Business Ethics: Definition, Principles and How to Demonstrate

Business Ethics
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A code of conduct governs many companies’ public relations and operational policies. Enterprises refer to these codes as business ethics, and they are an important part of many current corporate environments. Human resources (HR) professionals and management figures may need help managing issues of business ethics. If you work in business, it is beneficial to learn more about business ethics and why they are important.

In this article, we define business ethics, explain why it is important, list some issues of business ethics, and provide types of business ethics.

What Exactly Is Business Ethics?

Business ethics is the study of appropriate business policies and practises regarding potentially contentious topics such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility, fiduciary responsibilities, and many others. The law of ten guides business ethics, but business ethics also provides a basic guideline that businesses can follow to gain public approval.

Understanding Business Ethics

Business ethics ensure that there is a basic level of trust between consumers and various market participants and businesses. A portfolio manager, for example, must treat the portfolios of family members and small individual investors with the same care that they do the portfolios of wealthy clients. These types of practises ensure that the public is treated fairly.

The concept of business ethics has evolved since the 1960s. Business ethics is more than just a moral code of what is right and wrong; it attempts to reconcile what businesses must do legally with maintaining a competitive advantage over other businesses. Businesses display business ethics in a variety of ways.

Ethical Principles in Business

Here is a list of key business ethics principles to apply in the workplace:

#1. Trustworthiness

Customers, coworkers, and business partners can rely on reliable employees to keep their promises. Making good on promises shows that you can be relied on, making you a valuable team member. Being trustworthy also entails being dependable and finishing the tasks that have been assigned to you. You can demonstrate your trustworthiness by being punctual, meeting deadlines, and using consistent words and actions.

#2. Compliance

Compliance with all applicable laws is an essential component of ethical business practises. Companies must ensure that all procedures adhere to international trading standards, tax codes, and local building codes. Legal constraints are essential to business ethics, so companies can use these industry laws to develop more specialised policies and processes at the macro level.

#3. Honesty

Honesty entails telling the truth, regardless of the consequences. It fosters trust among colleagues and between a company and its customers. It is also advantageous to everyone in an organisation. Employees prefer to work for trustworthy leaders, employers prefer loyal employees, and customers prefer to do business with trustworthy partners. This trust entails communicating both good and bad news transparently and directly, resulting in a dependable reputation.

#4. Reputation and Morale

Building, protecting, and maintaining the company’s good reputation, employee morale and business ethics is critical. Ethical CEOs understand the value of their own and their company’s reputations, as well as the importance of employee pride and morale. As a result, they avoid saying or doing things that others may perceive as disrespectful, and they actively correct or prevent others from acting inappropriately.

#5. Integrity

Integrity entails adhering to a set of moral standards at all times, even if no one else is aware of your actions. Organisations and employees demonstrate integrity by acting and speaking in a way that inspires trust and credibility. Others notice when you live and work with integrity, which inspires respect and trust in your decisions.

#6. Legality

To protect consumers, the government monitors industries. Organisations must follow relevant local, state, and federal laws and codes. Businesses and employees that follow the law also follow industry and trade rules, market standards, and other mandatory organisational policies, practises, and procedures.

#7. Leadership

Leadership is a commitment to excellence achieved through ethical decision-making. You can demonstrate it by deliberately demonstrating ethical behaviour. Companies and executives maintain their competitive advantage by constantly improving operational efficiency, employee satisfaction, and consumer acceptance.

#8. Fairness

Workplace fairness entails treating everyone equally, including assistants, interns, and the CEO. Fairness also entails avoiding bias and allowing everyone to express their opinions and points of view. In the workplace and with clients, you can promote inclusion and equity. This contributes to a cohesive environment in which employees feel at ease, thereby increasing engagement. Task delegation, employee recruitment, and performance evaluation are all examples of fairness.

Different Types of Business Ethics

Depending on the nature or location of the business, different types of business ethics are used. Here are some types of standard ethical practises used by various businesses:

#1. Personal Accountability

Personal responsibility is expected of business employees. This responsibility can be demonstrated by completing an assigned task, arriving at work on time, or being honest in the workplace. Employees are also expected to accept responsibility for their mistakes and work to correct them.

#2. Corporate Accountability

Businesses must uphold their obligations to their employees, partners, and customers. They must consider the best interests of all parties involved in the business. These interests may manifest themselves in the form of written contracts, verbal agreements, or legal obligations.

#3. Social Accountability

Businesses have a responsibility for the environment in which they operate. As a result, businesses must work to protect the environment while also giving back to the community through empowerment or investment.

One method by which businesses have been able to accomplish this is through a practise known as corporate social responsibility (CSR), which has directed corporations towards environmental protection, community development, and improving the working environment by focusing on people.

#4. Ethics of Technology

Technology and business ethics are essential as businesses move their operations into the digital space through the use of e-commerce practises. Customer data protection, customer privacy, customer personal information protection, fair intellectual property practises, and so on are examples of these ethics.

The Advantages of Business Ethics

Among the advantages of business ethics are:

  • Customers and investors prefer to associate with transparent businesses, so ethics in business provide a competitive advantage for businesses.
  • Compliance with established business ethics improves a company’s image, making it more appealing to talent, customers, and investors.
  • Because their morals are aligned with the company’s morals, ethics in business help to create a motivating work environment where employees love to be.
  • Though following ethical business practises is largely voluntary, some are required, such as following the rule of law. Early compliance protects businesses from future legal action, such as large fines or business failure, caused by noncompliance with rules and regulations.

