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Major Ethical Issues in Business

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Published: Apr 29, 2022

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The 8 Biggest Ethical Issues Facing Businesses Today

Aguimar Neto

Ethical issues in business are a major concern, with companies facing increasing scrutiny over their business practices.

This comprehensive guide will explore the 8 biggest ethical issues businesses must know and discuss how companies can manage them.

https://www.profitablegatecpm.com/ng0ybhhi3t?key=466aea2707163da71ffc48f387ec0a76

Business ethics are in the spotlight more than ever before. High-profile scandals like Enron have highlighted how unethical behavior can lead companies to quit. According to the Global Business Ethics Survey, 50% of employees have witnessed unethical behavior in the past year. Every company needs to take ethical issues seriously.

We’ll look at real examples and discuss strategies companies can implement to deter ethical violations before they spiral out of control. Let’s dive in.

https://inovatteleaders.com/the-importance-of-ethics-in-leadership/

What are the Most Common Ethical Issues in Business?

Before exploring specific issues, it’s helpful to understand the most prevalent types of ethical issues in business:

• Accounting fraud — Companies falsifying financial statements and accounting records to appear more profitable.
• Discrimination and harassment — Unfair treatment of employees based on protected characteristics.
• Health and safety — Failure to protect employee wellbeing.
• Conflicts of interest — Executives acting in their own self-interest rather than their company’s.
• Insider trading — Company executives trading shares based on non-public information.
• Cybersecurity — Failure to protect consumer and employee data from breaches.

With these broad categories in mind, let’s explore the 8 biggest ethical issues facing businesses today.

1. Unethical Accounting Practices

One of the most common ethical issues in business is using unethical accounting practices to inflate financial results. Well-known examples include companies like Enron, WorldCom, and Tyco, which manipulated earnings and falsified financial statements.

Unethical accounting threatens the integrity of financial markets. It misleads shareholders, regulators, and the public about a company’s financial health.

According to the Global Business Ethics Survey, accountants face the most pressure to compromise ethical standards. Tactics companies use include:

• Recording revenue prematurely before completing sales
• Underreporting expenses to inflate profit
• Failing to disclose relevant information in financial statements

The infamous accounting firm Arthur Andersen was charged with obstruction of justice for shredding Enron-related documents. This highlights the widespread nature of unethical accounting.

To deter these issues, companies need robust ethics policies and training. Initiatives like the Sarbanes-Oxley Act also aim to protect consumers by mandating stricter financial reporting requirements.

2. Discrimination and Harassment

Workplace discrimination and harassment remain prevalent ethical issues. According to the Equal Employment Opportunity Commission (EEOC), sexual harassment charges increased by 13.6% in 2021.

Forms of discrimination and harassment include:

• Age — Treating employees differently due to their age.
• Disability — Failing to provide reasonable accommodations.
• Race — Making decisions based on race/ethnicity.
• Religion — Not respecting religious practices or beliefs.
• Sex — Discrimination based on gender or pregnancy.
• Sexual harassment — Unwelcome sexual advances or contact.

Discrimination lawsuits can damage a company’s reputation and bottom line. The best way to deter discrimination is to have clear policies, train managers, and maintain an ethical culture where misconduct is not tolerated.

3. Health and Safety Violations

Failure to protect employee health and safety is both unethical and illegal. However, many organizations fall short when it comes to protecting their workforce.

According to the International Labour Organization, over 374 million occupational accidents and work-related diseases occur annually. Common issues include:

• Inadequate training — Failure to train workers on hazards.
• Faulty equipment — Using defective or unsafe machinery.
• Poor ergonomics — Bad office setups that cause repetitive strain.
• Long hours — Scheduling excessive overtime.
• Stress — Subjecting workers to unmanageable workloads.
• Violence — Failing to protect staff from hostile individuals.

Protecting workers involves thoroughly assessing risks, involving staff in decisions, and having robust reporting procedures. Companies also need to promote well-being by tackling issues like work-related stress.

4. Conflicts of Interest

A conflict of interest arises when a company executive prioritizes their interests above their duty to the business. For example, approving contracts with family members or investing in competitors.

According to a Deloitte survey, 42% of executives have observed conflicts of interest in their company. Examples include:

• Self-dealing — Channeling business opportunities to themselves or family/friends.
• Gifts — Accepting lavish gifts that may influence decision-making.
• Outside employment — Working for competitors or suppliers.
• Inside information — Personally profiting from non-public knowledge.

Companies need robust policies requiring executives to disclose potential conflicts of interest. However, the culture also needs to promote ethical behavior from the top down.

5. Insider Trading

Insider trading is an unethical and illegal practice where executives trade shares based on confidential company information that could impact stock prices.

For example, executives selling large amounts of stock knowing an upcoming negative earnings report will cause the share price to plummet. This disadvantages everyday investors without access to such information.

Tactics to deter insider trading include:

• Blackout periods — Preventing executives trading shares close to major announcements.
• Reporting requirements — Mandating executives disclose share transactions.
• Monitoring — Using software to detect illegal trading patterns.

In the U.S., the Security Exchange Commission (SEC) pursues insider trading cases vigorously. Penalties range from fines to imprisonment. However, insider trading remains an ongoing challenge to eradicate fully.

6. Unethical Use of Technology and Data

Technology raises new ethical challenges around privacy, surveillance, and cybersecurity. For example:

• Monitoring employees via camera, computer monitoring, or tracking devices.
• Collecting excessive personal data without consent.
• Failing to disclose data breaches.
• Using AI unethically by amplifying biases.

Employees have a right to privacy, even while using company-owned devices. However, technology lets employers monitor virtually all online activity, blurring ethical lines.

Companies should have clear workplace privacy policies and be transparent about any monitoring. Data collection also needs to follow privacy laws and cybersecurity best practices.

7. Environmental Pollution

Environmental responsibility is a key ethical obligation for modern companies. However, many organizations still engage in practices harmful to the environment, including:

• Air/water pollution — Releasing toxic emissions or waste.
• Unsustainable sourcing — Using materials that damage ecosystems.
• Waste — Producing excessive, unrecycled waste.
• Carbon emissions — Failure to limit CO2 and greenhouse gases.

Environmental harm can occur directly through company operations or indirectly via supply chains. Either way, organizations have a moral duty to minimize ecological damage.

Strategies include investing in clean technologies, sustainable sourcing, auditing suppliers, and offsetting carbon emissions. Many consumers now demand brands embrace corporate social responsibility.

8. Bribery and Corruption

Bribery involves offering incentives, such as cash or gifts, to influence behavior unethically. For example, bribing overseas officials to award contracts or circumvent regulations.

Corruption is the abuse of power to gain an unfair advantage, often through bribery or extortion.

Transparency International says over 25% of firms worldwide experience public sector bribery. Corruption damages economic development and facilitates crime and human rights abuses.

Anti-bribery laws like the Foreign Corrupt Practices Act impose severe penalties. However, companies must go beyond basic legal compliance and institute ethical cultures intolerant of bribery.

How Can Businesses Manage Ethical Issues?

Unethical behavior can never be eliminated. However, companies can take steps to deter issues proactively rather than reacting once problems emerge:

• Institute a strong code of ethics and ensure it permeates decision-making at all levels.
• Provide regular ethics training to employees and suppliers.
• Implement anonymous reporting mechanisms like hotlines to flag issues early.
• Maintain transparency around business operations and practices.
• Establish diverse and independent board oversight committees.
• Incorporate ethics into performance reviews and compensation decisions.
• Conduct regular audits to identify any emerging risks or red flags.
• Promote an ethical culture where choosing the right path is valued over profits.

Key Takeaways

Ethical challenges will continue arising as technology, regulations, and society evolve. However, companies can get ahead of issues by:

- Identifying current and emerging ethical risks across all business areas.

- Having robust policies and management systems to address key issues like discrimination, safety, conflicts of interest, and data privacy.

- Going beyond basic compliance to embedding strong ethics throughout the organizational culture.

- Ensuring accountability, transparency, and integrity in all business practices.

- Providing regular training to employees, managers, and executives on how to make ethical decisions.

- Maintaining open communication channels so staff feel comfortable reporting any violations or concerns.

- Responding swiftly and decisively to unethical behavior rather than letting problems grow.

- Making values like trust, honesty and fairness central to the brand identity.

- Collaborating with partners and suppliers who demonstrate high ethical standards.

- Auditing regularly to identify any gaps or deficiencies in ethical practices.

- Learning from past mistakes and scandals in your industry to improve policies.

