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What are Corporate Ethics?

Tricia Christensen
By
Updated May 16, 2024
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Corporate ethics are a set of beliefs to which a company adheres that govern its behavior in the ways it conducts business. Some corporations have well defined ethical parameters and others don’t, or they sacrifice ethical behavior to profit and determine that gaining profit and power are the most desired motives. When discovered in this type of activity, there is often a strong backlash that results in losing profits. This suggests that even if the decision to adopt defined corporate ethics is purely motivated by profit, it may be good business.

The ways companies conduct business are multiple and complex, and corporate ethics may operate on numerous levels. Ethical considerations can determine how a corporation competes at the business level with other corporations. Are they aggressive, and prone to change their minds or drop allegiances with other companies for their own benefits, or does the corporation cheerfully compete with and support the efforts of its competitors?

Another way corporate ethics get expressed is through the care a corporation takes in interacting with customers or people on other levels. Decisions about how customers are treated are important, but decisions on what type of responsibility the corporation plays in protecting the environments of people are valuable too. A company that routinely releases chemicals into the environment can have great customer service, but its actions suggest the bottom line is not protecting the people that it serves. Many corporations now take great pains to promote sustainability, and these efforts are well received by customers and neighbors.

Employee relations is a different aspect of corporate ethics. Are employees provided with decent living wages and health care access? If profits go down, does the company immediately lay off workers to satisfy shareholders, or does it work to retain people’s jobs in difficult economic times? How a corporation handles this is variable and is one of many ethical dilemmas all corporations face.

Ethics are not easy, and might be considered as a series of judgment calls. A corporation must engage ethically with multiple parts of itself, other competitors, and the public, deciding what to do when ethical responsibilities conflict. Following corporate ethics in one way might prevent satisfying some other part of the corporation: for example, laying off employees to satisfy shareholders or using more polluting chemicals to save on costs to save employee jobs. Such decisions are difficult to make. Nevertheless, corporations that take a strong stance on ethical operation must try to negotiate each judgment call, while remaining true to their ethical code.

When a company does not have a code of corporate ethics, its behavior tells others what the corporation considers ethical. Constantly negative and only profit-induced decisions can be greatly disparaged by the public. Additionally, employees come to work with moral codes of their own, and might find it challenging to adopt a conflicting code at work. It is true, that many people sacrifice personal ethics in order to work or fail to see the obvious discrepancies between personal and business ethics.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen , Writer
With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.

Discussion Comments

By serenesurface — On Jul 17, 2014

I work at a business that sometimes takes decisions I find unethical. I'm actually looking for a different job for this reason. I realized recently that it's very important for a business' ethics and its employees' ethics must match. If it doesn't, then employees become resentful and won't want to work there any longer. This may actually be a good thing because maybe the directors of the business will realize that they are on the wrong path. Maybe it will get the business to change.

By candyquilt — On Jul 16, 2014

@fBoyle-- I don't agree with you at all. I think it's very important for businesses to have ethics rules and to follow them. Money and profits are not everything. Prestige and honesty are important too. I think that a business can be very ethical and still be very successful.

It's true that there is a lot of competition, but we should also keep in mind that employees and consumers have ideals as well. And they are more likely to prefer a prestigious business that acts ethical on all grounds. Respect is just as important as profits. If a business is respected, then it will do well regardless of the circumstances.

Humans are not money counting machines. We have beliefs, values and morals. Ethics is important in every arena and it certainly has an important role in the corporate world. At least this is how I feel about this topic.

By fBoyle — On Jul 16, 2014

Corporate ethics can be adopted and abound by as long as it doesn't lead to great losses for businesses. I think that as long as a business follows laws, it may sometimes have to act "unethically" for profit. The business world is rather competitive and if a business were to act in accordance with strict ethical rules, I'm afraid it might not survive.

Tricia Christensen

Tricia Christensen

Writer

With a Literature degree from Sonoma State University and years of experience as a SmartCapitalMind contributor, Tricia...
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