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.

About the Author

• February 21, 2024
• Uncategorized

What Are Business Ethics and Their Importance

Manaferra Content

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

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

The Definition Business Ethics

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

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

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

Why Are Business Ethics Important?

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

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

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

Ethical Principles

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

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

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

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

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

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

Responsibility

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

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

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

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

Benefits of Practicing Business Ethics

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

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

Ethical practices enhance employee morale

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

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

Ethical practices improve innovation and creativity

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

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

Challenges in Upholding Business Ethics

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

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

Pressure for short-term financial results

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

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

Complexities of the global business environment

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

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

Balancing stakeholder interests

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

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

Fostering an Ethical Business Environment

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

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

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

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

The bottom line

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

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

Frequently Asked Questions

How does personal morality influence business ethics.

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

What are examples of ethical practices in business?

Examples of ethical practices in business include:

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

How do business ethics vary across countries?

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

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What Are Business Ethics? Definition, Principles, and Types

• June 4, 2024

Table of Contents

What are business ethics, why are business ethics important, 1. accountability, 2. respect for others, 3. leadership, 5. compliance with rules, 7. environmental concern, 8. transparency, 9. integrity, 10. fairness, 11. respect for laws, corporate social responsibility, technology ethics, personal responsibility, the bottom line, what are business ethics, how do business ethics differ from personal ethics, what are some examples of ethical dilemmas in business, how can businesses promote ethical behavior, what are the consequences of unethical business practices, are there ethical considerations specific to certain industries.

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 exactly what are business ethics?

In this guide, we will explore the definition, principles, and types of business ethics to gain a better understanding of their importance in today’s corporate landscape.

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.

11 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.

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

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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.

Understanding and practicing business ethics is essential for creating a sustainable and responsible business environment. By adhering to ethical principles, companies can build trust with their stakeholders, enhance their reputation, and contribute to the overall well-being of society.

The best course of action if you want to run a successful business is to implement these business ethics as soon as possible.

Frequently Asked Questions (FAQs)

Business ethics refer to the moral principles and standards that guide behavior in the business world. It encompasses values such as honesty, integrity, fairness, and accountability in all aspects of business operations.

While personal ethics guide individual behavior in daily life, business ethics are specifically tailored to the unique challenges and responsibilities of the corporate environment. Business ethics often involve navigating complex situations where competing interests may arise.

Examples of ethical dilemmas in business include issues such as bribery, conflict of interest, environmental responsibility, employee treatment, product safety, and honesty in advertising and financial reporting .

Businesses can promote ethical behavior through clear communication of values and standards, comprehensive ethics training for employees, implementing robust compliance programs, establishing ethical decision-making frameworks, and fostering a culture of transparency and accountability.

Unethical business practices can lead to a range of negative consequences, including legal penalties, damaged reputation, loss of trust from customers and stakeholders, decreased employee morale, and ultimately, financial losses and business failure.

Yes, different industries may face unique ethical considerations based on their operations and impact on society and the environment. For example, the healthcare industry may grapple with issues of patient confidentiality and access to affordable care, while the technology sector may face challenges related to data privacy and responsible innovation.

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Business Ethics and Its Importance Today Essay (Critical Writing)

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

What is business ethics?

Why is business ethics important today.

• Business ethics is the branch of ethics that deals with the application of ethical principles to make the right business decisions (Smith, Palazzo, & Bhattacharya, 2010). It involves differentiating between right and wrong to make the right business decisions.
• Business ethics enables organizations to maximize profits while minimizing the negative impacts on the society (Griseri & Seppala, 2010). It enables businesses to appropriately influence power and society, makes organizations to be socially responsible, addresses the society’s demands, provides addresses the potential of inflicting harm, and facilitates ethical interactions.
• Business ethics differs from personal ethics because it is about elucidating right from wrong under different business situations and activities using principles of business ethics in decision making (Trevino & Nelson, 2010). Personal ethics is about the moral values and beliefs of an individual that are used to address the situation at a personal level.
• It is difficult to behave ethically in business because of situations that arise such as conflict of interest, which are difficult to ignore. For instance, a firm you are working for buys clothes from Bangladesh factory that uses child labor and does not pay the workers.
• Ethics is about the positive aspects of behavior while law is concerned with the negative behavior. Ethics comes first before the law, which comes later. Law is universal and enforceable within the accepted jurisdiction while ethics cannot be forced on an individual.
• Globalization is the process that enables the removal of territorial boundaries or restrictions to allow for the flow of economic, political activities, and social activities and leads to ‘deterritorialization’.
• The rapid improvement and use of technology caused a decrease in the cost of doing business due to a decrease in transportation costs, better, and cheaper communication methods. The removal of capital flow restrictions, barriers to trade and investment, free markets, and trade liberalization.
• Ethical challenges of globalization include intensification of ethical conflicts, different ethical codes of conduct, ability to make the right decisions on the type of products to offer.
• Sustainable development is the development that addresses the needs of the people without compromising the future generations’ abilities to sustain themselves (Sparks & Pan, 2010). Examples include the sustainable exploitation of natural resources such as trees for timber
• The best practices include reporting and disclosure to stakeholders on a firm’s performance. Other practices include shareholder engagement through collaborations. Use of efficient environmental management systems.
• ‘Race to the Bottom’ is a term used to describe a situation where firms show a trend of investing in environments with weak legislation on labor laws and other environmental issues leading to weak sustainability (Velasquez & Velazquez, 2002). Examples are those companies that invest in countries such as Bangladesh that have weak business practices.
• The Vendor Code of Conduct (VCC) was established to enable those in authority to address the problems associated with the lack of business ethics and best practices among different organizations that seemed to breach the best practices in business (Scholte, 2005). Examples include those institutions that have poor working conditions and other problems associated with poor business ethics.
• The main elements of the VCC include a factory monitoring programs that were used to evaluate the commitment of organizations to the vendor code of conduct. Also, VCC was defined by the partnerships of local governments, trade unions, suppliers, and civil society groups.

Griseri, P., & Seppala, N. (2010). Business ethics and corporate social responsibility . New York: John Wiley & Sons. Web.

Scholte, J. A. (2005). Globalization: A critical introduction . New York: Palgrave Macmillan. Web.

Smith, N. C., Palazzo, G., & Bhattacharya, C. B. (2010). Marketing’s consequences: Stakeholder marketing and supply chain corporate social responsibility issues. Business Ethics Quarterly , 20 (04), 617-641. Web.

Sparks, J. R., & Pan, Y. (2010). Ethical judgments in business ethics research: Definition, and research agenda. Journal of Business Ethics , 91 (3), 405-418. Web.

Trevino, L. K., & Nelson, K. A. (2010). Managing business ethics . New York: John Wiley & Sons. Web.

Velasquez, M. G., & Velazquez, M. (2002). Business ethics: Concepts and cases . Upper Saddle River, NJ: Prentice Hall. Web.

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• Corporate Social Responsibility' and Shareholder' Issues
• Chicago (A-D)
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What are business ethics, and why do they matter?

It’s no exaggeration that the Covid-19 pandemic transformed the business world. With millions of workers furloughed and redundancies rife, companies – both big and small – faced extraordinary challenges.

For those who remained in business, mass adaptations had to be made – from remote working to social distancing. Fostering a collaborative, communicative and sensitive company culture became essential.

In our post-pandemic reality, corporate responsibility continues to be tested. Our societal lens has shifted, with staff welfare a centre point of discussion, labour demand being questioned and misconduct reports on the rise . The very nature of the coronavirus has forced companies to consider wider health and safety implications, while other businesses have had to adapt, modify and change to meet ever-evolving consumer needs too.

Meanwhile, wider societal fears are on the increase. Amongst other telling statistics, the 2022 Edelman Trust Barometer reports a 6% global increase in public fear of experiencing prejudice or racism, a 3% increase in concern over climate change, and a notable anxiety regarding job security. And, with government distrust at a disarming high point, in the wake of the pandemic, the public have turned to NGOs and businesses to solve these escalating ethical concerns.

This is nothing new. In the 1960s, rising consumer-awareness and discourse on increased corporate responsibility underpinned the decade – and markedly, the concept of business ethics was first conceived. In times of global crisis, it’s been proven that they matter more than ever.

What are business ethics?

Business ethics refer to an essential system of policies and practices that uphold a corporation’s legal and moral responsibilities. At their core, they determine what is ‘right and wrong’ for a company and its employees and inform a wider code of conduct.

These ethical standards are reflective of various contributing factors to a safe and functioning workforce. Many are embedded in law, others are influenced by social and ethical dilemmas, while additional business practices may be adopted as part of a more ‘individualised’ company culture.

While organisations vary in nature, business ethics should typically address the following principles:

Personal responsibility Workers strive to be reliable employees and complete the duties assigned to them to their best ability.

Corporate responsibility Businesses uphold contractual and legal obligations to employees, stakeholders and clients – such as determining safe working conditions, meeting minimum wage requirements and upholding manufacturing standards.

Loyalty and respect Addresses the ways in which a company, their stakeholders, employees and clients should interact with integrity to maintain positive business relations. 

Trust Businesses should cultivate trust, with employees trusting that terms of their employment will be kept, while clients can trust the business with their money and confidential information, for example.

Fairness A company commits to holding all employees to the same standard, regardless of rank, and employs an equal treatment of customers.  

Community and environmental responsibility Businesses will consider their impact on wider society and adhere to environmental regulations.

Examples of ethical standards in action

General expressions of ethical behaviour within the workplace include maintaining data protection, prioritising workplace diversity, putting customer needs first, and operating fairly and transparently as a business. Other ethical practices are more sector-specific, such as food and cosmetic producers adhering to lawful product labelling; and, financiers protecting against bribery and insider trading.

Alternatively, cultivating a hostile workplace, ignoring conflicts of interest, favouritism or discrimination of employees and misusing company time would be examples of unethical behaviours.

Business ethics: the bigger picture

Business ethics also bleed into a wider framework of corporate social responsibility, which refers to the way in which a company works to achieve or support larger societal goals. Not governed by law, corporate social responsibility is largely a self-regulated practice, where a business independently and voluntarily decides how it can contribute positive action of a philanthropic, activist or charitable nature.

This could include a commitment to the reduction of a company’s carbon footprint, improving their labour policies, making charitable donations, strengthening diversity, equality and inclusion, and making socially conscious investments.

Some key real-world examples include Coca Cola’s commitment to sustainability and Ford Motor Company’s investment in electric vehicles. Starbucks, meanwhile, in a move to tackle racial and social equity, aims to represent black, indigenous, and people of colour (BIPOC) at 30% in corporate roles and 40% in retail and manufacturing by 2025. 

Why are business ethics important?

Business ethics are important for a number of reasons. They ensure that a company operates lawfully, safeguarding both employees and the general public. They keep trade honest and fair, uphold manufacturing standards, and prevent false or bogus product claims. Plus, a strong ethical corporate culture fosters, amongst other things, improved performance and prevents employee burnout.

It works both ways, too. Any successful relationship is built on trust, and adhering to an evolved code of ethics can really benefit a business in terms of brand awareness and customer loyalty.

As Edelman states in its 2022 report : “Lasting trust is the strongest insurance against competitive disruption, the antidote to consumer indifference, and the best path to continued growth. Without trust, credibility is lost and reputation can be threatened.”

With regard to social responsibility, a values statement that addresses, challenges and attempts to solve both social and environmental issues paves the way to a business having real-world impact. With both millennials and Gen Z taking an amplified interest in brand activism and positive action, socially conscious companies are more likely to capitalise on reach, engagement and public investment.

