Business ethics is an indispensable aspect in the rise of any business enterprise because it has been an element within the business environment for a long time. The phenomenon is clearly defined by the way business interacts with ethics, thereby generating the problem statements and how to solve them. Ideally, business ethics is concerned with the way a business conducts its day to day activities and transactions within its environment. Each and every business has its own specific and distinct ethical platform which depends on the kind of operations that the business is carrying out. These ethics apply to both the dealings that a trade has with individual customers and to the society at large (Yeoman’s and Tench, 2009).
The introduction of business ethics has redefined the way businesses should be operated in the sense that it has brought to an end the stereotype mentality of capitalism. Instead it has instilled the idea of minding the way a trade affects or interacts with its stakeholders, employees, single customers, and the whole world in general. It has made many people operating businesses to stop focusing on making money but also maintaining good ethical conduct. This has been a key factor in enhancing the reputation of an organization. In this light, this paper discusses the concept of ethical business with regard to various ethical models that are implemented by international businesses.
Is business a moral by definition?
Business can have a diversified scope of definitions mostly due to the nature of the activities dominating in the enterprise. All these definitions will in one way or another be related since they will all revolve around the main aim of carrying out the trade which obviously is profit making. Despite the fact that revenue generation is presumably the sole objective of any business, there other aspects that can also define a trade. One of these aspects is the moral standards that are set in an enterprise which without doubt forms the cornerstone of a business (Fredrick, 2002, p.200).
Morals can be defined as the categorization of behaviors as either right or wrong. From this point of view a person can therefore define a business as a commercial enterprise that provides goods and services in morally acceptable manner. This basically translates to carrying out of scrupulous dealings. Such dealings should involve a lot of integrity that should be sourced from simply carrying out the right thing in the business set up. Fredrick (2002) suggests that doing the right thing in the operations of an enterprise means conducting your activities in a manner that will uphold a good relationship between business and the environment.
The environment in this case implies the people who are affiliated to the business. This includes stakeholders, staff, and any other party that has a relationship with the dealings of the organization. In this case, since all these parties are influenced by the actions of the trade, it is the obligation of the enterprise to carry out fair and justifiable deals. It is therefore indisputable that it is necessary for all enterprises to ensure that operations are executed in a morally upright manner, which in other words implies social responsibility and accountability.
With this in mind, then it becomes rational to endorse the argument that business is a moral by definition since it is now crystal clear that everything that should be done in the set up should be right. With reference to the above definition, we can be able to distinguish between a business with moral ethics and one that does not have. This distinction will be regardless of the fact that both are aimed at making proceeds because it will be based on how well each is able to responsibly and accountably conduct its operations with the people that are associated with it.
Describing a business by moral standards has created a landmark in the entrepreneurship field whereby any person or company doing business is limited to perform his or her activities with an egocentric approach, but rather practice sense of integrity, conscientiousness, and accountability.
From the above disparity, a person can be able to give a good example of each of these types of businesses (Jennings, 2008, p.450). For instance, a factory that has poisonous waste product should not direct the waste to drainage system such as river where there is a likelihood of human beings or animals consuming the same water that will be contaminated.
Another case is where we have a supermarket that is open on normal hours between 7 am to 8pm and has a number of employees that are on day shift only. If it happens that on certain days, due to the work load, the employees are compelled to work till 10am. This simply means that the staff has been on duty for a longer time than agreed hence working on overtime. It is conventionally known that overtime rate are double the normal working hours rates, therefore whenever the workers work overtime they should be paid accordingly. If the supermarket does this willingly then there is no doubt that this is an example of business that is entrenched in moral ethics.
Is business “bluffing ethically”
If viewed at various angles a person can start perceiving a business as an ethical trick that is played with the aim of having space in the market. The main reason why bluffing can be deemed to be an ethic adopted by many businessmen is the way strategies are formulated to ensure that the establishment is able to remain competent and is capable of achieving its targets. Every business has its own secret weapons that are purposely made to combat adversities whenever necessary and at the same time there exist strategic tactics that are used to face challenges. These strategies are formed in rivalry of other competing businesses (Crane and Matten, 2007, p.350).
Ideally, it can be argued that using this point of view a person can relate such activities with poker. Poker remains to be the only activity that does not recognize the moral ethics in the sense that people playing this game bluff each other knowingly. But no one complains since both are thinking in the same mindset, conspiring how they can outsmart each other and win. It is all a matter of playing cards wisely and setting strategies against each other. From the above example, a person can draw a relevant interconnection between business and poker mainly by focusing how bluffing is done in both and with what intention (Crane and Matten, 2007).
