Business Ethics how its violated to gain competetive advantage Essay Example

Business ethics empowers companies by providing guidance on how to act ethically. Although individuals face moral and ethical dilemmas in their daily lives, these become critical in the realm of business. Business ethics assists leaders in making decisions that benefit the majority of stakeholders rather than a select few. Managers have a primary duty to ensure that their company adheres to legal and ethical standards, prioritizing stakeholder interests throughout operations.

Establishing an ethical environment is crucial for achieving both fair profits and the improvement of individuals' well-being in a competitive setting. However, it is important to obtain and maintain these profits ethically and with the right attitude. This involves operating a successful enterprise while considering ethical principles and employee attitudes. Building trust among business participants is essential to prevent others from leaving or demanding high-risk premiums, which can be achieved by acting ethically.The following text has beenand unified while keeping the and their contents:

• Business ethics models consist of expectations, perception, and evaluation.
• These models encompass concern for ethics, relationships with leadership, staff, external stakeholders, suppliers, customers, rivals, government statute law, lobby groups, institutional duty, increased instruction, power of media,
  socially responsible directors,
  professional associations,
  competition,
  international business with integrity,
  economic outcomes,
  lawful behavior,
  being better corporate citizens by paying appropriate taxes and being environmentally friendly,
• In return for these ethical practices,
• companies can expect to retain employees and services as well as have acceptable products that meet societal expectations.

Society expects ethical behavior from organizations and evaluates their results based on organizational values,norms,and beliefs. The reconnection between businesses and society is crucial in promoting ethical practices.The text illustrates the interconnectedness of various components through five sub-themes: society's expectations, organizational values, norms and beliefs, results, society's evaluations,

and reconnection. These components are crucial to consider as they shape an administration's culture within the operating environment.

Serpa (1985, p. 426) defines it as the "societal glue that holds a company together." According to Cohan (p. 287), each administration is shaped by its own perspectives and understanding of the company's historical background and future prospects.

The manner in which an administration carries out its day to day activities has an impact on both internal and external stakeholders (Freeman 1984). According to Benson (1989) and Fraedrich (1992), it is important for every administration to establish good relationships with rivals, customers, and the general community as no administration can operate independently in the market. Thus, every administration must address its relationships with all stakeholders.

Perception

This refers to the various ways in which an administration chooses to engage with society, whether through ethical or unethical behavior, each of which has its own consequences.

Result

The actions and interactions of a company with regard to societal expectations determine its outcomes. Theorists Levitt (1958) and Friedman (1962) state that the result for a company is whether it has made a profit or loss and how its activities in the market influence its stakeholders.

Joyner and Payne (2002) and Spiller (2000) argue that society's assessment of a company should not solely rely on its profits. They believe that assessments should also consider the company's contributions to corporate social responsibility, customer retention, and the healthiness of its products. Although society generally values profits, they do not always reflect a company's alignment with societal interests. Therefore, society implements checks and balances to ensure ethical earnings. These evaluation criteria form the basis for assessing a company's performance.

However, over time,

people's perceptions of ethical behavior may change. The previously established theoretical model may have been relevant in the past but has been disrupted due to significant changes and revolutions in the world. As a result, citizens have progressed and now possess a deeper understanding of business expectations and behaviors.

The development of moral ethics can be traced back to influential thinkers such as Adam Smith, Stuart Mill, David Hume, Karl Marx, and Kant.

The origins of morality pertain to the principles used to assess whether an action is good or evil, right or wrong, acceptable or unacceptable (journal codes of ethics). These origins encompass various aspects of human actions: Object - This refers to the specific action being performed and determines the inherent morality of the act itself.

Intention, or motivation, is the force behind someone's action. Even if intentions are noble, it doesn't guarantee that the act itself is good. Fortunes, however, refer to the circumstances surrounding the act that can impact its morality. While they can't turn an evil act into a good one, they can either reduce or increase the level of responsibility.

