Do good ethics result in good business? One might have a tendency to think, well yes, of course. Doesn't everyone prefer fairness and openness? Another might think, not so fast. If a company chooses to operate on the far fringes of both the law and accepted ethical norms, and seemingly produces results satisfactory to customers and stockholders, isn't that enough?
Enron was an American energy company founded in 1985 by Kenneth Lay after merging Houston natural gas and internorth( citetation). In early 1990's Enron sold electricity at market price. At around the same time US congress passed a bill regarding the deregulation sale of natural gas which favored Enron to sell energy at higher prices. In 1992 Enron was the largest merchant of natural gas in North America. Online trading model developed in November 1999 known as Enron online has developed and extended the abilities to negotiate and manage its trading business. By 2001 Enron had both owned and operated gas pipe line, pulp and paper plants, broad band assets, electricity plants and water plants internationally. Enron stock was priced at US $ 83.13 and market capitalization exceeded US$60 billion, and Enron was rated the most innovative large company in America in fortunes most admired companies survey. By the end of 2001 the Enron scandal was revealed. The CEO Jeffrey Skilling with some of the executives have hidden billions in debt from failed deals and projects. Chief financial officer Andrew Fastow and the other executives were able to mislead the board of directors and audit committee by presenting them psydo account statements. Once the scam was published the Enron stock priced at $90 per share in 2000 plummeted to less than $1 by the end of November 2001. This fall in stock value has caused at $11 billion loss for its share holder. The employees of the organization received a limited amount of their salary and pension when it was bankrupted. Several law suits were filed against the company CEO and other executives.
Let's look at business ethics as, 1) the avoidance of breaking criminal laws in the course of work activity; 2) the avoidance of actions that may result in civil law suits; and 3) the avoidance of actions that may do harm to the company's image and thus devalue the brand.
Need for the business ethics: for the following 1. Business operates with in the society 2. Every business irrespective of size exists more on ethical mean or in total regard to its social concern to survive long. 3. Business needs to function as responsible corporate citizens in the country. Business is a part of subsystem of a society, therefore its functioning should contribute to the welfare of the society. If the business earns social sanction of the society, where it exists then it would be able to survive, develop and excel in activities, because only through earning social sanction the business can get loyal customers. Loyal customers are sustainable advantage and therefore can survive in market without which it will collapse and die away. Large organizations put more interest on public, the managers are eager to have public opinion and always seek to maintain a proper image of company in their minds.
Now a day's minimizing profit is not the only priority of business, it should have sustainability, which can only be achieved through ethical practices. Any organization big or small should follow ethical practices as it brings in a sense of social responsibility which eventually provides sustainability to the organization. Business should also be a responsible corporate citizen which does not allow narrow mentality goals and motives.
I believe the answer is equal parts of both. And I posit that the ethical organization will create an economic advantage for itself as its culture becomes imbued and recognized. Business ethics, however, are sometimes viewed cynically, an oxymoron better suited for late-night comedy fodder. But I believe business ethics are a credible, reasonable model for stating an organization's principles so that those both within and outside the company have a common frame of reference.
Here are three reasons I feel business ethics can provide an economic advantage: 1. Business needs to help rebuild the trust that Americans are fast losing in its long-time institutions. Surveys indicate that the public is losing confidence in its government, the press, the public school system, the church, and business. There is ground to be made up here, and those in the forefront in a sincere, trustworthy way will be noticed. 2. Business leaders need to lead from the front, demonstrating by their own ethical behavior that business is indeed an honorable and noble profession; that it has the capacity to improve the human condition and provide opportunities for large numbers of citizens. Schools of business will respond by concentrating on ethics as much as quantitative methods. 3. It's the right thing to do, now more than ever. Simple as that.
Enron was an American energy company founded in 1985 by Kenneth Lay after merging Houston natural gas and internorth( citetation). In early 1990's Enron sold electricity at market price. At around the same time US congress passed a bill regarding the deregulation sale of natural gas which favored Enron to sell energy at higher prices. In 1992 Enron was the largest merchant of natural gas in North America. Online trading model developed in November 1999 known as Enron online has developed and extended the abilities to negotiate and manage its trading business. By 2001 Enron had both owned and operated gas pipe line, pulp and paper plants, broad band assets, electricity plants and water plants internationally. Enron stock was priced at US $ 83.13 and market capitalization exceeded US$60 billion, and Enron was rated the most innovative large company in America in fortunes most admired companies survey. By the end of 2001 the Enron scandal was revealed. The CEO Jeffrey Skilling with some of the executives have hidden billions in debt from failed deals and projects. Chief financial officer Andrew Fastow and the other executives were able to mislead the board of directors and audit committee by presenting them psydo account statements. Once the scam was published the Enron stock priced at $90 per share in 2000 plummeted to less than $1 by the end of November 2001. This fall in stock value has caused at $11 billion loss for its share holder. The employees of the organization received a limited amount of their salary and pension when it was bankrupted. Several law suits were filed against the company CEO and other executives.
Let's look at business ethics as, 1) the avoidance of breaking criminal laws in the course of work activity; 2) the avoidance of actions that may result in civil law suits; and 3) the avoidance of actions that may do harm to the company's image and thus devalue the brand.
Need for the business ethics: for the following 1. Business operates with in the society 2. Every business irrespective of size exists more on ethical mean or in total regard to its social concern to survive long. 3. Business needs to function as responsible corporate citizens in the country. Business is a part of subsystem of a society, therefore its functioning should contribute to the welfare of the society. If the business earns social sanction of the society, where it exists then it would be able to survive, develop and excel in activities, because only through earning social sanction the business can get loyal customers. Loyal customers are sustainable advantage and therefore can survive in market without which it will collapse and die away. Large organizations put more interest on public, the managers are eager to have public opinion and always seek to maintain a proper image of company in their minds.
Now a day's minimizing profit is not the only priority of business, it should have sustainability, which can only be achieved through ethical practices. Any organization big or small should follow ethical practices as it brings in a sense of social responsibility which eventually provides sustainability to the organization. Business should also be a responsible corporate citizen which does not allow narrow mentality goals and motives.
I believe the answer is equal parts of both. And I posit that the ethical organization will create an economic advantage for itself as its culture becomes imbued and recognized. Business ethics, however, are sometimes viewed cynically, an oxymoron better suited for late-night comedy fodder. But I believe business ethics are a credible, reasonable model for stating an organization's principles so that those both within and outside the company have a common frame of reference.
Here are three reasons I feel business ethics can provide an economic advantage: 1. Business needs to help rebuild the trust that Americans are fast losing in its long-time institutions. Surveys indicate that the public is losing confidence in its government, the press, the public school system, the church, and business. There is ground to be made up here, and those in the forefront in a sincere, trustworthy way will be noticed. 2. Business leaders need to lead from the front, demonstrating by their own ethical behavior that business is indeed an honorable and noble profession; that it has the capacity to improve the human condition and provide opportunities for large numbers of citizens. Schools of business will respond by concentrating on ethics as much as quantitative methods. 3. It's the right thing to do, now more than ever. Simple as that.
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