Ethical Questions in the Present Global Economic Conditions - Assignment Example

Why has it become necessary to ask moral (ethical) questions in the present global economic conditions? Word count Introduction Engaging in business activities aimed at increasing the profitability and the output of the business is wrought with a range of ethical and moral dilemmas. This is attributable to the fact that when making business decisions, managers have to take into account the views and beliefs on the working of the world and the social consequences of development, with particular significance in developing countries. Companies are not merely faced with issues about the morality of their actions and practices but also have to consider the impact of the actions on the reputation, legal exposures and competition amongst other aspects (Feigenbaum). Businesses are faced with moral quandaries from various levels of organizational decisions. The wage and labour conditions are critical factors in the economic growth of the company. Businesses that have maintained high standards of worker conditions and have paid the workers well are met with challenges in maintaining the same standards when they expand. For the long-term profitability of business ventures and continuing profitability, managers need to consider the impact of the business on the local workforce. Ethical issues may arise on the grounds of discrimination, rights of the workers and their tasks. Businesses are also starting to give more importance to the effects of their activities on the environment in particular reference to the pace and effects of economic globalization (Panayotou 2000). As public awareness rises and there is increasing pressure for social corporate responsibility, businesses who fail to comply with the standards for environmental sustainability are meeting grave consequences in national and international media. Business decisions also have political implications, with differing opinions amongst theorists on the effects of business on the political and economic framework of the country (Feigenbaum). This paper looks into the moral issues of a corporation and seeks to analyse them using moral frameworks including the social contract model and deontology. The Moral Problem: Enron Ethics is defined as the art of guiding the actions of men towards the production of the maximum degree of happiness (Bentham 1823). People who run the business or an organization are responsible for conducting the business in a way that is yields the maximum benefits to not only the company but also the employees and the stakeholders. The ethical practices of Enron became a high-profile ethical scandal because the executives at the company did not give any regard to the interests of the employees and the stakeholders. The unethical practices of the executives of the company led to the company going bankrupt, with all of the shareholders losing their money and the employees being deprived of their jobs. Kenneth Lay, former Enron CEO, and Jeffery Skilling were involved in unethical activities that led to the fall of the entire company. The Executives were involved in manipulating the financial statements of the company (Collins 2006). Amongst other ethical issues, one issue also was whether it was ethical of the women, who took the case to the media, to whistleblow on the Executives (Kinicki & Kreitner 2009). The Enron crisis gave rise to the “infallibility of the capitalistic economic system” (Conrad 2010). Analysing the Moral Problem According to a business ethicist, Manuel Velasquez, the reasons for ethical shortcomings of Enron can largely grouped into personal, organizational and systemic causes. Personal causes tend to explain the intent behind the actions that the executives took. The executives appeared greedy and interested in increasing their personal wealth. They did not give any consideration to the ethical implications of their actions and their actions represented a lack of compassion to the employees and the stakeholders (Santa Clara University 2010). When analysing their actions from a moral framework model such as social contract theory, one can come to the conclusion that the actions of the employees are out of line. The social contract theory asserts that the business is accountable to the society and owes it moral obligations. According to John Locke, a social contract theorist, it is reason which helps to distinguish between the moral nature of actions (MacIntyre 1998). Social contract theory requires that in order for organizations to exist, a social contract is to be upheld between the society and the organizations. This follows that the organization exists on the condition that it delivers benefits to the society. Members of the society gain from the activities of the business in a range of ways including greater economic efficiency, sustained levels of production and distribution and the provision of liability resources. However, when businesses engage in activities that are not propitious and productive to the society, it fails to uphold their side of the social contract. Unethical activities of the business such as misusing the power that the employees hold can have negative impact on the society. Moreover the public as part of the labour force is also affected by the lack of concern of the higher authorities to the employees. The social welfare aspect of the social contract requires that the businesses provide the greatest satisfaction of the demands of the customers, give reasonable salaries to the employees and secure their employment and to mitigate the effects of their activities on the environment. Moreover society only permits businesses to establish and function when they operate “within the bounds of general canons of justice” (Fernando 2009). Enron exemplifies the operation of the social contract theory in this regard. The executives failed to take into account social welfare and transgressed the canons of justice. Another moral framework for analysing ethical decisions and practices is through deontological ethics. This framework serves to describe the ethical nature of an action based on the degree of adherence of the action to rules. It provides a basis for judging the actions of people based on the will of the people, and focuses more on the duty rather than the consequences. The reason behind people accepting and carrying a particular duty efficiently and ethically is because of their will do good. Since the framework requires that businesses adhere to universalized principles in order to promote the faculty of good, one can appreciate that the executives at Enron did not adhere to preset rules of ethics (Jones, Parker & Bos 2005). The Code of Ethics is a 64 page document that presents the rules employees need to observe in order to uphold principles of ethics. The Executives broke these principles and went against the universalized rules. They belied their duty to the organization, the society, employees and the stakeholders. They defied the moral frameworks. The world gives event greater importance as compared to the design and all these reasons cumulatively are able to highlight the reasons for the fall of the company (Smith 1761). References Bentham, J 1823, An introduction to the principles of morals and legislation, Volume 2, W. Pickering. Collins, D 2006, Behaving Badly: Ethical Lessons from Enron, Dog Ear Publishing. Conrad, CA 2010, Morality and Economic Crisis - Enron, Subprime & Co., disserta Verlag. Feigenbaum, E 2011, Economic Development Moral Issues, The Houston Chronicle, retrieved 1 March 2011, Fernando, AC 2009, Business Ethics: An Indian Perspective, Pearson Education India. Jones, C, Parker, M & Bos, R 2005, For business ethics, Routledge. Kinicki, A & Kreitner, R 2009, Organizational Behavior 3E, Tata McGraw-Hill. MacIntyre, A 1998, A short history of ethics: a history of moral philosophy from the Homeric age to the twentieth century, Routledge. Panayotou, T 2000, Globalization and Environment, Ideas, retrieved 1 March 2011, Santa Clara University 2010, What Really Went Wrong With Enron? A Culture of Evil? Markkula Center for Applied Ethics, retrieved 1 March 2011, Smith, A 1761. The theory of moral sentiments, A. Millar. Read More