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What are Business Ethics?
Ethics are a set of moral standards that are relied upon to reach conclusions and make decisions. In a business environment, ethics are a key factor in responsible decision making. Maintaining a high ethical standpoint when operating your business can provide benefits to both the internal and external stakeholders of your business.
Your personal set of ethics are developed as you grow up and are influenced by the people and environment around you. Some ethical viewpoints are considered universal and apply to people around the world, whereas others are of a personal nature and may only apply to you. Your ethical viewpoints continue to evolve and change over time as you interact with different people and are exposed to different situations and environments.
The business case for ethics is based on the positive benefits that it can provide your business. The reasons behind maintaining high ethical standards include:
- Improved employee and organisational morale
- Increased ability to attract new customers
- Improved customer loyalty
- Reduced risk of negative exposure and public backlash caused by poor ethics
- Attraction of new stakeholders
- Making a positive impact on the community
Business ethics are important for managing a sustainable business mainly because of the serious consequences that can result from decisions made with a lack of regard to ethics. Even if you believe that good business ethics don't contribute to profit levels, you should be able to recognise that poor ethics can have a detrimental effect on your bottom line in the long term.
Poor ethical standards can result in business managers making misinformed, misguided or bad decisions. The future effects of their actions could be significant and wide reaching, particularly if they cause injury or financial loss to other people or businesses. Poor ethics are the basis of many legal cases where people seek compensation for the losses they have suffered as a direct or indirect result of the decisions of business people not following basic ethical standards.
In a sustainable business, employees at every level should be committed to the ethical standards of the business. As a business manager, it is important that you are able to clearly define and communicate to your employees what factors and ethical standards you expect them to adhere to and what the consequences are for failing to meet those expectations.
 List adapted from Bringing Business Ethics to Life, B. Anderson, 2004.