Comparing and Contrasting of Ethical Perspectives - Essay Example

?Introduction General ethics are intrinsic part of human interactions that are guided by individual values and principles. In the broader context of business, the ethical considerations are deemed complex as people have diverse perspectives on issues. This is critical aspect which could lead to conflict of interest, both within the organization and the external environment within which it operates. On the other hand, business paradigms are highly volatile which depend on externalities for their sustainable performance. The myriad shareholders and stakeholders of the business emerge as key factors whose interests need to be incorporated within the aims and objectives of the firm for its long term sustainability. As such, the need to become accountable for their actions becomes a highly desirable element of their success. Indeed, the ethical considerations become hugely important issues as they influence the decision making processes that have wide ranging implications for the business and the stakeholders at large. The paper would discuss the issue by comparing and contrasting three articles: ‘What is business ethics’ by Peter Drucker; ‘The social responsibility of business is to increase its profit’ by Milton Friedman; and ‘The relevance of responsibility to ethical business decisions’ by Patrick Murphy. The varying views of the scholars reflect not only the significance of ethics but also its hugely controversial impact on business outcome. Thus, it is vital to highlight the need to evaluate the extent to which the ethics play role in the overall performance of the business. Most importantly, the paper makes an effort to emphasize the changing dynamics of business imperative in the transforming societal values and emerging new socio-cultural and economic order. What is ethics? Drucker believes that in the contemporary times, the word, ‘business ethic’ has replaced social responsibility. He broadly expounds that ethics are moral obligations that are relative to contexts and people. He says that moral laxity can be defined by the individual behavior but its implications are suspect because of the differing perspectives on the right behavior. Moreover, the ‘extenuating’ and ‘aggravating’ circumstances make the moral behavior highly objectionable as they tend to favor the powerful and the rich. It is true that the wide diversity of socio-cultural and religious paradigms reflects the diverse ethical and moral practices within different societies across the globe. Thus, very often, the actions of people are deemed good or bad as per the different ideologies and views of the people coming from different background. Drucker claims that moral obligations and ethical behaviour therefore depends on the moral norms of one’s society’s culture. Most importantly, he says that individual behaviour cannot be applied to business because morality is relative that relies on socio-cultural norms. Milton Friedman, on the other hand, uses the term social responsibility to define business ethics and says that it is totally irrelevant to the main objectives of business, which is to make profit. He strongly asserts that business can only contribute to social causes to the point where its interests are not clashed. He has linked social responsibilities of business with that of issues like unemployment, poverty, pollution control etc. and criticizes the reformers who think that businesses need to focus on wider objectives than merely profits. According to him, burdening the business with social responsibilities adversely impacts its major objective and undermines the postulates of free society. Patrick Murphy’s article reviews the business ethics vis-a-vis moral responsibilities of businesses and how they are employed in decision making processes. He uses different articles to show how various types of social responsibilities: legal, corporate, managerial, social, stakeholder and societal are applied within and across businesses to achieve wider objectives of business. He says the normative ethical principles become the driving force for businesses’ to achieve its wider objectives of not only making profit but also in contributing to the welfare of all its stakeholders and community at large. He describes moral responsibility as ‘an entity’s ability to respond to a person, situation, or issue in a certain way’. According to him, scope of business responsibility is collective and address the corporate’s response to issues and elements within and outside the business. He has cited Weber and Schulz who have laid the foundation of social responsibilities of ethical decision making. The extent of responsibilities varies in direct proportion to the extent of freedom of individual within the corporate structure. Various dimensions of moral responsibilities are outlined to decipher the deeper meaning of ethical considerations within business that corroborate the core ethical values exhibited by them when applied across their operations with wide ranging implications. Most pertinent is the fact that Murphy highlights the importance of morally responsible behavior in decision making to reflect its impact on not only the business but also on the community and various stakeholders who are directly or indirectly influenced. Is business an entity? While Drucker and Friedman do not accept business as social entity which is endowed with moral responsibility to act in certain way, Murphy explicitly believes that they are moral actors with collective responsibility. Drucker says that corporates cannot be guided by the ethics of individuals and restrained within moral boundaries mainly because the axiom of individual social responsible behavior is dependent on cultural mores. Business, on the other hand, comprises of individuals which have collective goals. The code of ethical behavior of business therefore differs and would need to focus on issues which can be collectively addressed to issues of social relevance. Friedman also says that business cannot be philanthropic as well as be a profit making body. When they are forced to have social responsibility, principles and freedom of capitalistic society are compromised. Drucker and Friedman, both disagree that business can be termed as independent entity that is governed by social responsibilities. But at the same time, Friedman confirm that ‘corporation is an artificial person’ (ln13) but refuses to accept it as business! Rather than taking it as an entity with designated goals and objectives, he refers to the proprietors and corporate executives and links their individual behavior with that of the business. At the same time, Drucker is of the view that society has different perspectives of individual values and behavior and that of business responsibilities. While individuals are not morally ostracized if they pay the ransom money under some threat, the businesses are labeled unethical when they are forced to ‘submit to extortion’. Lockheed