Ethical issues in business may concern employer/employee relations, company/customer relations, company/shareholder relations, company/competitor relations, as well as relations between the company and the wider community.
Ethical problems in business can arise for a number of reasons - let’s consider some:
Businesses need to be competitive in the market place and some businesses will view ethics as a constraint to profits. In some instances strong ethical principles can reduce profits e.g. labour costs may increase due to the requirement to pay employees a fair wage, or potential contracts may be lost to competing companies with less ethical principles who are engaged in activities such as bribery or the exploitation of a labour force or the environment.
The global diversification of organisations has also brought specific ethical dilemmas. Multinational organisations may do business with organisations in countries with different ethics to their own e.g. in countries where there is more widespread bribery, sexual or racial discrimination, and less legal protection e.g. of human rights and the environment. Multinational companies must decide whether to adhere to their own ethical principles or adjust to the ethical principles of the country they are working. On the other hand unethical business practices can prove costly - unethical businesses can potentially loose customers with have higher ethical principles, loose employees with higher ethical principles, loose their business reputation and incur legal costs,
Businesses also face ethical issues resulting from the behaviour of its employees some of which may have legal implications. For example, in many countries legal action may be brought on the grounds of discrimination where a supervisor or manager discriminates against an employee on the basis of protected characteristics such as age, race and gender. Unethical working conditions may also result in legal action e.g. where a business has failed to comply with safety standards around equipment/ clothing etc.
Application of Business Ethics
There are many factors to consider when promoting an ethical business and many factors are considered later in the lesson where we consider the best application of ethics by an individual. The set task for this lesson also asks you to consider the necessary requirements to operating an ethical business, here are a few factors to get you started:
- Ethical businesses should be honest, obey the law, maintain professional standards and refrain from taking bribes.
- Ethical businesses should treat employees fairly avoiding discrimination.
- Ethical businesses should respect the community it operates in
- Being ethical can be a selling point when marketing a question; but there is a contrary dilemma to be considered -Is it ethical to use ethics for marketing purposes?