Business ethics has been one of the most controversial topics of discussion over the years. The term refers to the core business policies as well as practices in any business. Most of the companies of nowadays implement business ethics in their business in order to prevent their organizations affect ting from the controversial issues like bribery, discrimination in the work place, corporate social responsibility and so on (Crane and Matten 2016). Different laws and regulations are implemented in order to protect and guide business ethics. A framework is followed in terms of business ethics by the organizations so that they can gain the trust of their customers.
The main purpose of business ethics is to ensure the trust between the organization and its customers. Beside customers, by practicing business ethics in business, the business individuals also maintain a healthy business relationship with their market participants (Weiss 2014). It can be rightly said that business ethics is greater than principle and values, which determines the conduct of the employees in business. Rather it alludes to the corporate activities which can be with both the customers as well as other business organization. Business ethics can implemented on overall aspects of business. As the outcome of any business is strongly depended on the society, therefore, the organizations need to put their attention the social welfare (Crane and Matten 2016). It is needless to mention that the primary objective of any company is to gain profit. However, at the same time, it should focus on the contribution to the society by means of fair practices.
Most organization these days include ‘Code of Ethics’ in their business policies so that they can introduce the new hire with the ‘Code of Ethics’ of their company policy during the training period or during the time of induction (Trevino and Nelson 2016).
‘Code of Ethics’ is the set of principles which business professionals perform business practices ethically. It outlines the behavioral approach problems in view of the mission and vision of the company. It guides the professionals how to follow the ethical principles of the company that are bases on its core values (Trevino and Nelson 2016). The ‘Code of Ethics’ mainly comprises of three components that are code of individual practices, code of business ethics and code of conduct for the employees.
The business organizations incorporate ‘Code of Ethics’ in their business which is supposed to be strictly followed by the employees. The ‘Code of Ethics’ is of crucial importance in terms of overall business growth of the company. A complete set of rules and regulations are set by a company in terms of behavior that ensures the quality as well as the reputation of the company (Hoffman, Frederick and Schwartz 2014). Breaching of the rules and regulations regarding ‘Code of Ethics’ may result in the permanent dismissal or termination of the employee from the organizations. In order to supervise whether the ‘Code of Ethics’ are followed or not, the organizations appoint officer, who not only regulates the ‘Code of Ethics’ but also set the policies in order to mitigate the risk factors related to breaching the laws and regulations set by the company.
Certain practices are there in terms of ethics, which the employees as well as other members of a company should follow. In order to build a transparent reputation of an organization so that it can run its business process smoothly towards the success (Crane and Matten 2016). Thus, the practices are mentioned below that is supposed to be performed in an organization.
Investors: A company should assure the investors that their investments are safe in the company and it should make timely payments to them.
Employees: The Company is liable to give its employees opportunities in terms of promotion and other aspects like healthy working environment and so on (Trevino and Nelson 2016).
Customers: the customers need to provide complete information related to its products and services in order to avoid any discrepancies. On the other hand, the company should not make wrong usage of its customer’s personal details.
Government: Rules and regulations including tax laws and other directives should be essentially followed by the company so that the reputation of the company does not get hampered (Crane and Matten 2016).
Completion: It is often seen that companies adopt unscrupulous tactics or go in a wrong way to win over their rival industries (Weiss 2014). Thereby, organizations should implement the measures in order to avoid such issues.
Environment: Most of the companies primarily aim to pool maximum profit from the market and in course of that they exploit the natural resources. However, they can put control on such issues by introducing ethical business practices in their organizations. Additionally, they should fulfill all the laws and regulation directed by the pollution control board in order to maintain the reputation of the company (Crane and Matten 2016).
Businesses that are inclined to unethical activities in their business process exist in a large number. They simply violate the rules and regulations set by the government in the in order to pool maximum profit from the concerning industry. The unethical business practices include all the violations by means of which the company breaches the business ethics (Cohn, Fehr and Maréchal 2014). Some of the activities have been mentioned below in order to identify the unethical practices in business.
