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By definition ethics is moral principles and values applied to social behaviour, reasoned set of principles of conduct. Business ethics is the set of moral values and corporate standards of conduct in a business organization. The specifics of what this essentially means can vary from one organization to another (Paul merchant). Business ethics history being part of the larger social ethics, always been affected by the ethics of the epoch. At different epochs of the world, people, particularly the elites of the world, were blind to ethics and morality which were evidently unethical to the succeeding epoch. The need for business ethics in the current epoch had begun gaining interest since 1970s.Historically, firms started highlighting their ethical stature since the late 1980s and early 1990s, as the world witnessed serious economic and natural disasters because of unethical business practices. Ethics is the part of philosophy concerned with the evaluation of human conduct. Philosophers generally make a distinction between four or five major branches of ethics: meta-ethics, ethics and politics (political philosophy), normative ethics, virtue ethics and practical philosophy. In this assignment we will be concerned with an area of applied ethics in business and will analyse the impact of an organizations business ethics on the performance of the organization in explaining how poor business ethics could adversely affect the business. First we will answering the following question how ethics can positively or negatively affect a business and subsequently how businesses go about changing their ethical environment.
There is a common misconception that good businesses, that make good business decisions, are ethically good (Grace & Copen 2005). This means that there needn't be any organized influence of ethics into a business to make it ethically 'good'. More specifically it can mean that businesses do not need to consciously concern themselves with taking an ethical view when making decisions, they have to merely adopt sound business decisions and hope that it come across as sound ethical behaviour. This can be affective assuming that these businesses have a sound management system that has a sense of good business ethics as their bottom line, as in they have a base level of morality with which they will not cross (Grace & Copen 2005). The opposite of this view is that good business cannot in fact have any high level of ethics. This view centres on the theory that the higher the value placed on ethics in a business the more constraints the business has on how it operates (Grace & Copen 2005). This can be seen as good business and good ethical behaviour are naturally opposites. An example of this is seen in the case of a car model called the Ford Pinto. This car was deemed unsafe by its manufacturers and resulted in the injuries and deaths of a few of its customers. The ford company decided to continue production of the car as the costs of paying out the families that had suffered loss was less than the manufacturing costs of having to change the design or discontinue the model. The argument about ethics will always be about how much of its profits a business is willing to sacrifice to be seen (internally or externally) as having good ethical behaviour.
How does this idea of good, ethical business affect a business's performance? Financially the answer is obvious, the more unethical a company is the more likely the government or some other authoritative body is to step in and impose some kind of punitive measures (Weiss 2003). Normally these are monetary fines or place restrictions on business and mostly come in the forms of lawsuits and settlements (Weiss 2003). This is a reduction in the financial performance of the business. The more difficult to measure effect of ethics is how the business is viewed internally and externally, whether it is seen or not to be 'doing the right thing' (Weiss 2003). Internally there is an understanding in most companies were employees assume that the businesses that they are representing are conducting ethically good practices. Studies have shown that the deterioration in the relationship between a company and its employees brought about by questionable practices can lead to declining productivity, creativity, loyalty, information flow and a growing rate of absenteeism (Weiss 2003). Managers in good businesses understand this and attempt to communicate the views and goals of upper management to the lower level and vice versa, this allows for employees to have a sense of loyalty to the company as they feel that they have a stake in the company moving in an ethically positive direction (Weiss 2003).In companies that focus on conducting ethical practices there is evidence to show that the loss of being restricted by ethical decisions can be offset by employees working more productively(Weiss 2003). In 2003 fortune magazine listed the top companies and when reviewed showed that in one company in one year employees donated more than 28,000 labour hours to the company as they believed that they were socially responsible to their employers (www.fortune.com). This shows that effective ethical management can lead to a greater business performance despite the restrictions that ethical decisions can impose.
Externally the ethical behaviour of a company needs to be taken into account as the external perceptions of a company can have an impact on its success and even its survival (Lange & Washburn 2012). Companies are expected to satisfy normative expectations in their environment. Companies that are seen as making controversial decisions risk deterring their members as well as current and potential clients (Lange & Washburn 2012). Clients and members are only willing to do business with a company if they see a possible return on any investment that they make, if they see a risk of authoritative bodies taking action against a company, or even public or private scrutiny in a business they will be less confident in participating in the company (Lange & Washburn 2012). There is an underlying sense of corporate social responsibility that companies are expected to follow, breaching this can result in a company losing potential profits and lower the company's performance.
Ethics is essential not only in business but in all aspects of life because it is the crucial part and the founding on which the society is build. Ethics refers to a code of conduct that guides an individual in dealing with others. Business Ethics is a type of the art of practical ethics that examines ethical principles and moral or ethical problems that can occur in business environment. It deals with issues concerning the moral and ethical rights, duties and corporate governance between a company and its shareholders, employees, customers, media, government, suppliers and dealers. Henry Ford said, "Business that makes noting but money is a poor kind of business". Managers have to memorize that leading by example is the first step in fostering a culture of ethical behavior in the companies as rightly said by Robert Noyce, "If ethics are poor at the top, that behavior is copied down through the organization". A manager ought to treat his employees, customers, shareholders, government, media and society in an honest and fair way by knowing the difference between right or wrong and choosing what is right, this is the base of ethical decision making. Every manager has to remember that good ethics is good business. (need our recommendation and opinionâ€¦â€¦â€¦)