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Business Ethical Practice

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Government and other stakeholders of the business are emphasizing the relevance of ethical practices by business organizations. In recent years, we have seen many unethical behaviors taking place in the operations of certain businesses worldwide. This makes the society unsafe for upcoming businesses, healthy competition, and consumers.

Business ethical practice is an issue which is increasingly being given proper attention in the business world today. Businesses are recognizing that more and more customers are becoming ethically conscious day-in-day-out. It is now being proved in recent studies that many investors use the ethical behavior of a company in the society as a yardstick for choosing a company to invest in. In order to remain sustainable and competitive in the global market, many businesses have recognized the need to adopt the good ethical practice.

The concept of theoretical approaches to business ethics

Different philosophers and theorists have propounded various theories on what can be considered morally acceptable and unacceptable. Among these theories are: [2]

Teleology (Consequentialist theories)

The consequentialists approach to ethical reasoning involves justifying an action by the outcomes or results achieved by such action. From this fact, it is evident that consequentialism is based on two principles:

What is morally right or wrong depends only on the outcomes or results of an act.

The more good consequences can be produced by an act, the better that act.

According to the consequentialists, the results achieved by an action or a decision determines whether to categorize it as an ethical or unethical one. In assessing what the best consequences are, consequentialism is not very informative unless combined with other theory. Utilitarianism and egoism are the most influential forms of consequentialism.


In the utilitarian approach to ethical consideration, the emphasis is laid on the amount of good and harm which might be derived from an action or a decision i.e. judge a particular action or decision by the total amount of happiness or unhappiness it creates. For example, when a company decides to move its manufacturing plant from one location to another, what would be the amount of good i.e. happiness caused and amount of harm i.e. unhappiness that the movement would create. The utilitarian approach to business ethics is also evident when analyzing a particular action or decision on a cost-benefit basis. For example, when all the costs incurred from an action are added and compared with the resulting benefits. If the benefit is more than the cost, the action may be considered ethical.

According to a utilitarian, if the amount of good appears to outweigh the amount of harm in the course of the movement, the decision is considered as being ethical. But if the reverse is the case, it is an unethical decision. A good reference for this is in the quote of John Stuart Mill in his Greatest Happiness Principles. He quotes that “Actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness”. In a nutshell, utilitarianism says that an action that is ethically right in a given situation is the one that produces the most happiness and least unhappiness for the largest number of people. Relating the concept of utilitarianism to today’s business, an organization that weighs the number of influences its decisions and actions has on the numbers of stakeholders and use it as a basis of moral standards is said to adopt a utilitarianism approach.


Egoist theories define right and wrong in terms of the consequences to one’s self. In any ethical decision-making situation, an egoist would weigh and choose among alternatives those that would contribute in the largest amount to his/her personal self-interest. Before doing this, critical consideration would have been done in assessing the effects of such action or decision on his/her physical, mental or emotional welfare. An egoist theory is evident in today’s business where a particular organization base its ethical values on actions and decisions which it can to a very large extent, derive its primary purpose or objectives.

Deontological Theory

This theory is also referred to as “duty-based theory” of business ethics. This is because the word deontological was derived from the Greek word deon meaning duty. Rather than focusing and attaching what is morally right or wrong to the consequence that an action or a decision brings, deontologists based their decisions about moral right and wrong on broad and universally acceptable ethical values such as honesty, fairness, duty, respect for human beings etc. According to the deontological approach, some actions or decisions would be considered wrong even they created consequences that were good while others would be viewed as good even when bad results were achieved. For example, an auditor embracing deontological approach would likely insist on telling the truth about a company’s financial difficulties even if doing so might put the company out of business and his/her job on the line.

Summarily, deontologist denies that what ultimately matters is not the consequences of an action but the action itself. Deontology is mostly related to Immanuel Kant, a German philosopher. The deontological theory is evident in many businesses today were [3] organization critically put into consideration their business activities so as to be fair, accountable and transparent in their dealings with stakeholders.

Virtue ethics

Virtue ethics are normative ethical theories which emphasize virtues of mind and character. Virtue ethics is a broad term for theories that emphasize the role of character and virtue in moral philosophy rather than either doing one’s duty or acting in order to bring about good consequences. A virtue ethics is likely to give you this kind of moral advice: “Act as a virtuous person would act in your situation.”

Most virtue ethics theories take their inspiration from Aristotle who declared that a virtuous person is someone who has ideal character traits. These traits derive from natural internal tendencies, but need to be nurtured; however, once established, they will become stable. For example, a virtuous person is someone who is kind across many situations over a lifetime because that is her character and not because she wants to maximize utility or gain favors or simply do her duty.

