Ethical failures in business- Free Subjects Examples (2023)

Ethical failures in business are not uncommon.

Companies sacrifice even the simplest ethical principles for the sake of competitiveness and higher profits. Customer service professionals and salespeople often find themselves troubled by unethical values, with which they are bound to comply. Customer satisfaction is rightly considered as one of the weakest elements of corporate ethics: competition and market saturation place new demands on businesses. Pragmatism bordering on ethical absurdity often turns into the main instrument of retaining customers. Yet, unethical profits are never long-term. More often than not, customers do not accept unethical service and refuse to continue their relationships with unethical businesses. Therefore, organizations must build and sustain a healthy, ethical climate which will serve the basic measure of customer satisfaction in the long run.

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Martha Wang has recently been appointed to Consumer Affairs Department of Herb’s Garden Products (Bauer & Erdogan, 2011). She enjoys her job and is fascinated by the company’s commitment to environmental protection (Bauer & Erdogan, 2011). Martha believes that the company uses only natural, safe ingredients to produce and market fertilizers; however, one day a customer complains that Herb’s Special Fertilizer Mix has killed her dog (Bauer & Erdogan, 2011). Martha knows that Herb’s products are made of chicken manure and fish byproducts, but she heard of some secret ingredient, which is revealed to long-term employees (Bauer & Erdogan, 2011). Martha herself used the product and found several dead birds in that part of the garden where most fertilizer had been spread (Bauer & Erdogan, 2011).

Her boss does not take this information seriously, whereas the owner tries to persuade her that the product is the company’s bestseller (Bauer & Erdogan, 2011). Martha is being torn between her ethical concerns and the need to comply with the organizational values and culture. Martha must take the most relevant ethical decision, but she faces a number of decision-making challenges. It should be noted, that the customer service professionals, as well as salespeople and marketing personnel, are often perceived as failing to handle many ethical dilemmas (Valentine & Barnett, 2003). In this situation, institutionalization of ethics through codes of ethics and ethical procedures could solidify employees’ ethical intentions (Valentine & Barnett, 2003).

However, Martha operates in the culture of ethical complacency which makes it difficult to take the most relevant decision. On the one hand, failure to handle the customer’s complaint may readily turn into an object of criminal investigation and a matter of ethical scandal. These scandals do not simply incur additional financial costs on businesses but expose prevalence of severe ethical misbehaviors in business (Formbrun & Foss, 2004). On the other hand, Martha is bound comply with the cultural principles and workplace behavior expectations workplace at Herb’s: simply stated, she will have to persuade the customer that her concerns are invalid, since the product is made of natural ingredients and cannot cause any harm to people, pets, or other living beings. Otherwise, she may lose her job.

Eventually, Martha cannot take the most relevant decision, unless she has the fullest information about the product and its ingredients. Apparently, Herb’s exemplifies an outcome-based organizational system, which evaluates only outcomes but does not regard how salespeople and the company itself achieve their business goals (Verbeke, Ouwerkerk & Peelen, 1996). It goes without saying that the state of ethics in outcome-based organizational systems is extremely poor (Verbeke et al, 1996). Such organizations sacrifice ethical and moral principles on the altar of financial profits (Bazela, 2010). For Martha, quitting her employment with the company will be the easiest and least troublesome solution.

Yet, if that is the case, customers will be unaware of the dangers and risks of using Herb’s fertilizers. The situation is further complicated by the fact that Herb’s is actually a family business, and neither the owner nor Martha’s boss is willing to deal with the customer’s complaint. The best Martha can do is to file an official memo to the boss and the owner, trying to explain the risks and possible outcomes of ethical misbehaviors in organizations. First, the customer may file a lawsuit and demand compensation. Such a lawsuit will necessarily turn into a huge ethical scandal, which will disrupt the company’s reputation and may even lead the organization to bankruptcy. Second, the customer may file a complaint to government authorities which will reveal severe ethical and technical violations within the company.

Again, the company’s future is under threat. Third, unethical profits are never long-term: the company must realize that competitiveness and profitability are impossible without a profound restructuring of the organizational culture at Herb’s. The company must inform its customers that the Fertilizer is dangerous to living beings and must be used with caution. Herb’s must rebuild its ethical culture; this is possible if a general code of ethics is created and implemented. The process of cultural restructuring at Herb’s will not be smooth: employees and managers may resist and sabotage new rules and ethical requirements.

However, it is essential that these ethical and cultural initiatives come from within, before other stakeholders, including customers and the community, realize the hidden danger of Herb’s fertilizers and take a legal action against the company.


Ethical failures in business are not uncommon. The case of Martha Wang is a common example of how companies sacrifice ethical values on the altar of profitability.

