It is the responsibility of the management to ensure that business operations are carried out in the right way. These include making right decisions and putting in place rules and regulations that guides the business operations in the right course. By doing this, the business is said to be carrying its operations ethically (Ferrel, & Fredrick, 2014). Therefore, business ethics means that all the operations are within the confines of the law and regulations locally and internationally. It is important to understand that business operations include production in acceptable manner, business process, the company’s or organizations’ behavior, the customers as well as the relationship with the community.
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In a nutshell, business ethics means doing the right operationally and management allowing the stakeholders and other regulatory agencies to monitor and hold them accountable for their actions and decisions made for profit making (Husted & Allen, 2008). Analysis of the past studies have showed that business ethics is an area that has capture the attention of many scholars in the recent past, but there are information gaps that requires more research to be filled. Therefore, this paper explored the business ethics from the perspective of ethical theories and conflicts in office setting.
The Objective of Business Ethics
Ethics is described as moral principles and values that underpins human behavior through five elements as shown in the diagram below.Moral is about what is right and what is wrong. The connection between business ethics and moral principles revolves around the business behavior, since some business behaviors are wrong and others are right (Jones, 1991). This means that business ethics is the driver of the set moral principles and it affects both the employees, customers and the shareholders. In this case ethics involves the process of a business looking for the issues that conflicts with laws and regulations with a room for flexibility that the businesses ethical policy might got conflicts with company legalizations.
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Therefore, it is imperative for the business to establish ethical objects through considerations of the ethical values in relations to their targets and the strategies of realizing these objectives (Cohen, et al., 2006). The ethical values include the evaluation of all business strategies and tactical actions. The business must ask itself several questions that relates to the ethical dimensions such as:
- Whether to manufacture or carry out its operations only in affordable economy mostly in developing countries?
- Whether to leave the decision to the community to decide if they will buy or not buy products from companies with questionable reputations in relations to ethics and moral principles?
- Whether the business should focus its attention on the weak side of its competitors?
- Whether the business should always resort to downsizing whenever it is faced with shortage of cash flows?
- Whether the business should rely on nonnative labor to cut down the cost?
- Whether the business should rely on importing raw materials or finished products from countries with less restriction regarding the health and safety laws?
Ethical Objectives and Corporate Culture
The essence of corporate culture is to assist the business to efficiently and effectively enforce moral principles and standards. Studies have showed that for ethical corporate culture to be effective, the management must involve all the stakeholders especially the employees. In addition, it should be applied equally and the accountability should rest on the shoulder of each employees in the business (Vitell, 2014). This ensure that relevant code of conduct as well as ethical code of conduct transect from the top management to the employees at the lowest levels. Analysis showed that business that fail to set and enforce ethical corporate culture have their operations clashing with its values and their applications. Nonetheless, the companies that have set and adopted ethical corporate culture enjoys the following advantages:
- Motivated employees: Ethical corporate culture develops the sense of belonging among the employees. As a result, the employees are very committed to their work, thus delivering as expected.
- Reduced turnover: As the employees feels motivated and have sense of belonging towards the business, the rate of retention is high. This is also attributed to loyalty the employees have with the company.
- Improved reputation and perception: Studies have showed that customers are mostly taken by positive values to a more ethical approach and this may be used by many fair-trade companies as a model for business icons.
Ethical Practice and Legislation
For business ethics to be observed and adhered to by all business, it must be established and buttressed on proper laws and regulations. The legislations serve as a guideline on how businesses should operate in accordance with moral principles and sustenance of ethical practices (Mayer, et al., 2012). For instance, there are general laws and regulation that govern the pollution by companies such as the level of CO2 to be emitted by cement manufacturing companies. Other legislations control the amount of waste discharged into the environment such as water bodies. In the case of working environment, ILO have put in place legislation that govern the safety and health aspect for all the employees.
