Ethical management encompasses a series of managerial activities that cultivate an environment where organization members can make ethical decisions even in the face of ethical dilemmas. It also entails recognizing that businesses have a fundamental obligation to fulfill not only their economic and legal responsibilities but also their ethical responsibilities as expected by societal norms. In essence, ethical management is a business approach that embraces corporate ethics as a guiding principle.
Corporate ethical management is not merely a means to control corruption among employees within an organization or a tool for management innovation that was once popular. It is a business activity that corrects wrong practices or cost structures within the company to meet ethical standards, thereby enhancing the company's competitiveness and creating new economic value. Ultimately, the purpose of corporate ethical management is to maximize profits and contribute to society through the corporate profits generated in this way.
In a market economy, ethical management practices that enhance corporate ethics play a pivotal role in fostering trust among all stakeholders, including consumers and investors. This, in turn, significantly impacts the overall image of the company, leading to the maximization of corporate profits and ultimately determining the survival of the enterprise itself.
As exemplified by the recent case of Enron in the United States, ethical management has become an essential element for corporate survival, not just a choice, as ethical controversies stemming from accounting fraud can lead to stock price crashes, make it impossible to raise capital, and ultimately result in corporate bankruptcy.