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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

Business Ethics Journal Review

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

• About BEJR — Now 10 years in!
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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

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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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Building an Ethical Company

• Isaac H. Smith
• Maryam Kouchaki

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.

Create an organization that helps employees behave more honorably.

Idea in Brief

The opportunity.

Just as people entering the workforce can develop job-related skills and abilities over time, they can learn to be more ethical as well.

Why It’s Often Missed

Many organizations relegate ethics training to the onboarding process, perhaps also issuing codes of conduct and establishing whistleblower hotlines. Such steps may curb specific unethical acts but don’t necessarily help workers grow as moral people.

How to Capitalize on It

Managers can provide experiential training in ethical dilemmas, 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.

• Isaac H. Smith is an associate professor of organizational behavior and human resources at BYU Marriott School of Business. His research explores the morality and ethics of organizations and the people in them.
• Maryam Kouchaki is a professor of management and organizations at the Kellogg School of Management. Her research explores ethics, morality, and the complexity and challenges of managing ethnic and gender diversity for organizations.

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What Is Business Ethics?

Understanding business ethics, why is business ethics important, types of business ethics.

• Implementing Good Business Ethics
• Monitoring and Reporting

The Bottom Line

What is business ethics definition, principles, and importance.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Business ethics is the moral principles, policies, and values that govern the way companies and individuals engage in business activity. It goes beyond legal requirements to establish a code of conduct that drives employee behavior at all levels and helps build trust between a business and its customers.

Key Takeaways

• Business ethics refers to implementing appropriate business policies and practices with regard to arguably controversial subjects.
• Some issues that come up in a discussion of ethics include corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
• The law usually sets the tone for business ethics, providing a basic guideline that businesses can choose to follow to gain public approval.

Investopedia / Katie Kerpel

Business ethics ensure that a certain basic level of trust exists between consumers and various forms of market participants with businesses. For example, a portfolio manager must give the same consideration to the portfolios of family members and small individual investors as they do to wealthier clients. These kinds of practices ensure the public receives fair treatment.

The concept of business ethics began in the 1960s as corporations became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes, and corporate responsibility. The increased focus on "social issues" was a hallmark of the decade.

Since that time, the concept of business ethics has evolved. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally vs. maintaining a competitive advantage over other businesses. Firms display business ethics in several ways.

Business ethics ensure a certain level of trust between consumers and corporations, guaranteeing the public fair and equal treatment.

Principles of Business Ethics

It's essential to understand the underlying principles that drive desired ethical behavior and how a lack of these moral principles contributes to the downfall of many otherwise intelligent, talented people and the businesses they represent.

There are generally 12 business ethics principles:

• Leadership : The conscious effort to adopt, integrate, and emulate the other 11 principles to guide decisions and behavior in all aspects of professional and personal life.
• Accountability : Holding yourself and others responsible for their actions. Commitment to following ethical practices and ensuring others follow ethics guidelines.
• Integrity : Incorporates other principles—honesty, trustworthiness, and reliability. Someone with integrity consistently does the right thing and strives to hold themselves to a higher standard.
• Respect for others : To foster ethical behavior and environments in the workplace, respecting others is a critical component. Everyone deserves dignity, privacy, equality, opportunity, compassion, and empathy.
• Honesty : Truth in all matters is key to fostering an ethical climate. Partial truths, omissions, and under or overstating don't help a business improve its performance. Bad news should be communicated and received in the same manner as good news so that solutions can be developed.
• Respect for laws : Ethical leadership should include enforcing all local, state, and federal laws. If there is a legal grey area, leaders should err on the side of legality rather than exploiting a gap.
• Responsibility : Promote ownership within an organization, allow employees to be responsible for their work, and be accountable for yours.
• Transparency : Stakeholders are people with an interest in a business, such as shareholders, employees, the community a firm operates in, and the family members of the employees. Without divulging trade secrets, companies should ensure information about their financials, price changes, hiring and firing practices, wages and salaries, and promotions are available to those interested in the business's success.
• Compassion : Employees, the community surrounding a business, business partners, and customers should all be treated with concern for their well-being.
• Fairness : Everyone should have the same opportunities and be treated the same. If a practice or behavior would make you feel uncomfortable or place personal or corporate benefit in front of equality, common courtesy, and respect, it is likely not fair.
• Loyalty : Leadership should demonstrate confidentially and commitment to their employees and the company. Inspiring loyalty in employees and management ensures that they are committed to best practices.
• Environmental concern : In a world where resources are limited, ecosystems have been damaged by past practices, and the climate is changing, it is of utmost importance to be aware of and concerned about the environmental impacts a business has. All employees should be encouraged to discover and report solutions for practices that can add to damages already done.

There are several reasons business ethics are essential for success in modern business. Most importantly, defined ethics programs establish a code of conduct that drives employee behavior—from executives to middle management to the newest and youngest employees. When all employees make ethical decisions, the company establishes a reputation for ethical behavior. Its reputation grows, and it begins to experience the benefits a moral establishment reaps:

• Brand recognition and growth
• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors

When combined, all these factors affect a business' revenues. Those that fail set ethical standards and enforce them are doomed to eventually find themselves alongside Enron, Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and many others.

There are several theories regarding business ethics, and many different types can be found, but what makes a business stand out are its corporate social responsibility practices, transparency and trustworthiness, fairness, and technological practices.

Corporate Social Responsibility

Corporate social responsibility (CSR) is the concept of meeting the needs of stakeholders while accounting for the impact meeting those needs has on employees, the environment, society, and the community in which the business operates. Of course, finances and profits are important, but they should be secondary to the welfare of society, customers, and employees—because studies have concluded that corporate governance and ethical practices increase financial performance.

Businesses should hold themselves accountable and responsible for their environmental, philanthropic, ethical, and economic impacts.

Transparency and Trustworthiness

It's essential for companies to ensure they are reporting their financial performance in a way that is transparent. This not only applies to required financial reports but all reports in general. For example, many corporations publish annual reports to their shareholders.

Most of these reports outline not only the submitted reports to regulators, but how and why decisions were made, if goals were met, and factors that influenced performance. CEOs write summaries of the company's annual performance and give their outlooks.

Press releases are another way companies can be transparent. Events important to investors and customers should be published, regardless of whether it is good or bad news.

Technological Practices and Ethics

The growing use of technology of all forms in business operations inherently comes with a need for a business to ensure the technology and information it gathers is being used ethically. Additionally, it should ensure that the technology is secured to the utmost of its ability, especially as many businesses store customer information and collect data that those with nefarious intentions can use.

A workplace should be inclusive, diverse, and fair for all employees regardless of race, religion, beliefs, age, or identity. A fair work environment is where everyone can grow, be promoted, and become successful in their own way.

How to Implement Good Business Ethics

Fostering an environment of ethical behavior and decision-making takes time and effort—it always starts at the top. Most companies need to create a code of conduct/ethics, guiding principles, reporting procedures, and training programs to enforce ethical behavior.

Once conduct is defined and programs implemented, continuous communication with employees becomes vital. Leaders should constantly encourage employees to report concern behavior—additionally, there should be assurances that if whistle-blowers will not face adversarial actions.

A pipeline for anonymous reporting can help businesses identify questionable practices and reassure employees that they will not face any consequences for reporting an issue.

Monitoring and Reporting Unethical Behavior

When preventing unethical behavior and repairing its adverse side effects, companies often look to managers and employees to report any incidences they observe or experience. However, barriers within the company culture (such as fear of retaliation for reporting misconduct) can prevent this from happening.

Published by the Ethics & Compliance Initiative (ECI), the Global Business Ethics Survey of 2021 surveyed over 14,000 employees in 10 countries about different types of misconduct they observed in the workplace. 49% of the employees surveyed said they had observed misconduct and 22% said they had observed behavior they would categorize as abusive. 86% of employees said they reported the misconduct they observed. When questioned if they had experienced retaliation for reporting, 79% said they had been retaliated against.

Indeed, fear of retaliation is one of the primary reasons employees cite for not reporting unethical behavior in the workplace. ECI says companies should work toward improving their corporate culture by reinforcing the idea that reporting suspected misconduct is beneficial to the company. Additionally, they should acknowledge and reward the employee's courage in making the report.

Business ethics concerns ethical dilemmas or controversial issues faced by a company. Often, business ethics involve a system of practices and procedures that help build trust with the consumer. On one level, some business ethics are embedded in the law, such as minimum wages, insider trading restrictions, and environmental regulations. On another, business ethics can be influenced by management behavior, with wide-ranging effects across the company.

What Are Business Ethics and Example?

Business ethics guide executives, managers, and employees in their daily actions and decision-making. For example, consider a company that has decided to dump chemical waste that it cannot afford to dispose of properly on a vacant lot it has purchased in the local community. This action has legal, environmental, and social repercussions that can damage a company beyond repair.

What Are the 12 Ethical Principles?

Business ethics is an evolving topic. Generally, there are about 12 ethical principles: honesty, fairness, leadership, integrity, compassion, respect, responsibility, loyalty, law-abiding, transparency, and environmental concerns.

Business ethics concerns employees, customers, society, the environment, shareholders, and stakeholders. Therefore, every business should develop ethical models and practices that guide employees in their actions and ensure they prioritize the interests and welfare of those the company serves.

Doing so not only increases revenues and profits, it creates a positive work environment and builds trust with consumers and business partners.

New York University Stern Center for Sustainable Business. " ESG and Financial Performance: Uncovering the Relationship By Aggregating Evidence From 1,000 Plus Studies Published Between 2015 – 2020 ."

Ethics & Compliance Initiative (ECI). " The State of Ethics & Compliance in the Workplace ," Pages 16-22.

Ethics & Compliance Initiative (ECI). " 2021 Global Business Ethics Survey Report The State of Ethics & Compliance in the Workplace: A Look at Global Trends ."

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What is Ethical Business Essay And How to Compose it?

Are you wondering what you should add to the ethical business essay? If yes then you’re at the right place, in this blog we brought you everything that you can include in the ethical business essay. The behaviors in a commercial transaction are referred to as business ethics. Ethics is concerned with what is right and wrong. It is a principle that may be used in any commercial application. Customers, government regulators, competitors, interest groups. And others can all influence the acceptability of corporate ethics. This paper focuses on the topic of business ethics in particular.

About Business Ethics

Table of Contents

The standard for how your firm is run is set by business ethics. Ethical principles serve as the foundation for a wide range of modern concepts. These concepts are for work, business, and organizations, broadening individual. And corporate priorities far beyond traditional profit and shareholder enrichment goals. Institutions and public sector organizations, whose traditional emphasis on service quality. Cost management must now take account of the same ethical considerations influencing the commercial. And corporate sectors, are likewise influenced by ethical factors. You can also start your ethical business essay by telling a little bit about the importance of it.

The Value of Business Ethics

With the increasing pressure of business practices, it is more essential than ever for businesses to do their jobs correctly. Ethics programs are an excellent strategy for developing moral behavior. Organizations also require employees who are committed to making ethical decisions. Below are the things that you can add to your ethical business essay.

Business Ethics is a Necessary Skills

Almost every firm now has a code of ethics. Part of this is due to the fact that technology and digital communication have made it simpler to spot and broadcast ethical gaffes. Companies are dedicating greater resources to corporate ethics to avoid unwanted consequences. Companies are creating ethical workplaces by hiring the right people. In addition to establishing formal programs.

Employee behavior is influenced by business ethics

Employees are more likely to use ethical reasoning when their company clearly demonstrates why business ethics is important. According to the Global Business Ethics survey. Ninety-nine percent of employees in the United States. Who work in an environment with a strong ethics culture said they are prepared to deal with ethical issues.

The bottom line benefits from business ethics

Another reason for the importance of business ethics is that it can increase profitability. Over three years, honorees on this year’s list of the World’s Most Ethical Companies outperformed the Large Cap Index by 10.5 percent. A well-executed ethics program can also help to reduce losses. You can add all these points to your ethical business essay.

• Different types of business essay format
• Best ever business essay example for beginners

What You Should Consider Including

Apart from the importance, there are other things to add to the ethical business essay. This paper examines how ethical business practices affect corporate stakeholders. The overall influence of ethical behaviors on these interconnected factors has a favorable influence on the company organization.

Potential Investors’ Attraction

Few investors want to invest in organizations that lack integrity. And accountability because they don’t want to be associated with them. They know that performance will eventually drop for all of the other reasons listed below. And who wants to invest in a lost cause?

Retention of Customers

Consumers are increasingly favoring providers and suppliers who exhibit accountability and ethical behavior. Failure to do so results in a loss of market share and dwindling popularity. It reduces revenues, profits, or whatever other outcomes the organization needs. The study discovered three major areas of employee concern. That businesses must address to foster a culture of stronger, more loyal relationships. They are workplace fairness, employee care and concern, and employee trust. A values-oriented code of conduct is a critical first step toward better consideration of ethical problems. During the decision-making process in order to achieve these aims.

Staff Productivity

Employees who work in a high-integrity, socially responsible. And globally conscious organization are far less likely to experience stress, attrition, and dissatisfaction. As a result, they are more content and productive. People who are happy and productive are a common feature of highly successful organizations. Employees who are stressed and dissatisfied are less productive, take more time off, require more management. And have no interest in resolving the organization’s flaws when the whole thing implodes. People are less likely to waste valuable energy in internal turf battles in an ethical workplace, both and departmentally. The ethical business essay should always have a detailed part in it explaining employees and their work.

Organizational Reputation

It takes years, if not decades, to build an organization’s reputation – but only one scandal can demolish it. Scandals and disasters are far less likely in ethically responsible organizations. And if one does occur, an ethically responsible organization will know how to deal with it quickly, openly, and honestly. People are more likely to forgive organizations that are genuinely attempting to do the right thing. Organizations that fail and then fail again by not addressing the problem. And the root cause are not forgiven and are actually considered insulting.

Final Thought

An ethical business essay is all about ethics that are to be followed in the organization. Individuals, teams, and organizations have more power and influence when all of these connected. And somewhat overlapping components work together synergistically. Most people are also aware that ethical behavior can help them in their daily lives. All of these events are advantageous to the business in the long run. If you still have some doubts then clear them with our business ethics assignment help and business ethics homework help .

Frequently Asked Questions (FAQS)

How do you compose a paper about business ethics.

A good critical essay should, in general, include the following: Be humble. Be reasonable. Be well-organized. Limit yourself to two or three primary points. Be as specific as possible.

What is the format of an ethical business essay?

There is no specific format to write an ethical business essay. However, you can follow the INTRODUCTION-MAIN BODY- CONCLUSION approach.

What are the fundamental concepts of business ethics?

Business ethics refers to the implementation of appropriate business policies and practices in relation to potentially contentious issues. Corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities are some of the issues that come up in an ethical discussion.

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Business Ethics

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

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

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

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

1. Varieties of business ethics

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

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

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

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

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

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

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

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

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

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

3. The ends and means of corporate governance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5. Firms and consumers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6. Firms and workers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7. The firm in society

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Acknowledgments

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

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

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2 The Place of Ethical Theory in Business Ethics

Robert Audi is Professor of Philosophy and David E. Gallo Chair in Ethics at the University of Notre Dame. He works in ethics and in related philosophical fields, especially epistemology. His books include Action, Intention, and Reason (1993), The Structure of Justification (1993), Moral Knowledge and Ethical Character (1997), Religious Commitment and Secular Reason (2000), The Architecture of Reason (2001), The Good in the Right: A Theory of Intuition and Intrinsic Value (2004), and Moral Value and Human Diversity (2007).

• Published: 02 January 2010
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This article examines the relevance of ethical theory in business ethics. It explains the nature of ethical theory, provides an account of the leading theories, and explores the ways in which these theories form a critical resource for the treatment of practical moral problems. It discusses how theory connects to practice and provides several concrete examples of how ethical theory helps address practical problems in business ethics. It specifically illustrates how ethical theory can be helpful in analyzing the problems of whistle-blowing and affirmative action.

Ethical theory is a major critical resource for serious discussion of ethical problems, including those in business ethics. Why this is so will become clear once we frame an adequate conception of ethical theory and describe the scope of business ethics. I begin with a section that considers what kind of enterprise ethical theory is and what sorts of problems in business it can help address. I then proceed to explore some dimensions of ethical theory, some leading theories important for business ethics, and some concrete illustrations of the connections between ethical theory and specific problems in business ethics.

Ethical Theory, Applied Ethics, and Business Ethics

Ethical theory is the branch of inquiry concerned with understanding morality, in the wide sense in which morality is constituted by standards of right and wrong, and of the good and the bad, in human conduct. 1 There are at least two senses of “morality.” In the objective sense, it designates sound standards of right and wrong, and we can thus speak of what morality objectively requires in employment policy and of what it objectively prohibits in advertising. In the personal sense, morality designates an individual's or group's particular standards of right and wrong, which may or may not be sound. Ethical theory is concerned mainly with morality in the objective sense, but one of its questions is what it means for objective moral standards to be realized in an individual's thought and conduct. For instance, how closely does a person's behavior have to conform to sound moral standards in order for the person to qualify as genuinely moral?

We may also speak of an ethical (or moral) theory, such as utilitarianism. In common terminology, an ethical theory is a statement of standards of right and wrong and includes an account of at least their content and application to decision problems. An ethical theory need not contain answers to theoretical questions about morality, such as whether it embodies universally valid standards of conduct. Although the major proponents of an ethical theory of this sort also address such questions, there are ethical theories—including those called metaethical —that contain no endorsement of any moral standard. The latter theories will not be of primary concern here.

Ethical theory is commonly contrasted with applied ethics. The latter is moral inquiry concerned with answering specific questions of right and wrong, such as whether it is wrong for employers to require blood tests to determine drug use even for employees not in certain risky occupations such as operating dangerous machines. Applied ethics seeks generality in its answers, but it does not address theoretical questions about, for instance, the meanings of highly general moral terms, the nature of moral properties, or the kinds of evidence possible for moral judgments. These questions are often grouped under the term metaethics . An ethical theory such as Kantianism or utilitarianism, however, will often have implications for specific moral questions and will imply that certain answers are sound. These theories are normative, whereas metaethics is generally conceived as nonnormative.

Applied ethics was originally conceived as the application of one or more ethical theories or of at least of some general moral standard to specific problems of right and wrong. Now, however, the term also encompasses any kind of practical ethics, including an approach that might examine, in an intuitive and nontheoretical way, a particular question of right and wrong, such as one concerning drug testing, with no appeal to anything beyond what might be called intuitive moral sensitivity, a kind usually taken to reflect a commonsense understanding of human conduct. Practical ethics is not, however, always an application of a general moral standard. A manager's decision whether to blame an employee for losing a potentially profitable contract may be reached by reflection on the details of the case, with background ethical intuition playing the role that some people would accord to moral rules. This is not to say that the manager cannot, after the decision, formulate a rule that subsumes the case. We will here leave open the question whether every decision is an implicit application of an already presupposed rule or, by contrast, at least some rules emerge only in the light of reflection on a particular case.

Business ethics may be conceived as a branch of applied ethics, parallel to legal and medical ethics. Where a legal or medical practice constitutes a business, business ethics encompasses moral questions about its business conduct, and there business ethics may overlap with legal or medical ethics. Business ethics is neither narrow nor isolated from other branches of ethics. It overlaps legal ethics, for instance, in addressing the question of the kind and extent of business leaders' obligation to follow the law of the country in which they operate. It overlaps medical ethics in addressing the question of whether an incorporated medical group, pharmaceutical company, or hospital is a business and the related question of whether it has the same kinds of ethical obligations as other businesses.

Among the kinds of questions pursued in business ethics are both internal and external questions. Internal questions concern, among other things, the conduct of management toward employees under its authority: How, for instance, should one determine fair compensation, preserve privacy, and maintain a proper health insurance program? Internal questions also concern the rights of employees, most aspects of corporate governance—including ethics training for employees—and how to conduct research, particularly when it poses risks to persons. External questions concern, among other things, the relation of businesses to people and institutions outside them: What is the place of business in society and how does this bear on its responsibilities toward customers and environmental preservation? What are the standards of fair competition with other businesses? What criteria of remuneration and safety must businesses abide by, particularly when operating in countries with less stringent standards than their own, such as countries that permit the operation of sweatshops? Some external questions concern not only what roles, ethically speaking, businesses should voluntarily play in society but also what legal restrictions should be placed on their operations. There are also a multitude of questions, such as what constitutes truth in marketing, that might be conceived as mainly internal or mainly external, depending on whether their focus is on intra‐company activity or on the relation between the company and other elements in society, as is the case with advertising in public media.

Some of these questions will be considered below. First, however, it is important to develop a more detailed picture of ethical theory and its major concerns.

Major Dimensions of Ethical Theory

How ethical theory in the disciplinary sense bears on business ethics can be clarified by describing some subfields of ethical theory and articulating some of the major questions they explore. This section will not presuppose any particular ethical theory, though some theories are cited for illustration.

Moral Judgment

There is no brief way to distinguish sharply between, on the one hand, moral judgments or the oughts they commonly express and, on the other hand, aesthetic and, especially, pragmatic judgments and oughts . In the moral case, more than in the aesthetic and pragmatic case, taking the moral point of view implies receptivity to a kind of criticism. We are not taking the moral point of view in making a judgment on an action unless we meet at least three conditions. First, we must consider the effects of the action on the well‐being of persons. Second, we must be open to being held to a standard of consistency in treating like cases alike. Third, we are aware that something serious is at stake—sufficiently serious to make the emotions of guilt and shame appropriate if, with no mitigating circumstance, we err. Some of these conditions may apply to a lesser degree in aesthetic and pragmatic matters. What is it, then, that sets the moral point of view apart and indicates the broad subject matter of ethical theory?

Certain notions are, in their normal uses, intrinsically moral. Consider a judgment about justice. Judgments and decisions applying this notion represent the moral point of view. Similarly, we can plausibly say that acts such as cheating, defrauding, and exploiting people are paradigms of what is morally wrong; hence, to judge such an act to be wrong is to make a moral judgment. The judgment that an act is one of cheating implies wrongdoing by providing a criterial ground for it, the kind of ground whose relevance must be acknowledged by anyone who adequately understands the judgment. 2

One approach to understanding the moral point of view depends on finding moral terms . A wider approach proceeds, as in the examples just given, with reference to grounds of moral judgment. Moral judgments and decisions commonly employ the concepts of what is right or wrong or of what we ought or ought not to do, or of what is fair or unfair, just or unjust. There are, as already noted, nonmoral senses of “right” and “wrong,” for instance, senses applicable from the point of view of self‐interest. This point of view in particular needs comment in connection with understanding business ethics. Not only is self‐interest different from the moral point of view; the latter is to be understood as a point of view capable of conflicting with that of self‐interest and even the wider point of view of prudence. In many business decisions there is no conflict, but there may be, as in the greedy pursuit of profits. 3

I have presupposed that the point that we ought not to do injustices can serve as a model for understanding the notion of the moral ought. To determine precisely what counts as an injustice one must make a moral determination. One can do this from the point of view of a particular ethical theory, but there is a core notion of injustice recognizable without presupposing any particular theory. Consider a judge who fines one company $50,000 for pollution of a river and a second company $100,000 for it, where the only differences are in what part of town they dumped their effluent—and in the judge's friendship with the management of one but not the other. This is not a controversial case; it is the kind of uncontroversial example that anchors the concept of justice that competing theories seek to analyze. The same holds for other moral notions, such as being an act of reparation or of making amends for injuring someone, and—to shift to descriptions of character—for being virtuous or vicious. We can identify moral judgments and decisions in part in terms of nonmoral grounds for them—“facts” in one commonsense meaning of the term. The idea is roughly that   descriptive factual judgments, such as that one person lied to another, broke a promise to a customer, or allowed a lethal gas to escape and burn people, often tell us that a judgment of moral wrongdoing is being made. These descriptive judgments are not normative—they are not, for instance, moral in content or evaluative, though they are a basis for moral judgments and in that sense not morally neutral. This distinction is a very important matter when it comes to explaining and justifying moral judgments—for example, that a business ought to compensate someone for an injury or ought not to have lied about who released gas into the air. Their grounding in descriptive facts is perhaps the major reason for their objectivity and universal applicability. Let us consider some of the crucial domains of descriptive factual grounds.

One pertinent domain of (nonmoral) facts is that of bodily harms and injuries. Typical examples would be killing, raping, burning, and beating. Calling the facts in question nonmoral needs comment. The point is the narrow one that, like the fact that the judge gave different fines for the same offense, they are not moral in content : determining them does not require using moral or other normative concepts. But they are moral in upshot : they are by their very nature the kinds of facts that are criterial evidence for moral judgment. It is a very important fact about ethics (a fact recognized by virtually all ethical theories) that moral judgments can be justified and even known on the basis of facts to which we have access by observation and scientific investigation. Indeed, sound moral judgments may be considered anchored in descriptive facts in a way that yields objectivity of a kind that makes them acceptable across different cultures.

There are domains besides harming and injury in which factual affirmations enable us to identify moral judgments and moral decisions and to determine that they represent the moral point of view. One is veracity. A judgment that an act is wrong because it is a lie is a moral judgment. It has moral content in calling the act wrong . Similarly for fidelity to one's word: a judgment that an act is obligatory because it is the keeping of a promise is also moral. The same holds for a judgment that a deed ought to be done because otherwise a person who can be saved will die.

Moral judgments, then, are normative judgments with roughly the content that an action or kind of action ought, or ought not, to be performed. Sound moral judgments are justifiable on the basis of correct identifications of morally relevant facts, such as that someone lied to stockholders or poisoned a stream. Ethical theory is concerned with the nature of these judgments and their interconnections. Particular normative ethical theories demand action identified in relation to the facts they take to be morally relevant. For instance, utilitarianism is concerned with the consequences of actions for pleasure and pain. Sound moral judgments are anchored in facts accessible to observation or scientific inquiry, and this anchoring is the main basis of objectivity in moral judgment.

Metaphysical Dimensions of Ethical Theory

The metaphysics of ethics is concerned with whether there is any moral reality: whether there are in fact properties such as being obligatory or being wrong or being   good . Moral realists hold that there are in fact such properties; antirealists deny that there are. The previous discussion has not presupposed realism but is written in a way that suggests that it is highly plausible. Some readers may wonder why antirealism is plausible enough to need mention. The reason, as many in business fields who are social scientists know, is that empirical testability is a standard requirement for scientific acceptability—or, on a view still influential—of making sense at all in assertions intended to be true. An underlying motivation for the testability requirement has been memorably expressed by Wilfrid Sellars: “Science is the measure of all things, of what is that it is and of what is not that it is not.” 4 If this is so, then any moral properties there are must be empirical—that is, ascertainable by scientific means.

