Business Ethics: Ethical Decision Making

by Janet Hunt; Updated September 26, 2017
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Business ethics play an important role in a company's success or failure. A company has a special obligation to its customers to ensure that its decisions are legal and ethical. Management must set the example of a company's core values. The company will forever be known for how it handles business transactions and how it treats people. The choices a company makes speak volumes about its values.

Definition of Business Ethics

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Business ethics consists of the choices people make in a working environment. Factors that influence your business ethics include your personal belief system, environmental factors such as "our schools, families, friends and religious organizations" (Trevino and Nelson, Page 9), and the business code of your place of employment.

BusinessDictionary.com defines values as beliefs shared by members of an entire culture, as opposed to ethics, which relate to individual belief systems. A culture's value system determines what influence "society" has on the individual's decision-making process. The belief system of the majority of the culture decides what's good and desirable for the society.

Professional Code of Ethics

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An organization needs a professional code of ethics. Without it, employees have no set policy for interpreting values that aren't always clear. It's in the organization's best interest to have a set code of ethics rather than leaving ethical decisions up to employees' discretion.

According to Trevino and Nelson (Page 12), "Leaders identify appropriate and inappropriate conduct, and they communicate their expectations to employees through ethics codes, training programs, and other communication programs." Business ethics develop through company policies, many of which were created due to unethical situations and conduct at the workplace. Management should constantly evaluate and reevaluate the company's professional code of ethics for accuracy pertaining to the company's needs.

The company's executive management team sees an employee who follows the company's code of ethics as an asset to the company. Following the company's code of ethics helps in achieving the company's overall business goals.

Fiduciary Ethics

AllBusiness.com provides an example of professional ethics regarding conduct for CPAs. The American Institute of CPAs developed a code of professional values and ethics to safeguard the reputation of the industry and the public's confidence in public accountants. Violating this code of professional ethics subjects the accountant to disciplinary action. As examples of violations, a CPA cannot represent a client in whose company the CPA has a financial interest. CPAs must also maintain client confidentiality and exercise professional competence.

Ethics in e-Commerce

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Conducting e-commerce has particular ethical and legal considerations, especially in the area of marketing. Businesses can collect a vast amount of personal information and data about an individual. Integrated databases, polling and purchasing data pose serious questions about the rights of an individual regarding personal information. This data is easily collected, exchanged and even sold.

While some of these methods are not illegal, being legal doesn't equate to being ethical. Several groups have formed to seriously consider the long-term effects of computer ethics, including the Association for Computing Machinery, the Institute of Electrical and Electronics Engineers, the Computer Ethics Institute and the Association for Computing Machinery.

About the Author

Janet Hunt has worked in the insurance industry for more than 15 years. Now serving in online marketing, she also has expertise in business and finance topics. Hunt received her Bachelor of Business Administration from the University of Phoenix. Hunt has also worked as a food services manager for a high school cafeteria and received her school nutrition certification in 2002.

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