Business Ethics in Today's World

Business Ethics In today's world of economic upheaval, few questions are more pressing or pertinent than the issue of business ethics -- what constitutes ethical behavior in business situations, what the changing rules of ethics are in the world of globalization and environmental concerns, and the application of these ethical considerations in the real world have all become major topics of debate, especially in the past decade.

Scandals like the current mortgage-backed security crisis and the Enron ordeal from a few years back are indicative of the growing problem of business ethics, though the issue is actually as old as business and commerce itself. The above reasons illustrate why the study and practice of business ethics is necessary even for purely pragmatic reasons. The current financial crisis could have been largely diminished in its magnitude or even avoided altogether had mortgage lenders acted ethically in the first place.

Instead, driven by dreams of higher and higher profits, lenders granted loans that could not reasonably be repaid, which snowballed into the massive failure of several banks and economies. Making the right loans, and not letting greed overcome common sense, would have been the same thing as behaving ethically, and the current financial crisis would not have occurred.

So ethical behavior makes sense if only from a financial perspective; that is, even from a standpoint of greed and the desire for financial growth, ethical behavior makes more sense in the long-term. Ethics are also important in business for less directly pragmatic reasons. First, it enables business partners, customers, and other associates to trust an organization if that organization has a strong record of ethical behavior. This has tangible benefits as well, though perhaps they are not as direct as the instance mentioned above.

Ethics can also be looked at in a more abstract manner. Many philosophers and other thinkers have surmised that human beings have a duty to themselves, those around them, and the world they live in. Without this duty to take car of one another, government and society would have no reason to exist. Because man is a social creature, it seems reasonable that society is meant to exist, but that society will only be stable as long as everyone in it is treated fairly -- that is, ethically.

Therefore, business ethics are not only important for the longevity and profitability of a specific individual business entity, but also for the advancement and stability of society as a whole. One common business problem is reporting a loss to investors. The Enron scandal involved "creative accounting" to hide losses and so continue outside investment. Had the people at Enron behaved ethically and explained the situation honestly, they almost certainly would have suffered a loss, but the company might have survived. Accounts should always be presented honestly for this reason.

The mortgage issue is somewhat similar to the Enron scandal, but instead of being dishonest to investors lenders were dishonest with themselves. This illustrates an even more common business ethics issue -- the ability that the prospect of profit has in clouding judgment. In such.