Business ethics is the field of ethics that examines moral controversies relating to the social responsibilities of business practices, in any economic system. It looks at various business activities and asks "Is this ethically right or wrong".

Topics within this field include deception in advertising, covert monitoring of employee computers and telephones, insider trading, disinformation planting, ponzi scheme, employee rights, confidenciality, job discrimination, affirmative action, drug testing, bribery, political contributions, price discrimination, product churning, unethical labour practices, retail price maintenance, environmental issues, collusion, grey marketing, patent and copyright enfringement, tort law, negligence, product liability, sexual harassment, accounting accountability, tax avoidance, numerous sales techniques, covert marketing research, product placement, planned obsolescence, business intelligence gathering, industrial espionage, undercover marketing, kick-backs, sex in advertising, spam, telemarketing, payola, pyramid schemes, black market, competitive raiding, corporate crime, union busting, preditory pricing, hostile take-overs, creative accounting, child labour, and whistle blowing.

Business ethics is closely related to the philosophy of business which deals with the philosophical, political, and ethical underpinnings of business and economics. The philosophy of business asks questions like what the social role of business should be, if indeed it should have one at all, questions of individualism vs collectivism, freewill, enlightened self interest, “invisible hand theories”, and natural rights.

It is also closely related to political economy which is economic analysis from a political, normative (rather than positive), and historical perspective. Political economy deals with the distributive consequences of economic actions. It asks who gains and who loses.

Table of contents
1 Normative business ethics
2 Three levels of application
3 An example of an ethical question in business
4 Ethics statements and ethics codes
5 Religious views on business ethics
6 Political views of business ethics
7 See also:
8 References

Normative business ethics

Business ethics is primarily an applied ethics. It takes ethical concepts and applies them in specific business situations. Like political economy, but unlike the philosophy of business, business ethics is a normative discipline. It makes specific judgements about right and wrong. It makes claims about what should be done and what aught not to be done. It is less concerned with explaining or describing ethical events (called descriptive ethics) or analysing ethical concepts to achieve a deeper understanding of their meaning and justification (called analytical ethics).

Three levels of application

Business ethics can be applied at three levels; the individual employee , the organization, and the society. Very othen situations arise in which the three levels are not in line. A behaviour many be good for the employee, bad for the company, and good for society (or some other combination). Some ethicists (in particular Henry Sidgwick) see the role of business ethics as the harmonization and reconciliation of these three conflicting levels.

An example of an ethical question in business

Disagreements exist within the field regarding whether ethical imperatives imply only compliance with legal standards or going beyond such standards. This relates to the broader philosophical question of the appropriate role for business. If the role of business is to maximize the return of shareholders, then only activities that increase profitability should be encouraged. This would enclude obeying all laws because the consequences of failing to do so could be very costly both in fines and company reputation. If you see the company as having a social responsibility, then going beyond minimum legal requirements makes sense. It is sometimes claimed that a Gresham's law of ethics applies in which bad ethical practices drive out good ethical practices. In a competitive business environment, those companies that survive are the ones that recognize that their only role is to maximize profits.

A related problem is where a company faces multiple legal standards. Problems arise for multinational companies when various jurisdictions have different legal requirements: Do they obey the laws of their home country, or the less stringent laws of the developing country that they are operating in? For example American law forbids American companies from giving bribes domestically or overseas. But in some parts of the world, hidden bribes are the way business is conducted. What is the US company to do? Similar situations occur in regards to employee safety and environmental protection laws.

Ethics statements and ethics codes

Many companies are drafting policies in regards to ethics. When these policies are summarised into a few sentences that give general guidelines they are called ethics statements. When they are itemized in a multi-page list that covers many specific situations, they are called ethics codes.

Their purpose is to give employees guidance in ethically ambiguous situations. This should create consistency. It may or may not raise the level of behaviour, depending on the ethical standands of individual employees relative to the new codified standards.

Not everybody is happy with their use. Some claim that many ethical situations are better dealt with by giving individuals discresion and leting them use their best judgement. Many are also skeptical, claiming the main purpose of ethics codes is really to limit the companies legal liability. In case of a law suit the company can claim that the problem would not have arisen if the employee had followed the code properly.

