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Why are ethics important in business? 

July 07, 2023
Book of business ethics

Everyone has a personal moral code that shapes their everyday behavior. You make ethical decisions when you choose where to shop, what to eat, how you interact with others, and much more. People often don’t think of corporations as moral or immoral, but companies also consider ethics when making decisions and implementing policies. But why are ethics important in business? 

A business’s ethical–or unethical–behavior can significantly impact its public perception, daily operations, and revenue. Companies that act ethically can attract loyal clients, hire top talent, and even win awards. However, businesses that are perceived as unethical may face boycotts, social media campaigns, and even legal problems. This guide reviews essential business ethics and their significance in the corporate world. 

What are business ethics? 

Business ethics refer to the fundamental moral principles that shape the conduct and goals of a company and its employees. These values affect every aspect of a business, including hiring practices, public relations, and supply chains.1 Typically, businesses are regarded as ethical if they take actions that ordinary people would consider fair and morally correct. 

In some cases, government regulations force businesses to engage in ethical behavior. For instance, the federal No Surprises Act prohibits hospitals from billing patients if their insurance doesn’t cover the total cost of out-of-network emergency treatments.

However, most business ethics aren’t mandatory. Instead, company leaders decide what they consider right and wrong and act accordingly. Many executives choose to make business decisions with ethical principles like compassion, integrity, and transparency in mind. They may also uphold an expectation of corporate social responsibility to promote an ethical culture for the entire organization.

Examples of ethical business practices include the following.

Excellent Customer Service 

One standard example of business ethics is for companies to consistently treat customers and clients with respect and trust. Several brands have gained reputations for providing stellar customer service. For instance, warehouse retailer Costco famously allows customers to return most products with no questions asked, even if they’re missing a receipt or made their purchase years ago. Other companies with positive reputations for customer service include Amazon, which replaces lost packages, and Apple, which offers enthusiastic in-store tech support.3

Transparent Marketing Practices

Transparency is one of the core moral values in the American Marketing Association’s (AMA) Statement of Ethics.4 Transparency in marketing encourages businesses to provide accurate and complete information about a product when creating promotional materials. For instance, a customer’s purchase decision could be influenced by the product’s price, origin, and risks. Additionally, companies can practice transparency by providing explanations if they need to raise prices or fail to deliver a product as promised.


According to the AMA, businesses must act in the best interests of their customers, shareholders, and stakeholders when producing marketing materials.4 Companies can also stay accountable by implementing ethical business practices such as publishing honest financial reports and protecting whistleblowers from retaliation for reporting unethical practices.

Additionally, ethical leaders and companies hold themselves accountable by accepting responsibility and making amends for harmful actions. For example, in 2016, Airbnb CEO Brian Chesky issued a public apology and announced new anti-bias policies after the company was accused of ignoring customers’ complaints of discrimination.5

Why are ethics important in business? 

Business ethics play a vital role in a company’s long-term success. Good ethics can earn a company a positive reputation and encourage brand loyalty. Consumers and stakeholders increasingly expect corporations to have strong values. According to a recent global survey conducted by the communications agency Zeno Group, 94% of customers want to engage with businesses that have clear purposes, like fighting racial injustice. Additionally, 83% believe that companies should earn a profit only if they positively impact society.6 

Beyond satisfying customer demands, ethical behavior has many other advantages for businesses, including the following.

Avoid Legal Consequences

Businesses that engage in immoral actions may face legal trouble. In 2023, Theranos founder Elizabeth Holmes was sentenced to 11 years in prison after falsely telling investors she had invented a revolutionary blood testing device.7 Similarly, several Enron executives were convicted of fraud and other crimes in 2006 after the company lost billions of dollars’ worth of shareholder investments.8 Ethical scandals also damage businesses’ reputations and can result in costly fines. 

Increase the bottom line 

People often believe that unethical companies make the most money, but doing the right thing can lead to big financial rewards. Typically, companies that make a commitment to good business ethics earn more money than their less scrupulous competitors. For example, businesses that were designated by the corporate ethics assessment company Ethisphere as the World’s Most Ethical Companies in 2022 outperformed comparable companies by 24.6% between 2017 and 2022.9

Attract and retain top talent 

A growing number of workers prioritize corporate culture during their job searches. In a recent survey conducted by Qualtrics, 56% of American workers stated that they wouldn’t be willing to take a job at a company if they disagreed with its ethics. And 54% would take a lower-paying position to work at a more ethical company.10

Taking these trends into account, companies can use their good business ethics to appeal to potential job applicants. For example, job advertisements could prominently feature information about a business’s core values and ethical initiatives like honesty and fairness. This practice may help ethical businesses vie for top candidates. 

Upholding ethical standards also helps businesses retain their current employees. Forty percent of workers report that they would consider quitting their job if they disagreed with their company’s political views.11 Employees who feel satisfied with their company’s conduct are more likely to stick around, reducing turnover. 

Why is a code of ethics important in business? 

A code of ethics is a written document that outlines expectations for ethical conduct within business operations and employee behavior.12 For example, a technology business might include standards for handling customer data. Likewise, a hospital will likely emphasize the importance of treating patients with compassion and respect and handling medical records with the utmost concern for privacy. 

A code of ethics has several purposes, including: 

  • Ensuring compliance with legal regulations
  • Establishing a cohesive company culture 
  • Helping employees make ethical decisions
  • Reducing the risk of illegal and unethical behavior

Excel as an ethical leader with an Online MBA from Marquette University 

Business ethics are the key to success in the 21st century. Consumers and stakeholders are becoming more environmentally and socially conscious, and they want businesses to reflect their values. As a result, companies that maintain ethical practices can build and keep customer loyalty. 

Business leaders and managers play a vital role in ethical decision-making. You can expand your understanding of corporate responsibility and ethical frameworks with Marquette University’s MBA program. This online degree will help you learn how to make decisions and navigate complex ethical conflicts in the workplace. Speak with one of our Admissions Outreach Advisors today to learn more.