Do business ethics make economic sense?

As we’ve seen, ethical decision-making breeds trust – and, in business, trust is currency. 

A company that upholds ethical standards that reflect real-world concerns and plays to a rising consumer consciousness is more likely to attract monetary investment, loyal staff (reducing recruitment costs) and consistent clientele. A good reputation is valuable and ultimately results in stronger financial health, from share price to increased sales.

Getting caught for unethical behaviours, on the other hand, could cost a company custom and fines, lead to less competitive hires and drive down its share price. For example, when Reuters reported a Johnson & Johnson company cover-up involving asbestos-contaminated talcum powder, the accusation triggered a 10% drop in the company’s stock price.  

Ultimately, leveraging business ethics wisely can result in increased brand equity overall.

Want to build an ethical business?

Business ethics are one of many modules built into the University of York’s 100% online MSc in International Business Leadership and Management . 

The course places particular emphasis on the challenges associated with business management and global trade, marketing and sales, and provides an excellent overview of relevant management disciplines. Enrol now to obtain vital skills for professional adaptability and employability across industries, functions and roles.

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Business Ethics Journal Review

Edited by alexei marcoux & chris macdonald — issn 2326-7526.

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

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

Writing your own critical essay:

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

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

In general, a good critical essay should:

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

A few more tips:

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

Looking for essay topics? Check out Business Ethics Highlights .

See also: The Concise Encyclopedia of Business Ethics

Share this:

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

This is a useful resource – thanks Chris

“Shack”

Arthur Shacklock (Griffith University Queensland, Australia)

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

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

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

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

Good luck with your studies, Deon!

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A History of Business Ethics

• Markkula Center for Applied Ethics
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A history of business ethics, focusing on ethics in business, business ethics as an academic field and a movement.

The term 'business ethics' is used in a lot of different ways, and the history of business ethics will vary depending on how one conceives of the object under discussion. The history will also vary somewhat on the historian—how he or she sees the subject, what facts he or she seeks to discover or has at hand, and the relative importance the historian gives to those facts. Hence the story I'm going to tell will be somewhat different from the story someone else might tell in various particulars, and I hope that instead of being a dull recitation of facts it might in fact prompt some discussion at the end by those who would tell a somewhat different story.

The story I will tell has three strands, because I believe the term business ethics is used in at least three different, although related, senses. Which sense one chooses therefore gives priority to nature of the history of the topic. The primary sense of the term refers to recent developments and to the period, since roughly the early 1970s, when the term 'business ethics' came into common use in the United States. Its origin in this sense is found in the academy, in academic writings and meetings, and in the development of a field of academic teaching, research and publication. That is one strand of the story. As the term entered more general usage in the media and public discourse, it often became equated with either business scandals or more broadly with what can called "ethics in business." In this broader sense the history of business ethics goes back to the origin of business , again taken in a broad sense, meaning commercial exchanges and later meaning economic systems as well. That is another strand of the history. The third stand corresponds to a third sense of business ethics which refers to a movement within business or the movement to explicitly build ethics into the structures of corporations in the form of ethics codes, ethics officers, ethics committees and ethics training. The term, moreover, has been adopted world-wide, and its meaning in Europe, for instance, is somewhat different from its meaning in the United States.

The "ethics in business" sense of business ethics

In this broad sense ethics in business is simply the application of everyday moral or ethical norms to business. Perhaps the example from the Bible that comes to mind most readily is the Ten Commandments, a guide that is still used by many today. In particular, the injunctions to truthfulness and honesty or the prohibition against theft and envy are directly applicable. A notion of stewardship can be found in the Bible as well as many other notions that can be and have been applied to business. Other traditions and religions have comparable sacred or ancient texts that have guided people's actions in all realms, including business, for centuries, and still do.

If we move from religion to philosophy we have a similar long tradition. Plato is known for his discussions of justice in the Republic , and Aristotle explicitly discusses economic relations, commerce and trade under the heading of the household in his Politics . His discussion of trade, exchange, property, acquisition, money and wealth have an almost modern ring, and he makes moral judgments about greed, or the unnatural use of one's capacities in pursuit of wealth for its own sake, and similarly condemns usury because it involves a profit from currency itself rather than from the process of exchange in which money is simply a means. 1 He also gives the classic definition of justice as giving each his due, treating equals equally, and trading equals for equals or "having an equal amount both before and after the transaction." 2

In the West, after the fall of Rome, Christianity held sway, and although there were various discussions of poverty and wealth, ownership and property, there is no systematic discussion of business except in the context of justice and honesty in buying and selling. We see this, for instance, in Thomas Aquinas's discussion of selling articles for more than they are worth and selling them at a higher price than was paid for them 3 and in his discussion of, and, following Aristotle's analysis, his condemnation of usury. 4 Nonetheless he justified borrowing for a good end from someone ready to lend at interest.

Luther, Calvin, and John Wesley, among other Reformation figures also discussed trade and business and led the way in the development of the Protestant work ethic. 5 R. H. Tawney's Religion and the Rise of Capitalism 6 argues persuasively that religion was an essential part in the rise of individualism and of commerce as it developed in the modern period. The modern period, however, sought the divorce of the religious from the secular and politics from religion. In the process, economics and economic activity were similarly divorced from religion and joined with politics to form what was known as political-economy.

John Locke developed the classic defense of property as a natural right. For him, one acquires property by mixing his labor with what he finds in nature. 7 Adam Smith is often thought of as the father of modern economics with his An Inquiry into the Nature and Causes of the Wealth of Nations . Smith develops Locke's notion of labor into a labor theory of value. In modern times commentators have interpreted him as a defender of laissez-faire economics, and put great emphasis on his notion of the invisible hand. Yet the commentators often forget that Smith was also a moral philosopher and the author of The Theory of Moral Sentiments . For him the two realms were not separate. John Stuart Mill, Immanuel Kant, G. W. F. Hegel all wrote on economic matters and just distribution. Karl Marx, however, stands out as the most trenchant critic of capitalism as it had developed up through the Nineteenth Century, and Marx's critique in one form or another continues up to today, even when not attributed to Marx.

Marx claimed that capitalism was built on the exploitation of labor. Whether this was for him a factual claim or a moral condemnation is open to debate; but it has been taken as a moral condemnation since 'exploitation' is a morally charged term and for him seems clearly to involve a charge of injustice. Marx's claim is based on his analysis of the labor theory of value, according to which all economic value comes from human labor. The only commodity not sold at its real value, according to Marx, is human labor. Workers are paid less than the value they produce. The difference between the value the workers produce and what they are paid is the source of profit for the employer or the owner of the means of production. If workers were paid the value they produced, there would be no profit and so capitalism would disappear. In its place would be socialism and eventually communism, in which all property is socially (as opposed to privately) owned, and in which all members of society would contribute according to their ability and receive according to their needs. The result would be a society (and eventually a world) without exploitation and also without the alienation that workers experience in capitalist societies.

Marx's notion of exploitation was developed by Lenin in Imperialism: The Highest Stage of Capitalism , in which he claims that the exploitation of workers in the developed countries has been lessened and the workers' conditions have improved because the worst exploitation has been exported to the colonies. His criticism has been adapted by many contemporary critics who claim that multinational corporations derive their profits from the exploitation of workers in less developed countries.

Marx appealed to the workers of his time and helped start the labor movement, which improved the situation of the workingman. Marx's collaborator, Frederich Engels, saw the world as divided between those who follow Marx and those who follow religion, and the Marxists sought the hearts and minds of the workers. Refusing to yield the moral high ground, Pope Leo XIII in 1891 issued the first of the papal encyclicals on social justice, Rerum Novarum . As opposed to Marx, it justified private property, while seeking the answer to exploitation in the notion of a just wage, which was one sufficient "to support a frugal and well-behaved wage-earner," his wife and his children. 8 Later popes followed Leo's example. Pope Pius XI in 1931 wrote Quadragesimo Anno , which morally attacked both Soviet socialism and laissez-faire capitalism, a theme continued by Pope John Paul II in Laborem Exercens (1981) and Centesimus Annus (1991). The U. S. Catholic Bishops in 1984 issued a Pastoral Letter on the U.S. Economy along the same lines, although more open to the U. S. free enterprise system. The aim of the encyclicals was not to propose any particular economic system but to insist that any system should not be contrary to Christian moral principles and should improve the conditions of the masses of humanity, especially of the poor and the least advantaged. Hence although the popes were critical of existing economic structures, the emphasis in the pulpits was still primarily on individuals living up to the demands of morality, including the giving of charity to those in need.

The same is true of the Protestant tradition as of the Catholic, even though there is no central authority to issue documents such as the encyclicals. Perhaps the most influential protestant figure in this regard was Reinhold Niebuhr whose trenchant critique of capitalism in Moral Man and Immoral Society 9 became the basis for courses in seminaries and schools of theology. In 1993 the Parliament of the World's Religions adopted a Declaration of a Global Ethic 10 that condemned "the abuses of the Earth's ecosystems," poverty, hunger, and the economic disparities that threaten many families with ruin.

The idea of ethics in business continues until the present day. In general, in the United States this focuses on the moral or ethical actions of individuals. It is in this sense also that many people, in discussing business ethics, immediately raise examples of immoral or unethical activity by individuals. Included with this notion, however, is also the criticism of multinational corporations that use child labor or pay pitifully low wages to employees in less developed countries or who utilize suppliers that run sweat shops. Many business persons are strongly influenced by their religious beliefs and the ethical norms that they have been taught as part of their religion, and apply these norms in their business activities. Aaron Feuerstein is a prime example of someone whose actions after fire destroyed almost all of his Malden Mills factory complex kept his workers on the payroll until he could rebuild. He has stated often and publicly that he just did what his Jewish faith told him was the right thing to do.

This strand of the story is perhaps the most prominent in the thinking of the ordinary person when they hear the term business ethics . The media carries stories about Enron officials acting unethically and about the unethical activities of Arthur Andersen or WorldCom, and so on, and the general public takes this as representative of business ethics or of the need for it. What they mean is the need for ethics in business.

Business Ethics as an Academic Field

Business ethics as an academic field, just as business ethics as a corporate movement, have a more recent history.

The second strand of the story that I shall tell has to do with business ethics as an academic field.

The 1960s marked a changing attitude towards society in the United States and towards business. The Second World War was over, the Cold War was ever present, and the War in Viet Nam fostered a good deal of opposition to official public policy and to the so-called military-industrial complex, which came in for increasing scrutiny and criticism. The Civil Rights movement had caught the public imagination. The United States was becoming more and more of a dominant economic force. American-based multinational corporations were growing in size and importance. Big business was coming into its own, replacing small and medium-sized businesses in the societal image of business. The chemical industry was booming with innovation, and in its wake came environmental damage on a scale that had not previously been possible. The spirit of protest led to the environmental movement, to the rise of consumerism, and to criticism of multinational corporations.

