Business Ethics Definition: 4 Main Types of Business Ethics

Business ethics, also known as corporate ethics, is a type of applied ethics (ethics focused on real-world scenarios) that focuses on the theories, principles, and values that govern business practices. Business ethics can be a written set of rules or an ethical code that governs a particular company’s ethical conduct. Alternatively, it could refer to a set of unwritten rules or a code of conduct that members follow in corporate culture or in a business community. You can apply these ethical principles to individuals making business decisions within a company or to the company performing business activities as a whole.

There are four main categories that business ethicists use in professional ethics and that business schools often include in their curricula. These philosophies of ethics can be helpful when you are trying to define a company’s ethical culture, or when you are trying to work through ethical dilemmas or ethical issues.

1. 1. Communitarian ethics: These ethics focus on a company’s duty to the business community or its overall corporate social responsibility. Communitarian business ethics will evaluate the expectations brands place on themselves, on other businesses, and on their local communities, as well as the consequences their actions have on others.
2. 2. Deontological ethics: This philosophy of business ethics centers on a sense of duty and the philosophy of Immanuel Kant. Deontological ethics argues that a company should always follow its code of business ethics, regardless of whether or not it will result in good or bad consequences for the company. The bottom line of this philosophy is that, if the company has based its code of ethical behavior on moral principles, it will always be right to follow those rules, no matter the situation.
3. 3. Utilitarian ethics: A focus on creating the ideal outcome for the greatest number of people is at the root of the utilitarian approach to business ethics. Utilitarian ethics can be useful in decision-making, helping you identify an ethical solution that will result in the most good. Like other philosophies, however, it can be subjective, as it requires you to define what “good” really means.
4. 4. Virtue ethics: The point of view of virtue ethics is that virtue should be the central motivation for ethical business conduct. The Greek philosopher Aristotle popularized virtue ethics, which argues that a company should follow moral principles out of a pure desire to be morally good. Virtue ethics also argues that every course of action in corporate governance should be the result of a company’s intention to do good—rather than a desire for a reward or an obligation to fulfill a requirement.

Business ethics is important and even necessary if companies are to behave morally and ethically. These written and unwritten rules can prohibit businesses from acting unethically, can help preserve human rights in the business world, and can prevent companies from taking advantage of their employees or their clients. Here are a few examples of the importance of business ethics.

• A code of ethics helps to identify unethical behavior. A company will want to make sure their employees are creating a safe business environment and company culture for one another and for their clients. A code of business ethics can help leaders or a human resources department to identify unethical behavior or unethical practices in a business environment.
• Ethical practices can determine reputation. A business known to have ethical standards or a code of ethics can attract better employees and might have an easier time doing business with other companies. Trustworthiness and a company’s reputation can affect whether their customers, clients, and stakeholders want to do business with them.
• Ethics can help resolve conflicts of interest. Business operations will often involve conflicts or situations in which two parties or partnerships disagree. Ethical decision-making can help to resolve these conflicts without damaging relationships while also enabling both parties to retain their reputations.

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