Ethical Decision Making in Business

The assignment delves into the complexities of ethical decision-making within a business context. It requires students to examine various ethical decision-making frameworks, analyze real-world case studies involving ethical dilemmas, and ultimately develop their own comprehensive framework for navigating ethical challenges in business.

Running Head: Business ethics & Compliances
Table of Content:
Introduction...........................................................................................................................................3
Business Ethics......................................................................................................................................4
Features of Business Ethics................................................................................................................4
 Code of conduct.....................................................................................................................4
 Depend on Moral & Social values-.........................................................................................4
 Provides protection to the social groups...............................................................................4
 Provides basic framework/guidelines-...................................................................................4
 Voluntary...............................................................................................................................4
 Requires education & guidance.............................................................................................4
 It’s a relative term..................................................................................................................4
 New concept..........................................................................................................................5
Compliance alone is not enough...........................................................................................................5
Company and business laws are getting tougher by each passing day, and it is becoming difficult
for
Business ethics & compliances

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business to neglect the same............................................................................................................5
Ethics on the contrary take a different approach..............................................................................5
Ethics V/s Compliance.......................................................................................................................6
Corporate Social Responsibility.........................................................................................................7
Conclusion:............................................................................................................................................8
References:............................................................................................................................................9

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Introduction
Business ethics can be understood as the study of rationale business policies and practices regarding
corporate practices such as corporate governance, insider trading, bribery, discrimination, corporate
social responsibility and other fiduciary responsibilities. Business ethics is guided and governed by
the law, but many a times business ethics provides a framework that businesses choose to follow to
gain public acceptance (Crane & Matten, 2016)
Fair treatment is something which is a part of business ethics, every stakeholder should be treated
equally in the eyes of company law, and not on the bases of stakes they have in the company.
Business ethics came in existence since 1960’s, when companies became more and more aware
about the growing consumer based society that started showing concerns regarding various social,
environmental & corporate responsibility (Weiss, 2014). Business ethics is not just about following
moral code of conduct, it cuts much deeper, it guides the companies, how to do business legally, at
the same time maintaining competitive advantage over other businesses (Bowie, 2017)
In the report further we will be studying in depth about the business ethics and the elements
constituting its study. Also, we would discuss the statement “Compliance alone is not enough, and
business ethics is more than just complying with the law”. This will be studied in detail considering
all the points validating the above mentioned statement

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Business Ethics
Ethics is a branch of social sciences. It deals with principles & social values, it helps people to classify,
what is good and what is bad, what is right and what is wrong, it also tells to do the good things and
avoid the wrong deeds. Ethics can be simply understood as a book describing code of conduct to do
the rightful things. Hence, in business, where lives of people are getting affected directly, it is a moral
and a dutiful responsibility of companies to strongly follow this code of conduct and save itself from
any kind of embarrassment in the future (Shaw, 2016)
Features of Business Ethics
 Code of conduct-As discussed earlier, business ethics is a code of conduct, it tells us what
to do and what not to, hence, businesses especially have to follow business ethics, and work
towards the welfare of the society (Trevino & Neilson, 2016)
 Depend on Moral & Social values-Business ethics lays its foundation on moral and social
values. It therefore contains moral and social rules for doing the business. Fair treatment to
all, welfare for the society, protection of the consumers, self –control and not to exploit
other etc. (Ferrell & Fraedrich, 2015)
 Provides protection to the social groups-Business ethics becomes a guideline for
protecting the rights of the consumers, employees, society, small businessman, government,
shareholders, creditors etc. (Carroll & Buchholtz, 2014)
 Provides basic framework/guidelines-This is the most important aspect of business
ethics. It brings legality to the business functions. It provides legal protection in terms of
social, economic, political & environmental concerns (Boulouta & Pitelis,2014)
 Voluntary-There is a strange corollary between business ethics and discipline. As discipline
is imbibed in an individual, similarly business ethics can’t be forced upon any businessman,
he should practice it out of his own will and with the sense of doing something good for the
society (Ford & Richardson, 2013)
 Requires education & guidance-Business ethics must make some sense of purpose to
businesses before they start practicing them, Hence the onus is on the government
chambers or the trade bodies to educate and guide businessman about the advantages and
the benefits laid down by business ethics (Bishop & Lee, 2017)

