Basic Concepts of Business Ethics

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Whether you own your own business, you’re planning on establishing one or have any contact with the business world, it is good to know about business ethics and what it entails. Business ethics, otherwise known as corporate ethics, is applied in order to examine and analyze certain ethical principles or moral problems concerning every aspect of the business environment. It is a form of applied ethics and it helps manage an organization’s or an individual’s conduct within business parameters. Simply put, it makes sure every action, transaction and endeavor is performed under certain regulations and without breaking any types of laws.

Business ethics can be measured in descriptive and normative dimensions. The descriptive methods are usually employed by academics in an attempt to understand business behavior, whereas normative methods are useful in practice to corporations and companies. One reason for the existence of business ethics is to ensure that the only drive of a company is not money-making, so much so that such a company could neglect certain qualitative and moral aspects of business. Another way to explain this is that this type of ethics may also deal with balancing profit-driven characteristics with non-economic pursuits.

The interest for business ethics strongly increased in the 1980s-90s, but the concept existed long before that. To put this concept into perspective and emphasize its importance, think about the fact that business was also involved in activities such as slavery or colonialism. What seems natural today may become objectionable tomorrow, which is where ethics comes in to analyze a situation. Furthermore, governments can help regulate certain gray areas of business, such as stopping two major corporations dealing in the same trade from conspiratorially toying with the market or rising prices above normal limits.

However, business ethics also deal with a company’s internal concepts and philosophy of business. When being established, a company has to declare a set of fundamental goals and purposes, which can be punishable by law if violated. Companies started putting an emphasis on their ethical precepts during the 1980s-90s because there had been many business-related scandals in the previous period. Such an example is the savings and loan crisis that happened at that time and involved hundreds of savings and loans associations in the United States. Due to inflation and other managerial mistakes, many CEOs took the wrong decisions and turned their companies into money-bleeding entities, thus depriving people of their savings and even leading to certain banks’ bankruptcies.

Business ethics is functional in finance, sales and marketing, production, property and intellectual property. Today there is also an increasing interest in international business ethics, especially since continents like USA and Europe are thinking of establishing a free trade act in the following years. Thus, international ethics deals with:

  • Searching for universal values that can be recognized and respected throughout the world;
  • Comparing business ethical traditions from different countries;
  • Comparing business ethical traditions from religious perspectives to see whether two countries with different religions can find a common point or avoid controversy;
  • Analyzing concepts like globalization or cultural imperialism, which could lead to the engulfing of certain weaker cultures;
  • Dealing with different global standards, such as the use of child labor in certain parts of the world.

These are the basic concepts of business ethics, but the subject is much more complex and difficult to quantify because of its ideological nature. Nevertheless, better minds are working on expanding and improving this field, and if this could mean a free and fair trade world without border regulations, everyone could profit.

June 2022