Fact Checked

What Is the Role of Business Ethics?

K.C. Bruning
K.C. Bruning

The primary role of business ethics is to hold a company and its employees accountable for their actions as they affect others. This includes both internal and external behavior. It keeps businesses and professionals mindful of the consequences of their actions so that they can pursue success responsibly. Business ethics can apply to every aspect of business and thus they typically have a dramatic impact on the structure of a company.

One important role of business ethics is to manage behavior that cannot be covered by governmental laws. There are many actions which, while they are legal, are also detrimental to certain groups such as employees, members of the community, and groups that are affected by the actions of a company. By having a code of conduct, a business can self-regulate its behavior and ensure that it is acting appropriately.

Business ethics can apply to the shareholders of a company.
Business ethics can apply to the shareholders of a company.

The standards for what is acceptable in the professional environment are constantly changing. Another role of business ethics is to demonstrate behavior that is the current norm. Actions that were acceptable in the past can become inappropriate in later years and vice versa.

In addition to ensuring a company acts with sensitivity, another function of business ethics is to keep the business honest. While many unethical behaviors are not illegal, they can often lead to unlawful acts. Having a code of ethics can encourage employees to stay honest and steer clear of potentially illegal behavior.

Maintaining strong business ethics can also have an effect on the success of a company. By acting with sensitivity to others, a business can improve its profile in the community and industry. Ethical companies often inspire trust and loyalty in others and by extension their products or services.

Another role of business ethics is to ensure that the power wielded by large corporations is used to good effect. As a business expands, often opportunities for corruption also grow. In some cases this expansion can obscure or destroy valuable elements in a community. With a good code of conduct, a company can work to repair possible damage caused by its success and even work proactively to help others.

Business ethics can also apply to the shareholders of a company. When making decisions, an ethical company will consider how its behavior will affect all individuals who have a stake in the business. The theory is that while it is legal for a company to act in its own best long-term interests, it is moral to also consider the needs of those who support it.

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Discussion Comments


@indigomoth - It's true that big companies are often operating with questionable ethics but I don't actually think this is a common thing. I think we get a bias from the media, because they are only ever going to report scandals.

The legitimate companies that are following business ethics guidelines aren't going to get into the news because there's nothing interesting to report.


@Fa5t3r - I think the problem is that companies are so large and so impersonal a lot of the time. People who are perfectly lovely when you get them on their own are still going to be willing to go along with things that aren't all that ethical, particularly when they only ever see a part of the whole.

There's also that theory that the person most likely to become a CEO is a psychopath, just because of the way they confidently take charge and ruthlessly deal with problems.

When you add up the people who are willing to be ruthless and the people who are willing to look the other way, it becomes something quite scary. And that's why we need business ethics, as clearly stated guidelines, so that we can point to companies that are doing the wrong thing and make them stop.


My favorite example of business ethics in its purest form is the unofficial Google motto which is "don't be evil."

That's something which people should be able to take for granted from the companies around them, but unfortunately, it rarely seems to work out that way. There is almost always some kind of skeleton in the closet.

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    • Business ethics can apply to the shareholders of a company.
      By: Deklofenak
      Business ethics can apply to the shareholders of a company.