BUSHOR-1560; No. of Pages 10 BUSINESS LAW & ETHICS CORNER Embedded ethics: How complex systems and structures guide ethical outcomes Thomas Martin Key a, *, Carol Azab b , Terry Clark c a College of Business Administration, University of Colorado, Colorado Springs, Colorado Springs, CO 80918, U.S.A. b School of Business Administration, Stetson University, Deland, FL 32723, U.S.A. c College of Business, Southern Illinois University, Carbondale, IL 62901, U.S.A. 1. Ethical outcomes The Bloomberg (2013) editorial board once re- flected on the fate of former midlevel Goldman Sachs trader, Fabrice ‘Fabulous Fab’ Tourre. Tourre was convicted of concealing the fact that Paulson & Co. Inc., architect of the toxic mortgage-backed bond he was selling (Abacus 2007-AC1), had taken a short position on the portfolio. By purchasing the shorting instrument, Paulson was betting that bor- rowers would default on their loans; in other words, the company believed the bond was worthless. Within 9 months, 99% of the Abacus portfolio had been downgraded. The deal cost investors over $1 billion. However, for its relatively modest $15 million shorting fee, Paulson netted around $1 billion in profit. The editorial board (Bloomberg, Business Horizons (2018) xxx, xxx—xxx Available online at www.sciencedirect.com ScienceDirect www.elsevier.com/locate/bushor KEYWORDS Embedded ethics; Shareholder value; Business ethics; Unintended ethical outcomes; Corporate governance Abstract This article introduces a new concept, embedded ethics, to explain the subtle impact that complex systems and structures have on ethical outcomes. We define embedded ethics as the entrenched complex of networked structural indicators that subtly and silently direct actions in the form of normalized industrial, organizational, and/or functional-role behavior. We then describe two examples–—one from the legal systems (corporate governance) and one from business (shareholder value)–—to demonstrate the usefulness of this concept in helping to identify opportunities to improve unethical outcomes in systems in which actors otherwise are understood as just doing their job. The concept of embedded ethics is especially critical in our too-big-to-fail corporate environment and Post-Internet Age of technological innovation. # 2019 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. E-mail address: tkey@uccs.edu * Corresponding author E-mail addresses: tkey@uccs.edu (T.M. Key), cazab@stetson.edu (C. Azab), tclark@cba.siu.edu (T. Clark) https://doi.org/10.1016/j.bushor.2019.01.011 0007-6813/# 2019 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.