Effects of Moral Principles on Business Decisions
Business ethics is a set of moral and ethical principles that guide a company’s values, actions, and choices, as well as the values, behaviors, and decisions of its employees. Some ethical criteria for firms are codified in law; for example, environmental rules, the minimum wage, and prohibitions on insider trading and collusion are all instances of the government establishing minimum corporate ethics standards. What constitutes business ethics has evolved throughout time, and the many aspects of ethics are critical to every firm.
Business Ethics in Leadership
The management team establishes the tone for how the organization operates on a daily basis. When a company’s prevailing management philosophy is founded on ethical practices and conduct, executives may lead by example and guide workers in making decisions that benefit not just them as individuals, but also the organization as a whole.
Building a company’s reputation on a foundation of ethical behavior has long-term benefits, such as the capacity to recruit and keep highly skilled employees and the ability to build and maintain a great reputation in the community.
Employees follow in the footsteps of management when it comes to managing a business in an ethical way. With corporate ethics as a guiding concept, employees make better decisions in less time, increasing productivity and overall employee morale. When employees carry out their responsibilities with honesty and integrity, the entire business benefits.
Ethics Vary by Industry
Business ethics varies from one industry to the next, as well as from one country to the next. The nature of a company’s activities has a big impact on the ethical challenges it needs to deal with.
When the best option for a customer and their money does not align with what gives the brokerage the largest commission, for example, an ethical dilemma develops for the brokerage. A media firm that produces children’s television programming may have a moral duty to promote positive values and avoid using off-color material in its programs.
Giants like Amazon (AMZN) and Google (GOOGLE), who do the majority of their business online, are not subjected to the same environmental scrutiny as petroleum companies like BP and Exxon (XOM). When it comes to defending the privacy and security of its clients, however, their ethics are scrutinized.
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