International Ethics Standards For Business - Research Paper Example

International Ethics Standards For Business Abstract Ethics in business facilitates efficient business relations, and its basis is constituted by moral norms that differ in various cultures, environments and situations. There are two major principles that most businessmen would use as a basis for taking ethical decisions in business: utilitarian principle and moral imperative principle. There are also the three pillars determining the unique character of business ethics: the principle of economic viability, the situational principle, and individual responsibility. The latter presupposes that there are individual peculiarities of implementing ethics into business, which correlated with the postulates of “virtue ethics”, and raises the question of potential of human development in business. Introduction Without taking into consideration the ethical aspects of business, it is nearly impossible to create good and efficient business relations with either partners or customers. It is pretty clear that development, including economic development, only becomes possible if the company’s staff treat each other with trust and respect. Such attitude is based on such notions as social responsibility, quality management, good communication and transparency. Business-ethics determines the degree of responsibility of both company and its staff, and it regulates general ethical behaviors of both sides. Whereas the basis of business ethics are also moral norms that have their own cultural peculiarities, it also has a personal side to it, that is – the issue of important of human potential and the way it develops also becomes topical when we talk about ethics in business. Business ethics is a set of rules and laws of business that are all based upon generally acknowledged values: consciousness, respect, justice etc. If we take selling or producing goods, for example, the above mentioned values correlate with product quality, customer satisfaction, sticking to rules of advertising, safety for environment etc. Business ethics: the levels of application Business ethics is based upon pursuing the interests not only of every businessman’s own company, but also customers, partners, and society in the whole. Surprising as it may seem, this rule also concerns competitors as people who act according to ethical standards will never cause harm to other players on the market using methods that go well beyond the limits of honest competition. Ethics implements the “win-win” principle, which means that the majority of players in the market have to get the benefits, and they have to have equal opportunities for accessing them. Violating the rights of property, stealing confidential information, advertising that contains lies, commercial or industrial espionage, selling faulty goods etc. – all this produces negative impact upon the market. Winning a beneficial contract not thanks to high quality but by means of blackmailing or because you know someone in the potential customer company also destroys the market. The basics of modern business ethics are therefore social contract and corporate social responsibility. International ethical standards for business are based on general human values. These norms comprise corporate social responsibility, technological sides of businesses, marketing and communications, developing trust in business, having respect for the Law, honest competition, and admitting that the general norms of ethics are more important than business law (e.g. some of the business acts that are legally allowed could be unacceptable from the standpoint of morals), respect for the nature and environment, refusal to perform unlawful actions (bribery, money laundering, drug dealing, selling weapons to terrorists, etc.) If we talk about the most important responsibilities of companies and managers, the following categories of market players should be taken into consideration: customers – doing business we should aim at providing them with high quality goods and services, be totally honest in advertising, and respect their dignity; company’s own staff – we should ensure that they are getting good remuneration for their labor, and work in good conditions as well; and we should also take care of their health, safety and the issue of equal rights and opportunities. owners and investors – businesses should guarantee them fair income corresponding to their investments, free access to information, etc. suppliers – companies should establish with them honest and fair relationships, including the aspects of pricing, licensing, information exchange, timely payments, etc. competitors – mutual respect, without using shady methods of gaining competitive advantage; local citizens – human rights, respect to their culture, sponsorship, participating in civil life, etc. It is relatively easy to single out all these norms and principles, and include them into the content of a company’s website so that to make sure the public perceives the company as stable, reliable, responsible… but another thing is to start really implementing them in practice, and yet a more difficult problem is to built them into your corporate culture – i.e. make them really work for you and your environment. I have known a top manager and a company’s owner who was pressing her staff to collect money for charity projects and proclaimed that those who did not could not remain with the company as one of the company’s values was “social responsibility” – and on the other hand she did not bother paying her employees on time, keeping them in anxiety and uncertainty. It is not a secret that managers who are used to implement quantitative criteria to measure effectiveness, and as often as not working under pressure and tight schedules, sometimes try to neglect ethical decisions that might cause them inconvenience of some sort. It might sometimes be a problem to operate at different levels of ethical norms in business – at times an issue may