Sticking with a decision, especially when pressured to do otherwise, shows honor and courage. Companies that do what they believe is morally right based on equality and fairness can demonstrate strength and commendable character. Companies that keep promises and fulfill commitments to their employees, business partners and customers display their commitment to business ethics.
Trustworthiness is a monumental component to success in business because people typically like to work with and buy from those they believe are dependable and principled.
Loyalty encompasses all relationships a business has including those with staff, partners, investors and consumers. Loyalty allows a business to make decisions benefiting these relationships and overcome influences from outside conflicting interests. This shows the business values the advancement of the company and employees over an owner's personal gain.
Companies should strive to act fairly and commit to exercising their power justly. Leaders should only use honorable methods to gain an advantage over the competition. Also, fairness relates to equality, which means having an open mind and treating everyone fairly.
Fairness and equality can be involved in hiring practices, marketing initiatives, business partnerships and competing within the market for new consumers or clients. Ethical companies demonstrate genuine kindness, understanding and care for the livelihood of others. In business, this means accomplishing business goals to produce the most good while causing the least amount of damage. When a business decision needs to be made, careful consideration of the options and how each one may affect a person or community helps reduce the potential negative impacts, depending on the industry.
Having basic respect for the rights, privacy and dignity of people—including individuals within and outside the company—is an important business ethical standard.
Companies that treat all humans with respect regardless of religion, sex, race, nationality or other signifier are often reviewed positively in the public eye. Respect also relates to client or customer privacy since companies are held to the ethical standard of keeping information such as bank account details, health background or social security numbers private.
Maintaining this level of privacy shows respect and ensures the company operates within a variety of industry-specific laws, such as the Health Insurance Portability and Accountability Act HIPAA. Read more: What Is Respect in the Workplace? Business ethics also include abiding by legal regulations and obligations regarding their business activities like taxes, worker safety and employment and labor laws. Companies that work within the boundaries of the legal system are more credible and honorable, which can establish a strong positive reputation as an employer that encourages high-quality candidates to apply for roles.
Ethical organizations strive to provide excellence by always working to deliver the greatest quality of service or products to their clients and customers. They pursue creativity and innovation, looking for the best ways to deliver their goods and seek to constantly improve their performance, customer satisfaction and employee morale. Companies with high ethical standards recognize their responsibilities to their employees and customers and understand how the conduct of their leadership affects the business.
Dar says that if does not get more money, he will go to the authorities and the competitor to report this business dealing. One can say that Dar has behaved unethically because his actions were not consistent with his professed values.
And, you can conclude that all three parties involved in stealing insider information have acted immorally as judged by majority of the population.
With an understanding of values, ethics and morals while using ethical principles, a business owner or leader can form a framework for effective decision-making with formalized strategies. The willingness to add ethical principles to the decision-making structure indicates a desire to promote fairness, as well as prevent potential ethical problems from occurring.
Corporate ethics programs are part of organizational life, and organizations can use such sessions to further discuss the meaning of values, ethics and morals in the context of their businesses. Organizational codes of ethics should protect individuals and address the moral values of the firm in the decision-making processes. Doing so will increase the personal commitment of employees to their companies because people take pride in the integrity of their corporate culture.
Bahaudin G. He has served as a certified management development specialist and trainer. Consider the following dilemma and how the terms values, ethics and morals apply. A large part of business ethics is trying to determine what these requirements are. Answers to questions about the means of corporate governance often mirror answers to question about the ends of corporate governance.
Often the best way to ensure that a firm is managed in the interests of a certain party P is to give P control. We might see control rights for shareholders as following analytically from the concept of ownership. To own a thing is to have a bundle of rights with respect to that thing. See the entry on property and ownership. As noted, in recent years the idea that the firm is something that can be owned has been challenged Bainbridge ; Stout ; Strudler If this is right, then the ownership argument collapses.
But similar contractarian arguments for shareholder control of firms have been constructed which do not rely on the assumption of firm ownership. All that is assumed in these arguments is that some people own capital, and others own labor. It just so happens that, in most cases, capital hires labor. We know this because in most cases capital-providers are the ultimate decision-makers in the firm.
