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Business Ethics: Boiler Room, Research Paper Example

Pages: 6

Words: 1618

Research Paper

Screening the film “Boiler Room” during a classroom session left me with some impressions that I would like to reflect in relation to what this course is all about. Each person has his or her own set of values that differs with the set of values held by the system that person is a part of. There are times when the personal values of a person seems to collide with the values of others the person is interacting with, and, ultimately, with that of the system. It is at moments like this that a person is confronted with a nerve-racking question: “What shall I do?”  And in answering this question, the person also decides how much part of his own self to sacrifice. In other words, the person decides to what degree he should be true to himself.

This occurs at all levels of society; and in the context of the course, this phenomenon is explored within the institution of business. We have recently realized the importance of ethics as the global fiscal crisis swept all over the globe. We have, for instance, realized that the failure of the global economy is due to the greed that stemmed from the elite members of the financial sector – the nameless and faceless arbiters of values in the modern society. The ‘ego-centrism’ of the elite class resulted to a collapse that affected not only those below them in the social hierarchy. The collapse was so tremendous that even those, the overlords of modern society, were significantly affected. It is in the light of these events that businessmen, academics, and every member of society, reconsidered the role of ethics, specifically within the context of human relation within social institutions. In other words, the recent collapse calls for a reassessment or renegotiation of the responsibilities of each member to others.

In the film, the characters have their own set of values that differentiates them from other characters. We see how at times some of the characters confront an ethical dilemma. This ethical dilemma occurs when a cognitive dissonance emerge when a character’s personal set of values collides with other sets of values in the sector the person is a part of. At first glance, it seems that they are being affected by each other. However, upon closer inspection, it is the very system that underlies the kind of business they are in to that significantly causes this ethical dilemma.

The ethical underpinnings of business practice can be explored through taking into consideration the notion of corporate social responsibility (CSR). The notion of CSR became more important after the global fiscal crisis. The classic model of corporate social responsibility maintains that the primary responsibility of organization managers is to put together the most of profits within the law. The vision of economist Milton Friedman (1970) is that social responsibilities exceed over the significance of their stockholder. Friedman’s perspective expresses an elementary misconception of the nature of a system of free economy. The economic systems whose markets are not “open and free”, but are moreover marked by “deception and fraud”, are going to fall short in attaining economic ends.

The social responsibility of a business is to build up profits to the maximum by gratifying customer demands while adhering to the rules of “the economic game” competing truthfully and avoiding “deception and fraud” (Friedman, 1970).  Norman Bowie (1991) argues that “ethical customs” also hold the obligation to operate morally and avoid harming others, even when this is not explicitly prohibited by the law. Business managers should primarily satisfy certain moral duties. Managers have a task to expand profits to the maximum; this is only on the condition that they abide by with the “moral minimum” and create no harm. If a firm does not cross certain limitations, the firm is free to trace profit.

There are changes in the business environment that maneuver corporations to observe and assess their corporate social responsibilities covering response to ecological issues (Hohnen, 2007).  Also, there emerged a range of impetus that leads awareness about the critical role of companies. The idea of sustainable development maintains that the majority of the improvement procedures are harmful to ecological units (Harper, 2008). This eventually leads to dearth of resources around the globe. A corporate social responsibility framework is a point of entry wherein firms could fulfill their roles in preserving the bionetwork for the coming generations. The awareness of the importance of ethical standards also ups the call for attention to corporate social responsibility. This concern is chiefly on human resource management’s standards on treatment of the workforce. This becomes even more of an issue as firms are expanding and operating in other countries (Valentine and Fleischman). National governments as well as international organizations also developed and implemented rules regarding appropriate conduct of business (Evan). These regulations see to it that all business entities are adhering to the set of guidelines. These sets of guidelines are based on agreed upon concepts of business ethics, human rights, and others.

