Tammy Nguyen-Thach
This chapter draws from Section 2.2, “Ethics and Profitability in Business Computer Information Systems (2022). It explores how ethical business practices aren’t just the right thing to do, but that they’re also necessary for long-term success. This chapter is the companion for a Canvas learning module that was created as part of BCIS1305 during the Spring 2025 semester at the C.T. Bauer College of Business.
Learning Objectives
By the end of this section, you will be able to:
- Define and distinguish between ethical and unethical behavior in professional settings.
- Assess the consequences of unethical actions on organizations and stakeholders.
- Evaluate how unethical behavior affects a company’s reputation and stakeholder trust.
Time Commitment and Deliverables
Please set aside approximately forty minutes to one hour to engage with the contents of this chapter.
Click the “Next” button only after you have thoroughly read and completed everything on each page.
As you move through the chapter, complete the embedded activities as each one ties directly to the article you will read as part of this chapter.
You will find a reflection on the final page of this chapter. Complete that for your benefit to demonstrate your understanding of the content.
What is Business Ethics?
As children, many of us were taught the timeless principle: “Honesty is the best policy.” It was often tied to everyday situations, such as telling the truth when we made a mistake, admitting when we broke something, or taking responsibility for our actions. However, this lesson doesn’t just apply to our youth lives. Rather, it also carries relevance into adulthood, especially in the business world.
Business ethics refers to the moral principles and values that guide the behavior of individuals and organizations in the business world. These principles guide decision-making and ensure that companies operate with integrity, fairness, and respect for all stakeholders, including employees, customers, and the broader society.
Therefore, just as parents taught us to do the right thing, even when no one is watching, ethical businesses commit to honesty not just when it’s convenient, but especially when it’s difficult.
Why does Ethics Matter in Business?
Ethical conduct in business is not just about avoiding legal trouble; it’s about building trust and long-term success. Ethics affects a company’s brand reputation, customer loyalty, employee morale and retention, and investor confidence.
A case in point from a Fortune 500 CEO: John Barrett attributes his company’s growth – from just $8.8 billion in assets in 1994 to an impressive $125 billion today – to a culture built on honesty and integrity.
As he puts it: “If people don’t trust you, the heck with it. You’re not going to make good deals or have good relationships. If people know that you mean what you say and you say what you mean, you’re going to be in much better shape.”
On the other hand, the Enron scandal refers to the 2001 collapse of Enron Corporation, once a leading energy, commodities, and services company. The company’s use of widespread accounting fraud and deceptive financial practices led to one of the largest bankruptcies in U.S. history. Enron was forced to file for Chapter 11 bankruptcy, resulting in devastating losses for investors, employees, and retirees, and ultimately causing the collapse of its auditing firm, Arthur Andersen.
At the core of the scandal was Enron’s misuse of mark-to-market accounting, a method that allowed the company to record projected future profits from long-term contracts as if they were current earnings. This practice significantly distorted its financial statements. In addition, Enron used Special Purpose Entities (SPEs) to conceal billions of dollars in debt and inflate its assets, giving a false appearance that the company was performing well. These actions resulted in misleading and non-transparent financial statements, which violated ethical standards and misled stakeholders. The fallout from the scandal prompted sweeping regulatory reforms, including the passage of the Sarbanes-Oxley Act of 2002, which aimed to improve corporate accountability and strengthen oversight of public company audits.
References:
Bondarenko, P. (2025, August 19). Downfall and bankruptcy. Encyclopædia Britannica. https://www.britannica.com/event/Enron-scandal/Downfall-and-bankruptcy
Twin, A. (2025, August 17). Business ethics: Key principles and their importance in today’s market. Investopedia. https://www.investopedia.com/terms/b/business-ethics.asp
Watkins, S. (2025, May 30). This Fortune 500 CEO Shares Secrets For Long-Term Success. Investor’s Business Daily. https://www.investors.com/news/management/leaders-and-success/long-term-success-this-fortune-500-ceo-shares-secrets/
The contents of this page were written by Tammy Nguyen-Thach. CC BY ND.
Attribution:
Author: Tammy Nguyen-Thach. Website: UH Libraries. Book title: Let’s Read Together: For Students by Students.
Publication date: October 20, 2025. Location: Houston, Texas. Book URL: https://uhlibraries.pressbooks.pub/readtogetherbystudents/