In a publicly-traded corporation, they elect the board. Many writers find this result troubling. Even if the governance structure in most firms is in some sense agreed to, they say that it is unjust in other ways. Anderson characterizes standard corporate governance regimes as oppressive and unaccountable private dictatorships.
Arguments for these governance structures take various forms. Mayer A fourth argument sees worker participation in firm decision-making as valuable training for citizens in a democratic society Pateman But criticisms generally fall into two categories.
The first insists on the normative priority of agreements, of the sort described above. There are few legal restrictions on the types of governance structures that firms can have. And some firms are in fact controlled by workers Dow ; Hansmann To insist that other firms should be governed this way is to say, according to this argument, that people should not be allowed to arrange their economic lives as they see fit.
Another criticism of worker participation appeals to efficiency. Allowing workers to participate in managerial decision-making may decrease the pace of decision-making, since it requires giving many workers a chance to make their voices heard Hansmann It may also raise the cost of capital for firms, as investors may demand more favorable terms if they are not given control of the enterprise in return McMahon Both sources of inefficiency may put the firm at a significant disadvantage in a competitive market.
It may not just be a matter of competitive disadvantage. If it were, the problem could be solved by making all firms worker-controlled. The problem may be one of diminished productivity more generally. Business ethicists seek to understand the ethical contours of business activity. One way of advancing this project is by choosing a normative framework and teasing out its implications for business issues.
In principle, it is possible to do this for any normative framework. Below are four that have received significant attention. One influential approach to business ethics draws on virtue ethics.
For MacIntyre, there are goods internal to practices, and certain virtues are necessary to achieve those goods. Building on MacIntyre, Moore develops the idea that business is a practice or contains practices , and thus has certain goods internal to it or them , the attainment of which requires the cultivation of business virtues.
Aristotelian approaches to virtue in business are found in Alzola and de Bruin In competitive markets, people may be tempted to deceive, cheat, use, exploit, or manipulate others to gain an edge. Ethical theory, including virtue theory and deontology, is useful for thinking about how individuals should relate to each other.
But business ethics also comprehends the laws and regulations that structure markets and firms. Here political theory seems more relevant.
This is not an easy task, since while Rawls makes some suggestive remarks about markets and firms, he does not articulate specific conclusions or develop detailed arguments for them.
But scholars have argued that justice as fairness: 1 is incompatible with significant inequalities of power and authority within firms S. Arnold ; 2 requires people to have an opportunity to perform meaningful work Moriarty ; cf.
Singer and 4 corporate ownership M. It originates with McMahon , but it has been developed in most detail by Heath for discussion see Moriarty and Singer According to Heath, the justification of the market is that it produces efficient—in the sense of Pareto-optimal— outcomes. But this only happens when the conditions of perfect competition obtain, such as perfect information, no market power, and no barriers to entry or exit. On the MFA, these conditions are the source of ethical rules for market actors.
The MFA says that market actors, including sellers and buyers, should not create or take advantage of market imperfections. So, for example, firms should not deceive consumers creating information asymmetries or lobby governments to levy tariffs on foreign competitors erecting barriers to entry.
Selecting a normative framework and applying it to a range of issues is an important way of doing business ethics. But it is not the only way. The main way that firms interact with consumers is by selling, or attempting to sell, products and services to them. Many ethical issues attend this interaction. Among the things commonly said to be inappropriate for sale are sexual services, surrogacy services, and human organs.
Some writers object to markets in these items for consequentialist reasons. They argue that markets in commodities like sex and kidneys will lead to the exploitation of vulnerable people Satz Others object to the attitudes or values expressed in such markets. They claim that markets in surrogacy services express the attitude that women are mere vessels for the incubation of children Anderson ; markets in kidneys suggest that human life can be bought and sold Sandel ; and so on.
Whether selling a particular thing for money expresses disrespect, they note, is culturally contingent. They and others e. Some things that firms may wish to sell, and that people may wish to buy, pose a significant risk of harm, to the user and others.
When is a product too unsafe to be sold? This question is often answered by government agencies. In the U. In some cases these standards are mandatory e. The state identifies minimum standards and individual businesses can choose to adopt more stringent ones.
