Business Ethics In The Global Economy

Business ethics is a branch of the broader field of ethics. Every social organization has ethical standards that operate to bind its individual members together, and provide social harmony.

Ethics in general are standards or rules of behavior that are concerned with rules of right and wrong; good and bad. What may be ethical in one society may be unethical in another. Business ethics vary from society to society.

Doing business in the global economy requires business people to not only know the ethical standards of their own society, but also those of the societies that they do business with. Researching ethical standards in foreign nations can be problematic. There are written ethical laws and unwritten ones.

Knowing what people do, which is how they behave in practice is really the only way to learn the ethical code that is operational. Moral codes may or may not be different than the ethical standards operating in the general society.

Trust is Number One

People do business with those they

know,

Like, and

trust.

When trust is absent in social interaction in business all business activity comes to a screeching halt. For any economy to thrive and grow business ethics, and ethics in general, must be fully operational to bind everyone together, and make for social harmony.

Business systems will break down when ethical standards are lacking. Every other social system may be functioning, but when ethical standards are compromised that is the end of a thriving economy.

People normally trend one way or the other in their practice of ethical behavior. Nothing stands still. People are either getting better or worse, improving or digressing.

In the business arena people normally start out with the highest of ethical standards and ethical discipline. However, over time people may pick up one little bad habit or unethical habit, and then another, and so on. Then, one day a person may do something hugely unethical that would have been totally out of character for them years ago.

You may have heard of the experiments done with frogs. It is a fact of nature that frogs will sit in boiling water and burn to death. However, the water temperature has to be comfortable in the beginning.

The way it works is you place a frog in water covering the lower half of its body with a heat source such as a Bunsen burner underneath. The water has to be comfortable to the frog when you first place it in the water.

You can gradually turn up the heat bringing the water to an eventual boil. The frog will just sit there and not budge, boiling to death. However, if you throw a frog in boiling water it will jump out immediately.

People have a frog like nature within them. If you throw a person into an environment that is boiling with unethical behavior the vast majority of people will jump back out.

If you place a person in a business setting where the business ethics are cool or warm, and comfortable in the beginning, and then gradually turn up the heat a person that is not consciously aware will just sit there and boil to death as the ethics get hotter and hotter.

You have to be conscious of your business ethics, and discipline yourself to stick to them otherwise you will burn to death just like a frog. It happens gradually over time without you even realizing it.

Accounting fraud occurs in a frog like way. When managers make one little "harmless" adjustment in the accounting records to shade the results, and then reverse it later, and repeat this process over and over a frog like trend takes over. They lose sight of what is happening until one day they do something hugely wrong in "cooking the books" while they perceive it as just a little indiscretion.

Statistically 90% of all accounting fraud is done at the direction of the CEO or top executive of the company. Many of these corrupt CEOs don't normally start out as corrupt business managers. They commit one little indiscretion after another until they build up to a big unethical fraud.

If a CEO says he/she was unaware of the accounting fraud there is a 90% chance that CEO is flat out lying. So, for all practical purposes they are guilty until proven innocent when they say they were unaware of the accounting fraud.

Business ethics like all areas of ethical codes is governed by those invisible, universal laws operating in creation. Ethics are those first principles referred to in philosophical circles.People seem to intuitively know what is ethical and what is unethical.

The legal system of the United States is modeled after that of England which is a common law system. This is a system of law where laws and their application are determined over time by the judgments of judges presiding over cases.

Business ethics in the U.S. from a legal stand point have evolved over time in the courts. However, once again, the ethical behavior of people in every day practice may differ from court decisions, and the spirit and letter of the law.

Business ethics is a complicated field of study because there are always new situations that require new interpretations of business ethical standards. The Internet is one case in point. Copywrite infringement of music downloaded over the Internet is a conflicting area of what is right and wrong.

Business ethics requires you to be on your toes and keep abreast of what is going on in practice and in the legal community. Business success depends upon solid ethical standards fully operational in commercial life.

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