Business Ethics

Business Ethics

The responsibility of an organization does not merely end with obedience to the law. This is because obedience to the law does not fulfill the organization’s ethical obligations because the law in itself is logical and persuasive, but not necessarily moral or ethical. For instance, in some countries, child labor is not forbidden by the law, but this does not simply make it an ethical practice for the business (Carmichael, 1995).

Another example is seen when the law might exempt a company that is on the brink of bankruptcy from refunding its shareholders’ funds, which ethically is wrong. The law may also not have sufficient clauses to provide solutions for every organizational dilemma; it is impossible to create laws for every possible challenge that may arise. Therefore, the organization must also base their reasoning on ethicality in certain situations. The law therefore provides a guide to ethics but is not a means of ethical behavior in itself (Gitman & McDaniel, 2009).

Corporate Social Responsibility for instance is not required by the law but is an ethical business practice that enables the company to contribute to the well-being of the society. This shows that a company’s responsibility entails more than legal compliance and making profits; it should also be socially responsible. Some methods of maximizing profits may be legal but not ethical (Ward & Smith, 2006).

For instance, the company may reduce its costs by reducing its employees’ wages to the legal minimum wages. The legal minimum wage differs from the ethical wage because it does not factor in the individual employees productivity, dependants and current costs of living, which are all important factors. This again, illustrates that a company’s responsibility to itself and to its society goes further than just adhering to the law.



Carmichael, S. (1995). Business ethics: the new bottom line. London, UK: Demos.

Gitman, L. J. & McDaniel, C. D. (2009). The future of business: the essentials. Mason, OH: South-Western Cenage Learning.

Ward, H. & Smith, C. N. (2006). Corporate social responsibility at a crossroads: futures for CSR in the UK to 2015. London, UK: IIED.


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