Business ethics is one field of study that has been questioned by many. Several practitioners do not find any importance of including this study within business realms. However, studies have pointed out that ethics is a very essential part of the business world. The Game Theory gives an appropriate vantage point through which one can identify the importance of ethics in business.
According to the Game theory, decisions in an organization are made depending on the counter parties’ positions and likely actions and the organization’s preferences. Within the same brackets are one-time games and repetitive games. One-time games are those situations where an organization engages in a business deal where the customer or the person dealing with them is not likely to return. In such a case, the reputation of the organization is not at stake. The decisions made do not, therefore, reflect a moral approach.
Unfortunately, a one-time game that ends up in malpractice results into jeopardizing other organizations’ chances. As a result, distrust will arise between the different organizations. Accordingly, other organizations will either quit or resort to high-risk premium demand. Eventually, many deals will fail due to the above reasons. This could result into a great negative impact on the economy.
As one scholar puts it,
“the morality of economic agents influences their behavior and hence influences economic outcome. Without honesty, trust and goodwill, economic life would grind to a halt”.
A halt in the economy means that everyone suffers the brunt of unethical behaviors. Economic literature has also argued that there is an upward sloping of utility when good deeds and money prevail.
A good example of an ethical situation that needs to be addressed in my working place in Vietnam is the issue of low wages. Foreign companies have taken advantage of the weak legal structure of this country and failed to increase the salary of workers so that they can rake in more profit due to the reduced cost of input.