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Business ethics operates on the premise, for example, that the ethical operation of a private business is possible—those who dispute that premise, such as libertarian socialists (who contend that "business ethics" is an oxymoron) do so by definition outside of the domain of business ethics proper.
In business ethics, Ethical decision-making is the study of the process of making decisions that engender trust, and thus indicate responsibility, fairness and caring to an individual. To be ethical, one has to demonstrate respect, and responsibility. [ 1 ]
One example is a principal–agent approach (also called agency theory), where one party, called an agent, acts on behalf of another party, called the principal. However, a principal–agent problem can occur when there is a conflict of interest between the agent and principal. If the agent has more information about his or her actions or ...
For example, most corporations conduct research on specific products or services that promise to yield profit for share-holders. Similarly, most of the research funded by governments is mission-oriented, such as protecting the environment, developing new drugs, or designing more lethal weapons.
The function of developing and implementing business ethics in an organization is difficult. Due to each organization's culture and atmosphere being different, there is no clear or specific way to implement a code of ethics in an existing business. Business ethics implementation can be categorized into two groups; formal and informal measures.
A business may approach a professional engineer to certify the safety of a project which is not safe. While one engineer may refuse to certify the project on moral grounds, the business may find a less scrupulous engineer who will be prepared to certify the project for a bribe, thus saving the business the expense of redesigning.
In addition, certain contracts are required by state law to be in writing (real estate transactions, for example), while others are not. [ 2 ] Wade and Honeyman [ 3 ] describe a ‘durable’ contract as one in which all parties substantially perform without abandonment and without resorting to legal proceedings.
In commercial law, a principal is a person, legal or natural, who authorizes an agent to act to create one or more legal relationships with a third party.This branch of law is called agency and relies on the common law proposition qui facit per alium, facit per se (from Latin: "he who acts through another, acts personally").