Business Ethics: Theories, Applications, and Analysis in Business

This essay delves into the multifaceted realm of business ethics, exploring its fundamental principles and their profound impact on the business environment. It examines various ethical theories, including self-interest, duty to people, compassion and consequence, and virtue and vice, providing a comprehensive understanding of their applications and implications. The essay critically analyzes the strengths and weaknesses of these theories, highlighting their benefits such as customer loyalty and brand differentiation, while also acknowledging limitations like potential restrictions on profit maximization. Furthermore, it presents a debate and analysis of key perspectives, including Milton Friedman's profit-centric view and Edward Freeman's stakeholder-oriented approach, illustrating the evolving importance of ethical practices in today's business landscape. The essay concludes by emphasizing the significance of ethical considerations in shaping a company's reputation, fostering sustainable growth, and navigating government interventions related to ethical concerns.

Student’s Last Name1
Business Research Methodology
By (Name)
Course
Professor
University
Date

Student’s Last Name2
Introduction
In a business environment, there exist various principles and morals that dictate how
business activities should be carried out. Business ethics, therefore, entails the study of these
principles and morals and how they impact the business environment. It relates to all the
aspects that might be present in a business such as the conduct of employees or other
individuals, and the organization as a whole (Abend, 2013, pp 175). Ethics is important in a
business environment for many reasons. First, ethics entails the moral judgment of an individual
on whether a certain action is right or wrong. Ethical behaviors attract more customers to buy
the company’s products which translate to a boost in sales and profits.Secondly, the employees
will want to work for the business for a long period. In other words, a business that is keen to
observe business ethics values its employees and hence the productivity of the business is
increased due to the reduction in labor turnover.
It is also important to note that a business which portrays corporate social responsibility
attracts more employees. Top-notch and skilled employees will be more than willing to work for
the company. At the end, the business will enjoy lower recruitment costs and attract the most
qualified employees. Thirdly, the business will manage to attract more investors who will
increase the overall earnings of the business and keep the share price at an all-time high. This
works to cushion a business from a possible takeover. These are just a few benefits of business
ethics. Every business owner should understand the importance of business ethics. The
reputation of a small business or company is very difficult to restore once it has been lost. In
fact, the reputation of a business should be seen as one of the most valuable assets in the
business. This being said, businesses should purpose to fulfill their promises and ethical
responsibilities so that they will not have to deal with the detrimental repercussions of an eroded
reputation.

Student’s Last Name3
Ethical Theories in a Business Environment
Business owners face the daily responsibility of ensuring that every decision made is in
accordance with the theories of business ethics. Therefore, the business owners should at least
be able to comprehend the ethical theories which will help in solving ethical issues and making
well-informed choices.
Self-Interest, Enlightened or Otherwise
This business ethics theory argues that decisions relating to a business should be made
at a personal but within the confines or context of the law. Therefore, an individual has to make
the decision based on self-interest and aspirations. The people who believe and follow laissez-
faire capitalism agree with this theory. Most of the personal interactions see this as an unethical
behavior. The believers of the free market economy, however, hold the opinion that self-interest
behaviors champion for the creation of new jobs and wealth (Stanwick and Stanwick, 2013, pp
11). Considering the fact that most of the business owners might not be aware of the best
strategies to impact the whole society, they choose to benefit the society by upholding what is
good for their business. This theory is mostly used by the business owners who need to justify
their actions or business decisions.
Duty to people or principle
The real markets are obliged to adhere to various regulations and restrictions. Therefore,
a pure free market would be seen as a hypothetical approach. Business ethics theorists argue
that business owners bear essential ethical obligations which go beyond personal interests
(Simmons, Shafer, and Snell, 2013, pp 580). However, there are some prevailing debates which
intend to determine who the business owners are obliged to. In a case where a company has
stockholders and investors, the owner of the business is legally obliged to consider their

Student’s Last Name4
financial interests. Another school of thought would argue that the business owner is ethically
responsible to the interests of the employees, the community, the environment, and other
stakeholders. Some business owners believe that they are personally responsible for their
actions. Therefore, they tend to stick to what is morally acceptable and uphold what they believe
in, including the religious teachings.
Compassion and consequence
Some existing business theories have been criticized by a number of scholars. The
thinkers argue that these theories are more concerned with the abstract moral principles and fail
to consider the idea that humans need compassion. It is true that no business entity can operate
and succeed solely on compassion, but this does not mean that the business should neglect
compassion in ethical-decision making (May,Luth and Schwoerer, 2014, pp 80). A physician
who does not charge a needy patient or a business owner who relentlessly pardons his reckless
employee could be considered as compassionate. Also, a business may face some
consequences due to certain actions. For instance, the environmental problems which spark
from business practices might result in immediate benefits for the business owner and other
stockholders, but the long-term consequences would be detrimental.
Virtue and vice
The theory of virtue ethics is seen as ancient though it has been operational in the
recent years. A champion of virtue ethics upholds and acts within the confines of key virtues
such as courage, honesty, and kindness while steering clear of vices and unworthy
characteristics such as cowardice and dishonesty (Audi, 2012, pp 275). In a real-world, decision
making faces unavoidable challenges because no ethical theory can suffice or cater for all
cases. A business owner, for instance, will have to make several considerations and ask some

