The Evolution of Business Ethics free essay sample

Ethics began with the introduction of the first moral codes, which are a set of standards, laws, or rules that we hold ourselves to, whether they be based on religious affiliation, events that have happened in our life, or just from observing the world around us (Sharp Fox, 1937). The late Albert Schweitzer, Nobel Peace Prize recipient once said â€Å"Ethics is the activity of man directed to secure the inner perfection of his own personality† (BrainyQuote, 2013). Most individuals think of ethics as the rules for distinguishing right from wrong. Although an individual’s personal life is distinctly different from their professional life, ethics usually reflect from one to the other; that is if the individual practices good ethics in one area it will be reflected in the other (DeGeorge, 2010). This paper will focus on the evolution of business ethics; summarizing its development over the past several decades, including the rise of social issues, major changes and events giving rise on its present focus, the current impact of business philosophies and reporting practices of these changes, and a comparison of my evolved values and principles to its evolution. We will write a custom essay sample on The Evolution of Business Ethics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Business Ethics Ferrell, Fraedrich Ferrell (2013) define business ethics as† The study of general nature of moral and of specific moral choices; moral philosophy; and the rules of standards governing the conduct of the members of a profession† (p. 7). The recognition of business ethics as a field of knowledge in the United States has undergone a number of distinct evolutionary stages. Summary of its Development Including the Rise of Social Issues in Business Before the 1960’s ethics in business were discussed primarily through a religious perspective, which provided a foundation for the future field of business ethics (Ferrell, Fraedrich Ferrell, 2013). The New Deal a set of federal programs resulted in response to the calamity of the Great Depression; focusing on civic, cultural, and economic renaissance (Dunfee Werhane, 1997). The 1960’s: the rise of social issues in business, Americans witnessed the development of anti-business trends; such as the growth of pollution and the disposal of toxic and nuclear waste, and the rise of consumerism (Ferrell, Fraedrich Ferrell, 2013). The Consumer’s Bill of Rights was established, which outlined the consumer’s right to safety, right to inform, right to choose, and the right to be heard (DeGeorge, 2010). Consumers’ no longer had to focus only on the quality of the products they consumed, but focus was now increased on the reputation of the producing organizations (DeGeorge, 2010). In the 1970’s business academics began to teach and write about social responsibilities; an organization’s obligation to maximize its positive impact on stakeholders and minimize its negative issues more directly (Ferrell, Fraedrich Ferrell, 2013). During these years business ethics became an emerging field of study, as the term business ethics became a common expression (Dunfee Werhane, 1997). Researchers sought to identify ethical issues and describe how organizations might choose to act in a particular situation (Svensson Wood, 2008). The 1980’s: consolidation, as business academics acknowledged business ethics as a field of study (Ferrell, Fraedrich Ferrell, 2013). It was offered in colleges throughout the United States. Centers of business ethics provided publication, courses, seminars, committees and social policy committees (DeGeorge, 2010). The Defense Industry Imitative on Business Ethics and Conduct was developed to guide corporate support for ethical conduct (DeGeorge, 2010). The 1990’s: institutionalization of business ethics; focused on self-regulation and free trade as organizations with international operations grew (Ferrell, Fraedrich Ferrell, 2013). The Federal Sentencing Guidelines for Organizations was approved to reward organizations for taking actions to prevent misconduct, such as developing effective internal legal and fraud a corporate offense and stiffened penalties for corporate fraud (Velasquez, 2002). In today’s century: a new focus on business ethics; when more than a few business executives and managers chose not to fully embrace the public’s desire for high ethical standards (Ferrell, Fraedrich Ferrell, 2013). This resulted in highly visibly corporate misconduct causing the government and public to look for new ways to encourage ethical behavior. The Sabanes-Oxley Act was passed in 2002, making securities fraud a corporate offense and issuing stiffer penalties for corporate fraud (National Public Radio, 2005). Top executives are now required to sign off on their organization’s financial reports, or they risk heavy fines and prison sentences if they misrepresent their organization’s financial position. Major Changes and Events for its Present Focus With the globalization of the economy, and the media and the growth of the internet, companies are increasingly being held accountable for their ethical conduct and conduct of their business partnerships throughout the world. Major events that gave rise to business ethics vigorously began in late 2001. Enron the natural gas company was one of many organizations created the need for the heightened awareness of corporate ethics in the United States. As a result of their fraudulent practices of reporting false revenue, inaccurate accounting, and a total disregard for practically every business ethics. With all of the fraud and mismanagement that took place under the Enron, further questions arose which implicated their accounting agency; the firm of Arthur Andersen. WorldCom the telecommunication giant also practiced shady accounting methods; to cover-up its declining financial condition by falsely showing financial growth and profitability, which kept increasing the price of its stock. Halliburton, the energy giant; also became another organization lacking business ethics when they were discovered bribing their agents who overcharged the US military $6.  3 million for fuel delivered to bases in Iraq and Kuwait. Ethically speaking, these many scandals led to what is perhaps one of the most significant pieces of legislation associated with the oversight of business ethics; The Sarbanes-Oxley Act. This act sets guidelines and requirements for accounting, financial disclosure, and the ethical behavior of corporations (National Public Radio, 2005). With this legislation in place, th e promise exists for the elimination, of most corporate fraud. Current Impact on Business Philosophies and Reporting Practices Today many organizations are developing ethical culture within the organization’s core values and norms. Ferrell, Fraedrich Ferrell (2013) defines the term ethical culture as â€Å"the character of the decision making process that employees use to determine whether their responses to ethical issues are right or wrong† (p. 16). As organizations embrace the continuous practice of business ethics they are able to recognize its many benefits. Benefits such as employees’ commitment; an employee’s perceptions that their company has ethical culture often leads to improve job performance (DeGeorge, 2010). Shareholder’s loyalty improves when the social responsibility and reputation of the company is ethically sound. Customer satisfaction improves especially among organizations that support the environment and promotes ethical culture. All these benefits ultimately contribute to profitable growth, adding to the organization’s sustainability. This is reiterated by Ferrell, Fraedrich Ferrell (2013), who states that â€Å"The reputation of a company has a major effect on its relationships with employees, investors, customers, and many other parties† (p. 18). Comparison of my Evolved Values and Practices Although most people acquire their sense of right and wrong during childhood, moral development occurs throughout life and human beings pass through different stages of growth as they mature. The basic principles and values that govern interactions among individuals; sound personal ethics are typically those that positively impact the experience of others when used to govern an individuals social or business related behavior, and at the very least, such ethics should not have a negative impact on others (Sharpe Fox, 1937). My values and principles initially began like the evolution of business ethics with my religious belief of understanding right from wrong, and putting it into practice to be look upon with respect and righteousness. As I grew older my values and principles have evolved similar to the evolution of business ethics; I have come to realize that studying business ethics will continuously help in my identifying of ethical issues, in addition to recognizing and adopting the most appropriate ways to resolve them. Conclusion The evolution of business ethics took a long time, and continues to embracing multiple generations. Business ethics exist to ensure business professionals focus is not tainted by just the opportunity for immediate gains (Sharpe Fox, 1937). Business ethics is a continual process that helps build and improve a culture of ethics. Having a clear understanding of what ethical culture means to the organization, creates an atmosphere of trust and commitment throughout the organization benefiting employees, stakeholders, customers, and ultimately leading to the successful growth of the organization.