Questions about product safety are a matter of significant debate among economists, legal scholars, and public policy experts. Business ethicists have paid scant attention to these questions but see Brenkert Existing treatments often combine discussions of safety with discussions of liability—the question of who should pay for harms that products cause—and tend to be found in business ethics textbooks.
There is much room for philosophical exploration of these issues. Drop side cribs pose risks to consumers; so do trampolines.
On what basis should the former be prohibited but the latter not be Hasnas ? The answer must take into account the value of these products, how obvious the risks they pose are, and the availability of substitutes. With respect to liability, we may wonder whether it is fair to hold manufacturers responsible for harms their products cause, when the manufacturers are not morally at fault for those harms.
On the other hand, it may be unfair to force consumers to bear the full costs of their injuries, when they too are not morally at fault. The question may be one for society as a whole: what is the most efficient or just way to distribute these costs? Most advertising contains both an informational component and a persuasive component. Advertisements tell us something about a product, and try to persuade us to buy it.
Both of these components can be subject to ethical evaluation. Emphasizing its informational component, some writers stress the positive value of advertising. Markets function efficiently only when certain conditions are met. One of these conditions is perfect information. Minimally, consumers have to understand the features of the products for sale. While this condition will never be fully met, advertising can help to ensure that it is met to a greater degree Heath Another value that can be promoted through advertising is autonomy.
People have certain needs and desires—e. Their choices are more likely to satisfy their needs and desires if they have information about what is for sale, which advertising can provide Goldman These good effects depend, of course, on advertisements producing true beliefs, or at least not producing false beliefs, in consumers.
Writers treat this as the issue of deception in advertising. The issue is not whether deceptive advertising is wrong most would agree it is , but what counts as deceptive advertising, and what makes it wrong. As these examples illustrate, advertisements are deceptive not because of the truth-value of their claims, but what these claims cause reasonable consumers to believe. Questions can be raised, of course, about what it means to be reasonable Scalet ; the answer may depend on who the consumers are.
Intention is usually taken to be irrelevant to deception in advertising. Some philosophers would say that these advertisements are better described as misleading. For discussion, see the entry on the definition of lying and deception. Their goal is to protect consumers from acting on materially false beliefs, which may be caused either by deception or by blamelessly being misled.
Many reasons have been offered for why deceptive advertising is wrong. One is the Kantian claim that deceiving others is disrespectful to them, a use of them as a mere means. Deceptive advertising may also lead to harm, to consumers who purchase suboptimal products, given their desires and competitors who lose out on sales.
A final criticism of deceptive advertising is that it erodes trust in society Attas When people do not trust each other, they will either not engage in economic transactions, or engage in them only with costly legal protections. The persuasive component of advertising is also a fruitful subject of ethical inquiry. Galbraith , an early critic, thinks that advertising, in general, does not inform people how to acquire what they want, but instead gives them new wants.
Moreover, since we are inundated with advertising for consumer goods, we want too many of those goods and not enough public goods.
Hayek rejects this claim, arguing that few if any of our desires are independent of our environment, and that anyway, desires produced in us through advertising are no less significant than desires produced in us in other ways. Galbraith is concerned about the persuasive effects of advertisements. In contrast, recent writers focus on the techniques that advertisers use to persuade. Some of these are alleged to cross the line into manipulation Aylsworth, ; Brenkert ; Sher It is difficult to define manipulation precisely, though attempts have been made for extensive discussion, see the entry on the ethics of manipulation.
For our purposes, manipulative advertising can be understood as advertising that attempts to persuade consumers, often but not necessarily using non-rational means, to make irrational or suboptimal choices, given their own needs and desires. Associative advertising is often identified as a type of manipulative advertising.
In associative advertising, the advertiser tries to associate a product with a positive belief, feeling, attitude, ideal, or activity which usually has little to do with the product itself. Thus many television commercials for trucks in the U. Commercials for body fragrances associate those products with sex between beautiful people. The suggestion is that if you are a certain sort of person e.
In an important article, Crisp argues that this sort of advertising attempts to create desires in people by circumventing their faculties of conscious choice, and in so doing subverts their autonomy cf. Arrington ; Phillips Lippke argues that it makes people desire the wrong things, encouraging us to try to satisfy our non-market desires e. Aylsworth How seriously we should take these criticisms may depend on how effective associative and other forms of persuasive advertising are.
Our judgments on this issue should be context-sensitive. Paine Paine et al. But children, she argues, lack the capacity for making wise consumer choices see also E. Moore Thus advertising directed at children constitutes a form of objectionable exploitation. Other populations who may be similarly vulnerable are the senile, the ignorant, and the bereaved.
Ethics may require not a total ban on marketing to them but special care in how they are marketed to Brenkert ; cf. Sales are central to business. Perhaps surprisingly, business ethicists have said relatively little about sales. An emerging set of issues concerns refusals to sell.
Normally businesses want to sell their goods and services to everyone. But not always. In , Jack Phillips of Masterpiece Cakeshop declined to sell a wedding cake to a same-sex couple because he opposed same-sex marriage on religious grounds.
In response, the couple filed a complaint with the Colorado Civil Rights Commission. Should Phillips have sold the wedding cake to the couple? We might say that a commercial transaction is a kind of association, and people—including business owners like Phillips—should be free to associate, or not, with whomever they choose. Or we might say, as Phillips did, that his actions were protected by freedom of religion, since they were an expression of his identity, which includes his religious commitments.
Alternatively, we might claim that Phillips was discriminating against the couple, and his actions were wrong for the same reasons discrimination typically is, viz. Questions can also be raised about the techniques advertisers use to sell. These questions are similar to the ones asked about advertising. Salespeople are, in a sense, the final advertisers of products to consumers. Heath Carson justifies 1 — 4 by appealing to the golden rule: treat others as you want to be treated.
He identifies two other duties that salespeople might have he is agnostic : 5 do not sell customers products that you the salesperson think are unsuitable for them, given their needs and desires, without telling customers why you think this; and 6 do not sell customers poor quality or defective products, without telling them why you think this.
For the most part, 1 — 4 ask the salesperson not to harm the customer; 5 and 6 ask the salesperson to help the customer, in particular, help her not to make foolish mistakes. The broader issue is one of disclosure Holley How much information we think salespeople are required to share with customers may depend on what kind of relationship we think they should have, e.
For many products bought and sold in markets, sellers offer an item at a certain price, and buyers take or leave that price. But in some cases there is negotiation over price and other aspects of the transaction.
The locus classicus for this discussion is Carr According to him, bluffing in negotiations is permissible because business has its own distinctive set of moral rules and bluffing is permissible according to those rules.
Carson agrees that bluffing is permissible in business, though in a more limited range of cases. If you have good reason to believe that your adversary in a negotiation is misstating her bargaining position, then you are permitted to misstate yours. A requirement to tell the truth in these circumstances would put you at a significant disadvantage relative to your adversary, which you are not required to suffer. That is, the prices of goods and services are set by the aggregate forces of supply and demand; no individual buys or sells a good for anything other than the market price.
In reality, things are different. Sellers of goods have some flexibility about how to price goods. Most business ethicists would accept that, in most cases, the prices at which products should be sold is a matter for private individuals to decide.
This view has been defended on grounds of property rights. Some claim that if I have a right to a thing, then I am free to transfer that thing to you on whatever terms that I propose and you accept Boatright It has also been defended on grounds of welfare. Prices set by voluntary exchanges reveal valuable information about the relative demand for and supply of goods, allowing resources to flow to their most productive uses Hayek Despite this, most business ethicists also recognize some limits on prices.
One issue that has received increasing attention is price discrimination. This is discrimination based on willingness to pay, or the practice of charging more to people who are willing to pay more. This might at first seem unfair or even exploitative, but in fact it is commonplace and usually unremarkable Elegido ; Marcoux a. Examples of price discrimination include senior and student discounts, bulk discounts, versioning, and the sort of bargaining one finds in car dealerships and flea markets.
We might see price discrimination as an implication of freedom in pricing, and according to a familiar result in economics, price discrimination increases social welfare, provided that it enables producers to increase output Varian But some instances of price discrimination have come in for criticism.
Another issue of pricing ethics is price gouging. Price gouging can be understood as a sharp increase in the price of a necessary good in the wake of an emergency which renders that good scarce Hughes ; Zwolinski As the novel coronavirus spread around the world in early , retailers began to charge extremely high prices for cleaning products and medical supplies.
