Business Research Ethics - Essay Example

Unethical Behaviors in WorldCom Company Skewing Research Results Summary Recently, WorldCom was finding a way in which it can expand rapidly and within a short period to increase its market size and its competence. The solution to WorldCom’s desire of expansion was found to be acquisition of other companies or merge with them (Jackson, 2005). WorldCom’s growth through acquisition was indeed involving and a little bit risky. This is because; performing a lot of mergers and acquisitions is not only time consuming but also involves gaining a lot of trust by the other companies.

Therefore, in order to attract more companies and to get them to agree to the merging and acquisition more easily, WorldCom introduced the strategy of creative accounting in its financial books. The research it conducted about its company was twisted in order to reflect fair and excellent performance to the potential companies to be acquired. In addition, apart from falsifying the financial data, WorldCom Company skewed its research findings such as its market positioning, its internal structure and internal operations (Jackson, 2005).

However, with time WorldCom unethical practices started to fail and its stakeholder value started to fall. Since the company had no funds to increase the value, it only resolved to the acquisition of yet bigger and larger companies. This did not solve the problem but only worsened it since; the company was forced to engage in the skewing of results even more in order to convince the large companies to merge with it. Unethical behaviors involved The desire to increase its competitive advantage and to expand within a short period forced WorldCom to commit a number of unethical behaviors.

From its research, WorldCom had realized that its accounting books did not reflect positively and hence, decided to falsify the figures through the use of creative accounting. The results presented to the outsiders thus, indicated promising and favorable accounting records. Secondly, the top management also engaged in use of company funds in own luxury expenses and gave out loans at unusually low interest rates. Therefore, the company was undergoing a serious financial crisis. Nevertheless, instead of showing the true data to the outside world, it reflected the image of a wealthy and growing company (Jackson, 2005).

Injured parties Falsification of the research results by WorldCom company not only affected the company itself but also the outsiders who were directly involved in its operations (Jackson, 2005). For instance, the companies that were acquired using the skewed revenue and profit figures suffered multitude of losses since they only realized that the information was false when it was too late to turn back. In addition, some of the employers of WorldCom who had been pushed by management to participate in the unethical behaviors suffered job losses since they were laid off.

The society was also affected by the unethical behavior because; most individuals had invested their money with the belief that it was experiencing high profit returns. Therefore, most of them just ended up losing their funds. Effect of the unethical behaviour on the organization and the society WorldCom suffered immensely from its unethical and incompetent behaviors. To begin with, the company incurred high financial losses from the law suits and from resolving the malpractices. Most of the stakeholders of the company withdrew their funds from the company after the recovery of the incidence and hence, the company’s assets fell by a remarkable amount.

In addition, the company’s image was tarnished making WorldCom to start hibernating from the media. Most of its customers also shifted to its competitors such as AT & T and Spirit. Other companies that had been partnering with it previously lost trust in it and withdrew all their interests from it. Other effects include imprisonment of the individuals involved such as the CEO by then, serving a twenty five year imprisonment. Finally, the company was declared bankrupt by a report from Thornburgh (Jackson, 2005).

How could the unethical behaviour have been avoided? WorldCom could have given the right information to the public without having to falsify its financial data (Brown, 2004). Instead of skewing its financial figures to attract companies to merge with it, it should have given the correct information then after merging it could then have planned with the other company on the ways in which to improve on the figures. The company could also have changed its fraudulent and unethical practices earlier enough instead of worsening them by distorting the data even more (Best practices, (2003).

References Best Practices (2003). Retrieved October 9, 2012, from http://www.hrma-agrh.gc.ca/veo-bve/best_practices/best1_e.asp Brown (2004). The costly myth of growth through acquisition. Retrieved October 9, 2012, Jackson, P. (2005). WorldCom: An Ethical Case Study. What Went Wrong at WorldCom, 1(1), 1-12.