Business Ethics: Terms and Definitions

According to ‘Business Ethics’ (2003), business ethics is defined as the moral principles and values that administrate the behavior of an organization. It points out the basic beliefs and priorities of the organization in solid terms. An organization can therefore gain a particular status; bad or good, depending on the influence of the organization.

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Explain how corporate culture influences the ethical behavior of an organization

Corporate culture is simply the personality of an organization. It can influence ethical behaviors positively or negatively. Countries differ from each other in terms of their corporate culture. The western and the eastern countries have different cultural norms in their businesses. What is viewed ethically wrong in the United States is viewed to be ethically right in China. Polland, Chan, and Chuo (2007) point that ‘China has a corporate personality of accepting bribes as opposed to the US where they view it as illegal’ (p. 3). Therefore according to the western perspective, eastern countries instill some unethical behaviors and vice versa. Polland (et. al., 2007) asserts that ‘culture is difficult to define universally as it represents a group’s values, patterns of thinking, feeling and acting.’(p. 3)

On the other hand, if the corporate culture is ethical then ethical behavior will be exhibited. An excellent moral approach will generate positive corporate culture making the employees and customers happy and ultimately boosting the profits. Transparency of expectations and maintenance of ethical quality influences the behavior of employees positively (Small, 2009).

Corporate culture has proved to be difficult to change despite having influential capacity on the ethical behaviors of an organization. This is because culture has taken a long time to be in existence and the roots are beyond the walls of the organization. Therefore, it will not be easy for them to be changed overnight.

Klabunde (2008), states four ways of changing corporate culture. They include; educating and encouraging employees, pointing out expectations, recognizing and celebrate success, and remunerating success. These four methods will enable shifts and flexibility within an organization hence corporate culture change.

How can whistle blowing be both a positive and/ or a negative situation for many individuals?

An organization is not complete without the presence of whistle blowers. (Storey, 2009) defines a whistle blower ‘as someone who divulges unethical behavior to the people in authority.’ The positive aspect of whistle blowing is that person(s) will boost honesty, fairness and equality. On the other hand, one may be seen as a traitor and encounter a lot of hostility in the work place. From my point of view, whistle blowing should be encouraged but policy measures should be put in place to govern it. Protection must be provided to the whistle blowers to avoid their retaliation. The motive behind a whistle blower should be highly scrutinized so that they do not implicate innocent individuals. Whistle blowers should not be looked down upon as they are instilling good morals in the society. (Miceli, Zworykin & Near, 2008, p.168) states that ‘US whistle blowing decree offers protection to whistle blowers depending on the motive to avoid retaliation.’ The process of whistle blowing according to Miceli (et. al. 2008, p. 170) is that ‘employees should make their disclosure first to their line manager and it should be of good faith. They should also believe that the following has or is about to happen; criminal offence, breach of lawful requirements, violation of company’s procedures, and actions leading to negative impact of people’s health. Investigation is then conducted and the findings presented to all parties involved. Thereof the necessary action is taken.’ However, this is not the case in china as whistle blowing seeks anonymity, often by email and it comes from all sections of the company. However, the letters can point to the writer but this is kept as a secret. Chinese people hardly ever keep to a single allegation. Therefore, investigators tackles such issues by starting with general focus, then they narrow down to serious and specific allegations (Blank, 2009, ¶ 4-5).

Explain the responsibility of the corporation as a moral agent

Ethical accountability assumes the ability of corporations to make rational decisions which makes them to be held responsible for their actions. This signals corporations to perform their role as moral agents well. People with incapacity to make rational decisions (employees) should not be held responsible, but Measures to curb the irrational behaviors should be put in place. For example, adults are held responsible for the actions of their children because they can not make sound and mature decisions. Corporations on the other hand, render services, products and equally employment therefore, these activities bring about their moral responsibility. Thus, the major role of a corporation as a moral agent is to ensure their social and economic power does not negatively affect the society. Their interactions with the internal and external entities should show dedication, sense of care and reliance (Barriet, 2004, p. 1). The responsibility a corporation assumes as a moral agent makes it to be considered as a societal moral agent.

