Business Ethics: Definition, Examples and Application
Business ethics is a form of professional ethics that examines and applies to moral and ethical situations in a business environment. That is how you can sum up business ethics in a sentence. However, there is a whole lot more to it if you look deeper into its principles.
What is business ethics?
In its most straightforward context, business ethics is the study of appropriate business practices, policies, and conduct regarding potentially controversial issues.
As many working professionals know, controversial subjects are unavoidable in the business and workplace setting. These settings are full of people with different personalities and sometimes opposing values and beliefs.
Here are some of the subjects that are potentially controversial in a business setting:
- Corporate social responsibility
- Corporate governance
- Insider trading
- Fiduciary responsibilities
Usually, business ethics hinges on what is considered legal or not. The more compliant a business is to any laws affecting its operations, the more ethical they seem to be. Consequently, business ethics also dictates how much trust a business entity can gain and sustain from its customers.
Where does business ethics apply?
If you’d look at business ethics in a sentence, it would seem like a general term describing a business that is doing “good things.” In essence, it encompasses more than the business itself. Aside from internal business ethics, there are also the following:
Every member of society has a responsibility to the environment. That responsibility is stressed even further for businesses and corporations. If you are a business entity, it is understandable that you might be mass-producing products and possibly utilizing resources from the environment.
It is every business’s responsibility to minimize its impact to the environment by practicing ecologically sound methods in production and business conduct. Many laws cover business’ environmental responsibility by imposing regulations and requirements such as permits and clearances before enabling business operations.
Corporate social responsibility
Aside from the environment, businesses also have a responsibility towards the society that they operate in. Think of businesses that support social causes such as music and arts, mental health, and other good things that go beyond just making a profit.
There are four main types of corporate social responsibility:
Many major companies around the world have philanthropic activities that comprise their corporate social responsibility. This is common among corporate-based foundations that hold philanthropic events such as sponsorships and fundraisers.
As discussed above, corporations are required to align their practices with environmental sustainability in mind. Some companies take it one step further by organizing events or building funds that are set aside for projects that target environmental conservation.
Diversity and labor practices
Positive company culture is only possible with ethical labor practices. While that may not fully represent business ethics in a sentence, it forms a major part of it. Labor practices that encompass ethics cover gender, race, culture, humane treatment, and fair wages.
Apart from the act of giving, many companies also perform the act of serving as a part of their corporate culture. This practice may involve employees of the company to take part in volunteering for a cause.
Examples of business ethics
Business ethics aims to balance the business’ drive for profit with social responsibility. Here are a couple of examples
Integrity, transparency, and trustworthiness
If you were going to sum up the essence of business ethics in a sentence, it would all boil down to integrity. If a business conducts itself with integrity, honesty, and trustworthiness, all the rest of the qualities that display business ethics will follow.
A business can practice these three qualities by being truthful about the information that they display to the public through their marketing, being clear and open about the details of their product and manufacturing practices, and showing honor and courage to do what is right even at the face of criticism and pressure.
Equality, respect, and compassion
It is a given that businesses try their utmost best to be respectful and accommodating towards their customers. But if you want your company to level up your business ethics, the same respect should also apply to your staff.
Nowadays, companies are conscious of hiring a diverse group of people without discrimination. If someone is qualified and able to do the job well, it should not matter their gender, religion, race, or color. Everyone should be treated with respect and have equal rights within the business.
Lawfulness, responsibility, and accountability
A business should abide by the rules and regulations of the state or area that it operates in. abiding by the laws of the land reflects the company’s prudence and sense of responsibility. It means acknowledging the impact that your business has on the community.
This also means being accountable for the effects that the business may have on its customers. If a product harms customers or the environment, the business should be responsible enough to take accountability and correct any damages.
Providing excellence and upholding reputation
You can also sum up business ethics in a sentence by providing excellence and upholding your company’s reputation. You can do this through high standards of manufacturing practices and the quality of your products and services.
Striving to provide excellence is not just an “extra mile” for business owners, but rather a standard of outlook that should influence how they manufacture their goods and services.
Furthermore, if your business strives for excellence in what it does, its reputation will shortly follow. While big advertisements and marketing campaigns contribute a lot to major business growth, good old quality can sustain the business even long after the ads die out.
It can be hard to summarize business ethics in a sentence. It is an all-encompassing system of moral and ethical beliefs, behaviors, and business decisions that all good business owners observe. At the end of the day, it might be the determining factor that can help your local business stand out among its many competitors.