Ethical Integrity in a Business - Literature review Example

?ETHICAL MANAGEMENT IN BUSINESS MANAGEMENT of the School of the Ethics is about doing what is right, fair and just. Applied to business management, ethics refer to a set of principles and standards governing behaviors, values and propriety of relational norms in managing a business (Hosmer, 1994).This research aims to explore ethical integrity in business management. Philosophers define ethics in varied perspectives. Protagoras viewed ethics as a principle guiding self without interference to others’ rights. He asked persons and organizations not to venture solely for self-interests. Plato and Aristotle viewed ethics as personal virtues—a persons endeavor to achieve some interests, such must be within the standards for fair and courteous treatment of one another by valuing honesty, truthfulness, trust and to live with moderation (Hosmer, 1994). St. Augustine, a medieval philosopher, based his concept of ethics on religious injunctions. He argued that persons should have compassion expressed in a Golden Rule: do not do unto others as you would have them do unto you (Hosmer, 1994). Modern philosophers such as Hobbes and Locke assailed that compassion is an ideal virtue in a world that is competing on resources and on political posts; people compete and take advantages (Hosmer, 1994). Thus, Locke and Hobbes proposed that people ought to moderate themselves from competition; maintain societal peace and to abide on laws (Hosmer, 1994). Bentham and Mill, proponents of utilitarianism, contend that business ethics is possible if people abide to fundamental rules and if those who are serving in the central government are bereft of self-interests (Hosmer, 1994). Both also proposed that there should be a measure on government laws and to evaluate the justice in all actions (Hosmer, 1994). Thus, an act is good if it’s helpful to the greatest number of persons benefitted. Kant, on the other hand, contended that there is universal rule and such must be free from decision-makers’ interests. Kant proposed that ethics must forbid any action one is unwilling to see from others if on similar situation, one would be encouraged to take (Hosmer, 1994). This is further elucidated by modern philosophers, Rousseau and Jefferson, who postulated that removing self-interest is impossible thus, civil rights are necessary to protect persons from arbitrary actions and to guarantee them freedom of speech, religion, assembly, and the like (Hosmer, 1994). It also protects civilians’ properties and liberties, following due process. Moreover, Rawls argued that ethics is based on distributive justice. He advocated for equitable distribution of wealth and services, especially for the disadvantaged in the communities (Hosmer, 1994). Rawls posit that this is possible through social contract. Nozick’s argued that liberty is the bulwark of what is morally upright. Liberty allows freedom from constraints, from laws and market. Under the concept of Social Contract, Nozick argued that no one should be allowed to interfere with the rights of others for self-development and fulfillment (Hosmer, 1994). Larue (1987) perceived that ethical issues relating to business management are most discussed as a relevant matter in human resource management. Hosmer (1987) posited that ethical issues are foremost considered when workers experienced being harmed or at a loss especially when the company undertakes restructuring or closure. Such add to common transactional details on legal and financial matters where ethical imperatives are sought to resolve an ethical dilemma that would considerably be right, proper, and just (Hosmer, 1987). Thus, it’s wise to integrate management’s moral obligation and ethics in strategic planning as part of corporate responsibility (Hosmer, 1994). This is essential to create an environment of trust and commitment among company’s stakeholders to ensure business leverage in the market and its economy (Homer, 1994). He cited that managers whose general paradigm highly regardedrights and welfares of other people and have made it an integral part to its corporate policies, decisions, and actions are likely to gain positive impact on business management (Hosmer, 2000). Business ethics make leaders just and fair not only because this is right but because this is effective in directing business (Hosmer, 2000). Such fairness can be empirically illustrated and measured with (a) attitudes toward job satisfaction, institutional commitment and trust to management; (b) behavioral response in task performance and ancillary matters facilitative of group improvement; (c) improvement in the quantity and quality of work output or efficiency; (d) positive change for competitive advantage and financial performance of the business (Hosmer & Kietwitz, 2005, pp. 67-91). Both researchers contend that this ethical values or principles are applicable not only in business management but also in all facets of private and public administration. To cite simplified virtues that can be adhered to