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The western and the eastern views towards moral responsibility differ in a wide range. The Chinese community can not be held as moral agents as their way of doing business is selfish and profit driven; hence a lot of unethical behaviors are executed. On the other hand self-interest and selfishness in the US business organization is prohibited and illegalized. This indicates that US prioritizes moral responsibilities unlike in China where moral responsibility are not put into much consideration. Apparently, Polland (et. al. 2007) points out that, ‘the syndrome of selfishness has taken hold of the corporations and society in China’ (p.6). Therefore, corporations in China can not be termed as moral agents.

What usefulness does ethics training have on workers ethical behavior?

Unethical behaviors have become rampant in the current business world. This has led to the adoption of Ethics training by a high number of organizations today. ‘Todays marketer’ (2003) (¶ 1-2) indicates that ethical training inculcates corporate morals, rules and regulations to the managers as well as their juniors in an organization. Importantly, ethics training expands staff member knowledge on moral issues, increases the level of their personal awareness and makes them be aware of the consequences of malpractice. Further, it ensures organization’s moral rules are applied in a continuous prose. Lastly, the article cites that ethics training reinforces the rules and boundaries employees and their seniors should follow (¶ 1-2). Therefore, traits of ethics training discussed above are of high importance as they nurture ethical behaviors in a positive manner.

Ethics training can be a success or a failure. For it to be effective and have an impact on the moral behaviors of an organization especially in Vietnam, an effectual ethics training program should be integrated. This program should address a number of issues (LRN, 2007, ¶ 2);

  • It should be motivating and promote active contribution.
  • The ethics training program should reflect real work environment. Here employees learn and apply what they experience during work.
  • The program should incorporate day to day happenings in Vietnam that the employees stumble upon.
  • Employees should be taught the significance of ethics to motivate upright conduct, especially in a community full of unethical behaviors.
  • Lastly, leaders in an organization should actively motivate ethics training program efforts.

Why would a company choose to understand report on, and improve their ethical conduct?

In business arena, reports are prepared by the subordinate stuff to update the management about the business performance. It helps to enlighten the management about the success and failing of the enterprise. Therefore accuracy of the reports is very essential for the success of a business. Thus those in management should take their time to go through the reports presented to them and try to understand them accordingly. They should request clarification in case of any ambiguity in the reports. In situations where they realize that the reports presented to them failed to address the subject matter appropriately or were biased, they should consult those that prepared the reports and advice them accordingly. This will enable the subordinate to be more attentive and alert when reporting in future. In addition understanding of the reports appropriately will ensure that the reported issues are addressed amicably without prejudice in instances of biased reporting. Therefore understanding of reports well is a very important act for management in order to try and eradicate any ethical issue that may surface from the reports.This is very necessary and particular in Vietnam where there has been noted to suffer from poor company reporting of late(Simon, 2009 ).

List and describe three models that have been developed to capture structural and behavioral organizational ethical performance

The three models include; generic ethics influences model, ethics and mortgage lending model and executive’s ethical behavior model. The first model, generics ethics influences model depicts a number of facts that combine to form personal moral behaviors. The model is based on a number of assumptions which include;

  • Better media efficacy and the rule of law augment forces for greater levels of moral behavior.
  • Greater socioeconomic growth may expand the focus on obvious success values, thus forming culture’s moral values.
  • A culture’s moral values characterize individual decent growth.
  • Individual’s socio-economic security is influenced a lot by an organization’s demand to deliver which in turn affects an individual’s moral conduct.
  • External pressure; foreign and industrial competition, increases pressure to perform hence suppressing an organization ethical environment.

The second is ethics and mortgage lending model. This model focuses on present concern, where immoral behavior of lenders and borrowers of mortgage generate unhealthy ratio of less loans to major loans. A culture of spending is created to energize buyers and greater commissions lower lenders morals. The model thereof depicts self –correcting trait which leads to increase of money supply in the long run.

Lastly, it is the executive’s ethical behavior model. This third model concentrates on major powers which can outline moral behaviors of an executive. The executive is the body which holds high responsibilities and makes important decisions but it is not the overall management. Therefore, it can experience a lot of pressure to deliver, perhaps at the expense of morals (Barret, 2004, pp.4-6).

