Business ethics is the field of study concerned with principles of conduct in business. The field focuses on how businesses can carry out a wide range of activities while respecting the ethical standards of society. Most countries have laws that enforce certain standards for interactions between companies, consumers, employees, investors, and others. For instance, most Western countries have laws against the use of deceptive advertising practices. Similarly, many countries have laws that prohibit corporations from providing misleading or incomplete financial information to investors. Ethical decisions in business are in many ways similar to the ethical decisions faced by individuals in everyday life. Many such decisions involve issues of fairness, honesty, and responsibility.
Experts in business ethics agree on a number of basic principles. For example, a business should treat its employees, customers, partners, and competitors fairly and with respect. All employees—regardless of race, ethnicity, or sex—should have equal opportunities for promotions, salary increases, and other benefits. A company should also act fairly when building business relationships and dealing with other companies. Fair competition among companies provides a variety of benefits for consumers, including lower prices, a greater number of choices, and better quality goods. Antitrust laws in many nations seek to prevent certain kinds of unethical business behavior and to protect competition and consumers.
Many ethical issues in business involve honesty and integrity. For people or groups to do business with one another, they must have mutual trust. For instance, a supplier must trust that a buyer will pay for orders delivered, and a buyer must trust that a supplier will fulfil orders as negotiated. Likewise, stockholders must trust that corporate accounting documents provide an accurate description of a company’s financial condition. Deceptive or unethical business behavior violates trust and can damage a company’s ability to function.
Responsibility is also an important aspect of business ethics. A company and its employees should seek to be responsible members of society. For example, socially responsible businesses work to minimize the levels of environmental pollution associated with their activities. Responsibility also includes the obligation of a person or group to perform the duties of a particular job or role in a professional manner. Employees should not abuse their business positions for personal advantage. Managers within a company have the responsibility of establishing rules of ethical behavior for their employees and enacting policies and procedures to deal with violations of such rules. These rules, policies, and procedures may be developed with the help of consultants and other experts on ethical issues.