Business ethics has become an important issue since the fall of Enron. However, the priorities of individuals differ from the priorities of a business, therefore the ethics upheld vary from company to company. There are four major ethical theories that explain the manner in which some companies may conduct business. While there are standards, such as honesty, that many feel businesses should uphold, these theories may shed light on the motivations behind businesses not always conducting themselves in a manner appealing to the general public.
\r\nBusiness ethics are the moral standards by which a company conducts itself. Some businesses list the ethical standards employees are to abide by within handbooks; others find business ethics to be implied. Generally, an ethical business is one that conducts business in an honest manner, but the actual ethical principles by which a business functions have been up for debate for years. Stanford Encyclopedia of Philosophy provides an in-depth explanation and analysis of business ethics.
\r\nBusiness ethics are guidelines for your company to follow. A set of ethics guides the company on how to conduct their day-to-day operations. For instance, if one of your business ethics is to practice complete transparency, your goal would be to honest in all of your dealings.
\r\nDetermining the right way and the wrong way to conduct business helps you choose the ethics you want to incorporate into your organization. Another example of business ethics would be sustainability. However, a company can't just state they plan to act in a more environmentally conscious way. The business must demonstrate their commitment to sustainability by choosing products and services that don't have a detrimental effect on the planet.
\r\nIntegrity in accounting practices is another example of a business ethic. Always being fair with pricing and transparent on costs showcases good business ethics. Those who are looking at numbers only without considering the customer isn’t considered an ethical business.
\r\nPrinciples aren't necessarily standards, but absolute truths that serve as a goal for the outcome of business ethics. Basically, business principles are guides that steer employees toward the correct result. Principles are usually short phrases that demonstrate what it means to be ethical in the workplace.
\r\nPrinciples include:
\r\nLoyalty: Loyalty means that you are loyal to your company and co-workers. Known of your actions would be detrimental purposely to the brand. Loyalty breeds trust in any type of professional relationship.
\r\nIntegrity: Integrity means you have a character that people believe in. They know you will follow your company's core values without deviation.
\r\nHonesty: Honesty means you pledge to practice transparency. This is especially important if you are in sales. You never try to mislead others for monetary gain.
\r\nFairness: When you're fair, you make a pledge to be just. You don't rush to hasty decisions based on emotion. You look at a situation closely before determining the best outcome for all parties involved.
\r\nRespect: Respect is given freely as part of business ethics. You treat everyone the same regardless of their status.
\r\nCaring: Caring often applies to your pledge to help out the community. Your company should have concern for those located in the communities you serve.
\r\nDeontological ethics means that a business prioritizes society or the consumer over everything else. In deontology, the business has a duty to uphold and will, therefore, always follow through with its commitments and abide by the law. Davidson College in North Carolina compiled information on ethical theories, including deontology, covering the theory's benefits and flaws. To see it, scroll down to Ethical Theories.
\r\nThe utilitarian approach to ethics is one in which the actions a company takes are those that will have the most positive results and benefit the most people in the end. It is an analysis of consequences and choosing the action that has the least amount of negative results. The flaw with this ethical approach is that a business may find the benefits to its company and employees outweigh the benefits to the consumer. Markkula Center for Applied Ethics at Santa Clara University.
\r\nEthical relativism is the position that every individual has an equally valid point of view, and the determination of morals depends upon the cultural norms for that individual. In regard to business, relativism provides that the CEO's concept of right and wrong can differ from the receptionist's or consumer's concept of right and wrong.
\r\nEthical egoism is the position that it is moral for the individual to promote his or her own welfare over that of others. Ethical egoism is not typically a standard practice in the business world. Ethical egoism refers to companies that look out for themselves without worrying about anyone outside of their organization. The Internet Encyclopedia of Philosophy for more information on ethical egoism.
