How Unethical Behaviors Can Shut Down Entrepreneur’s Dreams

        Ethics plays a significant role in accelerating innovation and creating stakeholders wealth. Why do organizations bother with ethics? Ethics is so critical that management has to pay closer attention to it in order to survive. Society views unethical behavior by business leadership as being social irresponsible; and management more often than not pays a huge price tag for being unethical or being social irresponsible. Ethics needs no definition; however, if one cares to define it, it can simply be defined as “the behavior that includes respecting human dignity and vulnerable people and keeping them in mind when making decision in organizations.  Ethics is also critical to innovative processes and creativity in an organization.” (Petroy, 2007, Class notes on ethics in innovation processes, ¶ 1). Some organizations confuse ethics with legality that is to say; if their behaviors do not break the law they feel they are being ethical.

            Unethical behavior can be very costly to stakeholders. “Sometimes, revenues and profits are generally not what motivate managers to care about ethics. Managers want to feel good about themselves and the decisions they have made; they want to sleep at night” (Beatty & Samuelson, 2001, p. 211).  Customers’ reaction to unethical management behavior can force an organization out of business. An example of unethical behavior leading to a business failure is illustrated in a publication by Beatty el., 2001.

Unethical behavior is a risky business strategy, it may lead to disaster.  An engaged couple made a    reservation, and put down a $1,500 deposit, to hold their wedding reception at a New Hampshire restaurant.  Tragically, the bride died of asthma four months before the wedding. Invoking the terms of the contract, the restaurant owner refused to return the couple’s deposit.             

In a letter to the groom, he admitted, “morally or ethically I would of course agree that the deposit should be returned.” When newspapers reported this story, customers deserted the restaurant and it was forced into bankruptcy over a $1,500 disagreement. Unethical behavior does not always damage a business, but it certainly has the potential of destroying a company overnight. (p. 211)

        It may be difficult for the aforementioned business owner who acted so unethically to implement any innovative ideas even in the near future because of the stigma on him. Acting unethical lives with management forever. Management must lead by example.  Employees look up to management for ethical dilemmas; the more unethical management is, the more it transcends the organization.   Innovation is negatively impacted if management lives unethical behavior.  They must act responsibly in order to promote innovation and creativity. “Responsible professionals are persons who rely on moral and ethical principles to guide them, feel a sense of obligation to company and community, and contribute to society” (Hesselbien, Goldsmith, & Somerville, 2002, p. 58).

        Another recent example of unethical behavior by senior executives that had resulted into  lost retirement savings as well as lost of reputation was the Enron and Arthur Andersen accounting scandal.  Accounting transactions were kept under unethical business practices.  Revenues and profits were inflated to meet Wall Street expectations at the expense of its hard working employees who had given their whole lives, commitment and dedication to the organizations.  Enron and Arthur Andersen management did not include the plight of their vulnerable employees in making those unethical decisions. This unethical behavior was very detrimental to innovation and creativity. 

        Ethics is very important in the professional lives of management.  They must live exemplary lives to order to protect stakeholders’ wealth; because some unethical behaviors could lead to incarceration as well as lost of dignity, creativity and innovation. This is exemplified in

Martha Steward’s case even though she was not charged with insider trading but most people believe her unethical behavior was insider trading.  She was incarcerated and that had had a negative impact on her company today. (“Wikipedia,” n.d)

References

Beatty F.J., & Samuelson S. S., (2001).  Business law for a new century (2^nd ed.). Ohio:

for results. New York, Jossey-Bass.

Wikipedia. (n.d).  Martha steward insider trading charges.  Retrieved November 4, 2007

from  http://en.wikipedia.org/wiki/Martha_Stewart_insider_trading_charges