Business Ethics

Business ethics or corporate ethics is  define as all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. (Wikipedia, n.d) Business ethics has both normative and descriptive dimensions. The dimensions are ranging of the business commitment to non-economic values for example, usually under company headings such as ethics codes and social responsibility manners. Business ethic’s aim is to determine the fundamental purposes of a company, which reflects the philosophy of business.

The importance of ethical business is for the organization to differentiate between right and wrong, often no clear-cut choices and often shaped by the orgaziation’s ethical climate. The ethical business acts as a lubricant that keeps the economy running. Without the lubricant, the economy would operate much less efficiently-less would be available to consumer, quality would be lower, and prices would be higher. Ethical behaviour and Corporate social responsibility could bring benefits to a company: attract customers to the business therefore higher profit or sales, attract investors and make the company share high price, attract the employees to work with the company and stay and grow with the company. On the other hand unethical behaviour and lack of coporate social responsibilities in business could lead to damaging the firm’s reputation and make it less appealing to stakeholders, therefore profit could fall as a result. As an American business philosopher and author, Peter Drucker (1909-2005) says, “Start with what is right rather than what is acceptable.” In an organization, individuals can make the difference in ethical expectations and behaviour. Either the individual do ethical or unethical business which can damage his/her reputation and the company. For example by putting own interest ahead of the organization by corruption, lying to employees/er, misrepresenting hours and so on.

Another example is a dishonest farmers, distributors, and grocers tried to sell rotten vegetable as fresh vegetables and that grocers refused to take back the rotten vegetables. What will we do as a consumer of vegetables? We realised the grocers cannot be trusted, even the suppliers and farmers. Plenty of customers dissatisfied and realised this then sales of vegetables will plummet. Everyone loses. Farmers, distributors, and grocers make less money; consumers enjoy fewer vegetables. The point is, without fundamental trust in the integrity of business, the economy would operate much less efficient. In a much bigger scale, this could happen to companies which in reality had gone bankruptcy because lack of integrity and not applying their good corporate governance. Companies such as Enron, Bernie Madoff, Lehman Brothers and Countrywide.

So is a profitable business organization means an ethical business? It all depends. Because an ethical business, as explained before gain more attraction to customers, employees and shareholders; on the other hand a profitable business can either be achieved from an ethical or non ethical business conduct. That is why a company core values influence its decisions throughout its value chain. In conclusion, stakeholders prefer to deal with company which they can trust.