Business Ethics Key Terms

Understanding the theories that contribute to differing business ethics

Business ethics has become an important issue since the fall of Enron several years ago. However, the priorities of individuals differ from the priorities of a business, therefore the ethics upheld vary from company to company. There are four major ethical theories that explain the manner in which some companies may conduct business. While there are standards, such as honesty, that many feel businesses should uphold, these theories may shed light on the motivations behind businesses not always conducting themselves in a manner appealing to the general public.

Business ethics

Business ethics are the moral standards by which a company conducts itself. Some businesses list the ethical standards employees are to abide by within handbooks; others find business ethics to be implied. Generally, an ethical business is one that conducts business in an honest manner, but the actual ethical principles by which a business functions have been up for debate for years.
Stanford Encyclopedia of Philosophy provides an in-depth explanation and analysis of business ethics.

Principles

Principles aren't necessarily standards, but absolute truths that serve as a goal for the outcome of business ethics. Basically, business principles are guides that steer employees toward the correct result.

Deontology

Deontological ethics means that a business prioritizes society or the consumer over everything else. In deontology, the business has a duty to uphold and will, therefore, always follow through with its commitments and abide by the law.
Davidson College in North Carolina compiled information on ethical theories, including deontology, covering the theory's benefits and flaws. To see it, scroll down to Ethical Theories.

Utilitarianism

The utilitarian approach to ethics is one in which the actions a company takes are those that will have the most positive results and benefit the most people in the end. It is an analysis of consequences and choosing the action that has the least amount of negative results. The flaw with this ethical approach is that a business may find the benefits to its company and employees outweigh the benefits to the consumer.
Markkula Center for Applied Ethics at Santa Clara University.

Relativism

Ethical relativism is the position that every individual has an equally valid point of view, and the determination of morals depends upon the cultural norms for that individual. In regard to business, relativism provides that the CEO's concept of right and wrong can differ from the receptionist's or consumer's concept of right and wrong.

Ethical egoism

Ethical egoism is the position that it is moral for the individual to promote his or her own welfare over that of others.
The Internet Encyclopedia of Philosophy for more information on ethical egoism.