Common sense and ordinary language appear to favor realism, at least in the form in which it says simply that there are such properties as being obligatory and being wrong that acts may have in virtue of having the descriptive properties of being promised and being lies. This simple realism leaves open whether ascriptions of moral properties are empirically verifiable. Clearly they are empirically evidenceable , since the descriptive properties that justify them are accessible to observation and scientific inquiry.

A point that apparently gives support to moral realism is that in many languages one can say that a person did not know that an action was wrong, that someone did not see that an action was obligatory, and that it is true that someone did wrong. I am aware of no natural language in which some equivalent of these statements is not considered to have a clear meaning, and those who reject realism must explain why such terms as “true” have a different meaning than in ascriptions of descriptive properties. It has been argued that to speak of truth here is only to express something, not to ascribe a property. Moral language is here said to be expressive rather than factual, prescriptive rather than descriptive, or emotive rather than truth‐valued. 5 The widest term for these positions is “noncognitivism,” so called because it denies that moral statements express anything cognizable in the way objects of cognition—truths and falsehoods—do.

This is not the place to establish the cognitive status of the ethical, and even the best developed antirealist positions make room for some kind of objectivity. Even if one thinks that calling the cheating of employees wrong is expressive, rather than descriptive, one is likely to grant that people have reasons for taking this attitude and that they should hold the same negative attitude in any precisely parallel case. It can turn out that the relevant reasons, such as that children will starve if the company does not provide emergency flood assistance, are the same kinds of reasons realists would adduce for the same judgment. Thus, for those whose criteria for realism in a body of discourse are so strict as to require a belief in antirealism, business ethics can be pursued without further addressing this question. Realism is simply not a requirement for well‐ordered discussion of moral questions in business ethics. This point is especially important for those who think that objectivity in moral judgments can be achieved only if they are reducible to descriptive empirical judgments. Objectivity reaches beyond the empirical.

Epistemology is concerned with the nature of knowledge and justification. Scarcely anyone doubts that we have knowledge in logic and mathematics (which are not empirical disciplines), but ethics is another matter. Ethical skeptics hold that we do not have moral knowledge or, if they are strongly skeptical, that we also lack justification for moral claims. The commonsense view is that we sometimes achieve both, as in our judgments that the dictators who perpetrated the atrocities of the twentieth century did wrong. A great deal must be said to defend common sense here, and this is not the place to say it. I shall simply presuppose that at least some moral judgments are justified.

Empiricism implies that only testable claims or those that are true in virtue of certain relations of ideas can be known or justifiably believed. The main contrasting view in epistemology is rationalism , understood as the position that reason—our rational capacity—reveals substantive truths. Versions of rationalism have been held by Plato, Aquinas, Clarke, and, in twentieth‐century ethics, W. D. Ross, Thomas Nagel, and others. 6

The epistemological aspects of ethical theory bear more directly on business ethics than the metaphysical aspects. For moral empiricists, there will be a sense that ethical claims may be established by empirical information such as facts about the impact of an action on the material well‐being of persons. This information will be central for utilitarians. For moral rationalists, empirical information will also be essential, but it will not play the same role. Adequate reflection of a qualitative and often intuitive kind will be central for justification of moral decisions. Specifically, rational reflection will supply the general principles underlying moral judgments and decisions, but their application will require appraising facts pertinent to the circumstances. Consider veracity. For moral empiricists the obligation not to lie is based on empirical facts, such as facts about the negative consequences of lying. For moral rationalists this obligation is knowable by reflection— a priori , in one terminology—though whether it is overriding in a given case will depend on facts such as whether an innocent person will die if a lie is not told. Although rationalists in moral epistemology maintain that moral principles can be known through pure reason or some form of rational reflection, they commonly grant that the obligations these principles express may conflict. Hence they do not hold that the application of the principles in specific cases yields a decision independent of facts about those particular cases.

Methodologically, there is something neutral among empiricism, rationalism, and indeed antirealism, and also applicable to questions of business ethics. It is theoretical method . This is a general method of building and rebuilding theories while raising questions, hypothesizing, comparing, and evaluating hypotheses in relation to data, revising theories in the light of the comparisons and evaluations, and adopting theories through assessing competing accounts of the same or similar problems. An element in this method is the attempt to achieve reflective equilibrium : a kind of integration between one's general beliefs and one's judgments concerning the kinds of cases they apply to. 7 A plausible principle for determining raises in salary may, for instance, be compared with intuitions about what certain specific employees deserve. These intuitions may force one to revise the principle. One might then compare the revised principle with a new case and revise it yet again. Hypothetical cases may also play a role in refining a principle. There also may be competing principles—say, those concerning how much should be given to shareholders. Theoretical method, with the search for reflective equilibrium as a part of the method, may help one to improve principles already in place or to discover new ones needed for new challenges. The aim is to achieve a combination of plausible ethical judgments in specific cases and a coherent framework of principles that justifies them.

Moral Psychology

Ethical theory often considers questions about the psychology of human agents, particularly as it bears on our capacity to act on moral judgments and on the kind and degree of responsibility we have for our actions. Let us consider these two areas in turn.

Since antiquity, moral philosophers have debated the question whether holding moral judgments entails being motivated to act accordingly. The view that it does is often called motivational internalism . It is so called because its central idea is that some degree of motivation is internal to the holding of a moral judgment, as with judgments that one (morally) must do something. Sometimes this view is associated with moral rationalism, on the ground that, in ascribing motivational power to reason—which is assumed to be represented by the moral judgments in question—it expresses the wider scope attributed to reason by rationalists by contrast with empiricists. But nonrationalists can hold motivational internalism (as David Hume did), and it seems best to consider internalism to be neutral on epistemological matters.

Motivational internalism has some important implications for business ethics. It reinforces the view that actions speak louder than words. It implies that those who claim to hold moral principles and moral judgments, but do not act accordingly, must either be seen as motivated but hindered or be liable to suspicion of insincerity or of self‐deception—itself a sometimes blameworthy condition. They are at the very least properly subject to being challenged to explain why they failed to act accordingly. This is one way motivational internalism bears on moral assessment.

Motivational internalism also bears on moral instruction, including the kind possible in the ethics programs of business schools and companies: if it is true, then in educating the intellect we to some extent direct the will. Even if the moral judgments people hold do not entail enough motivation to produce action in accordance with them, they must, on a defensible motivational internalism, produce some motivation and will thereby assist whatever other motivation people have to be moral, such as a desire to be prudent. Everyday experience, however, shows sufficient disparity between people's apparent moral beliefs and their actions to suggest that moral instruction alone—even when it produces morally sound beliefs—cannot be the only ethical incentive in business or any other domain. This is one reason for the importance of ethical climate in a company—a notion that is best understood in terms of moral and social psychology.

Moral psychology also concerns the conditions for moral responsibility. One widely accepted result of analysis is that weakness of will—conceived as action against one's better judgment—does not entail mental compulsion. This implies that such weakness is not excusatory or even (necessarily) mitigatory. A fund manager may judge that an insider trade is wrong but, out of greed, do it. The “irresistible” deed here is not at all like action under a coercive threat of death. Another implication of a sound moral psychology is that self‐deception, rationalization, and other possible sources of unconscious motivation are not necessarily excusatory. Unconscious hatred can and must be resisted. In these matters, among others, moral psychology can both help to refine moral judgment and expand the scope of our understanding of moral responsibility. Doing that can help in articulating a company's ethics code, devising an ethics training program for all who work in it, and in deciding who to judge those who act wrongly.

Conceptual Analysis of Important Notions

There is a central activity that ethical theorists engage in regardless of their views in epistemology or metaphysics. They make explicit and clarify the concepts and judgments to be examined. This is crucial for both ethics and empirical inquiry. Some examples of morally important results of conceptual analysis will illustrate its value in business contexts.

Veracity. What is the difference between lying and deceiving? The question in the abstract is theoretical, but how we answer it may determine what kind of business we may and may not do. An advertisement, for instance, may deceive without lying (since it says nothing false) and people may lie without deceiving (since a lie need not be believed). Is some deception, then, permissible? And does the answer depend on still other notions needing analysis, such as those of “normal” or “reasonable” consumers? A related notion is being deceptive . This notion applies to both persons and their statements and independently of whether they succeed in producing false belief. This also differs from lying, although lying normally implies an attempt to be deceptive. Clarification of these concepts is central to ethical accounts of advertising and marketing.

Improper influence. Must gifts in business become bribes when their value rises to a certain level? The question for ethical theory here is what distinguishes an attempted bribe from an actual bribe given by one person to another with an understanding concerning a payoff. No gift necessarily produces an actual bribe, but some kinds of gift giving are reasonably taken as attempted bribes. It does not follow, however, that as a gift becomes more valuable, it automatically becomes an attempted bribe.

These points should make it clear that a great deal of conceptual sorting is needed to determine ethical standards for gift giving in business. For example, there are many forms of undue influence, which is a central issue in the area of corporate campaign contributions and lobbying.

Equal treatment. Equal treatment of persons is commonly considered a requirement of justice. The question for ethical theory is what equal treatment means if vast differences exist in, for example, compensation.

One answer is proportionate equality . What variables, however, are crucial for determining the proportions? A major one is productivity. But is that, in business, just a monetary variable? And are there not other variables, such as the degree of importance of an employee for the survival of a company? The determination of these variables and their proper weighting are challenges to ethical analysis in business, and different normative ethical theories in business ethics give different answers. Discussion of compensation of CEOs is but one of many examples.

Are these issues purely linguistic? Language is important, and its proper use is a major source of evidence, but concepts need not be taken to be peculiar to any given language. A linguistic issue—in the sense of one concerning the correct analysis of terms in a natural language—is not about mere words. Often the issue concerns the meaning of underlying concepts. Anyone lacking in linguistic competence and basic concepts will need help in being understood when addressing ethical questions and will be in a poor position to contribute to the articulation and promotion of high ethical standards in the company. Consider criticism vs. harassment, warnings vs. threats, incentives vs. temptations, and ambition vs. opportunism—all are significant concepts in business ethics. Ethical conduct in business requires distinguishing these, and managers who want to create an ethical climate should be articulate about the differences.

Ethics and Religion

One other dimension of ethical theory needs mention: the issue of autonomy of ethics in relation to religion. Many ethical works are written from a religious point of view, and many concrete moral judgments are influenced by religion. A question in ethical theory is whether ethics has some kind of evidential dependence on religion.

Consider the question whether moral knowledge—say, that lying is (with certain exceptions) wrong—requires knowing any religious truth. This does not seem so. To say this is not to claim (as some would) that we can know moral truths even if there are no theological or religious truths. The point is theologically neutral on this matter. It is that knowledge of moral truths does not depend on knowledge of God or of religious truths. This view that moral knowledge is possible independently of religion is not antireligious, and indeed it has often been held by religiously committed philosophers and by theologians.

A person's ethics, in business or any other realm, may be enriched by reflection on religious texts and traditions, and secular ethical reflection can enhance one's understanding of religious texts and traditions. Many religious traditions, for instance, give a special place to the Golden Rule. Each tradition interprets the rule in the light of its own scriptures and practices. 8 The related question for ethical theory is whether treating others as we would have them treat us implies, for example, an endorsement of good treatment, or of some kind of equal treatment, or of what one would rationally want for oneself. It is possible for religiously committed people in business ethics to benefit on either side, the perspective of ethical theory or that of religion, from reflection on the other. This does not entail that there is always complementarity between any plausible ethical position and any given religious viewpoint, but such complementarity is often possible and commonly achieved.

Major Ethical Theories as Resources in Business Ethics

So far our focus has been on ethical theory in the disciplinary sense, as used mainly by philosophers. Ethical theory of this kind has often been presented in the form of specific comprehensive positions in ethics spanning both normative ethics and metaethics. Four kinds of historically important, comprehensive ethical theories have received widespread attention in business ethics. These four are described below, with reference to the kinds of resources they provide for business ethics.

Virtue Ethics

The central demand of virtue theories is that one concentrate on being a person of good character—a virtuous person. Honesty, fairness, fidelity, and beneficence are important moral virtues, and they empower their possessor to make and adhere to sound ethical decisions. For a virtue ethics, agents and their traits, as opposed to rules of action, are morally basic: we are, for instance, to understand what it is to behave justly through studying the nature and tendencies of the just person, not the other way around. We do not construct a notion of just deeds as those that treat people equally, and then, on that basis, define a just person as one who characteristically does deeds of this sort. For virtue ethics, as commonly understood, moral traits of character are ethically more basic than moral acts . 9 Here, in ordinary life as in business, role models are crucial for moral learning. Everyone can be a role model for others, but virtue ethics particularly calls on management and other business leaders to model good character and conduct. For Aristotle, as for many later virtue theorists, the person of practical wisdom is the chief role model in ethics—such people exemplify many of the moral virtues and also tend to be good advisers in ethical decisions. They are prudent and insightful, as well as morally upright.