is prime example which had submitted to blackmail by Japanese Airline firm because it wanted to save the jobs of thousands of its employees who were employed in the manufacturing of L-1011 jet planes. Friedman and Drucker, both, therefore covertly accept business as entity whose actions need to corroborate the wider interests of its various stakeholders. Murphy’s assertion that legal parameters are the founding stones is highly pertinent as ethical considerations and moral responsibilities when applied to decision making processes add value to the business outcome. Thus, when business or corporate body acts collectively on issues and uses moral responsibility as a plank to embark on actions that are accountable, it serves as an independent entity with defined moral and ethical constraints. Relevance of ethics in business Friedman says that within the political mechanisms, the government or public sector becomes the key element to disburse justice and provide for the welfare of the people at large. The private sector is not accountable for welfare related activities but primarily looks for the interests of its shareholders and stakeholders vis-a-vis provide consumers with quality products and services and ensure good returns to its principals. Indeed, the executives or employees who look after the business and make business decisions must be guided by the interests of the principals or major shareholders. The ethics have therefore little or no relevance to the businesses. Drucker compares the modern business ethics to that of ‘casuistry’ which referred to the social responsibilities of rulers of late 16th century in Europe. He affirms that casuistry later gave rise to political ethics which ultimately led to discriminatory behavior. According to him, the ethical considerations were driven by the needs of the powerful and the rich and therefore were highly discriminatory. While the initial euphoria for social responsibilities can be highly recommendable, their gradual degradation under social pressure becomes a major issue for discontent. He is of the view that social responsibilities of business need to be linked to the ethics of prudence where wrong or questionable behavior is avoided. The organizational leadership therefore can set example of one’s behavior as benchmark and help create a spirit of common behavior and values. This is interesting because he inadvertently advocates a set of behavior that is ethically correct and conforms to the wider belief of what is wrong. Drucker has also discussed Confucian ethic which is ethics of interdependence and is dependent on the human relationship. It delineates the power within the relationship and works towards optimizing the benefits for the parties. The theory of mutual dependence is worth working on because in the contemporary times, the economic dependence has amplified the need to become more considerate towards the needs of other people. It is especially true for businesses because it focuses on the needs and requirements of the people and therefore their welfare must also become their major focus. Ethical considerations in business paradigms therefore become critical issues within business success. Murphy’s reviews of various articles clearly articulate his views on the relevance of ethics in business decisions. Through his analysis, he strongly contends that business ethics play vital role in the sustainable development of society that also results in the continued success of the business. The fast transforming social values and globalization has made developmental issues hugely pertinent. They have now become an intrinsic part of corporate strategy that also provides them with distinct leverage. Indeed, accountability in their actions and social responsibility has emerged as most crucial aspects of modern behavioral pattern within businesses across the geographical boundary. Consequently, in the recent times, the scope of accountability has broadened to embrace the emerging new paradigms of changing social values and issues which have significant impact on the overall socio-economic development of the society. Murphy emphasizes the importance of various types of responsibilities vis-a-vis legal, managerial, social, corporate etc. which act as strong motives for better management and encourage balance between power and responsibility. External forces like government regulations come into force whenever the balance is disturbed. This helps to maintain the requisite balance which is designed to improve the performance. Moreover, the various externalities also serve as mechanism of competitive advantage that helps the firm to maintain the leverage against their rivals in the field. This is chief reason that CSR modules have increasingly become vital aspects of corporate strategy. It helps them to incorporate social responsibilities that are most relevant to the firm as well as to the society so as to gain credibility amongst its various stakeholders. The improved image and their contribution to social causes gives them a definite edge in the market. Responsibilities of business entities The relationship between firms and social organizations has moved beyond paternalistic philanthropy to a re-evaluation of the roles and responsibilities of business in society. CSR has evolved as a tool to become more responsive to various stakeholders’ legal, ethical, social and environmental expectations. Friedman is against the reforms as envisaged by the changing times and believes that these are the areas for the government and public organizations. Cost analysis and capitalistic gains remain major aims of the businesses. He also asserts that firm cannot divert the funds to social causes as they must work for the sole interests of the proprietors or the principals. He says that if executives or employees do so, they ‘in effect, act as public employee…though he remains in name an employee of private enterprise’. Drucker, on the other hand, is conspicuous in his support for ethics of prudence and self-development as it promotes behavior that does not adversely impacts others. He stresses that ‘ethics will have to define right behavior as the behavior which optimizes each party’s benefits and thus makes the relationship harmonious, constructive and mutually beneficial’ (p36). He considers that the behavior rather than the intentions become important facets of socially responsible acts of businesses and people at large. Ethics therefore also become inherent part business dynamics. Murphy is most discursive on the relevance of business ethics, both as corporate strategy and government’s tool to ensure that businesses contribute to the social issues and causes. He agrees that government intervention often becomes main drivers for CSR. It not only provides the firms with opportunities to expand market and gain credibility but at the same time, helps them to gain critical insight into the mechanisms of social development and its consequences. He says that ethics in business