\n","docType":"article","guid":"articles_78a5b7407ff404368b2e8bb621d1971f","lastModified":"2020-04-27T14:28:00.000Z","published":"2010-07-05T02:49:00.000Z","structuredData":null,"subtitle":"Understand the theories that contribute to differing business ethics.","template":"v1","title":"Understanding Business Ethics Key Terms","type":"article","author":{"avatar":null,"bio":"The purpose of our community is to connect small business owners with experienced industry experts who can address their questions, offer direction, and share best practices.","name":"business.com editorial staff","image":null,"slug":null,"social":{"facebook":"","linkedin":"https://www.linkedin.com/company/business-com-/","twitter":"https://twitter.com/businessdotcom","website":"https://www.business.com/"},"status":"enabled","title":null,"type":"Old BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/b14a2c1fa0158a2f46854597139a2067ee8ef.jpg","profile":{"company":"","jobTitle":"","website":"https://www.business.com/"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Business Basics","slug":"business-basics"},"sub":{"name":"Entrepreneurship","slug":"entrepreneurship"}},"meta":{"robots":"index, follow","description":"Understand the theories that contribute to differing business ethics.","title":"Definition of Business Ethics Key Terms - business.com"},"parsedContent":{"toc":[{"id":"business-ethics","title":"Business ethics"},{"id":"examples-of-business-ethics","title":"Examples of business ethics"},{"id":"principles","title":"Principles"},{"id":"deontology","title":"Deontology"},{"id":"utilitarianism","title":"Utilitarianism"},{"id":"relativism","title":"Relativism"},{"id":"ethical-egoism","title":"Ethical egoism"}],"json":[{"component":"p","children":["Business ethics has become an important issue since the fall of Enron. However, the priorities of individuals differ from the priorities of a business, therefore the ethics upheld vary from company to company. There are four major ethical theories that explain the manner in which some companies may conduct business. While there are standards, such as honesty, that many feel businesses should uphold, these theories may shed light on the motivations behind businesses not always conducting themselves in a manner appealing to the general public."]},{"component":"h2","props":{"id":"business-ethics"},"children":["Business ethics"]},{"component":"p","children":["Business ethics are the moral standards by which a company conducts itself. Some businesses list the ethical standards employees are to abide by within handbooks; others find business ethics to be implied. Generally, an ethical business is one that conducts business in an honest manner, but the actual ethical principles by which a business functions have been up for debate for years. ",{"component":"a","props":{"href":"http://plato.stanford.edu/entries/ethics-business/","target":"_blank","rel":"nofollow"},"children":["Stanford Encyclopedia of Philosophy"]}," provides an in-depth explanation and analysis of business ethics."]},{"component":"h2","props":{"id":"examples-of-business-ethics"},"children":["Examples of business ethics"]},{"component":"p","children":["Business ethics are guidelines for your company to follow. A set of ethics guides the company on how to conduct their day-to-day operations. For instance, if one of your business ethics is to practice complete transparency, your goal would be to honest in all of your dealings."]},{"component":"p","children":["Determining the right way and the wrong way to conduct business helps you choose the ethics you want to incorporate into your organization. Another example of business ethics would be sustainability. However, a company can't just state they plan to act in a more environmentally conscious way. 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You never try to mislead others for monetary gain."]},{"component":"p","children":[{"component":"strong","children":["Fairness:"]}," When you're fair, you make a pledge to be just. You don't rush to hasty decisions based on emotion. You look at a situation closely before determining the best outcome for all parties involved."]},{"component":"p","children":[{"component":"strong","children":["Respect"]},": Respect is given freely as part of business ethics. You treat everyone the same regardless of their status."]