Why Have Ethics In Business?

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ethical conduct has moved front and centre as corporations are increasingly exposed to the glare of public scrutiny. In particular, there has been a fundamental shift over the past few years that requires a complete rethinking of the functions of compliance, governance and social accountability, putting ethics into the daily vocabulary of mainstream management (Institute Of Chartered Accountants Australia, 2013)

In recent years there has been an increased focus on the issue of ethics in business. This increase has come about due to some infamous cases that illustrate failure of business leadership. Due to corporate misdoings there has been an evident increase of public pressure on firms to take note of their ethical responsibility, not just to the financial stakeholder but the non-financial stakeholders. This essay will examine the implementation of high ethical standards in a firm, as companies now act before the eyes of a global public its importance of the advantage this implementation has for the firm in their market.

The worst economic crisis since the Great Depression was largely caused by poor business decisions made by boards of directors and executives in both the financial and industrial sectors. Institutional compensation practices, in particular, were seen to give rise to a new type of amoral business management practice that no longer curtailed the potential negative impacts of business. In the wake of what has also been seen as a crisis in ‘institutional integrity’, where both business and its regulators failed to protect society, businesses are facing greater scrutiny from global monitoring organisations. The fallout from the GFC has led many boards to concentrate more on compliance than performance. This is t...

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