Business Ethics: Rights, Obligations & Approaches

Business Ethics: Rights, Obligations & Approaches
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  • 0:00 Business Ethics
  • 0:39 Basics of Business Ethics
  • 2:30 Businesses and Consumers
  • 3:22 Competition vs. Regulation
  • 4:44 Lesson Summary
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Lesson Transcript
Instructor: Christopher Muscato

Chris has a master's degree in history and teaches at the University of Northern Colorado.

In this lesson, explore the concept of business ethics and discover how this dictates the ways that businesses interact with each other and with consumers.

Business Ethics

'It's not personal, it's just business.' We hear things like this all the time. The ways we conduct business are somehow expected to be different than our normal interactions. In the world of business, the study of moral rights and obligations as they apply to companies and corporations is called business ethics. This is a very specific branch of applied ethics, or morality as applied to a specific situation. And the rules that govern right and wrong, good and bad, for business are not always the same ones that govern the rest of our daily interactions. Why? Is it personal? No, it's just business.

Basics of Business Ethics

Now, off the bat, we need to recognize that the concept of business ethics is very broad, and there really is no single set of rules that is agreed upon by everyone. The nature of business, based around the idea that companies exist to generate profit, mean that ethical rules are defined, not necessarily by ideas like 'the greater good' or 'benefit to society,' but by competition. In a free market capitalist economy the values of products are determined by supply and demand. So companies are morally expected to behave in a way that benefits economic competition. Greater competition means a healthier economy, which should mean national growth and prosperity, at least theoretically. We take economic competition pretty seriously and this generally defines business ethics. Just like we expect people to interact in ways that will make society safer and more functional, we expect companies to interact in ways that benefit overall economic health. Basically, this comes down to the idea of fairness. In business, something is ethical as long as it is fair. Can a large company buy out a smaller company? Yes. Thanks to the free market, all companies have the same opportunities, so practices like buying out other companies is just part of competition. It's fair. But can companies use things like bribes, insider trading or threats to make themselves more competitive? Absolutely not. That would be unethical because it's unfair and in the end, breaks down trust and cooperation between businesses, which hurts economic competition. Again, just as individual ethics are defined by actions that promote a strong society, business ethics are defined by maintaining a strong economy.

Businesses and Consumers

Does all of this mean that the sole ethical responsibility of a business is to its profit margin? No it doesn't. Let's not forget about a very important group involved in the business world: the consumer, the person who purchases the business's products. At the end of the day, it's consumers who drive the economy, consumers who have to actually make purchases and spend money. So, in the interest of maintaining a strong economy, businesses have many ethical obligations to the consumer. If you buy a product, you can expect that product to work. You can expect that advertising will be accurate. You can expect to receive something you paid for. Ethical business practices encourage trust between companies and consumers. Unethical ones break trust and discourage people from spending their money.

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