The distinction between law and ethics has been a topic of debate for a long time. The debate does not just affect the social and political aspects of the society, but it affects business too. Business ethics and law are entwined, but they are at odds in many situations. The law is a set of universal rules that are accepted and enforced, whereas ethics are principles that guide the decision on what is right or wrong. It is not enough for individuals and businesses to comply with the law only; ethical compliance enables them to do the right thing all the times even when faced with tough situations that are not addressed by the law.
Individuals and institutions are viewed as ethical when they do the right thing in most cases, even when they do not have to do so. Ethical people and organizations have good reputations; they are honest, reliable, fair, and caring. For example, an ethical institution will treat all the customers equally regardless of their economic, cultural, and religious background. Unfortunately, many institutions are known to engage in unethical practices by failing to disclose relevant information to their customers. Institutions are now engaging in unethical practices such as lying about products or finding loopholes in the law to exploit to make more profits. Alternatively, individuals are viewed as ethical when they do the right thing all the time even when no one is watching them. Ethical individuals also treat others with respect, they have a good work ethic, and they tend to achieve their goals all the times. Unethical individuals on the other hand use shortcuts, they make a lot of excuses, and they take credit for the work of others.
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Evidently, law and ethics are quite different, and the most significant difference is their goals (Chaffee, 2014). The purpose of ethics is to equip individuals and organizations with virtues to make them make the right decisions in all aspects, whereas the law deals with compliance with legal policies. What is legal is not necessarily ethical, and sometimes what is ethical might not be legal either. Legal rules have their limitations, and they can be easily changed, unlike ethical rules which are permanent and universal in most cases.
A good reputation is more important than legal compliance in business. Organizations that pay attention to ethics do better; they are viewed positively by customers. The market does not respond well to unethical behaviors these days, and organizations that have engaged in unethical behavior have paid a high price. For example, businesses that used sweatshops or discriminated against certain groups performed dismally once the unethical practices became public knowledge. Observance of ethics helps businesses to build a good brand without having to spend so much on branding. While it is difficult to determine the exact effects of ethics on business, ethics has positive effects on the organization’s performance in the long run.
In conclusion, ethics and law complement each other. Legal compliance is no longer enough in today’s society as it does not do much for the organization’s reputation and brand. Ethics is a source of goodwill; it helps individuals and organizations to develop good relations and loyalty with customers. Therefore, individuals and businesses should strive to be ethical all the time by being respectful, fair and honest.
Reference
Chaffee, E. C. (2014). An Interdisciplinary Analysis of the Use of Ethical Intuition in Legal Compliance Decision Making for Business Entities . Maryland Law Review.
