Business ethics and/or social responsibility - Essay Example

Business Ethics/ Social Responsibility Accounting scandals that occurred in the start of the 21st century reminded us the significance of business ethics. World Com, Global Crossing, Tyco, Adelphia, and Enron were some of the companies which underwent fatal financial misconduct. Accounting scandals of these major public companies shook public confidence on America’s business environment. What is right and what is wrong in business depends on organizational decisions. However, organizational ethics is not a private matter but a broad societal issue that needs careful attention.

“Firms have numerous responsibilities to customers, to employees, to investors, and to society as a whole” (Boone L E, Kurtz D L., 33). Organizations should develop their own code of conduct to maintain reasonable social standards. This code of ethics is the basic principles of conduct that individuals are bound to maintain as managers, staff, and employees, and shareholders in order to accomplish the business objectives by ensuring the betterment of the community and company’s Human Resource.

However, business ethics is often misunderstood as legal compliance. Abiding by law is rather easy because it clearly states the requirements that an organization must meet. In contrast, ethical decision always demands careful assessment of prevailing situations and consequences. Code of ethics will not change as the firm’s natural and technological environment change. It always inspires organizations to do what is right other than what is appropriate to the situation. In addition, organizations have to heed genuine concern to the effect of each decision on the environment, community, employees, and customers.

People are interested to join organizations which are having high level of ethics and social responsibility (Daft R L., 393). Interests in business ethics was fueled as an immediate result of American corporate scandals. Subsequently, The Public Company Accounting Reforms Act was passed in the US congress in 2002 in order to control over the auditing in public companies. The Act is also known as Sarbanes-Oxley Act (SOX). The legislation was to enhance confidence in investors, and to enforce strict and authentic audit control that would prevent corporate misconduct (Ge Weili & McVay S., 2005). However, efforts of corporate governess have been misguided by numerous factors since the implementation of SOX.

According to Markham J W (2006), organizations today are struggling with massive law suits and unaffordable amounts in attorney fees in order to comply with the regulation. “SOX is a costly failure that is undercutting America’s competitive position” (Markham J W., XVIII). In order to point out the continuing flaws in full disclosure, writers like Markham illustrate numerous examples of massive financial scandals that perturbed corporate America recently. Regardless of the firm’s size or nature, business ethics is closely associated with an organization’s strategic management.

In addition to legal compliance, a company has many other social responsibilities to perform. American corporate scandals have helped organizations to emphasis on the significance of business ethics. Although experts are deeply at odds regarding the effects of Sarbanes-Oxley Act, it has enabled market recovery to a great extent in the current corporate America. The words of the American business philosopher Peter Drucker (1909-2005) have become relevant; “start with what is right rather than what is acceptable” (cited in, Boone, 33).

Works CitedBoone L E, Curtz. Contemporary Business 2009. Edn, 12. Cengage Learning, 2008. Daft R L. Organization Theory and Design. Edn, 10. Cengage Learning, 2009.Ge Weili & McVay S. “The Disclosure of Material Weaknesses in Internal Control After the Sarbanes-Oxley Act”, Accounting Horizons, 2005. vol.19, No.3, 18 Feb, 2010 Markham J W. A financial History of Modern U.S. Corporate Scandals: from Enron to Reform. M.E. Sharpe, 2006.