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The Limits and Prospects of Business Ethics, Research Paper Example

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Research Paper

Business ethics entails business situations, activities and decisions where a consideration for what is right or wrong has a primary influence on the final result.[1] The understanding of ‘right’ and ‘wrong,’ as its applied within business ethics, refers to the moral definition of wrong and right as opposed to  the commercial, strategic, or financial wrong and right. Furthermore, business ethics is not just applicable to commercial businesses, but non-profit organizations, government organizations, lobbyist groups, charities and other institutions as well. Organizational ethics attempts to rationalize morality into a set of normative rules that serve as a distinct difference from the fundamental understanding of morality and assist business practitioners to deal with situations of moral uncertainty. There are distinct differences between morality and organizational ethics and the following research will assess these fundamental differences between morality and organizational ethics and assess examples of their use within business fields.

Code of Business Ethics

To make sure of sound business ethics, most organizations have a code of ethics that guides the organization when managers make decisions. Business ethic codes are important because it gives an organization a guide that is designed to help the organization stay out of trouble with consumers, government agencies, or other businesses because of possible ethical or legal breaches. The Society for Human Resource Management states that the organizational code of ethics helps the organization’s employees understand how to behave and represent the business. The code of ethics is a tool that organization’s staff can use to know what misconduct to report, where to get advice, and how to understand ethics issues.[2]

Corporate Examples

Another way that organizations can make their businesses ethical is by making sure their employees go through business standards and ethics training. Many times, people may not know what is or is not ethical behavior, and giving them ethical tools and information through training is a good way to make sure they are aware of ethics and can behave in the best manner for the organization. For example, the Walt Disney Company has business standards and ethics training for all of its employees. The company teaches ethics to its employees through a learning management system that employees can access. The Walt Disney Company website states this gives its employees the training and awareness to act ethically and legally, based on the company code of ethics.[3]

According to Forbes, more than 100 companies from around the world make the Forbes “World’s Most Ethical Companies” list each year. For 2014, such companies include Ford Motor, Aflac, Kellogg, and Google, to name a few. To make this list, these companies must be focused on ethics compliance. This means they must show they have good corporate compliance programs in place, strong policies for corporate social responsibility, strict compliance with federal guidelines, good compliance with international laws, and good management of their supply chains.[4] These are the standards that companies have to meet in order to win a spot on the Forbes list. These standards are many of the things that a company can do to be sure it is practicing ethical business. Other elements exist that help make a company ethical, as well. These elements include (1) being respected, (2) having honor, (3) having integrity, and (4) being customer-focused.

Ethical Elements of a Company

A company’s managers should be sure that the company is ethical by not getting distracted by the everyday cares of business operations. This means it is important to understand elements that make a company ethical.

Respect

This is an element that is good for business for any company. When a company is respected by the public, which means its customers, clients, vendors, and even employees, then it will have a good reputation. It is important to do business with those who have a level of respect for the company and for the company to do business with those who are respected. This builds strong business relationships, which can mean greater success for a company.[5]

Honor

For a company to be ethical, it must have good and honorable employees who are willing to do things the right way. These type of employees will have a caring attitude and get into the spirit of the organization and work to fulfill organizational goals. These people are often top performers and those who go beyond what is expected of them, because they take pride in their work and in working for the company. It is important for a company to honorthis employees for the honor they show to the company. This helps employees feel comfortable and happy in working for the company, which encourages them to work ethically.[6]

Integrity

It is important for a company’s employees to have integrity, which means they do what they say they will do. Also, integrity means admitting wrongs and doing what is necessary to make up for the wrongs. Integrity means also to treat others as one would like to be treated. In a company, this means the employees should be true to the company’s values and mission, and that they will not do anything to disrespect the company for personal gain. For example, it is unethical for an employee to misrepresent the company to increase his or her own gain, such as receiving a bonus for work that resulted from unethical actions. This may result in trouble for the company on some level.[7]

Customer Focus

Being focused on the needs and desires of its customers gives a company a good advantage because it helps the company keep the customers it has and gain more customers. Focusing on the customers means a company lives up to its responsibility to customers and its industry. Focusing on customers helps a company’s managers make the best decisions for the company, which affects investors and partners as well. A customer-focused company gives good service, which is part of the company’s ethical responsibility to treat customers in the best way possible. Not doing this could hurt a company’s long-term success.[8]

