Business Ethics in 2000, Immediately Term Paper

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In the case of Enron, upper-level executives went too far. By blatantly lying on numerous occasions about the value of their stock, participants like CEO Kenneth Lay overstepped the boundaries of utilitarian lying.

Many studies have been conducted on the relationship between ethics and profitability in the business world. Studies indicate a "positive but not definitive" relationship between ethical behavior and financial success (Webley and More). Especially in the wake of the Enron disaster, investors and employees are looking toward companies with stronger ethical codes. Research has also indicated that companies that overtly refer to their codes of ethics in their annual reports and other public communications fare better than those that don't, in terms of economic added value (EVA), market added value (MVA), and reduced volatility (Webley and More).

Such research does not indicate a causal relationship between ethical behavior and profitability. What such research indicates is not necessarily that ethical companies are more successful because they did not lie. Rather the studies show that investors are more attracted to ethical companies: more investors means more profits. Similarly, consumers who are concerned about ethics will choose to patronize businesses they feel good about, businesses that are at least in word committed to ethical practices. Profitability follows spending and investment habits; profitability does not necessarily or directly follow ethics.

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Many ethicists insist that the question is not one of utility but of duty: members of the business community should tell the truth because it is their duty to, because it is the right thing to do. Others note that telling the truth is good practice insofar as it benefits the company in the long run, usually via increased profits or an avoidance of a lawsuit. A utilitarian ethicist would admit that lying is occasionally justifiable, if the ends clearly justify the means. The problem with utilitarian lying is that few people are capable of foreseeing all the consequences of their lies.

While many if not most executives and employees tell the truth nearly always, a few bad seeds can undermine the efficacy of a deontological business ethic. Companies that don't lie in general will be more profitable in the sense that they engender trust in employee, consumer, and investor. Ethical companies can be profitable because by engendering trust they attract more business from joyous consumers and keep their employees happy and reduce turn-around. Furthermore, lying in a corporate environment can be dangerous. As Enron shows, no one is immune from getting caught; companies that lie risk falling apart at the seams and undermining the very purpose for which they lied in the first place.

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