Why are ethics so important in business?

Ethics, according to Bottorff (2004), is defined as: “a set of principles or norms of human conduct that govern the behavior of individuals and groups. Ethics arises not simply from the creation of man but from human nature itself, converting it in a natural body of laws from which the laws of man are followed “(p. 3).

Ethics play an important role in the organization. Bottorff (2004) gives good and bad examples of what happens when organizations have positive or negative ethics. Poor ethics are described here as “detrimental to organizational performance,” productivity is reduced, group dynamics suffer, communication becomes more elusive and complex, and the result is a declining organizational environment.

Good ethics; however, it can have positive effects on organizations and their bottom line. Productivity increases, group dynamics and communication increase, and risk in the organization decreases.

Ethics should be high on the list of organizations because it will decrease outright negativity within the organization and elevate and encourage the reasoning and performance of both managers and employees.

Ethics can be understood as relative to the individual because the reputation of the individual is at stake, and from this continued positive reputation, success and personal satisfaction will be the net results. In the business world of yesterday and today, it is vital to acquire and maintain a good reputation; Because if one’s words or handshake are worthless, then the end result will be failure, low productivity, and negativity.

I believe that there can be and already is hope of promoting business ethics in a corporate culture. Treviño, Nelson (2005) state several reasons why this is true.

First, companies, economically speaking, need to use “energy responsibly or risk losing it.” Second, companies have a responsibility, both legally and ethically, to stakeholders; This includes fairness and stakeholder rights. Finally, when ethical responsibility and economic responsibility have conflicting agendas, the corporation has a huge social responsibility challenge to tackle.

Copyright Ann Star 2009