arise that is controversial and poses an ethical dilemma. All in all, I believe there are no ideal managerial solutions that are completely fine for all the parties affected, and a manager should take a decision every time considering all aspects of the matter. Principles for taking ethical decisions in business There are two major principles that can serve as a basis for taking ethical decisions in business: utilitarian principle and moral imperative principle. The utilitarian principle says that any action can be morally justified if it tends to bring maximal benefit to the maximal number of people. If the positive effect of the decision overlaps the damage, the decision can be considered ethical. The moral imperative principle states that the moral decisions should not depend upon situations – e.g. any bribery is bad, disregarding of who you bribe; any customer should be treated with same respect, etc. It is very hard, however, to implement these both principles in practice: for this, it would be necessary to define all parties that might be affected by the decision (both individuals and companies), this of all possible consequences, and most importantly – determine whose interests are the priority and whose could be put under threat. Ethics in business should control ethical behavior of members of company and other partners, and with its help it is possible to make personnel stick to the company’s rules and values, one the one hand, and control them on the other. When we talk about doing business, we can easily notice that the questions of ethics are normally not regarded among the most important ones. And this tendency is quite sad as to my mind; the issue of ethics is of paramount importance and should be considered prior to making any decisions in business. Analyzing the problems emerging within the scope of business ethics, we can touch upon various aspects. And one of the important issues is connected with individual ethical differences between people acting in business. The point is: the number of different business “ethics” equals the number of people in business. In certain aspects, the individual ethic rules correlate and coincide, in some aspects they just look similar, but one can never tell for sure which of the ethic rules will be interpreted differently by another person, and what consequences this will bring. The three pillars of ethics in business Talking about business ethics, there are three key points that should be taken into consideration that determine the basic peculiarities of ethics in business and can help understand this topic better. The main things, the three pillars that determine the uniqueness of business ethics and make it integral are the following three ethical rules: the principle of economic viability, the situational principle, and individual responsibility. The principle of economic viability It is the primary guideline for all people doing business, so it serves as a kind of consolidating principle for many individuals, situations and behaviors that may differ significantly from each other. The principle of economic viability naturally follows the nature of the business activity itself – because should it be violated, people would not be able to do business at all. The principle of economic viability is not the factor that totally determines all thoughts and behaviors of a business person; it rather provides certain limitations to these thoughts and behaviors. A businessman or a businesswoman are normally guided in their activity a number of different motives and values, but at the end he or she cannot afford that the decisions taken are economically non-viable and put his or her business under threat. This principle is as often as not being criticized by those who say that the goal of business is always only to gain profit – however, this is very wrong to say this as in this situation, the business ideology is overshadowed by propaganda. (MacKal, 1975, 62) But let us ask ourselves a simple question: isn’t it true that someone in this world should act from the standpoint of economic viability so that to ensure the wellbeing of the whole society? Because if nobody does, then economic, social and ethical consequences might be very frustrating. Let us therefore look at some of the typical ideological accusations. Businesses are often accused of chasing profit and being able to neglect people and society, that it does not stick to any values and ideals, that during the war businesses will not withhold from making profit from the war, and that given an opportunity, companies never miss a chance to produce low quality goods or offer low quality services that endanger people’s health or wellbeing, that marketing is just a bunch of dishonest manipulative methods, etc. It is quite possible to agree that there are dozens of examples from the real life that illustrate such opinion; however let us withdraw from unhealthy criticism and regard the situation from a wider perspective. Let us therefore start from a simple example of accusation: that businesses attempt to merely gain profit by all means, ready to sell bad quality goods whereas assuring customers these goods are the best for them. However, if in the past (ancient) times this was a typical situation, with the development of free market and competition the number of such stories tends to reduce dramatically. The reason for it is the principle of economical viability. Honest business is much more profitable than deceiving customers, and this happens because of objective economical reasons. It is quite possible to deceive a consumer and gain a momentary profit – but this can only be done once. And that is why, once we target more or less stable audience of customers and try to keep them loyal, it is economically non-viable to deceit them; besides with the growth of competitiveness in business from the beginning of the 20th century and the development of informational environment, it became very easy to inform vast audiences of potential customers