Ethics in Business - Research Paper Example

? Ethics in Business Contents Contents 2 Introduction 3 Introduction Ethics has been identified as one of the significant dimension and aspects in the business world. The original meaning of the word ethics is character, principle of conduct and customs. Ethics in business world answers the morality questions and determines what is right, what should be done on not, what is the right way of doing this, etc. These morality questions emerge as one of the significant business issues for the corporate personnel. Theoretical and applied ethics are the two commonly identified branches of ethics among which business ethics is being recognized as the component of applied ethics. Business ethics is also considered as an important branch of philosophy (Swanson and Fisher 34). The main reason behind considering business ethics under the dimension of applied ethics is due to the impact of business decisions on the public and private life of society. Applied ethics allows the business organizations to examine and investigate the impact of business policies and decisions on the private and public life of society. Every people in the society demand and aspire to live in the positive and appealing environment. Business organizations assume significant relationship with both individuals and society. The behavior of individuals is the central and focal point of business life and ethical principles adopted by business organizations create a significant influence on individual behavior. Thus, it can be said that ethics also assume significant influence on business areas and decisions (Jeurissen 55). In this regard, many companies have also demonstrated inclination towards framing ethical codes. The framing of ethical codes outlines the importance and role of ethics in business life. The present paper will throw light on ethical theories creating an impact and determines business decisions. The ethical theory will be helpful in specifying fundamentals of ethics in business environment. Moreover, emerging ethical issues related to technology, environment and international business will also emphasised in the present paper. This study will be helpful in ascertaining signifying concluding remarks about the ethical practices in business life and trends taking place in the business world. I. Thesis Statement The main aim of the research paper is to investigate and analyze fundamentals of business ethics in light of ethical theories. The study of ethical theories provides guidance and support in solving ethical dilemmas and ethical issues emerging in business world. The thesis statement for the research paper is ‘to assess the fundamentals of business ethics in light of ethical theories and emerging ethical issues’ II. Fundamentals of Ethics There are primarily two fundamentals of business ethics-emphasis on concurrent solutions and ethical and Emphasis on concurrent solutions Business ethics emphasis on concurrent solutions through making use of ethical theories and judgments. The concurrent solutions form the fundamentals of business ethics as it resolves the situation in light of morally accepted ethical principles and values. The ethical theories have been propounded with the object of finding concurrent solutions of any ethical dilemma. The business ethics is an integrated phenomena aimed at evaluating the impact of ethical decisions on the society and as well as on business organizations (Jeurissen 55).This evaluation helps in fostering concurrent solutions suitable to the needs of both society and business organizations. Ethical decision making and reasoning Ethical decision making and reasoning are the most common fundamentals of business ethics. The ethical decision making framework and reasoning serve the basis of business ethics. It is due to reason that this framework evaluated the business situation in the light of morally accepted principles. This evaluation facilitates process of ethical decision making and testing whether such decision has the chances of applying or implementing in the business environment. The alterative or the solution fostered by the decision making framework is backed properly by the reasonable grounds and valid arguments (Shaw 45). III. Ethical theories Various contexts and situations in the business environment give rise to the ethical theories. Ethical theories address different business problems in light of moral principles and guidelines. There are various ethical theories like Utilitarianism, Deontology, Egoism, Kant and Ross, Care Ethics, Virtue ethics, normative ethics, etc. Detailed description of some of these ethical theories is listed below: Egoism The ethical theory of egoism was propounded by the Ayn Rand and Adam Smith. This ethical theory states that whether an action is right or wrong, ethical or unethical should be evaluated in light of self needs and desires and the extent to which such actions led to the fulfillment of those needs and desires. The basic principle of this ethical theory is the self interest should be the only criteria of determining right and wrong actions. In other words, individual and business organization should adopt and choose those actions results in the satisfaction of one’s needs and desires. The actions results in the satisfaction or fulfillment of one’s desires and needs are the most ethical one and cannot be questioned on the grounds of ethical framework (Boje 56). The concept of self interest propounded by the egoism ethical theory has been modified in the context of present business settings and replaced with the concept of rational self interest. The self interest treats every business or individual decision results in the fulfillment of personal needs and interest as ethical one while rational self interest asserted that means adopted for satisfying personal needs should be evaluated in light of its impact on the society. The ascertainment of the impact of the decisions on the public and private society life helps in identifying and deciding whether a particular action should be taken or not. Utilitarianism The ethical theory of Utilitarianism seeks to bring overall happiness in the society. According to this ethical theory, any action result in the benefits and happiness of society members is ethical action. On the other hand, actions or decisions led in any kind of harm would be considered as unethical one. The Utilitarianism ethical theory emphasis and focus