Corporations, finding themselves under public attack and criticism, responded by developing the notion of social responsibility. They started social responsibility programs and spent a good deal of money advertising their programs and how they were promoting the social good. Exactly what "social responsibility" meant varied according to the industry and company. But whether it was reforestation or cutting down on pollution or increasing diversity in the workforce, social responsibility was the term used to capture those activities of a corporation that were beneficial to society and usually, by implication, that made up for some unethical or anti-social activity with which the company had been charged. The business schools responded by developing courses in social responsibility or social issues in management—courses which continue to thrive today. For the most part, in the 1960s such courses put an emphasis on law, and the point of view of managers prevailed, although soon that of employees, consumers and the general public were added. The textbooks paid no systematic attention to ethical theory, and tended to be more concerned with empirical studies than with the development or defense of norms against which to measure corporate activity. The history of the social responsibility movement is a story in itself and one that different people are writing somewhat differently. One version, by Archie Carroll, describes social responsibility as a pyramid that encompasses the four types of responsibility that businesses have: At the bottom is economic, then legal, then ethical and then philanthropic. And although some representatives of corporate social responsibility claim that they did business ethics before business ethics became popular and although some claim that what they do is business ethics, that is not the story of business ethics I am going to tell today.

Business ethics as an academic field emerged in the 1970s. Prior to this time there had been a handful of courses called by that name; and a few figures, such as Raymond Baumhart, 11 who dealt with ethics and business. For the most part ethical issues, if they were discussed, were handled in social issues courses. Theologians and religious thinkers, as well as media pundits continued writing and teaching on ethics in business; professors of management continued to write and do research on corporate social responsibility. The new ingredient and the catalyst that led to the field of business ethics as such was the entry of a significant number of philosophers, who brought ethical theory and philosophical analysis to bear on a variety of issues in business. Business ethics emerged as a result of the intersection of ethical theory with empirical studies and the analysis of cases and issues.

Norman Bowie dates the birth of business ethics as November 1974, with the first conference in business ethics, which was held at the University of Kansas, and which resulted in the first anthology used in the new courses that started popping up thereafter in business ethics. 12 Whether one chooses that date or some other event, it is difficult to identify any previous period with the sort of concerted activity that developed in a short period thereafter. In 1979 three anthologies in business ethics appeared: Tom Beauchamp and Norman Bowie, Ethical Theory and Business ; Thomas Donaldson and Patricia Werhane, Ethical Issues in Business: A Philosophical Approach ; and Vincent Barry, Moral Issues in Business . In 1982 the first single-authored books in the field appeared: Richard De George, Business Ethics ; and Manuel G. Velasquez, Business Ethics: Concepts and Cases . The books found a ready market, and courses in business ethics both in philosophy departments and in schools of business developed rapidly. As they did, the number of textbooks increased exponentially.

The field developed very similarly to the field of medical ethics, which had emerged ten years earlier in the 1960s, and the name paralleled that of the earlier field—although even whether the term "business ethics" should be adopted was discussed among the relatively small group that was engaged in starting what has become a field. The seminal work of John Rawls in 1971, A Theory of Justice , had helped make the application of ethics to economic and business issues more acceptable to academic philosophers than had previously been the case. Whereas most of those who wrote on social issues were professors of business, most of those who wrote initially on business ethics were professors of philosophy, some of whom taught in business schools. What differentiated business ethics as a field from social issues in management was 1) the fact that business ethics sought to provide an explicit ethical framework within which to evaluate business, and especially corporate activities. Business ethics as an academic discipline had ethics as its basis. While social responsibility could be and was defined by corporations to cover whatever they did that they could present in a positive light as helping society, ethics had implicit in it standards that were independent of the wishes of corporations. To that extent, 2) the field was at least potentially critical of business practices—much more so than the social responsibility approach had been. If we take Archie Carroll's pyramid, those in business ethics did not see ethics as coming after economics and law but as restraints on economic activity and as a source for justifying law and for proposing additional legal restraints on business when appropriate. As a result business ethics and business ethicists were not warmly received by the business community, who often perceived them as a threat—something they could not manage, preaching by the uninformed who never had to face a payroll.

The development of the field was far from easy, and those academics working in it initially also found a cool reception both from their colleagues in philosophy departments and from those in business and in business schools. The former typically did not see business as a philosophically interesting endeavor, and many of them had an anti-business mind-set. The latter questioned whether philosophers had anything of interest to bring to business. The initial efforts were tenuous, and more and more people entered the field who were often ill-informed, or who, in fact, adopted polemical attacks against or positions in defense of business. Many observers dismissed business ethics as a fad that would pass. Many misunderstood its aims and envisioned it as providing justification or a rationale for whatever business wanted to do. It took a number of years for the field to define itself, incorporate standards of scholarship and rigor, and become accepted.

As a field, business ethics covered the ethical foundations of business, of private property, and of various economic systems. 3) Although the field was concerned with managers and workers as moral persons with responsibilities as well as rights, most attention was focused on the corporation—its structure and activities, including all the functional areas of business, including marketing, finance, management, and production. Related issues, such as the environmental impact of business actions, were included in most courses and texts, as were, with increasing attention, the activities of multinational corporations. As a field, business ethics included a good deal, but not all, of what was covered in social issues courses and texts, as well as giving structure to discussions of ethics in business. As it emerged by the middle of the 1980s it was clearly interdisciplinary, with the lines between philosophy and business research often blurred.

Initial discussions of business ethics introduced students to two of the basic techniques of moral argumentation, that used by utilitarians (who hold that an action is right if it produces the greatest amount of good for the greatest number of people), and that used by deontologists (who claim that duty, justice and rights are not reducible to considerations of utility). Other approaches were soon introduced including natural law, virtue ethics (based on Aristotle), and the ethics of caring (often associated with a feminist approach to ethics). An initial philosophical discussion that arose concerned the moral status of corporations and whether one could appropriately use moral language with respect to them, or whether the only proper objects of moral evaluation were human beings and their actions. That controversy has not completely subsided, but most authors take into account the fact that most people do attribute actions and policies to corporations as well as to the individuals within them.

What did the development of business ethics as an academic field add that common sense morality couldn't handle; and who was the target audience?

Those in philosophy added a theoretical framework to the area that had been previously lacking. Within that framework they integrated both the personal responsibility approach that ethics in business emphasized and the social responsibility of business approach, which they pushed explicitly into the ethical realm by applying ethics to economic systems, to the institution of business, and especially to corporations.

Common sense morality and the ethics in business approach that I described are fine for the ordinary, everyday aspect of ethics in business. Employees shouldn't steal from their employers, and companies shouldn't cheat their customers. No one needs an academic business ethicist to tell them that. And if that is all business ethics had to contribute, it would indeed be superfluous. But what the business ethicists could add is not only arguments that show why most common sense judgments are indeed correct, but also the tools by which the morality of new issues could be intelligently debated. They could and did also join that debate—the debate for instance on whether affirmative action is justifiable, and even more basically, what affirmative action means. Ethicists analyzed and defended workers' rights, the right to strike, the ethical status of comparable worth in the marketplace, what constitutes bribery and whistle blowing, and so on. One need only look at the journals for the wide variety of issues that have been clarified, discussed, and argued—often to a conclusion. The moral status of leveraged buyouts, of greenmail, of outsourcing, of restructuring, of corporate governance raise complex issues to which ordinary common sense morality has no ready answers or obvious intuitive judgments. It is odd that no company would think of making a serious financial commitment without extensive study, but some people think that moral judgments should be made instantaneously and require no thought, study, debate or time. Levi-Strauss, long noted for governing by values, knew enough that it had a high level committee study whether it was appropriate to operate in China for three months before coming to a decision.

If those in business ethics wrote only for themselves, however, one could well question the relevance of what they wrote to business. What they wrote helped inform a large number of teachers who teach business ethics, and in turn has influenced a large number of students who have gone on to be practitioners. Moreover, many of those in business have also turned to the writings of those in business ethics, or have asked them for guidance as consultants on issues or for help in writing corporate codes or designing training programs. The media as well frequently turns to those in the field for guidance, help, or sound bites. Many of the academics in business ethics have made an effort to open a dialogue with those in business, and have frequently been successful in doing so. The audience, therefore, has been not only colleagues and students, but also corporate managers and the general public. Mediating between the academic in his or her office and the corporate executive have also been a host of non-academic consultants, many of whom use the scholarly material to become informed about the state of the art and the arguments for or against various positions. Some of these act not only as intermediaries but, in a sense, as translators, translating technical jargon into business-speak.

The development of the field, moreover, was not restricted to textbooks and courses. What differentiates earlier sporadic and isolated writings and conferences on ethics in business from the development of business ethics after the mid-70s is that only in the latter period did business ethics become institutionalized on many levels. By the mid-1980s there were at least 500 courses in business ethics taught across the country to 40,000 students. Not only were there at least twenty textbooks in the area and at least ten casebooks, but there were also societies, centers and journals of business ethics.

The Society for Business Ethics was started in 1980. The first meeting of the Society for Business Ethics was held in conjunction with the meeting of the American Philosophical Association in December in Boston. Other societies turned increasing attention to business ethics, including the Social Issues in Management Division of the Academy of Management, which had been established in 1976. Other societies emerged, such as the International Association for Business and Society. Still other societies, some specialized, and some general were formed as well. A number of European scholars became interested in the American developments and organized the European Business Ethics Network (EBEN), which held its first meeting in 1987. Many individual European nations in turn established their own ethics network or business ethics society. In general, the European approach to business ethics has placed more emphasis on economics and on social structures, with less emphasis on the activities of corporations as such, than the U. S. approach does. Both approaches were captured in the International Society for Business, Economics and Ethics, which was founded in 1989. That society in turn helped national groups throughout the world to develop local or regional societies of business ethics, so that now there are societies in a large number of both developed and less developed countries.

Simultaneous with these developments were the founding of centers for business ethics at a variety of academic institutions, and the establishment of a number of journals dedicated to business ethics, in addition to those journals that carry articles in business ethics among others. The Bentley College Center for Business Ethics was founded in 1976 and continues as one of the leading business ethics centers. Over a dozen more appeared within the next ten years, and many others have been established since then around the United States and in countries around the world. The Markkula Center includes business ethics as one of its areas, as we well know. The first issue of the Journal of Business Ethics appeared in February 1982; the first issue of the Business Ethics Quarterly in January 1991; and the first issue of Business Ethics: A European Review in January 1992. A number of other journals in the field have appeared since then.

The field has continued to develop as business has developed. By the mid 1980s business had clearly become international in scope, and the topics covered by business ethics expanded accordingly. Thomas Donaldson's The Ethics of Business Ethics (New York: Oxford University Press, 1989) was the first systematic treatment of international business ethics, followed by Richard De George's Competing with Integrity in Internal Business (New York: Oxford University Press, 1993). The focus on multinational corporations has been broadened in the light of the globalization of business to include ethical issues relating to international organizations, such as the World Trade Organization. Similarly, just as business has moved more and more into the Information Age, business ethics has turned its attention to emerging issues that come from the shift.

By 1990 business ethics was well established as an academic field. Although the academicians from the start had sought to develop contacts with the business community, the history of the development of business ethics as a movement in business, though related to the academic developments, can be seen to have a history of its own.

Business Ethics as a Movement

Business ethics as a movement refers to the development of structures internal to the corporation that help it and its employees act ethically, as opposed to structures that provide incentives to act unethically. The structures may include clear lines of responsibility, a corporate ethics code, an ethics training program, an ombudsman or a corporate ethics officer, a hot or help line, a means of transmitting values within the firm and maintaining a certain corporate culture, and so on. Some companies have always been ethical and have structured themselves and their culture to reinforce ethical behavior. Johnson & Johnson's well-known Credo was written and published by General Robert Wood Johnson in 1943. But most companies in the 1960s had paid little attention to developing such structures. That slowly began to change, and the change became a movement when more and more companies started responding to growing public pressure, media scrutiny, their own corporate consciences, and, perhaps most importantly, to legislation. We have already seen that big business responded to criticism in the 1960s by turning to corporate social responsibility, and the movement can be traced back to that period.