If, however, we take traits as ethically more basic than acts , we must ask: How does a virtue theory tell us what to do ? Ethics largely concerns conduct . How do we determine what counts as, for instance, being just or beneficent? Virtue ethics has resources for answering this question. For instance, Aristotle calls virtue “a state that decides, consisting of a mean, the mean relative to us, which is defined by reason.… It is a mean between two vices, one of excess and one of deficiency.” 10 Consider beneficence. If, relative to my resources, I am selfish and ignore others' needs, this is a deficiency; if I give so much at once that I am prevented from providing much better things for others later, I am excessive. Good ethical decisions, on this view, are seen in the light of such comparisons. 11

The term “mean” suggests a kind of kind of weighting that virtue ethicists, and indeed virtually all ethical theorists, take to be unavailable in ethics. One case might be the kind in which there is already a quantitative baseline. If you already have an employee whose monetary compensation is n and you are hiring one who is in every way comparable, then the relevant mean calls for equality of compensation. Suppose, however, that you are determining bonuses. Now you may have no such beacon. Still, some figures will be clearly too high, others clearly too low. Moreover, virtue ethics would have us not only avoid extremes but also formulate the general standards of virtue by which we are to judge. The manager should want to be, for example, just, generous, and prudent; in employees, virtuous managers look for virtues such as productivity, cooperativeness, and beneficence toward coworkers and customers. These refinements in the perspective of judgment, together with progressive elimination of what is too much or too little, can lead to good judgments. The judgments may, as in this case, be financial, but virtue bears on nonmoral decisions as well as moral ones. Plainly, such financial decisions as determinations of bonuses also have a moral aspect.

Kantian Ethics

A contrasting ethical theory centers on rules, and this kind of theory is even more prominent than virtue ethics in contemporary discussions of business ethics. Many business ethicists are substantially guided by the master principle of Immanuel Kant, a principle called the Categorical Imperative. In one formulation, it says that we are always to act in such a way that we can rationally will the principle we are acting on to be a universal law: So act as if the maxim of your action [that is, the principle of conduct underlying the action] were to become through your will a universal law of nature . 12 Thus, I should not mislead potential buyers in an advertisement I can legally publish if I could not rationally will the universality of the practice—say, when I am the victim. We would not want to universalize, and thus live by, the callous principle that “one should mislead others when this is legal and will be profitable.”

Kant also gave a less abstract formulation of the Categorical Imperative: Act so that you use humanity, as much in your own person as in the person of every other, always at the same time as an end and never merely as a means . 13 The requirement is that we always treat persons never merely as means, but also as ends in themselves. In part, the imperative seems to say: never use people, as in manipulating them by deceptive advertising. Instead, respect them. Treating people as ends clearly requires (nonselfishly) caring about their good. They matter as persons, and one must to some extent act for their sake whether or not one benefits from it. This formulation applies to oneself as well as others. It requires a kind of respect for persons, and this includes self‐respect. If we take Kant's two formulations together (and he considered them equivalent), then apparently we must not only treat persons as ends but equally so. Everyone matters and matters equally. 14

The Kantian approach has at least a twofold emphasis. The universalizability principle calls on us both to act on principle and to be willing to apply our principle in any relevantly similar situation, including one in which we are on the receiving end of the decision in question. This has obvious application to determining compensation in employment, but the variables that go into such a decision are often numerous, and it should not be thought that formulating the rules that account for one's actual decision is easy. Just as one can follow rules of linguistic usage without being readily able to formulate them, one can follow a moral principle yet find difficulty formulating it with precision. The effort to do so, however, is often both morally desirable and economically rewarding.

Managerial judgments, whether in rewarding merit or in punishing violations, are precedential , and both clarity in the ethical climate of a business and incentives toward ethical conduct are often well served by articulating the rules guiding managerial decision. The second Kantian formulation of the Categorical Imperative is, in emphasis at least, very different: it says that no one is to be treated merely as a means to someone else's ends and, positively, that people are to be treated with respect for their value as persons (as ends in themselves). Exploitive treatment, as in sending employees on dangerous missions without adequate warning and their proper consent is thus ruled out. Creating a climate of respect is essential for ethical business, and the good of all stakeholders must be given due weight.

Utilitarianism

It is sometimes said that whereas Aristotle's ethics is a virtue ethics, Kant's is a rule ethics. (Kant's is also sometimes called an ethics of duty.) There is a point in this contrast, but it must not be taken to imply that practitioners of one must always differ with practitioners of the other in concrete ethical judgments on cases. The same holds for a quite different kind of rule ethics, one suggested by the question: what good are rules unless they contribute to our well‐being—that is, unless (above all) following them enhances human happiness and reduces human suffering? This kind of concern leads to utilitarianism , the position of Jeremy Bentham and John Stuart Mill. For Mill, the central requirement of ethics is roughly this: choose that act from among your options which is best from the twin points of view of increasing human happiness and reducing human suffering (an ethically permissible act may be such by increasing happiness or decreasing suffering or both ). In Mill's words: “The creed which accepts as the foundation of morals ‘utility’… holds that actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain.” 15 If one act produces more happiness than another, it is preferable, other things being equal. If the first also produces suffering, other things are not equal. Ideally, our actions would be doubly good, as in providing good jobs for unemployed poor people. We would be producing pleasure and reducing suffering.

The ethical aim for action is to find options second to none in total value, understood in terms of happiness. For instance, lying causes suffering, at least in the long run, and truthfulness contributes, over time, to our well‐being—roughly, how well off we are from the point of view of happiness as the positive element and suffering as the negative one. Mill argued similarly in support of other morally required conduct, such as fairness in dealing with others and noninterference with other people's conduct. 16

From the point of view of ethical theory, utilitarianism has advantages of a kind that are appealing to many businesspeople. It is empirical, in the sense that the question whether an act is right is answerable in terms of its predictable consequences for happiness and unhappiness. This makes it correspondingly objective and as quantitative as one can be about measurements of pleasure and pain and the probabilities of producing them. Many ethical theories have noted, however, that pleasure and pain are difficult to measure and that the task of predicting their consequences is complex, especially if one tries to take account of an indefinitely long future. One response to this problem is to take the maximization of happiness standard to apply not to individual acts but to rules of action. For this “rule utilitarianism,” such everyday rules as those requiring promise keeping and veracity are often endorsed as normally giving good moral guidance. Their internalization by actors is what rule utilitarianism calls for.

In business ethics, then, utilitarians can claim to have a method that enables them to bring empirical techniques to bear on ethical decisions much as they bear on cost‐benefit analysis in purely economic decisions aimed at maximizing profit. However, consider the difficulty of deciding when a working mine is sufficiently safe to permit sending miners into it. How should one weight the unhappiness value of an accidental death? One would need to take account of the expected value of the otherwise remaining life, as well as the suffering caused by loss and grief. Less dramatically, is one to pay one employee more than another because, although they are equal in productivity and other professional variables, one is healthy and single, the other is the sole support of three children, and we can find no further basis of a differentiation in happiness value? Here one might have a rule of justice calling for equal treatment, but cases like these raise the question whether such rules are actually supported by the overall maximization aim. The literature on utilitarianism is enormous, and here we can only note some of the advantages and disadvantages of giving it a major role in business decisions. 17

Commonsense Intuitionism

A rule theory need not have a master principle. Many writers in ethics hold a pluralistic, multiple‐rule view that categorizes our basic obligations. W. D. Ross did so by considering the kinds of grounds on which moral obligations rest; for instance, making a promise to help you review an inventory statement is a ground of an obligation to do it, and damaging someone's computer in delivery is a ground of an obligation to make reparations. For Ross, the basic prima facie obligations—roughly, obligations that constitute our overall obligation when there is no at least equally strong conflicting obligation—include obligations to (1) keep promises, (2) act justly, (3) express gratitude for services rendered, and (4) do good deeds toward others. Ross also stressed (in the same chapter) the obligations to (5) avoid injuring others, (6) make reparations for wrongdoing, (7) avoid lying, and (more positively) (8) improve oneself. He considered it intuitively clear and even self‐evident that we have these eight obligations: you can see that we do by simply engaging in sufficiently clear and deep reflection—a kind of intuitive thinking—on the moral concepts in question in relation to representative applications of them to actual or hypothetical acts. 18 Hence the name “intuitionism” for the position that morality is to be conceived in terms of the principles expressing these commonly recognized obligations. 19

Ross thought that in at least the majority of cases in which two or more prima facie obligations conflict, we need practical wisdom (wisdom in human affairs) to determine which is final , that is, which obligation is, all things considered, the one we ought to fulfill, as opposed to our prima facie obligation, our obligation relative to the moral grounds in the situation. Our final obligation is what we ought to do “in the end,” and it will be the same as our prima facie obligation if no other such obligation of equal weight should conflict. Consider two cases in which most businesspeople would agree on the resolution, regardless of their orienting theories among those considered. If I promise to deliver a new computer to you and this turns out to be so expensive, owing to bad weather and shipping costs, that I would make no profit, this promissory obligation overrides my obligation to protect my profit. Similarly, if a computer is damaged in shipment, I may face a choice between replacement and equally costly repairs, but it would be wrong to hold the buyer responsible. These ethical preferences would often be intuitive and readily apparent to a person of practical wisdom, but they might also be justifiable by one or more ethical theories.

There is, then, both an Aristotelian element in Ross's common sense ethics and an openness to theoretical justifications of intuitive moral judgments. Practical wisdom is what Aristotle took to be essential in determining what kinds of acts express virtue; and Ross thought, as Aristotle may have, that sometimes it is intuitive, or even obvious, which of two conflicting obligations takes precedence. Saving a dying person may be quite obviously a stronger obligation than keeping a promise to help harvest corn. That the morally right choice is obvious does not prevent its being explained by, for instance, a Kantian categorical imperative. By contrast, the choice of one good candidate over another good one to fill an important position may rarely be obviously right. Here morality counsels humility—and the constant retrospective self‐scrutiny that helps us both to rectify past mistakes and to avoid future errors. But even in difficult cases like this one may still be able to find—and to defend to higher management—good resolution with the help of an ethical theory.

Given a conscientious use of practical wisdom and appeals to a morality that we all commonly share, do we really need an ethical theory at all? And if we do, must it be “high‐level” as are virtue ethics, Kantianism, and utilitarianism, or may it be more nearly “ground‐level,” as with the kinds of everyday moral generalizations Ross thought morally sufficient? Arguably, people are guided by one or another kind of high‐level theory even if they are unaware of it. Be that as it may, there is wide agreement on this point: an act that is right—including the mental act of deciding to do something—is not just brutely right, it is right in virtue of being, say, an equal division of profits, a keeping of a promise, a relieving of suffering, or an expression of respectfulness. The reference here is to grounds —grounds that represent verifiable descriptive facts . These grounds represent the things ethical theorists have stressed: equal treatment in Kantian ethics, promise making in commonsense intuitionism, reduction of suffering in utilitarianism, and, in virtue ethics, acting from virtue. Ethical decisions by any conscientious and morally committed person tend to be guided by taking account of grounds of these sorts.

This brings us to the role of ethical theory in making such decisions. Ethical decisions are precedential : if we (morally) ought to do a certain deed in circumstances C , then we ought to do the same type of thing in exactly similar circumstances or—to take the more common case—in relevantly similar ones. A conscientious ethical decision, then, implies a rule that calls for the same act in circumstances that are at least relevantly similar. Kant's universalizability idea partly rests on, and calls attention to, this important point. Utilitarianism is in part an attempt to summarize the kinds of grounds that matter under the broad “welfarist” headings of pleasure and pain. Commonsense pluralism of the sort embraced by Ross provides a wider account of such grounds. Virtue ethics indicates connections between such grounds and right action as those connections are seen in the light of such virtues of character as justice, fidelity, and sincerity.

All conscientious people are ground guided in making moral decisions. Often, they are influenced by one or another kind of theory in deciding what the relevant grounds are and what action they call for. Ethical theories help one to find and articulate grounds, to justify decisions by appeal to them, and to generalize from good decisions to rules that can guide future conduct and facilitate good decisions in the future. A special merit of commonsense pluralism is that it provides a practical and readily applicable meeting ground for people whose theoretical orientations may be quite different. The principles Ross formulated are common in the moral education of many cultures: (1) they describe much of the ethical conduct of the virtuous; (2) they are “theorems” rationalized by Kant's central principles; (3) they are widely and plausibly thought to promote human well‐being; and (4) they operate on the basis of familiar empirically accessible grounds for action.

Some Illustrative Problems in Business Ethics

Some illustrations of the practical uses of ethical theory in business ethics will help clarify the more theoretical matters discussed so far. The importance of virtue ethics, utilitarianism, Kantian ethics, and commonsense intuitionism will be presupposed, but it should be clear that other views might have similar applications to the problems in question.

Affirmative Action

Affirmative action is, roughly speaking, giving preferential treatment to members of a group identified by a characteristic not normally a qualification for doing the job in question. Gender and ethnicity are the main cases discussed in business ethics. Affirmative action comes in degrees. Among the importantly different degrees revealed by ethical analysis are (1) extra effort to bring the preferred group into the applicant pool, say to maximize female applications; (2) giving hiring preference when other things are equal in terms of qualifications; and (3) giving preference when a member of a nonpreferred class is perceptibly (but not substantially) better qualified.

