Ethical Issues and Leadership in Business

Topic: Business Ethics
Words: 2248 Pages: 8


Business leaders need to understand ethical issues and apply them prudently in their daily operations if they need to ensure the reputation of their organizations is maintained. Ethics mainly involve doing what is good rather than evil, being fair, and/or doing the actions while avoiding wrong ones. The increasing need for social responsibility in society has increased the urgency for ethics. It is essential to know the main social problems and ethical issues and then formulate viable solutions to solve these matters to better apply ethics and thus maintain social responsibility. It would also help to emulate what successful leaders have done to ensure social responsibility in their field of work while avoiding the mistakes of the unsuccessful ones. Analyzed below are the major ethical issues in business according to literature and current media, their relevance in this field, and how leaders have dealt with them.

Literature Review

Top Five Ethical Issues in Business

Unethical Accounting

There has been extensive research as to what causes the manipulation of financial statements. Smieliauskas et al. (2018) observe that loose government regulations contribute to unethical accounting standards. Many accountants and financial experts argue that the financial reports of many businesses do not reflect the accurate and fair position of the organization at the time of their preparation. These misleading financial statements often make users of these reports, including shareholders, employees, customers, governments, and other stakeholders, make wrong decisions. Unethical accounting standards lead to substantial economic losses making managers who are responsible face a hard time. The International Accounting Standards Board (IASB), the body responsible for mitigating this malpractice, has set a fair guideline to ensure financial estimates without basis are removed from the statement. However, the ever-changing business environment presents the board with new challenges every day, with the current problem now being how to regulate the accounting and reporting of financial instruments.

Privacy and Confidentiality

Social problems and issues are those that affect the whole society, not just a select few individuals. These issues are caused by many factors, including poverty, harsh climatic conditions, lousy legislation, inequalities, and unethical practices. An analysis of literature and current media reveals that some unethical practices are more prevalent in the business environment than others. One of the most popular issues, perhaps due to its association with billion-dollar corporations such as Facebook, is one concerning privacy and confidentiality. Privacy can be defined as the right of a person to have control over the use of their personal information and data (Clayton et al., 2019). On the other hand, confidentiality is usually defined as the state that information about a specific individual given to an organization cannot be released without the permission of the client (Miller & Tucker, 2018). This ethical concern is a social problem affecting many fields, including telecommunications, health, law, and consultancy. When business leaders ignore this ethical issue, the reputation of their service is likely to be damaged.


Another common ethical issue affecting society is the problem of discrimination. People are often judged and discriminated against based on their age, gender, skin color, and religion. Discrimination is an issue of significant concern as its exact definition and what it entails are subject to debate. Nonetheless, it exists and has significance in shaping how an individual views himself and how society operates. This unjust distinction of people based on various groups has been a major issue in society since the dawn of civilization. This unfair treatment has produced various disadvantages such as poverty, poor health, mental issues, and low self-esteem (Williams et al., 2019). This topic is widely discussed in many news outlets and has been researched extensively in the past few decades. Discrimination is not only an ethical issue but also an illegal one subject to punishment under the law.

Nepotism and Favoritism

Since ancient days, society has had to deal with the ethical issue of nepotism and favoritism. Nepotism is the practice in which specific individuals, particularly of a person’s family, are given certain privileges and opportunities (Firfiray et al., 2018). On the other hand, favoritism is where particular individuals are treated better than others since the person in power prefers one over the other. This ethical issue is known to contribute negatively to workplace motivation and spirituality (Iqbal & Ahmad, 2020). Although nepotism and favoritism could be categorized as a form of discrimination, their vast effects on society have made various researchers study them separately, making them one of the most popular ethical concerns.

Trust and Integrity

Business leaders today are often faced with the ethical dilemma of integrity; they have to choose between integrity and profit maximization. Choosing integrity will bring long-term benefits but will result in short-term loss of opportunities. Some managers will do anything to ensure short-term profits even at the expense of the clients. One of the most famous cases where this unethical practice occurred was when McKinley, a consultant firm, advised Purdue Pharma, a drug company. It advised them to maximize its profits by selling opioids, a dangerous drug to patients without offering proper guidelines. According to Ramstary (2021), this action disrespected human rights, especially consumers of the drug produced by Purdue Pharma. Many organizations in society are known to conceal their actual actions from the consumers, an issue that is unethical and dangerous to them. Gratz et al. (2021) show that people across the United States continue to suffer due to producers’ lack of integrity and trust. Companies are often faced with the ethical dilemma of choosing whether to maintain integrity and trust or shun this ethical issue and boost their profitability. This ethical dilemma has made integrity and trust extensively researched.