- Reviewing incentive structures and performance metrics to ensure they encourage ethical outcomes.

- Ensuring the board sets the tone for ethics at the top and provides robust oversight.

- Making amends fully if ethical lapses occur and changing practices to stop repeat issues.

- Highlighting any ethical initiatives and progress in company reports and press.

Managing business ethics requires constant vigilance, transparency, and, most importantly, the right culture. Leaders must demonstrate commitment to ethics in all decisions, big and small. With robust strategies and sincere commitment, companies can conduct business ethically and sustainably for the benefit of all stakeholders.

Written by Aguimar Neto

Text to speech

Business Ethics Journal Review

Edited by alexei marcoux & chris macdonald — issn 2326-7526.

• About BEJR — Now 10 years in!
• Books Received
• Instructions for Authors
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Student’s Guide to Writing Critical Essays in Business Ethics (and beyond)

Here is some advice for writing critical essays, in business ethics but also in other fields. There is of course much more to say on the topic, but this is a start.

Writing your own critical essay:

What kinds of criticisms should you offer in your essay? There are a nearly infinite number of errors or problems that you might spot in an essay or book that you want to critique. Here are a few common ones to look for, to get you started:

• Point out one or more logical fallacies. Did the author present a false dilemma , for example? Or an argument from ignorance ? Has the author presented a false analogy or a hasty generalization ?
• Critique the scope of the author’s claim. For example, does the author claim that his or her conclusion applies to all cases, rather than just to the small number of cases he or she has actually argued for?
• Point out unjustified assumptions. Has the author made questionable assumptions about some matter of fact, without providing evidence? Alternatively, has the author assumed that readers share some questionable ethical starting point, perhaps a belief in a particular debatable principle?
• Point out internal contradictions. Does the author say two things that, perhaps subtly, contradict each other?
• Point out undesirable implications / consequences. Does the author’s position imply, perhaps accidentally, some further conclusion that the author (or audience) is unlikely to want to accept, upon reflection?

In general, a good critical essay should:

• Describe and explain in neutral terms the article or book being critiqued. Before you start offering criticism, you should demonstrate that you understand the point of view you are critiquing.
• Be modest. Your goal should be to offer some insight, rather than to win a debate. Rather than to “show that Smith is wrong” or “prove that Sen’s view is incorrect,” you should set your aims on some more reasonable goal, such as “casting doubt” on the view you are critiquing, or “suggesting reason why so-and-so should modify her view.”
• Be fair. Sometimes this is referred to as the “principle of charity.” It has nothing to do with donating money. Rather, it is about giving the other side what you owe them, namely a fair reading. Your goal is not to make the author whose work you are criticizing sound dumb. Rather, the goal is to make her sound smart, but then to make yourself sound smart, too, but showing how her view could be improved.
• Be well structured . Professors love structure. Remember: a critical essay is not just a bunch of ideas; it is an orderly attempt to convince someone (in most cases, your professor) of a particular point of view. Your ideas will only have real punch if you put them in a suitable structure. That’s not all that hard. For example, make sure your opening paragraph acts as a roadmap for what follows — telling the reader where you’re going and how you propose to get there. Make sure each paragraph in the body of your essay has a main point (a point connected to the goal of your essay!) and that its point is clearly explained.
• Stick to two or maybe three main arguments . “The three main problems with Jones’s argument are x, y, and z.”
• Be clear. That means not just that your essay should be clearly structured, but also that each sentence should be clear. Proof-reading is important: get someone with good writing skills to proof-read your essay for you. If you can’t do that before your deadline, you can proof-read your essay yourself by reading it out loud. We’re serious. It is much easier to spot errors in your own writing if you read out loud.

A few more tips:

• Cite your sources carefully. Use whichever citation method your professor says to use. If in doubt, use one of the established methods (such as APA or Chicago ). But whatever you do, make sure to give credit to the people whose ideas you use, if you want to avoid being charged with plagiarism.
• Use what you’ve learned in class. Your professor would love nothing more than to know that you’ve been paying attention. So try to make use of some of the concepts discussed in class, or in your course textbook.
• Don’t try to sound like an author. Just say what you want to say. Trying to sound like an author just leads people to use big words they don’t understand and to write complex sentences that overshoot their grammatical skills. Just write it more or less the way you would say it out loud, in short, clear sentences.
• Follow instructions. Failing to follow instructions is easily the most common way students screw up when writing critical essays. Read the assignment instructions through carefully — twice! — and then if anything is unclear, ask your professor for clarification.

Looking for essay topics? Check out Business Ethics Highlights .

See also: The Concise Encyclopedia of Business Ethics

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3 comments on “student’s guide to writing critical essays in business ethics (and beyond)”.

This is a useful resource – thanks Chris

“Shack”

Arthur Shacklock (Griffith University Queensland, Australia)

I’m currently a student at Arizona Christian University taking a Business Ethics course. I’m in the midst of completing an assignment that requires me to post on an open blog forum. It was very difficult for me to find something interesting and that pertained to my class. Then I stumbled across your blog then more specifically, this article. The purpose of this specific assignment is to share my individual and collective experiences derived from collaborative learning and expressed through the narrative, as “actionable knowledge.” Actionable knowledge reflects the learning capability of individuals and organizations to connect elements including; social, political, economic, technological.

Knowing how to write critical essays in Business Ethics is an important element of success. I enjoyed reading through these helpful tips. This is useful information that will help in college and beyond.

Supporting evidence is an important part of writing a sound paper. Like you mentioned in the blog, it can’t be based on bias or ignorance. Rather, backed up by factual evidence to help support your claim. I love the general key points as well. Describe and explain, be modest, be fair, be well structured, and be clear. I am very familiar with these key elements as we have spoken on them in class. They are very important components of business ethics. We’ve learned things about leading in the business world, Capitalism, Socialism, and Communism, Business advertising, and more. In the essay I write in this course, I will refer back to this blog.

Like any other course, it is important to cite your sources like you’ve mentioned above as well as use information that we’ve learned in class. Sound like yourself and speak from your own understanding. The last tip was to follow instructions WHICH IS THE KEY TO SUCCESS! It’s all in the fine print. Read until you understand and ask questions if you don’t.

Good luck with your studies, Deon!

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Building an Ethical Company

Create an organization that helps employees behave more honorably. by Isaac H. Smith and Maryam Kouchaki

Summary .   

Just as people can develop skills and abilities over time, they can learn to be more or less ethical. Yet many organizations limit ethics training to the onboarding process. If they do address it thereafter, it may be only by establishing codes of conduct or whistleblower hotlines. Such steps may curb specific infractions, but they don’t necessarily help employees develop as ethical people.

Drawing on evidence from hundreds of research studies, the authors offer a framework for helping workers build moral character. Managers can provide experiential training in ethical dilemmas. They can foster psychological safety when minor lapses occur, conduct pre- and postmortems for initiatives with ethical components, and create a culture of service by encouraging volunteer work and mentoring in ethics.

People don’t enter the workforce with a fixed moral character. Just as employees can nurture (or neglect) their skills and abilities over time, they can learn to be more or less ethical. Yet rather than take a long-term view of employees’ moral development, many organizations treat ethics training as a onetime event, often limiting it to the onboarding process. If they do address ethics thereafter, it may be only by espousing codes of conduct or establishing whistleblower hotlines. Such steps may curb specific unethical actions, but they don’t necessarily help employees develop as moral people.

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4 Examples of Ethical Leadership in Business

• 14 Sep 2023

Have you ever faced an ethical dilemma? Maybe you found someone’s wallet on the ground or witnessed someone cheating during a test or competition. In these scenarios, the right answer isn’t always clear.

In business, you’re bound to encounter ethical dilemmas, especially as a leader. Behaving unethically can be illegal—for instance, stealing money or harming employees. In these situations, making the right choice is clearer. Sometimes, it’s not a question of legality but of weighing potential outcomes.

“Many of the decisions you face will not have a single right answer,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability . “Sometimes, the most viable answer may come with negative effects. In such cases, the decision is not black and white. As a result, many call them ‘gray-area decisions.’”

When facing ambiguity, how do you make the most ethical decision? Here’s a primer on ethical leadership and four examples of leaders who faced the same question.

Access your free e-book today.

What Is Ethical Leadership?

Ethical leadership is the practice of making decisions that balance stakeholders’ best interests with your company’s financial health, and empowering others to do the same.

As a leader, you have ethical responsibilities to four stakeholder groups—customers, employees, investors, and society—which Leadership, Ethics, and Corporate Accountability breaks down.

Responsibilities to Customers and Employees

• Well-being: What’s ultimately good for the person
• Rights: Entitlement to receive certain treatment
• Duties: A moral obligation to behave in a specific way
• Best practices: Aspirational standards not required by law or cultural norms

Employees have a fifth category—fairness—which comprises three types to consider:

• Legitimate expectations: Employees reasonably expect certain practices or behaviors to continue based on experiences with the organization and explicit promises.
• Procedural fairness: Managers must resolve issues impartially and consistently.
• Distributive fairness: Your company equitably allocates opportunities, benefits, and burdens.

Responsibilities to Investors

Your responsibilities to investors are known as fiduciary duties . The four types are:

• Duty of obedience: Adhere to corporate bylaws, superiors’ instructions, and the law.
• Duty of information: Disclose necessary information and remain truthful about performance and operations. Refuse to divulge certain information to nonessential parties.
• Duty of loyalty: Act in the most favorable way for shareholders and avoid conflicts of interest.
• Duty of care: Evaluate decisions’ potential outcomes before acting.

Responsibilities to Society

In addition to creating value for your business, you’re responsible for making a positive, or at least neutral, impact on society and the environment.

One framework to conceptualize this is the triple bottom line, also called the “three P’s”:

• Profit: Your business’s responsibility to make a profit.
• People: Your business’s responsibility to positively impact society by creating jobs, supporting charities, or promoting well-being initiatives.
• The planet: Your business’s responsibility to positively impact the natural environment, or at least not damage it.

Even business leaders with the best intentions can make unethical decisions. In a Harvard Business Review article , HBS Professor Max Bazerman describes the concept of motivated blindness , in which you become unaware of unethical decisions when they benefit you or your company.

Hsieh echoes this sentiment in Leadership, Ethics, and Corporate Accountability .

“Even when the right thing to do seems clear from an outsider’s perspective, factors like time, social pressures, and the need for self-preservation can complicate things,” Hsieh says in the course.

Learning about ethical leadership can enable you to be aware of unintended negligence and make more conscious, ethical decisions.

Here are four examples of business leaders who faced ethical dilemmas, how they handled them, and what you can learn from their experiences.

1. Johnson & Johnson’s Tylenol Poisonings

A classic case of ethical leadership in business is “the Chicago Tylenol poisonings.” On September 9, 1982, a Chicago-area 12-year-old girl woke up with a cold. Her parents gave her a tablet of extra-strength Tylenol to ease her symptoms and, within hours, she died.

Six more deaths followed—the connecting factor between them was having taken extra-strength Tylenol shortly before passing away. It was later discovered that the tablets were laced with cyanide, a chemical that interferes with the body’s ability to use oxygen.

Johnson & Johnson, Tylenol’s parent company, had an ethical dilemma and a public relations disaster to contend with.

Baffled as to how the cyanide got in the tablets, Johnson & Johnson’s leaders acted quickly and pulled all Tylenol products off the shelves—31 million bottles worth over $100 million—and stopped all production and advertising.

The swiftness of their decision, although incredibly costly, put customers’ well-being at the forefront and saved lives.

Johnson & Johnson partnered with the Chicago Police, the Federal Bureau of Investigation (FBI), and the Food and Drug Administration (FDA) to track down the perpetrator who added cyanide to the medication. The company offered a $100,000 reward and provided detailed updates on its investigation and product developments following the crisis.

When it became clear that the killer had bought the product, laced it with cyanide, and returned it to store shelves undetected, Johnson & Johnson developed the first-ever tamper-resistant packaging. The “safety seal” that now covers the opening of most food and drug products was born.

“Our highest responsibility has always been the health and safety of our consumers,” a Johnson & Johnson representative wrote in a statement to the Chicago Tribune . “While this tragic incident remains unsolved, this event resulted in important industry improvements to patient safety measures, including the creation of tamper-resistant packaging.”

The Tylenol brand recovered from the incident, largely because of Johnson & Johnson’s leadership team’s swift action and transparent care for customers.

2. JetBlue’s Shutdown

On Valentine’s Day, 2007 , at the John F. Kennedy International Airport, JetBlue Airlines sent nine planes from the gate to the runway during a snowstorm, hoping conditions would rapidly improve—but it had no such luck.

The misstep caused the planes to sit on the tarmac for more than five hours with disgruntled passengers inside. The issue snowballed from there.

Since JetBlue employees had to work overtime to deal with the delays, few had enough allowable flight time to handle upcoming departures. JetBlue was left with no choice but to cancel 1,096 flights over the following five days.

CEO David Neeleman responded by writing an apology letter to customers and crafting a “ customer bill of rights ” that the airline still abides by. The document outlined customers’ rights to information about flights, as well as how they’d be compensated in the event of delays or cancellations.

Neeleman also went on a public apology tour, taking full responsibility for the incident rather than blaming it on the weather.

This response stands in contrast to the 2022 Southwest Airlines incident that played out similarly but with less accountability from leaders. Initially caused by bad weather and then exacerbated by Southwest’s outdated booking systems, the 16,700 canceled flights left thousands stranded between December 21 and 31.

In contrast to Neeleman’s apologies and emphasis on customer rights, Southwest CEO Bob Jordan took a defensive stance, explaining in a video the impact that “record bitter cold” had on all airlines and that Southwest was doing everything it could to remedy the issue. While those points may have been true, the response didn’t go over well with customers who wanted to feel respected and understood.

Each leader's choices highlight the importance of being transparent and championing customer rights when facing similar issues.

Related: The Importance of Reflective Leadership in Business

3. Starbucks’s Racial Bias Incident

If one of your employees made a critical decision based on racial bias, how would you respond? That was the question Kevin Johnson, then-CEO of coffee shop chain Starbucks, had to answer in April 2014 .

One day, two Black men entered a Starbucks in Philadelphia and asked to use the bathroom. The manager on duty told them the restroom was for paying customers only, so they sat down to wait for their friend to arrive before ordering.

The manager called the police, who arrested the men for trespassing. Although no charges were filed, the arrest went viral and sparked protests throughout the United States.

Starbucks, which prides itself on being an ethical brand , has one of the most diverse leadership groups in corporate America—five of the board’s 14 members are women, and five are from racial minority groups. This racially motivated incident clashed with its values.

Johnson fired the manager who called for the arrest, apologized to the two men, and announced racial bias training for all Starbucks employees.

To emphasize the training’s importance, Johnson closed 8,000 locations on May 29, 2018, to educate 175,000 employees. This cost Starbucks an estimated $12 million in lost profit but spread the message that it cares about its customers, employees, and society.

Related: How to Create a Culture of Ethics and Accountability in the Workplace

4. The Muse Sticking Up for Employees

Ethical dilemmas often aren’t public scandals—even quiet, internal decisions can have enormous impacts. Kathryn Minshew, CEO and co-founder of The Muse , faced one such scenario in the early days of growing the online career platform.

She’d just signed a company to use The Muse’s recruiting platform. It was a major deal, and the young startup desperately needed revenue. But during the onboarding process, Minshew noticed the client’s representatives were talking down to her junior staff members. While they respected her, how they treated her team didn’t sit well.

She spoke with the client about it, effectively providing a warning and a chance to start the relationship on a better note. Still, the poor treatment of her team continued.

Minshew had a decision to make: Take the revenue despite the mistreatment or part ways with the client to support her team. She went with the latter.

“I told them nicely that it didn’t make sense to work together anymore and refunded the unused balance of their money,” Minshew says in an interview with Fast Company . “They tried to argue, but at that point, my mind was made up. I didn’t realize how relieved my team was—and how much they appreciated it—until after it was all done.”

By cutting ties with the client, Minshew fulfilled her ethical responsibility to create an environment that supported her employees’ well-being and right to be treated respectfully. In doing so, she built a strong foundation of trust and demonstrated that she’d have their best interest in mind—even at the business’s expense.

“I think backing your team in situations like that is really important,” Minshew says in the same interview, “but it’s not always easy, especially when you’re early-stage.”

How to Develop Ethical Leadership Skills

While these scenarios likely differ from those you face at your organization, ethical leadership’s guiding principles ring true.

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8 Current Ethical Issues In Business (and How to Prevent Them)

TABLE OF CONTENTS

Ethical issues in business can be an unforeseen and difficult challenge. 

Discrimination laws and other statutes are in place to keep workers and employers responsible, but they can’t wholly deter employees or employers from acting unethically.

We’ve compiled a list of current ethical issues in business that you might have to confront. Understanding how to detect and, most importantly, deter these issues before they become a problem can keep your focus on business growth instead of remediation.   

Here are the business ethics topics we’ll cover:

• Discrimination and harassment
• Abuse of leadership
• Accounting  
• Employee theft
• Social media
• Data privacy

What Are Ethical Issues in Business?

When referring to ethical issues in business, the meaning essentially comes down to what’s seen as morally right or wrong within an organization and in the eyes of the public, not limited to customers and shareholders. These issues can take the form of company actions, employee activities and business decisions, among others. At the core, they demonstrate character, trustworthiness and integrity (or lack of).

Ethics and Compliance Statistics

Just how prevalent are ethics issues in business? The Ethics & Compliance Initiative released its 2021 Global Business Ethics Survey Report . Some of the most striking statistics included the following:

• The most prevalent forms of misconduct in the U.S. include favoritism, management lying to employees, conflicts of interest, improper hiring practices, abusive behavior and health violations
• 86% of U.S. workers report misconduct within their organization
• 30% of U.S. employees say they feel pressured to compromise their company’s standards of ethics
• However, the global median of companies with strong work cultures is just 14%

8 of the Top 21st Century Ethical Issues in Business Today

Ethical and moral issues in business aren’t new, but fresh technologies can be a breeding ground for new forms of unethical behavior. Additionally, the way companies handle such concerns can evolve. Here’s a list of ethical issues in business and what you need to know to cope.

1. Discrimination and Harassment

Harassment and discrimination are arguably the most prominent contemporary ethical issues in business today. Should an instance occur, the result could be devastating to your company’s finances and reputation. 

Though discrimination and harassment laws have been put in place and continue to be updated, thousands of businesses see complaints levied against them each year. According to the United States’ Equal Employment Opportunity Commission (EEOC), there were 61,331 charges filed in 2021 alone. 

Although discrimination and harassment policies in business settings technically deal with different treatment types, both protect certain classes of employees.

To help combat ethical issues in your business specific to discrimination and harassment, ensure your policies don’t negatively impact the following protected classes: 

• Age: This usually applies to those 40 and older, but any ageist policies or treatment is prohibited.
• Disability: Anyone with a physical or mental impairment. Employers must grant reasonable accommodations and provide equal treatment to a person with actual or perceived disabilities to comply with the Americans with Disabilities Act (ADA).
• Genetic information: Employers can’t discriminate against employees based on information from genetic testing, and this extends to their family’s medical history.
• Race/color: Employee treatment must be consistent regardless of race.
• National origin: An employer can’t discriminate based on a person’s actual or perceived national origin or ethnicity.
• Religion: Accommodations and equal treatment must be provided within reason regardless of an employee’s religion.
• Equal pay: Compensation for equal work must be equal regardless of sex, race, religion, etc.
• Pregnancy: Accommodations and equal treatment must be provided within reason for pregnant employees.

Workplace Discrimination

Discrimination can be any treatment that negatively affects an employee in a protected class when it comes to the job itself. This includes hiring and retention practices, compensation, advancement opportunities, training and reasonable accommodations, among other workplace treatment. 

One of the more significant ethical issues in business is the gender wage gap, where an employer pays a woman less than a man when they have mostly equal skills and experience levels and are performing the same work. Other ethical issues in business examples include firing an employee for being perceived as too old or refusing to provide opportunities for advancement for people of certain races or ethnicities.

Workplace Harassment

Harassment, unlike discrimination, is an ethical issue that involves the social and personal treatment of people within a business. This list of ethical problems includes behavior that creates a hostile work environment, such as teasing, inappropriate sexual behavior and even verbal or physical abuse by a supervisor, co-worker or non-employee. The bullying of an employee with a physical or mental disability would be an example of workplace harassment.

How to Deter Harassment and Discrimination In Your Small Business

Unfortunately, small business owners can’t always make sure employees act ethically. However, what you can control is how your business accommodates and treats its employees of different backgrounds and abilities. 

A few things you can do to ensure a healthy, friendly work environment for all include:

• Putting strong company policies in place for human resources and conflict resolution
• Providing continued education on harassment and discrimination laws 
• Monitoring employee relationships to stay informed and catch any ethical violations before they become a larger problem
• Ensuring employees who bring forward complaints are shielded from retaliation

2. Abuse of Leadership

Another example of ethical issues in business is abuse of leadership. This occurs when individuals who hold positions of power in an organization misuse their authority, whether with staff members or in relation to their administrative functions. 

In addition to harassment, this could present in the punishment of employees who fail to meet unreasonable goals the manager has set. Alternatively, the manager may take credit for the work of a lower-level employee.

Beyond a leader’s interactions with employees, abuse of power can take the form of falsifying reports, including sales, expense or payroll reports. Additionally, it could involve accepting gifts from clients or vendors when the organization has a policy against such action.

Deterring Power Trips

Be sure your company handbook clearly defines acceptable and unacceptable behavior in the workplace. Outline consequences for abuses of power. Additionally, provide leadership training so administrators can learn how to manage themselves and their team appropriately. Finally, intervene when necessary to quash destructive behavior.

3. Compliance

Compliance ethical issues in business are often tied to companies straying from the rules and laws of conducting business. Businesses are required to comply with all environmental, federal and state regulations. If they don’t, they can jeopardize the health and livelihood of those within and outside of their company. 

Some businesses knowingly disregard these regulations to improve profits. An ethical issue in business example regarding compliance is a company that illegally dumps its waste. The company knows it’s wrong but does it anyway because it reduces the cost of finding safe alternatives.

Guarding Against Compliance Issues

To avoid compliance problems in business, enact the following practices:

• Always follow governmental and company bylaws.
• Promote a culture that puts the long-term health of the company ahead of short-term greed and self-interest. 
• Maintain awareness and adherence to any regulation or statute changes that can impact your business’s operations.
• Stay focused on how actions affect others.
• Always act ethically and in the company’s best interest.

4. Accounting

Another ethical issue in entrepreneurship and business can deal with accounting. Numbers don’t lie. But when accountants and companies act unethically, they do.

Deceiving shareholders and others with a stake in your company’s finances is a serious offense by both ethical and judicial standards. 

Penalties can be levied in fines, imprisonment and can often lead to a company’s closure. As an example, in the accounting realm, one of the most infamous business ethics issues in the news was the Enron scandal in 2001, in which company executives used questionable accounting practices to conceal financial troubles and give the appearance of higher profits.

Avoiding Accounting Violations

It’s crucial to have a trusted, honest accountant (or accounting team) who will pore over every number to make sure your records are correct. You should have a part in reviewing every financial statement and report in your company. Also, having an audit system, either internally or externally, for additional oversight can help you avoid ethical problems in your business.

5. Employee Theft

Business owners, especially those in the retail industry, are very aware of how theft can affect their business. Theft is not, however, strictly committed by customers. It’s estimated that 25%-40% of workers steal from their job . Additionally, according to the Association of Certified Fraud Examiners , companies can lose 5% of their annual revenue to employee fraud. 

It is not just stealing inventory. Employee theft also includes other ethical violations that can hurt your company.

Some of the ways employees steal from their companies include:

• Money: Stealing money is the most common type of employee theft.
• Time: Falsifying time sheets is another form of employee theft.
• Supplies: Taking office supplies home, such as pens, notebooks and other property, is an additional way employees steal from a company.
• Information: Stealing company information, trade secrets or client information is a form of workplace theft as well. This could put the business at a risk of loss and open it up to competition or litigation.

Preventing Employee Theft

Help avoid business ethics concerns by being thorough in your hiring process. Make certain you trust the employees you’re bringing in and ensure they will be respectful of your company’s property.

You should also have a policy delineating what constitutes theft and the potential consequences for anyone caught stealing. Employees should read and agree to this policy before starting work at your company. A legally enforceable nondisclosure agreement could also help deter the theft of trade secrets or intellectual property.

6. Social Media

A recent ethical issue in business is social media use, whether you and your employees are on or off the clock. Needless to say, your business should have a social media policy addressing do’s and don’ts when employees work with the business’s social media accounts. 

Ethical issues to address in a business social media policy include how to: 

• Properly seek permission for use or attribute content taken from another creator
• Handle copyrighted content
• Deal with unhappy customers
• Manage public relations concerns
• Use (or not use) personal social media accounts during working hours

While you usually wouldn’t police an employee’s personal social media behavior during non-working hours, their posts could still cause ethical problems in your business. If an employee’s written post, photo or video — even if it was created off the clock — risks damaging your business’s reputation and losing customers and clients, the employee could still face professional repercussions. 

Social media ethical issues in business examples include:

• Posting negative or derogatory comments about your business — including anything libelous or defamatory
• Leaking private information about the company or its clients or customers
• Posting content that denigrates an individual or group based on race, sex or gender, religion or disability

How to Manage Social Media Ethics

A clear, consistently enforced social media policy can help keep some business ethics concerns at bay. Have employees read and agree to your business’s policy when they onboard. Social media also rapidly evolves, so update your policy to reflect relevant changes to the landscape, looping in your employees as you do. Include ethical dilemma examples in your business social media policy to help illustrate behavior your company won’t tolerate.

7. Data Privacy

In a digital world, data privacy is at the forefront of ethical issues today in business. Your business and customer information is largely stored on computers, other smart devices or the cloud, and a shoddy IT governance policy can be just as damaging to privacy as a security hack.

Guarding Against Data Privacy Ethical Problems in Business

Maintaining data privacy is paramount. Consider using the following methods to avoid ethical issues in your business: 

• Enact clear guidelines regarding how data is handled, stored and purged.
• Identify who manages and/or accesses data and ensure they understand how it should be managed; have them sign a contract affirming this.
• Establish and enforce clear consequences for data privacy breaches.

8. Nepotism

Hiring family members or friends isn’t necessarily a negative. Recognizing when it’s an ethical issue in business comes down to understanding when nepotism supersedes competency and shows unwarranted favoritism. 

Additionally, keep in mind, depending on your relationship, the familiar hire may ask favors from you that may conflict with your organizational standards or codes of conduct, such as requesting unreasonable amounts of time off.

Avoiding Unfavorable Outcomes When Hiring Family

Show caution when hiring family or friends, and understand that your existing employees may look upon this negatively, particularly if the individual isn’t qualified to take on the role.

Addressing Ethical Issues In Your Business

Avoiding ethical issues in your business starts at the top. Being a strong leader encourages employees to follow in your footsteps. Weigh decisions against a robust code of ethics and demand the same from your employees. 

Use these final tips to avoid ethical issues in your business:

• Ensure policies outlining ethical behavior are known and understood within your organization.
• Learn more about discrimination laws in your state. 
• Read up on rules and regulations that affect your industry and make sure your business acts accordingly. 
• Work with accountants to maintain transparency and honesty in your financial reports. 
• Set up a confidential system for reporting ethical violations.
• Offer employee training and resources to combat unethical behavior.

If you create a healthy work environment with the right people and the right leadership, you’ll set up your employees and your business for success.

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Ethical Research in Business Ethics

• Editorial Essay
• Published: 29 November 2022
• Volume 182 , pages 1–5, ( 2023 )

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• Gazi Islam 1 &
• Michelle Greenwood 2  

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In this editorial essay, we argue that business ethics research should be aware of the ethical implications of its own methodological choices, and that these implications include, but go beyond, mere compliance with standardized ethical norms. Methodological choices should be made specifically with reference to their effects on the world, both within and outside the academy. Awareness of these effects takes researchers beyond assuring ethics in their methods to more fully consider the ethics of their methods as knowledge practices that have broader institutional consequences. Drawing from examples in published research, we examine five ways in which authors can formulate their methodological approaches with purpose, care and reflexivity.

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Business ethicists are accustomed to confronting the “hard cases” of ethical choices in organizational life. We believe that business ethics scholarship must be equally sensitive to ethical nuances in the design and implementation of research methods in our own activities. In the complexities of research practice, ethical considerations around method and design exceed the standardized templates of methods textbooks. Where research designs begin and end and whom they implicate as protagonists, who receives voice, protection and authority, and what is rendered visible and invisible within the field of study. These are thorny questions that are not amenable to check-list style compliance guidelines, even where such guidelines also have an important role (cf., Greenwood, 2016 ).

In our exchanges with authors and within the editorial team, we have confronted a plethora of hard cases that highlight the challenges of research ethics beyond rule compliance. To what extent should the mode of data collection (such as crowdsourced data or social media platforms) answer to ethical quandaries around digital labour and online surveillance? When should organizations or individuals engaging in ethically problematic practices be named, and when must they be anonymized? To what extent should the relationships between researchers and participants be problematized within methods sections, including financial and power relationships between funders, researchers and participants? What are the respective roles of institutional ethics boards and journal editorial teams (along with other actors in the research ecosystem) in validating the ethical permissibility of a design? When should hard ethical questions lead a study to be rejected at the review stage, rather than passed along to the research community to make its own judgment? Such questions (and many, many more) have filled our days with deep reflection, and the current editorial aims to share some of these reflections with the Journal of Business Ethics community, albeit in necessarily schematic form. Specifically, we aim to both expand thinking about research ethics to include elements that are often considered outside of methods, and situate conventional methodological ethics in relation to this broader vision. The result will be a plea for a research ethics based on purpose, care and reflexivity.

Between Prescriptive and Evaluative Research Ethics

In a previous editorial essay (Islam & Greenwood, 2021 ), we borrowed a distinction by Williams ( 1985 ) between prescriptive and evaluative ethics; the former refers to what one should do, while the latter to what the world should look like. Mapped onto methods, this analytical distinction differentiates between specific methodological practices (e.g., one should design measures that fit the core constructs, one should gather informed consent) and the broader social and practical implications of research (e.g., the goals of science to innovate, educate or emancipate). We emphasize that this is an “analytical” distinction because, in practice, these aspects of ethics are deeply intertwined, and we distinguish them primarily to show how they spill into each other. Actions should be prescribed, at least in part, for the worlds they contribute to making, although in the fog of situated practice, we are often unaware of, or unable to, clearly link our actions to those future worlds.

From this distinction, it is easy to differentiate heuristically between ethics in research methods, that is, the ethical norms and practices internal to research design and execution, and the ethics of research methods, that is, whether those methods should be used in the broader evaluative sense. In many cases, these ethical levels align, with ethical practices working toward an evaluatively desirable world. Gathering informed consent is important because it is desirable to promote a world of autonomous choice (e.g., Hansson, 2006 ). Hypothesizing after the results are known is problematic because promoting false positive statistical results reduces replicability and thus scientific certainty about the world (Kerr, 1998 ). To take the previous example, however, some have argued that “HARK”ing is less ethically problematic when research is transparently exploratory (Hollenbeck & Wright, 2017 ); in this case, what is ethically problematic is not the practice per se, but the lack of transparency between a given practice and its exploratory (rather than confirmatory) intent. As for informed consent, in cases where a signed form substitutes for, rather than expresses, true participant autonomy (cf., Dubois et al, 2012 ), it can obscure rather than clarify the ethics of a research project. To begin with, the presentation of a priori formulated protocols for consent presumes that the identified participant is the only stakeholder in the research who is affected by the research in a manner that would require their consent. Moreover, this protocol may preclude collaborative models in which participants actively construct research protocols with researchers (Hansson, 2006 ). In both of these examples, a practice is justified on the basis of a deeper evaluative motive, but the mapping between the two is imperfect and situation-dependent.

Tensions may appear between prescriptive and evaluative dimensions of research methods, giving rise to ethical polemics or dilemmas. To give one example, we have had recent debates around the ethics of online data crowdsourcing from platforms such as Amazon MTurk (e.g., Newman et al., 2021 ). Much discussion has been given to best practice in terms of construct validity and similar “internal” considerations of research design as well as issues such as “bots” or fraudulent respondent activity that affect validity. However, broader considerations in terms of labour exploitation on online platforms (e.g., Shank, 2016 ) bridge internal and external research ethics, given internal norms for participant autonomy and external considerations of the public good. Less discussed are the systematic effects of widespread use of online data collection for disembodying researchers from participant communities, entrenching economies of digital labour and surveillance, and reifying a context-free individual as the object of social scientific study. These, we would argue, are methodological outcomes that may contribute to undesirable worlds, and thus are materially relevant for ethical consideration.

Other examples illustrate the opposite tension between prescriptive and evaluative research ethics. In a provocative article, Roulet et al. ( 2017 ) describe the potentials of “covert” research, where normally unacceptable practices of researcher concealment are weighed against laudable goals such as revealing workplace abuse or unethical organizational practices. In such cases, practices that are prescriptively problematic (e.g., collecting data without consent, concealing researcher identity) are defended on the grounds that the ethical goods, in terms of creating a better world, legitimate such practices. While the example of online platforms seems more defensible at the level of practice but questionable at the level of broad systemic implications, that of covert research seems more problematic at the level of practices while (possibly) defensible in terms of its ethical purposes.

More than simply a conflict between means and ends, however, such tensions reveal discrepancies between ends that are “localized” as specific practices (e.g., the goal of conducting a valid study according to current norms) and the more broad-based ends of research (e.g., creating a better world through socially reflexive knowledge production). Our challenge at the Journal of Business Ethics as editors, and our counsel to authors, reviewers and editors is to reflexively seek equilibrium between the practical ethics of research design and execution and the broader promotion of the public good that is the ultimate end of science.

Guiding Ethical Research in Business Ethics

Situating research ethics within the relationship between concrete ethical practices and evaluative goals of social improvement adds complexity to ethical decisions, forcing researchers, reviewers and editors to confront real ethical dilemmas that cannot be dissolved in mere compliance practices. We think the recognition of this complexity is salutary. It emphasizes that the review process is one moment in the broader network of evaluative practices that includes—but is not limited to—institutional ethics approval processes prior to submission, ethical and legal considerations of publishing houses and scholarly societies that administer academic production, and reception of research after publication. Each of these moments bring into light different ethical stakes, and we see our editorial role as an important but not exhaustive evaluative moment. From our perspective, our role is not to present a hurdle over which only the most flawless research can pass, but to curate a conversation with the greatest potential for scholarly generativity and progress. This makes our goal a collective one, and we judge research for its ability to promote the field, by being rigorous, by being interesting, by being reflexive, or by some combination of these epistemic virtues. From the research ethics we have outlined we derive certain guiding principles for evaluation.

Showing Links Between Methodological Design and the Broader Purpose of the Study

Business ethics scholarship should clarify its purpose through clearly articulated research questions and hypotheses, while explaining in its methods why specific research practices are important for a broader purpose, and why that purpose is itself ethically relevant. Specifically, the methods discussion should reflect how the ethics-related purpose of the study is consistent with the methodological approach adopted, both in terms of the broad design and specific practices. In short, integration of methods with the wider purpose of the study, and alignment between the two, is a mark of ethically sensitive research.

In their recent study of child labour in Indian cottonseed oil farms, D’Cruz et al. ( 2022 ) demonstrate an exemplary integration of methods and purpose to explore a topic that is notoriously difficult to study methodologically. Drawing on analyses of children’s drawings, together with detailed conversational extracts, the authors paint a powerful picture of the experience of violence in a population of working children. Rather than staying only at the level of lived experiences, however, the authors use those experiences to understand how processes of embedding and disembedding labour within society are manifested at the micro level. Thus, their visual and discursive methods become powerful tools to link everyday suffering with macro processes of economy and society.

Acknowledging the Web of Relationships Within Which Research Methods are Embedded

Each aspect of the research process, from protocol design to data collection to peer review, involves multiple actors who collectively construct the meaning of scholarship (Greenwood, 2016 ). While it may not be possible to make this network entirely visible, the ability to do so increases the transparency and value of a scholarly inquiry.

In his study of external funding on research freedom, Goduscheit ( 2022 ) uses qualitative interviews, program materials and observations to understand how funding bodies shape research outcomes. He shows how expectations from funding bodies can shape the types of topics studied, the ways in which research questions are answered and the forms of research output that are produced. Rather than simply deeming such influences to be unethical, he analyses the positive and negative features of the evolving relationships between researchers and funding bodies and their implications for developing scholarship.

Similarly acknowledging relationships but on a very different topic, Allen et al. ( 2019 ) describe the role of reflexivity in sustainability research, where ecological responsibility can result from acknowledging the multiple relationships between humans and the environment. Promoting an “ecocentric radical-reflexivity”, they point to how methods such as participatory action research and arts-based methods can help identify organizational actors as embedded in ecological relationships. In this example, as in the previous one, research is recognized as more than simply the execution of accepted standards. Rather, ethical research depends on developing sensibilities towards the complex economic and ecological relationships in which scholarship is situated.

Complementing Compliance with Purpose

Ethics should be explicitly discussed as an aspect of methodology, but this is best done when a focus on compliance with standards is complemented by a consideration of core ethical issues and a transparent discussion of how decisions were made in response to those issues. Doing so reveals those decisions as tailor-made for the case at hand and not imposed upon the case without regard for its specificities (Greenwood, 2016 ). In other words, compliance is not a sufficient criterion for ethical research methods, and a methodological approach focused exclusively on ethical compliance criteria may miss the “bigger picture” of the role of the methods in the broader scientific and social goals of the study.

Nielsen’s ( 2016 ) paper on ethical praxis and action research elaborates on how research involves ethical decision making and situated, pragmatic choices that go beyond simply ticking the correct ethical boxes. Describing these from an Aristotelian perspective, he elaborates how researcher-participant interactions give rise to emergent research concerns that are both knowledge-related problems and problems for practice. The ethics of action research in this context is about facing unique problems that cut across the researcher-practitioner divide and can draw upon but are not limited to pre-existing ethics templates.

Adopting an Explanatory Versus a Justificatory Orientation

Methodological descriptions of ethics often have the tone of justification claims legitimizing authorial choices in terms of sample, data collection or analysis. Such justifications are warranted, and are good practice, but we believe that value is added when authors are more forthright about their ethical difficulties and dilemmas. Specifically, we value their attempts to work out those dilemmas transparently for a scholarly audience, that is thereby given access into the workings of scientific decision-making process and not simply presented with a black box labeled “method”. There is more value in showing the path taken to an ethical judgement than simply defending that the end decision was a good one. This also implies that wrong turns, changes of track, and similar ethical revisions should be described and contribute to the value of a paper.

Litz’s and Turner’s ( 2013 ) study of unethical practices in inherited family firms provides an interesting case of how researchers can productively describe the dilemmas they face methodologically. Given the difficulty of gathering data about the unethical practices of family members, they candidly ask “how does one approach a question so laced with shame and stigma?”(p.303). Rather than presenting their method in terms of templates used to justify their choices, they recruit the readers directly into their dilemma and walk them through their choices, which involved confronting participants with dramatic scenarios that allowed them to disclose intimately held views more safely. Ultimately building this technique into a validation exercise and a quantitative analysis, the latter are given credibility by their grounding in the initial researcher dilemma that led to the methodological approach.

Transparency and Reflexivity in Writing and Link Between Methods and Results Sections

Because transparent and reflexive description of methods integrates theoretical considerations within the methods itself, such description allows the method to operate more organically within the broader argument of the paper. Doing so allows authors to establish links between the methods and discussion sections, to describe what went right or wrong, what the limitations and possibilities of the method were, and how future research could remedy possible shortcomings or harms of the given method.

For example, Bontempi et al. ( 2021 ) study of CSR reporting inspired by the case of the Ethiopian Gibe III dam is exemplary of how methods can be used to reflexively and transparently link methods and results. Engaging in a “counter reporting”, the study draws upon conceptual literature, archival and theoretical research, and activist on-the-ground engagement to build an alternative view of reported social engagement around hydroelectric dams. Alternating between inductive and deductive approaches, these authors were particularly reflexive and deeply transparent in their methodological description, including detailed and publicly available information from their codebook in the article’s supplementary materials. The result went beyond the standard critique of CSR discourses to actively create a counter-discourse that was both scholarly and activist in orientation. The resulting discursive struggle continued onto the blogosphere, with methodological debate between the authors and the company itself over methods. Footnote 1 We see such interaction and engagement as key to the social relevance of research.

Purpose, Care and Reflexivity

Research ethics have conventionally been concerned with the procedural aspects of scholarship, in particular the methods. Gold standard in this regard has been to not merely treat ethical standards as hurdles but as aspirations. In this sense an ethical researcher is one who does not only comply but who also cares. We suggest that care requires researcher to actively reflect on and take responsibility for their ethical practices and their research goals, and to situate their practices reflexively within a broader collective process of scholarly inquiry. Thus, we extend the notion of care to embrace the reflexivity of the researcher with regard to their own positionality (and privilege) and with regard to the purpose of research, treating ethics as central to the entire research endeavor. Complementing ethical theorizing that draws data from orthodox empirical methods, we encourage scholars to take up new forms of ethical empirical research in which connections between the conduct of the research and the motivation of the research are deeply and actively formed. The guiding principles we outline in this editorial are aimed at integrating organic, particularized and reflective narratives about the ethical conduct and goals of research in the methods section and throughout the manuscript. Editors, reviewers and authors can all contribute to treating research ethics more centrally in business ethics research.

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Islam, G., Greenwood, M. Ethical Research in Business Ethics. J Bus Ethics 182 , 1–5 (2023). https://doi.org/10.1007/s10551-022-05301-z

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Published : 29 November 2022

Issue Date : January 2023

DOI : https://doi.org/10.1007/s10551-022-05301-z

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Eight common ethical dilemmas business owners face (and how to overcome them).

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Ethical dilemmas are commonplace in society, but when a business experiences one, the impact (and potential fallout) can have a wide reach.

In many cases, ethical dilemmas are challenging to work through because the risk and reward aren't as clear-cut as other types of decisions. This complexity becomes even more convoluted with businesses, as other businesses, customers and employees can all be affected. Below, eight leaders from Young Entrepreneur Council examine some of the more common ethical dilemmas business owners may face and offer their advice on how to overcome them.

Young Entrepreneur Council members offer their tips for how to overcome these ethical dilemmas.

1. Supporting Other Businesses When Money Is Tight

Sometimes business owners have to choose between keeping costs down to survive and supporting other businesses. This is a difficult choice to make and one with significant impact on different people. It helps to find alternative ways to do your part in helping other businesses. It doesn't always have to be about money. If you want to support other businesses and avoid losing money, you could cross-promote other businesses or help in different ways. Keep an open mind and keep looking for solutions and you could come up with interesting ways to help your business and others around you. - Syed Balkhi , WPBeginner

2. Compromising On Product Quality

Compromising on product quality is usually the first place business owners go to make a few extra bucks. Cheaper cost of goods sold looks great on a spreadsheet, but the reality of the situation is your customers will notice. In most industries, the goal is to maximize the lifetime value of the customer. It is very important to put your best foot forward with your product quality and not try to cut corners. If there’s a manufacturing error, don’t sell it. If the software is buggy, don’t ship it. If the food isn't cooked right, send it back. It’s always financially beneficial in the long term to do the right thing. Give the customer the highest quality you can for the money they’re paying you. - Michael Fellows , Patriot Crew

3. Offshoring Your Manufacturing

I once consulted with an entrepreneur who was passionate about manufacturing in the U.S., but who unfortunately found out through market testing that the customers could only tolerate a price point that was too low for this manufacturer to provide. So their ethical dilemma was whether or not to offshore their manufacturing. In the end, they came to terms with the market price, and then, while they chose to manufacture offshore, they ended up forming a strong relationship with the provider and built up enough trust in ethical practices. This was the only way for the small brand to take a toehold in the market. Once they gain enough traction, they hope to move their operations back to the U.S. and command a higher price point. - Kaitlyn Witman , Rainfactory

4. Letting Clients Go

Walking away from toxic clients can be a common ethical dilemma. It's hard to know what the right thing to do is if they are bringing good income into your company and there are contracts signed. But if it's a toxic relationship, boundaries need to be set. If those aren't working, the relationship needs to end—as difficult as that can be. - Diego Orjuela , Cables & Sensors

5. Responding To Employee Social Media Behavior

The question of how to respond to employees' social media behavior outside of work is a difficult one. It's sometimes hard to draw the line. It's entirely justifiable to fire an employee over poor behavior on their personal social media accounts, but it's sometimes tricky to determine exactly when that line is crossed. In today's day and age, there's no excuse for crossing a boundary on social media. Internet etiquette is taught to everyone these days. So if your employee, no matter how valuable they are, crosses a line into propagating hate speech or is discriminating against a particular community of people, then I'd let them go. - Amine Rahal , IronMonk Solutions

6. Keeping Employees Because Of Seniority

Keeping employees around because of seniority is an ethical dilemma. It's normal for business owners to feel that they should be good to people who have been around a company for a long time. However, the people who got you to where you are today are not necessarily the ones who are going to get you to where you need to go in the future. It can be counterintuitive and downright heartbreaking, but keeping people around too long is actually unethical. Business owners may want to keep a "family" atmosphere within their team, but as Reid Hoffman, founder of LinkedIn, says in his book The Alliance , teams are gauged on performance, and you can be cut from the team. Having people on the team who are incompetent destroys the morale of the competent ones on the team. Know when to terminate! - Matt Wilson , Under30Experiences

7. Accepting Job Applicants From Competitors

We recently had an implementation consultant apply to our firm who was coming from another firm in a similar space. The applicant was willing to jump ship without notice and even threw out that some clients would probably come with her. While it could seem easy to take a person with such experience, how they treat their former employers is how they will also treat you one day. If things don't feel right in your gut before day one even happens, it may be best to steer clear. - Marjorie Adams , Fourlane

8. Creating Honest Marketing

Being honest with your marketing message is one of the biggest ethical dilemmas that the modern business owner faces. A casual review of your social media feeds will quickly reveal that using unethical manipulation, misleading your market and overpromising benefits is still rampant across industries. The good news is one of the best ways to stand out in your marketplace is to actually care about your customers and tell the truth. Instead of rushing the sale, what I’ve found that works really well is to show your marketplace that you can help them by delivering valuable content that actually helps them solve real challenges they're having. By doing this, you generate incredible amounts of goodwill and trust with your market and this trust leads to more sales over a longer period of time. - Joe Stolte , The Tractionology Group

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Ethics in Leadership

Employee ethics, ethics by industry, benefits of business ethics, the bottom line, why are business ethics important a guide.

The system of moral and ethical beliefs that guides the values, behaviors, and decisions of a business organization and the individuals within that organization is known as  business ethics .

Some ethical requirements for businesses are codified into law. Environmental regulations, the minimum wage, and restrictions against insider trading and  collusion  are all examples of the government setting certain standards for business ethics. The concept of business ethics has also evolved over time .

Key Takeaways

• Business ethics involve a guiding standard for values, behaviors, and decision making.
• Running a business with ethics at its core from the top down is essential for company-wide integrity.
• Behaving in a consistently ethical manner can lock in a solid reputation and long-term financial rewards for companies.
• Employees tend to remain loyal to, and perform more effectively for, a company with a high standard of ethics.

A management team sets the tone for how an entire company runs on a day-to-day basis. When the prevailing management philosophy is based on ethical practices and behavior, leaders within an organization can direct employees by example. They can guide them in making decisions that are beneficial to them as individuals and to the organization as a whole.

Building on a foundation of ethical behavior helps create long-lasting positive effects for a company. One such effect is the ability to attract and retain highly talented individuals. Another is a positive reputation within the community.

Running a business in an ethical manner from the top down establishes stronger bonds between individuals on the management team. This, then, creates greater stability within the company.

By contrast, unethical behavior at the top can not only destabilize but even destroy a company. In one famous example, Enron Corporation , an American energy and commodity services company, collapsed after the Securities and Exchange Commission investigated its improper accounting practices and revealed that the company hid massive losses and liabilities while paying its executives millions. Thousands of employees suddenly were left jobless. Several executives were convicted of federal crimes. The company's unethical behavior also led to the downfall of one of the oldest and biggest accounting firms, Arthur Andersen.

When management leads an organization in an ethical manner, employees tend to follow in those footsteps. Employees can make better decisions in less time when business ethics are a guiding principle.

When employees conduct themselves in a manner that is based on honesty and integrity, the whole organization benefits. Employees who work for a company that demands a high standard of business ethics in all facets of operations are more likely to perform their job duties at a higher level. They're also more inclined to stay loyal to that organization.

Business ethics can differ from industry to industry, and nation to nation . The nature of a business's operations has a major influence on the ethical issues with which it must contend.

Ethics Concerning Clients

For example, an ethical quandary can arise for an investment brokerage when the best decision for a client and their money runs counter to whatever pays the brokerage the highest commission. A media company that produces TV content aimed at children may feel an ethical obligation to promote good values and eschew off-color material in its programming, even if there is money to be made by crossing that line.

Ethics Concerning the Environment

A striking example of industry-specific business ethics is in the energy field. Companies that produce energy, particularly  nonrenewable energy , face unrelenting scrutiny on how they treat the environment.

One misstep, whether it's a minor coal ash spill at a power plant or a major disaster such as the 2010 BP ( BP ) oil spill, can force a company to answer for its actions. Numerous regulatory bodies and society at large may pursue whether the company skirted its duty to protect the environment in an aggressive pursuit of higher profits. Even after the matter at hand has been resolved, the reputational damage to a company can endure for years.

A stringent, clearly defined system of environmental ethics is paramount for an energy company if it wants to thrive in a climate of increased regulations and public awareness on environmental issues.

Companies such as Amazon ( AMZN ) and Google ( GOOGL ), which conduct most of their operations online, are not scrutinized for their environmental impact the way energy companies such as BP and Exxon ( XOM ) are. However, when it comes to protecting their customers' privacy and security, their ethics are examined very closely. Many such companies have elaborate privacy policies that they make available online.

Ethics Concerning Privacy

A particular area in which technology companies must make tough ethical decisions is marketing. Advancements in  data mining  technology enable businesses to track their customers' movements online and sell that data to marketers or use it to match customers with advertising promotions.

Many people view this type of activity as a serious invasion of privacy. However, such customer data is invaluable to businesses, as they can use it to increase profits substantially. Thus, an ethical dilemma is born. To what extent is it appropriate to spy on customers' online lives to gain a marketing advantage?

The importance of business ethics reaches far beyond employee loyalty and morale or the strength of a management team bond. As with other business initiatives, the ethical operation of a company is directly related to profitability in both the short and long term.

The reputation of a business in the surrounding community, among other businesses, and for individual investors is a key factor in determining whether a company is a worthwhile investment . If a company is perceived to operate unethically, investors are less inclined to buy stock or otherwise support its operations.

Companies have more and more of an incentive to be ethical as the area of socially responsible and ethical investing keeps growing. The increasing number of investors seeking out ethically operating companies to invest in is driving more firms to take this issue more seriously.

In addition, changes in society and new technologies are raising fresh ethical concerns. The advent and ongoing development of artificial intelligence , for example, is creating new ethical dilemmas across a host of industries.

What Is Meant by Business Ethics?

Business ethics represents a standard of behavior, values, methods of operation, and treatment of customers that a company incorporates, and insists that all employees adhere to, as it functions from day to day.

How Do Business Ethics Benefit Companies?

By behaving according to a high ethical standard, companies can strengthen the drive to succeed internally among executives, management teams, and staff. Furthermore, companies can attract and keep investors who themselves are attracted to companies that align with their own standards of ethical behavior. In other words, business ethics can help companies build long-lasting, solid reputations and financial success.

Why Do Some Companies Have Bad Business Ethics?

That's a good question, especially when the financial advantages arising from a high degree of ethical behavior can be so great. A couple of reasons may be that some CEOs, management teams, or employees may feel it's just easier to work outside of an ethical standard. They may reach certain financial goals faster and not care about the long-term repercussions. It may seem to be less expensive to work without moral and ethical boundaries. Where money is concerned, good ethics can be forgotten.

With consistent ethical behavior comes an increasingly positive public image. There are few other considerations as important to potential investors and current shareholders . To retain a positive image, businesses must be committed to operating on an ethical foundation as it relates to the treatment of employees, respecting the surrounding environment , and fair market practices in terms of pricing, delivering value, and serving customers.

U.S. Securities and Exchange Commission. " Spotlight on: Enron ."

Google. " Google Privacy Policy ."

AWS. " Privacy Notice ."

Harvard Business Review. " Why You Need an AI Ethics Committee ."

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Workplace Ethical Issues Essay

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Workplace ethics refers to moral principles and values governing proper behavioral conduct in the place of work (Barry & Shaw, 2013). Work ethics guide the managers as well as employees to do the right thing even if doing the wrong thing can equally be rewarding and satisfying. Therefore, workplace ethical issues involve a plethora of ethical dilemmas and ethical abuses that come into play in any job.

An ethical issue is defined as an illegal, unethical, or irresponsible act made against the employer, and it jeopardizes the employer’s business. Ethical issues arise when workers including the managers and the subordinates are given the responsibility of making decisions about alternative courses of action. This paper discusses a few ethical issues that arise in the workplace.

Harassment of the co-workers or clients is one of the major workplace ethical issues that involve violation of the employers’ workplace ethics policy. Harassment in any workplace may involve unsolicited sexual advances, interferences with work performance through intimidation, or non-compliance with the conditions of work. Sometimes illegal harassment can be based on sex, religion, age, disability, race, or color.

Johnson (2007) provides that harassment does not only involve violation of business ethics, but also involves a breach of the federal laws. Sexual harassment is the common ethical issue many workers experience at their workplaces and it is propagated by both the management and regular employees.

Basically, sexual harassment of any nature makes the workplace hostile and causes distress among the sexually abused employees. According to Bredeson and Goree (2011), the most common ethical issue within sexual harassment is a dual relationship that involves sexual relationships between employees who share professional responsibilities.

Furthermore, sexual harassment occurs when employees engage in unethical intimate relationships, which in turn affects their professional decision-making process. Consensual relationships at workplace between a senior employee and a junior employee can become dangerous.

This may happen because a senior employee has more authority to affect the working ability of the junior employee if their intimate relationship breaks.

However, if this happens, the subordinates should report the act to the relevant authorities because it is improper for any person to use his/her authority to demand favors or create a hostile work environment (Barry & Shaw, 2013). Therefore, it is advisable to avoid consensual relationships with co-workers to combat ethical dilemmas and workplace distress.

Substance abuse is another ethical issue that crops up at many workplaces. It may involve dependence on stimulating substances such as alcohol and other addictive intoxicating drugs. Addiction to any substance becomes a workplace ethical issue when either a manager or a regular employee’s work performance and productivity are impaired until they use the substance (Johnson, 2007).

Alcohol is the most abused substance, and when the employees carry alcohol to workplaces or use in the workplace, it raises serious ethical questions. Generally, substance abuse can be a serious ethical issue if not handled with care since it can create a hostile work environment, and consequently jeopardize the productivity and performance of the entire workforce.

In addition, confidentiality is a workplace ethical principle that becomes a familiar ethical issue when it is violated (Johnson, 2007). For instance, the disclosure of an employee’s personal information or the employer’s business strategy to rival organizations is a major violation of the workplace ethics.

Actually, protecting the employees from privacy invasion creates trust and perhaps increases their productivity. However, when confidentiality is violated, serious ethical implications may occur, which affect the business negatively. Work ethics require that the clients’ private information or the co-workers personal information be accessed by authorized individuals only.

Conflict of interest is another common workplace ethical issue. It refers to a situation whereby an individual’s interests affect or influence his/her workplace judgment, actions, or decisions. Conflicts of interest are virtually unethical and illegal because they negatively affect workplace performance, decision-making process, and relationships with other participants (Bredeson & Goree, 2011).

Conflict of interest is a serious ethical issue, which should be avoided or resolved immediately it appears because it may result in professional misconduct in the workplace. Despite workplace ethical issues being endless, organizations can devise moral or ethical policies to protect their employees from ethical violations.

For instance, an organization can develop a workplace policy based mission, vision and code of conduct, and ensure that each employee understands the code of ethics.

In addition, the organization can provide workplace ethics training for employees, create a legal office to deal with employees ethical issues, and research all federal and employment laws relating to whistle blowing to avoid making decisions that lead to negative ethical implications (Bredeson & Goree, 2011).

In summary, ethical issues exist in almost every workplace because workers often face situations, which involve ethical dilemmas. Moreover, when ethical issues are not resolved in time, they result in a hostile work environment making it harder for the employees to give their maximum potential.

Thus, it is imperative for employers to respond appropriately to every ethical issue that arises in the workplace to make the workplace safe and friendly.

Barry, V., & Shaw, W. (2013). Moral Issues in Business (12th Ed.). Wadsworth: Cenage Learning.

Bredeson, D. & Goree, K. (2011). Ethics in the workplace (3 rd Ed). New York: Cengage Learning.

Johnson, C. (2007). Ethics in the workplace: tools and Tactics for organizational Transformation . London: Sage Publications.

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IvyPanda. (2019, July 4). Workplace Ethical Issues Essay. https://ivypanda.com/essays/workplace-ethical-issues/

"Workplace Ethical Issues Essay." IvyPanda , 4 July 2019, ivypanda.com/essays/workplace-ethical-issues/.

IvyPanda . (2019) 'Workplace Ethical Issues Essay'. 4 July.

IvyPanda . 2019. "Workplace Ethical Issues Essay." July 4, 2019. https://ivypanda.com/essays/workplace-ethical-issues/.

1. IvyPanda . "Workplace Ethical Issues Essay." July 4, 2019. https://ivypanda.com/essays/workplace-ethical-issues/.

Bibliography

IvyPanda . "Workplace Ethical Issues Essay." July 4, 2019. https://ivypanda.com/essays/workplace-ethical-issues/.