Though people have probably practiced business ethics since business began, the idea of business ethics as a definable terms is a modern invention. The term "business ethics" first began being used in academic circles in the 1970s and migrated from there to usage in the business world, until today companies strive to codify business ethics and build ethics into the organization with codified policies.
Most people are raised to be ethical. Whether through religion or personal code, children are taught right from wrong. Laws legislate some ethical behavior, such as not cheating on your taxes, while society dictates others, such as not cutting in line. Business ethics stem from these ideas of what it means to behave ethically as a human being. Many news stories that refer to business ethics refer to the failings of prominent individuals within a business organization, such as the chief executive officer who cheats stockholders or the accountant who embezzles money. These individuals violate both business and personal ethics. Companies try to prevent this kind of behavior with programs of character education, teaching people how to act ethically; and written codes of conduct that employees and management are supposed to follow.
Companies can be seen as ethical or unethical as well. For instance, companies that make use of foreign child labor or that pollute can be considered unethical, even if they aren't breaking any laws. Public attention to such practices can change company policy to fall in line with what society sees as ethical. Some companies call this social responsibility and have written policies and presentations detailing what it means for them to be socially responsible. Other terms businesses use in their written policies include "aspirational," meaning striving for a higher good; "good faith," meaning the information is true as far as anyone can determine; and "sustainability," or maintaining a position for a long period of time. Companies may assign an ombudsman to deal with possible ethics violations and to oversee implementation of ethics policies.
Issues and Ethics
Business ethics look at questions that don't always arise when dealing with personal ethics. For example, most people can agree that employees shouldn't steal from their employers and that companies should not cheat customers. But business ethics also addresses less clear-cut issues, such as whether workers have the right to strike and if hiring based on affirmative action is a good idea. Companies struggle with the question of whether it's just to open a factory in a country known for its human rights abuses or whether sending jobs overseas is ethical if it increases profits. Business ethics seeks to answer these kinds of questions.
Though most of the time companies determine their own policies for business ethics, sometimes the government steps in and tells businesses how they should act. For example, laws prohibit businesses from discriminating on the basis of a person's skin color, religion or country of origin. Other laws require businesses to make accommodations for persons with disabilities. Pollution laws prohibit the amount of pollutants companies can dump into the air and water. The feeling among those who sponsored such laws was that businesses would not voluntarily comply with such behavior even if society generally considered such behavior ethical.