Ethical Issues in Operations Management


The term ‘ethics refers to moral philosophy that emphasizes on the aspects of values and distinguishes between the better and worse. It is all about the rules of human behavior and the foundations of moral principles of life. The conceptual meaning of ethics revolves around three main divisions that include descriptive morality, ethical theory, and applied ethics. When the first division deals with the cultural background the second one focuses on moral concepts and principles. The third division of applied ethics deals with the ethical issues in our society. This applied ethics is related to the business arena where the aim is to understand the ethics in business and ethical issues in operations management.

Operations management refers to the approach of managing, designing, improving, and operating business processes or systems that work in tandem towards the production and delivery of goods and services. This tutorial sheds light to the ethical issues in operations management and ways to resolve them. It also looks into the management of ethics and ethical behavior within a work setting.

Ethics in Operations Management

All activities that are involved in the process of converting inputs into products or services come under the pursuit of operations management. Though the term ‘operation’ was originally used in conjunction with the production or manufacturing units, the scope of the term has evolved and is now vast and covers all business activities that result in output from goods to services. Operations managers are responsible for developing strategies, setting objectives, processes and design layout to designing of products and services, and employee motivation. Operations strategy should be formulated on ethical standards. The consequences of not formulating it like wise would lead to negative impact and workers may be discouraged to support it eventually.

Importance of Ethics in Operations Management

Ethics in operations management is truly significant especially in world-class operations and it should be considered in line with corporate responsibility.

  • Some ethical considerations in operations management decisions include customer safety, employee safety, materials recyclability, waste disposal, etc. This claim is based on the fact that most of the ethical issues in businesses originate from the operations level.

  • Another reason for importance of ethics is the ethical consequences that arise from the business or operations strategy of some companies to obtain cost advantage by outsourcing.

  • Ethics in operations management is concerned on the way how profit is obtained rather than on the quantity of profit which is considered enough. The drift between profits and the responsibilities of the company are to blame for the rise of ethical issues.

Ethical Issues in Operations Management

Ethical issues arise usually out of ethical dilemmas where a decision needs to be taken from two or more equally urgent yet incompatible alternatives. This could give rise to ethical issue of opportunism. This is considered an unethical behaviour as it refers to the abuse of opportunity.

Abuse of Opportunity

In operations management, managers or leaders might get involved and become vulnerable to unethical choices due to a number of opportunities that may be abused. It could be either due to the pressure for cost reduction or impractical strategic objectives. Such an area vulnerable to opportunism is procurement where the worker assigned in this job role handles a significant amount of company resources.

It also has more exposure to external environment out of the business entity that makes it easily prone to the conduct of unethical act.

For example, Procurement officers might face the situation where many suppliers compete and offer different favours and gifts just to create a business deal. An abuse of this opportunity creates a severe ethical issue as it directly tarnishes business reputation dealing with third parties.


Favouritism is another ethical challenge where the employee acts as intermediaries who tend to exaggerate the problem of either the buyer or the supplier in order to obtain a business deal, giving preferential treatment to certain parties, allowing certain personalities to interfere with business deals, engaging in reciprocity, and seeking and providing information of different business quotes from different competitors either in a fair or unfair manner. These deeds might be carried out for material or personal gain that result in unethical code of operations management.


Yet another ethical issue that arises in operations is bribery. It is the act of offering payments, services, products or opportunities in exchange of getting things in favour. It cannot be treated under the pursuit of gifting. Accepting gifts from people who have direct influence on the operations functions maybe considered as unethical. This is seen as an ethical issues as the person being gifted and have the ability to satisfy the interest of person offering the gift. Other ethical issues to consider in operations are breach of confidence, negligence, and fraud.

Corporate Responsibility

One of the latest and emerging view on business ethics links corporate responsibility and ethics. The Green Movement in businesses is an example of ethical consideration. According to this movement, companies are seen responsible for the environment as part of their ethics. For example, a business that is into paper making could take up planning a tree per number of batches of paper produced. This also helps in sustainability of the environment instead of causing harm to it.

Overcoming Ethical Issues

  • The best and practical way to help operations managers to control ethical issues is by establishing a code of conduct within the organization. This helps to create a sense of awareness and discipline among the employees and consequences of not abiding it. Every business is left with the liability to serve the public in an ethical manner. Hence, they need to maintain public trust and reputation to survive in the market. Developing and adhering strictly to ethical code of conduct will help to overcome the ethical issues faced by them.

  • Leadership too has its role to play when it comes to wiping off ethical issues. Ethical leadership could be viewed as a vital factor to promote ethics in organizations. As many incidents involve the acts of a few employees in such unethical incidents, ethical leadership will help tackling this. Ethical leaders can chalk out practical ways by instilling a sense of trust and integrity among employees and formulating ethical strategies to drive operations of a business. The increasing number of companies being involved in ethical controversies that have brought the business down have made it possible for the others to understand the significance of integrating ethics in operations management to ensure market sustenance and profitability.


Ethics is critical to the success of any business organization. All decisions made in operations must be framed from an ethical point of view. Ethics in business operations should be viewed as the responsibility of every manager concerned. Upholding ethical standards ensures a healthier business atmosphere that helps to boost brand image, gain public trust and enjoy market share and reputation.

Ethics in business management involves the social responsiveness of any company or business unit during its course of operation. It tags the business discipline of carrying out the business activities with moral responsibility and social commitment. It comprises of a set of moral principles and behavior that should guide and lead business decision makers and management in their day to day operations.

Updated on: 18-Apr-2023

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