Business Ethics

Business ethics is a complex of principles, rules and standards used within companies to guide employees and executives in morally ambiguous situations. Following business ethics allows achieving outcomes which are acceptable and supported by the public, thus enabling more trust between companies and their customers.

Business ethics concern issues that might become controversial, such as governing strategies, social and environmental responsibility of a business, internal cases of abuse or discrimination, insider trading, bribery, financial and fiduciary commitments, etc. Most of such cases are covered by law, dictating the necessary way of dealing with such situation, with business ethics aiding in choosing an appropriate decision when different options are possible.

History of Business Ethics

The idea of business ethics was introduced in the 1960s with the development of a more customer-oriented business model, which began taking into consideration the importance of good reputation and general approval of the public. Since that time, the society has been getting more and more aware of ecological problems, employees’ welfare and legal protection, as well as the principles of fair competition and marketing. In many cases, following a certain code of ethics turned out to be more profitable in the long run, as it helped to gain favor from the customers. 

The 1980s and the 1990s were the period of the main surge of interest in the concept. The corporations had to adjust to new standards to retain their customers, and business ethics became a subject of studying. 

Business Ethics main principles

It’s now considered to be an important part of a successful business strategy to have a developed set of business ethics within a company. As technology evolves, it’s getting more important for businesses to maintain their customers’ trust, as any ethical misstep might easily become public, bringing problems and possible losses.

A crucially significant issue of business ethics is the necessity of finding balance between seeking profits while reducing costs and remaining ethical. As any business aims at gaining revenue and needs to stay competitive, a variety of morally ambiguous situations might appear.

For instance, there might be a situation when a serious defect is discovered in some of the manufactured goods. It eventually raises questions among the management, whether the company should check all the recent batch of goods to sort out the defected ones. This might likely lead to a significant delay, possible losses of the revenue, as well as displeasing some customers. Alternatively, the company might release the goods into the market, hoping that a small quantity of goods is defected. So, by taking any option, the company would be exposed to risks, but over the longer term, the option which is more ethically acceptable usually result in better outcomes for the business, though different courses of events are possible.

To avoid spending too much time and effort on finding the best solution, it’s often recommended to establish an ethical program for the company, in which most of such situations would be addressed, and the guidelines would be given. Having such a program also enhances the integrity within a company, and stimulates the desirable behavior of its employees.

Another thing worth noting about business ethics is that sometimes employees might face challenges when trying to act in accordance with a company’s ethical program. Most of the workers name a fear of retaliation as the main reason of not reporting cases of unethical behavior at work. So, to implement and use business ethics sufficiently, it’s also necessary to improve corporate culture within a company, focusing on the idea that reporting misdemeanors is beneficial for all parties involved. 

It’s also important to distinguish legal and ethical issues. Many problems, which fall under the consideration of business ethics, are also regulated by law, but not all of them. Business ethics come in useful in those certain situations where there is no answer given by the legislation.