1. Business Ethics
Business ethics refers to the moral principles and values that guide the behaviour and decisions of a company and its employees. It involves the application of ethical principles to business practices, ensuring that businesses act responsibly, fairly, and transparently in their operations.
- To exist and be successful in a competitive world a business has to be ethical.
- An ethical organisation can be recognized on the basis of its corporate excellence and also on its relations with the stakeholders.
✅ 1. Utilitarianism
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Core Idea: The right action is the one that maximizes overall happiness or well-being for the greatest number of people.
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Key Focus: Consequences of actions — the ends justify the means.
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Application in Business: A company might make a decision that benefits the largest number of stakeholders (e.g., customers, employees, society), even if it means sacrificing the interests of a few.
Example: A company decides to cut costs by laying off a small number of employees, but the savings are reinvested into a new product that benefits a large number of customers.
✅ 2. Rights/Duty-Based Ethics (Deontological Ethics)
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Core Idea: Actions are right or wrong based on whether they respect the moral rights of individuals, regardless of the consequences.
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Key Focus: Individual rights — respecting autonomy, privacy, freedom, and fairness.
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Application in Business: A decision should ensure that people’s rights, such as the right to privacy or the right to fair compensation, are upheld.
Example: Ensuring all employees are paid fairly for their work and not discriminated against, regardless of how this affects company profits.
✅ 3. Justice-Based Ethics
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Core Idea: Fairness is the core of this framework. Justice-based ethics advocates for equal treatment and fair distribution of benefits and burdens.
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Key Focus: Fairness and equality — distributing benefits and burdens in a way that is fair to all stakeholders.
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Application in Business: Ensures that employees, customers, and other stakeholders are treated equitably and that no one is unfairly advantaged or disadvantaged.
Example: A company follows the “Same Job, Same Wage” principle, ensuring that all employees doing the same work are compensated equally.
✅ 4. Virtue Ethics
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Core Idea: The right action is the one that is in line with moral virtues (such as honesty, courage, fairness, and integrity).
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Key Focus: Character and integrity — doing what a virtuous person would do.
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Application in Business: Decision-makers are encouraged to act in a way that reflects virtuous characteristics and promotes the well-being of others, not just the bottom line.
Example: A company may decide to take responsibility for a product defect, not because of legal obligation, but because they believe it is the right thing to do in terms of their character and integrity.
✅ 5. Ethical Relativism
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Core Idea: Ethical principles are not universally applicable, and the rightness or wrongness of an action depends on cultural, societal, or individual beliefs.
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Key Focus: Context and cultural norms — decisions depend on the context and societal values.
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Application in Business: A company might follow local customs and practices in different regions where they operate, even if those practices differ from their home country’s standards.
Example: In some countries, business practices like gift-giving or hospitality are essential for building relationships, while in others, such actions may be seen as unethical.
✅ 6. Egoism (Ethical Egoism)
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Core Idea: An action is right if it promotes the self-interest of the decision-maker, or the company as a whole.
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Key Focus: Self-interest — making decisions that benefit oneself or the organization.
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Application in Business: A decision is considered ethical if it results in the greatest benefit for the decision-maker or organization, even if others are harmed.
Example: A company may cut costs by reducing employee benefits to maximize shareholder profits, arguing that the decision ultimately benefits the company’s success and sustainability.
Short Summary
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Utilitarianism:
“How can I do the greatest good for the greatest number of people?” -
Duty Based:
“How Can I meet obligations under absolute universal moral law?” -
Virtue:
“How can I ensure I’m behaving with high moral character?” -
Relativism:
“How must I behave to be considered acceptable to those in my society?” -
Justice:
“How should I act so that I treat others equally and fairly?” -
Egoism:
“How can I act so that I can benefit my own self-interest?”
📘 Business Ethics and Stakeholder Relations
In today’s competitive environment, ethical conduct is essential for business survival and success. Ethical businesses build trust, reduce risks, and ensure long-term sustainability through responsible practices.
An ethical organization is not defined solely by corporate excellence or profits, but by how it treats its stakeholders—employees, customers, investors, suppliers, and society. Fairness, transparency, and accountability in stakeholder relationships are key indicators of ethical behavior.
Thus, while corporate performance is important, ethics are best reflected in stakeholder engagement and responsible decision-making.
Additional Resource: Ethics In Management PPT