The U. S. Civil Rights Act of 1964 was the first piece of legislation to help jump start the business ethics movement. The Act prohibited discrimination of the basis of race, color, religion or national origin in public establishments connected to interstate commerce, as well as places of public accommodation and entertainment. Many corporations added equal opportunity offices to their human resources department to ensure compliance, and in general the consciousness of business about discrimination, equal opportunity, and equal pay for equal work came to the fore. This in turn led to more consciousness of workers' rights in general, and of corporate America's need to respect them. The U. S. Occupational Safety and Health Act of 1970 enforced the mandate to take those aspects of workers' rights seriously. In the same year the Environmental Protection Act forced business to start internalizing the costs of what had previously been considered externalities—such as the discharge of toxic effluents from factory smokestacks.

In 1977, following a series of scandals involving bribery by U. S. firms abroad including the Lockheed $12 million bribery case that led to the fall of the Japanese government at the time, the U. S. government passed the Foreign Corrupt Practices Act. The Act was historic because it was the first piece of legislation that attempted to control the actions of U.S. corporations in foreign countries. The Act prohibited U. S. companies from paying large sums of money (or their equivalent) to high level government officials of other countries to obtain special treatment. A number of companies prior to the Act had already adopted the policy of refusing to pay bribes as a matter of ethical principle. IBM, among others, was known for adherence to this policy, as was Motorola. The Act forced all companies to live up to the already existing ethical norm. Its critics complained, however, that it put U. S. companies at an unfair disadvantage vis-à-vis companies from other countries that were permitted to pay bribes. The U. S. government applied what pressure it could to encourage other countries to follow its lead, and finally twenty years later the OECD countries agreed to adopt similar legislation.

In 1978 General Motors and a group of other U. S. companies adopted what are known as the Sullivan Principles, which governed their actions in South Africa. The signatories agreed that they would not follow the discriminatory and repressive apartheid legislation in South Africa and would take affirmative action to try to undermine apartheid not only by not following the existing South African apartheid statutes, but also by lobbying the South African government for change. Adherence to the Principles was seen as a way by which American companies could ethically justify doing business in South Africa. They were adopted in part as a response to public pressure on the companies to leave South Africa. The Principles have become a model for other voluntary codes of ethical conduct by companies in a variety of other ethically questionable circumstances.

By the 1980s many companies had started reacting to calls for ethical structures, and more and more started adopting ethical codes and instituting ethics training for their employees. Each wave of scandals, which seemed to occur every ten years or so, resulted in more pressure for companies to incorporate ethics into their structures. In 1984 the Union Carbide disaster at its plant in Bhopal, India, which killed thousands of people and injured several hundred thousand, focused world attention on the chemical industry. This led to the chemical industry's adopting a voluntary code of ethical conduct known as Responsible Care, which became a model for other industries. In 1986, in response to a series of reported irregularities in defense contracts, a special Commission Report on the situation led to the establishment of the Defense Industry Initiative (DII) on Business Ethics and Conduct, signed by thirty-two (it soon increased to fifty) major defense contractors. Each signatory agreed to have a written code of ethics, establish appropriate ethics training programs for their employees, establish monitoring mechanisms to detect improper activity, share their best practices, and be accountable to the public.

The DII became the model for what has been the most significant governmental impetus to the business ethics movement, namely, the 1991 U. S. Federal Sentencing Guidelines for Corporations. That law took the approach of providing an incentive for corporations to incorporate ethical structures within their organizations. If a company could show that it had taken appropriate measures to prevent and detect illegal and unethical behavior, its sentence, if found guilty of illegal behavior, would be reduced considerably. Appropriate measures included having a code of ethics or of conduct, a high-placed officer in charge of oversight, an ethics training program, a monitoring and reporting system (such as a "hotline"), and an enforcement and response system. Fines that could reach up to $290 million could be reduced by up to 95 percent if a company could show bona fide institutional structures that were in place to help prevent unethical and illegal conduct.

The result was a concerted effort on the part of most large companies to incorporate into their organizations the structures required. This led to the development of a corporate position known as the Corporate Ethics Officer, and in 1992 to the establishment of the Corporate Ethics Officer Association.

The most recent legislative incentive to incorporate ethics in the corporation came in the Sarbanes-Oxley Act of 2002, passed as a result of a rash of scandals involving Enron, WorldCom, Arthur Andersen and other prominent corporations. The Act requires, among other things, that the CEO and CFO certify the fairness and accuracy of corporate financial statements (with criminal penalties for knowing violations) and a code of ethics for the corporation's senior financial officers, as well as requiring a great deal more public disclosure.

Corporations have responded to legislative and popular pressure in a variety of ways. The language of social responsibility rather than explicitly ethical language is still probably the most commonly used. Self-monitoring of adherence to a corporation's stated principles and self-adopted standards is becoming more common, and some companies have voluntarily adopted monitoring of their practices, policies and plants by independent auditors. The notion of a Triple Bottom Line, which involves financial, social and environmental corporate reporting, has been adopted by a number of companies. Other popular reporting mechanisms include corporate environmental sustainability reports and social audits, which vary considerably in what is reported and how it is reported. Ethical investing is another aspect of the movement, and mangers of ethical investment funds have begun proposing stockholder proposals as a means of encouraging more ethical behavior on the part of corporations in which they own stock.

Nor is the business ethics movement confined to the Unites States. Other countries have adopted legislation similar to that of the United States, and the UN has developed a voluntary Global Compact for Corporations. The Compact, which was endorsed by all governments, contains nine guiding principles, which focus on human rights, labor standards, and the protection of the environment. Over 1,500 companies world wide have joined the compact, and it seems likely that more and more will feel the pressure to become signatories and to abide by the required standards.

The business ethics movement, like business ethics itself, has become firmly entrenched. The concern for ethics in business continues. Business ethics as an academic field contributes discussion forums, research and teaching that inform both ethics in business and the business ethics movement. The business ethics movement is responsive to the other two and in turn has interacted with them. All three together make up the history of business ethics in its broadest sense.

From an academic perspective, looking back over the past thirty or so years, a lot has been accomplished. A historian deals with the past and not the future. But looking to the future, it is easy to see that there is still a lot to do. Both globalization and the march into the Information Age are changing the way business is done and the ethical issues businesses face. If business ethics is to remain relevant, it must change its focus accordingly.

If there is anything that the story I've told can teach us, it is that business ethics is neither a fad as some claimed early on, nor an oxymoron, as so many lamely joked. It is a vibrant, complex enterprise developing on many levels, with the three strands I've mentioned intertwining in complex, dynamic and fascinating ways. We can expect all three to remain vibrant and interacting for the foreseeable future.

• Aristotle, Politics, Book I, especially Ch. 8-10.
• Aristotle, Nicomachean Ethics, ed. Roger Crisp (Cambridge: Cambridge University Press, 2000), p. 88.
• Summa Theologiae , II-II, Question 77.
• Question 78.
• (See Max L. Stackhouse, Dennis P. McCann and Shirley J. Roels, with Preston N. Williams, eds., On Moral Business: Classical and Contemporary Resources for Ethics in Economic Life (Grand Rapids, Mich.: William B. Eerdmans Publishing Company, 1995).
• New York: Harcourt, Brace and Co., 1926.
• (John Locke, "Of Property," Second Treatise: An Essay Concerning the True Original, Extent and End of Civil Government ).
• Rerum Novarum , nos. 45-46.
• New York: Scribner's, 1932.
• Available at http://www.earthspirit.org/Parliament/parliamentstat.html.
• "How Ethics Are Businessmen?," Harvard Business Review , 39 (4) (1961) and Clarence Walton Corporate Social Responsibilities (Belmont, CA: Wadsworth Publishing Co., 1967).
• Norman E. Bowie, "Business Ethics," in New Directions in Ethics , ed. Joseph P. DeMarco and Richard M. Fox, New York: Routledge & Kegan Paul, 1986.

Aquinas, Thomas St., Summa Theologiae

Aristotle, Politics; Nicomachean Ethics , ed. Roger Crisp, Cambridge: Cambridge University Press, 2000.

Barry, Vincent, Moral Issues in Business (Belmont, Calif.: Wadsworth, 1979).

Beauchamp, Tom and Norman Bowie, Ethical Theory and Business ( Englewood Cliffs, NJ: Prentice-Hall, 1979; 6th ed, 2001)

Baumhart, Raymond, "How Ethics Are Businessmen?," Harvard Business Review , 39 (4) (1961)).

Bowie, Norman E., "Business Ethics," in New Directions in Ethics , ed. Joseph P. DeMarco and Richard M. Fox, New York: Routledge & Kegan Paul, 1986.)

De George, Richard Business Ethics (N.Y.: Macmillan, 1982; 5th ed., Prentice-Hall, 1999).

De George, Richard T., "The Status of Business Ethics: Past and Future," Journal of Business Ethics ,6 (1987), pp. 201-211.

De George, Richard, Competing with Integrity in Internal Business (New York: Oxford University Press, 1993)

Donaldson, Thomas and Patricia Werhane, Ethical Issues in Business: A Philosophical Approach (Englewood Cliffs, NJ: Prentice-Hall, 1979; 7th ed., 2002)

Donaldson, Thomas, The Ethics of Business Ethics (New York: Oxford University Press, 1989).

John Paul II, Pope, Laborem Exercens (1981); Cenesimus Annus (1991).

Lenin, V. I., Imperialism: The Highest Stage of Capitalism (1917).

Leo XIII, Pope, Rerum Novarum , 1891.

Locke, John, "Of Property," Second Treatise: An Essay Concerning the True Original, Extent and End of Civil Government .

Niebuhr, Reinhold, Moral Man and Immoral Society (New York: Scribner's, 1932).

Pius XI, Pope, Quadragesimo Anno (1931).

Plato, Republic.

Rawls, John, A Theory of Justice (Cambridge, Mass., Belknap Press of Harvard University Press, 1971).

Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations ; The Theory of Moral Sentiments .

Stackhouse, Max L., Dennis P. McCann and Shirley J. Roels, with Preston N. Williams, eds, On Moral Business: Classical and Contemporary Resources for Ethics in Economic Life (Grand Rapids, Mich.: William B. Eerdmans Publishsing Company, 1995).

Tawney, R. H. Religion and the Rise of Capitalism (New York: Harcourt, Brace and Co., 1926).

U. S. Catholic Bishops, "Economic Justice for All: Pastoral Letter on Catholic Social Teaching and the U.S. Economy," 1986.

Velasquez, Manuel G, Business Ethics: Concepts and Cases (Englewood Cliffs, NJ: Prentice-Hall, 1982; 5th ed., 2002)

Walton, Clarence, Corporate Social Responsibilities (Belmont, Calif., Wadsworth Pub. Co.,1967).

Richard T. De George is University Distinguished Professor of Philosophy and of Business Administration, and Director of the International Center for Ethics in Business at the University of Kansas. He is the author of over 180 articles and the author or editor of twenty books, including The Ethics of Information Technology and Business (2003); Business Ethics (1999), now in its fifth edition and also available in Japanese, Russian, Serbian and Chinese; and Competing With Integrity in International Business (Oxford, 1993), also translated into Chinese. He delivered this paper February 19, 2005, at "The Accountable Corporation," the third biennial global business ethics conference sponsored by the Markkula Center for Applied Ethics.

