Introduction to Business Ethics - Essay Example

?Business Ethics Introduction According to Bruntland, "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. (WCED, 1987, p. 43). Business ethics is the corner stone for sustainable development for a company in any society. Corporate Social Responsibility (CSR) extends beyond the domain of shareholders to encompass the interests of the various stakeholders in the operations of the business. The stakeholders in a modern society include community and therefore their welfare is closely interlinked to the business operations which need to be beneficial not only to the present generation but also to the future generations as well. Business does not exist independent of the society, and consequently politics. The participation and involvement of the businesses in the corrupt practices and policies of the governments has also been to some extent responsible for the developments which led to the ongoing protest movements that are challenging governments in the Middle-East. The emerging concept of Corporate Social Responsibility (CSR) calls for positive interactions on the part of the corporate entities with the communities in view of the fact that the companies are part of the communities and in turn the community is one of the stakeholders of the companies. Nasr, S. (2006) points out that if implementing corporate governance standards in joint venture companies has proven to be difficult, trying to apply them to family businesses is an even more difficult task. This is because such businesses are more about family than they are about business. The economy of the Middle East countries is dominated mostly by the family businesses. However, the broad picture emerging in a society is required to be well understood both by the family and professional entities for a sustainable development in the long run. Business ethics “There is enough for everybody’s need, but not enough for anybody’s greed” – Mahatma Gandhi. Nilsson (2008) states “In the past, the statement (Ibid) might have been overlooked as being a somewhat idealistic point of view, but in the light of climate change, the truth becomes very evident”.  Though the reference is made towards the environmental responsibility of the mankind, this aptly reflects the limits in terms of exploitation whether socially, economically or politically by the various vested interest groups. Blowfield, M & Murray, A. (2008, p.24) state “There are various ways of categorizing the main issues that fall under the corporate responsibility”. He has listed out Business ethics, Legal compliance, Philanthropy and community investment, Environmental management, Sustainability, Animal rights, Human rights, Worker rights and welfare, Market relations, Corruption and Corporate governance as prominent areas of corporate responsibility activity today. The agriculture and business are the cornerstones for development of the communities or societies in the world. The industrial development over the period of time has played an important role in the economic development of the countries relegating agriculture to the secondary place. Blowfield and Murray have placed business ethics in the forefront as its corporate responsibility, and the influence of the business enterprises in the society and politics has been growing phenomenally over the period of time. The importance of business in the scheme of things has been further stressed by the phrase ‘Corruption and Corporate governance’ implying that corruption and corporate governance is closely interlinked. When we say corruption in the corporate companies, logically it is implied that the business influences ‘politics’ negatively by way of corruption to further their corporate interests. The business enterprises in the Middle East countries acting as a conduit for the movement of monies out of the countries to the safe havens have facilitated corruption in these countries perpetrated by the political forces. Prisching, M. (2007, p. 34) states “According to the analyses of neoliberal economists, if something goes wrong it must be caused by the insufficient realization of market society and, in most cases, the insufficiency is caused by irrational interferences and interventions of (populist) democratic politics”. It is accentuated further in the case of countries with the political structure of dictatorship or monarchy. Business and Politics The business ethics of the companies and their close links to the political powers has become point of debate world over. The following cases in Germany and the emerging economy of India underlines the questionable practices of the companies and the corruption involved at the highest levels of the government. ICMR (2010) states that the bribery scandals were unearthed at Siemens AG (Siemens) in 2006 and 2007 relating to a series of scandals that involved some of the company's employees bribing foreign officials to gain contracts and creating slush funds for this purpose. Kuncheria, C. J. (2011) reports “The Central Bureau of Investigation (CBI) charged three telecoms firms [Reliance Telecom, Unitech Wireless and Swan], former telecoms minister [of India] A Raja and several executives with a range of crimes on Saturday in a multi-billion dollar licensing scandal, potentially the biggest graft case in Indian history”. It is a case in point to indicate how the politicians and the higher officials in the governments are involved in corruption, because whether a country is democratic or not, the agreements and the contracts at the ministerial level are concluded only with the assent