The home is commonly considered a private place to relax and be left alone. When introducing Internet of Things (IoT) into private spaces such as our homes, people transform into users of smart homes. Smart homes offer multiple benefits, such as increased security, entertainment, health, and energy efficiency. However, they also introduce various ethical challenges, such as managing the large amount of personal data in flux. From benign and seemingly harmless activities, such as your ideal indoor temperature or the time you turn your lights off at night, to deeply private and idiosyncratic ones, smart home-generated data can capture the wide-ranging activities that occur in the home. Analyzing ethical concerns related to smart homes requires an approach that explores the concerns contextually, as privacy is widely acknowledged to be defined in situ. Additionally, the interrelated stakeholders involved in developing and delivering smart home services – IoT developers, private companies, users, and lawmakers, to name a few – might approach the smart home context and its ethics differently. Methods to document ethical analyses to continue the exploration of smart home ethics over time and across stakeholder groups are currently lacking. A deeper examination into the role of ethics in smart homes is therefore warranted to develop methods supporting the contextual analysis of ethical risks and concerns. This thesis aims to review the literature on smart home ethics to consider the categories of smart home ethics and define its users. Subsequently, an approach to support ethical analyses of smart homes is developed based on conceptualizing smart homes as digital ecosystems. The analogy of a digital ecosystem has shown promise in supporting discussions across stakeholder groups and unifying the understanding of the context under analysis. The thesis documents the development and evaluation of a digital ecosystem approach and how it supports the contextual analysis of ethics in smart homes. The approach includes three artifacts developed by applying the design science research methodology. The artifacts include a species ontology defining four species of digital ecosystems, a conceptual model to depict the relationships between species and how data flows through the ecosystem, and a method to operationalize ethical analyses of smart homes. The method artifact is designed as a workshop and applies the ontology and conceptual model to support the systematic documentation of the analyses. Three workshops were conducted to evaluate the approach's utility in contextually defining unethical use cases of smart homes and eliciting ethical system requirements. The research contributions include a deeper understanding of smart home ethics and insights into how ethical analyses of domestic IoT might be conducted. Several ethical concerns are discussed in the thesis, such as the surveillance of children, data rights of smart home users beyond the household members, intimate partner violence, IoT gaslighting, IoT forensics, and power dynamics related to intrusive surveillance practices. This work may inform future research and policy developers to consider the smart home as a distinct site with unique challenges, seen as its connotations of being a private space, separate from but not independent of the public domain.