by Matthew J. Geiger

Created on: May 09, 2010

Comprehending what healthy business ethics dictate and instilling a strong culture of ethics across an industry must begin with a clear understanding of why ethics are important.  Business ethics are, first and foremost, not the legal authority to inflict punitive action against a violator.  Ethics revolve around instilling a sense of responsibility and professionalism into employees to help ensure a firm engages in healthy business practices that benefit the short and long-term success of the entity while improving the firm’s reputation and image.  In other words, ethics are an industry wide expectation that guarantees long-term success with healthy competition and strong, stable growth. 

A company, which treats its employees poorly, rips off consumers, and/or undercuts other firms through unhealthy competition, is going to foster unethically behavior among employees and outside interests.  This means the scope of business ethics extends beyond employee-employer relations to include how a given firm treats its competitors and partners.  In addition, ethics influence the decision making process that determines the quality standards and costs, including hidden or displaced costs, associated with a firm’s products and services.  As such, ethical businesses must factor in every aspect of business, because ethics are part of a culture that a long-term business and industry must instill in every employee, professional, and business owner.  

Meanwhile, it is important to remember businesses do not simply act on company interests; they act on the views of their management teams.  This makes it essential for observers of industry to recognize a firm will not solely act on its perceived interests; but rather, it will act on its interests and the interests of its leaders as perceived by those leaders.  Consequently, it is the executive managers who set the tone and direction of the company’s operations.  As business leaders, they are also the ones to shape the ethical culture of their firm while business leaders across an entire industry maintain standards for ethical conduct.  Moreover, leaders of business define what ethics mean for their industries, companies, and subordinates. 

Accordingly, business leaders looking to instill ethics into their subordinate employees need to lead by example.  An ethics policy, therefore, must go beyond punitive action designed to target specific

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