The Downsides of Business Ethics

The following are some of the disadvantages of business ethics:

  • It takes time to develop, put into practise, adjust, and maintain business ethics, especially when a company is just getting over a scandal that damaged its reputation due to unethical behaviour.
  • Another issue is the potential conflict between ethics and profit. Ethics in business have an impact on a business’s ability to maximize profits. An ethical business with a manufacturing plant in a developing country, for example, would not try to reduce labour costs through unethical means. 

How to Demonstrate Business Ethics 

It takes time and effort to foster an environment of ethical behaviour and decision-making, and it always begins at the top. To enforce ethical behaviour, most businesses must develop a code of conduct and ethics, guiding principles, reporting procedures, and training programmes.

Continuous communication with employees becomes critical once the behaviour is defined and programmes are implemented. Leaders should constantly encourage employees to report suspicious behaviour and provide assurances that whistle-blowers will not face retaliation.

Issues of business ethics

Issues of business ethics arise when a decision, activity, or scenario contradicts the ethical standards of the organisation or society. Because others may question their actions from a moral standpoint, both organisations and individuals can become involved in issues of business ethics. 

Here are eight examples of issues that may arise in business ethics:

#1. Harassment and Discrimination

Discrimination and harassment are two of the most serious issues of business ethics that HR professionals and managers face. The consequences of workplace discrimination and harassment can harm the organization’s finances and reputation. To protect employees from unfair treatment, many countries have anti-discrimination laws in place. 

#2. Health and Safety in the Workplace

Everyone has the right to a safe working environment and working conditions. Some of the most common employee safety concerns are:

  • Scaffolding: The HR department in construction or maintenance organisations is required to inform employees about the maximum weight capacities of structures.
  • Industrial trucks: It is important for business ethics to ensure that the necessary truck safety standards are in place to protect employees.
  • Methods for Electrical Wiring: Develop procedures for electrical and wiring tasks. These guidelines, for example, could specify how employees can design a circuit to reduce electromagnetic interference.
  • Machine Guarding: Where applicable, it is important to provide operation guarding instructions for items such as guillotine cutters, power presses, shears, and other devices as part of the business ethics of the company.

#3. Whistleblowing or Rants on Social Media

The use of social media has become widespread, making employees’ online behaviour a critical factor in their employment status. The ethical implications of punishing employees for inappropriate social media posts remain an issue, and the implications of a negative social media post may influence the employee’s treatment. You may decide to fire an employee if their social media posts cause a loss of business or damage the reputation of the organisation.

#4. Accounting Practise Ethics

Laws require organisations to maintain accurate bookkeeping practises. Unethical accounting practises are a major issue, particularly for publicly traded companies. The legislation establishes financial reporting requirements to protect shareholders and consumers. Regardless of the size of the company, all organisations must maintain accurate financial records and pay taxes to attract investment and business partners.

#5. Nondisclosure and Corporate Espionage

Many businesses face the risk that current and former employees will steal information, such as client data, and sell it to competitors. Corporate espionage is defined as stealing an organization’s intellectual property or illegally distributing private client information. This is why requiring mandatory nondisclosure agreements can be beneficial. You may also want to set strict financial penalties for violations as an HR professional or manager to discourage these types of ethical violations.

How Can HR and Management Professionals Deal With Issues of Business Ethics?

As a human resources or management professional, you can address issues of business ethics by evaluating management systems to identify ways to become more responsible. This may entail reviewing the company’s policies and processes to ensure they address ethical issues in the workplace. You can assist in setting environmentally friendly goals and deciding on actions that may aid in the transition. You can then track your progress towards these objectives regularly.

Communication and enforcing a strong code of ethics for decision-making are two daily actions your team can take to identify and deter issues of business ethics. You can ensure that it always complies with relevant legislation concerning these ethical issues. When compiling financial reports for the company, you can also work with accountants to ensure transparency and honesty.

What Are the Five Different Levels of Business Ethics?

Compliance, legal, ethical, economic, and philanthropic is the five levels of business ethics. Companies use these levels to make ethical and moral decisions. Businesses at the compliance level adhere to the laws and regulations that govern their industry.

What Are the Three Most Important Business Ethics Theories?

Utilitarianism, rights theory, and justice theory are three common business ethics theories.

In a Nutshell, What Are the Four Components of Business Ethics?

This written document of principles of conduct is known as a “code.” The code or code of conduct covers a wide range of topics, including product quality, product safety, fundamental honesty, adherence to laws, financial reporting, marketing practises, employment practises, workplace health and safety, and so on.

What Are the Six Steps for Enhancing Business Ethics?

Here are a few examples:

  • Recognise and Renew Company Values
  • Obtain Visible Commitment from Senior Management
  • Invite the Board of Directors to participate
  • Create a code of ethics or a code of business conduct
  • Incorporate ethics into mission and vision statements
  • Integrate ethics into all aspects of corporate communication

What Is the Last Stage of Ethical Decision-Making?

The adaptation stage is the final stage of this process. The clinician will look to adapt the selection or solution of the ethical dilemma at this stage by refining it or returning to the evaluation and selection stages to find and choose a better solution.


To summarise, business ethics require companies to act in ways that stakeholders regard as fair and honest. These ethics also guide owners, managers, and employees in making moral decisions and building customer trust.

A company that upholds ethical standards that reflect real-world concerns and appeals to a growing consumer consciousness is more likely to attract monetary investment, loyal employees (lowering recruitment costs), and repeat customers. A good reputation is valuable, and it eventually leads to better financial health, from increased share prices to increased sales.


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