Russian Presidential Academy of National Economy and Public Administration

Department of Economic and Social Sciences

Maintain corporate ethics to choose between success and failure

Written by Ivan Lapshin, third-year student

Date:15\05\2013

Moscow 2013

Contents

1. Introduction……………………...…………………………………….3

2. Maintain corporate ethics to choose between success and failure

1. Concept…………………………………………………………………..4

2. Background ……………………………………………………………...5

3. Corporate ethics management……………………………………………6

4. Wrong practices………………………………………………………….7

5. Ethical issues in ………………………………………………………….12

• finance

• human resource management

• sales and marketing

6. Control by ethics officers………………………………………………...15

7. Business ethics in Russia by the example of Gazprom ………………….17

3. Conclusion …………………………………………...………………..23

4. Bibliography…………………………………..……….………………24

5. Appendix…………………..…………….……………………………..25

1. Introduction

The main reason why humanity has survived for so long is due to certain rules, values, mores and ethics, which all of us abide by. Just imagine, what would happen if suddenly we were left without any sense of morality or values. In such a scenario, no doubt, chaos will prevail everywhere. Thus, ethics and values are the very foundations on which this civilization is standing.

An ability to act effectively in situations, which involve ethical aspects, is becoming one of the standards of corporate governance and a key element of business tasks solution and possible risks reduction. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws. Businesses can often attain short-term gains by acting in an unethical fashion; however, such behaviors tend to undermine the economy over time.

Players on the business ethics field are personnel, customers, suppliers, subcontractors, shareholders, society and those who speak on behalf of the environment and future generations. Many ethicists say there's always a right thing to do based on moral principle, and others believe the right thing to do depends on the situation. Ultimately it's up to the individual what they do and what they believe to be the right thing. Sometimes the right thing is not necessarily the best thing to do. Executable ethical standards are essential to reduce the risk of breaches when conventional measures of control prove inefficient. A system of corporate ethics to ensure that these standards are abided by is no less important than the standards themselves. The main purpose of this work is to define corporate ethics itself, determine its significance and spheres of application. This work is really very topical because more and more companies nowadays organize their internal structure by enforcing code of business ethics. Ethical behavior and corporate social responsibility can bring significant benefits to a business.

2. Maintain corporate ethics to choose between success and failure

1. Concept

Corporate ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Some corporations have well defined ethical parameters and others don’t, or they sacrifice ethical behavior to profit and determine that gaining profit and power are the most desired motives. When discovered in this type of activity, there is often a strong backlash that results in losing profits. This suggests that even if the decision to adopt defined corporate ethics is purely motivated by profit, it may be good business.

Formal business regimes. The ways companies conduct business are multiple and complex, and corporate ethics may operate on numerous levels. Ethical considerations can determine how a corporation competes at the business level with other corporations.

Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control. The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.

Corporate ethics reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company. If a company's purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility.

Ethical issues include the rights and duties between a company and its employees, suppliers, customers and neighbors, its fiduciary responsibility to its shareholders. Issues concerning relations between different companies include hostile take-overs and industrial espionage. Related issues include corporate governance; corporate social entrepreneurship; political contributions; legal issues such as the ethical debate over introducing a crime of corporate manslaughter; and the marketing of corporations' ethics policies.

Business ethical norms reflect the norms of each historical period. As time passes norms evolve, causing accepted behaviors to become objectionable. Business ethics and the resulting behavior evolved as well. Business was involved in slavery, colonialism, and the cold war.