Business ethics refers to the moral principles that guide the operations of a company or business. Common issues that fall under this umbrella include employer-employee relations, discrimination, environmental issues, bribery, insider trading, and social responsibility. While many laws exist to set basic ethical standards within the business community, it is largely dependent upon the leadership within the business to develop a code of ethics.
While practicing strong ethics keeps business within the parameters of the law, it can also serve to build goodwill and brand equity. That's because popular social issues often drive business ethics. When different issues come to the forefront, organizations respond by bringing their ethical tenets in line with new social norms.
Business Ethics in the '60s
The 1960s brought the first major wave of changes in business ethics. Cultural values were shifting, with individualism and fierce dedication to social issues such as environmentalism and world peace coming into vogue.
Key Takeaways
- Business ethics guide a company's operations and includes such things as environmental issues, social responsibility, and employee-employer relations.
- While laws related to business ethics to exist, it is up to each business to establish a code of ethics within the company.
- Business ethics saw a notable shift in the 1960s when more companies started embracing social responsibility.
- Business ethics saw another transition phase in the 1970s and 1980s when philosophy shifted from pure authoritarianism and towards greater collaboration.
- One of the most important ethical considerations in recent years is maintaining consumer privacy while companies mine user information for valuable marketing data.
While young workers in the 1960s were idealistic and wanted to make the world a better place, employers found their work ethic, compared to that of previous generations, was lacking. Drug use was rampant, and the new focus on individualism caused many workers to look upon their employers with disdain.
Companies responded to the changing times by beefing up human resources departments, establishing mission statements, and outlining codes of conduct. In response to the changing desires of their employees, however, businesses also began embracing social responsibility at a level not previously seen. In fact, the 1960s saw businesses trumpet environmental friendliness for the first time and companies also looked for new ways to give back to their communities.
Major Events in the '70s and '80s
During the 1970s and 1980s, two events shaped changes in business ethics: defense contractor scandals that became highly publicized during the Vietnam War and a heightened sense of tension between employers and employees. In response, the government implemented stricter policies governing defense contractors, and companies revamped contracts with employees to focus less on rigid compliance and more on values. Popular management philosophy shifted from pure authoritarianism towards more collaboration and working on equal footing.
The '90s and Environmentalism
The 1990s saw a rebirth of environmentalism, new heights in social responsibility reaching, and graver legal ramifications for ethical missteps. Tobacco companies and junk food manufacturers, for example, faced heightened scrutiny, along with several important lawsuits over the public health ramifications of their products. Oil companies and chemical companies had to contend with increasing public pressure to answer for environmental damage. Class action lawsuits rapidly gained in popularity and, in response, businesses were forced to spend more on legal departments.
The Online Realm in 2000+
From the year 2000 forward, business ethics have expanded to the online realm. The big ethical dilemmas of the 21st century have mostly centered on cybercrimes and privacy issues. Crimes such as identity theft, almost unheard of 20 years before, are a threat to anyone doing business online. As a result, businesses face social and legal pressure to take every measure possible to protect sensitive customer information. The rise in popularity of data mining and target marketing has forced businesses to walk a fine line between respecting consumer privacy and using online activities to glean valuable marketing data.
