Question

How does the degree law enforcement in a particular country affect ethical behaviors in business? Explain your answer.

Answer 1

The degree of law enforcement impact the ethical behavior in business in a considerable manner. It attempts to ensure that the business does not exploit or cheat the stakeholders by undertaking the activities within the framework of the legal activities governing the State. In fact, in many cases, laws and regulation do facilitate the ethical behavior. Accordingly, there are examples where the law coincides with the Business ethics or ethical behavior of Organizations or individuals for e.g., in case of Business ethics, Corporate Governance is about maximizing value subject to meeting the corporation’s financial and other legal and contractual obligations. It is the need for board of directors to balance the interests of shareholders with those of other stakeholders in order to achieve long-term sustained value. It is about nurturing enterprise while ensuring accountability in the exercise of power and patronage by firms. Hence in case of Corporate Governance, the degree of law enforcement in a particular country would affect the ethical behaviors in business in various ways:

Effective CG makes sure that a corporation is well managed

                - by establishing an effective Governing organ

                - by establishing an effective executive organ

                - by making clear the purpose and mission of the corporation

                - by establishing the right standards of corporate performance

In fact, the legal enforcement for the ethically legal behavior is rather necessary in the business because

• Business corporations of today are much bigger than in the past and the impact of their operations on the society is much larger.
• Good potential for thoughtless actions – long term consequences.
• Scope of operations of organizations has widened.
• A greater lot of the population is victim of bad actions by relatively few with disastrous consequence.
• Legal and Ethical issues occur frequently in management.
• They extend far beyond the commonly discussed problems of bribery, collusion, and theft, reaching into such areas as Corporate acquisitions, marketing policies, and capital investments.
• In merging the two firms, it is found that some of the positions in one are duplicated in the other. Here, law can supersede ethics.

With regards to Ethics in Decision making, abiding by law also plays an important role. With the increasing size of Business day by day, there has been a need to keep the business aligned with that of the ethics governing the same along with the Corporate Governance. Thus, overall, adherence of Business ethics while in Decision-making process, can attempt to make a person, both morally right along with being legally correct towards various business activities. To this extent, the degree of legal enforcement is necessary to ensure ethical behavior in business.