People begin to develop their internal beliefs from the time they are small children. Factors such as the conditions that a person grows up in affect the way that they see the world. For example if a child was raised in a household with a lot of violence, they might feel that fighting is okay. The beliefs of the peers around one may influence how they see things. It is human nature to want to belong and some are more apt to give into peer pressure. People have a lot in common with their peers due to similar values in the first place. However, it is hard to find two people that feel exactly the same about every situation. Some people would feel that if they found money that they should be able to stick it in their pocket and keep it. Others would feel as if they should take it to the lost and found area. Keeping money that you find on the ground in a public place is not illegal, but some people would not be able to benefit from a situation while the person who lost it could be potentially found. Powerful situational factors may cause people to compromise their values and resort to measures that they would not normally take. If someone is having financial problems, then they are more likely to steal. A person who is very angry with another person may have a hard time being objective and fair (Griffin, 1993).
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Many people feel that they won't be caught. An employee who steals a few dollars out of petty cash may in the end take large amounts of cash if they are never caught. Someone with lots of authority may feel like they can cover their tracks by lying to subordinates. Some people are unethical because they can justify what they are doing. If an employee sees other people not being punished for unethical behavior, then they may feel like they should be able to do it to. Some people make a poor choice and instead of coming clean about it feel the need to make more choices to cover it up. Once bad decisions are made, they tend to get worse until they are eventually caught. The biggest reason people are unethical is because they feel that they can gain from it or that they need to hide something that can hurt them (Griffin, 1993).
Ethics are referred to quite frequently and attended to by the media when unethical decisions are discovered. Unfortunately, people do not hear much about ethics when others are partaking in ethical behavior on a daily basis. Things that are not illegal may still be unethical. Ethics is a personal belief structure that consists of knowing the difference between right and wrong. Ethics often vary from person to person. Ethics is an element that is used when analyzing decisions, beliefs, and procedures. Inside the business framework, businesses are likely to have excellent ethical values and act socially accountable. The difficulty lies in that the principles of a business are a combination of many individual sets of ethics. This is the reason why it is important to have good people as employees. It is also consistently important that when one goes to work somewhere that they feel like they share the values of those that they work with. Ethics does not just consist of talking about the right thing. It is carrying out what is right in every choice that is made (Griffin, 1993).
Social responsibility is often an example of ethical behavior. It is improving society in general. Yet, a business can't afford to just do good actions if there is no potential for a reward. If the business were to loose a lot of money, then it would go out of business, hurt customers, and leave employees with jobs. There are some experts that disagree that social accountability is shown only when companies go past what is elective, and really mean to generate an advantage for others besides the company. Additionally, some companies may not profit from these structures of social responsibility. These businesses should center on doing business and give back what and when they can. Some examples of socially responsible actions range from ventures that raise money for study on diseases, raising money for the deprived, necessitating employees to volunteer within the community, recalling products that may be hazardous, encouraging recycling, and offering free services to the underprivileged (Griffin, 1993).
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There are immeasurable ethical dilemmas that may arise in a business background. Some of them are clearer while some of them are vaguer. There is a simple basis that helps keep decisions in perspective. Businesses should operate in a manner that is legal, profitable, ethical, and within social norms. By being within social norms means that you need to use society to gauge if your decisions are appropriate. Some cultures would define what is ethical differently from other cultures. Due to the fact that all businesses have a need to be gainful, sometimes there is an over emphasis on making more money. Social standards should govern what is appropriate to compensate individuals as well as to charge customers. Profit expectations and goals should not require a business to cut corners in an unethical way or to misrepresent or twist facts (Griffin, 1993).
Ever since the 1970s, corporations have looked at business ethics in a number of different ways, including the introduction of compliance agendas and managers, the addition of board-level ethics committees, the advancement of codes of conduct, the putting together of and dissemination of values statements, the hiring of corporate social responsibility managers and training programs of all kinds. As the actions of the past few years in the United States have demonstrated, these efforts, unfortunately, have not prohibited U.S.-based corporations from participating in unethical behaviors that has lead to larger corporate scandals. As a consequence there is increased pressure for U.S. companies to provide more structured governance and ethics programs so that companies are more responsible to the societies in which they operate (Hurst, 2004).
Ongoing examples of doubtful actions by employees and executives have given rise to severe questions of how corporate ethics efforts can be enhanced and can address the fundamental causes of misconduct, as well as the growing burden for practical, socially responsible, and sustainable business practices. It is important to accept the idea that the setting of business beliefs can be difficult. The field is huge and often includes such apprehensions as corporate governance, reputation management, accurate accounting, fair labor practices and environmental issues to name but a few. In reality, the field addresses the complete scope of responsibilities that a corporation has to each of its stakeholders. This includes those who have a vested interest in the choices and actions of a company, like clients, employees, shareholders, suppliers and the community (Hurst, 2004).
There are a lot of things that a business can do to assist good ethical behaviors. One of the best things that can be done is to make sure that the fundamental culture of an organization endorses strong values. People should not be punished for coming forward with problems. As a matter of fact, workers should be permitted to communicate problems anonymously. Some businesses have a phone number to call or a suggestion box that can be used. Employees should always be allowed to share any ethical concerns with authority above them when there are ambiguities about the right thing to do. Include a code of ethics as a written document for employees to read. Develop brochures, mission statements, and other media that express the company beliefs. Higher authorities within the organization should possess the beliefs and demonstrate the values that they want to see their employees have (Griffin, 1993).
