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When one is dealing with ethics, clear thinking is extremely important, because most ethical issues and problems are controversial, involving emotional questions of right and wrong behavior. A good first step is to have a clear definition of ethics.
What Is Ethics?
Ethics is a set of rules that define right and wrong conduct. These ethical rules tell us when our behavior is acceptable and when it is disapproved and considered to be wrong. Ethics deals with fundamental human relationships. Ethical rules are guides to moral behavior. For example, all societies have ethical rules forbidding lying, stealing, deceiving, and harming others, just as they also have ethical rules that approve of honesty, keeping promises, helping others, and respecting the rights of others. Such basic rules of behavior are thought to be essential for the preservation and continuation of organized life.
For many people, religious beliefs and organizations are a major source of ethical guidance and moral meaning. The family institution also imparts a sense of right and wrong to children as they grow up, as do schools and other similar influences such as television. The totality of these learning experiences creates in each person a concept of ethics, morality, and socially desirable behavior. Ethical rules are present in all societies, all organizations, and all individual persons, although they may vary greatly from one to another. Your ethics may not be the same as your neighbor's; or one particular religion's notion of morality may not be identical to another's; or what is considered ethical in one society may be forbidden in another society. In spite of this diversity, ethics is a universal human trait. All people everywhere need rules to govern their conduct, rules that tell them whether their actions are right or wrong, moral or immoral, approved or disapproved.
What is Business Ethics?
Business ethics is not a special set of ethical rules different from ethics in general and applicable only to business. Business ethics is the application of general ethical rules to business behavior. If a society's ethical rules say that dishonesty is unethical and immoral, then anyone in business who is dishonest with employees, customers, creditors, stockholders, or competitors is acting unethically and immorally. If protecting others from harm is considered to be ethical, then a business firm that recalls a defective and dangerous product is acting in an ethical way.
In the TG&Y episode, both the buyers who took the bribes and the bribers acted unethically because they deceived others, took unfair advantage of them, and then concealed their own selfish actions. They broke the rules of fair play. Likewise, the banks that allowed laundered money to [low through their accounts not only broke the law but protected criminals who harmed society and who brought tragedy into the lives of drug users and addicts. The supervisor who failed to give an employee advance notice of being fired was not breaking the law, but she felt unethical in not telling the whole truth. When business firms or people in business violate the rules that define right and wrong behavior, they are acting unethically, and they also may be acting illegally.
Why Is Business Ethics Important?
Why should business pay attention at all to ethics? What prevents a business firm from piling up as many profits as it can, in any way it can, regardless of ethical rules? In most cases, the general public expects business to exhibit high levels of ethical performance and social responsibility. Parker Brothers spent $ 10 million in recalling the toy that was involved in the death of two children because company executives knew that its customers and the general public would approve its attempts to protect children's lives, even though the likelihood of further accidents was remote.
A second factor encouraging business firms and their employees to act ethically is to prevent harm to society. One of the strongest-ethical principles is stated very simply: "Do no harm." A company that is careless in disposing of toxic chemical by-products that may cause disease and death is breaking this ethical injunction. Many ethical rules operate to protect society against various types of harm, and business is expected to observe these commonsense ethical principles.
A third reason for promoting ethical behavior is to protect business firms from abuse by unethical employees or unethical competitors. Bribery and kickback schemes penalize honest business firms: "One New York apparel vendor says he lost a $4 million account with one of the nation's largest retailers because he, unlike one competitor, didn't bribe the buyer with $ 20,000 cars and pricey stereo systems."
High ethical performance also protects the individuals who work in business. Employees resent invasions of privacy (such as unjustified polygraph tests) or being ordered to do something against their personal convictions (such as "midnight dumping" of toxic wastes) or working under hazardous conditions (such as entering unventilated coal mines). Businesses that treat their employees with dignity and integrity reap many rewards in the form of high morale and improved productivity.
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