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In the view of the above, a difference occurs between Vietnamese companies and multinational companies based in Vietnam. These multinationals always plays by their mother country rules of avoiding illegal and unethical behaviors as opposed to Vietnamese companies.

What can multinational companies and the global community do to reduce bribery?

Bribe means favors in terms of payment or other forms to make the recipient to act according to the instructions of the bribe giver. There are two types; white mail and lubrication. Bribery has some negative effects economically and socially around the globe. It wears away support for aid, puts intense load on the poor and makes the living standards to be of low quality. Reasons for bribery are well known and measures to combat it have been suggested. Dissuasion and prevention are two ways which can be used to tackle bribery. Other suggestions include; promotion of legitimate competition, creating a balance between rules and professional diplomacy, alter the reward structure, lower tariffs and trade barriers, and communal activities should be made visible. The effects of controlling measures against bribery on the companies conducting bribery acts are negative. Bribe is meant to speed up processes and activities conducted by companies. Therefore, measures put to curb corruption will slow down the organizations’ pace and the profit acquired will be low. Bribery brings inequality and undue advantage on entities exercising it. To ensure equal functioning of these businesses the following should be addressed;

  • Every institution should be involved in tackling bribery issues.
  • Communal institutions should be drawn to higher levels of transparency
  • Aid for development should be linked with how the recipient country has managed and illegalized corruption.
  • Privatization of public entities should be done.
  • People working in public institutions should be evaluated and take responsibility of the actions they have committed against the law.

For the above to be effective in Vietnam, the corporate culture of Vietnamese should be reformed and the global effects of bribery on business entities should be well emphasized.

Describe price discrimination and give three examples of when price discrimination may become an ethical or even a legal issue

Price discrimination is a case where a certain company charges different prices of similar goods to different consumers for a motive far from cost (‘Tutor 2 u’, 2009, ¶ 1). Schenk (2004, ¶ 3) also defines price discrimination as charging unlike prices to different buyers. The purpose of price discrimination is to charge the highest price that the buyer is eager to pay.

Price discrimination becomes an ethical issue when gains from trade are not properly distributed between buyers and sellers. As defined earlier, price discrimination does not occur to recover costs; therefore it becomes ethically wrong to have imbalances of price for the same commodity. Price discrimination also becomes an ethical issue if a vendor utilizes his market power to gain intensely from what the buyers get from the utilization of the commodity. For example, from the description of price discrimination similar goods are sold for different price to different consumers. Therefore the seller will obtain higher profits than required and this qualifies the seller to be ethically wrong. Lastly, price discrimination becomes an ethical issue when the capability of strong buyers is reduced by less influential sellers (Tiemstra, 2006 ¶ 22-23).

Reference list

‘Business Ethics’ (2003). What is business ethics?. Web.

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‘LRN’, (2007). How to create an effective compliance and ethics training program. Web.

‘Todays marketer’, (2003). Ethics training. Web.

‘tutor 2 u’, (2009) price discrimination. Web.

Barrett, W. (2004). Responsibility, accountability and corporate activity.

Blank, N. (2009). Global fraud report: whistle blowers in china. Web.

Gebler, D. (2004). Closing the behavior-standards gaps is the easy part. Web.

Jain, R. (2008). Importance of ethics in business. Web.

Klabunde, T. (2008). Four steps to changing corporate culture. Web.

McManus, K. (2003). The challenge of changing culture. Web.

Miceli, P. M., Dworkin M.T., Near, P. J. (2008). Whistle blowing in organizations (pp 168-170). New York: Madison Avenue.

Polland, D. F., Chan, S. P., Chuo, S, F. (2007). Corporate ethics. California.

Schenk, R. (2004). Price discrimination.

Simon, L. (2009).Vietnam – market ethics. Web.

Small, J. (2009). Importance of ethics in a corporate environment. Web.

Storey, A. (2009). Pros and cons of being a whistle blower. Web.

Tiemstra, P.J. (2006). Price discrimination and fairness. Web.

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