Importance of Ethical Practices in Business Decisions - Term Paper Example

Importance of Ethical Practices in Business Decisions of the Table of Contents Executive Summary 3 Introduction 3 Concept of Ethical Practices 3 Ethical Practices in Business Decisions 4 Impact of Ethical Practices in Business Decisions 5 Benefits and Challenges of Ethical Practices in Business Decisions 6 Conclusion 7 References 8 Executive Summary The paper tends to highlight both on the positive and negative side of ethical decision making approaches and activities. Ethical decisions making activities and ethical behavior are conducted in a business organization based on acting on specific codes of ethical practices. Ethical business decisions though beneficial in nature yet tend to reflect business problems both in the short and long term period. Thus, the paper critically analyzes the advantages and challenges of ethical decision making practices and behavior. Introduction With the rise of business problems and scandals storming the global business world, business managers are required to generate decisions in an ethical manner. This is principally because ethical decision making activities contribute in protecting the interests of the employees and also of the different types of stakeholders whether internal or external to a business organization. Furthermore, ethical decisions would also tend to have potential implications for the business corporation in that the same may tend to potentially affect the positions and status of different groups and employee and stakeholder communities. The paper in the light of the above issue aims to critically analyze the ambit of ethical decision making practices. Concept of Ethical Practices The concept of ethical behavior or ethical practices relates to the influence of honesty, fairness of treatment generated to different individuals. It can also be related to the level of equality reflected in the interpersonal behavior among individuals. Furthermore, several scholars have related it with the development of professional relationships among people working in an organization (Riivari & Lämsä, 2014). Ethical behavior reflects on the existence of dignity and equal rights of individuals working as a community in a business organization. The concept of equality relates to the aspect of fair treatment generated to the different individuals operating in a business organization (Riivari & Lämsä, 2014). It also reflects the existence of honesty in terms of level of truthfulness pursued in the dialogues between the different organizational individuals. Moreover, the aspect of fairness relates to the generation of decisions in a fair and equitable fashion that works in an unbiased manner and legitimate with the existing organizational rules. Ethical behavior or practices relate to the level of respect generated to the different individuals. In terms of ethical behaviors it is required by the managers to pay heed to the needs and aspirations of the different employees in the organization to generate effective decisions (Welsh & Ordóñez, 2014). Ethical Practices in Business Decisions The aspect of business ethics relates to the focus on managerial decision making activities with a focus on the aspect of moral judgments and ethics. Ethical behavior within the business organizations are conducted to help in the generation of business decisions to focus on the welfare of the citizens. Business decisions are required to be taken in an ethical fashion in that it contributes in the generation of moral behavior and rights of individuals. The incorporation of ethical practices related to business decisions contributes in the reduction of emergence of law suits and legal practices related to the conducting of business activities (Frisch & Huppenbauer, 2014). Unethical practices related to the aspect of business decisions are observed to affect the reputation of the business organization in the larger society. The aspect of ethical decision making is observed to gain space in that it contributes in enhancing the level of integrity and business reputation. This practice in turn contributes in attracting a large number of investors and clients to the business organization. The aspect of ethical business practices and ethical decision making activities in the business organizations gains needed significance owing to the growth of large amount of scandals in the business environment (Schneeman, 2000). Ethical practices in the business decisions is required to gain needed significance in that the same contributes in the development of interpersonal relationships between the different individuals relating to the different levels. The aspect of ethical practices is required to be generated greater importance to the business organizations so that it potentially contributes in the meeting of business regulations and statutory paradigms related to the business organizations. Moreover, the development of business decisions based on an ethical fashion highly contributes in meeting of the different business and professional obligations related to the business sector or industry. Again the mode of taking ethical and business decisions also contributes in helping the business organization to take care of the needs and welfare of the different clients. Taking of business and professional decisions in an ethical fashion rightly helps in enhancing the level of commitment and responsibility of the individuals to accurately contribute in meeting the needs of the different clients (Rogers, 2010). Impact of Ethical