Ethics’ (2003), business ethics is defined as the moral principles and values that administrate the behavior of an organization. It points out the basic beliefs and priorities of the organization in solid terms. An organization can therefore gain a particular status; bad or good, depending on the influence of the organization.

Explain how corporate culture influences the ethical behavior of an organization

Corporate culture is simply the personality of an organization. It can influence ethical behaviors positively or negatively. Countries differ from each other in terms of their corporate culture. The western and the eastern countries have different cultural norms in their businesses. What is viewed ethically wrong in the United States is viewed to be ethically right in China. Polland, Chan, and Chuo (2007) point that ‘China has a corporate personality of accepting bribes as opposed to the US where they view it as illegal’ (p. 3). Therefore according to the western perspective, eastern countries instill some unethical behaviors and vice versa. Polland (et. al., 2007) asserts that ‘culture is difficult to define universally as it represents a group’s values, patterns of thinking, feeling and acting.’(p. 3)

On the other hand, if the corporate culture is ethical then ethical behavior will be exhibited. An excellent moral approach will generate positive corporate culture making the employees and customers happy and ultimately boosting the profits. Transparency of expectations and maintenance of ethical quality influences the behavior of employees positively (Small, 2009).

Corporate culture has proved to be difficult to change despite having influential capacity on the ethical behaviors of an organization. This is because culture has taken a long time to be in existence and the roots are beyond the walls of the organization. Therefore, it will not be easy for them to be changed overnight.

Klabunde (2008), states four ways of changing corporate culture. They include; educating and encouraging employees, pointing out expectations, recognizing and celebrate success, and remunerating success. These four methods will enable shifts and flexibility within an organization hence corporate culture change.

How can whistle blowing be both a positive and/ or a negative situation for many individuals?

An organization is not complete without the presence of whistle blowers. (Storey, 2009) defines a whistle blower ‘as someone who divulges unethical behavior to the people in authority.’ The positive aspect of whistle blowing is that person(s) will boost honesty, fairness and equality. On the other hand, one may be seen as a traitor and encounter a lot of hostility in the work place. From my point of view, whistle blowing should be encouraged but policy measures should be put in place to govern it. Protection must be provided to the whistle blowers to avoid their retaliation. The motive behind a whistle blower should be highly scrutinized so that they do not implicate innocent individuals. Whistle blowers should not be looked down upon as they are instilling good morals in the society. (Miceli, Zworykin & Near, 2008, p.168) states that ‘US whistle blowing decree offers protection to whistle blowers depending on the motive to avoid retaliation.’

The process of whistle blowing according to Miceli (et. al. 2008, p. 170) is that ‘employees should make their disclosure first to their line manager and it should be of good faith. They should also believe that the following has or is about to happen; criminal offence, breach of lawful requirements, violation of company’s procedures, and actions leading to negative impact of people’s health. Investigation is then conducted and the findings presented to all parties involved. Thereof the necessary action is taken.’ However, this is not the case in china as whistle blowing seeks anonymity, often by email and it comes from all sections of the company. However, the letters can point to the writer but this is kept as a secret. Chinese people hardly ever keep to a single allegation. Therefore, investigators tackles such issues by starting with general focus, then they narrow down to serious and specific allegations (Blank, 2009, ¶ 4-5).

Explain the responsibility of the corporation as a moral agent

Ethical accountability assumes the ability of corporations to make rational decisions which makes them to be held responsible for their actions. This signals corporations to perform their role as moral agents well. People with incapacity to make rational decisions (employees) should not be held responsible, but Measures to curb the irrational behaviors should be put in place. For example, adults are held responsible for the actions of their children because they can not make sound and mature decisions. Corporations on the other hand, render services, products and equally employment therefore, these activities bring about their moral responsibility. Thus, the major role of a corporation as a moral agent is to ensure their social and economic power does not negatively affect the society. Their interactions with the internal and external entities should show dedication, sense of care and reliance (Barriet, 2004, p. 1). The responsibility a corporation assumes as a moral agent makes it to be considered as a societal moral agent.

