Business ethics is fundamentally about determining right from wrong in the business context. There are many complex factors influencing business ethics that shape and influence ethical decision-making and behaviours in organisations. Getting to the heart of what impacts ethical conduct allows companies to foster cultures of integrity from the top better down. In this deep dive, we will explore ten key factors influencing business ethics and provide recommendations for promoting ethical business cultures.
Factors Influencing Business Ethics
At its core, business ethics comes down to choices – the decisions companies and individuals make that have ethical implications and consequences. There are many interrelated factors influencing business ethics, impacting the ethical decision-making process. By understanding these key influencers, organisations can thoughtfully examine their own cultures and better encourage ethical conduct from leaders and employees alike. The ten factors influencing business ethics covered here provide a framework for this analysis:
Leadership & Tone at the Top
- Leadership plays a pivotal role in shaping business ethics across an organisation, from the board down to managers
- Leaders set the tone – their actions and integrity decisions permeate, signalling acceptable conduct
- Leaders who visibly cut corners, pressure without support, or act questionable spread unethical patterns
- Upright leaders maintaining transparency and accountability inspire ethics at all levels
- Leadership is the #1 influence on business ethics
- “Tone at the top” must demonstrate uncompromising integrity commitment by:
- Modelling ethical actions – walking the talk
- Transparency into decision processes
- Accountability for misconduct to executive level
- Alignment of stated values with real pressures and priorities
- Employees take behavioural cues from leadership tone when navigating grey areas
- Tone at the top shapes the overall ethical culture as acceptable or not
- Leadership has both power and duty to cultivate an ethical culture grounded in integrity
Organisational Culture & Norms
Closely related to tone at the top is an organisation’s culture and norms around factors influencing business ethics. Company culture refers to the shared assumptions, beliefs and values that guide practices and behaviours within a group, particularly in relation to ethics and integrity.
Cultures focused singularly on high performance and profits above ethical considerations incentivize misconduct, while cultures that support transparency, responsible risk-taking, and speaking up tend to encourage ethical behaviours. Aspects like incentives and advancement criteria either balance performance with integrity or focus solely on ends over means. Over time, cultures reinforce standards through what they consistently reward and tolerate.
Ethical Policies, Codes & Training
Most companies have ethics codes detailing expected behaviours and guiding principles around factors influencing business ethics. However, words on paper alone have only effect with comprehensive policies, oversight, training programs and consequences supporting them. Codes of conduct that sit on shelves serve as window dressing without robust compliance infrastructure and organisational commitment supporting the values they espouse.
Gaps can quickly emerge between aspirational principles and actual practices without consistent reinforcement through transparency, top-down modelling, formal training, and consequences for violations. With frequent communication and demonstrated accountability, integrity policies and ethical codes can shape cultures reflecting core values.
Performance Pressures & Incentives
- In the current highly competitive landscape, companies face immense pressures to continuously achieve stronger results and get ahead of industry rivals, which acts as a pivotal factor influencing business ethics
- While ambition undoubtedly drives business growth and innovation, excessive outcome-focused pressures often have the unfortunate side effect of eroding integrity when individuals rationalise misconduct as necessary when incentives reward ends over means
- Organisations seeking to foster ethical cultures aim to proactively balance high achievement with thoughtful examination of how desired results are obtained, incorporating ethical decision-making frameworks and compliance into core performance metrics at all leadership levels
- Most well-intentioned individuals and corporations set out to operate as upstanding, law-abiding corporate citizens and stakeholders
- The likelihood of an entity or individual engaging in unethical behaviours demonstrably decreases if one believes punitive consequences and enforcement actions are near certainties rather than improbable risks
- Clear regulations and expectations governing transparency, sourcing, bribery, environmental impacts, marketing claims and more influence behaviours by establishing compliance guardrails
- Penalties and enforcement activities by oversight bodies reinforce industry-wide integrity commitments
- Conversely, deficient regulations and lax enforcement undermine ethical norms, while enhanced clarity around guidelines and consequences deters misconduct
Societal Expectations & Public Pressures
Today’s consumers and stakeholders expect far more from companies than profits and quality products alone related to factors influencing business ethics. Shifting societal attitudes prioritise corporate social responsibility, sustainability, community impact and transparent business practices when evaluating brands.
As ethical conventions and public scrutiny continually raise the bar for responsible conduct, companies attuned to evolving expectations can proactively shape internal cultures reflecting intensified demands. Failure to address escalating standards around ethical business threatens market share and reputation. Ultimately, public distrust resulting from integrity breaches exacts consequences in the form of damaged brand equity and reduced sales over time across industries.
Individual Values, Morals & Character
Ethics and choices come down to people, as integrity relies on individuals within organisations making principled decisions even under pressure. The personal values, morals and character attributes that company members such as leaders, employees, board members and key decision makers bring into the workplace thus constitute a key factor influencing ethical conduct.
Behaviours are influenced by dimensions like honesty, responsibility, trustworthiness, and concern for others’ well-being. Companies must assess the ethical make-up of top talent carefully with cultural fit in mind. They also need to reinforce wanted behaviours continually through standard setting, mentorship, modelling and incentives promoting integrity from staff to executives.
Peer Conduct & Workplace Subcultures
Coworkers model behaviours as peers observe and often mimic one another, especially if certain actions seem rewarded through praise, promotions or positive attention. Ethical shortcuts by an isolated employee or two can initially metastasize over time if underlying problems go unaddressed.
