Ethical Principles in the Corporate World
IFMG 300 B04
Ethical issues are an area of the corporate world that most businesses deal with on a regular basis. The importance is growing with the continuous development of technology. Companies need to be aware of ethical obligations of their products and decisions. Privacy is a problem that occurs due to the fact that companies can access individuals’ information on the history of the websites a person has visited to develop customer trends through cookies, web bugs, and other means. Following ethical principles is essential to keep corporations on top and away ...view middle of the document...
When corporations are faced with an ethical issue it is important that they understand the consequences of their decisions. The corporation is responsible for the negative and positive outcomes of a situation. That is why ethics are important; since a simple decision to cut costs on a product could become harmful to a company and cost a lot more money and hurt the company’s reputation. If corporations refuse to be accountable for their actions it can have a devastating impact on the corporate culture of the firm. An equation created by Klitgaard states that monopoly plus discretion, minus accountability equals corruption (Osbourne, 294). If nobody takes their actions seriously it can only lead to corrupt behavior from employees of an organization. Not only can corporations be hurt by law suits and other physical damages as a result of unethical decisions, but their image can be hurt. The reputation or organizations and their executives have been hurt by various scandals. J Singh writes, “A recent survey by Gallup indicates that 82 per cent of the public no longer trusts management for taking proper care of the shareholders; 90 per cent do not trust them for taking care of the employees” (Singh, 61). Companies are losing people’s trust. Who is willing to invest in a company or buy products from a company that cannot be trusted? The results of unethical behavior can destroy a company. Arthur Andersen was a leading accounting firm until a few employees committed unethical and illegal actions. The damage to the company’s image outweighed all the legal problems and led to the end of the company. It is very important to remember that image is part of the loss a firm can take when they are accountable and liable for their decisions that may be unethical.
How can firms reduce the negative consequences of their decisions, which will reduce lawsuits as well as harm to their reputation? There are several ethical principles that will help firms to make better decisions. One principle is to ‘Do unto others as you would have them do unto you’. This is also known as the golden rule which is very straightforward, by putting yourself in that same situation it is easy to understand how another person would feel in that situation (Laudon and Laudon, 151). A person would not want to put themselves into harm from a decision, and then they would try not to put another person in situation that could cause harm. Another ethical principle is called Immanuel Kant’s Categorical Imperative, this states ‘If an action is not right for everyone one to take than it is not right for anyone’ (Laudon and Laudon, 151). This principle was broken by Enron, when the executives urged investors not to sell their stocks; when, actually the executives were selling all of their stocks. The executives were only looking out for themselves and their decision made them a lot of money, but lost retirement funds for their employees and many others people...