What Is Business Ethics?
What are some examples of problem-areas in business?
Why are ethical questions usually complex?
And what are some decision-making criteria?
Business ethics is the art and discipline of applying ethical
principles to examine and solve complex moral dilemmas
[problems]. Business ethics asks what is right and wrong, what is
good and bad, in business transactions. Ethical solutions to business
problems may have more than one 'right' alternative, and sometimes no
'right' alternative may seem to be available. Logical and ethical
reasoning are therefore required for understanding and thinking through
complex moral problems in business situations.
Business ethics requires reasoning and
judgment based on principles for
making choices that balance economic self-interests against social and
One expert stated that business ethics deals with three basic areas of
managerial decision making:
1) choices about what the laws should be, and are, and whether to
2) choices about economic and social issues outside the law's
3) choices about the priority of one's self interest over the
Different sources have described a
variety of major ethical issues in business. One source provided
- Employee conflicts of interest
- Inappropriate gifts
- Sexual harassment
- Unauthorized payments
- Affrmative action
In a Wall Street Journal
study of 1,400 women in 1990, the following unethical practices were reported
as occurring most frequently in business:
- Managers lying to employees
- Expense-account abuses at high levels
- Office nepotism [hring family members] and favorites
- Taking credit for others' work
Other examples of questionable ethical
activities that involve and affect corporations include the
- Receiving or offering 'kickbacks' [a pece of the money
involved in the transaction]
- Stealing from the company
- Firing an employee for 'whistle-blowing' [reporting illegal
- Padding expense accounts
- Disclosing confidential information or trade secrets
- Terminating employment without sufficient notice
- Using company property and material for personal use
Eight Reasons Why Moral Problems Are
Often Complex and Difficult and Require Reasoning from Ethical
1. Managers must confront a
distinction between facts and values
2. Good and evil exist simultaneously, interlocked
3. Knowledge of consequences is limited
4. There are multiple corporate constituencies (stakeholders and
interested parties), often with conflicting and competing ethical claims
5. Ethical standards change over history
6. Human reasoning is imperfect
7. Ethical standards and principles are not always adequate for
8. Twenty-first-century managers are faced with new ethical problems
that exceed traditional concerns such as honesty, charity, and modesty.
Decision Criteria for Ethical
- Have you defined the problem accurately
- Have you defined the problem objectively
- How did this situation occur in the first place?
- To whom and to what do you give your loyalty, as a person
and as a member of the corporation?
- What is your intention in making this decision?
- How does this intention compare with the probable results?
(Is what you want to have happen likely to happen?)
- Whom could you decision or action harm or injure?
- Can you discuss the problem with the affected parties before
you make the decision?
- Are you confident that your decision will be as valid
(appropriate) over a long period as it seems now?
- Could you disclose without hesitation your decision to
management, family, and friends?
- What is the symbolic potential of your action if
understood? If misunderstood?
- Under what conditions, if any, would you allow exceptions to