Business Ethics (Meaning and Explanation)

We explain what business ethics is, its origin and characteristics. Also, examples of ethics and lack of business ethics.

What is business ethics?

business ethics It is a set of principles and standards that guide the performance of a company in the field of business. It is governed by morality, that is, the difference between what is good and what is bad, between what is correct and what is inappropriate. It is also governed by ideals and values.

Business ethics applies to all aspects of the organization, including the behavior of the individuals who make it up. The interrelation between business ethics and the professional ethics of your human resources is the basis that will guide the business.

Additionally, companies must minimize any damage or negative impact they may generate on the environment or nearby communities. That is also part of the ethical principles, but due to the specificity and complexity of the social issue, this area is called Corporate Social Responsibility (CSR).

Ethical business have great value among clients and collaborators. Ethics must be part of the business culture at all times so that society trusts the products or services you provide, especially in the long term.

Origin of business ethics

Ethics is a branch of philosophy which deals with the rational study of morality, virtue, duty and good living. In the field of business worldwide, business ethics aims to find the reasons that justify one moral system compared to another, to achieve a balance or a general improvement.

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The term “business ethics” emerged in the United States in the 1970s and expanded in Europe and Japan in the eighties. From a moral point of view, the concept did not mean the same for all regions of the world, due to the sociopolitical and economic differences of each one. What was considered acceptable in one territory may not be acceptable in another.

Business ethics became an academic discipline after a group of philosophers intervened and debated “ethics in medicine.” As a discipline, business ethics is concerned with studying the morals surrounding the performance of companies and their impact on society.

In 2000, issues surrounding business ethics were associated with the United Nations Global Compact (Global Compact). This pact consists of an international initiative to promote ten universally accepted principles on the importance of integrity and ethics in commercial relationships between companies and between people in the business world.

Characteristics of business ethics

Companies are legal entities and, like human beings, their activities must be based on compliance with the law and be legitimate before the community. That is why they must apply ethics at the organizational level. Some characteristics of business ethics, as established by the United Nations, are:

Solidarity It consists of actively expressing interest in the well-being of others (its members and external agents).
The efficiency It consists of the responsible use of resources, both for production and for the performance of the organization.
The rationality It consists of using logic to make decisions, and not impulses, prejudices or emotions.
Equity It consists of treating individuals equally, without prejudice or discrimination. It requires having the capacity for empathy.
The dignity. It consists of acting responsibly, respecting others (other organizations or people) despite differences.
Transparency It consists of showing your activity in a clear and simple way, without hiding information or generating confusing messages.
Continuous improvement It consists of a performance that is constantly evaluated, even though it is working correctly.

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Importance of business ethics

Business ethics is an essential factor for society. Companies have great potential to transform people's lives and alleviating poverty through economic growth.

However, must be aligned with the objectives of the society they serve That is, they must act under business ethics. Otherwise, the long-term growth of some of the parts (of the company or society) may be reduced.

Governments in developing countries face many social and economic problems that challenge ethical practices, due to the contrasts between poverty and the more prosperous classes, social inequality and access to a quality of life that satisfies basic needs.

act low Business ethics represents a financial cost for every organization which is a long-term investment for your subsistence and that of your environment.

The benefits are several: reduction in fatal accidents, budget optimization after appropriate management of resources, increased employee motivation, improvement in the institution's image within the market.

Examples of business ethics

Some examples of ethical behaviors that can occur in the business world are:

Act according to values such as equality, freedom, dialogue, respect and solidarity.
Develop an organizational culture with common values for all its members, beyond the different levels of hierarchy.
Make the effort to achieve the satisfaction of all agents involved in the company, as shareholders, managers, employees, suppliers and customers.
Assume social responsibility for their actions and for their direct and indirect impact.
Work actively to reduce conflicts between the parts that make up the company.

Examples of lack of business ethics

Some examples of unethical behavior that can occur in the business world are:

The bribes to the authorities to obtain a benefit.
corruption such as the illegitimate use of privileged information (tax, financial or legal).
Lack of security measures to carry out the activities.
The abuse of power internally and with agents external to the company.
Failure to comply with regulations current.
Discrimination which can occur for reasons of race, gender, ideology, religion, physical appearance, among others.
Labor exploitation in any of its forms (such as long hours or child labor).