Another technique for implementing ethical conduct is to make sure that unethical conduct can't occur. The ability to safeguard resources is an important function of internal controls. Instances of internal controls are to make sure that more than one employee works with cash and accounting related materials. This way there is more than one person who knows what is going on and can identify theft. Other methods are to require signatures, to lock up valuables, use security cameras, have employees rotate jobs, and randomly check employee work. The more secure your business is, the less likely that individuals within the organization will make unethical decisions (Griffin, 1993).
The arena of business ethics is further complicated by the detail that there are many expressions that exist in order to refer to corporate offices and programs that are proposed to communicate, monitor, and implement a company's values and principles. In theory, there can be made some rough distinctions among the various areas related to business ethics, like corporate responsibility, social responsibility, and corporate compliance. These differences are often distorted because corporate offices of compliance established in the 1970s may now function similarly to offices of corporate and social responsibility (Hurst, 2004).
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Business ethics is a division of ethics that pertains to the interaction of business and ethics and applies ethical analysis to the business area. It is both expressive and normal. The five activities within business ethics can be delineated as follows:
Using general ethical principles to specific practices in business.
The analysis of whether moral terms related to individuals' actions may be applied to combined entities such as firms.
Analysis of presumptions of business.
Analysis of other related areas of information as guided by embedded problems in business.
Describing morally commendable and exemplary actions of firms (Barrett, 2009).
Corporate social responsibility (CSR) entails any activity that encourages the interests of any stakeholder of a business corporation. Occasionally CSR refers to philanthropic programs that target communities or employees. In other instances it refers to commitments to promote the welfare of suppliers. It also refers to an assortment of activities designed to enhance environmental stewardship or sustainability. In general, it refers to the blurred intention to better society. When used loosely, the term can be combined with common ethical practices in regards to customers, investors, or any other stakeholder. Basically, the term has an assortment of meanings and functions. Today, it can pertain to every business within all industries. The CSR concept of laxity and oversimplification allow it to include such a wide variety of ethical practices that have virtually become meaningless (Ludescher and Ahsud, 2010). Based on the beliefs of CSR, there are several implicit assumptions that are embedded in CSR. These include:
Normal business performances are unjust, unsafe, environmentally destructive, and unethical.
Ordinary firms essentially present no value to a community or society as a whole.
The profits of a firm accrue to their primary stakeholders only.
Common firms take something from society.
A critical stipulation of the usual business is a selfish and uncompassionate nature (Barrett, 2009).
Determining the appropriate courses of action that needs to be taken falls within the realm of a viewpoint known as ethics. The term ethical is often used universally used to mean a code of values used to guide actions with respect to human connections. It is by and large thought to be normal in temperament, but analysis and synthesis in ethics also may be expressive. There are numerous ethical classifications, such as Judeo-Christian, Objectivist, and moral relativism. These systems are often in disagreement on definite matters, so the choice of ethics is generally entrenched in other perspectives of philosophy, specifically metaphysics, epistemology, and axiology. Based on the additional branches of philosophy, and their interdependent combination, ethical truths may then be derived (Barrett, 2009).
Corporate governance has traditionally specified the rules of business decision making that apply to the internal mechanisms of companies. This set of norms and laws has served to form the relations among boards of directors, shareholders, and managers as well as to resolve agency conflicts. Yet in the aftermath of Enron, corporate governance has emphasized issues that go beyond this traditional focus to touch on corporate ethics, accountability, disclosure, and reporting. As companies seek to assure regulators and investors that they are fully transparent and accountable, corporations have increasingly pledged their commitment to honest and fair corporate governance principles on a wide spectrum of business practices (Gill, 2008).
At the same time, the corporate social responsibility (CSR) movement has developed the notion of corporate governance as a vehicle for pushing management to consider broader ethical considerations. CSR has drawn on the striking progress made by companies in recent decades in balancing shareholder goals with the need to reduce externalities that impact other stakeholders. CSR has united the political endeavors in order to make corporations more aware of public, environmental, and social needs by pursuing corporate governance as a framework for boards and managers to treat employees, consumers, and communities similarly to, if not the same as, stockholders (Gill, 2008).
In view of these processes, large public companies have recently created mechanisms of corporate governance that seek to engender investor accountability and stakeholder engagement. Such mechanisms include CSR board committees, company units dealing with business ethics, corporate codes of conduct, non-financial reporting practices, and stakeholder complaint and dialogue channels, among others. All of these governance devices have normally been created on a voluntary basis to constitute what is referred to as corporate self regulation, Institutional investors, regulators, NGOs, and social groups have generally responded by collaborating with the private sector to make self-regulation more enforceable and effective. Pension funds, consumer coalitions, non-profit organizations, and other groups have developed monitoring schemes that incorporate corporate governance aspects into their CSR guidelines, ratings, and best practices (Gill, 2008).
At the intersection of corporate self-regulation and meta-regulation, scholars have recently pointed to an evolving interplay between corporate governance and CSR. These explorations can and should be read as indicating a convergence between corporate governance and social responsibility. On the one hand, corporate governance is gradually becoming a framework for ensuring the public interest in business as well as structuring the procedures by which a company demonstrates its good citizenship and commitment to various constituencies. On the other hand, CSR-driven social coalitions are increasingly focusing on corporate governance as mirroring the company's conscience and long-term commitment to stakeholder accountability (Gill, 2008).
In the public marketplace of ideas, the term corporate governance has recently been described as the set of procedures, customs, policies, laws and organizations affecting the way in which a corporation is directed, administered or controlled. Yet the substance attributed to this definition has changed quite dramatically over the past years, shifting from a functional, economic focus on agency problems within a private law sphere to a pubic policy approach that seeks to protect investors and non-shareholder stakeholders. The evolution in the perception of corporate governance reflects broad changes in the socio-legal view of business corporations (Gill, 2008).