What is Business Ethics?

Ethics consists of principles or standards of behavior to which we hold ourselves. In our professional lives, ethics guides our interactions with customers, clients, colleagues, employees, and other stakeholders affected by our business practices.

Many people confuse ethics with legal compliance. These concepts, however, are not interchangeable. Legal compliance generally refers to the extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws. Yet this represents only a baseline minimum. Ethical behavior builds on this baseline and reveals the principles of an individual employee or a specific organization.

As described by ethics researchers at the University of Virginia,

Ethics is more than an individual’s view of things; it is also tied to a larger communal context—an organization, an industry, a community, a nation, or the globe. Ethics is about how one should live as an individual as well as how to get along with others. Ethics assumes that people are accountable for their actions, both to themselves and others. Every day, managers make decisions that can affect customers, employees, financiers, partners, the community, and the world in powerful ways. Since managers are accountable to these groups, they should have good reasons for their actions that go beyond mere intuition and be able to explain why they make the choices they do.^[2]

It is generally understood that the more ethical an organization is, the better it is positioned for long-term success. Thus, it is in the best interest of a company to hire and retain ethical employees and to foster a culture in which ethical behavior is modeled, reinforced, and valued.

Behaving Ethically

Many ethical challenges arise in business because companies, especially large ones, have multiple stakeholders who sometimes make competing demands. Making decisions that affect multiple stakeholders isn’t easy even for seasoned managers; for new entrants to the business world, the task can be especially daunting.

Regardless of an individual’s experience or position, ethic violations in business often involve three factors: pressure, opportunity, and rationalization. (Video 11.1). Together, these three factors make up what is known as the fraud triangle, which has relevance to many other types of ethical violations beyond just fraud.

Giving Voice to Values

You can prepare for the ethical dilemmas you will inevitably face in the business world by  understanding the nature of values conflicts and by developing, in advance, strategies to navigate these dilemmas (Videos 11.2 and 11.3). To this end, the remaining portion of this chapter will introduce you to Giving Voice to Values (GVV), a powerful method to enable you to effectively act on your values in your professional life.

Developed by Dr. Mary C. Gentile, Professor of Practice at the University of Virginia’s Darden School of Business, GVV takes an action-oriented approach to values-driven leadership. Unlike most approaches to business ethics, GVV is not about persuading people to be more ethical. Rather, it starts from the premise that most people want to act on their values, but they also want their actions to be successful and effective.

Traditional approaches to business ethics seek to provide guidance for questions including the following:

• What is the right thing to do in my particular situation?
• Which model of ethical reasoning is the most appropriate to use in my situation?
• What evidence do I need to gather to support my ethical viewpoint?

In contrast, GVV seeks to answer the following question:

• Once I know what the right thing to do is, how do I get it done effectively?

The seven pillars of the Giving Voice to Values (GVV) approach to ethics capture the ways of thinking that make it easier for people to act effectively on their values (Video 11.4). The seven pillars and the specific questions each seeks to answer are as follows:

Chapter Review

Optional Resources to Learn More 

	Books
	Giving Voice to Values by Mary Gentile https://givingvoicetovaluesthebook.com/
	Websites
	Ethics Unwrapped: Giving Voice to Values https://ethicsunwrapped.utexas.edu/series/giving-voice-to-values
	Ethics Unwrapped: Glossary https://ethicsunwrapped.utexas.edu/ethics-defined
	Violations Tracker https://violationtracker.goodjobsfirst.org/

Chapter Attribution

This chapter incorporates materials from the following sources:

Online Ethics Center. (n.d.). Giving voice to values (GVV) for engineering ethics. https://onlineethics.org/gvv-engineering-ethics. Licensed with CC BY 2.0.

Chapter 4 of Skripak, S. J. & Poff, R. (2023). Fundamentals of business (4th ed.). VT Publishing. https://pressbooks.lib.vt.edu/fundamentalsofbusiness4e/chapter/chapter-4-ethics-new/. Licensed with CC BY-NC-SA 4.0.

Media Attributions

Video 11.1: TED-Ed. (2015, June 8). How people rationalize fraud. [Video]. YouTube. https://youtu.be/Tb6QX9Yy1GM

Video 11:2: Online Ethics Center at UVA​. (2022, April 14). The client who fell through the cracks. [Video]. https://youtu.be/UcXF_KhGZ2c

Video 11.3: Online Ethics Center at UVA​. (2022, April 14). The client who fell through the cracks – what happened? [Video]. YouTube. https://youtu.be/_qztHqUITRs

Video 11.4: CFA Institute. Giving voice to values. [Video]. CFA Institute.​https://www.cfainstitute.org/en/ethics-standards/ethics/giving-voice-to-values