about the indecent behavior of any company within short period of time. Therefore, building business on the basis of deceit is economically non-viable for the dominating majority of businesses. Some more accusations of businesses are lobbying of their interests, aiming at monopoly, reluctance to pay taxes, etc. It is easy to notice that all the above listed behaviors also have the principle of economic viability behind them. But besides that, they also have one thing in common: all of them relate to the sphere of interaction between business and government, and this too affects the evaluation of ethics of behavior in business. If we talk about the ideal scheme of interaction between business and state, the business is supposed to actively perform its function of innovator and ensure functioning of industry, whereas the state is supposed to defend the rights of consumers on the market. If we look at the examples from the past, e.g. the accusations of businesses saying that they played a significant role in launching the world wars, there will be no doubt that a certain part of influential businessmen benefited from intensive development of war industry and weapons and food supplies. No will anyone doubt that some of them were actively lobbying their interests in the governmental structures. However, no businessman can launch a war with another state – this is up to the politicians to do so. Most businesses are also guided by the principle of obeying to the law. This social value is, in fact, much more widespread in business environment than many of its critics think they are. This is characteristic for businesses in many countries in the world. For example, in 1977, a poll with 1700 readers of Harvard Business Review was conducted which showed that 94 % of the readers considered it immoral for business to aim at unrestricted maximization of profit, and only 15% agreed with the statement that everything allowing to do good business is ethical. (Barach 1977, 97) It is easy to conclude that the managers of businesses are much more concerned about the issue of corporate social responsibility than the society tends to think. However, it is easy to notice that the principle of economic viability and social responsibility sometimes become incompatible, and if such a situation occurs the businessmen finds himself in a complex situation of moral choice. Everyone solves this dilemma in accordance with his own principles and values: some people prohibit themselves to even think of social responsibility and find arguments to support their egocentric position; some vice versa get too carried away by social projects totally forgetting about the development of their business. I heard about a manager of formerly flourishing trade company who at a certain period of his life got so interested in sponsoring one of the sport teams that he almost stopped attending his office – and only in several months he received a very bad result as the company did not manage to survive financial stress. This case can serve as illustration to some people’s position that proclaims social responsibility, charity and sponsorship as the main ethical indicator of business. Some others argue that charity and sponsorship are only an attempt to compensate for their dishonest actions against the community. Both parties might be right for certain cases… however, my strong belief is that charity is a very good and noble thing, but the main and basic form of social responsibility for the business is not sponsorship or charity but creating working places, high remuneration of labor based on the results of each employee’s work, introducing innovations and other aspects of business’ everyday word. Concerning the rest of socially directed projects, they can be conducted provided that the balance of economic viability is not affected. Social responsibility comes from the domain of the so called “virtue ethics” that prefers to focus on what potential people possess and what virtues they develop rather than on people’s actions: …by focusing on what people should do or how people should act, the "moral principles approach" neglects the more important issue – what people should be. In other words, the fundamental question of ethics is not "What should I do?" but "What kind of person should I be?" (Velasquez et al) Doing business is a way of development in itself, it gives a person ability to think independently, makes him open-minded and initiative, provides him with possibilities for creativity. That is why in practically every community businesses eventually become concerned about their responsibility for the society they live in. This virtue grows together with the experience in business and development of individual responsibility for it. And finally, a businessman comes to the stage of acknowledging his responsibility for the whole society – because this is the world where he, his dear ones and his colleagues live. The situational principle The situational principle of ethics in business correlates with ethical relativism theory that claims that “[e]thical principles or judgments are relative to the individual or culture”, and “there are ways in which ethical principles behavior vary legitimately from culture to culture and individual to individual”. (LaFollette 146) The situational principle logically develops from the previously considered economical viability principle, and at the same time it is influenced by business’ innovative nature. Very often the businesses have to act not in standard situations but in the conditions of high instability. This is what happens now, at the period of economic turmoil. As a result, in many situations that businesses have to deal with, there are a lot of controversial factors, including those of ethical character. There are no developed algorithms for tackling these issues, so this is always the matter of businessman’s individual choice. Here it is again important to remember that every human, if we consider his system of values and morals