The two most important rationales for affirmative action are that (1) it is needed, for some period of time, to compensate for past discrimination against the designated group (a rationale defensible by appeal to some of the commonsense intuitive principles or on Kantian lines) and (2) that it is beneficial for society as a whole (a rationale most readily defensible on utilitarian lines or by some nonutilitarian principle of beneficence). Consider African Americans whose ancestors were slaves and who may themselves have been victims of discrimination. It may be argued that there is an obligation of reparation owed to them, at least by government on behalf of society. The obligation of reparation, in general, is one Ross stressed. Fulfilling it here may also be considered a requirement of treating the persons in question as ends , in the sense required by Kant's categorical imperative. As to the social benefit argument, this may be supported by utilitarian considerations or even by appeal to the obligation of beneficence applied at the level of society as a whole. From the point of view of virtue ethics, both the character traits of benevolence and justice may be appealed to in support of an affirmative action policy: goodness toward others requires helping those at socioeconomically low levels, and justice toward those disadvantaged by wrongdoing calls for compensatory action. Both the reparation and the social benefit argument are controversial, and there is a huge literature on affirmative action. The aim here is to show some of the ways in which the major theories might be brought to bear on the issue.

The major ethical theories may, however, also be appealed to in challenging policies of affirmative action. Both the Kantian emphasis on universalizability and the commonsense principle of justice, for instance, call attention to the other side of the issue: equal opportunity . People commonly claim rights to it and argue that it requires assessing persons solely on their merits for the position in question. Rights of equal opportunity, many say, outweigh affirmative action considerations. These writers usually hold that there is no right to affirmative action and that even a right of reparation for wrongdoing could be satisfied by measures other than employment preference, say by enriched early childhood education programs, with some preference for the group owed the reparations. At the same time, since rights are not absolute—an important point of ethical theory that must here be assumed without argument—a case for some degree of affirmative action could still be made, at least in societies like that of the United States today. But what degree of affirmative action and for how long?

This problem is of the kind that Ross thought called for practical wisdom. Practical wisdom, however, may be significantly assisted by theory. Consider the requirements of justice and their bearing on affirmative action. Presumably, hiring preference is given only when other things are equal in terms of qualifications. Under this policy, no one should suffer the prima facie injustice of having someone less qualified preferred. It is true that there would not be perfect equality of opportunity, but do we have a right to have a prospective employer choose arbitrarily between us and someone equally qualified, so that our chance is equally good? An employer might claim a right in such cases to choose on other criteria within a morally acceptable range, including beneficence toward a member of a historically disadvantaged group. Both utilitarian and virtue ethical criteria may be helpful here. When the relevant details are clear, it may also help to frame a principle for deciding such cases and to consider, as Kantians would, whether whatever policy is considered is rationally universalizable.

Suppose that a good case can be made for affirmative action that calls for preference for a minority candidate whose qualifications for performing the job are not quite equal to those of the best majority candidate, though they are very close. Utilitarian considerations (among others) suggest an appeal to the economic value of diversity: the claim is that at least many businesses tend to succeed better when their workforce matches, in gender and ethnic proportionality, the population in which it operates. In a sense, this makes minority status a kind of economic merit. If the diversity argument is economically sound, does giving it some weight create a policy that would do an injustice to certain applicants or at least fail to treat them as ends? Is the argument truly a justification of some level of affirmative action, or is it a rationalization for violations of the equal opportunity standard? The answer is perhaps not obvious, but the question is an important one that ethical theory can at least help us clarify and think through.

Whistle‐Blowing

In mining, construction, engineering, security firms, and industrial manufacture there are sometimes failures to maintain adequate safety conditions. Employees may face the question whether to “blow the whistle,” that is, go to authorities higher in the business, or outside the business, or to the press or some other (usually outside) person(s) in order to rectify the wrong in question. The question can be difficult because blowing the whistle can harm other employees and even destroy the company, yet not doing so can lead to accidents or, on the economic side, loss of jobs for employees and suppliers and, for stockholders, loss of vast sums of money. Employees who discover serious wrongs will likely face conflicts of obligations—conflicts between obligations of fidelity to coworkers, who will likely be hurt by damage to the company, and to people, such as customers or stockholders, who will be harmed if nothing is done.

Suppose that tunnels in a mine are not sufficiently secured against collapse, with the result that there is a significant chance of a cave‐in—one that neither good judgment nor the law would tolerate if it should come to light. Given the obligation of fidelity to coworkers and to one's company, one might favor a priority of internal resolution principle: it says that a reasonable attempt to solve the problem should be made through internal channels if there is a significant chance of success. But suppose nothing is done in response. It will take courage to go above one's supervisor. But what if it turns out that no one within the company is at all likely to solve the problem? It may be hard to determine this, but there have been cases in which it is clear that the top management is corrupt or at least unwilling to correct a wrong. This appears to have been the case with Enron and with WorldCom, though the circumstances at both were complicated. In the mining case, the miner (or other employee) may, and perhaps ethically must, blow the whistle.

This case illustrates the relevance of probability calculations in ethics. There is always some chance of disasters in mining. One question is what constitutes an “acceptable risk.” It also may matter which ethical theory, if any, guides us. A utilitarian calculation is one route to an answer, but for cases like whistle‐blowing a Kantian universalizability principle may be more pertinent: all concerned, from the mine operator to the person considering blowing the whistle, should ask whether the risk is one we could knowingly and rationally take or let our friends take. If the answer is negative, that person morally should take some action. Suppose that, as has often happened, there is an inadequate attempt at remedy within the company. From the point of view of a pluralism of moral norms, several obligations are relevant: the obligations of fidelity to coworkers, of justice, of beneficence, and of noninjury must be considered. It is clearly reasonable to minimize harm to the company, but the need to protect innocent people also looms large, and prevention of injury and injustice may together require blowing the whistle.

Another ethical question about whistle‐blowing is how to state the appropriate degree of protection to provide for those who do it. One approach is a utilitarian calculation in which we compare, say, the good of strong protections against firings or prosecutions against the bad effect of the likelihood of false charges that would come with this system. Another approach is to appeal to the principle of noninjury (nonmaleficence), which calls for abstaining from injuring or harming others. This would imply that a truthful, judicious whistle‐blower should have protection, but penalties should be assessed against those who make false charges, especially if they are negligently or quite detectably false. The results of these two approaches might or might not coincide, but they differ in their central focus.

Other approaches to whistle‐blowing might also be used (as chapter 19 in this volume makes clear). Any approach should be tested by framing the principles it leads to and testing them against actual and hypothetical cases on which a clear intuitive judgment can be made. This procedure is usable in any field, and the attempt to achieve what was above called reflective equilibrium is an important goal in arriving at operating standards to govern whistle‐blowing.

Advertising and the Ethics of Creating Desire

Advertising succeeds only if adequate desire exists on the part of consumers. The ethical appraisal of advertising requires conceptual analysis, and it benefits from moral psychology. To begin with motivation, three important kinds of desire should be considered. The main division is between need‐based desire and non‐need‐based desire. But what is need? We here require a further distinction. Needs are relative to some state or outcome for which the needed thing is essential. Food and shelter are needed for survival; an all‐terrain vehicle is needed for certain kinds of recreation or for war. The respect of others is needed for a good life.

A good life is not definable in biological terms and can be the object of ethical needs and of desires an ethical person would have. For example, that people need the respect of others is an ethical statement. A plausible ethical theory can help us to determine what human beings need. In the virtue‐ethical tradition since Aristotle, the notion of human flourishing has been used to describe a pattern of human existence in which what is sometimes called “the human good” is realized. A broad guideline is that, from the moral point of view, people need to flourish. They need to develop and use their talents, to enjoy social interaction, and to express themselves intellectually and spiritually. Ethical theorists who give rights a central place tend to agree that there is a basic human right to an opportunity to flourish. 20 What level of support this right requires businesses to give to their employees and other “stakeholders”—and what it requires governments to provide for citizens—are difficult questions. No ethical theory of the basic kinds we have considered gives a precise answer, but no answer that is not defensible in relation to some general moral grounds is likely to succeed.

Need‐based desires of either biological or ethical kinds are natural for human beings and are ethically proper targets of advertising and marketing. Whether need‐based or not, desires met by marketing divide into two kinds: those existing antecedently to marketing—especially advertising—and those created by it. A desire for a good night's sleep is need based and antecedent to advertising; a desire for a particular kind of sleeping pill may well not be antecedent to advertising. A desire for a powerful all‐terrain vehicle for recreational use is (generally) not need based. It may or may not be created by advertising. Is it ethical for a business to create it and sell such products? Is doing so unjustifiably manipulative—a way of treating people merely as means or at least not as ends?

It would be a mistake to claim that creating and meeting desires that are not need based is always unethical. Many things that make life enjoyable are not needed either biologically or for ethical reasons. However, one could market cigarettes to minors or otherwise create desires for something harmful that is not needed. Here one would violate the obligation of noninjury. One could also create desires that have disproportionate strength . They are disproportionate in that, though not themselves need based, they come to outweigh need‐based desires. This would apply to desires for hard drugs that are not medically needed but create a chemical dependency.

People who want to enter the business world have choices, and businesses themselves have latitude regarding what they will create or market. Here it is important to ask what kind of person one wants to be, as virtue ethics demands of us, and to have a good understanding of what is called for in business conduct by one or another answer. Given a manufacturing or marketing plan, we should be able to explore how it bears on the promotion of human good, which in turn requires distinguishing between need‐based desires and other desires, and between evoking desire for what advances well‐being and manipulatively evoking desires that simply lead to consumption and, like excessive energy consumption, to harms. Connected with this is the difference between persuading potential customers with arguments based on their needs and manipulating them with images and information that produce consumption by evoking non‐need‐based desires.

Conclusions

Ethical theory is often developed purely metaethically in a way that is neutral on substantive moral questions. It is also frequently represented by a variety of well‐developed positions that include both metaethical and normative ethical components. These positions include virtue, Kantian, utilitarian, and commonsense theories. These theories either contain or can be readily integrated with positions in epistemology and metaphysics, moral psychology, and philosophical theology. These theories center on certain kinds of descriptive factual grounds for ethical decision, such as promises made, harms done to persons, or consequences for human happiness. All require conceptual analysis for their interpretation and application. In some cases of ethical decision, these theories lead one in different directions; in others, they converge in support of a decision or resolution, even if for quite different reasons. None makes ethical decisions in complicated cases easy. But the theories agree in recognizing a wide range of human conduct in which ethics provides helpful answers. In the majority of business decisions, it is clear that, negatively, harms, lies, and broken promises are to be avoided and that, positively, the welfare of human beings is to be promoted. Where hard cases require decisions that are controversial, ethical theory enables us to explain their basis, frame tentative principles that support the decisions, and critically compare the cases with other cases that fall under the principles and may confirm them or, in some instances, lead us to revise them. This use of ethical theory reduces the chance of error, facilitates nonviolent resolution of disagreement, sets a precedent for dealing with problems that will likely arise, and provides a basis for better procedures and decisions in the future. 21

The domain of the right and the wrong is called deontic , that of the good and the bad axiological , but I will not use these terms and will instead speak of what is right, wrong, obligatory (wrong not to do), and permissible (not wrong to do, though not necessarily obligatory), and of what is good as an end (good in itself) as opposed to good as a means (instrumentally).

The difference between a judgment that is moral in content and one that is moral in force is essential for showing that moral judgments have criteria of application not themselves dependent on prior moral judgment. If you give $20 for an item selling for $12 and are (intentionally) shortchanged by receiving $7 in change, it is a simple verifiable fact that you are cheated. There are moral uses of “cheat,” but the point here is that we can specify the moral point of view in part by finding terms with nonmoral content whose application entails the applicability of a moral judgment. Some would call cheating a “thick” moral concept, presumably on the ground that it has definite content self‐evidently entailing a prima facie wrong.

3. Kenneth Goodpaster analyzes various excessive pursuits of profit and other goals under the heading of “teleopathy,” Conscience and Corporate Culture (Oxford: Blackwell, 2007), 28.

4. This is from Sellars's paper “Empiricism and the Philosophy of Mind,” in his Science, Perception and Reality (London: Routledge and Kegan Paul, 1963), 173 (originally published in Minnesota Studies in the Philosophy of Science 1, 1956).

5. For a major recent statement of noncognitivism with references to earlier writers in this tradition see Allan Gibbard , Wise Choices, Apt Feelings (Cambridge, Mass.: Harvard University Press, 1990).

6. Ross is a prominent defender of the view that certain basic principles are self‐evident. He suggests that people who have a certain mental maturity and reflect sufficiently can know them in the way we know rules of inference in logic. See W. D. Ross , The Right and the Good (Oxford: Oxford University Press, 1930), 29. Supporting theory is given by Thomas Nagel , The View from Nowhere (Oxford: Oxford University Press, 1986).

7. John Rawls , A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971) is largely responsible for giving reflective equilibrium prominence in ethical theorizing; see, especially, 48–51. There is now a large literature on it, and the method has been claimed by both people who think justification for beliefs and judgments comes chiefly from coherence among them and those who think it comes chiefly from their grounding in experience or reason taken to provide evidence for beliefs and judgments. Rawls is also a major proponent of a contractualist approach to understanding social justice. For a short statement of how such an approach bears on business ethics see Thomas W. Dunfee and Thomas Donaldson , “Social Contract Approaches to Business Ethics: Bridging the ‘Is‐Ought’ Gap,” in A Companion to Business Ethics , ed. Robert E. Frederick (Oxford: Blackwell, 2002), 38–55.

 8. For an indication of how the Golden Rule is formulated in many different religious traditions—African as well as Western and Eastern—see Patrick E. Murphy et al., Ethical Marketing (Upper Saddle River, N.J.: Pearson/Prentice‐Hall, 2005), 36.