However, the numbers of the businesses that follow business ethics in their organization are less while most of the business organizations violate the rules and regulations in order to gain more than usual. This is the one of the reasons that the overall economy across the world is in danger. Organizations have been seen betraying the investors as well as the customers for the purpose of making profits (Bennett et al. 2013). As a result of that, the customers only suffer and they do tend to lose trust from the companies which are actually genuine.
Despite this negative impact of the unethical business practice, organizations have been started realizing the positive impact of implementing business ethics in thief organizations so that they can run their business process smoothly while maintain the reputation of the company (Leonidou et al. 2013). Business ethics is the most crucial part of the business strategy that the makes the company enable to maintain its position in the market (Cohn, Fehr and Maréchal 2014). Ethical business practices help the individuals to attain the trust of the company which is the most important aspect in achieving the expected business outcome. By practicing ethics in business, organizations can prevent them from being penalized.
The rate of unethical business practices is prominently evident in the financial industries, especially in the financial corporations. Due to the overall economic crisis across the world, a lack of business opportunities has been addressed (LeBaron 2013). The issues have been addressed by few business individuals that drove them to create business opportunities by means of financial corporations. The financial corporation’s give different financial assistance to its customers. Those financial corporation’s give more interest than the usual rate exist in market. Several schemes are given to the customers in which they invest a lot of money (Cohn, Fehr and Maréchal 2014). The customers are promised to be given more interest which is higher in rate as compared to the banks. As a result, the customers are encouraged by the higher rate of interest.
As seen, most of the customers invest a lot of money in these corporations. Often, it has been observed that the customers often overlook the fact that whether those financial corporations are authorized or unauthorized (LeBaron 2013). In case of in vesting in a unauthorized financial corporation, the companies often dupe the customers after collecting a huge amount of money from the market, as a result of which the customers loss their whole money that they had invested in those corporations. There are several types of financial corporations exist in the market that offer different types of schemes to their customers (Bennett et al. 2013). It has been found that these financial corporations in order to pool excessive profit from the market indulge in unethical business practices. Several kind of unethical practices have been mentioned below for a clear understanding:
Unethical business practices are grossly seen in the finance industry. Several surveys have been carried out in order to figure out the actual reason behind the unethical behavior among the professionals of the industry (Kouchaki et al. 2013). Certain major factors have found as the key reason of the behind the unethical business practices in the financial industry.
The greed to gain excessive money has been identified as the major influence on the unethical behavior of the professionals associated with this industry. The finance is entirely based on money (Leonidou et al. 2013). The customers or investors are easily attracted to the higher rate of interest provided by the financial corporations, hence the inflow of money is cooperatively huge than other industries. Mostly, customers are manipulated by the agents of those companies. As a result, they do not judge the claims and promises made by the companies are genuine or not. Often these companies being unethical dupe the customers after collecting money from the market (Bennett et al. 2013).
The question may arise that why these companies dupe their customers after collecting a significant amount of money from them. In order to answer the question, it must be mentioned before that it is known to the owners of those financial customers that the higher rate of interest is completely vague. Knowing the fact these individuals embark in this business with the aim to dupe its customers (Cohn, Fehr and Maréchal 2014). It must be mentioned that a huge amount of money can easily earned in short time through this type of business as the number of the investors are greater than banks or other authorized financial corporations. This plays a crucial role behind deceiving the customers.
Different theories and frameworks are there in order to maintain the sustainability of the environments. One of those frameworks is Circular Economy, which refers to the economic frameworks where only positive environmental impact is generated. The circular economy is often regarded as the alternative to the contemporary linear model. The circular economic model can be as effective as the traditional linear models without any change in the quality of the product or the services. The circular economy model prioritizes the recycling, system thinking, design thinking and product life extension (Ghisellini, Cialani and Ulgiati 2016). For example, renting models can implementing traditional business areas by renting the previous product to different clients as well as the manufacturers can trigger the revenue growth. In addition to that, recycling method is also considered as the circular economy and it is one of those models that are mostly used widely.
