Why are business ethics so important in today’s society?

In the past ten years, corporate scandals have become too widespread in our society. We hear about them all the time, Enron, Rite-Aid, AOL-Time Warner, the list is endless. But what few people understand is that when these companies act in such an unethical manner, it hurts more then just their employees and direct customers. When companies like Peregrine Systems, which is traded on the NASDAQ, overstates their sales by more then $100 million, the consequences go beyond the company itself. The share’s of stock lose their value, and the company in turn needs to cut costs. Where do they start? With their employees. These people lose not only their jobs, but also their benefits; in addition, they will try to collect unemployment. As the government is getting charged with giving out aid, they have two options: cut spending in other places or increase taxes.

In the case of Enron, they hid their debts, manipulated the Texas power market and Californian energy market, and bribed foreign officials. Not only is the latter illegal under the Foreign Corrupt Practices Act, it is unethical to use bribes to get business. Another problem with acting unethically is getting other businesses you work with caught in illegal or unethical activity too. In this case, Arthur Anderson had shred all of Enron’s documents. This cost them not only money in legal fees and penalty charges, but also in lost revenue. After this was brought to the media, they lose hundreds of clients because of their damaged reputation.

Unethical behavior doesn’t always have to do with finances, those are just the cases we hear about. Companies engage in behavior that is not socially responsible all the time. This includes piracy, counterfeiting, and more commonly, damaging the environment. As consumer’s are becoming more aware of these activities, it is imperative that companies begin to act more ethically or they are at risk lose customers and profits.

This article was originally published in the Etownian, on Thursday, October 4th, 2007.