In the world of fierce competition, one the most fundamental is the question of ethics. Is it enough to obey laws, in order to be ethical, or is there anything bigger than law that makes up the socially responsible image of organizations? The answer is simple: obedience to law is not everything needed to ensure ethical integrity within and across organizations. The responsibility of any organization should not end with obedience to the law. All organizations need to develop and sustain moral authority and ethical conduct at all levels of organizations’ performance.
The main reason why organizations should not limit themselves to legal compliance is because many ethical questions are beyond the realm of law. Another reason is that many things that appear to be legal also appear to be unethical. For example, it may be legal to pay minimum wages to unqualified workers in sweatshops, but is it ethical to keep these hard-working individuals at the edge of survival? Certainly, it is not. Managers in organizations are obliged to make choices that contribute to the welfare of workers and meet the needs and interests of the society (Daft, Marcic, Bradford & Stevens, 2009). In most cases, these choices cross the boundaries of law and require a detailed ethical analysis of each organizational situation.
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Organizations’ responsibility should go beyond mere compliance with the law, simply because legal clearance does not secure organizations from ethical problems (Brooks & Dunn, 2009). The case of Salomon Brothers in 1991 clearly indicates that laws alone cannot keep executives from engaging in unethical conduct (Brooks & Dunn, 2009). Managers must acknowledge the crucial role in shaping the ethical climate in organizations and create an atmosphere that helps strengthen these relations for the benefit of workers and the community (Paine, 1994). Law is just a factor of the deterrence, but the fear of punishment never suffices to bring managers and employees to the desired ethical result. Organizations must be responsible beyond the law, because laws cannot obligate employees and executives to behave ethically. Ethics is not about compliance but is about proactive promotion of ethical behaviors and decisions, such as corporate philanthropy and corporate giving programs (Hartman, 2008). Ethical conduct grows from within the personal and collective understanding of ethical values, principles, and beliefs.