of the ministers who are all politicians. Compared to the corruption in the democratic countries stated above, the political structure and the conditions prevailing in the countries such as Egypt, Libya, Yemen, Syria, Bahrain and Tunisia was more favorable to the rulers of these countries without any system effectively regulating the unethical and corrupt practices of the corporate companies with the participation and active support of the governments. Political upheavals in the Middle East Tran, M. (2011) reports “a glance through membership reveals that the governments of 18 of its 22 states do not have democratic credentials: they are suppressing – often violently – protest movements inside their own borders, have already undergone popular revolutions or have a chequered history regarding their support for democracy”. Hosni Mubarak has been finally forced to step down as a president consequent upon the mass movement against his rule in Egypt. A wave of protests followed throughout the region against the incumbent governments and their autocratic rules. According to Al-Hamad, A., an expert in economic development and international finance, the recent political events in the region have been extremely welcome because they are a signal for reforms and hopefully for better economic policies. In the long run, the benefits of economic development in the region will be much more inclusive. (Washish, N., 2011) Egypt El-Din, G. E. (2011) reports that according to several watchdogs, former speaker of the People's Assembly Fathi Sorour, former chairman of the Shura Council and secretary- general of Mubarak's ruling National Democratic Party (NDP) Safwat El-Sherif and former chief of presidential staff Zakaria Azmi in Egypt amassed large fortunes and registered the possessions in the names of their wives and children. Some media reports have placed the Mubarak family's wealth at $70 billion. They are currently living in a palatial villa in Sharm El-Sheikh, widely believed to have been built for the former president by businessman Hussein Salem. Several of the former ministers face charges of money laundering, evasion of taxes and embezzlement as well as peddling influence. The nexus between business and politics has been very deep routed and the companies are getting implicated in unethical business practices. According to Abdel-Malek, T. (2002), the spread of corruptive practices in government and business has become a national issue and the corruption indicators/indices such as those published by agencies such as Transparency International showed Egypt's score was 2.9 out of a perfect 10, giving it a ranking (1998) of 66 out of 85 countries on the list. Egypt being the United States’ closest ally in the Middle East is of no significance or consequence in the national perspective. The policies grounded on the considerations other than common business ethics may never strike a chord with any society. Unless the strategies of the external super powers are consistent with the sentiments prevailing in a country, the intended results cannot be achieved through diplomacy. Though political stability is also important for the growth of the industry, the declaration of the draft law by the transitional government banning protests, strikes and sit-ins that "damage the economy" raises doubts about the success of the mass revolution in establishing a welfare state by replacing Mubarak inter alia for not respecting freedom of speech. El-Sayed, M., a professor of Political Science says "Yet once again we seem to have a government intent on dealing with socio-economic issues as if they were security ones." (Shehab, S, 2011) The factory workers and social activists vehemently oppose this law through their protests by means of industrial actions. This process in turn may create suspicion in the minds of the workers and cause concern among the businesses leaders as well. Libya Britain had its military presence in Libya before Colonel Gaddafi came to power in 1969. Colonel Gaddafi  toppled the British backed King Idris of the Sansui clan in a coup and set up the republic which is to date continued under his rule. The anti-colonialist Gaddafi ordered closure of British and American air bases and expelled the Italians and nationalized their properties. Now, the people of the country are up against the dictatorship. Understanding the genesis and its difference from other countries of the middle-east is very important in the context of the discussions. Unlike in the case of Egypt, there is clear lack of alternative national figure to fill-up the political vacuum in the absence of Gaddafi in his place. According to an article by Sherwood, H. (2011), at present in Tripoli, many shops and restaurants are shut, the banks are closed and in the old city souk many shops are shuttered. But, the government blamed this on panic buying and stockpiling rather than any real shortage. Business ethics takes a backseat in an economy at a time when food and fuel are available only in black market. The economy of the country, with comparatively smaller population, mainly depends upon oil exports. Libya imports about 75% of its food, and the foreign nationals worked in various establishments have already been evacuated on safety considerations in the backdrop of political and economic crisis, rebel military operations, economic sanctions and external intervention of NATO air strikes. Tunisia An act of twenty six year-old Tunisian Mohamed Bouazizi has become the turning point in the history of Tunisia when he sets himself on fire in protest against the local authorities. If