These three elements are used to evaluate whether an action is good or evil. Nevertheless, the intention and outcomes cannot alter the inherent immorality of certain acts. Acts like stealing from a business and violating human dignity through arbitrary imprisonment, slavery, and degrading working conditions where individuals are treated as mere instruments for profit serve as examples of such acts. Each action has positive and negative effects, which lead individuals to assess the action using the double effect criteria. This criteria considers both the extent of positive and negative effects.

If an action with minimal negative consequences exists, it takes precedence over an action with more ethical merit that produces a positive outcome, thereby reducing the evilness of the negative consequence. It also suggests that when avoiding negative consequences is impossible, measures should be taken to minimize their impact. Additionally, the intention behind an action should inherently be good or neutral.

In certain circumstances, it is deemed necessary to unintentionally cause civilian casualties. This occurs when the central office of an enemy military base must be bombed in order to bring an end to the war. Another case illustrating this concept took place in October 1982 involving Johnson and Johnson. During that time, Tylenol was the foremost pain-relief medication in the United States but faced a significant crisis due to seven deaths reported in Chicago after individuals consumed extra-strength Tylenol capsules. Subsequent investigations revealed that someone had tampered with these capsules by adding a lethal dose of cyanide, measuring 65 milligrams – a dosage that exceeded human tolerance by 10,000 times. Consequently, this act resulted in an unethical loss of human lives. The investigations also indicated that this incident occurred while Tylenol products were available on store shelves, suggesting involvement from a third party. Nevertheless, Johnson and Johnson managed this situation by prioritizing people's safety over their own financial interests, thus aligning with their commitment to safeguarding their reputation.

The house's recall of merchandise from throughout the United States resulted in a loss exceeding $100 million and 31 million bottles, greatly impacting their profits. However, according to the standards of dual consequences, the positive outcome of saving lives and maintaining reputation outweighs the negative consequence of lost

profits and incurred losses.

Theories And Origin Of Business Ethics

Utilitarian theories can be traced back to David Hume (1711-1776), John Stuart Mill (1806-1873), and Jeremy Bentham (1748-1832) (Tom L. Beauchamp pg 17). These theories are deemed ethical as they have played a significant role in shaping politics, economics, and public policy.

Utilitarianism is a philosophy that posits the ethical nature of an action depends on its consequences. The central tenet of utilitarianism is to maximize overall good or produce the greatest good for the largest number of individuals. Actions that accomplish this are considered good, whereas those that fail to do so are regarded as bad. Utilitarians are pragmatic thinkers who believe that there is no absolute right or wrong in every situation; it hinges on the outcomes. For instance, according to utilitarian reasoning, telling a falsehood may be morally permissible if it benefits a greater number of people. In relation to the economy, utilitarians hold the belief that its purpose is to ensure the highest possible standard of living for as many individuals as feasible.

The text delves into two sets of values: instrumental value and the belief in happiness as the ultimate good. Utilitarianism and free market economics provide distinct viewpoints on these values. Utilitarians strive to optimize contentment by seeking the highest value for their money. Conversely, economic transactions take place when consumers pursue their personal happiness through voluntary purchases. If a product fails to meet consumers' satisfaction, they will stop buying it, resulting in its removal from the market. In a competitive and unrestricted market, consumers possess the liberty to negotiate for the products they desire to acquire.

An agreement between a buyer and a

seller will only occur when both parties believe that this specific transaction will be advantageous to them. The seller profits from it, while the buyer gains the desired product. Essentially, free market economics effectively maximizes the happiness of Utilitarians.

Utilitarianism and business policy

Utilitarians claim that there are experts who can predict the outcomes of public policies. For example, CBK analyzes economic data to determine the current and future state of the economy.

Concerns may arise from unsafe working conditions in a flower farm in Naivasha (Kenya), where employees work without wearing masks while spraying flowers. These employees are greatly affected and suffer from health issues, but they still have to work there to make a living, even though it does not bring them ultimate happiness. When an individual's self-interest leads to the maximum happiness of others unknowingly, it can be seen in a situation where someone sets up their business in an untapped location. Soon, one or two more people will also establish their businesses at the same location when they realize the benefits, such as a larger customer base. This ultimately benefits all three of them and maximizes happiness. This concept is known as the invisible hand theory. It applies to many business markets with high demand and limited supply of certain goods or services. The theory promotes policies that allow individuals to protect their property and reduce interest rates on loans, thereby enabling more people to start their own businesses and encouraging competition in the long run.

