All you need to know about Business Ethics

business ethics

What is Ethics?

Ethics refers to a system of moral principles, a sense of right and wrong, goodness and badness in our actions, and their motives and consequence.

It is derived from the term ethos which means custom or character.

Ethics are argued in the following four ways:

  • It describes what is desirable and not desirable
  • There are specific sets of principles and values.
  • Guidelines to govern the behavior of an individual group or organization.
  • It is a branch of philosophy.

What is Business Ethics?

 Business Ethics relates to benchmarks, moral principles, conventions, and rules as to what is just and unjust in a particular situation. All ethical and unethical activities that take place within an organization or work ethics are known as business ethics.

Ethical Dilemma

It is a paradox, problem, or an issue that is confronted by an organization, group, or an individual while making choice between conflicting claims, neither of which is clearly preferable or acceptable. It is a moral situation where the individual has to choose between two situations that are morally and desirable.  As it is also a paradox, that the choice at an ethical dilemma.

Causes of an ethical dilemma

Coercion by management

The management may pressurize the group or the individual to act in a certain way.  Often the companies are focused on generating profits and results.  Hence, the individual may feel forced to act unethically.

Discrimination or ambition

The individual may become ambitious and follow unethical part in order to receive resignation from the management. The individual may also be financially just to follow such unjust steps.


The worker may be pressurized to buy a good deal.  Hence, he may lie or mislead the other party in order to seal the deal.  He may try to bribe the negotiator in order to get the deal. Hence such pressure may lead to ethical behavior.

Unclear Policies

The policies of the organization are silent about the conduct of behavior expected from the employee while performing specific duties. The policies are inconsistent and vague with regard to moral conduct.

Unethical Culture

The organization in itself practices and ethical culture.  Organizational culture is determined by the practices of top-level managers, HR managers, etc. If the top-level management is Immoral, then the lower-level employee no longer remains motivated to be honest.


Business organizations exist simply for making money.  Hence, it is the driving force.  However, due to the competitive environment, the organization, individuals, or group main follow unethical practices to earn money easily and through shortcuts.  This promotes an ethical dilemma.

Theories of Business Ethics

The Utilitarian Approach

It deals with analyzing the cost and benefit of the decision.  The basis of moral activity in the utilitarian approach is based on the result of the act.  If the net benefit exceeds the overall cost than the act is considered morally right.

The ethical action,  that generates the utmost good and does the least harm for all who are involved like customers,  employees,   shareholders,  the community, and the environment.  The utilitarian approach deals with consequences, it tries both to increase the good and bad activity.

The Rights Approach

Other philosophers suggest that ethical action is the one that best protects and respects the moral rights of those affected.   It focuses on individual entitlement.  If the act guarantees individual rights, then it is considered to be morally right.

It focuses on analyzing whether the actions violate the rights of the individual or not.  The moral and legal basis of such rights is considered before taking any action.  The list of moral rights including the right to make one’s own choices about what kind of life to live, to be told the truth, not be injured, to a degree of privacy, and so is widely debated.

Some argue that non-humans have rights too.  Also, it is often said that writes implied duties, in particular, the duty to respect other’s rights.

The fairness of justice approach

Aristotle and other Greek philosophers have contributed the thought that all equals should be treated equally.  Today we use this idea to say that ethical actions treat all human beings equity or if unethically then fairly based on some standard that is defensible.

We compensate people more based on their hard work or the better amount that they contribute to an organization.  If the act extends or distributes wealth, burdens, and costs fairly,  then such as it is considered moral.  It also focuses on compensating those who have been unfairly affected.

The common good approach

If the intention of the day was, decision or the act considers all individuals with respect. It is associated with duties that each individual has to perform.  Universalism implies that all individuals perform their duties in the same way.

This approach also called attention to the common conditions that are important to the Welfare of everyone.  This may be a system of loss, an effective administrative system, good recreational areas, and good public educational system, etc.

The virtue approach

This approach is based on the character of the decision-maker.  Moral authority relies on the characteristics of individuals such as honesty, integrity, and truthfulness.  If a decision, strategy, or act reflects on our characters then it is considered morally correct.

Honesty, courage, generosity, tolerance, love, self-control, are all examples of virtues.


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