Income School Blog

Business Ethics—Is doing good my business’s responsibility?

Business ethics…

Is that a paradox?  Isn’t business all about making money, no matter what it takes?  I mean, within the limits of the law, or course.  But barring illegal activity, are all options on the table?

Paradox?  The Answer is No

Business isn’t just about making money.  I mean, it kind of is, but it really isn’t.  It is, because without the incentive of the ability to earn a living, most of us wouldn’t go to work.  We wouldn’t start businesses just for the fun of it.  I suppose some people might, but most of us go to work to earn the money we need to provide for ourselves and our families, and if possible, allow us to pay for the hobbies, activities, vacations, and luxuries that might make our life  more enjoyable.  Take that away, and people don’t have much reason to go into business.

On the other hand, businesses exist to fulfill people’s wants and needs.  Without those needs, the businesses wouldn’t have much value now, would they?  Businesses allow different people to specialize in one area or another, and produce something that others want and need, and in exchange, they earn money to buy the things that they want and need.  Without this sort of system of commerce, each person would have to provide for all of their own wants and needs, which would be horribly inefficient.  It’s that commerce or trade that allows us to have any sort of leisure or luxury in our lives.  Even at the most basic level.  I mean, how many people do you think have the knowledge and skills to build their own air conditioner?  And not just that, but to make all of the components for the air conditioner out of the most basic, natural, raw materials.  Probably not many.  So it’s specialization and commerce that allow us to have the things that many of us see as basic luxuries of everyday life.

So business serves to do more than just make people money.  It gives individuals a way to use the skills they have to provide for themselves the things that they don’t have the time or skills to make for themselves.

When you think about it that way, business, or commerce, is one of the things that has allowed humans to advance.  We achieve technological breakthroughs because people specialize in certain areas and work with others with similar specialties to come up with more advanced solutions in that given area.

But what about ethics in business?  Do businesses have any obligation to society, other than to provide as much money as possible for their owners?

Well that’s the big debate.  Some would say, “no”.  Others say, “absolutely”.

It Doesn’t Matter Who is Responsible

My take on the subject is this.  Businesses with strong ethics are more sustainable than those without.  A business that takes advantages of its suppliers, competitors, or customers in order to make a little extra money will struggle to survive in the long-term.  A business that doesn’t pay fair wages for the work its employees do won’t be able to keep good employees, and will incur much more cost having to continuously replace them.  A business that doesn’t work to reduce its energy usage will become uncompetitive over time as their competitors reduce their energy usage and therefore their cost.

That’s not to say that all sustainable business practices pay off financially.  Lots don’t.  Some give you a better image in the eyes of customers.  But in the end, when your customers don’t have a lot of extra money, they’ll shop at the store that’s least expensive.  So there can be a significant trade-off.  Staying up-to-date on all the latest green technology will probably bankrupt your company.  Energy reduction projects are often expensive, and don’t always pay for themselves with the reduced energy cost.

So it’s important to find a balance.  As a business, your first responsibility is to the owner(s).  It’s their investment that allows the business to exist, and in the end, it’s their business.  They own it.  But good business owners recognize the value of ethical practices both for their bottom line, and for their communities.  And businesses in good communities are most likely to thrive.

So the main takeaway is this.  Whether or not it’s the responsibility of businesses to practice good ethics (above and beyond the requirements of the law) doesn’t really matter.  You can argue that it is their responsibility, and you can argue that it isn’t.  I’ve read really compelling cases for both perspectives.  My point is that either way, it’s good business practice that makes for a stronger, longer-lasting business.

So Be Ethical

Treat customers, competitors, and suppliers well.  Do things that benefit your community and help other people.  Make generous donations and incorporate environmentally friendly practices.  Obey the law at a minimum, and don’t run your business with lower morals and ethics than your own personal morals and ethics.  Just make sure that in each thing that you do you look at the costs and the benefits.  Spending too much could run you out of business, and if you don’t have your business, you won’t have the resources to do as much good.

So find the balance that allows you to to do the most good for both yourself, and your community.


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