The western and the eastern views towards moral responsibility differ in a wide range. The Chinese community can not be held as moral agents as their way of doing business is selfish and profit driven; hence a lot of unethical behaviors are executed. On the other hand self-interest and selfishness in the US business organization is prohibited and illegalized. This indicates that US prioritizes moral responsibilities unlike in China where moral responsibility are not put into much consideration. Apparently, Polland (et. al. 2007) points out that, ‘the syndrome of selfishness has taken hold of the corporations and society in China’ (p.6). Therefore, corporations in China can not be termed as moral agents.

What usefulness does ethics training have on workers ethical behavior?

Unethical behaviors have become rampant in the current business world. This has led to the adoption of Ethics training by a high number of organizations today. ‘Todays marketer’ (2003) (¶ 1-2) indicates that ethical training inculcates corporate morals, rules and regulations to the managers as well as their juniors in an organization. Importantly, ethics training expands staff member knowledge on moral issues, increases the level of their personal awareness and makes them be aware of the consequences of malpractice. Further, it ensures organization’s moral rules are applied in a continuous prose. Lastly, the article cites that ethics training reinforces the rules and boundaries employees and their seniors should follow (¶ 1-2). Therefore, traits of ethics training discussed above are of high importance as they nurture ethical behaviors in a positive manner.

Ethics training can be a success or a failure. For it to be effective and have an impact on the moral behaviors of an organization especially in Vietnam, an effectual ethics training program should be integrated. This program should address a number of issues (LRN, 2007, ¶ 2);

• It should be motivating and promote active contribution.
• The ethics training program should reflect real work environment. Here employees learn and apply what they experience during work.
• The program should incorporate day to day happenings in Vietnam that the employees stumble upon.
• Employees should be taught the significance of ethics to motivate upright conduct, especially in a community full of unethical behaviors.
• Lastly, leaders in an organization should actively motivate ethics training program efforts.

Why would a company choose to understand report on, and improve their ethical conduct?

In business arena, reports are prepared by the subordinate stuff to update the management about the business performance. It helps to enlighten the management about the success and failing of the enterprise. Therefore accuracy of the reports is very essential for the success of a business. Thus those in management should take their time to go through the reports presented to them and try to understand them accordingly. They should request clarification in case of any ambiguity in the reports. In situations where they realize that the reports presented to them failed to address the subject matter appropriately or were biased, they should consult those that prepared the reports and advice them accordingly.

This will enable the subordinate to be more attentive and alert when reporting in future. In addition understanding of the reports appropriately will ensure that the reported issues are addressed amicably without prejudice in instances of biased reporting. Therefore understanding of reports well is a very important act for management in order to try and eradicate any ethical issue that may surface from the reports.This is very necessary and particular in Vietnam where there has been noted to suffer from poor company reporting of late(Simon, 2009 ).

List and describe three models that have been developed to capture structural and behavioral organizational ethical performance

The three models include; generic ethics influences model, ethics and mortgage lending model and executive’s ethical behavior model. The first model, generics ethics influences model depicts a number of facts that combine to form personal moral behaviors. The model is based on a number of assumptions which include;

• Better media efficacy and the rule of law augment forces for greater levels of moral behavior.
• Greater socioeconomic growth may expand the focus on obvious success values, thus forming culture’s moral values.
• A culture’s moral values characterize individual decent growth.
• Individual’s socio-economic security is influenced a lot by an organization’s demand to deliver which in turn affects an individual’s moral conduct.
• External pressure; foreign and industrial competition, increases pressure to perform hence suppressing an organization ethical environment.

The second is ethics and mortgage lending model. This model focuses on present concern, where immoral behavior of lenders and borrowers of mortgage generate unhealthy ratio of less loans to major loans. A culture of spending is created to energize buyers and greater commissions lower lenders morals. The model thereof depicts self –correcting trait which leads to increase of money supply in the long run.

Lastly, it is the executive’s ethical behavior model. This third model concentrates on major powers which can outline moral behaviors of an executive. The executive is the body which holds high responsibilities and makes important decisions but it is not the overall management. Therefore, it can experience a lot of pressure to deliver, perhaps at the expense of morals (Barret, 2004, pp.4-6).

In the view of the above, a difference occurs between Vietnamese companies and multinational companies based in Vietnam. These multinationals always plays by their mother country rules of avoiding illegal and unethical behaviors as opposed to Vietnamese companies.