Kantian theories

Kant (1724-1804) was a German philosopher.

Kant argues that we must act ethically in a manner that is universally applicable and respects everyone's freedom. Kantianism combines rationalism and theologism,

advocating for actions that are aligned with God's will (Resse, 1980) (journal 19 ref). According to Kant, our intentions should be guided by three primary imperatives. The initial imperative is to regard individuals as ends in themselves rather than mere means to an end.

A person should receive fair compensation based on their hard work and merit. They should not be unfairly used for personal gain. Wrongdoings in this context include deception and coercion (ref). However, this does not prevent commercial transactions as long as both parties agree and benefit. For example, during busy production seasons, an employee may need to work overtime. In such cases, after an agreement with management, they should be compensated at a higher rate than their usual pay.

The second jussive mood underscores the significance of establishing a universal law acknowledging the inherent dignity of every individual and advocating for equal rights to public goods and resources. It refutes the concept of privilege and advances the notion that in an ideal society, everyone should possess both ruler and citizen roles (reference for the three points). This imperative urges individuals to empathize with others and make logical decisions that do not cause harm. It affirms that each person possesses freedom to make independent choices without external influence.

Deductions for Ethics

According to Kant, if someone borrows money with no intention of repaying it, this cannot be considered a universal law because in normal circumstances, borrowed money should be returned by everyone. Therefore, it is not ethically correct for this to act as a universal law for everyone to follow. A manager who follows Kantian principles would first consider if any

decisions made could be applied universally as law, and if so, then it is implemented. Examples that can be used to explain this theory include dishonesty and conflicts in the workplace with colleagues, or providing false information about a company, cutting in line, and writing bad checks.

Virtue Ethics

Definition

Virtue ethics promotes living a good life by requiring individuals to act in a certain way for the benefit of others. This depends on one's character, beliefs, and interests. Values are habitual ways of behaving that shape a person's character (ref).

Both Kantian Ethics and Utilitarianism require us to disregard our emotions, but virtue ethics demands that we cultivate character traits that can be developed through education or work experiences, or based on our upbringing. There are four key virtues that individuals should possess:

Fortitude

These virtues empower a person to remain strong and optimistic even in challenging circumstances, without easily giving up. This virtue is particularly important for managers operating in highly competitive and dynamic business environments.

Justice

This virtue enables individuals to be fair and treat others deserving of their rights and respect, without restricting anyone's freedom.

Temperance

This virtue allows individuals to exercise control and moderation when utilizing resources, in order to avoid any harm to people or the business if left unchecked. Other important virtues such as honesty, kindness, and humility enhance a person's admirable and respectable actions.

The 6 essential pillars of virtues are as follows:
Citizenship - A good citizen will always work for the benefit of the state or their own community to improve the world we live in.
Respect - It is important to respect every human being in

order to receive the same treatment in return.
Trustworthiness - This quality is crucial in individuals as businesses rely on their employees' honesty.
Caring - This entails taking care of others' feelings, being kind, and serves as the foundation of ethics.
Fairness - Being just and treating every stakeholder equally, giving them what they deserve based on their efforts.

Responsibility means accepting the accountability and duty for actions and responsibilities delegated by a higher authority to implement, control, and maintain. According to renowned author Adam Smith, in his work "Theory of Moral Sentiments," justice and benevolence are the two most important virtues in a modern market society (ref). Honesty is one of the virtues that enable a market to operate efficiently, often achieved through the signing of contracts that bind both parties to a mutual agreement.

Courage is an important factor that enables individuals to take risks and gives them the strength to persevere even during difficult times. Recognizing hard work and incentivizing employees to work even harder is a virtue that will enhance employee efficiency and productivity.

