The importance of Firms Operating Ethically
Ethics can be defined as moral principles that are recognized by a given group, individual or profession, which discern the right conduct from the wrong conduct (Hooker, 2003). In business, ethics refers to the moral codes of behavior. which a business follows in the interaction with their customers and with the entire world. Business ethics is therefore a form of professional or applied ethics which checks on the ethical principle and moral problems, which arise in any business environment. There are several business ethics which are to be considered. These include corporate social accountability, political contributions, moral duties between a business and the shareholders, ethical conduct with other businesses and much more.
Ethics in business arise when different business gain poor reputations or become popular as a result the manner they are operating their business. Most businesses have the interest of making profits as their bottom line regardless of their moral conduct. This might as well be compared to capitalism. Although making profit is not wrong, the conduct in which businesses operate themselves raises several ethical questions. Most of the large multinational companies have not taken into consideration of the ethical concern in their operations. Often, this has resulted to loss of customers and the business being fined for its unethical conduct. A good example of unethical business conduct is the 2001 Enron Scandal, which a major impact to its shareholders. The question of ethics has therefore become common discussion because of such results.
Corporations and firms usually operate in the natural and social environment. Because of such existence in natural and social environment, business is charged with the duty to be accountable to their social environment as well as to their natural environment in which they exist (U.S. Department of Commerce, 2004). With the pressures and demands notwithstanding, businesses by virtue of their existence have to be ethical. The question of business ethics is most emphasized since any unethical behavior affects the stakeholders. To protect the shareholders from harmful effects that may arise due to unethical business conduct; it is important that all businesses operate in a professional moral way (Barnum, & Richter, 1994). It is also necessary for the business to conduct itself morally because every point in time of any action has ethical and unethical trajectories in which the business existence is only justified by the ethical options it chooses responsibly. Multinational companies can conduct themselves in unethical way and affect the lives of large numbers of people globally. It is therefore important to ensure that business is conducted in morally acceptable standards.
In order to ensure a high level ethical conduct within an organization and having in mind the public being served, the business has to build some ethical conduct into defined corporate systems. The business has to define its position as being ethical and provide the customers, shareholders and employees with true information on its day to day activity and progress (Hooker, 2003). An organization should also pledge on ethical conduct to all stake holders. The pledge may contain the value of the company and ways in which it defines what is right and what is wrong. Employees should be trained on ethical responsibilities and guidance and support should be provided to the employees. Success in the business should be measured and related to the codes of conduct and finally all employees who follow the required codes of conduct should be rewarded. The second measure is to talk to the employees all the time about the goals of the business, the roles, expectations and the priorities will help maintain the standards that are required (U.S. Department of Commerce, 2004). The owners of the business should not just assume that the employees know such elements. By making the employees know about the values of the business, the employees will know how to serve well the company and the customers who are the backbone of the business. The thirdly, the business should commit to publicly become an ethical organization. All corporations that have gone public about their conduct and ethical standards are perceived to be trustworthy. This can be done by preparing and making public the annual reports and the challenges they have met during the fiscal year.
Barnum, C., & Richter, A. (1994). When Values Clash-Business Ethics-Includes- Related Articles. Retrieved May 20, 2010, from <http://findarticles.com/p/articles/mi_m3495/is_n9_v39/ai_16309020/
Hooker, J. (2003). Why Business Ethics? Retrieved May 30, 2010, from http://web.tepper.cmu.edu/ethics/whybizethics.pdf
U.S. Department of Commerce. (2004). Business Ethics. Retrieved May 30, 2010, from http://www.trade.gov/goodgovernance/adobe/bem_manual.pdf