Ethical Theories

According to the Society for Human Resource Management, ethical theories center on principles that assist people in making business decisions based on doing the right thing and good conduct. Some ethical theories include normative ethics, virtue ethics, deontology, and utilitarianism.According to Vakoch (2011) there are three distinct factors that must be taken into account when implementing effective business ethics. These factors entail the influence of managers and co-workers as well as the moral standards of the individual and the exposure these individuals have to the opportunity to engage in misconduct. For example, within many police departments, there are no institutions set aside to realistically hold police officers accountable for their actions. This means that while there is a culture on the surface that promotes high ethical standards, many years of being exposed to the opportunity to engage in misconduct have created a subculture of misconduct and unethical behaviour. These three factors are significant because understanding them and how they relate to business ethics allows managers to better recognize how one’s personal morals can be demonstrated differently outside the workplace than they are demonstrated inside the workplace. As the author notes, “while one may have great control over personal ethics outside the workspace, co-workers and the management exert significant control on one’s choices at work”.[9]The author attributes this to the fact that the line between what is ethically right and what is morally right become vague and blurred. The goal of natural morality is to develop good character while the goal of good business is to develop profit.

Whether one is acceptable in business is dictated by regulators, competitors, customers, special interested groups, and the public, in addition to one’s moral principles and values.Ethics relates to how people make moral judgements about what is right and what is wrong, as well as how they make decisions based on these judgements. This is true, especially in businesses, because it is the people or groups of people within an organization’s management who make decisions for a company. Whether someone working for a company decides to act and behave ethically is a moral decision that is based on what that person feels is the right thing to do in certain situations.Ethics in business is important because it allows an organization to live up to standards that are legal and moral when dealing with customers and other businesses. Business ethics is also important for companies when they interact with stakeholders and investors, as well. In addition, developing good business ethics is a good way for an organization to build relationships of trust with its customers, vendors, and other businesses. If customers and other businesses have trust in a company, then that company is in good business and it will do better in its industry to be successful. Also, ethical behaviour by a company’s employees is good corporate responsibility and it can mean good profits for a company, by attracting customers, attracting and retaining good employees, and attracting investors to invest in the company. The following are some theories related to ethics in business and how they relate to morality.

Normative Ethics

The focus of normative ethics is what makes a situation right or wrong. This means it focuses on making decisions to take ethical actions in certain situations. Normative ethics relates to how morals and philosophy are connected to what is right and wrong, which includes how a person’s actions can affect others. Normative ethics is used to deal with issues regarding a person’s rights, moral actions, and social equality concerning social issues. This means that normative ethics works with practical moral problems and the guidelines and principles in place to address these issues.[10]

In addition, normative ethics is used a lot in the health care field and has four principles, which are beneficence, non-maleficence, justice, and autonomy. Beneficence means to do good and make it a priority. It is a way to accept possible solutions to ethical issues. Non-maleficence means simply to strive to do no harm or to make choices based on doing the least harm possible to the fewest people. The justice principle refers to fairness for all when making ethical decisions and is justified under special conditions, such as when a police officer has to speed to catch up to someone else speeding. The principle of autonomy means respecting people’s right to make their own decisions for their own lives, as much as possible.[11]

Virtue Ethics

Virtue ethics focuses on character and states that it is the most significant aspect of being ethical. Business ethics requires people to make right decisions and to do right. This means they value virtues such aswisdom, courage, generosity, compassion, temperance, instead of vices such as selfishness, greed, and jealousy. Moral thinking is important with virtue ethics. Virtues of a person’s character are respected by others. In business, this could mean balancing making the best decisions for a company while being as fair as possible to the employees. At times, a conflict may arise between obligations to the business and virtues toward employees. However, virtue ethics provides a moral theory for business because it allows virtuous people to tale virtuous actions for the business, and it is closely related to strengths in normative ethics (Audi 2012).

In other words, virtue ethics looks at a person’s character and judges that person by it, more than the person’s actions, which may be different from normal under certain circumstances that may arise. This is provided that the person’s moral character has not changed to something other than what was before known.

