13 Jul 2022


Role of Ethics in 21st Century Organizations

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Academic level: University

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Words: 886

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Corporate ethics and value systems have become organizational precedence in the twenty-first century. The rise in technology, globalization, threats of competition, and intangible assets, and other late global reforms have necessitated regulations and standards to ensure sobriety in the business world. In practice, professional ethics define the ethical principles and moral that applies to the various business operations and guides the behavior of individuals and ultimately the culture of the entire organizations. Meanwhile, adherence to ethical procedures and policies has numerous benefits to the organizational operations and external partners. Although integrating the ethical standards in an organization may be complex and multifaceted, the standards play several critical roles in the organization's operation.

Firstly, corporate ethics enable organizations to mitigate financial misconducts, including fraud, corruption, and insider trading. According to recent statistics, a growing number of ethics scandals have surfaced over the past few decades (Jendruszak, 2020). Besides employees' financial misconducts, companies can also engage in marketing fraud, wherein they purposely deceive consumers when promoting their goods or services. Recently, as reported in the New York Times, a popular airline was involved in systemic global bribery that resulted in the global bribery settlement of $4 billion, which is the largest in history (Alderman, 2020) . Such financial misconduct results in decreased stakeholder and consumer trust, loyalty, and commitment for implicated organizations. However, corporate ethics are effective tools that can help mitigate such financial misconduct. For instance, organizational ethics promote leadership based on line accountability, transparency, honesty, and integrity (Hegarty, 2018) . The ethics also advocate for frequent evaluation of the organization's incentives and systems based on its responsibilities, core values, and objectives. As such, ethical practices in an organization are critical in eliminating financial scandals in companies.

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Corporate ethics also develop and refine internal programs to mitigate factors that weaken interpersonal relations within the organization. Unethical misconducts among colleagues reflect some of the most common ethical problems that create a hostile work environment wherein organizational members feel threatened, whether physically or psychologically (Reich, 2011) . For instance, some of the interpersonal behaviors that qualify as ethical misconduct in the organization include intimidation, discrimination, sexual harassment, physical threats, false accusations, and insults. However, to mitigate unethical behaviors, the organization can enforce ethical standards through incorporating written codes of conduct, mandating ethics training, hiring ethics officers tasked with managing and monitoring the organization's ethics programs, and integrating rewards and sanctions. These, along with other programs and methods, function to enforce ethical standards and mitigate ethical risks of misconduct in the organization.

Organizational ethics enable businesses to maintain positive relations with competitors and the public. For instance, the ethical standards discourage copyright infringement which is a form of unhealthy competition. Intellectual property (IP) rights create a distinction between different companies' products. The World Intellectual Property Organization defines IP as an individual's or an entity's creation, including inventions, software, music, ingredients, books, and movies used for commercial purposes (WIPO, 2016 ) . Copyright infringements on the company's products or illegal infiltration into its classified information can negatively impact the organizations, members, and consumers. For example, competitors might imitate the organization’s product which might reduce its customer base and sales. Organizational ethics also ensures that the consumers’ information that organizations gather through corporate intelligence is not used for unauthorized purposes. Organizational ethics that guide consumer confidentiality, accountability, and transparency advocate that companies use consumer data for only the allowed purposes (Ritter, 2020) . Adhering to the code can enable the companies to gain trust and credence from the public. Overall, organizational ethics plays a primary role in fostering positive relations among different companies and their relationship with the public.

Professional ethics also enable businesses to comply with government legislation. The Federal and State government have enacted various laws over the past few years to discourage ethical misconduct in business practices. When organizations integrate ethical standards within their practices, it implies they will not violate the stipulated government regulations. For instance, organizational ethics promotes the welfare of the employees by providing safe and healthy working environments and fair remunerations (Chikono, 2017) . The latter policies are also enforced by the US Department of Labor (U.S.Department of Labor, n.d.). Some other government regulations similar to organizational ethics include the Dodd-Frank Act of 2010 and the antitrust laws. The Dodd-Frank Act of 2010 increases the oversight and transparency of financial intuitions and by providing stronger protection and encouragement for whistle-blowers to expose unethical practices within businesses (Goodwin, 2010) . The act also introduced an incentive program and an agency to educate and protect consumers from fraudulent financial practices. Overall, organizational ethics enables organizations to avoid risks associated with illegal practices that may result in detrimental consequences such as government penalties, fines, or even business closures.

In conclusion, the adoption of ethics in the operations of organizations is crucial, particularly owing to the significant roles they play in effectively addressing most of the emerging ethical issues in the corporate world. The ethical practices ensure that businesses run profitably and sustainably by mitigating the unbudgeted use of finances for bribery settlements. Similarly, ethical leaders and employers ensure business resources are appropriately used for the best interest of the business's core values, objectives, visions and missions, and standards. The ethical standards also promote the welfare of the external partners of the organizations, including the consumers and competitors. The standards also play a significant role in enabling businesses to comply with the State's and Federal policies and regulations guarding business practices. The standards are crucial to organizations as unethical practices often lead to business failure, customer base loss, loss of public credence, and detrimental legal repercussions. It is increasingly important for organizations to adhere to the standards to ensure their sustainability and success in the future.


Alderman, L. (2020, January 21). Airbus to pay $4 billion to settle corruption inquiry . The New York Times. https://www.nytimes.com/2020/01/31/business/airbus-corruption-settlement.html 

Chikono, N. N. (2017). Leadership practices that improve the workplace safety environment. Dissertation, Walden University. https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?article=4538&context=dissertations 

Goodwin, K. (2010, July 21). Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 . Federal Reserve History. https://www.federalreservehistory.org/essays/dodd-frank-act 

Hegarty, N. &. (2018). Components of ethical leadership and their importance in sustaining organizations over the long term. The Journal of Values-Based Leadership, 11 (1), 2-7.

Jendruszak, B. (2020). Looking at future fraud trends to help you fight them this year. SEON. https://seon.io/resources/the-top-5-fraud-trends-for-2020/ 

Reich, T. C. (2011). Interpersonal relationships at work. https://doi.org/10.1037/12171-006 

Ritter, S. (2020, March 31). The ethical data dilemma: why ethics will separate data privacy leaders from followers . Forbes. https://www.forbes.com/sites/forbestechcouncil/2020/03/31/the-ethical-data-dilemma-why-ethics-will-separate-data-privacy-leaders-from-followers/?sh=7c68a31114c6 

U.S.DepartmentOfLabor. (n.d.). Summary of the Major Laws of the Department of Labor . U.S. Department of Labor: https://www.dol.gov/general/aboutdol/majorlaws#:~:text=The%20U.S.%20Department%20of%20Labor,workers%20and%2010%20million%20workplaces. 

WIPO. (2016 ). What is Intellectual Property? World Intellectual Property Organization : https://www.wipo.int/about-ip/en/#:~:text=Intellectual%20property%20(IP)%20refers%20to,and%20images%20used%20in%20commerce. 

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