Different departments, such as Sales or Operations, prone to high pressure, may even develop versions of accepted norms that violate company cultures endorsed from the top down. Certain teams could prize results in certain ways, while Finance may view practices entirely differently.
Subcultures form easily within large organisations, and teams often know right from wrong but start small and then collectively reinforce concerning practices. Leaders need formal and informal conversations, engagement surveys, audits, hotlines for anonymity and zero tolerance for misconduct once discovered.
Industry Landscapes & Competition Levels
External factors such as industry practices, norms and competitive pressures further influence organisational ethics significantly as companies do not operate within voids. Rising rivalry among organisations within sectors battling for market share or industries with histories of corruption present added ethical minefields to navigate.
Groupthink can form at broader levels where practices objectionable from individual standpoints gain unfortunate traction more widely, especially when competitors engage and seemingly gain an advantage while scrutinizers lose ground for restraint.
Certain sectors known for ethical shortcuts likely require strong regulatory measures that provide level playing fields with transparent disclosure, accountability and penalties influencing participants’ calibrations.
Customer & Stakeholder Demands
Client requirements and specifications shape project development, while investor preferences impact resource allocation and performance criteria. Customer mandates and stakeholder pressures that set unreasonable bars for pricing constraints, turnaround times, problem-solving requirements or return levels strain company resources in ways that encourage ethical compromise.
It is best to establish deliverables and milestone requirements that are realistically achievable, as it helps to maintain integrity. Progress tracking with open communication allows for course correcting if pressures mount on either side. Supply chain partners and customers upholding ethical practices, in turn, positively influence company contractors through demonstrated commitment to integrity from start to finish.
Concept of Business Ethics
The term business ethics refers to the principles and values that guide organisations to act with integrity and responsibility towards society rather than solely focusing on profit maximisation. Prioritised elements tend to include honesty, transparency, accountability, sustainability, community involvement and safeguarding stakeholders’ interests.
Companies demonstrate commitment to business ethics conceptually through integrity policies, codes of conduct, oversight infrastructure, engagement around operating impact and by embedding ethical priorities across all operations. Concept statements alone, however, do not ensure ethical business cultures without continual investment and accountability supporting them organisation-wide.
It is far too easy for disjointedness to form over time between front-facing messaging and actual practices if rooted commitment does not permeate operations, engagement remains surface level only, or consequences do not reinforce expected behaviours at all levels. Leaders, in particular, set the ultimate tone around just how much the concept resonates.
Elements of Business Ethics
There are several core elements comprising an ethical business approach that demands clarity, transparency and accountability in order to transcend good intentions. Key elements of business ethics in practice include:
- Leadership Commitment – Tone at the top with an executive dedication to integrity policies and modelling behaviours expected throughout organisations. Ethics and compliance involvement in strategy and decision-making with consequences for violations.
- Codes and Guidelines – Comprehensive, accessible codes of conduct all employees understand and uphold, supporting integrity policies plus job-level ethics oversight.
- Training and Communication – Multichannel internal communication campaigns, education and ethics training immersing all staff in reinforcing standards.
- Monitoring and Auditing – Internal controls identifying ethical risks plus auditing and monitoring channels allowing anonymity without retaliation.
- Incentives and Enforcement – Performance evaluation criteria incorporating ethics with remedies enforced consistently against policy violations.
- External Reporting and Transparency – Timely, accurate public transparency around practices, decision-making rationales and progress made toward integrity commitments.
- Continuous Improvement – External advisory panels, progress tracking, culture surveys and updating approaches through the latest research and regulations around ethical business.
Elements of business ethics only prove as strong as accountability measures testing effectiveness and willingness to course correct based on findings. Responsible companies seek outside perspectives, embrace discomfort when discoveries point to gaps between principles and practice and dig into root causes with openness to prevent future missteps.
Influencer Marketing Agency
Influencer marketing remains an exponentially growing industry, on pace to become an 22.2 billion U.S. dollars by 2025. Brands enlist influencers as partners, lending their voices, perspectives, creativity, networks and content development skills toward positively highlighting products or services.
Instagram stars now wield greater sway at times than traditional Hollywood celebrities. However, the competitive terrain creates ethical minefields if not navigated consciously by brands, influencers and agencies alike. As the industry gamifies monetization, risks emerge around inappropriate targeting, inflated metrics, and shady tactics seeming to deliver short term such as fake followers, then causing major integrity blows plus consumer backlash.
Key players must balance ambition with intentional ethics standards, steering practices toward sustainable traction through creativity, offering true win-win value. The influencer marketing realm still currently operates largely unregulated without enforceable policies guiding disclosures or transparency.
Top agencies proactively self-impose thorough ethics codes requiring exhaustive vetting, thoughtful pairing gauging authenticity, clear compensation rules, regularly auditing effectiveness beyond vanity metrics and stopping associations where integrity questions arise. They also offer ethics training while requiring influencers and brands to formally commit to upholding moral marketing principles.
Conclusion
Business ethics remain crucial yet complex, dependent on consistent examination of the key factors influencing organisational and leadership approaches. Prioritising integrity requires embedding ethical processes while also rewarding transparency, responsibility and balanced performance measures company-wide. Establishing ethical cultures demands walking the talk through robust infrastructure and accountability supporting motivating concepts. With frequent progress tracking, authentic engagement and responsive course correction, businesses can thoughtfully shape ethical ecosystems benefitting all.