Aristotle described just acts as the kind that a just person would perform; a just person is not to be defined as one who performs just acts. He took moral traits of character to be ethically more basic than moral acts. He said, regarding types of acts that are right, “Actions are called just or temperate when they are the sort that a just or temperate person would do” ( Nicomachean Ethics , 1105b5ff). It is virtues such as justice and temperance rather than acts that are ethically basic for Aristotle: “Virtue makes us aim at the right target, and practical wisdom makes us use the right means” (1144a).

10. Aristotle , Nicomachean Ethics , ed. Roger Crisp (Cambridge: Cambridge University Press, 2002), 1107a1–4.

11. For discussion of virtue ethics in the business domain, with applications to many problems treated in this volume, see Robert C. Solomon , Ethics and Excellence: Cooperation and Integrity in Business (Oxford: Oxford University Press, 1992) . Also instructive for business ethics is Edwin Hartman , “Can't We Teach Character? An Aristotelian Answer,” Academy of Management Learning and Education 5 (2006): 68–81.

12. Immanuel Kant , Groundwork of the Metaphysics of Morals , trans. Allen Wood (New Haven, Conn.: Yale University Press, 2002) , 38, sec. 422. Kant apparently has rational universalizability in mind in this and the other universalizability formulations of the Categorical Imperative. There is a large literature on how he should be interpreted, but nothing highly controversial about his view will be presupposed here.

13. Ibid. , 46–47 , sec. 429.

14. A account of Kantian ethics in business is provided by Norman E. Bowie , Business Ethics: A Kantian Perspective (Oxford: Blackwell, 1999) . A shorter statement of his view is his “A Kantian Approach to Business Ethics,” in A Companion to Business Ethics , ed. Robert E. Frederick (Oxford: Blackwell Publishers, 2002), 3–16.

15. John Stuart Mill , Utilitarianism , ed. George Sher (Indianapolis: Hackett, 1979).

Utilitarianism is popularly formulated as the position that for an act to be morally right is for it to produce “the greatest good for the greatest number.” This misrepresents the view. Utilitarians are concerned above all to maximize the good. Some ways to produce good for all concerned, such as providing education for all children, are quantitatively better than others because of how many people they help; but the idea that doing good for more people rather than less is not a basic concern of utilitarianism and is not appropriate to defining the position. For instance, if providing public parks only in poor communities would produce more good than providing them equally to a whole population (where this entails their being of lower quality), the former, narrower distribution would be preferred.

For critical explication and an analytical treatment of utilitarianism, see my “Can Utilitarianism Be Distributive?” Business Ethics Quarterly 17 (4) (2007): 593–611.

See W. D. Ross, The Right and the Good , 21–34.

19. For clarification, modification, and extension of Ross's position, see Robert Audi , The Good in the Right: A Theory of Intuition and Intrinsic Value (Princeton, N.J.: Princeton University Press, 2004), 40–79 , which proposes a Kantian intuitionism , an integration between the Rossian, commonsense pluralist approach and a version of the categorical imperative. Clearly, an ethical theory may draw on elements in more than one of the four major kinds of positions introduced in section 2, and my statement argues for an integrated view with advantages over Kant's and Ross's positions.

It is difficult to say what constitutes a moral right. On the most plausible understandings of the notion, rights do not exhaust oughts , and hence are not the entire basis of moral standards.

Acknowledgments: For many helpful comments on earlier versions of this essay or parts of it, I thank my colleagues Georges Enderle and Patrick E. Murphy and, especially, the editors of this volume.

Suggested Reading

Aquinas, Thomas . Disputed Questions on the Virtues . Edited by E. M. Atkins and Thomas Williams . Cambridge: Cambridge University Press, 2005 .

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Mill, John Stuart . Utilitarianism . Edited by George Sher . Indianapolis, Ind.: Hackett, 1979 .

Nagel, Thomas . The View from Nowhere . Oxford: Oxford University Press, 1986 .

Nozick, Robert . Anarchy, State and Utopia . New York: Basic Books, 1974 .

Parfit, Derek . Reasons and Persons . Oxford: Oxford University Press, 1984 .

Rawls, John . A Theory of Justice . Cambridge, Mass.: Harvard University Press, 1971 .

Ross, W. D.   The Right and the Good . Oxford: Oxford University Press, 1930 .

Scanlon, T. M.   What We Owe to Each Other . Cambridge, Mass.: Harvard University Press, 1998 .

Swanton, Christine . Virtue Ethics: A Pluralistic View . Oxford: Oxford University Press, 2003 .

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Academic Degrees , Business Administration Articles

What are Business Ethics? Why Do They Matter?

Updated: May 7, 2024

Published: May 4, 2024

One of the most egregious examples of a company violating business ethics is the Enron scandal. In 2001, it was revealed that Enron’s executives had engaged in widespread accounting fraud to hide the company’s financial losses and inflate stock prices. 

The fallout was immense, affecting thousands of employees and shaking investor confidence. It also led to significant changes in regulations with the introduction of the Sarbanes-Oxley Act to enhance corporate transparency and accountability.

The consequences for businesses that do not operate ethically can be dire, and no leader wants to be responsible for a scandal that results in bankruptcy, as Enron did. In this article, we’ll dive into business ethics to ensure you have a grasp of the concepts.

What are Business Ethics? 

Business ethics refers to the moral principles, policies, and values that guide individuals and companies in their business activities. These principles influence decision-making processes and define standards for moral conduct within business operations. 

Although ethics and morals are very similar, they are used in different contexts. Morals refer to personal beliefs about right and wrong, often shaped by cultural, social, or religious influences. They are generally more personal and emotional, reflecting individual or collective beliefs about what constitutes good behavior. Ethics, on the other hand, refers to a more structured set of principles that guide behavior in various situations, particularly professional contexts. 

However, it is important to know that business ethics extend beyond legal requirements and also focus on promoting honesty, transparency, reliability, and fairness. They are more rational and based on reason, centering on what behaviors are acceptable in a societal or professional context. In this way, they are crucial for building trust with clients, customers, and employees and ensuring that a business’s actions are considered fair and morally correct by societal standards.

The Role of Corporate Social Responsibility in Business Ethics

Corporate Social Responsibility (CSR) is an expression of a company’s commitment to ethical practices by focusing on how its business impacts society and the environment. CSR focuses on ensuring that companies conduct their business in a socially responsible manner, which involves being accountable to its stakeholders, including employees, customers, suppliers, and the communities in which they operate. This approach helps businesses create a positive impact on society while upholding ethical standards and maintaining a good reputation.

Why are Business Ethics Important?

Business ethics are important to the long-term success of any organization because they foster a positive reputation, build consumer trust, and enhance employee morale and commitment. Companies that adhere to high ethical standards are better equipped to navigate the complexities of business operations and negotiations, ensuring sustainable success. 

Ethics in business act as a safeguard, mitigating risk by ensuring that all operations are conducted legally and morally. Moreover, a strong ethical foundation in business encourages accountability and transparency, which is crucial for avoiding scandals and maintaining public confidence . 

Even if they don’t reach Enron proportions, the consequences of poor business ethics for companies can be profound. A company caught behaving unethically may face a damaging loss of trust and credibility among its stakeholders, a decline that is often hard to reverse and that can affect long-term viability. 

Additionally, legal repercussions are a serious threat, as unethical behavior could lead to fines, sanctions, or legal proceedings, draining valuable company resources and further tarnishing its reputation. Internally, such practices can lead to demoralized employees, which manifests in reduced productivity and difficulties in attracting and retaining talent.

The impact of unethical behavior can also harm the broader economy by eroding the principles of fair competition and economic equity. Collectively, these consequences underscore the critical importance of maintaining strong ethical principles to protect the company’s sustainability and integrity.

What are the Recommended Principles for Business Ethics?

The principles of business ethics ensure responsible and moral conduct in business activities. Here are some of the key principles widely recognized in the field:

Being truthful and transparent in business practices and communications.

Upholding moral and ethical standards consistently, regardless of the situation.

Engaging in practices that are just, equitable, and impartial.

Respect for Others

Showing consideration and regard for the rights and feelings of others.

Responsibility

Acknowledging and accepting the choices made and the consequences that follow.

Concern for Others

Caring about the welfare of others and acting in a way that positively impacts the community and environment.

Exhibiting behavior that encourages ethical practices and commitment to ethical standards in a leadership role.

Transparency

Ensuring actions are clear and understood, fostering trust and accountability.

Social Responsibility

Acting with consideration for the impact of one’s actions on the broader social fabric.

These principles are integral to fostering an ethical climate within organizations, guiding both strategy and daily operations.

How to Implement Business Ethics as a Leader?

For a leader aiming to effectively instill business ethics within their organization, a strategic approach that pairs ethical values with the company’s culture is essential. This requires leaders to be paragons of ethical behavior themselves, demonstrating accountability and transparency in all their actions to set a benchmark for the entire workforce. 

They must also ensure that the organization’s policies and expectations are clear and reflect its ethical standards, which involves articulating written guidelines for decision-making, hiring, promotions, and compensation practices. However, the leader must integrate ethics into every aspect of the corporate culture rather than merely presenting them as a list of rules.

Leaders should offer ethics training, equipping employees with the knowledge and tools needed to address and navigate ethical challenges. Such training contributes to building a workforce that understands its role in upholding the company’s ethical standards. Additionally, leaders should promote open communication , creating a safe space for employees to voice ethical concerns and report misconduct without the threat of retaliation, while also encouraging active feedback. 

Finally, implementing values-driven programs that genuinely reflect the organization’s commitment to ethics will deepen the employees’ dedication to these values. Altogether, these strategies can cultivate a robust ethical climate within the organization, thereby bolstering trust and reinforcing integrity across all levels of the business.

How to Become a More Ethical Leader?

Developing ethical leadership involves a continuous commitment to aligning one’s actions with widely accepted moral standards and leading by example in fostering an environment of integrity and accountability. Ethical leaders not only adhere to ethical norms but also actively promote ethical behavior within their organizations. 

One effective way for leaders to enhance their ethical standards is through education and structured learning programs such as MBA programs. UoPeople offers courses that focus on business ethics, sustainability, and corporate social responsibility as part of their MBA program . These affordable programs are designed to equip leaders with the knowledge and skills to make ethically sound decisions and to manage diverse and inclusive teams. 

Additionally, UoPeople offers several professional certificates in business administration. Ethics principles are included in all of the programs, which are specialized for professionals wishing to advance their knowledge in strategy, market i ng , entrepreneurship , accounting , and finance . 

Moreover, practical strategies suggested by researchers, such as promoting humility, encouraging reflection, and giving back to the community, are crucial for building an ethical culture at work. By combining formal education with ongoing personal development activities, leaders can better navigate the complexities of modern business environments and drive positive change, ensuring they act as ethical role models in their professional and personal lives.

With challenges on the horizon like environmental sustainability, artificial intelligence , and social inequality, the role of ethical leaders in business cannot be overstated. The future will require leaders who can confront these challenges while driving their organizations toward more ethical practices. 

Ethical leaders set a standard for integrity and accountability not just within their organizations but across industries and communities, influencing broader societal norms and expectations. By embedding values such as honesty, integrity, and respect into the core of business operations, leaders ensure that their organizations not only thrive but also contribute positively to the economic and social fabric of their communities.

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Home — Essay Samples — Business — Management — Business Ethics

Essays on Business Ethics

When it comes to writing a business ethics essay, choosing the right topic is crucial. The topic you choose will determine the direction of your essay and the kind of research you will need to conduct. In this article, we will discuss the importance of choosing the right business ethics essay topic and provide a list of potential topics that you can consider.

Importance of Choosing the Right Business Ethics Essay Topic

Choosing the right business ethics essay topic is important for several reasons. Firstly, it will determine the scope of your essay. Some topics are broad and cover a wide range of issues, while others are more focused on specific aspects of business ethics. By choosing the right topic, you can ensure that your essay is focused and well-structured.

Secondly, the right topic will make it easier for you to conduct research. If you choose a topic that has been well-researched and has a lot of available literature, you will have an easier time finding relevant sources to support your arguments. On the other hand, if you choose a topic that has not been widely studied, you may struggle to find credible sources to back up your points.

Finally, choosing the right topic will make your essay more engaging for your readers. If you choose a topic that is relevant and interesting, you are more likely to capture the attention of your audience and keep them engaged throughout your essay.

Potential Business Ethics Essay Topics

Now that we understand the importance of choosing the right business ethics essay topic, let's explore some potential topics that you can consider for your essay:

• The impact of corporate social responsibility on consumer behavior
• Ethical considerations in marketing and advertising
• The role of ethics in corporate governance
• Ethical dilemmas in the workplace: A case study approach
• The ethical implications of outsourcing and offshoring
• Whistleblowing: Ethical considerations and implications for employees
• The ethical challenges of data privacy and cybersecurity
• Corporate culture and its impact on ethical decision-making
• Ethics in the supply chain: Balancing profit and responsibility
• The role of ethics in decision-making: A comparison of different ethical frameworks

These are just a few examples of potential business ethics essay topics. As you can see, each topic covers a different aspect of business ethics and offers a unique perspective for exploration. Depending on your interests and the specific requirements of your assignment, you can choose a topic that aligns with your goals and expertise.

How to Choose the Right Business Ethics Essay Topic

When choosing a business ethics essay topic, there are several factors to consider. Firstly, you should consider your own interests and expertise. Choose a topic that you are passionate about and have some knowledge of, as this will make the writing process more enjoyable and the end result more compelling.