Practices in Business Decisions Decision making in an ethical manner is observed to generate two types of impacts. On the one hand where the taking of ethical decisions help in generating welfare to the employees and interested stakeholder groups it is also observed that the same contributes in affecting the lives and interests of other parties both relating to the internal and external business environment. The publishing of scandalous events related to the business organization and the business heads of the company in terms of truthful conducts is taken to largely affect the goodwill and the market capitalization of the company in the larger target market (Birtch & Chiang, 2014). Similarly, the publication of unsafe practices relating to trading of commodities and in generation of services is observed to largely affect the market for the commodities and also it tends to affect the demands of the consumers relating to the product or service. Reduction of the demands of the product or service in the larger market is likely to affect the amount of business revenue and market share of the company. Similarly, the generation of ethical and business decisions by the organizational managers is also observed to potentially increase the amount of social and ethical cost for the organizations. Decisions taken in an ethical setting is also observed to generate risky implications for the business. It tends to enhance the level of business risks for the company in the larger target market. Business organizations are observed to generate an ethical code of conduct to help in governing the actions and business decisions (Kuratko, 2013). Benefits and Challenges of Ethical Practices in Business Decisions The following of ethical and moral conducts related to the decision making activities of managers is observed to have potential implications for the business corporations. It contributes in helping in the development of effective liaison with the government bodies and also other regulatory authorities operating in the region. On the other hand, the use of ethical practices affects the image of the company in the larger market. Existence of whistle blowing policies contribute in generating large scale awareness for an event related to a business organization based on unethical and faulty conducts. Generation of large scale awareness for the event in turn affects the market for the business company. It tends to restrict the market from purchasing of merchandises generated by the company thereby affecting the dimensions of business revenues and profitability (Lu & Lin, 2014). Managers in terms of taking ethical business decisions are required to rightly anticipate the public relation activities that would tend to emerge in the long run owing to the publication of the ethical results and outcomes. Taking of business decisions in an ethical environment or business setting rightly contributes in generation of needed value to the decision making activities. It thus helps in enhancing the efficacy of business decisions related to a future period. Decision making in an ethical sphere despite having the above advantages is considered ambiguous in nature owing to its potential problems of defacing an organization in the larger target market. The same tends to decrepit the state of finances and marketing and social status for the company (Eaton, 2004). Conclusion The concept of decision making in an ethical setting is considered to be effective in that it helps in protecting the interests of the employees and also the different stakeholder groups to the business organization. It also helps the business organization gain long term advantages for the business conducts and in also contributing in developing effective liaison with external bodies and groups. Despite the above advantages the concept of ethical decision making has some serious implications for the business. It tends to affect the domain of the business activities in terms of reducing profitability and market share and in also reducing potential goodwill. Thus, it is imperative for the business managers to generate effective thought relating to the activities in the public relation sphere owing to the generation of such ethical decisions. References Birtch, T., & Chiang, F. (2014). The Influence of Business Schools Ethical Climate on Students Unethical Behavior. . Journal of Business Ethics , 283-294. Eaton, M. L. (2004). Ethics and the Business of Bioscience. United States : Stanford University Press. Frisch, C., & Huppenbauer, M. (2014). New Insights into Ethical Leadership: A Qualitative Investigation of the Experiences of Executive Ethical Leaders. . Journal of Business Ethics , 23-43. Kuratko, D. (2013). Entrepreneurship: Theory, Process, and Practice. United States : Cengage Learning. Lu, C.S., & Lin, C.C. (2014). The Effects of Ethical Leadership and Ethical Climate on Employee Ethical Behavior in the International Port Context. . Journal of Business Ethics , 209-223. Riivari, E., & Lämsä, A.-M. (2014). Does it Pay to Be Ethical? Examining the Relationship Between Organisations Ethical Culture and Innovativeness. . Journal of Business Ethics , 1-17. Rogers, W. (2010). The Professional Practice of Landscape Architecture: A Complete Guide to Starting and Running Your Own Firm. United Kingdom : John Wiley and Sons. Schneeman, A. (2000). Paralegal Ethics. United States : Cengage Learning. Welsh, D. T., & Ordóñez, L. D. (2014). Conscience Without Cognition: The Effects Of Subconscious Priming On Ethical Behavior. . Academy of Management Journal , 723-742. Read More