Ethics in Business
Senior 3 · Entrepreneurship
Ethics in Business
Lesson 1 of 4
22 min
Uwamahoro runs a small bakery in Nyamagabe. One morning she finds that a tray of yesterday’s bread has gone slightly dry. It is not mouldy and not unsafe, and her customers would probably not notice until they got home. She could put it on the shelf with today’s bread at the full price, or sell it as “yesterday’s bread” at a discount, or give it away. Nobody would know which she chose.
No inspector is watching, and the bread will not make anyone ill. The question Uwamahoro faces is not mainly about the law: it is about what is right. That is the question of ethics. Uwamahoro and her bakery are illustrative.
Definition
Ethics: the principles that guide a person or group in deciding what is right and wrong, good and bad.
Values: beliefs about what is important and worth doing, such as honesty, fairness and respect.
Business ethics: the application of ethical principles to business decisions and behaviour: how a business treats its customers, workers, suppliers, owners, the government, the community and the environment.
Ethical dilemma: a situation in which a person must choose between actions that each have some right and some wrong in them, or where the right action costs something.
Laws are rules made and enforced by the state; breaking them brings punishment. Ethics goes further: it asks what is right even where the law is silent. A useful way to compare the two is a grid.
Most of what the law forbids is also unethical: bribery, fraud and selling unsafe goods are both. But not everything that is legal is ethical. A business that keeps within the law but treats people unfairly still loses their trust. Good businesses aim for the top-left box: legal and ethical.
| Value | What it means in business | Example |
|---|---|---|
| Honesty | telling the truth about products, prices and accounts | a label that states the real weight and contents |
| Integrity | acting on your values even when nobody is watching | refusing a supplier’s gift offered for a contract |
| Fairness | treating people equally and without favouritism | the same price list for every customer |
| Responsibility | caring about the effects of decisions on others | recalling a faulty batch at the firm’s own cost |
| Accountability | answering for your actions and their results | keeping records that can be checked |
| Transparency | being open about how decisions are made | explaining how a cooperative shares its profit |
| Respect | treating every person with dignity | listening to complaints politely |
| Keeping promises | doing what was agreed, on time | paying suppliers on the agreed date |
Definition
Code of ethics (code of conduct): a written set of rules and values that tells the members or workers of an organisation how they are expected to behave. Example: a cooperative’s code may forbid members from selling on the side to a buyer who offers more, and set out how conflicts of interest are declared.
Conflict of interest: a situation in which a person’s private interest could influence the decisions they make for an organisation, such as a buyer who chooses a supplier owned by a relative.
Tip
Five quick tests for an ethical decision. (1) Is it legal? (2) Is it fair to everyone affected? (3) Who could be harmed? (4) The family test: would I be happy if my family, or a newspaper, knew what I did? (5) The golden rule: would I accept being treated this way? If any answer is “no”, think again.
Worked example 1: testing Uwamahoro’s choice
| Test | Sell dry bread as fresh, full price | Sell it as “yesterday’s”, discounted |
|---|---|---|
| Legal? | probably, as it is safe, but it misleads the buyer | yes |
| Fair? | no: buyers pay for fresh bread and get dry bread | yes: buyers know what they buy |
| Who is harmed? | customers; later the bakery’s reputation | no one; the bakery earns a little |
| Family test | she would not want it known | she could say it openly |
| Golden rule | she would not accept it as a customer | she would accept it |
Decision: the second option passes all five tests, and it still earns some money. Ethical choices are often not the most profitable today, but they protect trust, which is worth more over time.
Worked example 2: placing actions in the grid
| Action | Box |
|---|---|
| A trader gives every customer a receipt from her electronic billing machine. | legal and ethical |
| A shop advertises “the best rice in Rwanda” with no evidence. | legal but unethical (an exaggeration that misleads) |
| A manager accepts money from a job applicant to hire him. | illegal and unethical (corruption) |
| A phone seller tells a buyer, unasked, that a used phone’s battery is weak, and lowers the price. | legal and ethical |
The cases are illustrative.
Warning
Common mistakes. (1) Saying “if it is legal, it is ethical”: the law sets a minimum, not the whole of right behaviour. (2) Treating ethics as only personal: a business’s rules, rewards and leaders also shape behaviour (lesson 2). (3) Thinking ethics only means avoiding harm: it also means doing good, such as keeping promises and treating people with respect.
Practice
Sources and credits
Written by Ganzaa: the Uwamahoro case, the law-and-ethics grid, the tables, the worked examples and the practice items. The people and businesses are illustrative (2026).