Student’s Last Name5
key questions before taking a course of action. Does the action act in the interest of the
business? Does it consider the interests of the stockholders and investors? What impact will the
actions have on the environment, employees, and the community? The decision that will be
made after a careful and keen consideration of these questions will abide by the ethical
requirements.
Strengths and Weaknesses of Business Ethics Concepts
The theories of ethics offer a business numerous benefits. First, the business achieves
customer loyalty because of the enhanced trust. The customers will choose to remain loyal to
the brand event during the challenging moments. Johnson & Johnson, for instance, spent a
fortune in an effort to recall their once best-selling product named Tylenol, after a person had
interfered with the containers of the drug. The company set up worthy organizational values
which resulted in enhanced consumer confidence and trust, regardless of the contamination
threat (Strobel,Tumasjan and Welpe, 2015, pp 33). A business that follows its ethical obligations
benefits the society as a whole. Ethical theories also serve to differentiate brands and
businesses. In a case where businesses operate in oversubscribed markets, a competitive edge
can be achieved. Strong ethical values and key theories make the services or products of a
company more appealing and worthy. For instance, a cosmetics company that does not test its
products on animals would be more likely to achieve a competitive edge (Ferrero and Sison,
2014, pp 400). It is also important to note that a business has moral obligations to the
community. A business should not just operate for financial benefits. As a key player in the
society, the business should observe the needs of the employees and other stakeholders, and
also consider the environmental impact (Michalos, 2017, pp 300). The knock-on-effects result
from adoption of worthy and strong business ethics. Transparent and honest accounting
operations increase the financial base of the company and help to prevent sanctions and

Student’s Last Name6
lawsuits (Michalos, 2017, pp 200). The knock-on effects accrued to a fair compensation of
employees and fulfilling tax liabilities lead to a robust economy which serves the benefits of all.
On the other hand, the ethical theories serve several drawbacks and weaknesses to the
business. It has been proved that business ethics restrict a business from maximizing its income
and profits. For instance, a multinational business may decide to relocate its manufacturing
activities to a developing nation in order to cut costs (De Cremer and Tenbrunsel, 2012, pp 16).
Some of the practices that are regarded right and acceptable in that nation such as poor
working conditions, poor pay, and child labor, are not acceptable by an ethical business (Ulrich
and Sarasin, 2012, pp 20). Good working conditions, including the safety and health standards
and living wage,reduce the income generated by a company.Another weakness of the ethical
theories is lack of enforceability (Bardy, Drew, and Kennedy, 2012, pp 270). This is the case
especially in international business platforms where some nations break the rules.
The business ethic theories contribute to knowledge in many ways. A business owner or
employee, for instance, will need to understand and pick the most relevant concept in order to
succeed. Wrong choices deliver undesired services and products (Hartman,DesJardins and
MacDonald, 2014, pp 13). A successful business should acknowledge the existence of these
theories and seek to learn from them since they offer a stepping stone to the success and
sustainability of a business.
Debate and Analysis
Milton Friedman is one of the commentators who argue that the sole responsibility and
role of a business is to generate profits while adhering to the requirements of the law. Other
people who are inclined to this opinion believe that a company’s self-interest serves the benefits
of all society members (Ma, Liang, Yu and Lee, 2012, pp 290). Another commentator, Edward

Student’s Last Name7
Freeman, holds a different opinion. He asserts that businesses should strive to meet the
expectations of other stakeholders including the employees, customers, suppliers, and the
community as a whole (Ford and Richardson, 2013, pp 40). Companies should see their
success beyond just income levels and profits. Companies are obliged to explain their social,
environmental, and financial performance. The Dow Jones Sustainability Index requires
companies to abide by the triple bottom line, “people, planet, profit”, and benchmarking of
companies is done on the basis of the same (Giacalone and Promislo, 2013, pp 90). This
reporting approach considers the fact that businesses must make profits to remain relevant but
enforces the need for ethical business practices.
As seen in this paper, the concept of business ethics is gaining relevance in the
business environment day by day, and the businesses are obliged to follow ethics in their
operations at whatever cost. Honesty and morality help businesses gain credibility, not
forgetting that it also results in more sales and more customers (Santoro and Strauss, 2012, pp
90). The impacts of business ethics are overwhelming, to say the least. It is also important to
note that the reputation, future deals, development, and growth of a business depend on the
ethical opinion of a business (Floyd, Xu, Atkinsand Caldwell, 2013, pp 760). Andrew Crane, a
professor at York University, asserts that businesses are starting to see big changes as a result
of adopting ethics in their operations (Carroll and Buchholtz, 2014, pp 23). He also states that
ethics should be seen as a win-win opportunity and businesses should take maximum
advantage of it.
In cases where businesses fail to act ethically, the government is bound to step in. For
instance, governments in many nations intervene in energy drinks, sodas, and alcohols. While
some businesses such as monster are not unethical in their operations as they act to meet the
demands of the customers, the products have been proven to cause health problems (Grace

