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What is Business Ethics

Business Ethics

Business ethics can be defined as the principles and standards that establish acceptable conduct in business organizations.

The acceptability of behaviour in business is determined by customers, competitors, government regulators, interest groups, and the public, as well as each individual’s personal moral principles and values.

code values of business ethics

What is Business Ethics?


Many consumers and social advocates reckon that businesses should not only make a profit but also consider the social implications of their activities.

We define social responsibility as a business’s obligation to maximize its positive impact and minimize its negative impact on society. Although many people use the terms social responsibility and ethics interchangeably, they do not mean the same thing.

Business ethics relates to an individual’s or a work group’s decisions that society evaluates as right or wrong, whereas social responsibility is a broader concept that concerns the impact of the entire business’s activities on society.


Business Ethics

There are good business reasons for a strong commitment to ethical values:

1. Ethical companies have been shown to be more profitable.

2. Making ethical choices results in lower stress for corporate managers and other employees.

3. Our reputation, good or bad, endures.

4. Ethical behaviour enhances leadership.

5. The alternative to voluntary ethical behaviour is demanding and costly regulation.


Points to Ponder relating to behavioral ethics:

1. What conflicts of interest have you personally experienced in personal or professional roles?

2. If you perceive a potential conflict for yourself, what are some ways you might ensure that this conflict doesn’t lead to unethical behavior for you and others?

3. When have others’ conflicts of interest impacted how you or those you know were treated?



4. What types of policies can or do organizations implement to try to reduce conflicts of interest or their costs?

5. Why do you believe conflicts of interest are so pervasive in society? Why don’t we take more steps to avoid them?

6. Why is it so hard for individuals to recognize their own conflicts of interest, and how is this impacted by behavioral biases?


Conflict of Interest:

Conflict of interest arises when there is a clash between responsibility and reward. Say, if a doctor decides to be more business-like, if a judge decides to favor one party, if a ruling party favors a decision not good for the masses, what will happen?

A conflict of interest exists when a person must choose whether to advance his or her own personal interests or those of others.

Wal-Mart Stores, Inc., may have the toughest policy against conflict of interest in the retail industry. Sam Walton, the late founder of Wal-Mart, disallowed  company buyers from accepting so much as a cup of coffee from suppliers.

The Wal-Mart policy is black and white and leaves no room for interpretation, and it is probably a factor in helping Wal-Mart reduce costs.