Ethical issues that can affect the operational activities of today’s business

An ethical issue can be described as a problem, situation or opportunity which requires individuals, group or an organization to choose among several actions those which must be evaluated as right or wrong, ethical or unethical. Hence, an ethical issue from the business point of view is a subject matter which raises questions about the standards of conduct or behaviors which are being adhered to by the company separate from the financial motives. In some situations, certain ethical issues may require the company to undertake behavior which is unprofitable if it adheres to one set of standards or profitable if adheres to another set of standards. For example in the UK, while employing women at lower rates of pay than men may have been considered acceptable according to the business ethics of the 1960s, it was not by the 1970s and indeed the Equal Pay Act which was passed in 1970. Examples of ethical issues faced by today’s businesses are:

Environmental Issues

The environmental issue is becoming an area of increasing concern for every business nowadays. Considering the growing concerns of global warming, many businesses now strive hard to reduce their emissions of carbon dioxide and encourage the production of more energy-efficient equipment and appliances. The objective is to stabilize greenhouse gas concentration in the atmosphere at a level considered less able to trigger dangerous climate change. Other environmental issues that can affect the operational activities of today’s business are in the aspects of water utilization and pollution, responsible sourcing and waste management i.e. recycling. For example, the Coca-Cola Company has an environmental issue in India when it was reported by some communities that its operation has led to a shortage of water, water pollution, and illegal toxic dumping. This really affects the operation of the company. Another recent issue that raised ethical questions is that of BP Gulf oil spills.

Employment Issues

These are issues relating to working for or taking up a role in an organization. Examples of issues arising from discharging one’s duties in the workplace are:

Discrimination: This occurs when individuals are not being treated accordingly in the workplace. Examples of areas where discrimination may occur are in pay, promotion and performance evaluation. Also, racial and sexual discriminations in an organization create ethical issues which can, in turn, affect the operations of such an organization. In the UK, employers must not discriminate base on the aforementioned factors and if found guilty in any aspect by any employer, such employer will be liable.

Equal Opportunities and Diversity: On the ground of being operating ethically, many organization gives proper attention to equal opportunity during the process of recruitment, selection, staff training etc. They also promote diversity in every aspect of their business operation by employing and dealing with different people of different nationalities, backgrounds, cultures, people with disabilities etc. All these go a long way in influencing business operations. For example, failure to give equal opportunities may lead to a high rate of staff turnover, reduce employee morale and the rate of absenteeism in an organization.

Advertisement and Marketing

The process of creating awareness for products and services, the means of distribution, the ways in which product/service are priced and the promotional strategies adopted are a business area that generates potential ethical issues. For example, false or misleading marketing communications i.e. the use of deceptive sales tactics can jeopardize customer’s trust in a company. Also, charging unnecessary and unjustifiable high price or engaging in price fixing for a product or service may be considered unethical by buyers or users. These can affect business operations. Many businesses try to adopt ethical standards for advertising and marketing and this goes a long in influencing how they operate. [9] Labour Utilization

The manners in which labor is being used and paid for in the production of goods and provision of services constitute a major issue to business ethics. For example, utilizing labor at below minimum wage, not complying with health and safety standards, poor working conditions etc are current ethical issues in today’s business. Also, it was revealed recently that the amounts of money paid as wages to workers by companies in some part of Asian and African countries are by far too low compared to the amount of labor utilized for production.


In the UK and other parts of the world e.g. US, consumers have rights to quality products and services. That is the reason why businesses, during their process of production give proper attention to methods adopted in the process of production and standards laid down by regulations. On the ground of being ethical in operation, businesses now engage in proper product labeling, packaging, honest advertisement, safe and quality products etc all for protecting consumer’s interest.

Conclusion and recommendations

This report has revealed that good ethical practices by businesses are very significant to the realization of organizational success. A business organization that embraces ethical ways of conducting its business affairs is more likely to achieve employees’ commitment, loyalty, and satisfaction which in turn lead to quality of works and increased performance than unethical one. Such a business will also portray good organizational value in the eyes of the stakeholders. It is also concluded that adopting good ethical behavior will increase being competitive, business sales, profit, customers retention and loyalty, and investments to mention a few.

Since the relevance of business ethics cannot be downgraded in today’s business world, it is highly recommended that business organization embrace ethical practices. Businesses should handle ethical issues such as discrimination and equal opportunities in the workplace in the best possible manners. Obviously business do operates in a vacuum, environmental issues such as energy utilization, minimizing waste and recycling should be properly addressed so that business operations will not be negatively influenced by stakeholders.

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