Term Paper on "Importance of Good Business Ethics"

Term Paper 5 pages (1496 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Importance of Good Business Ethics in Business

Introduction

There's been a crisis of confidence in corporate ethics in the last ten

years, and as a result, legislation continues to be used as the mechanism

to bring trust back into business. Many argue that Sarbanes-Oxley (2002)

legislation has actually taken the price of doing business significantly

up, enriching Indian Business Process Outsourcing (BPO) companies by 30%

revenue growth, in the process (Economist, 2006). The issue of corporate

responsibility, the extent of its existence and what ideally corporate

ethical responsibility should be are examined in this paper. Simply put,

the lack of business ethics has introduced compliance-based initiatives at

the national and global level of legislate confidence and trust back into

business. The high costs of Sarbanes-Oxley Compliance (SOX) could have

been averted, in addition to the billions of investors' dollars lost from

the Enron, Tyco, and MCI scandals to just name a few.

Defining Ethics

There are as many definitions of ethics as there are of academicians,

researchers, and scholars studying the topic. To align ethics with a

specific religion is erroneous; there are many religions in the world that

embrace honesty and truthfulness, yet do not provide the impetus for

followers to willingly select these ethical approaches to interacting with

others. One scholar, Josephson (2001), suggests that ethics involve first

the ability to discern right and wrong, and second, the commitment to do

what is good and aligning with what ethical conduct is. Ethics then

requires action to be undertaken; to be ethical is to act in a consistently

transparent and honest way. Josephson (2001) is specifically referring to

the values a person has as shaped by their cultural, economic, religious,

spiritual and social interactions accumulated over their lives. Ethical

choices, according to Josephson (2001), place an equal weight of the values

of an individual and their choice of behaving ethically or not. In a study

conducted at the Institute for Global Ethics (1996), 272 individuals were

asked to identify the 5 values from a list of 15 that were most important

to them. Researchers found that the value of truth was by far the most

frequent choice. What also emerged were the top three values of truth,

compassion, and responsibility. When individuals were asked to pick the

most important value, compassion was far and away the greater one chosen.

The research went on to show that this small set of core values that is

cross-cultural and universal.

Lichtman (1998) has done parallel research specifically in this area,

providing the suggestion that the eight core ethical values that guide

behavior need to include loyalty, honesty, fairness, caring, respect,

tolerance, duty, and moral courage. When comparing this list to the

Institute for Global Ethics (1996) analysis and then applying them to the

series of corporate scandals of which Enron was the largest, it is clear

that a lack of ethics continues to force many corporations to drastically

cut back their existing operations plans or in the case of major ethical

lapses, discontinue operations altogether. Being ethical is good business,

and the body of research correlating ethical decision making to increased

job performance is an area that this paper will next address.

Finding the Connection of Ethics and Performance

One of the most fascinating areas where scholars are looking at the

influence of ethics on performance is in the sales profession. Research

findings support the hypothesis of sales people who act in an ethical

manner and behave consistently to ethical standards of performance

outperform those that do not, according to Schwepker and Ingram (1996).

The researchers found that the more quantified and measurable the

objective, including objective components focused on achieving higher

levels of sales quality interactions with customers, the higher the levels

of ethical performance. Salespeople found it more expedient to be honest,

transparent, and truthful with clients rather than create any impressions

of either product or company performance that could not be substantiated.

In the case of these researchers' studies, the value of ethics as a sales

qualifying strategy delivered results. In another study Behrman and

Perreault (1982) measured four dimensions of performance, which were

defined as follows. The first was the relative levels of success in

achieving quantity and quality sales objectives. The second was the

development and use of technical knowledge/sales presentations to expedite

prospects through a sales cycle. The third and fourth dimensions were

providing information and controlling unnecessary expenses. What the

research found was that when there were clear and attainable objectives for

the… READ MORE

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