on ends rather than on the means of achieving those ends (Trevino and Weaver 78). It asserts that whether any act is ethical or not should be judged in the light of overall results and impact it has on the society members. In this regard, decisions taken by business organizations might appear unethical in the first instance, but such decisions should be considered and rewarded as unethical. Rather, there should be an assessment of the impact of such decisions on the overall society and then it should be decided whether ethical or unethical decision. This ethical theory considers and evaluates all the current and expected benefits that accrue to anyone on account of such decision. Utilitarianism ethical theory also stated that any individual or business acts can be considered as morally acceptable if it yields maximum possible advantage and benefits to the society as a whole. The social benefit is ascertained through subtracting social costs from social benefits. This ethical theory also assumed that all the individuals should be treated equally irrespective of the fact that each individual differs from one another and so the welfare needs. The welfare of one individual in no case should be considered as less important with the welfare of other individual. The unequal treatment among two individuals would prevent the overall goal of maximizing the objective of general welfare. There are two forms of utilitarianism-rule utilitarianism and act utilitarianism. Rule utilitarianism seeks to design specific set of rules and regulations in a manner results in greatest possible advantages and net positive consequences to the overall society. Act utilitarianism demands the parties to determine the impact or effect of each individual alternative on parties and should result in adoption of such alternative optimizing satisfaction of all parties (LaRosa and Salvetti 85). Deontology Deontology ethical theory suggested that moral and ethical decisions are those implemented with the intention of fulfilling and complying with duty. Intention behind the actions is more important rather than the consequence of such act. In other words, right or good intention makes the decision ethically sound irrespective of the consequences incurred with such intention. Intention holds the prime and significant consideration while consequences are secondary factor in determining ethical or unethical aspects of any business or individual decisions. This ethical theory also holds profound importance in the business settings. It demands that business policies and strategies should be framed and implemented in such a manner capable of contributing in the overall development of human rational and moral capacities. Business organizations should be viewed and recognized as a moral community where each action is taken in light of moral benefit and good for others. Every personnel in the organization should stand in a moral relationship with other organization members. Deontology ethical theory holds the assumption ‘treat others as you would be treated’, ‘respect for person principle’, etc. Application of such ethical principles would surely helpful in minimizing business problems and will provide business organizations a universal peace in commercial world (Koehn 66). Normative ethics theory The business world faces various kinds of ethical dilemma where it is difficult to strike a balance between philosophical ethical principles and ethical dilemmas arising in business environment. Philosophical ethical principles and theories guide and govern human beings in almost each and every aspect of their life. These principles focus exclusively on the human life with little emphasis on business relationships. In this regard, normative ethical theory has been introduced with the purpose of guiding each and every aspect of human life as well as business relationship. The theory has demonstrated the application and implementation of ethical principles in the business world in order to provide ethical guidance to the people functioning in their business capacity in the business world. There are primarily three types of ethical theories-stockholder, stakeholder and social contract theories (Shafer-Landau 76). All the ethical theories present and visualize accountability and responsibility of business class persons in a distinct manner, therefore hold profound importance in the business world. (a) Stockholder theory: This theory is the oldest among the available three ethical dimension of normative ethics theory. The theory asserts that business entities represent group of several people collaborated together and vested their interest in a business venture in order to achieve specified ends and results. All the stakeholders assume fiduciary relationship with each other and are bound to pursue actions and decisions in accordance with such relationship. The meaning of fiduciary relationship implies that business resources need to utilize for societal benefits instead of their personal profits. Business decisions and actions should be taken with the mutual understanding of each stockholder. (b) Stakeholder theory: This is another normative theory holding profound importance in the business settings. This theory implies that management of every company is under the obligation of maximizing firm financial and operating success. The financial and operating success should be ensured through striking balance among the conflicting claims of various stakeholders. This balance and attainment of financial gains should be maintained through the corporate legitimacy and stakeholder fiduciary principle. The corporate legitimacy principle asserts that business organizations should be managed and operated in accordance with the interests and benefits of all stakeholders. The rights of all stakeholders should be duly met and ensured in order to enable the business organization to function smoothly (Mackinnon 112). The stakeholder fiduciary principle asserts that management of business organization accounts a fiduciary relationship with all stakeholders and thus bears the moral duty of safeguarding their interest and benefits. ( c) Social contract theory: Social contract theory asserts that business organizations are ethically obligated to pursue actions in accordance with the welfare and benefits of society. The general principles of justice should not be violated by the businesses in any case. The conduct of businesses in accordance with