Many jurisdictions have laws against price gouging, and it is widely regarded as unethical Snyder But some theorists defend price gouging. While granting that sales of items in circumstances like these are exploitative, they note that they are mutually beneficial. Both the seller and buyer prefer to engage in the transaction rather than not engage in it. Moreover, when items are sold at inflated prices, this both limits hoarding and attracts more sellers into the market.
Permitting price gouging may thus be the fastest way of eliminating it Zwolinski For further discussion, see the entry on exploitation. Most contemporary scholars believe that sellers have wide, though not unlimited, discretion in how much they charge for goods and services. Business ethicists have written much about the relationship between employers and employees.
Another important topic at this interface is privacy. For space reasons it will not be discussed, but see the entries on privacy and privacy and information technology. Ethical issues in hiring and firing tend to focus on the question: What criteria should employers use, or not use, in employment decisions? The question of what criteria employers should not use is addressed in discussions of discrimination. While there is some debate about whether discrimination in employment should be legally prohibited see Epstein , almost everyone agrees that it is morally wrong Hellman ; Lippert-Rasmussen Discussion has focused on two questions.
First, when does the use of a certain criterion in an employment decision count as discriminatory? It would seem wrong if Walmart were to exclude white applicants for a job in their marketing department, but not wrong if the Hovey Players a theater troupe were to exclude white applicants for the role of Walter Younger in A Raisin in the Sun.
We might say that whether a hiring practice is discriminatory depends on whether the criterion used is job-relevant. Suppose that white diners prefer to be served by white waiters rather than black waiters. In this case race seems job-relevant, but it seems wrong for employers to take race into account Mason Another question that has received considerable attention is: What makes discrimination wrong?
Some argue that discrimination is wrong because of its effects on those who are discriminated against Lippert-Rasmussen ; others think that it is wrong because of what it expresses to them Hellman For extensive discussion, see the entry on discrimination. According to them, employers have a duty to hire the most qualified applicant.
Some justify this duty by appealing to considerations of desert D. Miller ; Mulligan ; others justify it by appealing to equal opportunity Mason We might object to this view by appealing to property rights.
A job offer typically implies a promise to pay the job-taker a sum of your money for performing certain tasks. While we might think that excluding some ways you can dispose of your property e. In support of this, we might think that a small business owner does nothing wrong when she hires her daughter for a part-time job as opposed to a more qualified stranger. Most would say, and the law agrees, that it is wrong for an employer to terminate an employee for certain reasons, e.
Thus the debate is between those who think that employers should be able to terminate employees for any reason with some exceptions , and those who think that employers should be able to terminate employees only for certain reasons. Arguments for at will employment appeal to freedom or macroeconomic effects. The more difficult it is for an employer to fire an employee, the more reluctant she will be to hire one in the first place.
Businesses generate revenue, and some of this revenue is distributed to employees in the form of compensation, or pay. Since the demand for pay typically exceeds the supply, the question of how pay should be distributed is naturally analyzed as a problem of justice.
Two theories of justice in pay have attracted attention. According to it, a just wage is whatever wage the employer and the employee agree to without force or fraud Boatright This view is sometimes justified in terms of property rights. Employees own their labor, and employers own their capital, and they are free, within broad limits, to dispose of it as they please.
In addition, we might think that wages should be should determined by voluntary agreement for the same reason prices generally should be, viz. According to it, the just wage for a worker is the wage that reflects her contribution to the firm. This view comes in two versions.
On the absolute version, workers should receive an amount of pay that equals the value of their contributions to the firm D. Miller On the comparative version, workers should receive an amount of pay that reflects the relative value of their contributions to the firm, given what others in the firm contribute and are paid Sternberg The contribution view strikes some as normatively basic, a view for which no further argument can be given D.
An analogy may be drawn with punishment. In this way, pay might be understood as a reward for work. Some argue that compensation should be evaluated not only as a problem of justice but as an incentive. The question here is what pay encourages employees to do, and how it encourages them to do it.
Poorly structured compensation packages for traders in the financial services industry are thought to have contributed to the financial crisis of Kolb Traders were incentivized to take excessively risky bets, and when those bets went bad, their firms could not cover the losses, putting the firms and ultimately the whole financial system in peril.
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