Deontology

The theory of deontology focuses on people sticking with their obligations and their duties when having to make ethical decisions. This includes what is required, permitted, or forbidden in a moral sense.[12] In other words, when keeping with deontology theory, people will follow through with their obligations to their employer, other individuals, families, or society because they believe that fulfilling their duties is correct ethically. However, SEP (2014) states that there can be conflicting obligations that a person may have to choose from to carry out this theory.[13] For example, if a person who is always on time to work is running late one day, the person must choose between breaking a duty to society by speeding and breaking an obligation to his or her employer by being late. That person must decide which choice is the most ethically correct in his or her own eyes, but whatever the person chooses, one entity will suffer—society or the employer.

Utilitarianism

Utilitarianism theory suggests that a person’s actions directly affect a certain amount of suffering or of happiness for others, and this is what matters the most. This means that right actions mean to increase happiness and decrease suffering, even if it means breaking rules tied to traditional morals. Utilitarianism means predicting consequences of some action and choosing to act based on what will give the most people the most benefit, which is thought of as the ethical thing to do.[14] Morally, utilitarianism can be questionable because it takes into consideration calculated risk and a willingness to sacrifice wellbeing of the few for the success of the many and the overall success of the company as a whole.

The theory of utilitarianism is also a part of normative ethics and means that the morally right action is considered the one that does the most good by maximizing the overall good in a situation. This means that the decision is neutral, which means the happiness of everyone involved counts the same as being important. This is true without considering personal feelings and sometimes even laws. However, laws are considered when the decision needs to be as fair as possible. This means that justice and beneficence are considered equally (SEP-2 2014).

Limits of Business Ethics

Even though business ethics is an important part of having a successful business, it does have some limitations that come with it at times. This is so even though the concept of business ethics is to provide businesses and organizations with guidance on how to act ethically. This includes how to adopt policies and how businesses act in the society. The limits come in when businesses or organizations are constantly changing, which means their ethical standards can change as well. This means that business ethics as intended may be hard to deal with in business operations, unless what businesses should be doing can be justified (Brenkert 2010).

In addition, over the last few decades, many businesses have been part of scandals and fraud, for example, the scandals involving Enron and WorldCom. These incidents have caused many businesses to examine their ethics programs and policies so that they would not fail at ethics like so many other companies have done. This has led to the development of the business ethics concept; however, “the development of business ethics has been limited by the lack of adequate attention paid to an account of ethical change and moral development in business organizations”.[15]

It is important for businesses to understand what made other businesses fail in their ethics so that they do not repeat the same mistakes. This means that more attention should be put to the legal, political, social, and economic sides of ethics in business policies and actions. This can help improve corporate behavior by making sure a business’s employees are managed properly so that they follow ethical guidelines.Brenker (2010) notes that,“the future of business ethics depends on businesses working with government to increase requirements on business to act in responsible ways”.[16] As the above data has shown responsibility in business ethics does not always entail moral responsibility as it’s understood in the personal sense, but satisfying the companies responsibility to internal and external stakeholders,

Conclusion

Business ethics within an organization is a vital tool for any company both domestically and internationally, considering the continued growth of globalization in various business markets. This is because ethical standards and laws vary by country, as many countries’ cultures and laws strictly govern what they consider ethical and unethical, and all businesses should be aware of a host country’s ethical standards before doing business with them. Furthermore, ethics in business is the best way for an organization to be guided by a set of organized principles for making ethical decisions regarding the organization’s policies and programs. All persons associated with a business should be trained on how to conduct themselves in an ethical manner, to maintain the company’s integrity and to ensure compliance with any and all government regulations or guidelines, as well as keeping with good corporate responsibility in the public eye.

There are many benefits to being ethical for a company. Customers, clients, stakeholders, and investors are well taken care of and understand that the company they are associate with has their best interests in mind. An ethical company also is at less risk for liabilities that may arise from someone within the company being unethical and possible breaking the law. In addition, a company that practices good ethics has happy and comfortable employees who are proud to help the company grow by sharing in the company’s vision and working in ways that help carry out the company’s mission statement goals.

Bibliography

Adams, Carol A. “The ethical, social and environmental reporting-performance portrayal gap.” Accounting, Auditing & Accountability Journal 17, no. 5 (2014): 731-757.Audi, Robert. “Virtue ethics as a resource in business.” Business Ethics Quarterly 22, no. 2 (2012): 273-291.