In the financial industry, the circular economy model is grossly adopted. The model is regarded as the ultimate solution to address economic scarcity by applying the concept of ‘product as service’. In this model, the customers no longer need to pay or invest a lump sum amount but they can continue to invest short amount of money in a long term scheme. The financial corporations that dupe the customers or investors adopt such strategies in their business with high rate of interest that attracts the customers easily (Stahel 2016).
The term ‘triple bottom line’ alludes to the concept that inclines to shed light on the economic bottom line in order to involve social responsibilities in business. The economic value, environmental impact and the degree of social responsibility of the company are evaluated by a ‘triple bottom line’ (Savitz 2013).
Generally, profit of a company is considered as the bottom line of the income statement of the company. The main purpose of the triple bottom line is to extend the focus of sustainability in business. Thus, the focus of the companies shifts to environmental and social issues from profit in order to evaluate the total cost of the business. Triple bottom line is an accounting model that includes three parts such as environmental, social and financial (Glac 2015). The organizations adopt triple bottom line approach in order to measure their business performance so that the value of the business increases to a greater extent.
A social enterprise like non-profit organizations that take care of the social issues by providing under privileged people basic amenities would be the perfect example of an organization, which seek triple bottom line in their business process (Savitz 2013).
The financial corporations are exactly opposite to the organizations that seek triple bottom line. The financial corporations primarily intend to gain profit from the money invested by the customers (Glac 2015). They tend to perform unethical business practices in their businesses like deceiving the customers, not paying the actual money towards the completion of the scenes and making false promises to the customers so that they can get attracted to invest their money in these financial corporations.
Conclusion
To conclude, it can be said that business ethics is one of the most essential strategies that a company should implement in its process of business. Business ethics do not only help the company to maintain its reputation in the industry but it also help in securing the customer interest in that business. The financial industry is one the industry, where unethical business practices are prominently seen. The main reason behind this unethical behavior of those companies is the greed of making money more than usual. These companies knowing that the promises they make are false, dupe the customers after pooling a huge amount of investment from the market. As a support to the study different frameworks have been discussed in relation with unethical business practices.
References
Bennett, V.M., Pierce, L., Snyder, J.A. and Toffel, M.W., 2013. Customer-driven misconduct: How competition corrupts business practices. Management Science, 59(8), pp.1725-1742.
Cohn, A., Fehr, E. and Maréchal, M.A., 2014. Business culture and dishonesty in the banking industry. Nature,516(7529), p.86.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Ghisellini, P., Cialani, C. and Ulgiati, S., 2016. A review on circular economy: the expected transition to a balanced interplay of environmental and economic systems. Journal of Cleaner Production, 114, pp.11-32.
Glac, K., 2015. Triple Bottom Line. Wiley Encyclopedia of Management.
Hoffman, W.M., Frederick, R.E. and Schwartz, M.S. eds., 2014.Business ethics: Readings and cases in corporate morality. John Wiley & Sons.
Kouchaki, M., Smith-Crowe, K., Brief, A.P. and Sousa, C., 2013. Seeing green: Mere exposure to money triggers a business decision frame and unethical outcomes. Organizational Behavior and Human Decision Processes, 121(1), pp.53-61.
LeBaron, G., 2013. Subcontracting Is Not Illegal, but Is It Unethical: Business Ethics, Force Labor, and Economic Success. Brown J. World Aff., 20, p.237.
Leonidou, L.C., Kvasova, O., Leonidou, C.N. and Chari, S., 2013. Business unethicality as an impediment to consumer trust: The moderating role of demographic and cultural characteristics. Journal of Business Ethics, 112(3), pp.397-415.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Savitz, A., 2013. The triple bottom line: how today’s best-run companies are achieving economic, social and environmental success-and how you can too. John Wiley & Sons.
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Stylianou, A.C., Winter, S., Niu, Y., Giacalone, R.A. and Campbell, M., 2013. Understanding the behavioral intention to report unethical information technology practices: The role of Machiavellianism, gender, and computer expertise. Journal of business ethics, 117(2), pp.333-343.
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