the natural principles of justice and equality determines the existence of business organizations. The social contract theory is based on the implicit agreement between society and business organizations under which businesses assumes responsibility to serve the interest of society in the best possible manner. The social contract theory plays a significant role in striving business organizations towards social responsibilities. Care Ethics The care ethical theory gives due recognition to the virtues affecting personal relations like compassion, sympathy, loyalty and empathy. This ethical principles demand individuals not to adopt moral obligations blindly in their personal life (Title 89). It motivates and guides individuals to think for the good and benefit of others and takes actions resulting in the betterment of others. This ethical principle becomes more important in case with whom individual has special relations. The individuals and business organisations need to adopt universally accepted ethical principles in the event of ethical dilemma. IV. Ethical issues regarding emerging technology The rapid and continuous development in the field of science has invented various kinds of new technologies like nanotechnology, information and communication technology, biotechnology, etc. The introduction of new technologies plays a crucial role in extending human thinking and design capabilities in the past few decades. The impact of such technologies on the societal life is also apparent. The technological advancement and emergence of new technologies disturbs the human interaction and dialogue with the climate cycle and implicit carbon cycle. The interaction and dialogue of humans with the climate cycle and carbon cycle is necessary for the proper functioning of environmental dynamics (Koehn 66). The emergence of new technologies and continuous technological developments has disturbed this interaction and dialogue mechanism. The other critical cycles like hydrologic cycle and nitrogen cycle are also affected adversely on account of development of new technologies. Although there is less number of studies conducted demonstrating the impact of new technologies on hydrologic and nitrogen cycle. Similarly, genetics engineering and proteomics also create negative impact on almost all layers of biosphere. The magnitude of soil and rock formation, occurrence of natural forces like wind and water erosion, formation of glaciers and volcanoes are takes place with the interplay of science or technology and human activities (Koehn 66). The pattern of human activities has changed considerably due to technological advancement and thereby influence occurrence of such natural forces. In all, technological developments has made the ecosystems as human dominated and this human dominated ecosystems is being identified as major ethical issue regarding current and future technologies. In the past years, ecosystems has been controlled and dominated by the natural forces with little bearing of human forces. The pace of technological advancement has changed the entire system and functioning of ecosystems and resulted in the replacement of natural dominated ecosystems with the human dominated ecosystems. V. Ethical issues regarding the environment Environmental sustainability is one of growing and demanding issue in present years. The environmental sustainability has gained considerable attention and recognition across the world. The political and economic climate of the countries also depicts high inclination towards this issue. The business firms are one of the significant components of political and economic atmosphere, thus are required to carry their operations in accordance with the sustainability issue. Business firms are ethically and morally obligated to preserve environment and conducting their operations in accordance with the environmental regulations (Koehn 113). In this regard, the major ethical issues arising regarding the environment are environmental pollution, deforestation, conservation of energy resources, etc. Business organizations exist and operate in the environmental boundaries, therefore acts of business organization affect and get affected by the environment dynamics. The issue of environmental pollution has gained attention of many international forums and conventions. The manufacturing facilities, production and transformation process, and disposal of wastage materials by the business firms have polluted the environment to a wide extent (Boje 115). The environmental pollution creates a direct impact on the health of living beings and made their life susceptible to various kinds of diseases. Since, the organization is a component of society and strives to conduct operations for the welfare and development of society, it is obligatory for business organizations to take care of pollution issue seriously. The establishment of new business firms or expansion of already existing firms led in the cutting of forests and natural vegetation. The massive cutting of trees and forests has given rise to the problem of deforestation. The deforestation resulted in the extinct of many natural vegetation which in turn create negative impact on the overall surrounding and environment. The green house effect, depletion of ozone layer and acid rain are some other environmental ethics related issue demands remedial steps in present years (Shaw 118). The business organizations procure resources from the environment and ethical issues affect the environmental sustainability negatively. VI. Ethical issues in International Business International business operates in the business environment, therefore also affected by the dynamics of ethical issues and dilemmas existing in the environment. The ethical issues arising in international business relate to employment practices, human rights, bribery and corruption, unfair trade practices, and many more. Employment practices of different countries vary from each other demanding business organizations to mould and adapt their employment practices accordingly. The variations in the working environment conditions also complicate the situation more as it becomes difficult for the international businesses to decide which working environment standards will be suitable in all countries. There is no universal working environment standard applicable in all business environments. This practice of formulating new standards and adapting existing standards