An Introduction to Business Ethics

Business Fraud and Corporate Crime

A corporation is a legal entity that is created by the laws of a state with all the rights and privledges of a citizen to enter into contracts. Corporations are created strictly as a product of corporate law.

Corporate Ethics became a popular area of concern in the 1980's at a time when it became evident the popular saying "Greed is Good" became the war-cry of corporations and professionals everywhere within the United States. The subsequent stream of corporate fraud cases from the 80's through today resulted in a focus of corporations to develop and adhere to corporate ethics policies.

Corporate Ethics is the study and evaluation of decision making by busninesses according to moral concepts and judgements. One of the key concepts to understand when attempting to define just what corporate ethics are is the motivation for a corporation. A company's main purpose is to maximize its return to investors, this driving purpose of profit maximization would then indicate that it would be unethical for a corporation to consider the interests of anyone else other than its shareholders. Taken to the extreme that driving factor would state that it would be acceptable for a corporation to cheat its customers if it resulted in placing more profit within the hands of its shareholders. However in recent years questions of ethical responsibility of corporations to the environment, community, and its employees have arisen and been at odds with the stated purpose of profit maximization. Governments have also placed ethical responsibilty onto corporations through the use of regulations defining the legally acceptable practices of a Corporation. These regulations are frequently different from Country to Country and what may be criminal on one location is the accepted practice in another such as bribery.Companies must decide on whether to follow one constant ethical concept or to adapt to local customs.

Corporate Ethics are frequently mandated by trade associations and unions associated with a particular field. These organizations have realized the costs associated with corporate crime are high both to society and the businesses themselves as well as the overall industry to which they belong in terms of the reputation of the industry. 

When corporate officers and corporatations choose not follow an ethical code and carry out fraud and crime the damages to society are staggering. From cases of retirement pensions being used for corporate expenses to the manufacture of known defective products the shear size of corporations can result in staggering damages being incurred by society.