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Business Ethics

What do business and ethics have to do with each other? Business is about making profits. Ethics is about right and wrong. How are they connected? Well, business ethics is the study of right and wrong as applied to business actions.

Some businessmen would say that there is no need for business ethics. If we don’t break the laws of the country, we have nothing to worry about. However, we can do many bad things without breaking laws. In some countries, it would be legal for a businessman to pollute the land, sea and air, to confine his workers to barracks and to hire children to work in factories. But, these things may not be right. On the other hand, it may be illegal for a businessman to do some good things. For example, his society may expect him to treat people unequally and discriminate against some ethnic or religious groups.

In order to know what is right or wrong, we need a moral rule. This rule does not come from business itself, but from ethics. So we need a statement of what we believe to be right. The American Declaration of Independence in 1776 states an ethical principle: “We hold these truths to be self-evident that all men are created equal….” The Declaration further tells us that all men have a right to “…life, liberty and the pursuit of happiness.”

Principles such as these can be used in American politics and law to decide whether an action is right or wrong.

Many companies have their own ethical guidelines. IBM, for example, outlines its corporate ethics under headings such as, “Tips, Gifts and Entertainment,” “Accurate Reporting,” “Fair Competition,” and “Not boasting.” So each employee knows what to do or not to do in various situations.

Ethical choices are made on three levels. Individuals, by companies and by societies, make them. An individual might choose whether or not to accept a bribe. A company might decide whether or not to bribe government officials. A government or society might decide whether or not to outlaw bribery. Similar principles of right and wrong might be used at all three levels. For example, it might be decided that bribery is simply wrong in all situations. On the other hand, it might be decided to view the situation case by case. In other words, there is a strong ethical stand and a more tentative ethical stand.

The strong ethical stand applies when you have a basic moral principle and apply it to all situations. For example, you might believe that it was always wrong to let workers handle hazardous substances without any protection. The weaker stand would consider whether it is legal to do so. If it is legal to let workers handle dangerous materials, and this conforms to social expectations, then the weak ethical stand would say, “No problem.”

As long as the law is not broken, and no one strenuously objects, then everything is okay.

However, in ethics there is a principle called the “moral minimum.” This principle means that you should never harm another person knowingly. The only exception would be to protect some other people, or yourself. So business ethics would say that the businessman who exposes his workers to hazardous chemicals is wrong. He is not practicing the moral minimum.