Business Law, Governance and Ethics - Assignment Example

Business Law, Governance and Ethics TASK A: EXPLAIN THE MORAL THEORIES OF BUSINESS ETHICS The concept of “human rights” has been the of polarised philosophical debate as regards the rights of the individual versus legal protections conferred by the state, particularly in western liberal democracies. This tension between the legal protection of human rights, political constraints and the extent of individual protection highlights the conflict between legal enforcement of rights in practice and moral theory pertaining to ethics. Furthermore, the concept of ethics, social responsibility and accountability in business is inherently complex and has fuelled polarised debate as to the parameters of its role in practice. In turn, this has been compounded by the integration of the globalisation phenomenon into international business. A concomitant result of this has been the proliferation of international expansion opportunities for businesses, which has brought the issue of ethics and corporate responsibility to the fore ( Shaw, 2010). To this end, some commentators argue that governments should discourage trade with countries having bad human rights records. Indeed, in the British Government body “Headsup” 2008 debate “Human Rights or Poverty? Should the UK only trade, send aid or money to countries with a good human rights record?”; MP Shahid Malik argued that continued trade and aid to countries with poor human rights records was problematic and that “there is evidence that too much of the wrong sort of aid, going to governments, may actually discourage and paralyse development” (www.headsup.org.uk). This underlines the conflict between applications of moral theory to business ethics. If we further consider moral ethical theory, the two central theories pertaining to ethics is the deontological and utilitarian approach to moral behaviour. The utilitarian approach considers ethics in terms of results and the deontological approach prescribes that moral behaviour should be under predetermined principles, which cannot be violated (Donnelly, 2003). Therefore the central conflict at the heart of ethical moral theory is relativism versus individualism, which has created a practical conundrum in applying ethical theory to business practice (Beauchamp et al, 2008). For example, Somerville argues that the crux of ethics with regard to human rights is whether it is “inherently wrong?”(Somerville, 2006, p.xi). Furthermore, Somerville argues in considering human rights protection, often the legal issue of human rights protection is inherently linked to the issue of whether it is ethical and that to consider ethics, “we must first ask whether what we plan to do is inherently wrong. Although as societies we once commonly addressed this question….a wide variety of societal factors has led us as societies to rely instead on a situational ethics approach that says that nothing is inherently wrong, rather it all depends on the situation.” (Somerville, 2006, p.xi). As such, Somerville posits that in considering the wider concepts of ethical morality, it is important to note that “the primary question in this approach is: Does it do any good? Moreover, what is possible and even legal might not be ethical”. Therefore, to this end, Somerville argues that in considering the notion of “human rights” protection need to consider the concept of ethics (Somerville, 2006, p.xi). However, in discussing the concept of what constitutes inherently wrong and immoral, Somerville’s central ethical paradigm relies on the shared ethics concept and that “ethics …… is characterised as moral policing within the primary function of restricting and inhibiting people….. but this is not the only way of to view ethics” (Somerville, 2006 p.xi). Nevertheless, the crux of this shared ethics approach relies on human compliance, which in turn has led some to argue whether the concept of ethics in business is an oxymoron. Indeed, if we reconsider Donnelly’s observations regarding human rights and makes the point that “human rights are not just abstract values such as liberty, equality and security. They are rights, particular social practices to realise those values. A human right thus should not be confused with the values or aspirations underlying it or with enjoyment of the object of the right” (Donnelly, 2003p.11). Therefore it is evident that the theoretical moral basis for ethics is difficult to apply to business due to the numerous interests at play. Notwithstanding, it is submitted that in the context of business, the moral application of business ethics operates within a dual framework (Kent et al, 2007). On the one hand, organisational performance is directly correlated to employee performance and internal efficiency, which lends itself to application of ethical business practices to maintain an optimum working culture (Kent et al, 2007). On the other hand, the market within which businesses operate and the growing power of the consumer has increased the attention to the application of corporate social responsibility and fair trade practices (Fellner, 2008). For example, a common method utilised for business expansion internationally is the use of the Multinational Enterprise (MNE) paradigm. However, MNEs have been criticised for often being susceptible to corruption as part of their entry strategy; driving calls for implementing ethical business practices at an external level to implement corporate social responsibility (Fellner, 2008). Additionally, whilst the UN Global Compact aims to introduce ethics into corporate responsibility, its lack of enforcement at global level has lent further support to the argument that governments should discourage trade with countries with poor human rights records in order to implement corporate social responsibility to comply with ethical issues in the external marketplace (Fellner, 2008). On the other hand, there are clearly disadvantages of such an approach and Weede refers to the danger of implementing “negative” or “protective human rights (2008, 35). For example, in certain war torn countries, where human rights have been abused under international law resulting in Western government imposed trade bans, Chinese companies have had no such reservations about entering the same market; which begs the question as to whether trade bans are the correct approach to implementing ethical business practices (Weede, 2008). Accordingly, it is submitted that interrelationship between moral theories of business ethics and practical application is intrinsically complex and twofold. At an internal level, the shared ethics approach is applied through the implementation of policies and procedures to facilitate an optimum working environment, which in turn facilitates organisational performance. On the other hand, the most difficult area to apply theories of business