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The State of Ethics and Unethical Practice in Business

The need to study the state of ethics and ethical conduct cannot be overemphasized. In business history, corporate executives, entrepreneurs, and corporations should know that unethical behaviours or practices cannot go for too long unnoticed.

Bateman and Snell (2011) have rightly observed that insider trading, illegal campaign contributions, bribery and kickbacks, famous court cases, and other scandals have given an impression that entrepreneurs and corporate leaders use illegal means to gain competitive advantage, increase profits, or improve their personal positions or interests.

In research years, as a result of corporate scandals and extremely general pay packages, the public’s trust and confidence in corporate governance have greatly been eroded. Some firms, including ‘Enron’ and ‘World com’ went bankrupt because of unethica| practices. This brought a lot of hardships on employees, investors, pension holders, and other stakeholders. This also brought enormous shame ridicule to the corporate leaders involved, Onuoha and Ogbuji (2011). In response to series of unethical conducts in USA, the Congress passed the Sarbanes- Oxley Act in 2002 to improve ethical behavior and corporate governance.

Few weeks ago (2016), a major scandal involving Volkswagen, the biggest auto company in Europe and second biggest in the world, broke out. It was said that this auto giant lied and misled the public and world in its report about the emission levels of its brands. The report was doctored to enable the company meet the emission standards, to escape sanctions from regulatory agencies.

The revelation of this unethical practice has had unfavourable consequences on the company. They include:

a. The resignation of chief executive of the company:

b. Public apology;

c. The falling in value of the company’s stocks;

d. Costs involved in correcting the affected brands;

e. Reduced demand of the brands involved ;

f. Likely law suits;

g. Regulatory fines and penalties;

h. It damages the company’s reputation;

i. A whole lot of other opportunity costs.

If the stories coming out of the developed nations are like this, then the picture from the developing world, including Nigeria is more precarious, if not gloomy. Many firms are unethical in their business transactions. Again, there are weak institutional home works and highly compromised regulatory environments to contain the excesses of unethical entrepreneurs and enterprises. We read every day of numerous unethical practices of business people without sanctions. In the present process, customers’/consumers’ rights have been infringed upon. In some extreme cases, the health and wellbeing of Nigerians have been put in jeopardy while regulatory agents look the other way. Entrepreneurs, corporate leaders and organizations should look out for certain factors that create a climate conducive to unethical behaviours or practices. These danger signs have been identified by Cooke, (1991) and Bateman and Snell (2011). They are summarized thus:

1. Emphasis on short-term revenues or benefits over longer-term considerations.

2. Failure to put in place in the organization a written code of ethics.

3. A disposition towards “quick-fix” solutions to ethical challenges and problems.

4. Unwillingness or failure to take an ethical stand that-may involve financial costs.

5. Getting involved in ethics solely as a legal issue or as a public relations tool or staunt.

6. Lack of clear procedures or guidelines for handling ethical challenges or problems.

7. Tendency of responsibility to the demands or interests of shareholders at the expense of other constituencies or stakeholders.

Business people should avoid the above mentioned unethical signals and put in place Sustainable ethical strategies for their organizations. By so doing, they will be in a better position to reap all the benefits of ethical conduct.