In particular, stakeholder theory, which stresses the importance of all groups that affect or are affected by a firm, has been proposed as a more adequate theory of the firm for studying business ethics. An important benefit of business ethics research conducted within such a framework would be a narrowing of the gulf between business ethics and the fields of financial economics and corporate law. Business ethics is widely dismissed as irrelevant by researchers in these fields because of its failure to recognize the existing financial and legal structures of the corporation, which are built largely on a contractual foundation. Hence, a common framework could increase the relevance of business ethics research and create a mutually beneficial dialogue. As a framework for identifying and analyzing many common business ethics problems, the contractual theory focuses our attention on the need to provide adequate safeguards for each constituency's interests.
Ethical business practices include assuring that the highest legal and moral standards are observed in your relationships with the people in your business community. This includes the most important person in your business, your customer. Short term profit at the cost of losing a customer is long term death for your business. A reputation for ethical decisions builds trust in your business among business associates and suppliers. Strong supplier relationships are critical to a successful business.
This indicates that ethics is a win-win strategy for business if managers place consumer satisfaction and social welfare beyond profitability. According to Meyers (2004), being ethical or not, is attributed to individual characteristics and business culture. This report will identify how individual characteristics affect ethical behaviour in an organization and its marketing strategy with The Body Shop (TBS) example applied and how it can strike the balance. The relation between ethical behavio... ... middle of paper ... ... to some extent, is a crucial element for Anita Roddick and TBS to persist with ethical responsibility for years. It is a shame-induced sense of imperative.
They follow step by step every illegal activity and try to examine alternative actions, if the participants (owners and auditors) were aware of the proposed ethical framework. As a result the reader of this article can focus on the practical aspect of the ethical theories inside the organizations. In conclusion, the above ethical theories can be used by managers and auditors as a useful tool in the decision-making process in order to avoid future financial scandals. These theories might not be an answer to all the ethical dilemmas that professionals face, but an ethical development in this field is required so that trust and confidence in the financial markets can be reinstated.
Regulatory Compliance Requirements for Managerial Accounting with emphasis on Financial Institution Impacts Regulatory compliance, ensures that financial institutions deliver fair dealing when conducting business with consumers and business partners. As a result, financial institutions have to ensure that their products, services and finance related activities, are in compliance with relevant laws, regulations and aligned with standards of good industry practice. Part of the ongoing effort of many financial institutions, is to reduce compliance risk. Compliance risk is the risk of legal or regulatory sanctions that can lead to financial loss or reputation loss for a company. Compliance risk may occur as a failure to comply with specific
The stockholder and stakeholder theories are two popular frameworks used to examine the purpose of business and its ethical obligations. With reference to the quote above, both theories seem rational and enjoy strong support. However, a common failing of both is typically how humans interpret and implement the theories in contemporary business environments. For instance, Enron was so focused on the raising the price of their stock that they “cooked the books to produce fake profits”1. This paper will provide a description of each theory and, analyze ethical justifications and major objections to each theory.
Furthermore, ethical conflict often arises in the workplace and creates ethical dilemmas due to conflicts between personal interest and professional duties. Business professionals are required to balance the conflicting pressures of the corporate world with the need to act with integrity (ATT Ethics, 2013). This means they have to be truthful and honest in their professional duties and they have to benefit without exploiting others. They are challenged to remain professional by protecting the interests of the clients and the public, above considerations of self interest during ethical dilemmas (Duska, Duska & Ragatz, 2011). Accountants have ethical responsibilities to themselves, their clients, their employers, their families and their profession as their profession allows them to maintain a fiduciary relationship with the public (Senarante, 2011).
After the customers made a down payment, Loewen started to recognize the customers’ purch... ... middle of paper ... ...hairman and CEO, who may have his own interests other than other shareholders. Good corporate governance practices would have helped to solve the issues: • Align the company’s accounting principles to make sure they are in compliance with GAAP and the law. • The independent compensation committee would review the compensation packages granted to the management to make sure they were reasonable. • Review and guild the company’s strategy, major action plan and risk policy. In Loewen’s case, the risky acquisition strategy would have been rejected.
In theory, a business could address these concerns by assigning corporate attorneys and public relations experts to supervise employees on their daily activities. Because at anytime an employee might stray from acceptable conduct, the experts would be there to guide them back. Obviously, this solution would be a financial disaster if practiced. Given that it would cost a company more in attorney and public relations fees, companies save more by having preventative procedures in place. Consequently, companies have established special task forces or special departments to combat company from losses that it more cost effective.
Introduction In today’s world, different types of business have emerged and business operations have become the cornerstone of making a success, however the way in which they are operated is what is important. Most businesses hunt the main objective of making a profit without considering how that might affect other factors of society and that is what in most cases diminishes the longevity of the organisation. This research is compiled to explain how good ethical practices and good values in business can yield sustainability within the business and the society as a whole and in order to do this the concept of ethical business practice and values have to be understood. Decades ago, the perception of ethics and values in business practice has always been associated with business failure as entrepreneurs had the “eat or be eaten” mind set – which in essence means that one must do whatever it takes to reach the desired goal, which in the case of a business means that the businesses has to make a profit no matter the cost. As the standard of living advanced so did the ways of doing business – business ethics supervened.