Business Ethics and Law Relationship


These days, businessmen are interested not only in gaining maximum possible profit, but also in maintaining their positive image in the eyes of the broad public, and, consequently, increasing attention is paid to business ethics. In general, it implies regulation of professional conduct when ethical issues arise and contains guidelines on the best solutions to minimize harm for the business owners, employees, and customers.

The importance of business ethics may be explained by the fact that it ensures that the company’s activity is profitable and safe for the population. It prompts organization leaders to understand their responsibility and to create new ways of making and distributing their products and services without negative consequences for nature and society. Moreover, business ethics supply a systematic approach to finding a sufficient solution to the possible problem. In general, these guidelines are supposed to make a safe working environment around the globe, requiring companies to adhere to ethics, integrity, principles, and accountability.


These days, finding sufficient solutions to ethical concerns appears to be a hot-button issue, and this regards the field of business as well. In this sphere, business ethics has been introduced, which implies guidelines on professional activity, intended to examine the ethical principles and problems, which may occur in the process of company operation. It presents effective advice on ethical professional behavior and prompts to find appropriate solutions in case of various concerns. Therefore, ethics in business is a guiding force within the law realm, whether it is an individual or company, all cases require ethics, integrity, principles, and accountability.

Ethics and the Role of Business

The Relationship of Law and Ethics

In general, a variety of ethical regulations in business implies guidelines on the correct conduct. They involve further than ordinary laws and highlight the behavioral pattern, which is right from a moral perspective. On the contrary, ethics include principles of taking action, considering the factor of benefit both for individual and society (Trevino & Nelson, 2021; Trevino & Nelson, 2021). In the sphere of business, these terms are more closely connected than in ordinary life, as ethical issues are highly likely to result in legal repercussions for an organization, its employees, and its director.

The Role of Business in Society

From an economic perspective, the role of business in society is defined by producing and selling goods and supplying services, which fulfill a particular demand of different categories of the population. However, none of the companies are successful, unless they benefit their clients (Trevino & Nelson, 2021). Therefore, from an ethical point of view, the major role of business in society is helping people satisfy their needs, making their lives more convenient, and supplying other benefits (Hanks, n. d.). In general, while contributing to balancing the economic system, different forms of entrepreneurship help maintain order and harmony in society.

Profit Maximization Theory and Corporate Citizen

Profit maximization theory was formulated by an economist Milton Friedman, who won the Noble Prize. Reflection on the purpose of any business, he claimed that the sole responsibility of an organization is “to use its resources… to increase its profits” (Hanks, n. d., para. 3). This theory admits applying all the methods, which are effective for earning money regardless of its influence on people. On the contrary, the approach of corporate citizenship involves considering the fact of social responsibility (Trevino & Nelson, 2021).

In other words, it requires a company to observe the side effects of its professional activity (Hanks, n. d.). For instance, in case of producing and distributing cars, it is essential to take into consideration the safety measures and harm to the environment and contribute to minimizing all the resists.

The Ethical Issue in Business that Arise

It is possible to highlight some widespread occasions, which may cause ethical issues in business. Despite the popularity of tolerant ideas in the modern world, discrimination or harassment may occur at the workplace. It may regard age, religion, gender, sex, disability, and other factors. Another possible circumstance involves a violation of the right to work in a safe environment, which can pose health risks to employees and customers. Whistleblowing may also result in ethical concerns, as they are intended to prevent cheating, though they may present a betrayal of a colleague. This question appears to be especially hot-button, when people tend to publish their comments on social media.

The Importance of Ethical Leadership

Ethical leadership is crucial in a business today, as it involves a range of positive implications. For instance, it makes an organization more attractive for potential investors and customers, who take into consideration this aspect (Moriarty, 2016). Moreover, it contributes to establishing a healthy working environment and making a company more appealing for competent and talented employees (Moriarty, 2016). For these reasons, the importance of ethical leadership in business cannot be underestimated.

Ethical Principles and Philosophies

Duty- and Outcome-based Ethics

Duty-based ethics implies an intention to do something, which should be judged as good or bad from the position of moral. On the contrary, outcome-based ethics involves the result of performed activity, judged as good or bad from the position of moral (Trevino & Nelson, 2021) (Trevino & Nelson, 2021) (Trevino & Nelson, 2021) (Trevino & Nelson, 2021) (Trevino & Nelson, 2021). These approaches appear to be different, as the first option concentrates on intentions, namely on possibilities of acting in the future, while the second one focuses on the outcome regardless of a particular action.

Corporate Social Responsibility

These days, businesses in various fields prefer to adhere to corporate social responsibility, which implies one of the ethical philosophies. According to it, the company’s actions should include not only receiving maximum possible profit and paying salary for their employees, but also address social concerns. In other words, an organization should act in good faith and transparency, providing benefits for society by selling products or delivering services.