Brenkert, George G. “The limits and prospects of business ethics.” Business Ethics Quarterly 20, 4 (2010): 703-709.

Crane, A., & Matten, D. (2010). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Disney. Business and Ethics Standards.n.d. Accessed February 11, 2015. http://thewaltdisneycompany.com/about-disney/business-ethics.

Jonasson, Lise-Lotte, Per-Erik Liss, Björn Westerlind, and Carina Berterö. “Empirical and normative ethics A synthesis relating to the care of older patients.” Nursing ethics 18, no. 6 (2011): 814-824.Matthews, Jana. 2015. Eight Elements of an Ethical Organization. Accessed February 12, 2015. http://www.entrepreneurship.org/resource-center/eight-elements-of-an-ethical-organization.aspx.

SEP. Deontological Ethics.(2014). Accessed February 12, 2015. http://plato.stanford.edu/entries/ethics-deontological/.

SEP-2. The History of Utilitarianism.(2014).Accessed February 12, 2015. http://plato.stanford.edu/entries/utilitarianism-history/.

SHRM. A Guide to Developing Your Organization’s Code of Ethics. Code of Ethics Toolkit, Ethics Resource Center.(2001). http://www.shrm.org/about/Documents/organization-coe.pdf.

Vakoch, Douglas A. “Responsibility, capability, and Active SETI: Policy, law, ethics, and communication with extra-terrestrial intelligence.” Acta Astronautica 68, no. 3 (2011): 512-519.Acta Astronautica, 68(3), 512-519.

 

[1] Crane, A., & Matten, D. (2010). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

[2] SHRM. A Guide to Developing Your Organization’s Code of Ethics. Code of Ethics Toolkit, Ethics Resource Center. (2001).

[3] Disney. Business and Ethics Standards. n.d. Accessed February 11, 2015.

[4] Adams, Carol A. “The ethical, social and environmental reporting-performance portrayal gap.” Accounting, Auditing & Accountability Journal 17, no. 5 (2014)

[5] Audi, Robert. “Virtue ethics as a resource in business.” Business Ethics Quarterly 22, no. 2 (2012): 273-291.

[6]Jonasson, Lise-Lotte, Per-Erik Liss, Björn Westerlind, and Carina Berterö. “Empirical and normative ethics A synthesis relating to the care of older patients.” Nursing ethics 18, no. 6 (2011): 814-824.Matthews, Jana. 2015. Eight Elements of an Ethical Organization.

[7] Audi, Robert. “Virtue ethics as a resource in business.” Business Ethics Quarterly 22, no. 2 (2012): 273-291

[8]Vakoch, Douglas A. “Responsibility, capability, and Active SETI: Policy, law, ethics, and communication with extra-terrestrial intelligence.” Acta Astronautica 68, no. 3 (2011): 512-519.Acta Astronautica, 68(3), 512-519.

[9]Vakoch, Douglas A. “Responsibility, capability, and Active SETI: Policy, law, ethics, and communication with extra-terrestrial intelligence.” Acta Astronautica 68, no. 3 (2011): 512-519.Acta Astronautica, 68(3), 512-519.

[10]onasson, Lise-Lotte, Per-Erik Liss, Björn Westerlind, and Carina Berterö. “Empirical and normative ethics A synthesis relating to the care of older patients.” Nursing ethics 18, no. 6 (2011): 814-824.Matthews, Jana. 2015. Eight Elements of an Ethical Organization. Accessed February 12, 2015.

[11]onasson, Lise-Lotte, Per-Erik Liss, Björn Westerlind, and Carina Berterö. “Empirical and normative ethics A synthesis relating to the care of older patients.” Nursing ethics 18, no. 6 (2011): 814-824.Matthews, Jana. 2015. Eight Elements of an Ethical Organization. Accessed February 12, 2015.

[12] SEP-2. The History of Utilitarianism. (2014).

[13] SEP-2. The History of Utilitarianism. (2014).

[14] SEP. Deontological Ethics. (2014).

[15]Brenkert, George G. “The limits and prospects of business ethics.” Business Ethics Quarterly 20, no. 4 (2010): 703-709.

[16]Brenkert, George G. “The limits and prospects of business ethics.” Business Ethics Quarterly 20, no. 4 (2010): 703-709.

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