Business Ethics: Importance and Benefits to Stakeholders - Essay Example

Business Ethics: Importance and Benefits to StakeholdersEthics, after all, encompass wider perspectives of human concerns ultimately affecting business organizations. Ferrell, Fraedrich & Ferrell (2009, 6) define business ethics as “the principles and standards that guide behavior in the world of business”. As businesses comprise a greater majority of the world’s human activities, the importance of studying ethics come as a necessity rather than a matter of natural occurrence.

Businessmen interact with diverse stakeholders in capacities ranging from employees, creditors, customers, directors, stockholders, government entities, and the community, as a whole. In this regard, they are obliged to abide by a set of standards which guide their actions and decisions in order to protect the stakeholders’ interests which they serve. Accordingly, each professional endeavor is governed by a code of ethics which encompass principles and values of integrity, objectivity, competence, respect and protection of legal and personal rights, confidentiality, non-discrimination, promotion of wellness, refusal to participate in illegal and unethical acts, following scientific and ethical research procedures and compliance with state and federal laws, among others.

Studying business ethics would assist individuals, as part of the organization, to discern their personal values that affect or influence the performance of their required responsibilities. By learning theoretical ethical concepts and their applications in business, individuals are made aware of the need to recognize relationships between legal and ethical decisions. Business ethics discusses the concepts of leadership and management where managerial responsibilities for the conduct of subordinates need to conform to ethical codes for guidance and compliance.

The study of ethics gives direction to promote the ethical behavior expected of stakeholders in the business setting. It assists individuals and groups in understanding the ways to cope and address conflicts in the organizations according to ethical theories and moral principles. Firms ultimately recognize that abiding by ethical standards pay off in terms of better financial performance with employees exhibiting higher performance and productivity due to an environment of trust, employees are therefore more loyal contributing to low turnover, and a preponderance for higher investor loyalty, among others.

Firms that incorporate policies on ethics and cultural diversity, social responsibilities, the concern for the environment and the community, achieve their organizational goals more efficiently with the support from their various stakeholders.