Unethical Practices and Organizational Failure

Business ethics and organizational culture

In a bid to ensure that all stakeholders in an organization remain focused on common goals and objectives, organizations pay incredible emphasis on subscription to common ways of thinking, interactions, values, and norms. These aspects define an organizational culture, which requires people to align with the business of an organization. These organizational culture elements constitute some basic assumptions that all stakeholders in an organization need to adopt and observe. One of the important assumptions that define the culture of an organization is ethical codes of behavior, which is alternatively referred to as corporate ethics or business ethics.

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The principle of business ethics is important since it helps in erasing individualistic interests in an organization. This aspect helps in mitigating risks such as fraud and making of decisions, which negatively present an organization before its stakeholders and communities within which it is established (Andrews et al., 2011). Considering the importance of business ethics, in their peer-reviewed article, Holland, and Albrecht (2013) surveyed 211 international scholars on corporate ethics. The focus was on determining the respondents’ perceptions of the most significant issues in business ethics, both currently and over the next decade.

The study identified eight (8) important issues in understanding the discipline of business ethics and its contribution to ethical behavior in the contemporary and future business organizations. The first issue relates to the need for the development of corporate ethics curriculum, accreditations, and pedagogies coupled with faculties. Respondents were also concerned about the decline in concerns of corporate ethics in the discipline’s research tools and the decline of ethical behaviors within organizations coupled with the society in general. Others identified issues of “credibility to business ethics field, environmental issues, corporate social responsibility, globalization, and institutionalization of ethics into business” (Holland & Albrecht, 2013, p.777). These constructs form essential considerations in building pillars for supporting organizational approaches to business ethics.

The peer-reviewed article plays an essential role in understanding the subject of business ethics. It sets out important areas that organizations should focus on in the quest to build better performance, which is unrelated to the conventional approaches to business success in terms of financial performance. For instance, the article identified corporate social responsibility (CSR) as an important aspect that most scholars in the business ethics field contend will pose the most serious challenges to organizations over the next decade. Indeed, organizations are now appreciating the importance of building good relationships with stakeholders to succeed in the future uncertain operational environments (Andrews et al., 2011).

This observation implies that pushing for the consumption of an organization’s products through marketing strategies aimed at increasing sales without consideration of the impacts and value of the products and services to its consumers is no longer effective in enhancing the success of organizations. Therefore, ethical marketing is crucial to business success.

In the 21st century, people are more interested in establishing relationships with organizations reliable in terms of sustainability and paying concerns to the social needs of their consumers (Andrews et al., 2011). This assertion suggests that enhancing corporate ethics through CSR underlines the importance of ensuring that an organization not only serves the function of delivering value to its owners by increasing returns on investments but also to other stakeholders such as communities within which they are established. Consequently, the article is important as it helps in establishing a paradigm (social corporate responsibility) for the elimination of individualism and exploitation as one of the essential business ethics.

Identification of the concerns of decline in ethical behavior in organizations to awakens organizations to rejuvenate their strategies for inculcating a culture of compliance to corporate ethics to minimize chances of organizational failure. In this sense, the term ‘business ethics’ refers to “ethical principles and moral or ethical problems that arise in a business environment” (Gentile, 2010, p.44). This definition covers the prevention of fraud, protection of consumers from consumption of poor quality products, and honesty in the execution of one’s tasks within an organization among other issues.

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Fraud, embezzlement of organizational funds, and other organizational malpractices such as deceptive marketing are critical contributors to the failure of organizations (Moberg, 2010). Decline of ethical behavior in an organization signals re-emergence of malpractices that do not conform to ethics in business. Examples of the malpractices include “…maltreatment of helpless workers (Nike, sexual harassment), corporate pressure to push unsafe products (the Challenger disaster, the Ford Pinto, infant formula), and yes, risky businesses from the bankers requiring federal bailouts (the S &L scandals)” (Moberg, 2010, p.753). People learned lessons from these unethical practices. Hence, any organization adopting them to constitute its culture might collapse.

Organizational failure can occur especially considering that people appreciate that organizations should behave in a manner that delivers value to their stakeholders and other parties having stakes in their operations. For instance, the re-emergence of fraudulent organizations points to the failure of employees to protect the investments of the owners of an organization from exposures to risks. Identification of probability for such misconducts would force investors to withdraw their stakes in fear of losing them in the future. These withdrawals expose an organization to risks of financial sustainability. In this context, the article helps in understanding the links between business ethics and other aspects of organizational operation such as financial sustainability.

References

Andrews, C., Baker, T., & Hunt, G. (2011). Roles of corporate social responsibility in the 21st organizations. Leadership and Organization Development Journal, 32(1), 5-19.

Gentile, M. (2010). Turning values into action. Stanford Social Innovation Review, 8(3), 43-47.

Holland, D., & Albrecht, C. (2013). The world wide academic filed of business ethics: Scholars’ perceptions of the most important issues. Journal of Business Ethics, 117(1), 777-788.

Moberg, D. (2010). Business and marketing ethics: Good news and bad news. Business Ethics Quarterly, 2(1), 751-753.

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