Sources of Ethical Issues in Business Decisions

Reasons for Ethical Problems

Occasionally, business decisions may lead to ethical problems, and one of the most widespread reasons for it is the willingness to save money. They may cheat and avoid taxes and prevent establishing environmentally-friendly equipment due to additional expenditures. Another popular prompt is the lack of precise and detailed policy. In this context, there a likelihood of unethical behavior of employees due to lack of knowledge of the correct course of actions or determination to cheat.

Effects of Social Media on Business Decisions

Today, social media’s impact on business is predominantly positive, as it provides an additional and effective opportunity for attracting new customers. It presents an effective way of attracting the attention of the broad public to a business, though it may involve some ethical concerns. These days, it is impossible to work productively without access to the Internet, though it appears to be challenging to monitor, how workers use this possibility. Therefore, it is essential to establish appropriate policy in this regard, which will regulate the use of social media by employees.

Awareness of Ethical Behavior

In general, in the context of present-day developments, the rate of ethical behavior awareness is relatively high, as companies understand how this factor influences their authoritativeness in the eyes of the public and investors (Moriarty, 2016). Therefore, businesses in different spheres start to implement these concepts in their operation, ensuring that the actions performed by their employees are ethically correct and do not involve harm for any categories of the population.

Rationalization and Uncertainty of Ethical Business Behavior

Occasionally, companies tend to rationalize their unethical behavior, which means employees or directors may hide their true motivations for adhering to this principle. Directors and employees may give themselves excuses and finding circumstances, which can possibly justify their actions. This also regards situations, which involve uncertainty of ethical behavior, when an organization have to encounter difficult choice (Ferrell et al., 2017). In this context, companies may adhere to the decision, which is profitable for them and involves some harm to others, and find a rationalization for this choice, minimizing their fault.

Making Ethical Business Decisions

The IDTDR and the 4 Steps

In order to respond to ethical problems in business competently, it is advisable to use the I Desire To Do Right (IDTDR) approach. It involves four steps, and the first one is inquiry. This stage implies understanding of the fact that ethical problem has occurred by relying on inner feelings, which may indicate wrong action or a complicated situation. It is recommended to clarify all the information about the event in order to achieve profound comprehension. The second step is discussion, which should include comparing the alternatives and their strengths and weaknesses. The third stage is making a sufficient decision, which should be supported by the arguments discussed before. The final step is reviewing the outcome and analyzing whether the chosen decision is effective and contributes to solving the problem.

The Systematic Approach

A systematic approach for ethical decision-making implies a range of advantages in business. It may provide a quick and competent response to unexpected ethical problems, which required urgent solutions. In addition, its directors and employees avoid long analysis of a situation, allowing them to make sufficient decisions by precise guidelines. Moreover, it may prompt people to take into consideration possible threats, which have been out of their sight. Apart from this, some people become confused when they are required to make an ethical decision and feel a lack of confidence and knowledge. Therefore, a systematic approach, which provides essential steps to reflect and act appropriately.

Business Ethics on a Global Level

The Influence of Religion, Cultural norms and Ethics in Global Business Transaction

Religious specialties, cultural norms, and ethics has an impact on global business transactions, as they have to adjust to the local special features. Employees have unique values and beliefs, and for this reason, they may perceive ethical problems and the development path of a company differently. However, there are basic ethical principles, such as honesty, transparency, and the absence of harm to society and the environment, which are supported by every culture and religion and should be advanced in every part of the world (Ferrell et al., 2017).

Moreover, companies should take into consideration the cultural specialties of the region in order to adapt the working day to religious practices and implement strategies, which do not violate them (Ferrell et al., 2017). This also regards the process of solving ethical problems and the implementation of ethical business behavior.

Outsourcing and Avoiding Corruption in Ethical Global Issues

Global business ethics does not admit outsourcing and corruption as a method of realizing particular functions and responsibilities. In order to prevent the mentioned events, a range of measures is used. For instance, business leaders actively support for adhering to competent and honest fulfilling of working duties and match this requirement as well. In addition, all the businesses are based on spending a precise number of resources effectively (Ferrell et al., 2017). Furthermore, an anti-corruption program is included in the continuous process of learning, and the measures in this regard are controlled.


In conclusion, it should be mentioned that business ethics is essential in order to ensure that the company’s operation does not involve any harm to society and the environment. In addition, it provides helpful guidelines for responding to the arising problems. In the modern world, this aspect appears to be increasingly important, as it improves the status of an organization, which makes it more attractive to the customer and potential investors. In general, business ethics promotes integrity, principles, and accountability, which improves business performance. For this reason, the necessity to apply its principles at the workplace is evident.


Hanks, G. (n. d.). Maximizing profits and the theory of social responsibility of business. Chron. Web.

Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2017). Business ethics: Ethical decision making and cases. Cengage learning.

Moriarty, J. (2016). The demands of stakeholder theory for corporate governance. Business Ethics Journal Review, 4(8), 47-52. Web.

Trevino, L. K. & Nelson, K. A. (2021). Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.

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