The prime goal of business people is formulating strategies with the aim of remaining on the safer side and perhaps competing effectively with other related enterprises. This is sometimes seen as a bluffing affair. However, Smith (2009) asserts that it can be debated to be an ethical trick that is done provided no one interferes with the operations of the other. It can also be viewed as being ethical only if the bluffs do not go to an extent of tainting the reputation of the competitors by spreading defaming rumors. If only all people could limit themselves to true and transparent strategies then it could be reasonable to say that business is sustained by bluffing ethically.
What would an ethical business look like?
For a business to be classified as being ethical, it has to pass several tests of in-depth scrutiny. Assessments are done focusing essentially on the way a business conducts its operations, putting into consideration its concerns with every party that is affiliated to the organization and the society at large. Every business in the contemporary world is expected to carry out its operations in a manner that is not only profit oriented but also socially responsible. An ethical business is one that does not fail to do a certain thing just because it is illegal or undesirable but rather follow the right standards willingly. Ethics is supposed to be exercised in all facets of an enterprise, ranging from accounting, customer service, quality control and environmental conservation (Beauchamp, Bowie, and Arnold, 2008, p.165).
Besides, the accounting procedures of a system should be done in a transparent way and should also portray the actual financial position of the business. This is very essential as far as the stakeholders and the government is concerned since these are the two parties that are required to know such information for valuation dividends and tax collection respectively. Whenever a business gives the wrong accounting records it compromises with the rights and expectations of these two mentioned parties this is morally unethical.
Examples of business ethics
Customer service is another obligation that any enterprise should embrace and fulfill as expected. Customers should be treated with a lot of respect and dignity since they make a business have the reason to push on. Every business person should ensure that his or her customers do not complain of poor treatment that emanates from deliberate motives. According to Sunita (2005), any grievance made by customer should be listened to and acted upon accordingly so as to make sure that the complaint is contented, therefore upholding the rapport of the company to its customers. This gesture is not only beneficial to the customers but also uplifts the reputation of the industry.
The other crucial element that a company should assimilate in its system is the production of quality products. According to Yeoman’s and Tench (2009), quality is an aspect that is determined by how best a product is made and whether it meets the standards of quality control. A company therefore has to adhere to these stipulated standards to be allowed to continue with its operations. Quality products should be fit for human consumption and at the same time should be up to the expectations of the consumer. A company should at all times provide goods and services that are authentic and price them at value that corresponds with the type and the cost of production incurred. It should also sell goods at their fresh state and dispose those that are stale.
In addition to the above checks a company should also have concern on its environment. It translates that an enterprise should avoid any thing that pollutes the physical environment such as emission of harmful substances in form of waste. Companies have a big role in safeguarding the environment hence anything they undertake should be in line with the maintenance of the surrounding. It is very necessary for a business to undertake this with a lot of seriousness since it is a two way traffic. The reason why it is give and take scenario is due to the fact that for a company to survive it requires almost every aspect of existence from it.
On the other hand environment needs care and protection from the business to continue giving a sustainable atmosphere. This shows that there is mutual benefit between the business and the surrounding but it is very common that the business requires more from the environment than the other way round. It therefore becomes very obvious that all businesses should at all times be very conscious as far as the well being of the surroundings is concerned (Michalos, 1995).
From the above explanations it becomes very clear that ethics is the core issue in the society pertaining the running of industries. But at the same time it is proven that ethics do not have uniform uniformity. This is to mean that ethics do not have a conventional benchmark or else it implies that they are relative. The relativity arises as a result of there being diverse setting of the society whereby all the social classes have their pedigree which follows certain cultural and religious doctrines. In other words ethics vary from place to place depending on the beliefs and the way people of each and every place perceive right and wrong (Sunita, 2005).
Ethics and Law
At times, there is a clear and strong relationship between law and ethics. Though at some points these two may overlap and this is what that might be considered unethical or illegal. At some point what may be alleged as unethical may be legal and also what may be perceived as illegal may be ethical. This therefore, depends on the perceptions of different people. A distinction between the two terms may also occur considering that laws may have been legislated, stating the governments’ position, apparently the majority of opinion on the behavior. Considering the above explanation, we can then define law as the consistent set of rules which are generally accepted and enforceable (Smith, 2009).
Though, legal and ethics may be closely related but ethical obligation may exceed legal obligations. Laws define how people are expected to relate with each other in the society and if they are not adhered to, other forces may be used to enforce them. Ethics unlike the laws defines on how individuals choose to interact with each other in the society. According to philosophy, ethics will delineate on what is expected for both the individual and the society and therefore ascertains on the nature of the duties and the care of duties one owes to one another (Smith, 2009). This therefore explains why law is not the minimum standard to apply, considering the running of the business.
