Why is Business Ethics so important and how it impacts on corporate success?

Ethics is a subsection of philosophy that includes the standards by which human

actions can be judged right or wrong. However, ethics is a theme which many people tend to

neglect. In many cases, money or profit can affect the people to do inappropriate things in

business or their everyday life. We can define ethics as the conviction that distinguishes right

from wrong.

Ethics is imperative in the business world. Business ethics has a long history.

However, in the last couple of years the interest in business ethics has grown significantly

and reached the highest point today due to several main reasons (Ferrell, Fraedrich and Linda

Ferrell, 2002, p.71).

First, it is the unique position of corporations in the modern society. This form of

business, whose economic and social power may be high, involves numerous stakeholders

(Trevino and Brown, 2004, p.73). The next one is a wave of corporate scandals, involving

deceptions, negligence, and unethical marketing methods has increased the attention to

businesses’ internal affairs, in particular, and their employees. Besides, there is a way of

economic and legislative thinking in all fields of ethics has also transformed the thinking

towards businesses, from sensing them as the mechanism for creating value to active

representatives of the society with individual sets of authority.

Understanding business ethics can be problematic since this area is extensive, often

covering many issues such as corporate governance, social responsibility, audits and accurate

accounting, fair labor practices, environmental problems. Business ethics is an eclectic blend

of intellectual traditions that seeks to examine the question of "what should I do in my

business relationships" (Nelson Phillips, 1992, p.228). As we see the term of ethics can have

many definitions in a broad context, and it can be awkward to find a common understanding

of the phrase. Therefore, most organizations prefer the concept of the term ethics as integrity,
business applications or responsible business conduct. So, its primary application in

enterprises is to regulate moral or ethical problems that come up within the business

environment.

Business companies have power and capacity to enhance or change situations that the

common individual does not. As organizations have an impact on many people, they also

have liabilities to their employees, community, users and the world. They carry a

responsibility to conduct business in a way that is not harmful and which positively benefits.

Any decisions that companies make need to do with an informed awareness of the particular

situation and then act according to some system of principals which is called Business Ethics

(Crane, Andrew and Dirk, 2010, p.217).

Various firms have experienced violations of ethics. The biggest business firms have

suffered damage to their reputation when questions concerning ethical behavior arise.

Although many business managers argue that the primary responsibility of a company is

making a profit. However, society more concerned with how companies conduct their

business.

Today's global business world requires companies to take into account its people's

values and to follow through ethically sound practices. Business ethics helps a team work

better both independently and as a unit, therefore inspiring ethical values while maintaining

innovation and overall productivity. Competent leadership is relevant for business ethics

because society is increasing its demands for more ethical behavior by managers of

organizations. However, societal and workplace ethical attitudes are always evolving as

generational differences and demographic diversity make the workplace more complex.

(Perryer and Scott-Ladd, 2014, p.129).

Nowadays the issue of effectively integrating ethics into business decision making is

an important area of discussion confronting today's corporate leaders. Leadership

development in the current diverse business settings requires ongoing training and

communication. Business leaders have to be on top of the most significant trends in business.

In recent years, business ethics has developed as the standard with which we can judge an

organization. The leader has to think more as a person devoted to a cause than as a manager

running a company. Articulates and spreads the values of the organization in a way that is

explicit rather than implicit, and personal commitment to success is obvious and frequently

verbalized. In a culture-driven company, the style of leadership itself is emulated at all levels

of the business (Kuhlmann, 2010).

Directors are concerned with how decisions affect the company while ethics is

concerned about how decisions affect everything. Management operates in the particular

context of the firm while ethics operates in the general context of the world. Management is

therefore part of ethics. A business manager is not able to make the right decisions without

understanding management in particular as well as ethics in general. Business ethics is a

control carried out in the real world. This is why business managers should study ethics. A

person who not sure in own decisions, cannot have respect for others (John, 2003).

Business ethics helps bring and keep investors, employees, and customers. Business

ethics helps engage and hold employees, investors, clients. They receive peace of mind to

work with the company that as they think uses their funds, resources and time carefully.

Business ethics increases productivity and teamwork among its workers. Making of

decisions becomes smooth and efficient enough. In its turn, it gives a positive characteristic

of the company. As its internal and external partners evidence this, the company’s assets are

protected managed well. This provides an excellent opportunity for the development and

growth of not only the business but besides the market and society as a whole.

To conclude with, there are infinite examples to study when considering the effects of

unethical business methods on the overall position of the organizations. Fortunately, there are
so many positive examples of ethics in business that underline the importance and power of

ethical approvals to commercial success. Many companies be it large, medium or small

scale, have learned to accept ethics. This is conditioned to its positive influence on the

internal and external environment. Where there is no discipline, work cannot be done

efficiently and productively. Today, the business world is much different from the business

community of the last years. In the old world, little regard was given to employees: children

worked long hours, women worked in unsafe conditions, etc. At the present day, the world

can see a radical change: we have health and safety codes in every company, children under

18 years old can work only limited hours per week. However, it is just the tip of the iceberg

of changes that have happened over the last years. Nowadays, humanity uses words like

ethics, tolerance and value to define the policies and the actions of companies in how they

refer to their employees, especially globally. We have to accept ethics standards like a perfect

tool that can help to be more flexible, conduct self-correction for our survival in today's

racing world.
References:

Chris Perryer and Brenda Scott-Ladd, (2014) Deceit, Misuse and Favours: Understanding and
Measuring Attitudes to Ethics. Journal of Business Ethics [online]. 121 (1), pp. 123-134.
Crane, Andrew, and Dirk Matten, (2010) Business Ethics. 3rd ed. New York: Oxford
University Press Inc. pp. 202-230.
Ferrell, O.C., John Fraedrich, and Linda Ferrell, (2002) Business Ethics. Boston, MA:
Houghton Mifflin Company, pp. 67-83.
John Hooker (2003) Why Business Ethics? Carnegie Mellon University [online] from
http://pdfsr.com/pdf/why-business-ethics
Kuhlmann, A. (2010) Culture-driven leadership. Ivey Business Journal [online] from
http://iveybusinessjournal.com/publication/culture-driven-leadership/
Nelson Phillips, (1992) Understanding Ethics in Practice. Business Ethics Quarterly [online].
2 (2), pp. 223-244.
Trevino, L. K. and Brown, M. E., (2004). Managing to be ethical: Debunking five business
ethics myths. Academy of Management Executive, 18(2), pp. 69-81 from http://www-
biz.aum.edu/kevinbanning/ethics.pdf
 Journal article: précis for Culture-driven leadership by Kuhlmann A.

As we see, today a word of the leader includes many value and quality. No one can

be a leader without ethics, culture, etc.

In the article, we see that culture of leadership is critical to get success. A leader

should improve culture skills continually. There’s no doubt that now, a leader’s success

depends on how he molds and develops that culture. A leader whose own culture is

combined with a company’s culture is likely to be much more productive. Also, the leader

must have a sense of purpose that is in aligned with the corporation’s vision. A leader has to

make decisions in the right direction without a doubt. A successful leader must believe in a

vision and mission that can be combined to form a cause.

The leader articulates and spreads the values of the company in a direction that is

clearer rather than implicit, and his personal responsibility for success is evident and

frequently verbalized. The culture-driven leader continually demonstrates desire and

potential for the work to do and is not alone in doing so. In a culture-driven organization, the

style of leadership itself is emulated at all levels of the company, hence to bring it to success.