},{"component":"p","children":[{"component":"strong","children":["Caring:"]}," Caring often applies to your pledge to help out the community. Your company should have concern for those located in the communities you serve."]},{"component":"h2","props":{"id":"deontology"},"children":["Deontology"]},{"component":"p","children":["Deontological ethics means that a business prioritizes society or the consumer over everything else. In deontology, the business has a duty to uphold and will, therefore, always follow through with its commitments and abide by the law. ",{"component":"a","props":{"href":"http://www.bio.davidson.edu/people/kabernd/Indep/carainbow/Theories.htm","target":"_blank","rel":"nofollow"},"children":["Davidson College"]}," in North Carolina compiled information on ethical theories, including deontology, covering the theory's benefits and flaws. To see it, scroll down to Ethical Theories."]},{"component":"h2","props":{"id":"utilitarianism"},"children":["Utilitarianism"]},{"component":"p","children":["The utilitarian approach to ethics is one in which the actions a company takes are those that will have the most positive results and benefit the most people in the end. It is an analysis of consequences and choosing the action that has the least amount of negative results. The flaw with this ethical approach is that a business may find the benefits to its company and employees outweigh the benefits to the consumer. ",{"component":"a","props":{"href":"http://www.scu.edu/ethics/publications/iie/v2n1/calculating.html","target":"_blank","rel":"nofollow"},"children":["Markkula Center for Applied Ethics"]}," at Santa Clara University."]},{"component":"h2","props":{"id":"relativism"},"children":["Relativism"]},{"component":"p","children":["Ethical relativism is the position that every individual has an equally valid point of view, and the determination of morals depends upon the cultural norms for that individual. 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",{"component":"a","props":{"href":"http://www.iep.utm.edu/e/egoism.htm#SH2b","target":"_blank","rel":"nofollow"},"children":["The Internet Encyclopedia of Philosophy"]}," for more information on ethical egoism."]}]},"resource":null,"sponsorship":{"sponsorType":"no-sponsor","name":null,"thumbnail":null,"bio":null,"slug":null,"status":null,"social":{"website":null,"linkedin":null,"twitter":null,"facebook":null}},"thumbnail":{"path":"https://staging.business.com/images/content/5eb/2d3347b4374bc408b4570/1500-0-","caption":"Fizkes / Getty Images","isBlurred":false},"bestPicks":null},"related":{"relatedArticles":[{"title":"Understanding Business Ethics Key Terms","canonical":"https://www.business.com/articles/business-ethics-key-terms/","slug":"business-ethics-key-terms","thumbnail":"https://www.business.com/images/content/5eb/2d3347b4374bc408b4570/1500-0-","dek":"Understand the theories that contribute to differing business ethics.","lastModified":"2020-04-27T14:28:00Z","published":"2010-07-05T02:49:00Z","sponsored":false},{"title":"Using Lean Strategies to Achieve Team Synergy and Efficiency","canonical":"https://www.business.com/articles/lean-strategies-team-efficiency/","slug":"lean-strategies-team-efficiency","thumbnail":"https://www.business.com/images/content/5be/480e49c658a51108b458c/1500-0-","dek":"Learn more about lean manufacturing strategies and how to implement them in your business.","lastModified":"2018-11-08T08:00:00Z","published":"2018-11-08T08:00:00Z","sponsored":false},{"title":"How to Hire for Your Business","canonical":"https://www.business.com/articles/how-to-staff-business/","slug":"how-to-staff-business","thumbnail":"https://www.business.com/images/content/5ea/9c8bb9c658aee018b456c/1500-0-","dek":"Sterling Staffing Solutions CEO Stephen Carter shares his tips on staffing your business.","lastModified":"2020-07-31T15:00:00Z","published":"2018-08-16T12:00:00Z","sponsored":false},{"title":"From COVID-19 to Hurricane Season: Disaster Preparedness for Small Business","canonical":"https://www.business.com/articles/business-disaster-prep/","slug":"business-disaster-prep","thumbnail":"https://www.business.com/images/content/5e7/a495e5a215eb11d8b4569/1500-0-","dek":"Natural disasters – whether a hurricane, tornado or outbreak like COVID-19 – can have a disastrous effect on small businesses, but they don't have to. 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