Secondly, consider the requirements of your assignment. Some topics may be too broad or too narrow for the scope of your essay. Make sure that the topic you choose aligns with the specific guidelines provided by your instructor or the assignment prompt.

Finally, consider the current relevance of the topic. Choose a topic that is current and has real-world implications. This will make your essay more engaging and relevant to your audience.

Choosing the right business ethics essay topic is crucial for the success of your essay. Consider your own interests, the requirements of your assignment, and the current relevance of the topic when making your decision. By choosing a topic that is focused, well-researched, and engaging, you can ensure that your essay will be informative and thought-provoking for your readers.

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1000-Word Philosophy: An Introductory Anthology

Philosophy, One Thousand Words at a Time

Business Ethics

Author: Thomas Metcalf Category: Ethics Word count: 996

Listen here

Everyone does business, of some kind or another, on a near-daily basis. We buy food and shelter and pay for many other wants and needs. And most people sell their labor by working for an employer, or for themselves.

When all goes well, people enjoy rewarding jobs and paychecks, and lots of valuable goods and services. But when things go badly, people can lose their jobs, lose their money, ruin their reputations, and even end up in prison, in poverty, or dead. [1]

What happens in the course of business is therefore of great ethical significance: people can be harmed and benefited in many ways; people can be treated, and treat others, in respectful and uplifting ways, as well as disrespectful and degrading ones; and businesses can promote fairness and justice, as well as enable unfairness and injustice, in many ways.

Stakeholders are anyone who can be affected by a business. But not all stakeholders are individuals. Others include communities, countries, and even the natural world, including animals. [2] The scope of business ethics is thus very wide indeed.

Business ethics , therefore, is one of the most important areas of applied or practical ethics. Here we’ll review some of the ethical obligations that business owners, employees, and customers have to each other and to the rest of the world.

1. Obligations to Employees and Customers

Maybe most people don’t expect to ever own their own businesses. But they’ll still be employers from time to time. Suppose you hire someone to fix your roof. Do you need to ensure that your yard is free of unexpected dangers? Suppose your roofer quotes you an estimate and you agree to it, and then the roofer forgets their quote and asks you to repeat it. Do you have an obligation to tell the truth?

One main area of business ethics concerns an employer’s obligations to employees. Thus, business ethicists study the moral duties employers have to ensure safe working conditions and decent pay. While the law often requires such treatment, business ethics isn’t simply about following the law itself. [3]

Some argue that these moral duties arise from truly respecting your employees. [4] Fairness or justice might require that salaries or wages be relatively equal. [5] And employers have an obligation to ensure that women and people from other oppressed groups are treated fairly, which might extend to giving some preference to hiring women or people of color. [6] Beyond this, businesses might have obligations of loyalty or reciprocity not to replace striking workers, and not to offshore jobs. [7]

Employees also have obligations to treat their fellow employees fairly: help ensure a safe workplace and communicate honestly with the other employees. You might also have an obligation of fairness to not work during a strike.

As a customer, you have an obligation to treat employees with kindness: while they are means to the end of acquiring some product, they also deserve respect. [8] This respect might also include not buying from a business when its workers are on strike.

Agents of businesses should not deceive their customers, and perhaps should not sell defective or dangerous products to their customers, at least without warning. [9] There might be important moral obligations concerning advertising as well, such as not to advertise to children or other vulnerable groups. [10] And businesses might have obligations about protecting customers’ (and employees’) privacy. [11] We likely also have the obligation not to steal intellectual property. [12]

This is just a start; there are many other obligations. [13]

2. Obligations to Owners, Society, and the Environment

If you work for a retailer, do you have an obligation not to steal clothes from that retailer? What if your employer is a huge corporation and probably won’t miss the items? Is it okay to slack off when no one’s watching? Suppose your boss wants to pay you under the table: is it wrong to accept a tax-free wage? And if your boss orders you to dump a bunch of trash in a neighboring park, what should you do?

Most ethicists believe that businesses have some obligations to the business’s owners. Agents of a corporation have a fiduciary duty to the corporation’s owners. If I trust you with something as important as my investment money, then by accepting that trust, you take on substantial moral responsibility. [14]

One might also argue that businesses have obligations to the owners to not waste money by paying employees too much. [15] Similarly, even setting aside the law, there might be a moral obligation of fairness not to allow insider trading. [16]

Most business-ethics courses focus primarily on moral obligations of businesses to stakeholders and vice-versa. However, businesses have enormous political and societal influence, so business-ethics topics are inextricably linked to broader topics in economics, sociology, politics, and justice: [17] e.g., businesses commonly lobby Congress to pass special, rent-seeking laws that don’t benefit society nor the nation’s economy overall. [18]

Ethicists believe that businesses have many obligations to the broader society, such as to obey minimum-wage and intellectual-property laws, [19] to minimize pollution, and not support corruption. [20] And they might have obligations not to run sweatshops. [21]

As a customer, you might have an obligation of respect or beneficence to buy only from morally responsible businesses. [22] And as a potential employee, you might have an obligation not to work for an apparently immoral industry. [23]

3. Conclusion

As we can see, business ethicists deal with a wide variety of ethical questions. To answer them, we use the methods and resources of philosophical ethics, such as appealing to normative-ethical theories and arguments from analogy. [24]

Of course, some say that the only obligation in business is to make money. [25] But that’s implausible: there is a difference between what’s beneficial and what’s morally right, and it is selfish to always prioritize the former. [26] Ethicists therefore advocate for corporate responsibility : to take seriously the set of obligations a business has to the broader society and environment. [27]

Beyond this, fortunately, when a business is ethically responsible, that can also help it be profitable. [28] Sometimes, morality and self-interest converge.

The Office Ethics Dance .

[1] See e.g. Bryce 2002 for a prominent example of a disaster that can occur when businesses act insufficiently ethical; Rosenfield 2010 also provides a helpful account, and see also Brown and Dugan 2002. See also von Drehle 2006 for another famous example of failures of business ethics and the corresponding harms.

[2] The project of prioritizing all the people who can be affected by a firm is the project of adopting a stakeholder orientation. “Stakeholders” are anyone who can affect or be affected by the business, and the business attempts to satisfy its moral obligations to all these stakeholders. See e.g. Freeman (2010 [1984]) for one of the first entries in the advocacy for the stakeholder approach. See also Byers and Stanberry (2018, § 3.1).

[3] See Byers and Stanberry (2018, § 4.1, and especially ch. 4 itself) for more about corporations and the law.

[4] See also Werhane (1985, p. 132); Arnold (2003) and (2010); Byers and Stanberry (2018, § 6.1)  on working conditions and Wertheimer (1996, p. 230) on wages.

[5] Boatright 2010; Byers and Stanberry (2018, § 6.2).

[6] Himma (2001); Boxill (2010); Byers and Stanberry (2018, § 8.1).

[7] See e.g. Gould (2010, p. 309), Biondi (2010), and Byers and Stanberry (2018, §§ 6.3).

[8] See also Deontology: Kantian Ethics by Andrew Chapman.

[9] See e.g. Carson (2010, p. 343).

[10] Carson (2010, p. 351).

[11] See e.g. Byers and Stanberry (2018, §§ 6.4 and 11.1).

[12] Himma (2008); DeGeorge (2010); Byers and Stanberry (2018, §§ 7.1).

[13] For a recent, comprehensive survey, see Byers and Stanberry (2018).

[14] Goodpaster (2010, p. 131); Byers and Stanberry (2018, §§ 4.1). See also Marcoux (2003). More generally, in business ethics, we encounter principal-agent problems: cases where one person (the principal) hires someone else to do some work, and the principal wants to ensure that the agent gives the principal’s interests some priority. If I hire you to mow my lawn, you have a strong interest in making me believe that you did a good job, and I have a strong interest that you actually do a good job. Those aren’t the same thing. Jensen and Meckling (1976). One potential solution is to pay the employee a lot, but there might also be an obligation to the owner of the business not to waste money by paying the employee too much (Bebchuk and Fried 2004; Boatright 2010; Byers and Stanberry 2018, § 6.2).

[15] This can be especially important when a new CEO might be friends with people on the Board of Directors, who might prioritize their friendship over saving shareholders’ money. See e.g. Bebchuk and Fried (2004); Boatright (2010); Byers and Stanberry (2018, § 6.2).

[16] Engelen and Van Liederkerke (2007); Strudler (2010); Byers and Stanberry (2018, § 7.4).

[17] Thus, a comprehensive study of business ethics includes social-and-political philosophy, philosophy of law, and potentially also political economy and macroeconomics. See e.g. Heath (2014) for such an approach. Similarly, some ethicists have argued that firms can be like small governments, issuing orders to their employees (Anderson 2017). Economists have studied how the standard structure of the firm might mirror other structures in society in morally important ways (Coase 1937; see also Gaus 2010, p. 90).

[18] See Munger (2006) for a discussion of rent-seeking and some examples.

[19] De George (2010, p. 421).

[20] Sagoff (2004); Newton (2005); Newton (2010); Byers and Stanberry (2018, § 4.2). On corruption, see Rose-Ackerman (1999); Velasquez (2010); and Byers and Stanberry (2018, § 7.4).

[21] See n. 5.

[22] Arnold (2003); Arnold (2010); Powell and Zwolinski (2012); Newton (2010, p. 668); Byers and Stanberry (2018, § 8.5); cf. Huemer (2019) on the meat industry.

[23] See e.g. Williams (1973, 97 ff.).

[24] See e.g. Consequentialism and Utilitarianism by Shane Gronholz and Deontology: Kantian Ethics by Andrew Chapman.

[25] Some people think that businesses should not be too concerned with their moral obligations to anyone other than the businesses’ owners. For example, the economist Milton Friedman (1912-2006) famously argued that the only obligation a business has is to do what the business’s owners (typically, shareholders) want it to do. Usually, that means maximizing profits. See Friedman (1970). But business ethicists generally believe that firms have some moral obligations beyond simply increasing profits.

[26] See also Ethical Egoism by Nathan Nobis.

[27] We’ll assume that business owners actually do have moral obligations beyond simply obeying the wishes of the owners.

On corporate responsibility, see Farmer and Hogue (1973) and Den Uyl (1984). See also Goodpaster (2010) and Byers and Stanberry (2018, § 3.4). This is sometimes also called “corporate social responsibility,” but the broader term (without “social”) implies that firms might have obligations that aren’t to society or aren’t to members of society. Such obligations might include environmental protection for its own sake.

We should also assume that even in a capitalistic system, businesses can behave better or worse from the perspective of morality. We make this assumption because someone might argue that no business can be morally good in a capitalistic system, or at least, that no privately-owned business can be good. Indeed, some have argued that there can be no morally permissible consumption in a capitalist system (Tang 2021). For more, see my Arguments for Capitalism and Socialism and Defining Capitalism and Socialism . See also Gaus (2010).

[28] See e.g. Rosalsky 2019 and Morrison 2021 for useful discussions.

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Ethics and CSR in Business: A Review and Future Research

• First Online: 02 March 2024

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• Xingxing Wang 3 ,
• Chatchawan Chaiyasat 3 &
• Voralux Vorapuksirikool 3  

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In recent years, corporations increasingly adopt socially responsible business activities, policies, and processes. Corporate social responsibility (CSR) has attracted a great deal of scholarly attention in business-related fields such as business administration, human resource development, organizational development, marketing, and so on with the general acknowledgment of its benefits to an organization’s reputation, stockholders, employees, consumers, community, environment, society, and the country at large. This paper aims to present a brief detail of CSR development, the CSR concept, and the counterargument of CSR criticism regarding its role of emphasis on firms’ reputation and redirecting the resources for stockholders. Further, it appears that CSR is generally viewed as an ethical means of business organizations’ strategies, aiming to make a great contribution to society through various kinds of socially responsible activities, initiatives, and practices. The related ethical concepts, three different approaches to CSR in business contexts, and some significant issues for business in CSR; therefore, were briefly discussed. In order to create a better understanding of the role of CSR in business operations in a systemic way, this paper also proposes the four-interrelated step conceptual framework for CSR in business. Interestingly, the ideas for future research on CSR in related topics under the concept of Green Human Resource Management (GHRM) and Green Human Resource Development (GHRD), consumer behaviors, stakeholder influence, and corporate reputation were also provided.

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Wang, X., Chaiyasat, C., Vorapuksirikool, V. (2024). Ethics and CSR in Business: A Review and Future Research. In: Russ-Eft, D.F., Alizadeh, A. (eds) Ethics and Human Resource Development. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-38727-2_14

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Business Ethics Essay

• Author Kimberly Ball
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Introduction

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

Case Analysis

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

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

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

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Tesla, Inc.: Ethical Business Practices

Introduction.

Tesla, Inc. strives to improve lives by introducing electric-powered automobiles. The corporation seeks to develop its ecosystem through its vision and mission. Its vision states that it is to create the most compelling car company of the 21st century by driving the world’s transition to electric cars (Li, et al., 2021). The main sector that Tesla focuses on is transport and energy. The mission is to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible (Li, et al., 2021). The company has succeeded in meeting its objectives through increased production of various car models used today.

