The Need for Ethical Standards, Codes of Ethics, and Practices in Business

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In the business environment, people are obliged to make critical decisions every day. Most importantly, businesspersons must be guided by ethical model in the process of making such decisions. Corporate ethics highlights the acceptable traits companies anticipate to observe from their workers (Withers & Ebrahimpour, 2013). Robust ethics-based decision-making can also assist organizations to choose the most viable business opportunities. The ethical standards in a firm can have an impact on its productivity and reputation of business (Jondle, Ardichvili & Mitchell, 2014).

Ethical-based decision-making are important because they facilitate creation of an ethical corporate culture. Employees and leaders abiding by the code of conduct may establish an ethical culture by demonstrating the kind of behaviour they would like their subordinates to demonstrate (Jondle, Ardichvili & Mitchell, 2014). The company can support ethical performance by rewarding workers who display integrity and values that matches with firm’s code of ethics. A healthy and positive organizational culture enhances the morale among employees in the firm, which may raise workers retention and productivity (Evans, 2015). Consequently, this has financial profits for the firm. A greater level of productivity expands the firm’s efficiency while raising workers retention minimizes the cost of replacement (Withers & Ebrahimpour, 2013).  It also contributes to the improvement of workers’ loyalty to the company, which contributes to the growth of organization’s reputation.

Finally, meeting the ethical standards ensures the company participate in work with integrity and honesty. Workers who employ ethics to monitor their traits observe employee rules and policies while endeavouring to satisfy the goals and needs of the firm (Evans, 2015). They are also able to deliver quality services and products in their work, which can strengthen the reputation of the company. Leaders who practice ethics-based decision making also motivate employees to attain the same level (Jondle, Ardichvili & Mitchell, 2014). In this regard, ethical code of conduct reinforces the firm’s business.

The need for ethical standards, codes of ethics, and practices in business

Ethical standards, codes of ethics, and practices in business are tools used by organizations to ensure that executive officers, directors, or managers act responsibly in different business environments (Evans, 2015). Ethical decision-making tries to enhance the company in its entirety instead of allowing one person take advantage of business decisions (Withers & Ebrahimpour, 2013). Persons who regularly make decisions centred on their personal benefits may establish legal liabilities for an organization that can contribute to bankruptcy.

Formulating an ethical corporate environment does not succeed on a short-term basis. Firms are forced to spend money and time promoting and training business ethics among employees and managers. Corporates may also discover that execution of an ethical decision-making may contribute to undesirable feedback from employees or managers (Jondle, Ardichvili & Mitchell, 2014). Dealing with such negative feedback may be challenging part of upholding business ethics.

A business needs code of conducts based on corporate decisions that will reproduce the ethical tolerances of the situations in which they function (Garegnani, Merlotti & Russo, 2015). The government via regulations and laws may assist in defining the meaning of corporate ethics. Nonetheless, an efficient solution to the challenge of meeting the demands of business ethics must encompass a mechanism where ethical consideration occupies the integral part of the processes (Withers & Ebrahimpour, 2013).  A crucial element in ensuring ethical conducts in the contemporary business environment is by the incorporation of moral reasoning in the company.

Businesses need ethical standards and code of conduct because they demonstrate to the workforce that the firm is a responsible organization. One motive for business to establish a code of ethics is to communicate to its workers that it is dedicated to participating in commerce in a responsible way (Jondle, Ardichvili & Mitchell, 2014). New hires understand right away that firm’s expectations and standards if the management follows stringently to the code of ethics. Therefore, a corporate culture that is consistent with this code will emerge among the workers across the organization. Such type of company culture establishes a positive force to sustain a high standard of job, which is in close conformity with the company’s value (Garegnani, Merlotti & Russo, 2015).

Moreover, practices ethical business processes prove to customer that the firm value integrity. Similarly, consumers tend to feel at ease by the presence of a code of ethics within an organization (Garegnani, Merlotti & Russo, 2015). They have a feeling that the firm pay particular attention to its integrity and will function accordingly when engaging in business. Furthermore, third party stakeholders have a tendency of looking favourably upon companies that embrace a code of ethics (Withers & Ebrahimpour, 2013). Therefore, they are happy that some attempts have been made to support a corporate culture of honesty and responsibility.

More importantly, emphasizing the code of ethics in a company helps to control innocent breach of ethics. In so doing, it solves issues that might not take place to workers on their own (Jondle, Ardichvili & Mitchell, 2014). Although the code does not essentially indulge in the issues of illegality, they do not focus on crucial matters that influence the reputation, integrity, and profitability of a firm. A code of ethics highlights the specific expectations and standards of the firm. Therefore, the senior staff will create awareness and sensitive the other workers on issues, which may not be easily understandable to them. In addition, they assist in avoiding serious missteps, which negatively affect the business performance (Garegnani, Merlotti & Russo, 2015). The code of ethics may also work as a reference for executing corrective action.


Evans, T. R. (2015). What does it mean to be an ethical CPA? Pennsylvania CPA Journal, 86(3), 66.

Garegnani, G. M., Merlotti, E. P., & Russo, A. (2015). Scoring firms’ codes of ethics: an explorative study of quality drivers. Journal of Business Ethics, 126(4), 541-557.

Jondle, D., Ardichvili, A., & Mitchell, J. (2014). Modeling ethical business culture: Development of the ethical business culture survey and its use to validate the CEBC model of ethical business culture. Journal of Business Ethics, 119(1), 29-43.

Withers, B., & Ebrahimpour, M. (2013). The effects of codes of ethics on the supply chain: A comparison of LEs and SMEs. The Journal of Business and Economic Studies, 19(1), 24.

January 19, 2024

Business Philosophy



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Company Ethics

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