Martha faces several decision-making challenges. On the one hand, Martha must deal with the customer’s complaint. On the other hand, she is bound to comply with the rules and principles of organizational behavior at Herb’s. She even risks losing her job for noncompliance. In this situation, the best Martha can do is to file a memo explaining all possible consequences of ethical misbehaviors in organizations. Herb’s must rebuild its culture and implement a complex code of ethical conduct. The company must inform its customers that the fertilizer may be dangerous for other living beings and should be used with caution.


Bauer, T.

& Erdogan, B. (2011). Organizational behavior. Creative Commons. Retrieved from http://www. Bazela, M. (2010). Customer satisfaction: The weakest link of business ethics. Informacion Filosofica, VII(14), 110-118. Formbrun, C. & Foss, C.

(2004). Business ethics: Corporate responses to scandal. Corporate Reputation Review, 7(3), 284-288. Valentine, S. & Barnett, T. (2003).

Ethics code awareness, perceived ethical values, and organizational commitment. Journal of Personal Selling & Sales Management, XXIII(4), 359-367. Verbeke, W., Ouwerkerk, C. & Peelen, E.

(1996). Exploring the contextual and individual factors on ethical decision making of salespeople. Journal of Business Ethics, 15(11), 1175-1187.

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What is an example of an ethical failure? ›

False accounting, sexual harassment, data privacy, nepotism, discrimination—these are just some of the ethical dilemmas that happen in today's workplace. Many business owners and managers will deal with ethical issues at some point in their career.

What are some ethical problems in business? ›

Examples of ethical issues in business
  • Discrimination and harassment. ...
  • Workplace health and safety. ...
  • Whistle-blowing or social media rants. ...
  • Ethics in accounting practices. ...
  • Corporate espionage and nondisclosure. ...
  • Technology and privacy practices. ...
  • Nepotism or favouritism. ...
  • Environmental responsibility.
Jul 9, 2022

What is the most common cause of ethical failure? ›

The four major factors that can cause ethical problems in the workplace are lack of integrity, organizational relationship problems, conflicts of interest, and misleading advertising.

What is bad ethical behavior in the workplace? ›

The ERC reported that employees most often observe the following five unethical behaviors in the workplace: 1) employees misusing company time, 2) supervisors abusing subordinates, 3) employees stealing from their employers, 4) employees lying to their employers, and 5) employees violating company internet policies.

What are examples of ethical lapses in the workplace? ›

Examples of ethical lapses include business-related misconduct such as fraud, bribery, insider trading, and environmental disasters involving negligence or recklessness. They also include personal ethical misconduct, such as inflated résumés and sexual indiscretions.

What are the two most common types of unethical practices of business? ›

The most common of these unethical practices of business establishments are misrepresentation and over-persuasion. Misrepresentation may be classified into two types: direct misrepresentation and indirect misrepresentation.

What are the four ethical issues in business? ›

Ethical issues in business can be divided into four areas: equity, rights, honesty, and the exercise of corporate power. Business organizations have conflicting responsibilities to their employees, shareholders, customers, and the public.

What are the 4 types of ethical conflicts? ›

In the field of ethical conflict, the four forms or categories of ethical conflict identified are: moral uncertainty, moral dilemma, moral distress, and moral outrage.

What is the most common ethical problem for employees? ›

Harassment and Discrimination in the Workplace

Harassment and discrimination are arguably the largest ethical issues that impact business owners today. Should harassment or discrimination take place in the workplace, the result could be catastrophic for your organization both financially and reputationally.

What are the six ethical issues? ›

These principles include voluntary participation, informed consent, anonymity, confidentiality, potential for harm, and results communication.

What is unethical business practices? ›

The unethical business practices definition encompasses anything that falls below minimum standards for business code of conduct. This includes any behaviors that are widely accepted as being morally wrong and lead to the mistreatment of people, animals, or the environment.

What are the 3 basic types of ethical issues? ›

Ethics is traditionally subdivided into normative ethics, metaethics, and applied ethics.

What are some real life examples of ethical dilemmas? ›

Should You Lie to a Sick Loved One? Usually, if someone considers lying, whether they do it or not, it goes against their belief system and in their heart they know that it's wrong. However, whenever the truth would hurt someone you love, it often presents a gray area or a moral dilemma.

What is ethical failure? ›

Ethical failure has become the most severe problem in government, business, charity, & even religious institutions of these days as never before. It occurs when individuals or organizations fail to comply with the societal codes of conduct.