In general, legislations are meant to regulate the operations of businesses to conform with ethical practices. For instance, most countries currently are establishing legislation that encourages business to invest in green energy as well as energy saving operations (Porter & Kramer, 2006). This move ensures that use of goal and thermal to generate electricity is minimized thus cutting down the emission of carbon dioxide and other greenhouses gases.
The modern liberal concept
Carroll and Buchholtz (2014) described modern liberal concept to mean emphasize on the strategic advantage that companies the CSR approach. The modern liberal concept in relations to ethical theories encompasses the benefits brought by strategic advantage in alignment with CSR approach. Some these benefits include:
- Human Resources: The business ethics requires that the human resources of the company or organization must be recruited in a just and fair process. This include putting in place retention programs to ensure that experience, skills and knowledge is passed to the next generation, thus allowing smooth transition.
- Risk Management: The ethical theories emphasize the importance of the management to put in place mechanism that detects risks and defects that can negatively affects normal operations of the business. Some of the risks and the defects can negatively affects the reputations of the business that has taken many years to build.
- Product differentiation: This is the ability of the business to create unique products that differentiate the business’s products from those of its competitors. In this process, the business must adhere to the laws and regulations without infringing on the operations of other businesses within the niche market where the product is offered.
- Documentation to operate: Lack of proper documentation to operate in specific localities and municipalities can lead to law suits. It is against the ethics for a business to carry out its operations without proper documentations as well as avoiding to pay taxes to the relevant agencies.
- Diverting attention: Studies have showed that big organizations such as UN uses diverting attention by engaging in social activities when faced with reputation issues. This is unethical because these organizations use diversionary tactics instead of facing the issue and make the necessary corrections.
Therefore, the business should consider the above strategic advantages while engaging in social responsibility to make sure they are conducted in ethical manner. It is the responsibility of the business management to analyze the positive and the negative impacts CSR may have on the business as well as in the community. Although the management prioritize in making their employer happy by generating profits and expanding the business, it imperative for them to make sure that the processes that leads to generation of revenues conforms with ethical values and morality.
Profiteering is phenomenon where a business strives to make profit at any cost without considering ethical behavior. Studies have showed that profiteering businesses do not engages in social responsibilities which is against business ethics. This is because the shareholders of the business are interested in making profits and not charitable activities that takes away the money from the company (Carrol & Buchholtz, 2014). In most cases, these business or companies are the most responsible for environmental pollution and exploitation of the employees or employment of underage, which is unethical and against ILO law and regulations. It is important for the business management to understand that there is mutual relationship between business operations and the community it operates in and that relationship should be respected for the business to strive. To understand the connection between the business and the community, the following aspects were examined from business ethics perspective:
Society and business
For example, most of the resource that businesses rely to manufacture their product comes from the community including the workforce and the only way the community benefits from the business is through CSR (Archie, 1991). Therefore, the failure of the management to acknowledge the mutuality aspect of these relationship leads to conflicts and can curtails business operations. By building social amenities, schools, hospitals, parks and roads, the business extents the benefit to the larger community as opposed to paying salaries to only few workers from the community. This also make the community and the society at large to have sense of belonging, thus minimizing conflicts as much as possible.
This is one approach that business uses as part of CSR and studies have showed to improve the livelihood of the community. The business can offer short training to fresh graduate to improve their experience and out their knowledge acquired in class into practice. During this short training session, the experienced workers are assigned to each trainee and the trainees get the opportunity to learn from the most experienced employees of the company (Carrol & Buchholtz, 2014). Upon finishing the short training, there is high chances of the fresh graduates getting employed in other companies due to experiences they have acquired. It will be also advantages for these trainees since they won’t be undergoing long induction because they have already learned how the work environment operates. Voluntary endeavor helps the business to relate well with the community and minimizes the likelihood of conflicts arising.
