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What is ethics?
Ethics is the science of morals in human conduct - i.e. determining what is the right or wrong course of action. In this
knowledge bank we are most concerned with business ethics.
Furthermore it is possible to distinguish between business ethics (the discipline described above) and an ethical
business (such as The Co-operative Bank) that has decided to place high ethical standards on an equal priority to the
pursuit of profit.
Directors' pay arrangements - should directors continue to receive large pay packets even if the company is
performing poorly?
Should bribes be paid to facilitate contracts, especially in countries where such payments are
commonplace?
Insider trading, where for example directors may be tempted to buy shares in their company knowing that a
favourable announcement about to be made should boost the share price.
Production issues:
Should the company produce certain products at all, e.g. guns, pornography, tobacco, alcoholic drinks
aimed at teenagers?
Should the company be concerned about the effects on the environment of its production processes?
Price fixing and anti-competitive behaviour may be overt and illegal or may be more subtle.
Is it ethical to target advertising at children, e.g. for fast food or for expensive toys at Christmas?
Employees should not be favoured or discriminated against on the basis of gender, race, religion, age,
disability, etc.
The contract of employment must offer a fair balance of power between employee and employer.
Any study of ethics ties in with the religious and cultural background of the society. For example 'Thou shalt not steal'
is one of the Ten Commandments of the Christian faith. Meta-ethics would consider whether such a statement is
always absolutely true, or whether it is only true relative to some society or culture - for example, was Robin Hood
wrong to 'steal' from the rich to give to the poor in medieval England?.
Proponents of business ethics are generally less concerned with meta-ethics and more interested in solving practical
business problems.Business ethics is therefore a normative discipline whereby particular standards are set out and
obligations are placed on participants in a commercial relationship. Experts in applied ethics can then test whether
the normative rules are effective in particular circumstances.
Businesses are part of society. Society expects its individuals to behave properly, and similarly expects companies to
operate to certain standards.
Business ethics is important to both the organisation and the individual.