in business management, researchers on business ethics recommended these values: a. Trustworthiness – this refers to level of reliability, character and strength of a company to that enable customers to develop belief on its competence and leadership; b. Open-mindedness- refers to the ability of leaders in a company to be adaptive to innovative ideas about improving business management and business-client relations; c. Accountability—this refers to company’s capability to perform obligations, honoring commitments and taking responsibilities over decisions. d. Clarity of Documents- business must be promoted or advertised with clarity of information which couldn’t be susceptible to misinterpretation; e. Community involvement – good businessmen should be involved in contributing for community development and to be participative in all civic affairs contributive to social welfare. This can be illustrated as sincere practice for corporate social responsibility. f. Transparency of Accounting Control - business manager should directly take care of transparent financial records and reports g. Respect – this is a fundamental virtue in human interrelations. Hosmer (1994) proposed that managers must be morally upright by bringing about distributive and procedural justices to all workers such as compensating, providing benefits for their protection, and encourage them such dedication in the performance of their functions. Managers who made decisions supportive of this are sensitive to their Christian duties that uphold the commandments of God, dignity of human persons and permeate the perfection of human nature. Business ethics helped developed social order and inculcates self-worth (Hosmer, 1994). This religious dimension in business management is perceived imperative if managers intend to learn and advocate ethical behavior for higher degree of executive integrity which can be illustrated only in the confluence of moral judgment and moral action (Weber & Green, 1991, p. 325). Such meant that those who are in conformity to moral reasoning tend to perform ethically acceptable behavior (p. 325) and have completely understood the relations of business agenda and workers interests, although in a meta-analysis study, females professed strong ethical attitudes than males regardless of age (Borkowski & Ugras, 1998, p. 1117). Business researchers further professed that management requires interrelations of managers, workers and customers that are founded on trust. Trust, as a virtue, is imperative in interactions, transactions, and in other forma of human conduct. It arises as an individual expectation, in interrelationships, in economic expectations and in social structures (Hosmer, 1995). Trust is a non-rational optimistic expectation of an outcome; a matter of confidence (p. 382). It meant reliance, an innate or subjective precept within the spectrum of hope for desirable outcome. The expectation can be expressed in three conditions: (a) expectation that the world, a complex reality, remain as it is without discontinuous change (Luhman, 1980, p. 4; Hosmer, 1995); (b) expectation derive from competence in the performance of functions (Hosmer, 1985); and, (c) expectation of propriety of role performance grounded on what is moral such as fiduciary duties. Hosmer (1995) further pointed that trust is possible only for those who deserve to be trusted. This is more evident in interpersonal relations when an individual voluntary relinquish his vulnerability to another beyond his means of control (Hosmer, 1995, p. 383). Trust in this case relates to emotional and cognitive confidence and dependence to another’s decisions with uncertain conditions depending on tasks and situations (p. 383). Often, interpersonal tasks relied on words, promise or written assurance of a person or group which sought to be relied upon. In this level, expectations are for the greater good or are adaptive of utilitarian principles for that what is considered as the ultimate good. Trust therefore is essential in achieving mutual cooperation or at least a cooperative behavior from persons involved (Meeker, 1983, p. 231). In a company, this level of interrelationship in career path is used as bases for the subordinate’s promotion since executive’s effectiveness in performance will depend on this. Values needed are (a) integrity, (b) competence, (c) consistency, (d) loyalty and (e) openness (Hosmer, 1995). Integrity is the reputation of truthfulness while competence is about knowledge and skills possessed. Consistency means reliability in managing situations while loyalty is about benevolence to protect and support others. Openness meant willingness to share and access ideas (p. 384). It can be inferred that trust is essential in interpersonal relationships; in improving managerial careers and in predicting general positive outcomes. Businesses involves person, groups and institutions’ economic transactions which are generally perceived risky, opportunistic, misleading, disguising and confusing—and thus, necessitate contracts and control to exact trust from parties involved (p. 386). On the other hand, non-opportunistic behaviors are possible by developing cooperative relations with all stakeholders or parties of interest to a business. Such however, require a reputation of trustworthiness in transactions; otherwise one would loss contracting opportunities. Hosmer (1995) pointed that it is essential for parties to know that they are mutually volunteering to fulfill the nature of the business agreement or contract, in such way, transaction cost would be reduced. Hosmer (1995, p. 386) subscribed that trust, in business management, an expectation to another that (a) one behave in good faith based on commitments; (b) to be honest in whatever negotiations from this commitments; (c) and not to make excessive advantage to others when opportunity is available. Trust is most evident when party to the interaction showed genuine response to the needs of partner (p. 387) and when an economic actor helps in decision-making that is beneficial to stakeholders. This is a valid strategy rather than competition. Trust, as fundamental in business management, is necessary in all social structures where everyone are assured that institutions behaved in a secured and trustworthy conduct. As such, business managers sensitive to business management ought to be: (1) Process-based – which meant that trust is shown in interrelationships as depicted in past operations; (2) Person-based—trust is manifested by people sharing the same culture and expectations; (3) Institution-based – when trust is built in founded on professionalism or in cases where there are guarantees; (Hosmer, 1995, p. 389) If business is managed based on moral standards and is exercised publicly, such will become empirical proof for future business relations. Dutifully performing of obligations is an example for this. Hence, researchers perceived that business who advocated for ethical codes, practice standards and proper regulation. Hosmer (1995) concluded that in business ethics where trust is paramount, he concluded with the following: a. Trust is an optimistic expectation of an outcome or from the human behavior to generate that what is best from all parties and stakeholders. Sensible individuals must know how to forecast possibilities, specially within the an environment full of distrust, by using contracts, market controls, legal obligations and forms to maintain optimism and expectations; b. Trust happens under the condition of vulnerability to generate dependence and to gain from an individual. This is part of economic reasonableness in order not to incur loss from distrust and not to confront more risks; c. Trust is associated with voluntary and cooperative performance of obligations in sharing benefits from business agreements, contracts and other transactional relations; d. Trust is admittedly difficult to enforce except when it’s illustrated within a context of individual actions and interpersonal relationships where loss and control is acknowledged. In the context of economy, contracts and control are perceived alternate of trust. However, within the context of social structure, legal forms and obligations are considered ineffective because these are source of severe conflict of interest and lack of effective oversight procedures; e. Trust tag along with it an assumption that peoples’ rights and interests should be of paramount concern. Business ethics call for principle-centered leadership that is primarily based on (a) being proactive in business relations; (b) starting a business deal with forecasted outcome, conscience, and willpower; (c) understanding and performance of agreements and obligations; (d) developing synergy with partners; and (e) learning lessons to sharpen experience and increase motivations (Covey, 1991). Conclusion Business ethics is only extolled if managers and executives will sustainably work for the improvement of personal, interpersonal, managerial and organizational levels as these are all interrelated in nurturing trustworthiness. Workers and managers should have shared responsibilities in developing business standards and environment. Business success is easy if desired results are articulated and are worked well based on fundamental guidelines, principles, and procedures. Human resource should be guided with ethical frameworks as standard of performing services and in interrelating with all stakeholders and customers. Available resources should also be determined and be accounted to ascertain that measures, observations and discernment are achieved. At end, outcomes and consequences should be assessed to identify possible succeeding actions. If strategized plans are achieved, then managers can proceed giving rewards, incentives, and promotion to compensate hard work. On the other hand, if business targets are not achieved, managers can plan for improvement or for termination of employees. References Hosmer, L. T. (1987), Ethical analysis and human resource management. Human Resource Management, 313–330. 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