The benefits of business ethics to business
The direct benefits of business ethics to business is the attraction of quality employees, investors and customers. Ethical theories have emphasized that businesses that conduct their operations in adherence to business ethics and uphold high moral standings enjoys full support of the its shareholders since they trust and approve how the operations are carried out. The investors also know that the money generated in terms of revenue was done in accordance to the law and the business will not attract any lawsuit. In addition, the employees of the company will follow the footstep of the management by upholding high moral standing. As a result, they will be carrying out their duties accordingly. Such businesses have high level of accountability and each of the employees is held responsible for his/her actions.
For the consumers, the products and services offered by the company are of high quality because they are produced and offered without exploitation of workforces, employing underage workers and destroying the environment. The consumers know that the supply chain of the business observes the ethical standards and all the processes are in accordance with the lay down laws and regulations. Studies have showed that some customers are very keen to monitor how the business relates with the community (Vitell, 2014). This include evaluating the CSR that the business provides to the communities. It is imperative for the business management to understand that CSR activities can be viewed as investment and the business will benefit from it in the future. Although there is no immediate return from CSR, studies have showed that there are economic returns in the long run since the community can serves as marketing conveyers by spreading good information about the company, thus improving the reputation of the business.
Reputation is a critical asset to the business that takes a protracted time to be build and takes a single incident to be destroyed. Analysis have showed that business that uphold high moral standing, integrity and observes business ethics in its operations enjoys good reputations before the eyes of its customers and the community at large. Due to weak labor laws in China and some African countries some of the companies have questionable reputations from the world. However, companies from western and some parts of Asian countries such as Japan and South Korea enjoys good reputations (Cohen, et al., 2006). The companies that enjoys good reputation across the world command market as compared to those with questionable reputations. Due to questionable reputation and lack of business ethics, some Chinese products are not allowed to enter European and American market despite American and European market being among the largest in the world. Chinese companies have questionable reputation due to exploitation of labor in China and African countries where they get their raw materials.
The Aspect of Business Ethics from Global Perspective
Globalization has made the world a global village and slightest unethical move by a company one part of the world will be known all the over the world. This is why companies that fails to observe business ethics and uphold high moral standings such as failing to fulfill their CSR mandate face dire consequences (Husted & Allen, 2008). In most cases countries have come together across the world to sigh treaties that give business check and balance especially where the company is exploring natural resources such petroleum products, gold, diamonds, nickels among others. These treaties are met to protect the communities living within and neighboring areas where the resource is exploited. They also protect the environment especially at the present time where some parts of the world are experiencing extreme weather conditions caused by climate change.
For example, the company I work for deals with electronics and in most cases, there many electronics that have infiltrated into the market across the world that are substandard. As part of the management, we discuss about the type and the quality of electronics that the company should import and supply to the customers. This is the period where differentiate the managers who are after profit at any cost and those who are after profit but in ethical manner. In some occasion, the management fails to reach a decision because each of them is interested in satisfying his/her interested (Porter & Kramer, 2006). But because the decision must be arrived, the benchmark is the ethical theory, where quality of products must be maintained and the source of the raw materials the product was made from must have also been acquired in accordance with business ethics. Therefore, after a long deliberations business ethics must prevail for the business to thrive and the products to be accepted across the world. this is very crucial for the business that targets international market, since international law are very strict where human rights are violated such as exploitation of labor force, employment of underage workforce and lack of environmental concerns. This might not be the case in business operating in Eastern especially China, but western countries are very strict in adherence to laws and regulations of business ethics.
Moral responsibility of the company is driven by the management and business that offers their products and services globally receive more attention from regulatory bodies. Business ethics globally are made to create a level playing field for all companies producing similar products. This ensure that businesses do not exploit their workforces by offering the lowest salaries and obtaining their raw materials in unconventional manner brings their products to the market and sale them at lower prices than those of other companies. Other companies that have been known to disregard business ethics are the multinationals. However, international law and fair business practices have made these businesses to operate within the laws and regulations of business ethics.
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