Ethical Business Practices and Social Responsibility

Tesla’s supplier code of conduct is the core foundation on which the company was built. It is essential to ensure corporate growth while maintaining social standards and being environmentally friendly (Sypko, 2022). All the suppliers are mandated to propel the company through meeting their duties, such as keeping an up-to-date record. All workers are guaranteed a safe work environment in which their health is not endangered. Tesla, Inc. has laid guidelines that are to be followed diligently by all suppliers with no exceptions. The company treats its suppliers as a family and strives to ensure that they all uphold their ethical conduct (Sypko, 2022). The company’s primary goal is to meet all its objectives while maintaining a social and environmental environment.

Empowering Workers

Suppliers endeavored to respect all workers, their rights, and their dignity. Tesla, Inc. has always treated its workers with high regard, striving to empower them to grow in their careers. The company also organizes routine seminars and conferences through which its workforce is trained on new skills and knowledge (Ahmad & Khan, 2019). This enables them to develop themselves at personal levels, competence, and careers. Additionally, Tesla, Inc. provides opportunities for talent exhibitions through which employees with specific skills are empowered to grow and make them productive. The company has internal and external promotions and rewards for best performance.

Labor and Human Rights

The company has upheld the labor rights of the US Constitution, and it only hires qualified staff and those within the appropriate age limit. Any person under 18 is prohibited from serving at any level. All workers are set to work only with the legal hours of 60 per week (Ahmad & Khan, 2019). The company alternates them in shifts to ensure there are no burnouts. Overtime work is voluntary, and it is well compensated for with allowances. The corporate pays its workers high wages above the country’s minimum wage rates. The payments are made on a timely basis to enable them to work comfortably. Further, all employees in the company receive humane treatment regardless of gender, race, or social background (Ahmad & Khan, 2019). Discrimination and harassment within the company facilities are also prohibited, and each person has the freedom of association and expression. In case of any harm sustained while at work, the corporation takes full responsibility for providing medical care and compensation.

Health and Safety

Health and safety are an obligation that every corporation should strive to meet. Tesla, Inc. has made it essential for its supplies to meet safety standards. They should promote a safe environment for every personnel. Waste management guidelines are also outlined to ensure that segregation occurs to prevent any dangers that may hinder the health and safety of people. Tesla, Inc.’s partners are to adopt all government laws and regulations applicable in maintaining a free and clean environment. All health hazards, such as chemicals, and electrical appliances, are handled by experts, and necessary precautions are taken to ensure it is safe (Hastig & Sodhi, 2020). Reasonable measures, such as preventing vulnerable persons like pregnant women and nursing mothers, are also taken to minimize the risk. The units have qualified medical practitioners who are always ready for any emergency. They serve to protect and treat any injury or illness. Hygiene standards are also maintained to ensure no disease develops.

The Environment and Accountability

The United States government has formulated the laws and policies governing each business. Each supplier associated with Tesla, Inc. has to follow them precisely for them to do business with the company. Suppliers must acknowledge their role in protecting the environment per the country’s code. They should all obtain environmental permits, approvals, and licensing from regulatory bodies (Hastig & Sodhi, 2020). The suppliers must maintain pollution prevention by minimizing emissions and discharges that endanger the environment. No company can modify the products one produces or substitute any material. Any harmful product should be identified and labeled. Solid waste that could cause problems should be disposed of carefully. Each supplier must also adhere to all customer needs on the product. To promote responsibility, the supplier is to be held accountable. for any misconduct within their company. Any danger posed to the environment, and the workforce directly or indirectly should be resolved promptly.

Changes in the Last Years

Over the years, Tesla, Inc. has sought to improve itself and its services by adopting new operation methodologies. The main changes include restructuring the supplier code of conduct and introducing new laws, such as prohibiting child labor (Ahmad & Khan, 2019). This resulted from the rise in child labor trends, especially in developing nations. Another change is the formulation of safety policies in China following the issues of the dumping of waste. Poor waste segregation has made it difficult to guarantee safety. Car battery manufacturing has also been improved to enhance efficiency.

How the Code Promotes Social Responsibility

Tesla’s supplier code of conduct is vital in maintaining the corporation’s social responsibility. The company seeks to uphold safety and a conducive environment per the CSR strategy. The suppliers’ code of conduct has promoted the product’s safety and met the social role of satisfying the customer’s requirement (Ahmad & Khan, 2019). The code has also enhanced the preservation of the environment and ensured all rights of each stakeholder are upheld.

Developing a supplier code of conduct is a comprehensive action that should include all stakeholders of the business. They include representatives of the company’s administration, government policymakers, employees, suppliers, and consumers. The management team will communicate the mission and vision of the company and how the code should be streamlined to meet the objectives (Ahmad & Khan, 2019). An official from the government will ensure that the code is established as per the country’s laws. The concerns of the workforce both at Tesla and from the supplier companies will hire the concerns of their members to ensure that they are well protected under the code. The customers are the final consumers of the product and their interests and requirements are essential to business success. They will play a role in ensuring that they are served well and protected against any form of harm.

Ahmad, S., & Khan, M. (2019). Tesla: Disruptor or sustaining innovator . Journal of Case Research, 10(1). Web.

Hastig, G. M., & Sodhi, M. S. (2020). Blockchain for supply chain traceability: Business requirements and critical success factors . Production and Operations Management, 29(4), 935-954. Web.

Li, Y., Lin, J., & Xu, S. (2021). Analysis of Tesla’s business model: A comparison with toyota. In 2021 International Conference on Financial Management and Economic Transition (FMET 2021) (pp. 30-39). Atlantis Press. Web.

Sypko, D. (2022). Time-based competition in Tesla´ s supply chain in the era of industry 4.0 . pp. 8-36. Web.

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"Tesla, Inc.: Ethical Business Practices." BusinessEssay , 19 Dec. 2023, business-essay.com/tesla-inc-ethical-business-practices/.

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1. BusinessEssay . "Tesla, Inc.: Ethical Business Practices." December 19, 2023. https://business-essay.com/tesla-inc-ethical-business-practices/.

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BusinessEssay . "Tesla, Inc.: Ethical Business Practices." December 19, 2023. https://business-essay.com/tesla-inc-ethical-business-practices/.

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Ethical Practice in Business Environment Essay

Introduction, the spa issue, works cited.

The business environment is faced with multiple ethical issues that need to be resolved. This paper reviews the ethical issues that arise from a spa in Singapore, Wellness Village spa, closing down without notice. The spar disappears while owing customers’ money in the form of pre purchased packages and credit card bills. This paper applies various ethical theories so as to solve the ethical issues.

By use of the consequentialist, social contract and stakeholder theories, it is proposed that the bank has an obligation to cover some of the costs covered by the customers. Application of the deontological ethics reveals that the bank is under no obligation since it has performed all the duties expected of it. While the directors of the spa are pinpointed as the major culprits, this paper shows that they should not be punished alone since they were working for the interests of shareholders.

Collective punishment is seen as the best manner to obtain justice. From the ethical theories applied in this scenario, it has been seen that the interest of the society at large should ideally take precedence over individual or business interests. The paper concludes by restating that knowledge of ethical theories is essential in solving ethical issues that arise in the business environment.

Ethical behavior has throughout human civilization been supposed to be a major building block for a productive and well functional society. For this reason, ethical behavior has been applauded and taught to be superior to unethical dealings. However, ethics have not been given much relevance in businesses and so long as businesses stay within the law, businesses been given much consideration and businesses have been subjected to little criticism for their ethical behavior so long as they did not break the law.

Ethics can loosely be defined as a system of moral principles by which social conduct is judged as either “right” or “wrong”. As relates to business, ethics are moral principles which prescribe what is legitimate behavior in varied business dealings (Chryssides and Kaler 3). This paper shall analyze the ethical issues that surround the closing of the Wellness Village spa. The paper shall make use of various ethical theories so as to demonstrate the most effective way to deal with the ethical issues.

The ethical issues surrounding the Wellness Village Spa closure is who should pay for the credit card bills charged to cardholders by the bank for services that the cardholders did not receive. In the scenario, the spa closed down without informing the clients some of whom had purchased expensive packages from the spa.

Notably, the Wellness Village spa used misinformation to deceive the customers. This was by claiming that they were overbooked while in reality the company was preparing to close operations abruptly. Another underlying concept in the case are secrecy whereby the company directors failed to divulge vital information about the company being closed in the near future since the information would had affect the company’s profitability.

Ethical theories are the criteria that we use to make judgment as to the fairness or unfairness of actions undertaken regarding problems (Crisp, Potter & Perry, 2005). The theories provide support to decision making and shed some light the thought process behind a conclusion.

The first theory that can be applied on this case is the consequentialist ethics theory holds that actions can be judged as right and/or good only on the basis of the consequences they produce with no consideration for their intentions or motives. Based on this theory, the actions of Wellness Village Spa were hugely unethical.

The management of the Wellness Village Spa is no doubt the major culprit since they are the one’s who closed down the spa without giving their clients any notice. In addition to this, they proceeded to take money from clients for services that they had no intention of offering.

The Social Contract theory holds that actions carried out by someone are morally permissible if they increase the benefits of an individual or indeed, the society at large. The actions of Wellness Village were evidently did not benefit the majority of the people. As a matter of fact, there are 7000 customers who are affected by the credit card liability issue as a result of the spa closing down. The spa should therefore be sued and held accountable so as to benefit the majority of the individuals.

One of the theories that guide manager’s behavior in an organization is the stakeholder theory which states that “managers should make decisions so as to take account of the interests of all the stakeholders in the firm” (Jensen 299).

According to the stakeholder theory, the stockholders are not the only legitimate claimholders and as such, the needs of other stakeholder entities such as customers, employees, supplies and community should be taken into consideration. By following this theory, the banks should cover some of the bills of the customers since they are stakeholders to the banking institutes.

Deontological ethics place emphasis on the assumed duty. This implies that duty is the basis of all moral actions regardless of the consequences. By applying this theory, it can be seen that the banks in question do not require to foot the bill for the cardholders. This is because the banks have fulfilled their duties to all parties as the theory stipulates.

The banks have paid for the customer’s purchases and therefore, the card holders should fulfill their obligation to settle the charges incurred by the bank. As such, the offer by the bank to support the investigative efforts of the customers to dispute the charges is more than enough.

Another theory that can be used is Utilitarianism which is considered to be the most influential ethical theory. This principle dictates that the collective welfare of the people overrides the individual’s right and as such, the theory advocates the maximization of happiness for the greatest number of people (Johnston 76).

In this approach, the net benefit is calculated and the net consequences evaluated. By use of the Utilitarianism the bank should take some liability and incur some cost on behalf of the cardholders. This is because the principle dictates that that the collective welfare of the people overrides the individual’s right and as such, the maximization of happiness for the greatest number of people is advocated for (Crisp, Potter and Perry, 20).

Being unethical inevitably leads to loss and damage for some of the people involved in the issue. This is the case in the spa scenario where the customers to the spa have lost money as well as been denied services they had a right to.

For this damage to be undone, the guilty parties must be held accountable. In an attempt to redress the clients of the misdeeds of the spa, it has been proposed that the directors be held personal accountable. This is because the directors of the company are no doubt the major culprits since they made the actual decisions to close the company but keep it “live” therefore causing lose to the customers.

However, it should be taken into consideration that the management was only acting in the interest of the shareholders who were the major benefactors of the profits obtained from the business dealings. It would therefore be unjust to personally hold the management responsible since they were only protecting the interests of the company (Fredrick 405). A better means of seeking justice would be to collectively punish all the stakeholders.

Being unethical inevitably leads to loss and damage for some of the people involved in the issue. This is the case in the spa scenario where the customers to the spa have lost money as well as been denied services they had a right to. For this damage to be undone, the guilty parties must be held accountable. From the above discussions, it can be seen that most of the ethical theories support the notion that the bank should at least foot part of the bill incurred by the customers.

In addition to this, the theories support the taking of legal action against the directors of the Wellness Village Spa for their wrongdoings. However, a more collective punishment is proposed since the directors only acted with the interests the company at heart. From this paper, it can be authoritatively stated that knowledge of ethical theories can greatly assist in solving ethical issues that arise in the business environment.

Chryssides, D.G and Kaler, H. J. An Introduction to Business Ethics , Cengage Learning EMEA. 1993. Print.

Crisp, J. Potter, P. A. and Perry, G. A. Potter & Perry’s Fundamentals of Nursing. (2nd ed). Australia: Elsevier Australia. 2005. Print.

Frederick, R. A Companion to Business Ethics, Wiley-Blackwell. 2002. Print.

Jensen, M. “Value Maximization, Stakeholder Theory, and the Corporate Objective Function”. European Financial Management, Vol. 7, No. 3, 2001, 297-371.

Johnston, George. An Introduction to Ethics, for Training Colleges. BiblioBazaar, LLC, 2009. Print.

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IvyPanda. (2019, December 2). Ethical Practice in Business Environment. https://ivypanda.com/essays/ethical-practice/

"Ethical Practice in Business Environment." IvyPanda , 2 Dec. 2019, ivypanda.com/essays/ethical-practice/.

IvyPanda . (2019) 'Ethical Practice in Business Environment'. 2 December.

IvyPanda . 2019. "Ethical Practice in Business Environment." December 2, 2019. https://ivypanda.com/essays/ethical-practice/.

1. IvyPanda . "Ethical Practice in Business Environment." December 2, 2019. https://ivypanda.com/essays/ethical-practice/.

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IvyPanda . "Ethical Practice in Business Environment." December 2, 2019. https://ivypanda.com/essays/ethical-practice/.

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