What is Business Ethics?

Before the development of business ethics, it was a vague term. But as it has evolved into an academic discipline, the concept of business ethics has become much more concrete. It is a set of moral rules for conduct that affects law and the political economy. Here, we will look at three aspects of business ethics:
It's a set of rules for morally right or wrong conduct

Business ethics is an ongoing conversation that is largely defined by the nature of the market. The concept of business ethics evolved from the 1960s, when corporations became increasingly concerned about consumer concerns. This shift brought increased emphasis on "social issues" and the concept of corporate moral agency. Whether a company is a legal entity or collective of individuals, it is morally responsible for the actions it takes.

One example is the balance between marketing and social responsibility. If company XYZ manufactures and sells cereal with all-natural ingredients, the marketing department will want to promote these ingredients as a selling point. However, the marketing department must temper their enthusiasm for the product with laws governing labeling. While a company cannot go out of business by committing immoral acts, it can do so by following ethical rules.

A basic rule of business ethics is to avoid harm. While few goods can be produced with zero risks, many consumers demand harmful products. Also, production practices can lead to environmental impact, including habitat destruction or urban sprawl. New technologies can have adverse effects on the environment, resulting in the precautionary principle. A company may also be prohibited from introducing products that are potentially dangerous, despite their good quality.

While ethical theory can help in thinking about interpersonal relationships and the laws governing markets and firms, it is more useful to analyze the role of human beings in commercial transactions. When people compete in a market, they may be tempted to deceive, exploit, and manipulate others. Using Kant's version of deontology, these behaviors are deemed violations of human dignity and therefore unethical.

As the study of right and wrong business practices becomes more widespread, the definition of business ethics has become more specialized. While law still largely defines acceptable behavior, business ethics attempts to add new standards to the rules and practices of conducting business. Moreover, it gives companies a basic guideline for conducting business. In the process, business ethics is often based on law. For example, a business may use an illegal activity, but it would be unethical to commit a crime simply because it is in violation of the law.

It's related to law

The role of business in society is a controversial but important issue. Although the phrase "business ethics" sounds like a contradiction, it actually has some merit. Business organizations and businesspeople seek to maximize shareholder value, often at the expense of ethical standards and expectations of others. In many cases, legal compliance has no lasting value for many businesses. Business ethics focuses on thinking about people and the environment as part of achieving sustainable profitability.

The principles of business ethics include the duty to prevent harm. Few goods are produced with no risks or dangers, but consumers demand them anyway. And production has environmental consequences, such as habitat destruction and urban sprawl. And the consequences of new technologies are often unclear, so companies may choose to employ the precautionary principle and refuse to introduce a new technology. This can create a legal problem. But businesses cannot ignore ethical considerations, so they must find ways to be honest.

While business ethics may be separate entities, they are often related in important ways. For instance, an employee who knows about an earnings shortfall may not sell shares of his own stock. Or a large competitor collaborating to gain an unfair advantage. These types of ethical considerations are often enforceable through law. Businesses should seek to follow these codes of conduct and avoid any business activity that violates these standards. It will be a better business overall in the long run.

Business ethics is a growing function of business. It attempts to reconcile the interests of competing businesses and the rights of consumers. Business ethics helps firms operate according to the rules and regulations of the government, but is not the same as legality. It is intended to establish personal accountability and a high level of trust between the public and the company. When business ethics is in place, businesses can continue to run successfully and earn the respect of their consumers.

It's a duty to customers

One ethical perspective asserts that companies have a duty to customers. The duty to disclose the nature of a product to the consumer is a basic ethical duty. Similarly, a company has a duty not to misrepresent the nature of a product or mislead the customer. The duties against manipulation and duress prevent a consumer from forming an incorrect idea about the product or service.

It's related to political economy

Political economists are not typically involved in moral debates, but they do study why societies choose certain actions. One example is how a government policy benefits car manufacturers over sugar producers. In many countries, these government policies benefit car makers, because the latter have more at stake and are more organized. Thus, the government may favor their interests over those of their consumers. In such cases, business ethics may not be an issue, as long as it is related to politics and economics.

Moreover, the current debate on business ethics is a prime example of how politics and economics intersect. Often, contemporary discussions of business ethics fail to incorporate historical and political contexts. In doing so, they risk becoming ideological justifications for the status quo. In the long run, such studies are necessary. But how are political economy and business ethics related? This article argues that both areas are important and should be explored in parallel.

The increased economic interdependence between nations forces issues such as labor standards onto international political agendas. Furthermore, governments in economically linked nations arguably have a greater ethical responsibility to address workplace and labor conditions in other nations. Meanwhile, companies that use intergovernmental agreements to operate in more economically connected countries are often linked to "sweatshop" conditions in other countries. The economic interdependence of countries forces many ethical issues to the top of the political agenda.

In business ethics, a student learns how to evaluate and apply value frameworks. For example, when economists begin a cost-benefit analysis, they often implicitly adopt a value framework. When this happens, the same item may be considered cost from one perspective and a benefit from another. The same is true for the ethical analysis of political economy. The key is to make choices based on values, not simply on facts.