in detail, has a set of ethical principles that is totally and completely unique; and consequently in the world of business where these people interact there is no “universal” ethics that is true to everyone. Acting in the same cultural environment and context certainly helps businesses adjust their systems of ethical rules; however when doing business it is inevitable to meet people of other cultural and ethical backgrounds: Practical application of business ethics should be the focus of corporate ethics codes. Since many U.S. companies do business internationally and the number is growing every year, their ethics codes should address international ethics standards. (Carlson & Blodgett 1997, np) Besides, the ethical systems are dynamic and constantly develop, adjusting to the demands of the environment and situations. It would also be an illusion to state that in their everyday life people have unified system of ethical rules. It is no wonder that conversations about ethical issues very often turn into heated arguments. Situational principle does not mean that a businessman does not – or should not – have a stable system of ethical principles, or that he denies the morals of the society he lives in. Vice versa, business ethics actively develops the existing ethical systems by making a considerable impact into the development of ethical approaches. The norms and rules of business relations and the methods of solving ethical dilemmas could not but affect social environment. There have been discussions of situational ethics, because this topic is very ambiguous. Individual responsibility Situational approach in taking ethical decisions inseparably connected with the increased individual responsibility for every decision. I am acting in a certain way not because this is how everyone acts, and not because there is a rule to do so, and not even because of my spirit of defiance, - but because this situation is unique, and I make my choice, and take all the responsibility for it. The ethics of individual responsibility is a very interesting and important issue in business. The norm of businessman’s individual responsibility is one of the most outstanding peculiarities of business. The Universal Declaration of Human Rights claims that all people are born with equal rights and opportunities, and the basic responsibility of the state is to ensure this equality. But only individual responsibility of every person determines the way he realizes these rights and opportunities and what results he achieves in life. (The universal declaration, 2008-2009) What is the ethics of individual responsibility, and what are the conditions that ensure its development? In the American system of upbringing and education, this particular trait is paid significant attention to. But once the kids grow up and enter the world of business, they sometimes face rather tough reality. On the one hand, many things in business depend on the words of honor. This approach clearly correlates with viability principle: time is money, so it’s better not to waste it for unnecessary paperwork and similar things. However, the basic conditions of any agreement should be formalized, and the parties should stick to them. And the reason for this is easy to understand since in business, everyone has his own interests, and there might appear a temptation to deviate from the conditions should this deviation promise a good profit or other benefits. Which is more, sometimes agreements are concluded where one of the parties deliberately puts certain points that will ensure its benefit even if the conditions of the agreement are not met – partially or fully. However, the key thesis of business is – everyone is solely responsible for his own actions. And if the party is not enough knowledgeable in law area and signs an agreement that infringe his interests – this is his own problem, because he had had an opportunity to study all necessary legal issues or invest into professional expertise. Such ethics looks really tough, yet it works effectively. Situations like this encourage a businessman to develop his own inner sense of individual responsibility. Conclusion: recommendations for ethical business behaviors Basing on the above said, I believe that businessmen who want to be both successful and ethical should follow these recommendations: elaborate a habit of regarding every issue that you tackle from the viewpoint of profit for business; stick to your commitments and deadlines; be attentive to all agreements that you conclude; do not go for useless offers but be tactful and show respect to people who offer them to you; be sure of yourself but not overconfident as this might cause you use harmful methods while doing business; take responsibility for all of your actions; never forget that your opinion or position is not the only one possible; don’t leave any case of failure without analyzing it; always correlate your company’s goals with personal goals of your staff; be tolerant to people’s disadvantages if they do not affect your business; never insult people as it is never forgotten or forgiven; be fair. References 1. Barach, J. A. (1977). The individual, business and society. London: Prentice-Halt. 2. Carlson, P. & Blodgett, M. S. (1997). International ethics standards for business: NAFTA, CAUX Principles and Corporate Codes of Ethics. Review of Business, 18. Retrieved on April 3, 2009 from www.questia.com database 3. LaFollette, H. (1991). “The Truth in Ethical Relativism”. Journal of Social Philosophy, 146-54. 4. MacKal, P. K. (1975). The economic psychology of business institutions. New York, Washington: Vantage Press. 5. The universal declaration of human rights. (2008-2009). Retrieved on April 5, 2009 from official UN website: http://www.un.org/Overview/rights.html 6. Velasquez, M., Andre, C., Shanks, Th. and Meyer, M. (Spring 1988). Ethics and virtue. Issues in Ethics, 1 (3). Retrieved on April 1, 2009 from http://www.scu.edu/ethics/practicing/decision/ethicsandvirtue.html Read More