Business Ethics

Moral principles that govern the conduct of businesses

What are Business Ethics?

By definition, business ethics are the moral principles that act as guidelines for the way a business conducts itself and its transactions . In many ways, the same guidelines that individuals use to conduct themselves in an acceptable way – in personal and professional settings – apply to businesses as well.

Determining Right and Wrong

Acting ethically ultimately 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.

For example, unsafe working conditions are generally considered unethical because they put workers in danger. An example of this is 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.

For example, assume Company A works with a contact at Company B, an individual through which they negotiate all the prices for supplies they buy from Company B. Company A naturally wants to get the best prices on the supplies. When the individual from Company B comes to their home office to negotiate a new contract, they put him up in a top-tier hotel, in the very best suite, and make sure that all his wants and needs are met while he’s there.

In technical terms, the practice is not illegal. However, it might be considered a grey area – close to, but not quite, bribery – because the individual is then likely to be more inclined to give Company A a price break at the expense of getting the best deal for his own company.

Understanding Business Ethics in Three Parts

To truly break down business ethics , it’s important to understand the three basic components that the term can be dissected into.

The first part is the history. While the idea of business ethics came into existence along with the creation of the first companies or organizations, what is 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 United States.

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

The second major meaning behind the term is derived from its 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

Perhaps the most recent and continually developing aspect of ethics is the third piece – 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.

To learn more about how to develop a strong ethical culture within an organization, see CFI’s Professional Ethics course!

Business ethics are important for every company. They keep workers safe, help trade and interactions between companies remain honest and fair, and generally make for better goods and services. Distinguishing what a company will and won’t stand for is not always the same for each organization, but knowing basic ethical guidelines is a key component of company management.

Additional Resources

We hope you enjoyed reading CFI’s explanation of Business Ethics. The following CFI resources will be helpful in furthering your financial education:

• Ethical vs. Legal Standards in Finance
• IFRS Standards
• Internal Controls
• Utilitarianism
• See all ESG resources
• Share this article

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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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Ethics in Leadership

Employee ethics, ethics by industry, benefits of business ethics, the bottom line, why are business ethics important a guide.

The system of moral and ethical beliefs that guides the values, behaviors, and decisions of a business organization and the individuals within that organization is known as  business ethics .

Some ethical requirements for businesses are codified into law. Environmental regulations, the minimum wage, and restrictions against insider trading and  collusion  are all examples of the government setting certain standards for business ethics. The concept of business ethics has also evolved over time .

Key Takeaways

• Business ethics involve a guiding standard for values, behaviors, and decision making.
• Running a business with ethics at its core from the top down is essential for company-wide integrity.
• Behaving in a consistently ethical manner can lock in a solid reputation and long-term financial rewards for companies.
• Employees tend to remain loyal to, and perform more effectively for, a company with a high standard of ethics.

A management team sets the tone for how an entire company runs on a day-to-day basis. When the prevailing management philosophy is based on ethical practices and behavior, leaders within an organization can direct employees by example. They can guide them in making decisions that are beneficial to them as individuals and to the organization as a whole.

Building on a foundation of ethical behavior helps create long-lasting positive effects for a company. One such effect is the ability to attract and retain highly talented individuals. Another is a positive reputation within the community.

Running a business in an ethical manner from the top down establishes stronger bonds between individuals on the management team. This, then, creates greater stability within the company.

By contrast, unethical behavior at the top can not only destabilize but even destroy a company. In one famous example, Enron Corporation , an American energy and commodity services company, collapsed after the Securities and Exchange Commission investigated its improper accounting practices and revealed that the company hid massive losses and liabilities while paying its executives millions. Thousands of employees suddenly were left jobless. Several executives were convicted of federal crimes. The company's unethical behavior also led to the downfall of one of the oldest and biggest accounting firms, Arthur Andersen.

When management leads an organization in an ethical manner, employees tend to follow in those footsteps. Employees can make better decisions in less time when business ethics are a guiding principle.

When employees conduct themselves in a manner that is based on honesty and integrity, the whole organization benefits. Employees who work for a company that demands a high standard of business ethics in all facets of operations are more likely to perform their job duties at a higher level. They're also more inclined to stay loyal to that organization.

Business ethics can differ from industry to industry, and nation to nation . The nature of a business's operations has a major influence on the ethical issues with which it must contend.

Ethics Concerning Clients

For example, an ethical quandary can arise for an investment brokerage when the best decision for a client and their money runs counter to whatever pays the brokerage the highest commission. A media company that produces TV content aimed at children may feel an ethical obligation to promote good values and eschew off-color material in its programming, even if there is money to be made by crossing that line.

Ethics Concerning the Environment

A striking example of industry-specific business ethics is in the energy field. Companies that produce energy, particularly  nonrenewable energy , face unrelenting scrutiny on how they treat the environment.

One misstep, whether it's a minor coal ash spill at a power plant or a major disaster such as the 2010 BP ( BP ) oil spill, can force a company to answer for its actions. Numerous regulatory bodies and society at large may pursue whether the company skirted its duty to protect the environment in an aggressive pursuit of higher profits. Even after the matter at hand has been resolved, the reputational damage to a company can endure for years.

A stringent, clearly defined system of environmental ethics is paramount for an energy company if it wants to thrive in a climate of increased regulations and public awareness on environmental issues.

Companies such as Amazon ( AMZN ) and Google ( GOOGL ), which conduct most of their operations online, are not scrutinized for their environmental impact the way energy companies such as BP and Exxon ( XOM ) are. However, when it comes to protecting their customers' privacy and security, their ethics are examined very closely. Many such companies have elaborate privacy policies that they make available online.

Ethics Concerning Privacy

A particular area in which technology companies must make tough ethical decisions is marketing. Advancements in  data mining  technology enable businesses to track their customers' movements online and sell that data to marketers or use it to match customers with advertising promotions.

Many people view this type of activity as a serious invasion of privacy. However, such customer data is invaluable to businesses, as they can use it to increase profits substantially. Thus, an ethical dilemma is born. To what extent is it appropriate to spy on customers' online lives to gain a marketing advantage?

The importance of business ethics reaches far beyond employee loyalty and morale or the strength of a management team bond. As with other business initiatives, the ethical operation of a company is directly related to profitability in both the short and long term.

The reputation of a business in the surrounding community, among other businesses, and for individual investors is a key factor in determining whether a company is a worthwhile investment . If a company is perceived to operate unethically, investors are less inclined to buy stock or otherwise support its operations.

Companies have more and more of an incentive to be ethical as the area of socially responsible and ethical investing keeps growing. The increasing number of investors seeking out ethically operating companies to invest in is driving more firms to take this issue more seriously.

In addition, changes in society and new technologies are raising fresh ethical concerns. The advent and ongoing development of artificial intelligence , for example, is creating new ethical dilemmas across a host of industries.

What Is Meant by Business Ethics?

Business ethics represents a standard of behavior, values, methods of operation, and treatment of customers that a company incorporates, and insists that all employees adhere to, as it functions from day to day.

How Do Business Ethics Benefit Companies?

By behaving according to a high ethical standard, companies can strengthen the drive to succeed internally among executives, management teams, and staff. Furthermore, companies can attract and keep investors who themselves are attracted to companies that align with their own standards of ethical behavior. In other words, business ethics can help companies build long-lasting, solid reputations and financial success.

Why Do Some Companies Have Bad Business Ethics?

That's a good question, especially when the financial advantages arising from a high degree of ethical behavior can be so great. A couple of reasons may be that some CEOs, management teams, or employees may feel it's just easier to work outside of an ethical standard. They may reach certain financial goals faster and not care about the long-term repercussions. It may seem to be less expensive to work without moral and ethical boundaries. Where money is concerned, good ethics can be forgotten.

With consistent ethical behavior comes an increasingly positive public image. There are few other considerations as important to potential investors and current shareholders . To retain a positive image, businesses must be committed to operating on an ethical foundation as it relates to the treatment of employees, respecting the surrounding environment , and fair market practices in terms of pricing, delivering value, and serving customers.

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5.1 Ethics and Business Ethics Defined

• What are ethics and business ethics?

Ethics essentially involves how we act, live, lead our lives, and treat others. Our choices and decision-making processes and our moral principles and values that govern our behaviors regarding what is right and wrong are also part of ethics. 1

Normative ethics refers to the field of ethics concerned with our asking how should and ought we live and act? Business ethics is applied ethics that focuses on real-world situations and the context and environment in which transactions occur—How should we apply our values to the way we conduct business?

Ethics and business ethics continue to gain influence in corporations, universities, and colleges nationally and internationally. No longer considered a luxury but a necessity, business ethics has awakened a need in the public consciousness due to crises in many areas. For example, the 2008 subprime lending crisis—economic effects of which still persist—revealed widespread corruption of large investment banks and lending institutions internationally. Unsupported mortgages were fraudulently offered with no legitimate financial backing. Some large financial institutions, such as Lehman Brothers Holdings, Inc., went bankrupt; millions of mortgage holders lost their homes. An estimated cost of that crisis to the global economy is over $22 trillion U.S. dollars. 2

In the early 2000s, CEOs and top-level leaders from notable corporations such as Enron, Tyco, WorldCom, and others were caught committing outrageously greedy and fraudulent crimes of white-collar theft from their organizations and shareholders. The now classic film The Smartest Guys in the Room depict how Enron’s leaders during that time, Kenneth Lay (now deceased), Jeff Skilling (still serving prison time), and Andrew Fastow (released from prison in 2011), deceived employees, Wall Street, and shareholders. Enron’s crisis took an estimated $67 billion of shareholder wealth out of the U.S. economy. 3 These criminal activities ushered in national laws such as the Sarbanes-Oxley Act, which we discuss below.

While these recent historical crises illustrate the continuing relevance and importance of business ethics, ethical issues are not only concerned with financial and economically motivated crimes and misbehaviors. Fast forward to the rise of artificial intelligence (AI), which also is calling attention to the relevance and need for ethics in scientific institutions, businesses, and governments. The public needs to be informed of potential and actual harmful consequences—as well as all the recognizable benefits—of these technologies that are in large part driven by algorithms (“a sequence of instructions telling a computer what to do”). 4 Intentional and unintentional misuses of such designs embedded in artificially intelligent technologies can negatively and harmfully affect individual lives as well as entire societies. For example, studies show that a number of minority members of society are often discriminated against by institutions using faulty algorithms to qualify customers for mortgages and to predict who is at risk of being incarcerated. Often times, racial and low-income minorities are discriminated against by such technology designs. 5

At a societal level, another now classic film, The Minority Report , illustrates how misuses of technology can threaten individual rights, privacy, free will, and choice. While this may sound like science fiction, scientific and business luminaries such as Elon Musk, Stephen Hawking, Bill Gates, and others have openly declared that we as a society must be cautious and ethically aware and active to fend off the ill effects of the control and dominant influences of certain AI algorithms in our lives. Scientific and ethical practices in corporate social responsibility (CSR) are one way that ethicists, business leaders, and consumers can support moral self-regulation of technologies. Some scientific and technological firms have adopted ethics boards to help safeguard against harmful social uses of AI technologies. 6 The European Union (EU) has produced policy studies that are forerunners of laws to safeguard against potentially harmful uses of robotics. 7

Another timely ethical issue is climate change and the environment. Lack of sustainable environmental practices that curb air pollution and destructive uses of land, water, and natural resources have, according to a large community of reputable scientists, threatened Earth’s—and our neighborhoods’—atmosphere. 8 Scientific studies and United Nations reports affirm that changes to the earth’s atmosphere, melting glaciers, and rising seas are occurring at accelerated rates. For example, “California's coastline could rise up to 10 feet by 2100, about 30 to 40 times faster than sea-level rise experienced over the last century.” 9 While university, business, and local community groups are rallying for legal actions to curtail and reverse environmental polluters, current political executive orders push against such regulations designed to protect against further erosion of the physical environment. 10 The point here is that as these issues described above are not only technological, economic, and political in nature, but also moral and ethical, as the public’s health, welfare, and safety are at risk.