What are three business ethics examples? ›

8 examples of business ethics
  • Data protection. Businesses often collect information about their customers. ...
  • Customer prioritization. ...
  • Workplace diversity. ...
  • Whistleblower protection. ...
  • Corporate transparency. ...
  • Community outreach. ...
  • Environmental awareness. ...
  • Employee compensation.
Dec 22, 2022

How do ethics affect a business provide at least 3 examples? ›

Examples of ethical behaviors in the workplace includes; obeying the company's rules, effective communication, taking responsibility, accountability, professionalism, trust and mutual respect for your colleagues at work. These examples of ethical behaviors ensures maximum productivity output at work.

What are the 10 bad work ethics? ›

If you can see yourself in any of these common workplace mistakes, you should address these bad habits ASAP:
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  • Perpetuating microaggressions. ...
  • Interrupting. ...
  • Not giving credit where it's due. ...
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What is an example of violation of ethical communication? ›

Examples of such violations include (a) posting distinctive personal information about your clients or research subjects that breaches confidentiality and (b) misrepresenting to the public the services you provide, the products you sell, or your level of expertise.

What are 3 ethical issues related to your workplace? ›

Unethical accounting, harassment, health and safety, technology, privacy, social media, and discrimination are the five primary types of ethical issues in the workplace.

What are the seven common ethical issues? ›

7 Common Ethical Concerns in Businesses Today
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  • Health and Safety. ...
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  • Fraud. ...
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What are the big four ethical dilemmas? ›

In LDRS 111 you were introduced to four different ethical dilemma paradigms: truth vs loyalty, short-term vs long-term, individual vs community, and justice vs mercy. larger group.

What are the ethical issues in Coca Cola? ›

Examples of ethical issues found to had affected the company includes racial discrimination, health issues, channel stuffing, issues dealing with unions, competitive, and contamination issues. The ethical problems led to severe consequences such as loss of customers, ban on Coke products, among other adverse outcomes.

How do you identify ethical issues in a situation? ›

When considering ethical issues, it is advised that you follow a stepwise approach in your decision-making process:
  1. Recognize there is an issue.
  2. Identify the problem and who is involved.
  3. Consider the relevant facts, laws and principles.
  4. Analyze and determine possible courses of action.
  5. Implement the solution.

What are four examples of unethical? ›

Asking for recognition for someone else's job, calling in sick to go to the hill station, sabotaging someone else's work, and, in sales, falsifying the product or service to fulfill the target are all examples of unethical behavior in the workplace.

What are examples of unethical behavior by customers? ›

Unethical behaviour by consumers can include shoplifting small consumer goods, using a coupon for merchandise not purchased, and consuming a product in-store and not paying for it.

What are real life examples of ethical lapses? ›

Examples of ethical lapses include business-related misconduct such as fraud, bribery, insider trading, and environmental disasters involving negligence or recklessness. They also include personal ethical misconduct, such as inflated résumés and sexual indiscretions.

What are ethical mistakes? ›

Ethically speaking, mistakes are a problem because they cause harm, or because they result from a lapse in an obligation we ought to be honoring, or both.

Are the causes of failures in business ethics? ›

Based on the findings above, the failure of ethics management is caused by multiple factors, namely: lack of management commitment; inadequate leadership; lack of trust within the organization; lack of open, honest and timely means of communication; inexistent programs and policies about the organization's ethical ...

What are examples of failures in ethical leadership? ›

Failing to use self-control (“I will do this even though it's not allowed.”) Entitlement view (“I definitely deserve this even though it's not allowed.”) Warped personal values (“I think this is really fine to do even though it's not allowed.”) Crowd-following (“Everybody else is doing it, so it must be fine.”)

What are today's biggest ethical issues? ›

Harassment and discrimination are arguably the largest ethical issues that impact business owners today. Should harassment or discrimination take place in the workplace, the result could be catastrophic for your organization both financially and reputationally.

What is an example of an ethical situation in the workplace? ›

Examples of ethical behaviors in the workplace includes; obeying the company's rules, effective communication, taking responsibility, accountability, professionalism, trust and mutual respect for your colleagues at work. These examples of ethical behaviors ensures maximum productivity output at work.

What are some ethical issues in the world today? ›

  • Privacy and Confidentiality. Privacy has many dimensions. ...
  • Socially Vulnerable Populations. ...
  • Health Insurance Discrimination. ...
  • Employment Discrimination. ...
  • Individual Responsibility. ...
  • Race and Ethnicity. ...
  • Implementation Issues.

What are the four major ethical issues? ›

This framework approaches ethical issues in the context of four moral principles: respect for autonomy, beneficence, nonmaleficence, and justice (see table 1). This framework has been influential because the values it espouses seem to align with our moral norms.

What are some examples of ethical dilemmas someone might face in managing a project? ›

  • Accountability. When things go wrong, it's human nature to try to avoid the consequences and place the blame somewhere else. ...
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