Business Ethics and Corporate Social Responsibility

Business Ethics and Corporate Social Responsibility

James E. Gleason

Athens State University

Author Note

James E. Gleason, Department of Philosophical Foundations and Technology, Athens State University.

Correspondence concerning this paper should be addressed to James Gleason, Department of Philosophical Foundations and Technology, Athens State University, Athens, AL 35611.

Contact: jgleason@my.athens.edu

Business Ethics and Corporate Social Responsibility

Introduction

        Ensuring that the necessary steps are taken to create and foster a high level of ethics in the business practices of the workplace is critically important regardless of the size of an organization. A commitment to a strong ethical code in the workplace involves treating stakeholders, both internal and external, with honesty, integrity and respect. Every workplace needs to identify and develop a set of core values representing the ethical ideals of the organization (Kerns, 2003). It is very important that well-defined, established ethical principles are infused throughout an organization starting at the top with the executive leadership. Strong ethical principles must be owned and cherished by an organization’s leadership and management (Kerns, 2003). These virtues must be incorporated in every business practice, process and procedure (Kerns, 2003). Workplace ethics are what identifies an organization and the very best organizations strive to incorporate a strong sense of social responsibility and ethical awareness in their business operations.

        A difficult challenge for business leaders today is finding ways to create and sustain an ethical workplace culture within their organizations. Creating a business ethics policy, also called a code of ethics or code of conduct, should be an important ambition as corporate leaders strive to encourage ethical behavior at all levels within the business infrastructure (Gomez-Mejia & Balkin, 2012). To accomplish this, management needs to establish certain expectations and guidelines that instill the corporate commitment to fairness, honesty and integrity in the workplace.

Discussion

Defining Ethics

        Very simply, ethics is about behavior and doing the right thing when faced with an important decision. Formally, ethics is defined as rules or standards, a code of behavior that govern the conduct of a person (Gomez-Mejia & Balkin, 2012). In everyday life, people must constantly weigh competing ethical values when making decisions that impact their lives and the lives of others. An individual with strong ethical awareness expresses both respect for oneself and a concern for others and achieves an appropriate balance between the two. Appropriate ethical behavior requires that the interests of all affected persons are taken into consideration (Moore, 2012).

        Applying ethics in business. The application of ethics in business, or business ethics, are ethical guidelines governing the behavior and decision making of employees and managers (Gomez-Mejia & Balkin, 2012). Without a code of ethics, there is generally no consensus regarding ethical principles or their application in the workplace (Gomez-Mejia & Balkin, 2012). A unifying ethical framework is needed in the workplace where individual actions in an organization are weighed against policies that address employee and management conduct and actively promote an ethical business culture within an organization (Kerns, 2003). The values that comprise an organization’s business culture should always strive to incorporate values such as the common good, justice, truth and individual rights (Kerns, 2003; Moore, 2012).  

The Importance of Business Ethics

        Evidence to date illustrates that of the 500 largest corporations in the United States (U.S.), about two-thirds have committed some form of unethical behavior (Boddy, Ladyshewsky, & Galvin, 2010). There are numerous well-publicized examples of corporate misbehavior involving large, internationally recognized organizations such as Wal-Mart Stores, E.F. Hutton, American Express Company, Goldman Sachs Group, Continental Illinois Bank, First National Bank of Boston, Manville Corporation, Enron, Lehman Brothers, Halliburton, Roche Pharmaceuticals, General Electric, Wellpoint Insurance Company, Union Carbide, IBM and others (Petrick, Cragg, & Sañudo, 2011; Ruiz-Palomino, Martinez-Canas, & Pozo-Rubio, 2012). The many publicized accounts of unethical business activities has prompted business, government and academic institutions to focus increasingly on the role of ethics in business. The increased litigation as a result of corporate misbehavior has led to federal government legislation such as the Sentencing Guidelines for Organizations in 1991 (United States Sentencing Commission: USSC) which was an attempt to encourage corporations to provide effective ethical policies to their employees and develop individual ethics training and compliance programs (USSC, 2013).

Costs of unethical business behavior. The increased criminal and civil liability for corporate misconduct is now a major incentive for business leaders to create a strong ethical atmosphere within their organizations. This is absolutely necessary for top management because litigation is very costly to an organization. The negative press resulting from litigation can cause irreversible damage to a company’s reputation (Boddy et al., 2010). The negative publicity may foster ill will from the public resulting in loss of customers, revenues and profits (Boddy et al., 2010).

        Benefits of ethical business behavior. Aside from the societal and business costs of unethical behavior in the workplace, today’s business leaders recognize there are many benefits to behaving ethically. First and foremost, ethical decision-making in business is necessary because it is simply the right way to behave as human beings (Moore, 2012). It is no longer acceptable for a business to operate in an isolated, self-interested manner with little regard to the impact it has on the local community. Always considering right and wrong in any business decision will have a positive fallout for any business including fostering a sense of goodwill with the public, strong investor confidence, an expanded customer base and strong customer loyalty, better, more productive, more socially conscious employees and a vibrant, more entrepreneurial local economy (Kerns, 2003; Moore, 2012). Today’s business leaders recognize the need for strong ethical leadership from top management; that is, to send a clear message that good ethics is the foundation of good business.