Relevant ethical questions can be asked to prevent a crisis: Who is responsible for preventing and addressing what happens to individuals, the public, our institutions, and government and who is responsible for preventing such crises and harmful effects from occurring and reoccurring? At whose and what costs? Whose responsibility is it to protect and preserve the common good of societies? What ethical and moral principles should and can motivate individuals, groups, and society members to act to change course?

Universities and colleges are taking notice. Business ethics and corporate social responsibility courses and offerings are becoming increasingly important. The accrediting national body of business schools, AACSB (Association to Advance Collegiate Schools of Business), reported that “[i]n their curricula, research, and outreach, business schools must be advocates for the human dimension of business, with attention to ethics, diversity, and personal well-being.” 11 In addition, NGOs (nongovernmental organizations), emergent groups internationally representing the public’s interests and common good, and political action movements are beginning again to give voice to injustices and potentially dangerous ethical as well as fiscal (income inequality), health (the environment), and discriminatory (racism and stereotyping large segments of the society) problems that require stakeholder as well as stockholder actions.

In this chapter, we begin by presenting an overview of the dimensions of business ethics at the individual, professional, and leadership levels, followed by the organizational, societal, and global levels.

Concept Check

• What individual and organizational ethical issues can we expect to occur?
• What are some signs of unethical activities you might notice individually and organizationally?

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Business Ethics

In concept, business ethics is the applied ethics discipline that addresses the moral features of commercial activity. In practice, however, a dizzying array of projects is pursued under its rubric. Programs of legal compliance, empirical studies into the moral beliefs and attitudes of business people, a panoply of best-practices claims (in the name of their moral merit or their contribution to business success), arguments for (or against) mandatory worker participation in management, and attempts at applying traditional ethical theories, theories of justice, or theories of the state to firms or to the functional areas of business are all advanced as contributions to business ethics—even and especially in its academic literature. These projects vary considerably and often seem to have little in common other than the conviction, held by those who pursue them, that whatever each is pursuing is business ethics.

This entry focuses generally on academic business ethics, more particularly on the philosophically-informed part of business ethics, and most particularly on the constellation of philosophically-relevant questions that inform the main conversation and ongoing disagreement among academic business ethicists. It covers: (1) the history of business ethics as an academic endeavor; (2) the focus on the corporation in academic business ethics; (3) the treatment of the employment relation in academic business ethics; (4) the treatment of transnational issues in academic business ethics; and (5) criticism of the focus and implicit methodology of academic business ethics.

2.1 Is the corporation a moral agent?

2.2 how and in whose interests ought the corporation to be governed, 3. the employment relation in business ethics, 4. international business ethics, 5. criticism, bibliography, other internet resources, related entries.

Construed broadly as moral reflection on commerce, business ethics is probably as old as trade itself. If law is a rough guide to widely-held moral intuitions (Gooden 1985), the Code of Hammurabi (1700s B.C.), prescribing prices and tariffs and laying down both rules of commerce and harsh penalties for noncompliance, evidences some of civilization's earlier attempts to establish the moral contours of commercial activity. Aristotle's Politics (300s B.C.) addresses explicitly commercial relations in its discussion of household management. Judeo-Christian morality, as expressed in, e.g., the Talmud (200 A.D.) and the Ten Commandments (Exodus 20:2-17; Deuteronomy 5:6-21), includes moral rules applicable to commercial conduct.

As a discrete, self-conscious academic discipline, business ethics is roughly four decades old. Raymond Baumhart's (1961, 1963, 1968) groundbreaking studies in the 1960s are generally understood to be early contributions to business ethics. Richard DeGeorge (2005) dates academic business ethics to the 1970s, identifying Baumhart as a forerunner to a self-conscious academic business ethics. Prominent contemporary business ethicist Norman Bowie dates the field's first academic conference to 1974 (DeGeorge 2005).

Although academic instruction explicitly devoted to the relationship between ethics and commerce can be found in U.S. business schools as early as the first three decades of the 20th century, particularly in Catholic colleges and universities, creation of academic positions dedicated explicitly to business ethics in U.S. business schools tracks closely waves of corporate scandal from the 1980s to the present. In 1987, in the midst of the insider trading scandal on Wall Street, former Securities and Exchange Commission head John Shad gave the Harvard Business School over $30 million for the purpose of starting a business ethics program there. Subsequent philanthropy from a number of sources financed the creation of prominent endowed chairs at the University of Virginia's Darden School, the University of Pennsylvania's Wharton School, and other business schools. Today, academic positions in business ethics, whether endowed chairs or ordinary faculty positions, are found frequently in U.S. business schools and in philosophy departments, as well.

Academic business ethicists address questions that range across the functional areas of business, giving rise to various recognized specialties in business ethics (e.g., marketing ethics, finance ethics, accounting ethics). But despite the wide range of questions pursued, the bulk of the academic literature and discussion is focused more closely on (and much of the function-specific work is connected closely to) the large corporation whose ownership shares are traded on public exchanges.

2. The Corporation in Business Ethics

Although self-conscious, academic business ethics is of recent vintage, its intellectual roots are found in the corporate social responsibility (CSR) and business-and-society literatures originating in law and in business in the early and middle 20th century (see, e.g., Berle and Means 1932). Academic business ethics displays its CSR heritage in the peculiar constellation of concerns that pervade its literature. Those concerns surround the business corporation, which Robert Solomon (1991) calls “the basic unit of commerce today.”

The corporate focus is evident in the titles of early works of academic business ethics that have done much to shape the subsequent discussion in the field. Tom Donaldson's Corporations and Morality (1982) and Patricia Werhane's Persons, Rights, and Corporations (1985) take business ethics to be concerned centrally with questions about the corporation's proper role in and relationship to the social order. These questions, taken up by the field and continuing to inform its main conversation, are said to surround the “moral status of the corporation,” by which is meant typically one or both of: (1) Is the corporation a moral agent, distinct from the persons who compose it? (2) Morally, how or in whose interests ought the corporation to be managed?

At law, the corporation is a person, distinct in its personality from the persons who bear ownership shares in it (its shareholders) or conduct activities on its behalf (its directors, officers, and other employees). Among the many manifestations of the corporation's separate legal personality are: (i) Distributions of dividends from the corporation to its shareholders are subject to income taxation in the same way that gifts between persons are subject to income taxation. If the corporation were not a separate legal person (as, for example, in U.S. and English law a partnership is not a separate legal person from the partners who compose it) the distribution of dividends would not a be a taxable event (because money would not be changing hands). (ii) Corporations are subject to civil liability that is distinct from that of its owners. Indeed, one of the principal motivations for organizing business activities in the corporate form is that corporate assets are legally separate from the personal assets of the corporation's shareholders. Shareholder liability for corporate debts is limited to whatever assets owners have contributed to the corporation in return for their ownership stakes. (iii) Corporations are subject to criminal liability that is distinct from that of its owners, directors, officers, or employees.

If the corporation is a legal person, is it also a moral person? Anglo-American law takes no explicit position on this, although the corporate personality is frequently described there as a legal fiction , suggesting that the corporation's legally recognized personality is not also ontological fact. Business ethicists have taken a variety of positions on the question whether the corporation is a moral person or moral agent.

Peter French (1979, 1984, 1995) argues that important features of the corporation and corporate decision making exhibit all of the necessary components of moral agency. He argues that corporations have corporate internal decision (CID) structures that provide sufficient grounds for attributing moral agency to them. These CID structures consist of two main parts: (i) an organization chart that corresponds to decision authority within the corporation and (ii) rules (usually contained in the corporation's articles of incorporation or its by-laws) for determining whether a decision, made by one who possesses decision making authority according to the organization chart, is a corporate decision rather than merely a personal decision. That is, analogous to H.L.A. Hart's (1961) rule of recognition for determining whether a norm is a legal norm, there is also a rule of recognition (or set of rules of recognition) for determining whether a decision is a corporate decision. Combining the organization chart with the rule(s) of recognition, one identifies corporate actions, intentions, and aims—the stuff of moral agency in natural persons. Thus, for French, corporations are both legal and moral persons, and hence moral agents in their own right.

To the contrary, Manuel Velasquez (1983) argues that the CID structures to which French appeals are the product of human agency and design. They are rules of cooperation among persons who, given their actions, intentions, and aims, associate under the corporate banner. Attributing moral agency to corporations opens the door to the intuitively implausible conclusion that a corporation can be morally responsible for something no natural person connected with it is responsible for.

Seeing the large, publicly-traded corporation as the key actor in business, most academic business ethicists understand the foundational normative question of their discipline to be that of how and in whose interests corporations ought to be governed. Over the last two decades, the main attempts to answer this foundational normative question have been understood as constituting a ‘shareholder-stakeholder debate’ in business ethics.

Originating in the work of R. Edward Freeman (1984), stakeholder theory is widely regarded among academic business ethicists as the most significant theoretical construct in their discipline. Normative ethical stakeholder theory articulates the view that a business firm ought to be managed in a way that achieves a balance among the interests of all who bear a substantial relationship to the firm—its stakeholders. In Freeman's account, the very purpose of the firm is coordination of and joint service to its stakeholders.

This characterization is vague, but deliberately so. For the normative ethical stakeholder theory literature in business ethics consists principally in attempts to address one or more of the questions (whether ethical, ontological, or epistemic) this characterization leaves unanswered: Who counts, i.e., who are the stakeholders? What interests , held by those who count, count? What is balance , why is it valuable, and how is one charged with achieving it to know when it has been achieved or what activities promote it? How are the ends, values, or practices commended by stakeholder theory incompatible with directors and officers extending the partiality entailed by fiduciary care to shareholders, such that stakeholder theory stands as a rival to the so-called shareholder theory (about which more below)? Whatever the success of stakeholder theorists in answering these questions, there can be little doubt that stakeholder theory's mode of analysis (identifying stakeholders and their interests; asking how these interests ought to be accommodated, served, subordinated, or traded-off in directing the firm's activities) is the one academic business ethicists adopt most readily in considering the moral controversies they address.

‘Shareholder theory’ is not so much a distinct, univocal normative ethical theory of the firm as it is a shorthand, usually applied by those sympathetic to stakeholder theory to what they understand stakeholder theory to oppose. (A leading encyclopedic dictionary (Werhane and Freeman 1997) boasts a handful of mentions of, but no entry devoted to, shareholder theory.) Thus, ‘shareholder theory’ may be used to describe a defense of prevailing institutions and practices (‘the status quo’), the extension of fiduciary care by officers and directors to a firm's equity owners, or an account of a firm's function derived from neoclassical economics.

