In today’s market, businesses that prioritize ethical behavior not only enhance their reputation but also contribute to long-term success and stakeholder confidence. Businesses that pursue ethical strategies find not only public support but profitability. Both consumers and business leaders are calling for a new way of understanding business law and ethics.
Ethical business practices go beyond simply following the law: they shape corporate reputation, influence consumer trust and contribute to a company’s ability to navigate social and environmental challenges.
Understanding the critical interplay of business, law and ethics is the key to stability and success in the current landscape. We asked a business law expert with extensive experience in both academia and legal practice to share how legal frameworks and ethical considerations shape the modern business environment. Continue reading to learn more.
Introduction to Business Law and Ethical Business Practices
Business decisions are rarely made in isolation. Instead, they exist within a framework shaped by legal requirements and ethical responsibilities. Business law ensures a fair and orderly internal marketplace, offering guidelines that govern everything from corporate governance to consumer protection. Ethical business practices work outwardly from the corporate world, encouraging organizations to operate responsibly beyond what is legally mandated to maintain public trust and long-term sustainability.
Adhering to the law is just the starting point of ethical business. Companies that proactively embed ethical principles into their strategic planning often find that they build stronger relationships with stakeholders and contribute to a more sustainable business environment.
What is Business Law?
Business law is concerned with regulating and protecting the legal aspects of commercial activities. Successful business law ensures fair competition, both protecting stakeholders and providing a framework for dispute resolution. This includes antitrust regulations that prevent monopolies, consumer protection laws that safeguard buyers from fraud and labor laws that guarantee fair treatment of employees.
Business law covers a variety of areas such as contracts, corporate governance and regulatory compliance, offering businesses the legal structure necessary for smooth operations. In the current globalized economy, international business law plays a crucial role in cross-border transactions and regulatory standards, helping companies navigate complex legal environments worldwide.
Defining Ethical Business
While business law is critical for providing legal structure, ethical business practices go beyond mere legal compliance; they involve making principled decisions that foster trust, accountability, and sustainability. Profitability is always a core business goal, but ethical companies recognize the importance of balancing financial success with corporate social responsibility.
Environmental, social and governance factors are becoming increasingly important in modern business, influencing investment decisions and consumer preferences. To gain deeper insights into this critical intersection, we spoke with Craig Barkacs, JD & MBA, a recognized leader in business law and social responsibility.
Merging Business Ethics and Law with Craig Barkacs
Craig Barkacs is a professor of business law at Knauss School of Business and an advocate for those in need of a bold voice in high-stakes civil and business litigation. His robust legal career has led him to work at the crossroads of business law and academia, and he has designed and taught courses on negotiation, power and influence, conflict resolution, ethics, law and international business. He shares his decades of experience through his ethics training program he started with his wife, and he remains active as a media commentator on business, legal, ethical and political issues.
We asked Professor Barkacs about the right balance of legal and ethical values when making business decisions and maintaining profitability overall, and what his advice would be to future business professionals hoping to make a positive difference in ethical business.
Q: How can business professionals navigate the tension between profit-driven goals and ethical decision-making?
Professor Barkacs: Business professionals can balance profitability with ethical imperatives by weaving ethical considerations into every decision. It’s not about choosing one over the other—it’s about making ethics a central part of long-term strategy.
It all starts with leadership. When executives consistently model ethical behavior and clearly communicate a vision rooted in integrity, ethics become as routine as financial metrics. A company-wide code of conduct that directly links ethical behavior to business success further reinforces this culture.
Beyond leadership, decision-making should integrate ethical analysis at every turn rather than treating it as an afterthought. Tools like the triple bottom line—which evaluates people, planet and profit—help balance short-term gains against long-term societal impacts. Using decision matrices that combine quantitative profits with qualitative ethical outcomes allows teams to anticipate unintended consequences and adjust strategies accordingly.
Engaging a broad range of stakeholders is equally important. Recognizing that every decision affects employees, customers, investors, suppliers, and local communities ensures that diverse perspectives are considered. Open, transparent communication not only minimizes risk but also builds trust over time.
Robust accountability and oversight add another layer of protection. Establishing independent ethics committees and conducting regular internal audits keep ethical considerations front and center, helping to prevent short-term ambitions from undermining long-term commitments.
In short, balancing profit and ethics means viewing ethical decision-making as a driver of sustainable competitive advantage rather than a constraint. Though sustainable practices may involve upfront costs, they typically yield benefits in resilience, consumer trust and a strong corporate reputation. Maintaining an ongoing dialogue and regularly reassessing practices ensures that ethical considerations keep pace with an ever-changing global landscape.
Q: How can businesses effectively and ethically balance legal compliance and innovation?
Professor Barkacs: When success is measured solely by short-term financial gains, one might mistakenly view ethical and legal standards as burdens. Yet, these very principles form the indispensable bedrock that ensures innovation is sustainable and truly beneficial.
Innovation flourishes precisely because it respects the tenets of fairness, accountability, and public trust. Legal compliance and ethical conduct are not obstacles to creativity; they provide a robust framework that safeguards our pursuit of progress against the pitfalls of short-term thinking and unchecked ambition. Ultimately, businesses that embrace these principles not only fulfill their social responsibilities but also pave the way for long-term success in an ever-evolving landscape.
Q: What advice would you give to business students looking to build a culture of integrity and legal compliance?
Professor Barkacs: In my experience as a college professor, I encourage business students to view integrity and legal compliance not as burdensome requirements but as the foundation for a sustainable and reputable career. Begin by cultivating a deep personal commitment to ethical reasoning—think of it as developing your internal compass. When faced with challenging decisions, reflect on not only what is legally required but also what truly aligns with your core values and the broader societal good. This mindset will serve as a steady guide, even under pressure.
It's also essential to understand that a culture of integrity doesn’t emerge overnight but grows through consistent, everyday choices. Engage actively in discussions, case studies and real-world scenarios where ethical dilemmas are dissected and explored. By doing so, you’ll learn to anticipate potential pitfalls and recognize the importance of transparency and accountability. Look for mentors who exemplify these traits and be prepared to both learn from their experiences and, in time, share your insights with others.
Remember that building such a culture extends beyond individual actions; it involves nurturing an environment where open dialogue and critical thinking about ethical challenges are the norm. By insisting on adherence to robust legal standards and ethical practices, you can influence your future workplace to prioritize integrity as a competitive advantage rather than a mere obligation. Ultimately, maintaining this balance between legal compliance and ethical leadership will not only enhance your professional reputation but also contribute meaningfully to the well-being of the organizations you serve and the communities they impact.
Where Ethics and Business Converge: Studying Business for Good in San Diego
Integrating ethics into every policy, product and process not only protects businesses from legal ramifications but also gives them the framework they need to transform business practices from the inside out. For future business leaders, earning a business degree can be the key to making the most of your social impact. The Knauss School of Business at USD uniquely focuses on developing ethical and responsible business leaders who strive towards Business for Good.
The nationally ranked Knauss MBA develops thoughtful leaders focused on ethical business. Business for good is woven into the fabric of our curriculum—our faculty expertly blend in-demand competencies and ethics.
With a variety of formats to accommodate your schedule, our MBA doesn’t take your education lightly. We want to help you personalize your degree to fit your career pathway and develop your business mindset through a values-based education and innovative research. Together, we work to advance sustainable and ethical business solutions that address the world's greatest challenges.
Learn more about our MBA options and career outcomes in our guide, Unlock Your Potential with an MBA.
