... Doing business ethically
… makes for better business
Business Ethics Briefing
Date: December 2007
Business Ethics for SMEs
This briefing explores what business ethics means for small to medium-sized business enter-
prises and how they can introduce and support high standards of business practice.
Why think about business ethics?
Few directors of small and medium sized enterprises
(SMEs) will deny the importance of good, trusting
relationships with customers, employees, suppliers and
the community. The success of their company depends
Also, due to requirements higher up supply chains,
smaller firms are increasingly asked about their social
and environmental credentials during tendering
processes with large corporations.
SME owners and managers will also recognise the
importance of trust and ethics in business when on the
‘receiving end’ of unethical business practice; for
example, when suppliers deliberately do not meet
agreed terms and conditions.
Owners and managers can often encounter ethical
challenges. Examples include:
• Do I meet a deadline with my customer and ship out
products even though I know there is a possibility
they might be faulty, or do I openly discuss my
difficulties with the customer?
• How do I ensure that my employees do their work
properly and do the right thing?
• How do I deal with my employees’ desire to balance
their work obligations with their personal ones?
• How do I respond when securing an important
contract seems to require the payment of a
• Do I delay payment to suppliers and the Inland
Revenue when my cash-flow is currently limited?
The desire to build trusting internal and external
relationships, as well as growing pressures from wider
society, should lead SME owners and managers to
consider to what extent ethical values and principles
guide their business behaviour. (See Fig 1). What does
‘doing the right thing’ mean?
Ethical Values in SMEs
SMEs are characterised by info