Topic 1.6: Business Ethics

Unethical behavior

Actions that violate accepted moral standards in business - falsifying or concealing information, misusing company property, or causing harm to employees or customers.

Code of conduct

A written set of rules a business publishes that defines expected behavior and what is off-limits for employees.

Internal repercussions

Consequences a business imposes when an employee breaks an ethical rule - warnings, training, demotion, or termination.

Modeling ethical behavior

When leaders demonstrate the ethical standard themselves so employees see the rule lived, not just written.

Brand loyalty

When customers continue choosing a business over alternatives because they trust how it operates, not just what it sells.

Ethical dilemma

A situation where a core value conflicts with another core value or business goal - and the right course of action is not obvious.

Internal stakeholder

An individual or group with direct involvement in a business’s operations, decisions, and outcomes - owners, managers, employees

External stakeholder

An individual or group with a vested interest in a business’s decisions but not directly employed by it - customers, government agencies, community members

Greatest benefit/least harm response

An ethical dilemma response approach in which the leader weighs the benefits and costs of each option for every stakeholder group and picks the best one with the best total result.

Strength: forces explicit consideration of ALL stakeholders

Weakness: stakeholders are hard to weigh equally, quantification of harm requires judgement.

Vision-consistent response

An ethical dilemma response approach ion which the leader picks whichever option best fits the business’s written vision and goals, even if stakeholder math is ambiguous.

Strength: lets a business hold the line on values when stakeholder math is ambiguous.

Weakness: only works if the vision is clear, written, and lived by leadership.

Incentive structure

How a business rewards specific behavior (bonuses, quotas, rankings) - can push individuals to act ethically or unethically depending on design.

Public perception

How customers, the press, and the broader public view a business’s motivation. Affected by how the business responds to ethical issues.