Business ethics: principles, practice, and stakeholder responsibility

Business Ethics

What do you consider the three most important ethical issues or dilemmas encountered by modern day businesses? Explain and give examples of each. How do laws, societal changes in values and globalization present challenges for corporate business ethics?

Transparency: The financial industry has come under increasing criticism for concealing the level of risk it took with investor's earnings to make a profit. This raises the ethical question as to how much of a right investors have to know about a companies' range of investments, given the damage large-scale losses can do to retirement funds and the American economy in general. Seeing generations of retirees without nest eggs is not only dangerous for the individual, but also for society. Additionally, American taxpayers find themselves tapped for funds by private industries now deemed 'too big to fail.' These private companies demand a bailout because of their poor investment decisions, although they originally claimed that free market capitalism gave them the right to take risks to make money. Greater knowledge of how firms invest their money is required in the future to secure the safety of jobs, the economy, and investors.

Healthcare: If cost-cutting enables a company to be profitable and enrich shareholders, if this is done at the expense of the workers, and perhaps the overall health of society, is this still 'ethical' as the company is technically fulfilling its money-making purpose as a corporation? Increasingly, the answer seems to be 'no.' Giving workers appropriate benefits for their labor, and investing in workers, rather than hiring multiple part-time workers to avoid paying benefits like Wal-Mart is essential.

Green technology: How much should the government require companies not just to make a profit, but to invest in the future through the use of sustainable practices? Traditionally, business models demanded that corporations profit from their endeavors, and thereby profit shareholders and workers. Now, the idea of societal good and long-term health to the planet has arisen in discussion of responsible business practices. But should businesses really be required, ethically, to consider long-term issues that may outlast the lifetime of the business such as environmental damage?

Question

What is the significance of the Sarbanes-Oxley Act? From your perspective what laws have had the greatest impact on organizational ethics? How?

Sarbanes-Oxley mandated accounting practices with greater transparency to make it easier for investors to truly value the correct worth of a company. The law standardized internal control and auditing procedures. It mandated auditing committees use stricter standards when vetting accounting firms and raised standards for corporate responsibility for fraudulent accounting. It provided more stringent conflict-of-interest guidelines for accounting firms. It was passed by the U.S. Congress to protect ordinary investors from losing their money due to fraudulent accounting practices which ordinary investors could not monitor, through public documents. It also established an oversight board for public companies and mandated "stricter disclosure within company financial statements and ethical guidelines to which senior financial officers must adhere" (Sarbanes-Oxley Act of 2002 -- SOX, 2009, Investopedia). It created "authorities available to the Commission and the Federal Court, as well as required broker and dealer qualifications enforcement methods available for punishment of activities deemed criminal by the Act" (Sarbanes-Oxley Act of 2002 -- SOX, 2009, Investopedia).