Rationale and Motivation for Overt Ethical Policy

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Corporate scandals and billion-dollar bankruptcies are the results of the lack of ethics in business today. According to Robinson (2002), ethics is a set of moral principles held by an individual or a group, encompassing individual behaviour, environmental policy, staff policy, and corporate social responsibility, which has gained importance recently. Demands of the shareholders, stakeholders and investors are forcing industries to maintain a high morality in how companies conduct business. Any deviation can adversely affect the brand image, customer retention, and overall business. A certain group of investors in Europe have decided to invest only in companies who are conscious of their social responsibility. Total, a Paris based oil company has instilled in its managers that it has a mission apart from making money (Peter, 2004). It is responsive in the way it deals with the environment, the employees, customers and vendors, with the governments and the people of the countries in which it operates. The rationale for ethics in business stems from the fact that when corporations collapse the society in general loses – the shareholders lose, the customers, the employees, the community, the creditors, the family – all lose. Hooker (2003) argues that ethics exist because ethical behaviour does not always pay. If ethical behavior were always rewarded, there would be no need for ethics. In the long run, however, morality plays. Unethical people do run into trouble even if they have reaped profits for some time. Ethical companies develop a brand image. investors come forward and support it in times of trouble. Above all, it brings financial rewards with it. There can be certain standard business practices laid down as far as child labour, integrity, respect for fellow employees, customers and business partners are concerned but code of ethics woulddiffer from industry to industry.