may sometimes result in the violation of ethical codes and categorize company as unethical one (Mackinnon 125). Human rights are another major ethical issue emerging in the context of international business. The concept of human rights requires the domestic and international business to establish standards and policies aimed at safeguarding the rights and duties of employees. The phenomena of human rights assume high importance in developed countries as compared to developing countries. The developed world assigns less importance to the human rights like freedom of association, speech, assembly, etc. This situation gives rise to ethical dilemma for many international firms. The firms face difficulty in establishing harmony between the prevailing conditions of human rights in developing and developed countries. Unfair trade practices like bribery and corruption has attracted huge attention in the recent years due to huge involvement of international business firms in such unfair trade practices. The complexities and dynamics of international business environment led the businesses to get indulged in such unfair trade practices (Jeurissen 55). It has been identified that practice of giving bribes or money is being visualized by many countries as the consideration or payment of greater benefit or good for society. In other words, bribes has been recognized as the means of availing opportunity of having greater good or benefit for the society in many countries. Bribery and corruption is no longer being considered as unethical practices in such countries. The business officials believe that paying extra money or consideration to the higher official in order to ‘speed up’ business proposals will actually enhance the welfare of society. And, anything that ultimately results in the welfare and development of society cannot be considered as unethical and illegal (Jeurissen 55). On the other hand, various countries like United Stated has formulated foreign corrupt practices act to prevent the business officials for paying money or bribes to the higher authority for business purpose or benefit. Likewise, various international forums like organization for economic cooperation and development also organized various kinds of conventions and meetings to restrict bribery and corruption practices. The economist believes that bribery and corruption disturbs the free market economy and working of existing market mechanism. Therefore, such practices should be restricted in order to stimulate the existence of free market regime. Ethical problems become more intensified in the arena of international business transactions. The ethical issues related to transfer pricing, biopiracy, and bioprospecting fall within the dimension of international business transactions. Besides, the issues related to the child labor and cultural imperialism also invited the attention of business ethics in the international business environment. It has also been identified that multinational business firms takes the advantage of international differences prevailing among countries (Jeurissen 55). The outsourcing of services by the rich or affluent nations to the poor countries at cheap price or cost is an example evidencing the advantage taken on account of differences existing in economic conditions of two countries. Dumping is another major ethical issues gaining significant attention within the ambit of international business. Dumping practices are adopted by the foreign players in order to eliminate competition from the domestic players. Foreign or multinational players sell goods and services at comparatively cheaper price thereby creating difficult for the small and domestic players to sustain in the marketplace (Title 89).The dumping practices are most commonly adopted by the consumer durables and FMCG companies to increase their market share and eliminate competition from domestic and international markets. The dumping has been identified as ethical issue as it results in monopoly in the longer time. The creation of anti-dumping laws and acts is a step towards curbing such practices and regulating dumping practices. VII. Conclusion The research paper emphasised on the thesis statement ‘‘to assess the fundamentals of business ethics in light of ethical theories and emerging ethical issues’ led to the conclusion that business ethics has been recognized and identified as one of the specialized branch of ethics. The business ethics throws light on the moral standards and applicability of such moral standards in the business organizations and behavior. Emphasis on concurrent solutions and ethical decision making and reasoning are the two identified fundamentals of business ethics. The fundamentals throw light on the emergence of ethical dilemmas and approach adopted by the business ethics in resolving such dilemma. The study of ethical theories also led to the conclusion that fundamentals of business ethics has been backed and supported by the ethical theories. The ethical theories lay down the platform or prescribe a framework within which business organizations take morally and ethically accepted decisions. Some ethical theories focused on the means rather than ends, while some other focus on the ultimate consequence irrespective of the means adopted to arrive at such decisions. The main objective of ethical theory is to guide and pave the path of ethical decisions in the business world. The ethical theories vary in their approaches of facilitating ethical decisions in the business organizations. But there is uniformity in the overall aim of ethical theories i.e. to prevent organizations from pursuing unethical actions and decisions. The discussion of ethical issues regarding environment, international business and technology has led to the interpretation that business organizations need to take decisions and actions with the ultimate objective of welfare and development in the society. The business organizations are confronted with ethical issues at each and every aspect of their functioning. The ethical theories guides, directs and resolves such ethical issues to a wide extent. References Swanson, L, Diane, and Fisher, G, Dann. Advancing Business Ethics Education (Hc). US: IAP, 2008. Jeurissen, Ronald. Ethics & Business. US: Uitgeverij Van Gorcum, 2007. Shaw, H, William. Business Ethics: A Textbook with Cases. UK: Cengage Learning, 2010. Boje, M, David. 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