The Rank of the Issues According to Literature and Current Media

Today, if there is one ethical issue everyone is aware of, it is that of privacy and confidentiality. This ethical issue ranks first among the five listed above due to its importance to society. It thus has been implicitly scrutinized in the recent past by both scholars and media pundits. Privacy and confidentiality are known to be very important prerequisites for many business fields. Managers who do not observe the privacy and confidentiality of their customers are likely to risk losses over the long term. Elkoumy et al. (2022) conclude that if the ethical standard of privacy is not maintained, businesses in the mining industry are likely to fall. This ethical issue is also important in the health business and has been widely breached. However, health organizations that do not observe their client’s confidentiality not only risk losing clients but also risk legal punishments (Dwork et al., 2020). Technology giants have made this problem the number one trending issue with the Cambridge Analytica data scandal, which affected Facebook, the most popular.

Second among the listed ethical issues when the extent of literature and current media attention is used to rank them is the ethical issue of discrimination. Discrimination is a broad topic and can take place in schools, healthcare systems, sports, employment, and any other place in society. Of all the ethical issues business owners have to deal with, harassment and discrimination, particularly in the workplace, rank top. International ethics and human rights texts have for a long time focused on this issue giving various recommendations on how to prevent and mitigate its risks (Joly et al., 2020). However, the issue is complex, and the exact definition of what fits discrimination and what does not have proved hard. Nevertheless, the media and scholars have not avoided this controversial issue, with almost all books and articles dealing with ethical theories, including a form of discrimination in their literature.

When one talks about ethical issues in business, many people wrongly interpret it as the moral concern of trust and integrity. This is due to the extensive debate that has covered the issue in the past few years, making integrity synonymous with ethics. A review of the current literature and media puts trust and integrity third behind the two discussed issues. Trust has been seen as the driving force of society, and without it, many businesses, particularly large ones, cannot operate. Trust and integrity are beneficial since they can make customers know that the information they give to the companies, mainly social media companies, is safeguarded (Ayaburi & Treku, 2020). Trust and integrity as well offer businesses a competitive advantage by strengthening the relationships between organizations and stakeholders (Pirson et al., 2017). For businesses to succeed, they thus need to integrate the ethical issue of trust and integrity into their daily operations.

Unethical accounting in the workplace can be argued to be just a topic in the broad ethical issue of trust and integrity. However, it has received almost equal attention compared to all other issues concerning trust and integrity combined, as evidenced by its vast number of articles about it. Moreover, unethical accounting can be ranked fourth in the literature among all business issues. This business malpractice is a crucial ethical issue since it misleads the shareholders that the organization is doing better than it is. It as well puts organizations in danger of being legally punished if the auditors discover these unethical reporting standards. Despite this knowledge, unethical accountants often escape this practice since the field depends on the professional judgment of the expert (Nambukara-Gamage & Rahman, 2020). Often when accountants want to report misleading information, they normally use complex balance sheets to report the financial position of the business, and many people have come to understand this fact.

The last issue in this rank, but one that causes great pain to both society and individuals, is the unethical standard of nepotism and favoritism. Many studies have been done to find the effect of this unethical issue on both employees and businesses. Sefraz et al. (2022) found that bias in business based on one’s family and favoring particular people over others causes less job satisfaction and withdrawal behavior among employees in Pakistan. In addition, studies have shown that this ethical issue leads to reduced work spirit in the ASEAN regions (Khamis et al., 2020). Nepotism brings reduced performance in businesses as employees are compensated for their closeness to the management rather than their qualifications (Burhan et al., 2020). Thus, the issue is a significant concern for most managers today and has made scholars draft numerous studies to address the problem. Upon noticing an increasing interest in the topic, current media has also awarded the subject more space on its schedule.

Findings/Results of the Research

Impact of Ethical Issues on the Field

Unethical accounting influences the business community by making people make wrong investing decisions and thus has made businesses set up internal audit units to control it. Privacy and confidentiality have changed the business field of telecommunication by making it mandatory for businesses to ask the owners for permission before using their data. Discrimination has impacted the business field by promoting legislation that disallows discernments of any nature. Nepotism and favoritism have changed the management field by making leaders more vigilant about what goes on in the business. Finally, trust and integrity, which have been reducing in the past few years, have impacted the business community by having the members of the public know organizations that cannot be trusted and avoid them.

Relevance of Ethics to Current and Future Stakeholders

Any business that is found to be submitting false and misleading financial statements should either be sued for damages or avoided by various stakeholders, especially the shareholders, and employees. A business that does not respect the privacy and confidentiality of its customers could make short-term profits but make long-term losses, an issue that shareholders and other stakeholders should know. Stakeholders should avoid a discriminatory organization, and those that can restrict this prejudice, such as governments, should take action. Stakeholders have taken the necessary steps to prevent nepotism and favoritism, such as shunning businesses that commit this act and reporting the actions to relevant legal institutions. Employees and managers need to ensure that their organizations maintain integrity. At the same time, current and future shareholders must avoid institutions that have a history of unethical practices, as these tend to fall with time.