is hugely important because in the increasing competitive environment, it becomes easy to exploit people (consumers) for one’s vested interests. It is vital ingredient of responsive behavior when the interests of consumers are not compromised through sub-standard goods and services by emotional appeals or covert acts of socio-religious practices. Murphy also affirms that ethics in business are mutually beneficial and act both ways. The other stakeholders are equally liable to act ethically while enjoying the goods and services of the businesses. Murphy also claims that the various elements of business ethics encourage disclosure and transparency within their work. The basic tenet of ethics in business requires unbiased and just behavior that cuts across the different segment of society. Indeed, the business ethics serve as tools for sustainability of business and profitability. The rationale for it endorses economic growth and competitiveness when it helps to forge strong bonds between the business and civil society. The market oriented policies must be backed by responsive behavior and social responsibility that can give them sustainable business for long term. The normative ethical foundation in the managerial decision making goes a long way in ensuring social responsiveness to the changing dynamics of business in the current times. Thus according to him, code of ethics for businesses become very essential part of strategic decision making processes. My opinion on social responsibility and business ethics Various factors like rapid globalization, technology, multi-cultural society have significantly impacted business dynamics across the globe. The changing environment of values and work paradigm has necessitated that the businesses must become responsive to the needs of the changing times. They must acknowledge the impact of their decisions, actions and behavior within which they operate and on the people at large. Most importantly, the highly competitive nature of evolving new models of global business has augmented the risks and responsibilities of the organizations and made it vital for them to become proactive participants in the development of society at large. The understanding of the issues supports wider acceptance of the decisions made and encourages mutual respect. It helps create better working environment for improved productivity. I strongly believe that sound business ethics are key ingredients of organizational culture. It motivates proactive participation in the community development processes and stimulates sustainability of business performance through ethically delivered mechanism of its strategic goals and objectives. In the current times, the scope of responsibilities has considerably increased that necessitates businesses to incorporate the evolving values within its strategic decision making. Within the broader concept of business imperatives, the accountability of actions, social responsiveness and understanding of evolving dynamics of social pattern become very critical part of sustainable development. Ethical considerations espouse sustainable business practices and high standard of ethical and moral code of conduct within the business dynamics. They are major challenges which need to be assessed from wider perspectives of socio-cultural and economic compulsions. It is important that events and issues be interpreted within the right context, looking for long term solutions. Thus flexibility of approach and moral reflections also serve as tools for critical thinking and need to be applied judiciously in the managerial decision making processes. An eminent scholar, Hall asserts that corporate social responsibility of firm redefines the ‘rules of economic game in order to move from a situation of wasteful consumption and pollution to one of conservation, and one of privilege and protectionism to one of fair and equitable changes open to all’ (1996:63). In the current times of environment degradation, recessive economy and dramatic climate change, the social responsiveness of businesses become hugely relevant issues. All business caters to the needs of the people and thus their decisions have wide ranging implications on the interests of its various stakeholders. The unethical practices like corruption, bribery, exploitation of the weak and meaningless exploitation of natural resources without giving it back to nature for long term sustenance have become significant elements that adversely impact the market credibility of firms. The transparency and disclosures corroborate with the social responsibility of the firms and give them distinct advantage. Friedman has discounted the strong role of the masses within the broader objectives of businesses and has narrowed down the scope of business objectives to make it non sustainable in the long term. Drucker is disillusioned with the duality of roles of ethics which seem to have differing connotations for the people and business. I believe that while Drucker has given strong examples of dissonance in ethics within businesses, he has been short sighted and deliberately ignores the wider ramifications of sustainable business practices that heavily rely on business code of ethics. Murphy has shown clear understanding of ethical considerations in businesses. The business is a mutually satisfying bond between business objective and society. To maintain that bond, it is imperative that business must contribute to the welfare of the society by exhibiting sensitivity to social issues and getting proactively involved in addressing them. Thus, contributing towards environment conservation and preservation by promoting sustainable business practices greatly enhances their credibility and facilitates long term sustainability of the firms. Conclusion One can therefore conclude that ethics in business is closely linked to social responsibility and inherently endorses the concept of accountability. In the highly competitive environment of global business, the strong code of ethics helps businesses to develop critical mechanisms that provide people with goods and services that facilitate sustainability of resources. Friedman totally discounts the effectiveness of business ethics and Drucker hesitantly accepts its role in business. But Murphy has displayed distinct enthusiasm and belief in the ethical considerations and social responsibility of the businesses. His foresight is highly recommendable as it promotes sustainable business practices. (words; 3058) References Drucker, Peter F. (1981) What is ‘Business ethics’? The Public Interest, 63:18-36. Friedman, Milton. (September 13, 1970). The social responsibility of businesses is to increase its profits. The New York Times Magazine. Hall, D T. (1996). The Career is Dead – Long Live the Career: A relational approach to career. San Fransisco: Jossey Bass Publishers. Murphy, Patrick E. (2009). The relevance of responsibility to ethical business decisions, Journal of Business Ethics, 90: 245-252. Read More