This article is an excerpt from my book Philosophy for Business Leaders: Asking Questions, Navigating Uncertainty, and the Quest for Meaning.

I once moderated an online session that revolved around discussions about personal finance, investments, and entrepreneurship. During the session, I asked the guest a question that sparked concerns about the importance of ethics in the business world. The guest, wearing a smile, along with many attendees—most of whom were bankers and professionals—agreed that as long as actions are legal and compliant, there is no problem.

I chose to refrain from following up on my question and moved on to another, more ‘practical’ subject.

This was right around the GameStop short squeeze saga when a group of retail investors and Reddit users worked to drive up the stock price of struggling GameStop, resulting in substantial losses for hedge funds that had shorted the stock.

After gaining significant media attention, the event underwent thorough analysis in YouTube videos and documentaries, sparking conversations about market dynamics and regulations. These discussions aimed to address the need for preventative measures against similar social media-driven squeezes, even though such actions were not explicitly illegal.

Some of the arguments in the wake of this incident centered around the morality underlying such a practice. Discussions ensued about whether the coordinated efforts to increase the stock price were ethical. Some questioned the morality of the intention behind these efforts, which aimed to harm big investors and get rich quickly through a speculative mechanism.

In this particular case, I think that there’s a high chance that ethics was invoked because those on the losing side had no legal recourse to rely on.

Advocates of the actions of retail investors and Redditors viewed it as a form of karmic, Robinhood-like, redistributive justice, with undertones reminiscent of the David vs. Goliath narrative. In this perspective, the perceived weaker but more deserving side triumphs over the ‘bad’ side.

But in the absence of regulatory measures and policies that prohibit such an undertaking, was it ethical or unethical? Does it even warrant or merit consideration from a moral perspective? What do you think?

I started this part with this example to emphasize how specific actions within the business and professional realm, while legally permissible, can still trigger considerable reflection and provoke extensive ethical debates.

In this case, your stance on whether stricter measures and regulations should be implemented to prevent another similar occurrence may be influenced by ethical considerations. You might feel uncomfortable with the idea of manipulating the market without violating the law.

Conversely, you might find it rewarding to hold large investment firms accountable for their reckless investment choices, with the hope that they would exercise greater caution in the future.

To defend any of these opposing standpoints, you would have to back your conclusion up with sound arguments that follow a coherent and logical structure and are built on true premises.

Here’s the catch, though. If both arguments do make sense and are constructed based on rigorous reasoning and true premises, then why would we end up with contradictory and opposing conclusions? This is because, even if the facts and premises are true, the arguments laid out would rely on different ethical frameworks to examine and analyze the situation.

This leads to a larger question: what exactly is ethics, and how do we decide what is right or wrong?

What Is Ethics?

The simple answer to this big question is that no one really knows, to a certain extent. If you search for the definition of ethics, you are likely to come across answers that emphasize what ethics is not, or more specifically not reducible to, rather than providing a clear explanation of what ethics truly is.

A more straightforward yet vague answer would be that ethics is the branch of philosophy that deals with questions of right and wrong, and what sort of good behavior and decisions we ought to pursue to ensure that our conduct is ethical.

So far so good. We know that ethics and morality are concerned with right and wrong matters, and with how we ought to behave towards ourselves and others because we are social animals and live in communities and societies.

Great. However, a more immediate and intriguing yet complex question arises: How do we ascertain whether a conduct is morally right or wrong? And which actions, behaviors, and decisions belong to the realm of morality and ethics?

In other words, how can we determine whether an action should be evaluated from a moral perspective? For instance, is the debate over pineapple pizza a matter of morality, or is it more about subjective taste and preference? What about instances like lying to your friends, choosing one major over another, or deciding between job offers?

Why Defining Ethics Is So Complex

What specific criteria qualify an action for discussion and analysis from a moral and ethical standpoint? This is one reason why defining ethics can be exceedingly complex and delicate.

Here’s another reason: human beings have, for a long time, drawn moral and ethical principles from a wide range of sources, including myths, religions, norms, conventions, philosophy, and law. What further complicates matters is that, at times, within the same group, moral dilemmas, debates, and contradictions arise due to differing stances between religion and the law, between norms, or as a result of different interpretations of a particular edict. Complexity deepens when individuals hold views that diverge from those of the entire group.

For example, when ‘do not lie’ and ‘do not do harm’ come into opposition, what would the best course of action be? This can apply to something as life-threatening as hiding an innocent person being unlawfully persecuted, or as insignificant as telling your friend a white lie.

This complexity exists not only within individual groups, societies, or countries but also on a global scale. In the global village, many people from diverse backgrounds interact and engage in business with one another on a daily basis. We work in international environments, constantly exposed to different, often opposing, perspectives and worldviews, moral or otherwise.

Ethics Across Cultures

Some countries and societies rely primarily on religion as the source of their moral principles, which form the basis of their legal systems, while others draw from a combination of philosophy, law, and codes established and agreed upon by the international community.

You can sometimes observe the consequences of this on social media when intense and heated moral debates unfold concerning immigration, healthcare, and social welfare. However, these debates need not always focus on what might be considered serious matters; occasionally, the contention can be centered around seemingly casual topics, such as comedy.

At times, the discourse shifts towards the offense taken due to a comedian’s joke, morphing the conversation toward what is morally acceptable to be the subject of comedy and jokes and what is not.