Recommendations for Further Research

This paper has dealt with the top ethical issues according to the degree of discussion in previous literature, studies, and media discussions. In conducting the research, it is noted that the impact of these ethical behaviors on the attitude and preferences of customers is not conclusive. Further study is needed on the five with surveys and questionnaires given to the customers and other stakeholders on the issues. A study on preventing and mitigating risks brought by the five unethical concerns has to be performed. A conclusive report needs to be tabled, and the responsible bodies implement a result-oriented go-forward plan.


For social responsibility to be achieved, the major ethical issues should be known and analyzed, and the best ways to deal with unethical practices formulated. According to the attention given by the media and literature, the top five ethical concerns in today’s society ranked in order are; privacy and confidentiality, discrimination, trust and integrity, unethical accounting, and nepotism and favoritism. They all have different impacts on society, and all stakeholders should be aware of them. All can be improved using different means analyzed above, and the dilemmas they present can be solved through extensive study. While analyzing these ethical issues does not help solve the problems, understanding them can help leaders and other stakeholders avoid the consequences of committing the stated unethical practices.


Ayaburi, E. W., & Treku, D. N. (2020). Effect of penitence on social media trust and privacy concerns: The case of Facebook. International Journal of Information Management, 50, 171–181.

Burhan, O. K., van Leeuwen, E., & Scheepers, D. (2020). On the hiring of kin in organizations: Perceived nepotism and its implications for fairness perceptions and the willingness to join an organization. Organizational Behavior and Human Decision Processes, 161, 34–48.

Clayton, E. W., Evans, B. J., Hazel, J. W., & Rothstein, M. A. (2019). The law of genetic privacy: Applications, implications, and limitations. Journal of Law and the Biosciences, 6(1), 1–36.

Dwork, C., Karr, A., Nissim, K., & Vilhuber, L. (2020). On privacy in the age of COVID-19. Journal of Privacy and Confidentiality, 10(2). Web.

Elkoumy, G., Fahrenkrog-Petersen, S. A., Sani, M. F., Koschmider, A., Mannhardt, F., Von Voigt, S. N., Rafiei, M., & Waldthausen, L. V. (2022). Privacy and confidentiality in process mining: Threats and research challenges. ACM Transactions on Management Information Systems, 13(1), 1–17.

Firfiray, S., Cruz, C., Neacsu, I., & Gomez-Mejia, L. R. (2018). Is nepotism so bad for family firms? A socioemotional wealth approaches. Human Resource Management Review, 28(1), 83–97.

Gratz, E. T., Sarkees, M. E., & Fitzgerald, M. P. (2021). Whose view is it anyway? Media coverage of litigation in for-profit firms’ role in the opioid crisis. Journal of Marketing Theory and Practice, 1–17.

Iqbal, Q., & Ahmad, N. H. (2020). Workplace spirituality and nepotism-favouritism in selected ASEAN countries: The role of gender as a moderator. Journal of Asia Business Studies, 14(1), 31–49.

Khamis, K. A., Kaliappen, N., Jermsittiparsert, K., & Omar, R. (2020). The influence of workplace spirituality on nepotism and favouritism in ASEAN regions. Polish Journal of Management Studies, 22. Web.

Joly, Y., Dalpé, G., Dupras, C., Bévière-Boyer, B., de Paor, A., Dove, E. S., Granados Moreno, P., Ho, C. W. L., Ho, C.-H., Ó Cathaoir, K., Kato, K., Kim, H., Song, L., Minssen, T., Nicolás, P., Otlowski, M., Prince, A. E. R., P. S. Nair, A., Van Hoyweghen, I., & Voigt, T. H. (2020). Establishing the international genetic discrimination observatory. Nature Genetics, 52(5), 466–468.

Miller, A. R., & Tucker, C. (2018). Privacy protection, personalized medicine, and genetic testing. Management Science, 64(10), 4648–4668.

Nambukara-Gamage, B., & Rahman, S. (2020). Ethics in accounting practices and its influence on business performance. People: International Journal of Social Sciences, 6(1), 331–348.

Pirson, M., Martin, K., & Parmar, B. (2017). Formation of stakeholder trust in business and the role of personal values. Journal of Business Ethics, 145(1), 1–20.

Ramsastry, A. (2021). Advisors or enablers? Bringing professional service providers into the guiding principles’ fold. Business and Human Rights Journal, 6(2), 293–311.

Serfraz, A., Munir, Z., Mehta, A. M., & Qamruzzaman, M. (2022). Nepotism effects on job satisfaction and withdrawal behaviour: An empirical analysis of social, ethical and economic Factors from Pakistan. The Journal of Asian Finance, Economics and Business, 9(3), 311-318.

Smieliauskas, W., Bewley, K., Gronewold, U., & Menzefricke, U. (2018). Misleading forecasts in accounting estimates: A form of ethical blindness in accounting standards? Journal of Business Ethics, 152(2), 437–457.

Williams, D. R., Lawrence, J. A., Davis, B. A., & Vu, C. (2019). Understanding how discrimination can affect health. Health Services Research, 54(S2), 1374–1388.

Employee Perceptions of Corporate Social Responsibility
Sunrun: Fighting Climate Change