ethics is at an external level particularly in the globalisation business paradigm. This is further supported by Donnelly’s reference to Hobbensian ethical theory (Donnelly, 2003). Under Hobbes’ strand of realism, humans are only moral to the extent that they follow rules and regulations imposed by the state, which undermines any notion of innate “shared ethics”. This in turn highlights the intrinsic limitation of applying moral theories of ethics to business practice. TASK 2: DESCRIBE OECD CONSUMER POLICY The Organisation for Economic Co-operation and Development (OECD) is an international economic group, whose central objective is to work towards international cohesion and harmonisation in economic objectives. The OECD highlights one of its central objectives as being to co-ordinate international governments in order to implement democracy and growth in market economies. To this end, the OECD specifically highlights its mission as being to: “1. Support sustainable economic growth; 2. Boost employment; 3. Raise living standards; 4. Maintain financial stability; 5. Assist other countries’ economic development; and 6. Contribute to growth in world trade” (Source: www.oecd.org) To this end, the OECD constitutes one of the world’s largest policy groups in monitoring international economic trends and studying the interrelationship between societal change and economic developments to recommend economic and taxation policy initiatives. Additionally, in reviewing initiatives for economic policy reform the OECD’s work covers the following categories: 1. Economy (including competition, growth and development); 2. Development Issues; 3. Corporate governance; 4. Sustainability; 5. Society; 6. Financial Markets; and 7. Innovation (Source: www.oecd.org) At the heart of the OECD’s work in all these areas is the interests of the consumer and the OECD’s consumer policy objectives inform all studies to ensure that market economies are continually evolving towards market efficiency in matching supply and fair competition with consumer demand (OECD, 2010). Indeed, in the OECD’s latest Consumer Policy Toolkit, the OECD comments that “more open global markets, new technologies, and growth in the role of services have provided significant benefits to consumers. Relatively little attention has been paid to the challenges these developments have posed for consumers. More choice and more complexity have made… challenges for consumers” (OECD, 2010). Accordingly, the main aspect of consumer policy at present is to ensure policy initiatives are implemented to protect against potential abuse of the market particularly in light of the emerging technology markets (OECD 2010). To this end, the OECD has a specific committee dedicated to addressing consumer policy, which includes consumer policy officials from various countries belonging to the OECD. The officials in the committee collaborate and undertake research on common issues impacting consumers. Additionally, the committee investigates trends in emerging markets and consumer behaviour and use the findings of research to recommend and develop policy guidelines to address problems in consumer protection and how to ensure harmonization in law enforcement and international co-operation with view towards consumer centric market efficiency (OECD 2010). In highlighting the OECD’s commitment to protecting consumers, the OECD Committee on Consumer Policy release a Consumer Policy Toolkit in Jul 2010, which provides guidance to national authorities on potential problem areas and how to address these in order to ensure market efficiency and value for consumers (OECD 2010). The Consumer Policy Toolkit highlights six recommended steps that should be followed when policy making and further provides 12 policy tools for authorities to use. These include: 1) Defining the consumer problem and source; 2) Measuring how serious the problem is from the consumer’s perspective; 3) Determining whether consumer detriment requires action at policy level; 4) Evaluating which policy option is the most appropriate to address the problem; 5) Evaluate the available options and select the policy; 6) Review how effective the policy is (OECD, 2010). The Toolkit was formulated on the basis of OECD research undertaking in over 20 countries (OECD 2010). Chairman of the OECD Committee on Consumer Policy Michael Jenkin asserts that “knowing when and how to intervene in markets to deal with consumer problems is the key to protecting consumers” (www.oecd.org). Additionally, in highlighting the need to ensure that policy action is implemented, Jenkin further comments that: “Consumers need to be well informed, aware of their rights and responsibilities, protected from fraud ad be able to resolve disputes when problems arise. Consumer authorities are active on all these fronts and will benefit from the ideas and recommendations contained in the Toolkit” (www.oecd.org). It is evident that the reality of the globalised business model and its interrelationship with digital technology has fuelled innovative enterprise with emerging markets (Win, 2006). As a result, there is increased consumer choice, however this hasn’t always been to the advantage of the consumer and in order to ensure market efficiency, the OECD observes that many consumer regulatory authorities are under immense pressure to provide immediate responsive action to concerns regarding consumer protection (OECD 2010). This can be difficult to implement in practice and the objective of the OECD consumer policy toolkit is to provide guidance for national policy makers on how to address these challenges by applying the six step plan. BIBLIOGRAPHY Beauchamp. T, Bowie, & Denis, G. (2009). Ethical Theory and Business. Prentiss Hall Donnelly, Jack (2003) Universal Human Rights in Theory and Practice. Cornell University Press Fellner, K. (2008) Wrestling with Starbucks: Conscience, Capital Cappuccino. Rutgers University Press Kent, S., G. Cheney & J. Roper. (2007) The debate over corporate social responsibility. Oxford University Press Malik, S. (2008). Human Rights or Poverty? Retrieved at www.headsup.org.uk accessed December 2010. OECD Publishing, (2010). Annual Report on the OECD Guidelines for Multinational Enterprises. OECD Publishing OECD (2010). Consumer Policy Toolkit. Retrieved at www.oecd.org accessed December 2010. Shaw, W. (2010). Business Ethics: A Textbook with cases. Cengage Learning Somerville, Margaret. A (2006) The ethical imagination: journeys of the human spirit. 2006 Anansi Weede, E. (2008). Human Rights, Limited Government and Capitalism. Cato Journal, Volume 28 No 1 retrieved at www.cato.org accessed December 2010. Wilkinson, R. & S. Hughes (2002). Global Governance: Critical Perspectives. Routledge Winn, J. (2006). Consumer Protection in the age of the information economy. Ashgate Publishing. Websites www.oecd.org accessed December 2010. Read More