Ethical and legal behavior can often be confused—partially because they can often overlap. However, legal behavior and ethical behavior are different. For instance, it is not a legal issue to debate if you should buy a boat or donate to a charity, but it could be an ethical issue.
Both legal and ethical behaviors have significant consequences for business: legal misconduct can result in fines and (depending on the severity of the misconduct) incarceration of perpetrators, and ethical misconduct can result in a loss of trust from customers and partners. In this section you’ll get an introduction to ethics and learn why this is an especially challenging issue for companies that are trying to “do the right thing.”
Ethics are a set of standards that govern the conduct of a person, especially a member of a profession. While ethical beliefs are held by individuals, they can also be reflected in the values, practices, and policies that shape the choices made by decision makers on behalf of their organizations. Professions and organizations regularly establish a “Code of Ethics” that serves to guide the behavior of members of the profession or organization. In the medical profession, for instance, doctors take an ethical oath to “do no harm.” The American Society of Mechanical Engineers’ code states, “Engineers shall hold paramount the safety, health, and welfare of the public in the performance of their professional duties.”
Legal behavior follows the dictates of laws, which are written down and interpreted by the courts. In decision making, determining the legality of a course of action is facilitated by the existence of statutes, regulations, and codes. Unlike ethical considerations, there are established penalties for behaving in a way that conflicts with the law. However, as society evolves, what constitutes legal behavior also changes. For example, until recently, the possession or use of marijuana was illegal in the State of Colorado. As a result of the legislation that legalized marijuana, existing laws will need to be reinterpreted, and undoubtedly additional laws will be enacted to govern what was formerly illegal behavior. Whether or not an individual thinks it is ethical to use a potentially harmful substance, the fact is that the law now allows such behavior.