Law and ethics are very essential in the management of business. Managers should consider not only what is legal but also what both the employees and the society consider right or wrong or the behaviors consumers may or may not accept. Therefore, there is need to train employees on the importance of embracing ethics within the industry. In order to sustain ethics within the business, the management should organize some training workshops and seminars through which the employees are trained on the importance of having ethics in the industry. Almost all business enterprises have embraced ethics within their businesses and this aspect has been embraced in the global arena. The global market has therefore focused on this issue as it is able to boost the businesses by increasing the sales.
U.S Model versus European Model of Ethics
Ethics which develops from within the organization or in other words the business is the one responsible for formulating the ethical standards which becomes the best in running the business. This is because the management knows the requirements in the business as opposed to a situation where the state or the government is the one responsible for initiating the ethical standards in any governmental corporation. United States model in this case has been able to embrace ethical guidelines which are able to dictate the ethical standards from within the corporation in the form of “internal compliance programmes” and corporate codes of ethics.
This is quite better as compared to the European Model since it is able to maintain the tendency of focusing on issues such as privacy, the rights of the workers, and the remuneration issues (Crane and Matten, 2007). The European model is concerned with collective bargaining in regards to ethical conduct. Thus, multinational corporations need to understand the necessity of ethical standards in various countries so as to have a good relationship with stakeholders.
United States model may also be considered for most of the business corporations since an individual would be considered responsible for his or her own ethical conduct. From the above explanation on the U.S model, it is very clear that since the model formulates the ethical standards within the corporation, those working within the business are responsible for the consequences of their own actions (Ghauri, 2003).
It is therefore essential to have theories that give guidelines of how ethics should look like. These theories are formulated by people who have particularly experienced a certain happening in life that triggers the need for an action to be taken to act as a remedy. These theories are formulated to suite all social settings without any biasness (Jacob, 2002, p.50). The following section shall comprehensively expound on each and every ethical theory as outlined by the modules provided
The first theory is the utilitarianism, which was formulated by Jeremy Bentham during the period 1748-1832. This theory revolves around the principle of the greatest happiness. It states that man seeks to maximize pleasure and minimize pain. This therefore implies that decisions made by a firm should offer the greatest good to the majority. This idea is a cost-benefit analysis and a Consequentialist theory. A Consequentialist theory is a moral theory that is based on the fact that the moral uprightness in decision making and implementation is portrayed on the outcome. It ideally dictates that the way decisions are made and put into action is reflected by the end result that emanates (Oderberg, 2000).
Non-consequentiality theory is another theory that was invented by Immanuel Kant during the period 1724-1804. This theory encompasses the importance of duty by arguing that man is freed only by duty. It also endorses that moral choice is what distinguishes man hence moral ethics are human creations that are not found in nature (Tully, 2006).
The third theory is the stakeholder’s theory. Stakeholders refer to any group or individual who can affect or is affected by the achievements of the organization’s objectives. Stakeholders are either positively or negatively affected by the actions of a corporation due to the fact that they have rights that should not be violated by the firm. Therefore, Nozick (1990) argues that corporations have the responsibility of upholding the interests of these parties by being very cautious on the way they carry out their operations. Each and every organization has a specific type of stakeholders but in all cases their rights should be respected depending on the stipulated rules and regulations structured in every corporation.
In most cases it is much easier to ensure that the stakeholders’ rights are respected and their interests well represented in the management system by including a certain percent of the stakeholders in the work force. By doing this, it is made certain that any decision made in the business is also influenced by the stakeholders’ point of view and suggestion hence avoiding leaving any loopholes in the welfare of the stakeholders. The above theory is better explained by freeman by use of other theories namely; normative theory, descriptive theory and instrumental theory (Hooker, 2003).
Normative theory affirms the reasons why a firm needs to consider the stakeholder theory. It affirms the advantage of having this theory in an organization. Descriptive theory on the hand checks whether a firm puts into consideration the interests of the stakeholders and how it is done. Instrumental theory is then used to see if it is beneficial to adopt a stakeholder model of management. When these three theories are applied it is made very simple to implement the stakeholders’ theory (Tresch, 2002). Therefore, organizations need to embrace different types of ethical theories with regards to the strength of ethical issues.
In summary, the above arguments extensively explain the reason for the existence of ethics in the world of trade which apparently touches almost every facet of people’s lives. It is with no doubts that failure to understand, incorporate and embrace moral ethics in all business firms can cause harm to the society since it solely depends on what these firms provide. Basically, people ought to willingly adopt ethics in their business operations to ensure that the welfare of every party that is directly and or indirectly affiliated to the organization. This is quiet beneficial as far as the reputation of the corporation is concerned therefore it becomes a necessity for business owners to uphold moral ethics.
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