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 It’s a relative term-Business ethics does not have uniformity along; it may vary company
to company, city to city or country to country. One business ethic might be established in
some country, but in other it may be worthy of a criminal act, and so it is referred as a
relative term (Craft, 2013)
 New concept-In countries like India, South Africa, and Pakistan etc. are the economies
which are developing, hence they don’t focus much on business ethics, the penetration in
developing economies of business ethics is low in comparison to the nations which are
developed (Ritter, 2006)
After having a good understanding of business ethics, let’s focus on why just compliance to business
ethics alone is not enough, and business ethics has more to offer than just complying with the law
Compliance alone is not enough
Company and business laws are getting tougher by each passing day, and it
is becoming difficult for business to neglect the same, as the direct effect falls on
the shoulders of the executives who are going sideways with the compliance laws and trying to avoid
these laws. It can be proven that compliance and ethics have different goals attached to each other
Compliance is ensuring that the actions of the executives, employees, suppliers (People directly
linked with the company) do not go against the regulation or standards prescribed and defined by
law. Objective of compliance laws are created keeping in mind that the companies try to avoid doing
evil and stay out of the problems (Patrick, 2015)
Ethics on the contrary take a different approach, ethics is about teaching the
employees and executives to always act and behave responsibly, and should always be in look out
for what is best for the company, its customers, the society it functions in, the impact it’s going to
have on the culture, its colleagues etc. Ethics is about doing good, and not avoiding the evil.
Compliance is about avoiding the evil; there is a vast difference between these two ideologies
(Weiss, 2014)
This can be cited as one of the strong reasons why compliance is built on the basis of standard alone
and ethics are built on the grounds of goods, standards and virtues.
Compliances push people forcibly to abide certain rules and regulations in their day to day practices,
which is okay, for some time, but as a practise this may have adverse effect. For example, executives

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or the managers try to sneak in some malpractices in the system and at the same times look for ways
by which the system can be flouted. Compliances follow this nature doe to its procedural
understanding and follow procedures (Jones & George, 2015)
Ethics on the other hand are imbibed in the individuals; they can be inherent or developed in
humans. It also depends to a large extent on what kind of society they are raised in, what values
have they been taught and what drives them. If doing welfare for the society drives them,
compliance and ethics go hand in hand. But if, compliances drive an individual rather than his in built
ethic system, he sure would lose his integrity at some point or the other.
A company must not start with a code of conduct, but should start with individual responsibility. This
does not necessarily states that the organization will not be able to perform at best of its levels, but
what it means is, the company chooses employees on the basis of ethics in them, what they choose
to do in absence of any person, is ethics (Schwartz, 2015)
Ethics V/s Compliance
Legal compliance is one thing and ethics are other. Following compliance provides legality to any
business situation or a case, but, keeping apart the legality, is that situation right or wrong, are we
doing the right thing or the wrong thing, is this going to hurt somebody or do good to someone, falls
under ethics. As business owners the responsibilities are of the managers to not do take certain
actions which may do harm to the consumers or the society in general. The long lasting effects of
ethics are always positive and fruitful, whilst that of compliances can swings in any of the direction
(Beach, 2014)
Another distinction, if legal compliance has to be ensured, it can only be done if the business ethics
is in the culture, else people would eventually find out ways to not even follow the compliances.
Following ethics has a greater benefit than just complying with the law in the sense, if any
misconduct is reported, and action is taken against it, the morale of the employee boasts and he
feels motivated, this increases his productivity and hence profits for the organization. There is no
cost involved in established of ethical culture in the company, it depends only on the individual
responsibility at the least, hence if an employee wants to be ethical , it’s a win-win for an
organization ,as the employee will take of both, compliance and business ethics in the company
(Voegal, 2016)