Canonically, shareholder theory is understood to be an encapsulation of the views advanced by Milton Friedman (1970) in his famous New York Times Magazine article, “The Social Responsibility of Business Is to Increase Its Profits.” But the appellation is applied most often in the academic business ethics literature to arguments seeking to legitimate morally managerial fiduciary duties owed to a corporation's shareholders—whatever the particular grounds for holding that such managerial partiality is justified. So understood, arguments that managerial partiality to shareholder interests is justified by consequentialist considerations (Boatright 1994), by contract-as-promise (Sollars 2002), by the peculiar vulnerabilities of those bearing the residual risk in the firm (Marcoux 2003), or by the idea that claims to fiduciary care are themselves among a firm's residual claims (Macey 1999) are all contributions to shareholder theory.

More recently, Donaldson, writing with Tom Dunfee (Donaldson and Dunfee 1999), has sought to advance a contractarian theory that provides a framework for settling not just questions of how and in whose interests firms ought to be managed, but also most any ethical question that may arise in the context of doing business. Integrative Social Contracts Theory (ISCT) posits a bi-level array of social contracts in which a single, hypothetical social contract serving a largely adjudicative function with respect to the many extant, actual social contracts in terms of which business relationships are structured. Equally opposed to what is often characterized as shareholder theory, ISCT's relationship to stakeholder theory (and hence to the shareholder-stakeholder debate) is unclear. In some moments, Donaldson and Dunfee (1999) characterize ISCT as a form of, or the completion of, normative ethical stakeholder theory. In others, it appears to emerge more as a rival to stakeholder theory.

Underlying the shareholder-stakeholder debate is a disagreement over the analogies in terms of which we ought to understand the firm. Stakeholder theorists generally see strong parallels between firms and political states. Call this the firm-state analogy. Under the firm-state analogy, a firm's stakeholders are like citizens in a polity. Stakeholder theory is an attempt to elucidate the just claims of citizens (stakeholders) in that polity (the firm). It takes the rich citizenship rights characteristic of liberal democracies as the paradigm for considering each stakeholder's legitimate claims on the firm. Thus, stakeholder theorists see normative political philosophy as a natural source of theoretical constructs and normative principles applicable to the governance of firms (Freeman and Evan 1990; McMahon 1994; Moriarty 2005).

By contrast, defenders of extending fiduciary care to a firm's shareholders frequently appeal, implicitly or explicitly, to the idea that the firm is better understood as either an actual agreement among its stakeholders (Sollars 2002) or else a point of intersection to the many agreements that together make up the firm—a so-called nexus-of-contracts, as the firm is usually understood in neoclassical economics. Call this the firm-contract analogy. Under the firm-contract analogy, a firm's stakeholders are just contractors, people who have agreements with other people. The firm is less an actor (much less, a polity) than a Schelling point around which agreements get made, or a Lockean substrate on which agreements rest. Thus, those who are characterized as shareholder theorists usually see prescriptions of normative political philosophy derived from concepts like citizenship as poor guides to the governance of firms.

Which analogy strikes one more compelling depends upon how one conceives of the relative and absolute availability of exit and voice opportunities (Hirschmann 1970) to a firm's stakeholders. The rich voice rights characterizing just polities in much of normative political philosophy are compelling in significant part because one generally is bound to a political state and cannot exit that political state except for another political state. However, rich voice rights are less compelling as a model of just human interaction where liberal exit opportunities exist. Organizational hierarchies and terms of employment that would be intolerable as conditions of citizenship in a polity may be unexceptional in the context of a firm, owing to the consensual aspect of participating in a firm and the richer right to and availability of exit from the arrangement.

It is not surprising, then, that much in the shareholder-stakeholder debate turns on how theorists characterize the exit opportunities available to a firm's stakeholders (Maitland 1994). Stakeholder theorists emphasize circumstances in which exit opportunities are costly, especially for non-shareholding stakeholders, in order to justify voice rights, e.g., strong rights of participation in a firm's governance (Freeman and Evan 1990), or other claims, e.g., protection against termination of employment. Shareholder theorists emphasize rights of exit and the wide array of options available in vibrant markets, especially to non-shareholding stakeholders, that have no analogue in the more static world of political states.

Unlike the case of corporate moral agency, wherein the corporate form is itself the source of the debate, the virtually exclusive focus on the large, publicly-traded corporation in the shareholder-stakeholder debate is strange. For the same questions about how and in whose interests firms ought to be managed arise also, and often more forcefully, in firms doing business in forms other than the publicly-traded corporate one. Closely-held corporations and partnerships lack the fluid markets for ownership shares that make exit a viable choice for the disgruntled shareholder. Moreover, closely-held corporations and partnerships are marked frequently by widely diverging interests among members of the ownership class, whether due to the fact that some of those members are in day-to-day control of the enterprise whereas others are not, or that one or a small coalition of owners form an effective voting majority of shareholders, leaving minority shareholder interests to the majority's mercy.

Falling neatly out of concern about the power of large, publicly traded corporations is a concern about the terms of employment they afford. The discussion of the employment relation in academic business ethics has crystallized into a debate over the relative moral merits of at-will employment terms and just cause employment terms, especially in light of the place each occupies in employment law.

Absent a contract to the contrary, in the great bulk of U.S. jurisdictions the employment relation is governed by the at-will doctrine. Under the at-will doctrine, an employment relation may be terminated by either party (employer, employee), for any reason or no reason at all, without notice. At-will employment thus constitutes a default contract—it is the agreement that obtains between employers and employees absent an agreement to the contrary (e.g., a union contract). Over time, both statutory and case law have carved out a number of exceptions to the at-will doctrine. Thus, the at-will doctrine will not protect an employer who uses the power of termination to engage in racial discrimination, punish an employee for refusing to violate the law, and so forth. Absent circumstances covered by the exceptions, however, the at-will doctrine remains the basic rule governing employment relations in most of the U.S.

Most of the discussion of the employment relation in academic business ethics concerns the fairness of the at-will doctrine and whether other terms of employment ought to be substituted for it through public policy initiatives. Indeed, the debate makes little sense outside the public policy context. On broadly Kantian grounds, Werhane (1985) argues that arbitrary dismissal is incompatible with respecting employees as persons. Respecting employees as persons demands that they be supplied with good reasons when adverse action is taken against them. Thus, at-will employment (or at least, dismissal without cause undertaken in accordance with the at-will doctrine) is incompatible with recognizing and respecting the employee's personhood.

Werhane's argument may depend on an equivocation between giving employees reasons and giving employees reasons on the merits . That is, even if one accepts that, morally, employees as persons are owed reasons, it doesn't follow that the reasons they are owed are reasons that go to, e.g., their job performance, the firm's economic prospects, etc. The at-will doctrine supplies a reason. It says that the terms of our arrangement are such that any of us has the option to terminate it at our discretion. That, coupled with exercise of one's discretion, is sufficient reason to terminate the arrangement. Many decisions affecting persons are settled on the basis of reasons that do not refer to the merits of the case. At law, for example, a plaintiff's case may be dismissed because the statute of limitations has run, because it was filed in the wrong jurisdiction, because the court is not competent to hear the case, etc. None of these are reasons on the merits, but it would be strange to conclude that these dispositions of their claims fail to respect plaintiffs' personhood.

Arguments advanced in defense of the at-will doctrine lean heavily on consequentialist considerations. (But see, e.g., Maitland 1989, for an argument that defends the at-will doctrine on rights grounds.) Proponents attribute the vibrant labor market of the United States and the stagnant labor markets of Europe to the prevalence of the at-will doctrine in the United States and the prevalence of mandatory just cause employment rules in Europe. Mandatory just cause rules are a significant disincentive to job creation and to the pursuit of labor-intensive entrepreneurial ventures because they impose heavy record-keeping and infrastructure requirements on firms. Richard Epstein (1984) puts the point succinctly: “Harder to fire mean harder to hire.” Similarly, David Schmidtz (1998) observes that young black males in the United States enjoy greater employment prospects than do young white males in France in the course of arguing for freer markets in labor—markets that include a default at-will employment contract. The point is that employees can be protected from the ill-effects of arbitrary dismissal in two ways. One way, favored by just cause advocates, is legally. The other way is through the promotion of a vibrant labor market in which jobs are frequently created and readily available. The at-will doctrine lubricates vibrant labor markets by reducing the costs and the stakes of disputes over dismissal. Mandatory just cause rules do the opposite.

The consequentialist case for the at-will doctrine depends critically on the vicissitudes of the labor market and what one considers its normal or usual state to be. When the labor market is strong, as in the middle 1980s or late 1990s U.S., that case is compelling. When it is weak, as in the late 1970s or early 1980s U.S., then it is less so.

Some of the more interesting and sophisticated contributions to the debate by just cause proponents come from outside the business ethics literature. In the legal literature, the trend among just cause proponents is toward acknowledging the appeal of a default rule regime like that in which at-will employment is the default, but arguing that the default ought instead to be just cause. Cass Sunstein (2002), for example, argues that the best world is one in which we capture the benefits of a default rule regime, including permitting those best served by at-will employment to enter into at-will arrangements, but in which the default rule is just cause. He favors the just cause default rule on the grounds that behavioral economics research shows that people are influenced heavily by default rules and default choices. In addition, people tend to regard benefits they already possess as more important than those they can bargain for (i.e., they exhibit what social psychologists call the endowment effect ). Consequently, Sunstein believes that just cause default rules will yield more employees covered by just cause, which outcome he holds to be an improvement, but at the same time will permit employers and employees genuinely and mutually better served by at-will rules to contract for them instead.

David Millon (1998) favors a just cause default rule, by contrast, on the grounds that it will permit employees to hold out for higher wages in return for becoming at-will employees. He acknowledges that just cause employment rules are costly, but believes that avoidance of those costs, in favor of more efficient at-will employment relations, will motivate employers to be more generous in their wage offers. In sum, Millon sees changing the default rule from at-will to just cause as a redistributive strategy, not as a means of getting more employees covered by just cause employment rules.

The debate over at-will employment is a debate not about what employers and employees ought or ought not to do, but instead about the merits of taking the terms of employment continuation out of the realm of contract and into the realm of public policy. In that sense, it is more like the debate over the minimum wage. The at-will doctrine neither commends nor incentivizes a managerial practice. Instead, it apportions the legal risk of arbitrary firing in a way different than just cause rules do. Which apportionment is better may tell us much about the public policies we ought to have, but it doesn't tell us how we ought to conduct business.

Doing business transnationally raises a number of issues that have no analogue in business dealings done within a single country or legal jurisdiction. International business ethics seeks to address those issues. Where ethical norms are in conflict, owing to different cultural practices, which ethical norms ought to guide one's business conduct in other nations and cultures? Some discussions of international business ethics conceive this home country/host country question as central. On one hand, adopting host country norms is a way to respect the host culture and its members. Thus, business persons are advised that when in Rome they ought do as the Romans do—as in etiquette, so too in ethics. On the other hand, business persons are advised to resist host country norms that are morally repugnant. Therein lies the rub. When, for example, bribery of officials is central to doing business where you are, ought you to embrace the practice as a mark of cultural respect or forswear the practice on the grounds that it is morally repugnant?

