BUSINESS ETHICS is defined as the applied ethics discipline that addresses the moral features of commercial activity1, which

in laymen terms, means that business decisions or actions should be driven directly from the organizations principles and values. BUSINESS ETHICS has increasingly become more complicated over the past five decades, especially, as U.S. companies expand their footprint on a global level. For example, a multinational corporation may operate in various countries where bribery, sexual harassment, racial discrimination, and lack of concern for the environment are neither illegal nor unethical or unusual where management is challenged with the notion of either adhering to its ethical principles or to adjust to the local rules to maximize profits.2 During the Clinton Administration era, as U.S. companies began to dramatically increase their global footprint, especially, in China and Russia. Human Right activists became increasingly concern that U.S. companies may expose themselves in the pursuit to maximize their bottom line results. The Administration addressed the concerns in 1995 through the publication of the U.S. Model Business Principles. The U.S. Model Business Principles encourages all businesses to adopt and implement voluntary codes of conduct for doing business around the world that cover at least the following areas of concern:3

Provision of a safe and healthful workplace. Fair employment practices; including avoidance of child and forced labor and avoidance of discrimination based on race, gender, national origin or religious beliefs; and respect for the right of association and the right to organize and bargain collectively.

Responsible environmental protection and environmental practices.

Business Ethics, Stanford Encyclopedia of Philosoph accessed on April 22, 2012 via http://plato.stanford.edu/entries/ethics-business/ 2 Business Ethics, The Free Dictionary by Farlex accessed on April 22, 2012 via http://encyclopedia2.thefreedictionary.com/Corporate+ethics
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Model Business Principles, United States Department of Commerce, International Trade Administration accessed on April 22, 2012 via http://actrav.itcilo.org/actravenglish/telearn/global/ilo/guide/usmodel.htm

Compliance with U.S. and local laws promoting good business practices, including laws prohibiting elicit payments and ensuring fair competition. Maintenance, through leadership at all levels, of a corporate culture that respects free expression consistent with legitimate business concerns, and does not condone political coercion in the workplace; that encourages good corporate citizenship and makes a positive contribution to the communities in which the company operates; and where ethical conduct is recognized, valued, and exemplified by all employees. During the Bush Administration era, the United States capital market

started to experience an increased frequency of financial reporting scandals. Many of the business leaders of this era had become increasingly aggressive in order to manage investors and analysts expectation. Companies like WorldCom/MCI, Adelphia Communications Cable, HealthSouth, Cendant, Tyco, Imclone Systems, and Enron were among a few that were found guilty of some type of earnings management coupled with fraudulent activities by management members. HISTORICAL FACT : On December 2nd, 2001, the Enron Corporation files for Chapter 11 bankruptcy protection in a New York court, sparking one of the largest corporate scandals in U.S. history, which resulted in the loss of billions of dollars due to its unethical behavior. The Enron scandal resulted in legislators creating the Sarbanes and Oxley Act of 2002 in an attempt to control corporate ethical behavior, to implement financial reporting controls and to levy judicial punishment to violators of the Act. According to President Bush, who executed the Sarbanes and Oxley Act of 2002, he stated Today I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt. This new law sends very clear messages that all concerned must heed. This law says to

every dishonest corporate leader: you will be exposed and punished; the era of low standards and false profits is over; no boardroom in America is above or beyond the law.4

H. Rockness & J. Rockness, Legislated Ethics: From Enron to Sarbanes-Oxley, the Impact on Corporate America, Journal of Business Ethics 57: 31) 54, 2005 accessed on April 24th, 2012.
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