Exploring Different Types of Ethical Dilemmas in Business

Business ethics are more than just a matter of morality. Ethical decision-making shapes the reputation, growth, and long-term success. Of a business Just look at a few modern examples: TD Bank has been charged a record-breaking fine for failing to uphold anti-money laundering controls; the CEO of Volkswagen faces years in prison due to an emissions scandal; and Macy’s had to delay an earnings-statement release due to the actions of a single employee.¹

Ethical issues in business should never be taken lightly. This post will explore some common types of ethical dilemmas in business, the potential consequences, and ways to handle them.

Defining an Ethical Dilemma

 
An ethical issue is not necessarily a legal issue, although they often overlap. That’s not to say ethical dilemmas are without consequences. Remember that businesses are also judged in the court of public opinion, and reputational harm can be as costly as legal fines.

You’ll find three common elements across various ethical dilemmas:

• Competing duties, or conflicting interests, drive an employee or business leader to act outside of the business’ best interests²
• Ambiguous guidelines make ethical standards unclear, so it is difficult for workers to make the right choice³
• Stakeholder trade-offs can unfairly or illegally benefit multiple parties at the cost of the business’ reputation

Types of Ethical Dilemmas in Business

It isn’t always easy to identify an ethical dilemma. You must have experience and a strong ethical code to spot issues before they spiral out of control. Here are specific types of ethical issues in business that should automatically raise a red flag.

Conflicts of Interest

A conflict of interest is a dilemma in which an employee or business leader’s personal interests clash with their professional responsibilities.⁴ Examples include self-dealing (personally profiting from a business transaction), nepotism, and insider trading.

When a conflict of interest arises, the most ethical thing professionals can do is remove themselves from the situation. For example, if an employee’s relative is applying for a position at the company, that employee should ask to be removed from the hiring process.

Financial Misconduct

Financial misconduct is one of the most common ethical issues in accounting. It involves falsely reporting, manipulating, or redirecting company funds. This type of misconduct could result in personal profit or unjustified business growth. Either way, it can lead to severe legal consequences, including fines and jail time.⁵

Misleading Marketing 

Deceiving consumers is not only unethical but costly. As many as 73% of consumers are willing to pay more for brands they perceive as transparent.⁶ This means that intentionally inaccurate advertising can seriously weaken a brand’s customer base.

Examples of misleading marketing include the following:

• Greenwashing (using “green” branding and imagery without actually acting sustainably)
• Hidden fees
• Deceptive claims about a product

Data and Privacy Breaches

Many current ethical dilemmas in business involve consumer data: how it is collected, who has access to it, and how it can be used to promote a business responsibly.

According to Forbes, a lack of regulation when it comes to accessing and using consumer data leads to abuse and privacy violations.⁷ It's important for businesses to self-regulate their data policies, putting consumers' privacy first, to avoid scandals and fines.

Workplace Misconduct

Workplace misconduct, such as discrimination, harassment, and retaliatory action against employees, can harm any business’ reputation.⁸ Such behavior not only damages employee morale and trust but can also lead to costly lawsuits, reputational harm, and long-term challenges in attracting and retaining talent. Instances of misconduct should be swiftly and publicly resolved to reduce harm to the company’s workforce, its productivity, and its public image.

Environmental Negligence

In the face of the escalating climate crisis, businesses are often expected to minimize their environmental footprint and operate sustainably. Examples of environmental negligence include excessive emissions and pollution, unsustainable sourcing and shipping practices, improper disposal of hazardous materials, and a failure to take meaningful steps toward reducing carbon emissions. Beyond regulatory fines and legal consequences, companies that neglect environmental responsibilities risk significant reputational damage, loss of consumer trust, and strained relationships with investors and partners.

Supply Chain Issues

Ethical corporate governance doesn’t stop at internal operations; it extends to every partner, supplier, and stakeholder involved in the supply chain. A company is accountable not only for how it treats its own employees and customers but also for the practices of the external organizations it chooses to work with.

Upholding ethical standards across the supply chain means ensuring fair labor practices, safe working conditions, and transparent business dealings at every level. Common ethical violations include the use of forced or underpaid labor, unsafe or exploitative working environments, and bribery or corruption among suppliers. Addressing these risks is critical for protecting human rights, maintaining corporate integrity, and safeguarding brand reputation.

Intellectual Property (IP) and Innovation

A business’ creative team must also uphold ethical standards. Plagiarism and patent trolling (abusing patent infringement law) are both examples of common issues in the IP world.

A more modern example is the use of artificial intelligence (AI) in marketing content. While the ethics of AI are still being defined, it’s important for IP teams to disclose any use of AI art or content generation and to prioritize human creativity whenever possible.

Become an Ethical Business Leader with an Online MBA

In today’s business world, ethical conflicts arise all the time, and it’s up to savvy, well-educated business leaders to solve them responsibly. For long-term success, ethics must be thoroughly embedded into a company’s culture and growth strategies.

Learn more about the role of ethics and decision-making in business in the Online MBA program from Santa Clara University Leavey School of Business. This program is designed to help burgeoning entrepreneurs, innovators, and corporate professionals elevate their careers, with coursework focusing on communications, decision-making, and the common good.

Our flexible online classes let you pursue your degree on your schedule, without putting your career or personal life on hold. You’ll gain a high-quality education and personal support, all while learning when and where it works best for you.

Make the SCU Online MBA the next step in your career. Contact an admissions outreach advisor today to find out more.