One common approach in international business ethics is to refer to or to construct lists of norms that ought to guide transnational business conduct. Thus, for example, the United Nations' Universal Declaration of Human Rights or, more recently, the United Nations Global Compact , is advanced as a guide to conduct. The UN Global Compact enjoins business firms to support and respect internationally recognized human rights, avoid complicity in human rights abuses, uphold freedom of association and collective bargaining, eliminate forced and compulsory labor, eliminate child labor, eliminate all forms of discrimination in employment, support a precautionary approach to environmental challenges, promote greater environmental responsibility, encourage the development of environmentally friendly technologies, and work against corruption in all its forms, including extortion and bribery. Alternatively, whether inspired by something like the UN Global Compact , a preferred moral theory, a preferred theory of justice, or some combination of these or other factors, other lists of norms are proposed as guides to the ethical practice of transnational business. DeGeorge (1993), for example, advances ten guidelines for the conduct of multinational firms doing business in less developed countries. These guidelines call for the avoiding harm, doing good, respecting human rights, respecting the local culture, cooperating with just governments and institutions, accepting ethical responsibility for one's actions, and making hazardous plants and technologies safe. Among other uses, Donaldson and Dunfee (1999) see the hypothetical, macrosocial contract in ISCT providing an ideal framework for adjudicating questions of transnational business conduct.

The problems with these approaches appear to be threefold. First, they tend to minimize or ignore competitive reality. Imagine that our firm takes seriously the UN Global Compact . We do business in a less developed country with longstanding environmental and corruption problems. We are implementing a significant environmental initiative in this country, but find that our ability to do so depends upon securing licenses from a corrupt government bureaucracy. If we refuse to pay bribes, we will be unable to implement our initiative and, moreover, we will lose market share and our economic rationale for locating operations in this country to competitors who have no compunction about paying such bribes. Ought we to pay bribes for the sake of environmental improvement and maintaining a presence in this country or forsake the environment and a presence in this country in order to strike a blow against corruption? Although not focusing explicitly on the international context, Ronald Green (1991) stands virtually alone in taking seriously the question of when and under what conditions ‘everyone's doing it’ is a moral justification—a question that arises regularly when doing business transnationally and in competitive markets. Second, these approaches serve mainly to reduplicate the home country/host country question they are intended to help answer. Thus, when enjoined by DeGeorge to cooperate with just governments and institutions, which and whose sense of justice ought to guide the determination of whether the governments and institutions are to be cooperated with? Third, even when enjoining respect for local cultures and moral norms, these approaches tend to privilege Western conceptions of justice, fairness, and ethics. Thus, in Donaldson and Dunfee's ISCT, it is a hypothetical social contract —a concept itself embodying Western notions of procedural fairness—that is supposed to adjudicate clashes between home country and host country, including Western and non-Western, norms and practices.

Moreover, the more interesting home country/host country cases are those where home country norms are explicitly extraterritorial and incompatible with host country norms. In ‘Italian Tax Mores’, a case widely republished in business ethics textbooks and anthologies (see, e.g., Gini 2005: 70-71), Arthur Kelly tells of American firms doing business in Italy. American securities regulations, accounting principles, and conceptions of commercial integrity require firms to account for their tax liability (including foreign tax liability) fully and correctly, with that liability matching what appears on their tax returns. Italian tax authorities, by contrast, take a firm's tax return to constitute not a full and correct accounting, but an initial negotiating position to which they then make a counteroffer. A firm's final tax liability is settled through negotiation between the tax authorities and the firm. Consequently, an American firm's tax liability for its Italian operations will likely never match what is reported on its tax return, in contravention of securities regulations, good accounting practice, and conceptions of commercial integrity back home. General principles of good conduct and hypothetical social contracts seem not to speak to what tax accountants and auditors ought to do, given the institutions and norms that actually confront them.

International business ethics has taken on a new urgency with the emergence of globalization. Low transaction and communication costs, driven by advances in computer and telecommunication technologies, have made the global market, once a metaphor (and at least for some, an aspiration), truly global. Transnational business is increasingly the rule rather than the exception, especially in the production of shoes, clothing, automobiles, and other commodity goods. Nowhere has this urgency been felt more acutely than in the debate over so-called sweatshop labor—the hiring of workers in less developed countries, usually at wages and under work conditions prevailing in those countries, to manufacture products for the developed world.

Opponents of sweatshop labor argue that multinational firms like Nike wrongfully exploit poor work and wage conditions in less developed countries. They argue that, when contracting for labor in less developed countries, multinational firms are duty-bound to pay living wages and ensure that work conditions more closely approximate those that prevail in the developed world.

In a paper much reprinted and anthologized, Ian Maitland (1997) argues that sweatshops constitute for many less developed countries an important rung on the ladder to economic development. Although small relative to the developed world, wages paid in factories serving multinationals like Nike exceed, often by a wide margin, those prevailing in the surrounding economy. The same is true of working conditions. Consequently, sweatshops are a force for the better in the less developed countries in which they appear. They demonstrate the abilities of the local work force, serve to raise local wages as local firms and other multinationals compete for the best employees, and through the extra-market wages they pay facilitate the personal savings and capital formation on which economic development depends. Demanding that multinationals pay even more, so-called living wages—by which is generally meant wages that closely approximate those prevailing in the developed world—is to effectively deny workers in the less developed world the opportunity to compete in the world labor market. For the outcome of a mandatory living wage is not sweatshop workers being paid more, but multinationals keeping factories in places where the market wage parallels the living one (usually the developed world). This promises to leave sweatshop workers working for the (lower) prevailing wages and in the (poorer) prevailing conditions that their local economies, absent the multinationals, offer. According to Maitland, opponents of sweatshop labor are guilty of allowing the perfect to be the enemy of the good.

Maitland's critics have replied generally by disputing the effects that flow from living wage mandates and other proposals for overcoming sweatshop labor. Denis Arnold and Norman Bowie (2003), for example, argue that Kantian respect for persons demands payment of a living wage. They maintain that the minimum wage research of economists David Card and Alan Krueger (1995) demonstrates that raising the wages of low-wage workers lacks the unemployment effects that Maitland predicts. As sweatshop workers earn wages that are usually below those of U.S. minimum wage workers, it is likely that they will escape the unemployment effect. Just as which corporate analogy (firm-state, firm-contract) is more compelling depends upon how one understands the relative and absolute availability of exit from the firm, which sweatshop argument is more compelling depends, at least in part, on the economics. Where the Card and Krueger study fits within the larger body of research about the minimum wage is a matter of dispute among economists. How economists come down on it will have implications for at least one, important aspect of the sweatshop labor debate in business ethics.

The main conversation in academic business ethics is focused on the large, publicly traded corporation. It owes its prescriptions mainly to normative political philosophy, rather than moral theory. It speaks more to public policy toward business (and especially the large, publicly traded corporation) and the institutions of capitalism than it does to ethical business conduct, i.e., what one ought to be doing when one is doing business.

That academic business ethics is focused mainly on public policy toward the large corporation and the institutions of capitalism can be seen in a characterization of the field due to Solomon (1991). Solomon distinguishes three levels of business ethics analysis or argument, which he calls the micro, the macro, and the molar. The micro level concerns “the rules for fair exchange between two individuals.” The macro level concerns “the institutional or cultural rules of commerce for an entire society” (‘the business world’). The molar level (‘molar’ from the Latin moles , meaning ‘mass’) concerns “the basic unit of commerce today—the corporation” (1991: 359). Although Solomon is careful to describe and articulate the central questions of the macro and molar levels of business ethics, the micro level—the level at which people do business—isn't favored with a similar treatment in his discussion. Solomon's macro level business ethics addresses the relationship between political society and economic activity. It “becomes part and parcel of those large questions about justice, legitimacy, and the nature of society that constitute social and political philosophy” (1991: 359). His molar level is a response the fact that, according to Solomon, “the central questions of business ethics tend to be unabashedly aimed at the directors and employees of those few thousand or so companies that rule so much of commercial life around the world” (1991: 359).

As the macro and molar conversations (conversations that are clearly derivative of normative political philosophy) dominate academic business ethics, some wonder what its distinctive contribution is supposed to be and what is the justification for including it (and often, requiring it) in the business school curriculum. Much of academic business ethics's content is contentious, depending upon highly debatable claims about justice, and argues for institutions unlikely to be the ones within which business persons will operate. Consequently, it says less about what one ought to do when doing business than is generally supposed or advertised.

This criticism comes in milder and stronger variants. Andrew Stark (1993) faults academic business ethics for its overemphasis on issues of public policy and top-level corporate decision making. He calls instead for a business ethics focused more on the quotidian decisions and dilemmas of the middle manager. Stark's criticisms are mild because he endorses generally the large, publicly-traded corporate and organizational focus, seeking only to make the subject matter more practical and pitched more to the middle and less to the top-level manager. Joseph Heath (2006) finds academic business ethics's reduction of all issues to battles of stakeholder interests both myopic and misleading. In its place, he favors a methodological approach that sees unregulated market failures, rather than clashes of stakeholder interests, as the principal occasion for ethical deliberation and restraint.

In the stronger form, criticism of academic business ethics can focus on its apparent irrelevance to the vast majority of business persons in the world. That majority works neither for nor with (and certainly doesn't lead) large, publicly traded corporations, yet they surely engage in business. Whether characterized as micro-enterprises, small businesses, or in some other way, the great body of academic business ethics has little to say about the circumstances faced by that majority. Although conceptually the micro level business ethics of which Solomon writes speaks to the circumstances of that worldwide majority, in practice that micro ethics is little developed by and commands scant attention from academic business ethicists. Tethered by its CSR heritage, academic business ethics emerges as a discussion focused on large-scale, North America and Europe-based firms, perhaps with similarly large-scale Asia-based firms included, as well. Except as the potential object of predation by these large-scale firms, business done in the rest of the world and business done outside the large, publicly-traded corporate sectors of North America, Europe, and Asia fall mostly outside the field's purview. In a more methodological vein, Nicholas Capaldi (2006) argues that philosophy's contribution to business ethics needs to be a form of explication, rather than exploration. Its purpose should be to articulate the norms internal to and inherent in business practice (just as legal ethics does with respect to legal practice and medical ethics does with respect to medical practice), rather than to submit briefs on behalf of ideal economic institutions favored by university academics.

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• The ten principles of the UN Global Compact

beneficence, principle of | computer and information ethics | contractarianism | integrity | -->justice -->

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What is business ethics?

Business ethics is the application of ethical values to business behaviour. Business ethics is relevant both to the conduct of individuals and to the conduct of the organisation as a whole. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their employees and suppliers to sales techniques and accounting practices.

Business ethics is the application of ethical values to business behaviour

Ethics goes beyond the legal requirements for a company and is, therefore, about discretionary decisions and behaviour guided by values.

The IBE aims to demystify the topic of business ethics and to make it practical and tangible. The IBE focuses on how ethical values and standards apply to the world of business. It takes a practical rather than an academic or philosophical approach to helping organisations and their employees with ethical dilemmas so that they are able to 'do the right thing'.

The field of 'Professional ethics' is similar but instead focuses on the expected behaviours of professionals, such as doctors, lawyers, accountants and engineers, who are required to follow specific principles or codes or of conduct, usually as members of a professional body or holders of a professional qualification.

What is business ethics? Why is it important? Simon Webley explains...

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A Level Philosophy & Religious Studies

Business Ethics

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?

Quick links

Year 12 ethics topics: Natural Law. Situation ethics. Kantian ethics. Utilitarianism. Euthanasia. Business ethics. 

Year 13 ethics topics: Meta-ethics. Conscience. Sexual ethics. 

OCR Philosophy OCR Christianity OCR essay structure OCR list of possible exam questions

Building an Ethical Company

Create an organization that helps employees behave more honorably. by Isaac H. Smith and Maryam Kouchaki

Summary .   

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

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

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

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