What are Business Ethics?

While most people have taken the time to define their personal morals, the concept of business ethics has only recently begun to come under intense scrutiny. After Enron was at the center of a scandal involving its irregular accounting practices in 2001, it seemed like a high profile business executive was in the news almost every day being accused of greed, deceit, and corruption. In response to public outrage, the business community at large began to focus more on encouraging ethical behavior. Now, it is common for both large and small businesses to have a formalized listing of ethical guidelines for employees to follow.

Naturally, any successful corporation must remain focused on earning a profit. With no profit, the company loses value and the employees eventually lose their jobs. However, business ethics do not allow a company to do whatever is necessary to make money. Corporate social responsibility dictates that businesses must provide safe working conditions and use manufacturing practices that do not unnecessarily harm the environment. Ethics also require that companies provide accurate financial data to stockholders and avoid advertising their products and services to consumers under false pretenses.

The study of business ethics is sometimes referred to as applied ethics because it attempts to translate utilitarianism, social contract theory, deontology, and other theoretical principles into acceptable rules for conduct in various real world situations. At the college level, many schools now have programs to encourage students to develop an awareness of ethics. These classes typically use case studies as the basis for discussions on what constitutes ethical behavior. Lower level classes are sometimes required for an undergraduate business degree, while students working towards an MBA may be able to specialize in leadership and business ethics. While many people do feel classes discussing ethics are beneficial, others say it’s hard to predict how students will behave once they are out of school and into the working world.

To some extent, the government can regulate ethical behavior by passing laws that require businesses to take certain actions. In many ways, however, professional organizations may be the best equipped to impart a sense of business ethics onto a particular industry. Organizations such as the Public Relations Society of America, the National Independent Automobile Dealers Association, the Chartered Property Casualty Underwriters Society, and the National Association of Realtors have codes of ethical behavior that members are required to follow and provide regular training events that help encourage open discussions of business ethics.