What can multinational companies and the global community do to reduce bribery?

Bribe means favors in terms of payment or other forms to make the recipient to act according to the instructions of the bribe giver. There are two types; white mail and lubrication. Bribery has some negative effects economically and socially around the globe. It wears away support for aid, puts intense load on the poor and makes the living standards to be of low quality. Reasons for bribery are well known and measures to combat it have been suggested. Dissuasion and prevention are two ways which can be used to tackle bribery. Other suggestions include; promotion of legitimate competition, creating a balance between rules and professional diplomacy, alter the reward structure, lower tariffs and trade barriers, and communal activities should be made visible.

The effects of controlling measures against bribery on the companies conducting bribery acts are negative. Bribe is meant to speed up processes and activities conducted by companies. Therefore, measures put to curb corruption will slow down the organizations’ pace and the profit acquired will be low. Bribery brings inequality and undue advantage on entities exercising it. To ensure equal functioning of these businesses the following should be addressed;

• Every institution should be involved in tackling bribery issues.
• Communal institutions should be drawn to higher levels of transparency
• Aid for development should be linked with how the recipient country has managed and illegalized corruption.
• Privatization of public entities should be done.
• People working in public institutions should be evaluated and take responsibility of the actions they have committed against the law.

For the above to be effective in Vietnam, the corporate culture of Vietnamese should be reformed and the global effects of bribery on business entities should be well emphasized.

Describe price discrimination and give three examples of when price discrimination may become an ethical or even a legal issue

Price discrimination is a case where a certain company charges different prices of similar goods to different consumers for a motive far from cost (‘Tutor 2 u’, 2009, ¶ 1). Schenk (2004, ¶ 3) also defines price discrimination as charging unlike prices to different buyers. The purpose of price discrimination is to charge the highest price that the buyer is eager to pay.

Price discrimination becomes an ethical issue when gains from trade are not properly distributed between buyers and sellers. As defined earlier, price discrimination does not occur to recover costs; therefore it becomes ethically wrong to have imbalances of price for the same commodity. Price discrimination also becomes an ethical issue if a vendor utilizes his market power to gain intensely from what the buyers get from the utilization of the commodity. For example, from the description of price discrimination similar goods are sold for different price to different consumers. Therefore the seller will obtain higher profits than required and this qualifies the seller to be ethically wrong. Lastly, price discrimination becomes an ethical issue when the capability of strong buyers is reduced by less influential sellers (Tiemstra, 2006 ¶ 22-23).

Reference list

‘Business Ethics’ (2003). What is business ethics ?. Web.

‘LRN’, (2007). How to create an effective compliance and ethics training program . Web.

‘Todays marketer’, (2003). Ethics training . Web.

‘tutor 2 u’, (2009) price discrimination . Web.

Barrett, W. (2004). Responsibility, accountability and corporate activity . Web.

Blank, N. (2009). Global fraud report: whistle blowers in china . Web.

Gebler, D. (2004). Closing the behavior-standards gaps is the easy part . Web.

Jain, R. (2008). Importance of ethics in business . Web.

Klabunde, T. (2008). Four steps to changing corporate culture. Web.

McManus, K. (2003). The challenge of changing culture . Web.

Miceli, P. M., Dworkin M.T., Near, P. J. (2008). Whistle blowing in organizations (pp 168-170). New York: Madison Avenue.

Polland, D. F., Chan, S. P., Chuo, S, F. (2007). Corporate ethics . California.

Schenk, R. (2004). Price discrimination . Web.

Simon, L. (2009).Vietnam – market ethics. Web.

Small, J. (2009). Importance of ethics in a corporate environment . Web.

Storey, A. (2009). Pros and cons of being a whistle blower. Web.

Tiemstra, P.J. (2006). Price discrimination and fairness . Web.

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BusinessEssay. (2022, December 6). Business Ethics: Terms and Definitions. https://business-essay.com/business-ethics-terms-and-definitions/

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1. BusinessEssay . "Business Ethics: Terms and Definitions." December 6, 2022. https://business-essay.com/business-ethics-terms-and-definitions/.

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BusinessEssay . "Business Ethics: Terms and Definitions." December 6, 2022. https://business-essay.com/business-ethics-terms-and-definitions/.

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