There is often a dissonance between code and practice. Frequently the code will say one thing, but the established practice in the organization is something quite different. This puts the employee in an untenable situation.

To be sucessful a code of ethics should:

Religious views on business ethics

Jewish business ethics

Judaism has an extensive literature and legal code on the accumulation and use of wealth. The basis of these laws is the Torah, where there are more rules about the kashrut (fitness) of one's money than about the kashrut of one's food. These laws are developed and expanded upon in the Mishnah and the Talmud.

Rabbi Yisrael Salanter (19th century), founder of the Mussar movement in Eastern European, taught that just as one checks carefully to make sure their food is kosher, so too should one check to see if their money is earned in a kosher fashion. (Chofetz Chaim, Sfat Tamim, chapter 5).

Christian business ethics

Christianity has an extensive literature and legal code on the accumulation and use of wealth. The basis of these laws is the Torah, and they are amplified in the New Testament.

Muslim business ethics

Islam has an extensive literature and legal code on the accumulation and use of wealth. The basis of these laws is the Quran, and they are amplified in the Hadith.

Political views of business ethics

Libertarian socialist view

Libertarian socialists, sometimes known as left-anarchists, hold that, as Proudhon said, "Property is theft" -- that is, in reference to the ownership of productive resources, property is not the right to use, but the right to keep others from using. Advocates of this philosophy therefore hold the "institution of property", as they sometimes call it, to be immoral in itself, so the accumulation of wealth that includes productive resources, especially land, is also immoral. This means that no business can really be ethical, since the very foundation of business as we know it is private property.

See also:


General references

Moral Issues in Business, Vincent E. Barry, Belmont, CA: Wadsworth, 1986
Essays on Ethics in Business and the Professions, Jack N. Behrman, Englewood Cliffs, NJ: Prentice Hall, 1988
Ethical Dilemmas in the Modern Corporation Gerald F. Cavanagh, Prentice-Hall, 1988
Ethics and the Management of Computer Technology: Proceedings of the Fourth National Conference on Business Ethics National Conference on Business Ethics (4th: 1981: Bentley College) Cambridge, MA: Oelgeschlager, Gunn & Hain, 1981
Above the Bottom Line: An Introduction to Business Ethics Rbert C. Solomon, Harcourt Brace Jovanovich, 1983

Jewish references

You Shall Strengthen Them: A Rabbinic Letter on the Poor Elliot N. Dorff with Lee Paskind, The Rabbinical Assembly, NY
Free Enterprise and Jewish Law: Aspects of Jewish Business Ethics Aaron Levine, Ktav Publishing House, 1980
The Challenge of Wealth, Meir Tamari, Jason Aronson Inc., 1995
With All Your Possessions: Jewish Ethics and Economic Life, Meir Tamari, Free Press, 1987, AISN: 0029321506
Al Chet: Sins in the marketplace, Meir Tamari, Jason Aronson, 1986, ISBN: 1568219067

Christian references

Biblical Business Ethics: Exploring Secular Ethical Values & Alternative Christian Approaches, David Bertch, Terry Martin, Dyna Martin, Works Press, 1994. ISBN: 0963447238
Business By The Book: The Complete Guide Of Biblical Principles For The Workplace, Larry Burkett, Nelson Reference; Updated edition 1998, ISBN: 0785271414
God is my CEO: Following God's Principles in a Bottom-Line World, Larry S. Julian, Adams Media Corporation, 2001, ISBN: 1580624774
Full value: Cases in Christian business ethics O.F. Williams and J. W. Houck, San Francisco, CA: Harper & Row, 1978

Muslim references

Islamic Business Ethics Rafik Issa Beekun, The International Institute of Islamic Thought
Islam and the Economic Challenge M.Umer Chapra
The Problem With Interest Tarek El Diwany
Distributive Justice And Need Fulfilment in an Islamic Economy Munawar Iqbal, The Islamic Foundation, Leicester, U.K.
Islamic Commercial Law: An Analysis of Futures and Options Mohammad Hashim Kamali
Banking Without Interest Muhammad Nejatullah Siddiqi