Ethical issues as major concerns in organizations

¶ … Ethics in the Business Environment

The Importance of Ethics in Organizations:

The traditional view of ethics in business is that the primary benefit of ethical values and business practice is to the customer and the general public and not to the company bottom line. According to that view, highly ethical business practices often contradict maximum profits and other interests of professional business. However, Vivek Wadhwa explains in this week's Business Week ("Why Be an Ethical Company? They're Stronger and Last Longer"), ethical business practices are also beneficial to the company, especially from the long-term perspective, if not always maximum short-term profitability (Wadhwa, 2009).

Wadhwa (2009) lists the companies on the original 1917 Forbes 100 list and the original (1957) Standard & Poor 500 Stock Index that have survived until today and suggests that one of the principal differences between those that eventually failed and those that remain viable and profitable today is the greater commitment to ethical business practices and policies of the most successful companies.

According to Wadhwa (2009), the best recent example of the long-term consequences of unethical business practices are evident in the aftermath of the 2008 U.S. economic crisis and the collapse of the home real estate market that precipitated it. The companies that failed since the economic crises were those that took economic advantage of the unethical approach profits through selling insecurely backed mortgage securities. Meanwhile, other companies specifically avoided mortgage backed securities because of the inherent risk to stockholders where the mortgage qualification process deteriorates.

Wadhwa (2009) points out that the companies relatively unscathed by the U.S. economic crisis were those that ignored the short-term profit potential of the unstable mortgage backed securities and adhered to ethical concern for the appropriateness of the risks to which they could expose their clients. Ultimately, it was this ethical approach to business that protected the companies themselves and ensured their long-term viability.

Individual Influences on Ethical Behavior:

Usually, the attitude and business values of an individual are subcomponents of the individual's approach to ethical values in general (Halbert & Ingulli, 2008). In that regard, individuals for whom honesty, integrity, and ethical principles are important in general tend to approach professional relationships and business the same way. Conversely, many others adhere to much lower standards in both personal and professional matters. However, within organizations, individuals must ordinarily adapt to the prevailing corporate ethical culture, at least with respect to business concerns (Halbert & Ingulli, 2008).

Organizational Influences on Ethical Employee Behavior: