Ethics in Business are an Optional Extra Essay
Ethics in business is about doing what is right, and what is generally accepted as good, or the standard set up to be adopted. “It aims at inculcating a sense within a company’s employee population of how to conduct business responsibly” (Hurst, 2004). The interpretation of business ethics may be difficult especially in international business operations. In business, ethics differs from religious ethics that should be followed holistically.
In this sense, business ethics may come, as a bluff where sometimes what is unethical religiously may be ethical business wise. According “ethics of business are games ethics, different from the ethics of religion” (Carr, 1968). Falsehood may cease to be falsehood when both parties accept that the truth should not be spoken. So adopted moves of businesspersons may not be ethical in the outer world, but business ethics sometimes permits and overlooks those unseemly practices.
This may include outwitting competitors to gain a contract through hand shake, playing smart to be recruited for a juicy post when the qualifications wanted are not presently available, some employees allow their sales personnel to adopt ‘pressure to deceive’ strategy in the process of handling customers etc. No wonder Representative Omar Burleson, the Democrat from Texas stated that business ethics are liken to ethics of Congress characterized as ‘Ethics is a barrel of worms’ i. e. pungent summing up of the problem of deciding who is ethical in politics (ibid).
The boundary of business ethics is broad. It is somewhat problematic covering the fields of business ethics, which includes such concerns as corporate governance, reputation management, accurate accounting, fair labor practices and environmental stewardship, inter-alia (Hurst, 2004). These fields of business ethics goes to constitute the corporate responsibilities of business organization. Now, the question is ‘Ethics in Business an Optional Extra’.
This is what the write-up tends to focus on. Most business ethics are considered as mandatory, but the true nature of this ethics is that they are those that are optional activities that should be undertaken by business to enhance the value of the organization. “A confusion between corporate philanthropy and corporate social responsibility can arise from this connection between corporate giving and a firm’s business activities” (UNCTAD, 1999).
Thus, the classification on a business ethical or social responsibility include mandatory moral responsibility, that is, its corporate social responsibilities, and other optional social responsibilities based on strategic or altruistic corporate social responsibilities. The mandatory moral responsibilities of business organization ensure that firms conduct their business morally; doing what is right and fair.
The mandatory social responsibility are business ethical obligation that should be kept to safeguard the good of the society. Many of today’s legal standards were once largely matters of good ethical conduct, such as deceptive product claims or advertising, shoddy products, hidden charges, inadequate product warranties, or polluting the atmosphere”( Bialkin, 1994). Optional social responsibilities (referred to as philanthropic responsibilities) are voluntary services made by business to the society, in form of giving their time, money for the society good.
According to Lantos (2001), the mandatory corporate social responsibilities and the optional social responsibilities can be separated through three moral theories: “teleological or consequences-based (consequentialism), deontological or duty-based, and virtue-based moral theories”. The teleological or consequences-based moral theory uses principles of utility (for instance, Utilitarianism of John S. Mill). Moral operations of corporate organization are judged based on the outcome of actions or behavior.
If the consequences of business operations are good then it is ethically right, and it is bad or evil if such action is wrong. The deontological or duty-based moral theory focuses on people duties on how it upholds norms, using principles of justice and rights. In this regards, corporate social responsibilities are conceived as rights to individuals in the society as regards of protection from harm or operational hazards of business corporations, or the rendering of justice based on fairness and equity in corporate decision making.
The value based moral theory for separating corporate social responsibility involves considering whether ethical values and good character are catered for by the business corporations. Some social responsibilities that are considered as right and justice based are ethically optional to business. The corporate business, may reframe from doing those philanthropic responsibilities and still go on to conduct a better service to society. The interpretation of business ethic embracing responsibilities to satisfying rights of people is wrong.
The question that should be asked is where this right comes from. Business exist not for itself but for the shareholders and other stakeholders. Ethical responsibility should not be considered as rights, but as philanthropic service to humanity. “…community welfare should not to be provided at the stockholders’ unrequested expense and to the detriment of employees, customers, and others with valued relationships with the business” (ibid).
The shareholders of business and stakeholder may on their goodwill or based on their consensus stand decide to execute ethical good for the society by providing altruistic responsibilities. “Ethical duties of firms do not entail providing for stakeholders’ welfare rights or making up for the injustices of the free enterprise system. These are optional philanthropic ‘responsibilities’ which should only be undertaken when they are expected to enhance the firm’s value” (Lantos 2001).
The major purpose of business is to make profit for its stakeholders. Other social responsibilities are not the major reason why the business exists. This is optional in the real sense, outside the Judeo-Christian (based on Godly moral) which business are expected to execute good deeds. “Most management and economic theory and practice either see profit and growth motives as the interests, thus subsuming and absorbing morality within these interests or perceiving it as a purely personal matter (Sayer, 2003, cited in Smyth & Pryke, 2006)”.
Moral practices in business to society is good way of conducting business. It goes on to promote the good name of such organization and win the public to it due to it’s’ acknowledge of contributing to society well being. However, this moral practice should not be substituted as a ‘must do’ practice. Corporate social responsibilities are normative obligations. This good deed from business is based on how the individual firm interprets what responsibility to engage in. the failure to execute such responsibility is not a good bases for judicial litigation.
For instance, when the civil social implicitly or explicitly threatens to seek legal mandates based on the failure of business to execute social responsibility, the business firm has the right to defend its stand based on the flexibility of self-designed voluntary standards (UNCTAD, 1999). Business ethics, especially those concerning altruistic and moral obligations, are based on normative interpretation. Thus, business ethics are extra optional responsibility that is subjected to subjective interpretation of the individual firms.
Increases in litigation against business are based on public reports and government actions against business failure to exhibit good ethical responsibility. For instance, a famous litigation case was against the Salomon Brothers Inc. where its senior management failed to report its traders’ deliberate violated Treasury Department regulation pertaining Treasury bond auctions. This is example of failure of business to meet public expectation. The failure of the company to adhere to good ethical business practice is condemnable because this is a mandatory social responsibility of the firm to the society.
On the other hand, suppose the firm fails to implement a social responsibility that is based on altruistic ground (e. g. Sponsoring of payment for drugs of HIV-AIDs patients) such business ethical responsibility is not a legal ground to raise a legal suit. Conclusively, it is seen that there are tow types of business ethics. One has to do with mandatory social responsibilities of business corporations, the other is an optional extra corporate responsibilities. The latter, constitute business ethics that are optional extra to business operations.