- Business ethics is the study of how a business should act during ethical dilemmas or otherwise controversial situations. The study arose during the 1960s in response to increasing discourse regarding environmental issues, social causes, and corporate responsibility.
- Business ethics complement existing legislation by providing a framework for acceptable behavior that is beyond governmental influence.
- The specific business ethics an organization adopts will depend on its industry and culture to some degree. However, every company should adopt ethics related to personal responsibility, corporate responsibility, loyalty, respect, trustworthiness, fairness, community, and environmental responsibility.
Understanding business ethics
Business ethics is a form of professional or applied ethics that examines the moral and ethical problems that arise in a business environment. The concept of business ethics arose during the 1960s as corporations became aware of consumer concerns regarding the environment, social causes, and corporate responsibility. Business ethics is the study of how a business should act during ethical dilemmas or otherwise controversial situations.
Business ethics determine how a business should behave in a difficult situation, defining the standards for morally right and morally wrong conduct. Some of these situations may be related to corporate governance, discrimination, insider trading, corporate social responsibility, and bribery. While existing legislation in these areas dictates acceptable conduct to some degree, business ethics enhance the law by outlining acceptable behaviors beyond government control.
Corporations establish business ethics for a few very important reasons. For one, they are used to promote integrity amongst employees which has subsequent implications for company culture. Business ethics also help the organization manage conflict and gain trust from key stakeholders such as investors and customers.
Seven business ethics types
Every employee in an organization holds certain beliefs around matters such as honesty, the avoidance of criminal acts, and a willingness to perform accepted duties.
Businesses also have responsibilities to their employees, clients, customers, and in some cases, the board of directors. These responsibilities may be contractual or legal in nature, or they may involve the business promising to operate fairly and to treat its people with respect.
The employee should be loyal to their colleagues, managers, and the organization as a whole by speaking positively in public and addressing contentious issues in private. Conversely, the organization should remain loyal to its customers to ensure a good public reputation.
Respect determines how the business treats its clients, customers, and employees. Respect also determines the way employees treat each other and is characterized by collaboration, mutual understanding, and appropriate conflict resolution.
Essentially, this means employees and businesses do what they say they will do. Trustworthiness is associated with honesty, transparency, and reliability. These traits are particularly important in businesses where money, data, contractual obligations, and other confidential information must be held in trust.
Community and environmental responsibility
These business ethics are top of mind for most modern businesses, who must look for ways to give back to local communities and develop strategies to minimize their environmental impact.
A business that exemplifies fairness applies the same standards to all employees regardless of rank or seniority level. In other words, the CEO of a company and an entry-level janitor are held in the same esteem. The business must also treat its customers with similar fairness by making its goods and services available on fair and equal terms.
Examples of Business Ethics:
- Corporate Social Responsibility (CSR):
- Many companies engage in CSR activities, such as donating to charitable causes, supporting environmental initiatives, or promoting fair labor practices.
- For example, a tech company may donate a percentage of its profits to educational programs in underserved communities.
- Whistleblower Protection:
- Business ethics may involve protecting whistleblowers who report unethical behavior within the organization.
- Companies can establish policies that shield employees from retaliation when they raise concerns about misconduct.
- Anti-Discrimination Policies:
- Businesses often implement policies and training programs to prevent discrimination in hiring, promotion, and workplace treatment.
- An example is a company promoting diversity and inclusion by actively recruiting employees from various backgrounds.
- Environmental Sustainability:
- Business ethics can include commitments to reduce the environmental impact of operations.
- Companies may set goals to reduce carbon emissions, conserve water, or minimize waste generation.
- Fair Trade Practices:
- Ethical businesses ensure fair trade practices in their supply chain, particularly in industries like agriculture and manufacturing.
- This may involve paying fair wages to workers or sourcing materials from environmentally responsible suppliers.
Key Highlights of Business Ethics:
- Purpose: Business ethics focuses on addressing moral and ethical issues that arise within a business environment, aiming to define acceptable and unacceptable conduct.
- Promoting Integrity: Ethics in business promotes integrity among employees and contributes to a positive company culture.
- Enhancing Trust: Businesses that uphold ethical standards build trust with stakeholders, including customers, investors, and employees.
- Types of Business Ethics: Various types of business ethics include personal responsibility, corporate responsibility, loyalty, respect, trustworthiness, community and environmental responsibility, and fairness.
- Complementing Legislation: Business ethics goes beyond legal requirements, providing a framework for ethical behavior that surpasses government regulations.
Connected Business Concepts
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