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Another important aspect of promoting ethical culture is that it increases the brand value of the
company. By being transparent in its business operation, keeping the book audited and clean, not
being a part of any fiduciary activities, etc., does wonders for the company and helps in the
employer branding. People, strive hard to work in such high business ethics company, as the
company depicts such strong values that the employees resonate with them (Dane & Sonenshein,
2015)
Companies which favour ethics more than its competitors are prone to have a better brand loyalty.
The sales and stock prices of such companies always seem to follow an upward trend, the reason can
be simply cited by saying that people in their heads wants to associate themselves or their families
with a company who understands the meaning of ethics, understands the importance of it and
follows the ethics at the core of their heart. People see the truthfulness, righteousness, goodness in
associating with such companies, thus companies gain both ways, morally and financially.
For example, in certain countries, advertising alcohol on national television is banned, so the
companies comply with this law, but find lacunae in this law gap and advertise soda and music cd’s
with the name of alcohol brand. So, they are following compliance but ethically they are doing
wrong. Hence, it is following of compliance, but failure of ethics. For reasons like these, it is said that
ethics is a bigger umbrella, compliance is just a branch of legality under it, but ethics has many more
olive branch associated with it.
Corporate Social Responsibility
Corporate social responsibility, another useful aspect of business ethics, it can be understood as
integration of the companies in order to work towards the upliftment and welfare of the society.
These efforts can range from donating money towards a social cause, or in from of NGO/NPO (Non-
Government organization/Not for profit organizations) , who are working towards different causes
like clean water, sanitation, war effects, relief to famine victims etc. and helping the society. Ethics
play again a very important role in the corporate social responsibility, compliance put the companies
in CSR, but the onus is back on the companies to be a part of CSR or not. A company having strong
business ethics value in it will definitely understand and envision the bigger picture of corporate
social responsibility, and thus act in compliance with it. If ethics are missing, the mangers, executives
or the management may find some way or the other to escape this responsibility in order to save
some money.

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Such is the case with environment, it is no news that the environment is depleting day by day, this
has been due to the excessive mining, cutting of trees etc. by the private players, they have been
using natural resources at their disposal and not caring about the society or the population in
general, they though followed the compliance, and thus government organizations could not point a
finger at them, but at the same time, its failure of ethics. If ethics of the company would have been
strong, such environmental degradation condition would not have erupted, the company would
have first thought of the negative effects of deforestation before filling their pockets. Hence,
reiterating the point, business ethics have its relevance, with a view point of not just law, but in the
totality of all the aspect of business and society.
Conclusion:
Business ethics can be understood as an umbrella, under which elements like compliances, CSR fall.
Business ethics is a path, following which compliances and other laws will have a smooth execution.
The importance of business ethics can be understood in the view of the societal benefits,
improvement in living condition of a human and development of the entire race and country.
Compliances are seen as a path which helps to save a company from legal purview, irrespective of
analysing something is right or wrong, good or bad. This kind of situation can be tricky, as they might
provide businesses with gain, in a shorter term, but in the longer run it might have negative effects
on the society. As an individual, every citizen has individual responsibility towards his city, his state
and his country, and this responsibility can addressed only if the individual is ethical with his works,
and before doing anything, thinks about the bad effects of it multiple times. Thus, with the evolution
business working and also the rise in the mentality of humans, it becomes extremely important for
the companies to pick candidates who have a higher sense of business ethics in general, because
ethics are the ones that will take the company, society, city, state and the country to the heights
unimagined.

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References:
Beach, L. R. (2014). Decision making in the workplace: A unified perspective. Psychology Press.
Bishop, D.L. and Lee, D.S., 2017. Business Ethics: Ethical Decision Making and Cases (Asia Edition).
Boulouta, I., & Pitelis, C. N. (2014). Who needs CSR? The impact of corporate social responsibility on
national competitiveness.
Bowie, N. E. (2017). Business ethics: A Kantian perspective. Cambridge University Press.
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Craft, J.L., 2013. A review of the empirical ethical decision-making literature: 2004–2011. Journal of
Business Ethics, 117(2), pp.221-259.
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in
the age of globalization. Oxford University Press.
Dane, E., & Sonenshein, S. (2015). On the role of experience in ethical decision making at work: An
ethical expertise perspective. Organizational Psychology Review, 5(1), 74-96.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson
Education.
Ford, R. C., & Richardson, W. D. (2013). Ethical decision making: A review of the empirical literature.
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Jones, G., & George, J. (2015). Contemporary management. McGraw-Hill Higher Education.
Patrick, W. (2015). BA 300 Ethical Decision-Making in Business, Section 2.
Ritter, B. A. (2006). Can business ethics be trained? A study of the ethical decision-making process in
business students. Journal of Business Ethics, 68(2), 153-164.

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Schwartz, M. (2015, July). Ethical Decision-Making Theory: Identifying Gaps and Deficiencies.
In Proceedings of the International Association for Business and Society (Vol. 26, pp. 13-23).
Shaw, W.H., 2016. Business ethics: A textbook with cases. Nelson Education.
Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it
right. John Wiley & Sons.
Voegel, J. A. (2016). AN EXPLORATORY EXAMINATION OF THE ETHICAL DECISION MAKING PROCESS
OF ENTREPRENEURS THROUGH THE THEORY OF PLANNED BEAHAVIOR LENS: A POLICY-
CAPTURING APPROACH.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-
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