The History and Psychology Roots of Business Ethics

The History and Psychology Roots of Business Ethics

These days, the topic of business ethics is so popular that you can get a master’s degree in it. It wasn’t always that way.

Since business ethics are an important part of running a business, let's discuss the history and psychology of it. This discussion may help you avoid ethics pitfalls in the future.

The History of Business Ethics

Technically, business ethics have been around since humans started bartering for goods. The goal was to make sure the trade was equal and fair to both parties. Ethics have been a part of the business ever since then.

The term “business ethics” became popular in the United States during the 1970s and 1980s. That’s because anti-big business protest groups started claiming that large companies were unethical in their business dealings.

Since then, government legislation of business ethics has gradually expanded to the rest of the world. The UN Global Compact launched worldwide business ethics guidelines in July 2000.

The Psychology of Business Ethics

There is some interesting psychology behind this. The occasional person without a moral compass may wreak havoc on a company’s ethos of ethics. However, even people with strong morals can get caught making terrible ethical decisions.

Within a corporation, there are 3 main psychological dynamics that lead regular people to cross ethical lines. Let’s discuss those dynamics in more detail.

Psychological Dynamics that Lead to Crossing Ethical Lines

3 psychological dynamics in a workplace that can lead to crossing ethical lines are omnipotence, cultural numbness, and justified neglect. Luckily, if you recognize that you’re being affected by one of these dynamics, each one has an antidote.


Omnipotence is a feeling that you are invincible and that the rules don’t apply to you. Many CEOs of large companies have made terrible decisions based on their feelings of omnipotence.

The confidence and rush of being a strong leader can be a good thing and help you make good decisions. However, it’s easy to be led astray and believe that you don’t need to follow rules or moral guidelines.

How do you draw a line between being a strong, confident leader and being an omnipotent rule breaker?

Owning Your Flaws

Omnipotent leaders feel like they are incapable of doing anything wrong. They are so used to getting their way that nobody even speaks up to tell them about their flaws anymore.

The best way to prevent poor business ethics decisions is to recognize and own up to your flaws and mistakes. Nobody is perfect, including you. The rules apply to everybody, including you.

Cultural Numbness

Do you find yourself making tasteless jokes or using vulgar language just because all your coworkers are doing it? This is one example of cultural numbness. You get so used to a certain culture, that you follow along against your better moral judgment.

Cultural numbness is the workplace equivalent of “If all your friends jumped off a bridge, would you?” Business ethics can be compromised if you’re swept up in trying to be part of the crowd.

Look Out for Signs of Moral Capture

How can you tell if you’ve become a victim of cultural numbness?

It can be hard to spot the signs in yourself. It may be easier to talk to friends and family members that you don’t work with. Ask if they’ve noticed any negative changes in you since you’ve started your job.

Once you start paying attention to the business culture where you work, you can be more conscious of your decisions. Take a moment to think about your reasons for making a certain business decision. Simply because your company’s culture makes a decision seem right, doesn’t mean that it is ethical.

Justified Neglect

Have you ever heard your boss talk down to a waiter during a business meal? Have you ever witnessed sexual harassment in your workplace? If you have witnessed behavior like this but kept quiet, you’re dealing with justified neglect.

You convince yourself that it isn’t worth rocking the boat to stand up for what you believe is right. This behavior may seem OK at first. After all, you need your job. However, where does it stop?

It’s too easy to go from ignoring callous remarks to ignoring dangerous mistakes. What happens if you find out that your company is about to knowledgeably ship a defective or dangerous product? You’ve already decided that blowing the whistle isn’t worth the risk, but now people’s lives could be on the line.

Make a List of Things You Won’t Do

Sometimes, it isn’t worth rocking the boat over every little thing you morally disagree with. However, you must decide before heading into a situation exactly what you will and won’t do to keep your job.

Write down a list of ethical boundaries that you absolutely will not cross. Keep the list handy, like a note on your phone, and check it frequently. Staying conscious of the fact that you could be pushed into one of these uncomfortable decisions will help prepare you.

If you’ve already decided that you won’t allow out defective products, despite the cost, the decision will be easier. You’ve already debated the pros and cons and decided that you won’t do it.

Helping Your Business Succeed

First Union Lending wants to help your business succeed. We’re here for any of your lending needs, and we have 9 different types of loans to choose from.

Finding the right loan with First Union is easy. Just call 863-825-5626 or click here to talk to one of our lending specialists. They will discuss all of our loan types and help you decide which one best fits your needs.

Applying for a loan doesn’t hurt your credit, and you can get financing as soon as today. Contact us today to get started.

Becky: Hi! Let's find the best loan option for you