the world is candid enough to accept the impact of this incidence in its proper perspective, it could be understood that the ingenious plans emanating from outside the borders of the country have no relevance in the destiny of any nation, as it is guided by different set of factors. For instance, the developments in Tunisia in terms economic, educational or social development indicators have been very impressive by all standards. Noor, N. (2011) reports “Ben Ali arrested and tortured thousands of dissidents, put a virtual stranglehold on the media, and blocked civil society organizations. So extreme was the repression that Tunisia may be the only Muslim country without an active Islamist opposition group” and concluded “The severity of repression in Tunisia suggests it played a greater role in fomenting and sustaining the uprising than other factors”. The comparison of Tunisia with Egypt and Libya is very illuminating for the simple reason that the ethical aspects in any society outweigh the material aspects in life. The sustainable growth and development of not only the company but also the society is largely dependent upon business ethics, because a corporate entity is well equipped to be the torch bearer in a society, thereby capable of reaping the benefits for its growth and development by acting as a responsible corporate citizen. Common features for general uprising in the middle-east countries The most important common feature of the general uprising against the governments in the middle-east is that the countries are oil rich and hence the world powers are very concerned about the freedom of the people in these countries. The other important feature is corruption at the highest levels of the government and the magnitude of wealth amassed by the dictators. With the level of corruption at high places increased over the period, the freedom of the people, especially freedom expression, press and media in the society has been curtailed leading to all round resentment in the country. The dictators or the monarchs have moved their wealth to safe havens signifying their lack of commitment or patriotic attitude. Another important common feature is the involvement of the descendents of the rulers whether of Mubarak or Gaddafi in the government functions. In fact they have been groomed to become the successors to the rulers. People in general dislike the idea of succession in politics except in rare cases where it is justified. Conclusion The question of generation of wealth, movement of wealth out of the country and giving support services for maintenance of this wealth outside the country implies the role of businesses in assisting these political forces in return for favors from the governments for their growth. It becomes a vicious circle with the good business ethical practices relegated to the background, giving wrong signals to the people down the line in the hierarchy and society. Therefore, pragmatic strategies grounded on business ethics, rather than tactical measures adopted in pursuit of maximization of wealth and the relentless exploitation of the natural resources is important for the sustainable development without compromising the welfare of not only the current but also the future generations as well. Though linking business ethics to the ongoing protest movements that are challenging governments in the Middle-East is hazardous on account of several social and economic factors apart from the political factors, the linkage is nevertheless important on account of the phenomenon of liberalization and globalization cutting across the national borders. The developments have been influenced greatly by the political factors and the foreign intervention of late due to geopolitical importance on account of energy security. The importance of the region stems from ‘oil’ and its relevance on the global economy. The positive developments in these regional economic forces become important due to its importance in the energy security of the international communities. The success of any business hinges on integrating business ethics in the corporate strategies aiming balanced socio economic development in the societies. References Abdel-Malek, T. (2002) Exports: The five-piece puzzle (2), Al-Ahram, 23 -29 May 2002, Issue No.587, http://weekly.ahram.org.eg/2002/587/ec9.htm Blowfield, M. & Murray, A. (2008) Corporate responsibility, Oxford University Press. Brundtland Report, (1987) What is Sustainable Development? International Institute for Sustainable Development, http://www.iisd.org/sd/ El-Din, G. E. (2011) Mubarak's men face prosecution, Al-Ahram, 7 - 13 April 2011, Issue No. 1042, http://weekly.ahram.org.eg/2011/1042/eg2.htm http://www.ace.mmu.ac.uk/eae/sustainability/Older/Brundtland_Report.html ICMR, IBS Center for Management Research, The Bribery Scandal at Siemens AG, http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/BECG106.htm Kuncheria, C. J. (2011) A. Raja, firms charged in 2G spectrum scam probe, Reuters, 2 April 2011, http://in.reuters.com/article/2011/04/02/idINIndia-56073520110402 Nilsson, H. (2008). “There is enough for everybody’s need, but not enough for anybody’s greed” Leonardo Energy, 8 April 2008, [online] Available at: < http://www.leonardo-energy.org/there-enough-everybodys-need-not-enough-anybodys-greed > [Accessed 23 February 2011]. Noor, N. (2011) Tunisia: The Revolution that Started it All, International Affairs Review, http://www.iar-gwu.org/node/257 Prisching, M. (2007) Diagnoses of Our Time: Theoretical Approaches to the Globalised Age, pp.27-56, Globalisation and business ethics, