The Importance of Business
Ethics
C H A P T E R 1
Why Study Business Ethics?
•Business decisions under great
scrutiny
–Global financial crisis created
diminished stakeholder trust
•Deals with questions about
whether practices are
acceptable
•No universally-accepted
approach for resolving issues
Source: © Jack Hollingsworth/Corbis
Business Ethics
•Comprises principles, values, and standards that guide
behavior in the world of business
•Principles: Specific boundaries for behavior that are
universal and absolute
–Freedom of speech, civil liberties
•Values: Used to develop socially enforced norms
–Integrity, accountability, trust
Americans’ Trust in Business
(% of respondents who say they trust the
following business categories a great deal)
A Crisis in Business Ethics
•Consumer trust of businesses is declining
•No sector is exempt from ethical misconduct
•Stakeholders determine what is ethical/unethical
–Investors
–Employees
–Customers
–Interest groups
–Legal system
–Community
Source: Stockbyte
Why Study Business Ethics?
•Reports of unethical behavior are on the rise
•Society’s evaluation of right or wrong affects its
ability to achieve its business goals
•Studying business ethics is a response to
Sarbanes-Oxley, FSGO, and stakeholder
demands for ethics initiatives
•Individual ethics alone is not sufficient
•Studying business ethics helps identify ethical
issues to key stakeholders
A Timeline of Ethical and Socially