Rights To Private Property: A Natural Right

The entire Earth was given to mankind by God for their use and enjoyment, therefore every individual has a natural right to own both consumer and productive goods. There are two schools of thought regarding private property ownership: Capitalism and Socialism. Capitalism suggests that property should be made available to the public, and those with sufficient resources can own and develop it.

Socialism, on the other hand, advocates for equal opportunity and the complete government ownership of property, which is then used to provide necessary goods and services based on basic needs. Individualism, or capitalism,

allows individuals to own property and use it as a resource to generate more capital, leading to competition and ultimately benefiting the common good. The production of goods and services relies on motivation, which is achieved through the right to private property. This motivation drives individuals to bring better products to the market, satisfying more wants and improving living standards. The concept of common good refers to the benefit that society as a whole gains from the actions of each individual in doing what is right.

The presence of ethical standards among businesses operating in society is crucial for achieving the common good. If a company engages in unethical practices such as environmental pollution, the common good cannot be achieved, and such businesses should be regulated by a higher authority, such as the local government. The state plays a crucial role in determining how resources are allocated and utilized. It has various ministries that control different functions, including commerce, land, water, energy, finance, and others. The actions of businesses are directly influenced by these ministries.

Thus, the authorities must ensure that there are strict regulations and ordinances which businesses must adhere to; failure to comply should result in severe legislative actions. Instances exist where companies engage in unethical practices that may be legal, indicating loopholes in the state's system that need to be closed to prevent such behavior. The state should allow employees to form and join labor unions and provide support to these unions so that they can have a stronger bargaining power when it comes to working conditions and wages. In the past, when labor unions in Kenya were highly discouraged, employees suffered greatly as

they were unable to negotiate with their employers.

Collective bargaining has empowered workers to demand their rights and receive fair treatment. The pursuit of profit in business has long been debated, with some arguing that employers prioritize maximizing profits over the well-being of employees and other stakeholders, such as clients. Kantian philosophy suggests that employers should provide employees with meaningful work. Additionally, management has a responsibility to fulfill the obligations outlined in the employment contract.

Certain governments with significant decision-making power should not use that power to undermine junior employees, especially for unclear aspects of their work. Employees are crucial for the progress of organizations, and their needs should be addressed within the capabilities of the company. According to the Universal Declaration of Human Rights, workers have the right to have their needs met, as long as the employer has the capacity and the employee deserves it, although it cannot be guaranteed. It is highly discouraged to dismiss employees for minor reasons, as it is unethical to take away someone's freedom without allowing them to make decisions. In Kenya, a developing country, the number of available jobs is lower than the total number of unemployed individuals.

This text discusses unethical practices in the workplace and the concept of agency theory in business ethics. Employers are given too much power and exploit their employees by paying them the minimum wage, which is unethical. Employees should have the freedom to work without being under constant surveillance and invasion of privacy. Some organizations intrude into employees' personal lives even when it's not relevant to their work. Additionally, employees also act unethically by misusing their freedom for personal activities such as reading

newspapers, using the internet and telephone, and not working during working hours without the knowledge of management.

Agency Theory

Agency theory explores the relationships and interests that different stakeholders have in relation to a business's activities. It recognizes that various stakeholders have different needs that cannot always be met simultaneously.

Milton Friedman proposed a theory that explains why stakeholders may have differing perspectives. According to Friedman, the ultimate goal of a business should not be solely profit maximization, but other scholars argue that social responsibility should play a greater role in business operations. Friedman believes that businesses cannot have moral obligations, as they are not individuals, and should only consider costs and benefits. In his view, managers should focus on maximizing profits since they are employed by the business. The Agency theory addresses the responsibilities of shareholders and managers, determining who should be accountable in case of losses or harm to society, and who should be rewarded in the event of profits. The stakeholder theory clearly defines the roles and actions that management should take to avoid conflicts among various stakeholders.

According to Kant's theory, it is important to meet the demands of all stakeholders to a certain extent based on the company's efforts, resources, and time that have brought benefits. In the case of a loss, all parties who would have otherwise benefited should be penalized. If the company wants to progress and become larger and more productive, stakeholders should be given the right to be part of the company and have influence in its decisions.