Student’s Last Name8
and Cohen, 2015, pp 31). In countries such as the United States, these companies have been
constantly bashed for the health problems among the populations (Jennings, 2014, pp 19).
Some of the government interventions include restricting the consumption of the products and
creation of price floors. In cases where the interventions are not fruitful, the healthcare providers
and other stakeholders will have to bear with the stress.
On the flip side, the success of these interventions denies the consumers the right to
consume what they please. These are some of the big and unending debates which arise when
the question of business ethics is mentioned, thus creating a dilemma (DesJardins and McCall,
2014, pp 21). However, these scenarios can be prevented if the businesses are willing to follow
business ethics and produce ethical products (Crane and Matten, 2016, pp 17). Though this
might be impractical or impossible for several businesses, more focus should be put on the
propagation of ethical practices. The 21st century calls for mature and considerate business
activities which are dictated by the accepted code of ethics.

Student’s Last Name9
Bibliography
Abend, G., 2013. The origins of business ethics in American universities, 1902–1936. Business
Ethics Quarterly, 23(2), pp.171-205.
Audi, R., 2012. Virtue ethics as a resource in business. Business Ethics Quarterly, 22(2),
pp.273-291.
Bardy, R., Drew, S. and Kennedy, T.F., 2012. Foreign investment and ethics: How to contribute
to social responsibility by doing business in less-developed countries. Journal of Business
Ethics, 106(3), pp.267-282
Barry, N., 2016. Business ethics. Springer.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
De Cremer, D. and Tenbrunsel, A.E. eds., 2012. Behavioral business ethics: Shaping an
emerging field. Routledge.
DesJardins, J.R. and McCall, J.J., 2014. Contemporary issues in business ethics. Cengage
Learning.
Ferrero, I. and Sison, A.J.G., 2014. A quantitative analysis of authors, schools and themes in
virtue ethics articles in business ethics and management journals (1980–2011). Business
Ethics: A European Review, 23(4), pp.375-400.

Student’s Last Name10
Floyd, L.A., Xu, F., Atkins, R. and Caldwell, C., 2013. Ethical outcomes and business ethics:
Toward improving business ethics education. Journal of business ethics, 117(4), pp.753-776.
Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical
literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer
Netherlands.
Giacalone, R.A. and Promislo, M.D., 2013. Broken when entering: The stigmatization of
goodness and business ethics education. Academy of Management Learning & Education,
12(1), pp.86-101.
Grace, D. and Cohen, S., 2015. Business ethics.
Hartman, L.P., DesJardins, J.R. and MacDonald, C., 2014. Business ethics: Decision making for
personal integrity and social responsibility. New York: McGraw-Hill.
Jennings, M.M., 2014. Business ethics: Case studies and selected readings. Cengage Learning
Ma, Z., Liang, D., Yu, K.H. and Lee, Y., 2012. Most cited business ethics publications: mapping
the intellectual structure of business ethics studies in 2001–2008. Business Ethics: A European
Review, 21(3), pp.286-297.
May, D.R., Luth, M.T. and Schwoerer, C.E., 2014. The influence of business ethics education
on moral efficacy, moral meaningfulness, and moral courage: A quasi-experimental study.
Journal of Business Ethics, 124(1), pp.67-80.
Michalos, A.C., 2017. Ancient observations on business ethics: Middle East meets West. In
How Good Policies and Business Ethics Enhance Good Quality of Life (pp. 297-311). Springer
International Publishing.

Student’s Last Name11
Michalos, A.C., 2017. Issues for business ethics in the nineties and beyond. In How Good
Policies and Business Ethics Enhance Good Quality of Life (pp. 197-212). Springer International
Publishing.
Santoro, M.A. and Strauss, R.J., 2012. Wall street values: Business ethics and the global
financial crisis. Cambridge University Press.
Simmons, R.S., Shafer, W.E. and Snell, R.S., 2013. Effects of a business ethics elective on
Hong Kong undergraduates’ attitudes toward corporate ethics and social responsibility.
Business & Society, 52(4), pp.558-591
Stanwick, P. and Stanwick, S., 2013. Understanding business ethics. Sage.
Strobel, M., Tumasjan, A. and Welpe, I., 2015. Do business ethics pay off?.
ZeitschriftfürPsychologie/Journal of Psychology.
Ulrich, P. and Sarasin, C. eds., 2012. Facing public interest: The ethical challenge to business
policy and corporate communications (Vol. 8). Springer Science & Business Media.