How Does Ethical Culture Affect The Australian Economy

Second Part
The Global Financial Crisis (GFC) was followed by the deepest recession in the world economy since World War II. The Australian economy performed better during this period than most other advanced economies on nearly all relevant indicators. Although financial and economic conditions were stressed, the financial system worked remarkably well (Tony & Morling, 2011). Diverse factors have been stood in to explain this strong Australian economy performance during this recession. These include the strength of Australian financial system, the monetary and fiscal policy response and the Australian government commission’s well performing. This paper looks at only Australian Securities and Investment Commission (ASIC) performance
during the GFC relating with Australian corporate ethical culture. The term “corporate ethical culture” might have a range of explanation and definition. However in this paper this term will relates only the meaning of what kind of decisions workers are making.
Are those decisions base on just getting the job done whether it hasn’t ethical value or getting the job ethically right way. Applying this terminology this paper will focus on Australian corporate culture whether it is strong or weak. Secondly it’s going to demonstrate how ASIC performed during the recession complying the ethical issue.
Part1. - It is important to find out does Australia has positive or negative corporate ethical culture. Even though comparing with other countries ethical culture is far more accurate method to discuss Australian ethical culture, there are might be some challenges due to what kind of dimensions are used to compare. For example if comparing the maturity level of ethical culture with different countries the Australian ethical culture is at a different stage of maturity comparing with other countries; such as Europe and US (Institue of Chartered Accountants Australia, 2013). The recent study mentioned in Europe and the US, business ethics is more recognized as a management discipline informed by comprehensive body of range of researches, yet in Australia business ethics is still seen in compliance level. However some author such as Luke Nottage argues
that corporate law has been modernized in the legislations as well as in applied level (Nottage, 2007). He continues that Australia has applied the approach in preferring broadly worded principles instead of detailed rules and encouraging it via the stock exchange; because all these aspects make more sense for corporate governance system with traditionally stronger features. For example in 2007 the “Corporations Amendment (Isolvency) Act” was legislated (strengthen protection of employee entitlements, improve insolvency practitioner disclosures to creditors, streamline procedures for liquidating corporate groups; extend ASIC’s investigative powers in monitoring liquidators and improve court processes regarding misconduct by company officers; stricter regulation of insolvency practitioners; fine tune (Treasury, 2007)). Furthermore indicators which are evaluated by different organizations show that Australia has strong ethical culture. Regarding to a global index on corruption which publishes By Transparency International (IT) Australia ranked in the best 10 countries (International, December 2012). Furthermore in 2011 three of Australian top four banks were included in the 2011 World’s Most Ethical Companies list (Ethisphere, 2011). Thus there is no aggregate measurement which indicates does Australia has strong ethical culture or not. However few indications claim that Australia ranked in the quite top best performing country in business ethical culture. Part2. Turning to the issue of how ASIC had performed during the GFC and what kind of relationships does corporate ethical culture has with economic performance. First it is important to look at what kind of relationship does corporate ethical culture has with company and with economic performance. The US 2009 National Business Ethics Survey demonstrated a few main findings ( Ethics Resource Center, 2010). Those findings showed that recognizing the importance of ethical culture in a company has an esoteric impact on the way of workplace behavior which can lead business in risk. The one of the most insightful finding was “in stronger ethical cultures, employees feel engaged and committed to the company and the company is protected from the risks associated with misconduct and lurking ethics issues.” The ERC survey also supported this idea showing that there is a very strong correlation between a positive ethical culture and lower company risk (The Ethics Resource Center, 2012). What ASIC had done during this period is another area for consideration. According to the ASIC story about how they respond to the GFC the chairman of ASIC mentioned that the GFC impact on Australian security and investment market was less than in the US and The UK (Australian Securities and Investments Commission, 2010). He continued whit the main four points that ASIC developed during the 2009 recession. One of these points was about ethical culture issue. Chairman of ASIC in the Trans-Tasman Business Circle 30th of November, 2011th event mentioned:
“In a crisis such as the GFC, financial and other pressures on participants in these markets increases and, notwithstanding overall good corporate ethics in Australia, can lead to wrongdoing. ASIC has continued to act decisively to investigate and punish wrongdoing.” (Australian Securities and Investments Commission, 2010).
According the ASIC report ASIC has continued to act decisively to investigate and punish wrongdoing. During and aftermath of the recession ASIC was continued the investigation and civil penalties. In addition, leading up to recession, ASIC had significantly improved its source in improving market integrity and punishing insider trading and market manipulation. Thus it can argue that ethical issue has played significant role in encouraging the Australian economy to avoid more serious damage in during recession period. It could supported with idea that was mentioned before having an engagement in ethical behavior to reputations makes the company more effective and allows them to prevent reputational risk and ethical business cares an integral part of what drives company success. As long as company success leads the economic to growth, ethical culture is one of the factors that derive the economy to growth. End of part2
To sum up the second part of this paper Australia possibly does have a positive and strong corporate ethical culture which is demonstrated from global indicators.
Furthermore the positive ethical culture and ASIC strong performance apparently contributed to help the Australian economy to better perform during the GFC.
Bibliography
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