The Evolution of Business Ethics
In any business, decisions must be made to ensure that a business entity or firm is conformity with its vision as well as mission. Most of decisions made by businesses are tailored toward wealth maximization of the firm which ensures that there is continuity production and operation of the entity. It is clear that most if not all businesses want to make profits, however, it is undeniable too that businesses must also be socially responsible to their environment which in this case involves consumers, sellers, lenders, the government and the entire community at large (Ferrell, Fraedrich & Ferrell, 2011). For a business to be able to accept ...view middle of the document...
Adam Smith did a great work on self-interest and why people should consider doing the common good to the society. He came up with six essential psychological motives from which any common good is linked with; they include prudence, reason, prosperity and sentiments which are all tailored towards promoting a jovial life of mankind (Smith, Cannan, & Lerner, 1937). In fact, it is the application of these values that resulted to the development of business ethics.
It is these six values that actually constitute and defines the real meaning of business ethics and therefore the need to apply them in any business transactions. It is important that businesses be socially responsible because most of them if not all, do operate in the public domain. This in a sense is that, businesses obtain their raw materials from producers and then sell their products to the consumers in order to be able to make any reasonable profits. The relationship that exists between a business and the community is what has triggered the rise in social issues in business. This is because a business cannot be competitive in the market if it does not depend on the social environment around it. Therefore, for a business to be able to perform well, it must also take care of its surrounding (Smith, Cannan, & Lerner, 1937).
Changes that led to the focus of business ethics
There has been a great focus on business ethics of recent years to an extent that some business in the world have opted to set up departments that purely deal with ethics within an organization. This is due to the discovery that, business which adhere to ethical guidelines have seen a great improvement in terms of customer relation which have enabled them to have an upper hand in the industry and thus making high profits. Another reason as to why businesses have put an emphasis on business ethics is that, it is cheaper to adhere to ethical requirements than ignoring them, because it normally results to lower rates of stress for the managers because instances of litigation are eliminated. Yet another point of operating within the ethical framework is that, the reputation of a business matters if a venture intends to ensure continuity in its operation and the fact that, ethical behaviors normally promotes leadership (Ferrell, Fraedrich & Ferrell, 2011).
How changes impact businesses
The above changes that led to a focus in business ethics have various impacts in an organization and the entire industry as a whole. For instance, if a firm or a business is sued for ignoring its social responsibilities, the image or reputation of the business is likely to be bad and thus the number of...