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...
... middle of paper ...
...e of Firm Behaviour on Purcahse Intention: Do Customers Really Care About Business Ethics?. Journal of Consumer Marketing, 14(6), pp. 421-432.
Hynes, R., 2011. Top 10 Unethical Business Actions. [Online]
Available at: http://listverse.com/2011/09/13/top-10-unethical-business-actions/
[Accessed 01 May 2014].
Kranacher, M.-J., 2006. Creating an Ethical Culture: More than Just a Warm, Fuzzy Feeling.. The CPA Journal.
Sanchez-Runde, C. J., Nardo, L. & Streers, R. M., 2013. The Cultural Roots of Ethical Conflicts. Journal of Business Ethics, Volume 116, pp. 689-701.
Shen, . C.-H. & Chang, Y., 2009. Ambition Versus Conscience, Does COrporate Social Resposibility Pay Off? The Application of MAtching Methods. Journal of Business Ethics, Volume 88, pp. 133 - 153.
Zimmerli, W. C., Richter, K. & Holzinger, M., 2007. Corporate ethics and Corporate Governance. Berlin: Springer.
Pitta, A. D., Fung H., Isberg S. (1999). Ethical Issues Across Cultures: managing the differing
In today’s global society, a Code of Ethics policy is used to label established, acceptable behaviors among that industry’s business associates, potential investors, and the corporation’s executive officers and employees, and most important, the consumer (Ethics Resource Center, 2003). In an attempt to promote an increased efficiency and productivity potential level, among employees and prospective clients, a corporation’s standard Code of Ethics should guide its members toward a more in-depth examination of their personal moral activity, and how these actions affect the people or acquaintances they encounter. A company should utilize this strategy as a model for the professional behaviors and responsibilities of its constituents, and proves the occupational advancement of that business. Ethics are important in every level of a corporation, but specifically in the day-to-day actions of its members, and the image the company broadcasts to its associates is fundamental in building a stable business foundation. These pledges are a vital communication tool used to covey the firm’s standards for business operations, and predominantly, its relationships with the surrounding communities (Ethics Resource Center, 2003).
Ethics in business environment is core values and standards to guide one’s decision-making. (Mintz and Morris, 2008) Maxwell (2003) introduces “Golden Rule” to decide what constitutes to be ethical by asking one “How would I like to be treated in a particular situation?” Hence, unethical behaviours include allegedly inflating earnings to meet stockholders expectation in Healthsouth Scandal in 2003.
Ethical behavior is behavior that a person considers to be appropriate. A person’s moral principals are shaped from birth, and developed overtime throughout the person’s life. There are many factors that can influence what a person believes whats is right, or what is wrong. Some factors are a person’s family, religious beliefs, culture, and experiences. In business it is of great importance for an employee to understand how to act ethically to prevent a company from being sued, and receiving criticism from the public while bringing in profits for the company. (Mallor, Barnes, Bowers, & Langvardt, 2010) Business ethics is when ethical behavior is applied in an business environment, or by a business. There are many situations that can arise in which a person is experiencing an ethical dilemma. They have to choose between standing by their own personal ethical standards or to comply with their companies ethical standards. In some instances some have to choose whether to serve their own personal interests, or the interest of the company. In this essay I will be examining the financial events surrounding Bernie Madoff, and the events surrounding Enron.
Business ethics are the moral principles that describe the way a business behaves. Because businesses are treated as “persons”, it can be said that the same principles that determine an individual’s actions can also apply to business. Making ethical choices involves distinguishing between right and wrong, and then making the right choice; and while it can be easy to identify unethical business practices, such as using child labor or not paying employees properly, good ethical practice can be harder to define simply because what is deemed right is not always universally accepted. In other words, everyone has a unique moral compass, and can see black and white as different shades of gray. In the face of this, every business holds corporate social responsibility to act fairly for their employees’, stakeholders’, and sometimes even the earth’s sake. However, whether or not the business adheres to this ethical paradigm varies.
For a company to be successful ethically, it must go beyond the notion of simple legal compliance and adopt a values-based organizational culture. A corporate code of ethics can be a very valuable and integral part of a company’s culture but I believe that it is not strong enough to stand alone. Thought and care must go into constructing the code of ethics and the implementation of it. Companies need to infuse ethics and integrity throughout their corporate culture as well as into their definition of success. To be successfully ethical, companies must go beyond the notion of simple legal compliance and adopt a values-based organizational culture.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business ethics: Ethical decision making and cases: 2011 custom edition (8th ed.). Mason, OH: South-Western Cengage Learning.
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.
To provide an example of a breach of ethical conduct in the workplace, we may remember the case of a financial manager in a corporation that decided not to pay overtime to some employees. After a deep outside investigation, the company was summoned with thousands of dollars to remedy the payment that was supposed to be paid to all employees who worked more than forty hours per week. Again, it is needed more than just a booklet stating that the company adheres to the code of business ethics. It is needed serious managers that can run the company with the most seriousness as possible. Consequently, any written codes of business ethics, regardless of how well it has been crafted, need people that adhere to its internal content with a serious desire to do the right thing.
Corporate governances actually illustrate that no entity or agent is immune from fraudulent practices (Arjoon, 2005 p 342-344). Therefore, it is crucial for an organization to have a stable ethically healthy corporate culture, Patagonia is "doing things right" by influencing the actions of the workforce. Through the integration of ethical conduct in an organization, employees see the complexity of making ethical choices; also, it helps the staff understand what an ethical decision entails and how to talk about hard ethical choices and taking responsibility for making moral choices carefully and
Bernardi, Richard A., and LaCross, Catherine C. "Corporate Transparency: Code of Ethics Disclosure." The CPA Journal (2005). Retrieved on 16 September 2006 .
Importance of ethics in the business world is superlative and global. New trends and issues arise on a daily basis which may create an important burden to organizations and end consumers. Nowadays, the need for proper ethical behavior within
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2011). Business Ethics: Ethical Decision Making and Cases. Mason, Ohio: South-Western Cengage Learning.
A company's code of ethics is very important to establishing the expectations and quality of its brand. The code of ethics are concrete expectations for employee behavior, accountability and communicates the ethical policy of a company to its partners and clients. A good business practice is to have sound ethics. Having good ethical practice is knowing the difference between right and wrong and choosing what the right thing is. Though good ethical behavior is something that should be done automatically, a company needs to have a set of rules in place that holds everyone accountable. Over the last twenty years, the country has been bombarded with company scandals and unethical behavior; though morally wrong, the punishment does not fit the crime. The punishments have been overkill. A murderer, rapist, or child molester commits violent crimes and potentially is out of jail in 10 - 20 years. The CEO’s that commit white collar crime receive 25 years to life; this paper will discuss how this punishment for committing nonviolent crimes, such as breaching a company’s code of ethics, are disproportionate to violent crimes that plague the country today.
Solomon, J (2013). Corporate Governance and Accountability. 4th ed. Sussex: John Wiley & Sons Ltd. p.7, p9, p10, p15, p58, p60, p253.