Another stimulus includes the influences of the corporate sector on society. Firms are influencing the lives of the global community in unimaginable ways. This is the reason more and more people are becoming interested to know the power dynamics behind this corporate influence. Tracking of the activities of other organizations is now easier due to the improvements in digital technology (Chaudri & Wang, 2007). Organizations could benefit from the technological developments in enhancing exchange of ideas and partnerships with other organizations. Financial processes are also a driving force (Chih, Shen, & Kang, 2008). This is because firms and investors developed an increasing concern on responsible business practices. Furthermore, there are scandals that dragged the reputation of many corporations down the ground. These, eventually and inevitably, earned public distrust. This distrust expands towards other corporations (as manifested, for instance, in Occupy Wall Street Movement). CSR frameworks can guide corporations in terms of facilitating plans to improve the transparency of corporations, thereby also improving accountability. The global community is setting a high benchmark when it comes to societal and ecological care (Bonini & Boraschi, 2010).

A business might have positive and negative association with performing its duties in terms of the environment, such as the duties to circumvent damage, not to aggravate pollution and to contribute to the well-being of the environment (Millar, 1995). Businesses can act in passive ways to fulfill the environmental demands. An example of this is through adhering to the laws on appropriate business conduct.

Bowie (1991) states that if a company adheres with laws that protect the environment, it will be accepted by the society. However, Bowie’s study attests that most consumers are not willing to pay more for environmentally friendly goods and services. Furthermore, consumers are eager to neither preserve resources nor recycle.

The ecological program that is set by the society is affected by two forces: regulation of the government and demand of consumers (Miller & Spoolman, 2011). The environmental responsibility of a company is to comply with the two mechanisms. The society cannot necessitate nor suppose a company to go further than the moral minimum, but there are positive effects if a company dares to go beyond this moral minimum.

The stakeholder’s theory in another important notion. The Stakeholder theory re-defines purpose of the firm and moves away from stockholder theory (Phillips & Freeman, 2003). Corporations have stakeholders. These are groups or people who benefit from or are harmed by, and whose rights are violated or respected by, corporate actions. The principles of corporate legitimacy and stakeholder fiduciary principle are the underlying principles of this theory (Evan & Freeman, 1993). The corporate legitimacy principle maintains that corporations have to be managed to the advantage of the corporation’s stakeholders. The principle of stakeholder fiduciary maintains that management must uphold a fiduciary relationship to both the stakeholders and the corporation.

In sum, ethics is an important aspect of business practice. It is through knowing how the system works and see how amorphous this system is that one can be a part of this system without losing one’s own self within a system that tends to consume a person in his or her entirety. In other words, it is through the light of ethics that one can preserve one’s own humanity within a system that, as we all know today, tends to drive individuals to act in inhumane ways.

Works Cited

Bonini, S., & Boraschi, D. (2010). Corporate scandals and capital structure. Journal of Business Ethics, 95, 241-269.

Bowie, N. (1991). New directions in corporate social responsibility (moral pluralism and reciprocity. Business Horizons, 34(4), 56.

Chaudri, V., & Wang, J. (2007). Communicating corporate social responsibility on the internet: A case study of the top 100 information technology companies in india. Management Communication Quarterly, 21(2), 232-247.

Chih, H.-l., Shen, C.-h., & Kang, F.-c. (2008). Corporate social responsibility, investor protection, and earnings management: Some international evidence. Journal of Business Ethics, 79(1-2), 179-198.

Evan, W., & Freeman, R. E. (1993). In T. Beauchamp, & N. Bowie (Eds.), Ethical Theory and Practice (pp. 75-84). Englewoods Cliffs, N.J.: Prentice Hall.

Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. New York Times Magazine, pp. 122-125.

Harper, C. (2008). Environment and society: human perspectives on environmental issues (4th Edition ed.). New Jersey: Pearson Prentice Hall.

Hohnen, P. (2007). Corporate Social Responsibility: An Implementation Guide for Business. (J. Potts, Ed.) Winnepeg, Manitoba: International Institute for Sustainable Development.

Millar, J. (1995). What is ‘green’? European Management Journal, 13(3), 322-332.

Miller, T., & Spoolman, S. (2011). Living in the environment: principles, connections, solutions (17th Edition ed.). Belmont, CA: Brooks-Cole.

Phillips, R., & Freeman, R. E. (2003). Stakeholder Theory and Organizational Ethics. San Francisco, CA: Berrett-Koehler Publishers.

Valentine, S., & Fleischman, G. (2008). Ethics programs, perceived corporate social responsibility and job satisfaction. Journal of Business Ethics, 77(2), 159-159.

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