Business Ethics

- Business ethics is an “inquiry into the nature and grounds of morality where
the term morality is taken to mean moral judgments, standards and rule of
conduct”.
- It has also been called the study and philosophy of human conduct, with an
emphasis on determining right and wrong.
- AND – “The study of the general nature of morals and of specific moral
choices; moral philosophy; and the rules or standards governing the conduct
of the members of a profession”.
• The difference between an ordinary decision and an ethical one lies in “the
point where the accepted rules no longer serve, and the decision maker is
faced with the responsibility for weighing values and reaching a judgement
in a situation which is not quite the same as any he or she has faced before”.
• Values and judgments play a critical role when we make ethical decisions.

Aspect to be considered when applying ethics to business:

1. To survive, businesses must earn a profit. If profits are realized though

misconduct, however, the life of the organization may be shortened.
2. Businesses must balance their desires for profits against the needs and
desires of society. Maintaining this balance often requires compromises or
trade-offs. To address these unique aspects of the business world, society has
developed rules – both legal and implicit – to guide business in their efforts
to earn profits in ways that do not harm individuals or society as a whole.

• Moral definitions of business ethics to rules, standards, and moral principles

regarding what is right or wrong in specific situations.
• Business ethics comprises the principles and standards that guide behavior in
the world of business. Investors, employees, customers, interest groups, the
legal system, and the community often determine whether a specific action is
right or wrong, ethical or unethical.
Determining Right and Wrong

- Acting ethically means determining what is “right” and what is “wrong”.

Basic standards exist around the world that dictate what is wrong or
unethical in terms of business practices.
- Example, unsafe working conditions are generally considered unethical
because they put workers in danger. An example, a crowded work floor with
only one means of exit. In the event of an emergency – such as a fire-
workers could become trapped or might be trampled on as everyone heads
for the only means of escape.
- While some unethical business practices are obvious or true for companies
around the world, they do still occur. Determining what practices are ethical
or not is more difficult to determine if they exist in a grey area where the
lines between ethical and unethical can become blurred.

Understanding Business Ethics in Three (3) Parts

1. HISTORY
- Most often referred to by the term is its recent history since the early
1970s. This was when the term became commonly used in the U.S.
- The main principles of business ethics are based in academia and on
academic writings on proper business operations. Basic ethical practices
have been gleaned through research and practical study of how
businesses function, and how they operate, both independently and with
one another.

2. SCANDALS
- Close relationship and usage when scandals occur. Companies selling
goods in the U.S. that were created using child labor or poor working
conditions is one such scandalous occurrence.

3. INTEGRATION
- Most recent and continually developing aspect of ethics. The idea that
companies are building business ethics into the core of their companies,
making them a standard part of their operational blueprint. As the world
continues to grow more political – and more politically correct – an
increased focus on proper business ethics and strong adherence to them
become ever more the norm.