As a result, philosophers and researchers have long pondered the question of whether morality and ethics are subjective or objective, universal or relative. The study of the nature of morality and the scope of moral values falls under the branch of ethics called metaethics.

Can we assert that different cultures possess different moral codes, and therefore should we respect and refrain from interference if we believe they adhere to principles and practices we consider harmful and unethical? To give one example, think of bullfighting in Spain. This is sufficient to start a never-ending debate about ethics and traditions. You probably get the gist.

Where should we draw the line between merely pointing out that another culture’s ethics are immoral and compelling them to cease their actions or change their principles and codes? And when two ethical systems collide, what would be the best course of action?

Ethics as a Spectrum

To provide a simple yet concrete example that underscores this issue, consider the difference in how various cultures perceive the exchange of gifts in a business setting.

In a Western context, this action has become frowned upon and is seen as a form of bribery, therefore being strictly prohibited by law. Meanwhile, in many non-Western countries, the exchange of gifts is an almost inherent and fundamental aspect of conducting business. So, who is right in this case? And what should be done in situations where a firm based in a Western country must do business with a firm based in a non-Western one? You’re meeting your potential client over for lunch for the first time, what would you do?

I think it’s becoming clearer why ethics and morality are not only challenging to define but also complex to contemplate, discuss, and analyze. However, our exploration isn’t over yet! Another reason why this is a sensitive and intricate subject is because it permeates our lives, professions, and nearly everything we do, both on an individual and collective scale.

Ethics operates as a spectrum and a framework that becomes increasingly nuanced as we expand from individuals to families, communities, countries, and the entire world. Similarly, it gains complexity as we move across professions, from a small independent business to a family-run enterprise, to a small company, to a large corporation.

Why Scale Matters

Moreover, the seriousness, risks, and potential harm resulting from our actions and decisions vary widely. For instance, telling a small white lie to a friend about the quality of the dinner they prepared may not lead to significant consequences. Using the office printer for personal use may not be particularly harmful either. Consuming someone’s lunch at the office, as in Ross’s case, might not have adverse consequences if your colleagues remain stoic about it.

However, issues like misrepresenting a product’s safety, and debating topics that involve people’s livelihoods such as money laundering, euthanasia, healthcare, and the ethics of war, involve a different level of gravity and complexity altogether.

Sometimes, disagreements and exchanges worsen because we are not mindful of these differences, and we don’t take into consideration scale (an extremely interesting point Nassim Nicholas Taleb makes in “Antifragile” and elsewhere). Many times, this occurs due to mixing concepts and utilizing different ethical frameworks when analyzing a particular subject.

The Ongoing Effort of Ethics

It is essential to keep all of that in mind when thinking about and discussing ethics and morality.

Neither religion, nor the law, nor conventions are the primary source of ethics and morality. While they do contribute to the debate and inform some of the discussions, they don’t necessarily reflect or represent a moral perspective, namely because morality evolves over time, and the law takes time to catch up, or vice versa.

For example, slavery was legal in many countries, even when many people considered it immoral. In the case of religion, the question becomes which of the religions has a better moral framework, and what does this entail for those who don’t necessarily subscribe to any of these religions?

Given all the above, we can view ethics as a continuous effort to scrutinize our established principles, moral beliefs, and ethical behavior. This endeavor aims to ensure that both individually and collectively, we are striving to lead a virtuous and ethical life and treat one another well to the best of our abilities.

It’s essential to remember that our standards of right and wrong, whether they find expression in the law, societal norms, or religious principles, fundamentally originate from ethical models.

What Comes Next

These ethical frameworks provide the bedrock from which our principles and codes of conduct are drawn. While numerous ethical frameworks exist, our focus will be on three specific ones that form the foundation of many derivative theories. These are virtue ethics, consequentialism, and the theory of duty.

These theories, collectively referred to as normative theories, serve as guides for determining what actions are morally permissible or impermissible within various contexts, personal, societal, and professional, and how we ought to behave under different circumstances.

Normative theories provide frameworks for determining moral principles and evaluating ethical dilemmas and act as a guide to help us apply these in specific situations. For example, what applies to business ethics differs from what applies to engineering ethics, bioethics, environmental ethics, and so on.

While normative ethical theories are concerned with how we should broadly analyze actions to determine how we ought to behave, in applied ethics, we utilize these normative theories to align them with established normative principles.

Applied ethics involves the practical application of ethical principles to real-world scenarios, aiding individuals and organizations alike in making morally sound decisions. In the realm of business ethics, for example, these theories can help assess the ethical implications of practices such as fair labor practices, work-life balance, or corporate social responsibility programs.

To provide a concrete example of how normative theories and applied ethics work together without delving into excessive detail, consider a theory stipulating that we have a duty to avoid causing harm. This normative principle guides our behavior. However, its application varies across contexts.

In medicine, it means doctors should not voluntarily harm patients. A similar expectation applies to engineers, businesses, and so forth in their duty toward their customers and users. Yet, the types of harm each profession might cause differ significantly. That’s why different ethical committees convene to explore what harm means within their profession and what necessary practices should be implemented to prevent it.

Despite our complete freedom to determine how we want to live and the meaning of our lives, we do not exist in isolation. Our decisions carry consequences that impact not only us but also others, both directly and indirectly.

Ultimately, understanding these frameworks allows us to navigate moral complexity with greater clarity—whether in business, society, or our personal lives.

Get a copy of the book today: Philosophy for Business Leaders: Asking Questions, Navigating Uncertainty, and the Quest for Meaning.