What Is the Relationship Between Business and Ethics?

What is the relationship between business and ethics?

Ethics and business go hand in hand. You cannot have one without the other. This does not mean that a very ethical business will be more successful than one which does not rely heavily on ethics; but it does mean that there should be a place for ethics in a business. Ethics should become involved in the business from the very beginning when the goals and intentions are being put together. They should also be involved in the internal infrastructure of the business once it is established. Ethics in a business is especially important in the relationship between its employers and employees, between the business and whatever partners it may have, and its customers.

Even though the primary goal of an organization may be to maximize profit, it must always have the intention to produce some sort of social benefit or reach a goal that is not necessarily only to make money – it must fulfill a need or a want. An organization must provide something that others give value to. From whichever angle it is looked at, a business cannot exist without taking social needs into account. And when taking social needs into account, a business requires the involvement of ethics in order to make sense of what it means to start or operate a business. Of course, it does not mean that a business embracing ethics as part of its character will or should give up the importance of making profits. This is a good example of ethics and business going hand-in-hand. Ethics should not be considered a negative extrinsic thing or a setback to profit. It should go along with the initial profit motive and can even contribute to that same motive.

This idea is different from Adam Smith's early articulations of the theory of wealth. Smith felt that the main economic intent was to consider one's private interest and that society as a whole would benefit (Smith, 2008). In other words, in search for profit during normal business activities, there would likely be an ethical outcome. Smith did not think that people should act unethically but he did not see ethics as the motivating force of business activity (Smith, 2008). A modern version of Adam Smith is Milton Friedman. Friedman strongly promotes the idea that, "there is one and only one social responsibility of business – to use its resources and engage n activities to increase its profit so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception and fraud" (Friedman, 1970). Although similar, Friedman's ideas seem to separate ethics from business even more than Smith did. While Smith thought that an expected outcome from routine business activity could be an ethical one, Friedman talks more about possible unethical outcomes from business activities needing to be redressed by government doings rather than by business pursuit alone (Friedman, 1970).

Ethics is necessary in the day-to-day operations of a business from within as well. Ethics can be incorporated in an organization's management structure. There is an important correlation between the principles of a positive managerial organization and essential ethical principles. It could even be said that ethics are at the core of the rules of how to manage a business effectively. A very important internal ethical responsibility of a business is its relationship with its employees. The employer-employee relationship cannot be thought of as an economic relationship only. The employer has a moral obligation with the employee. A company should treat an employee with respect and loyalty, provide a fair wage, and offer good working conditions.

Another example of this moral relationship in a business can be seen in something as simple as contracts. Anything requiring a trade needs an ethical relationship between two people or entities. The trade or agreement cannot happen without some sort of trust between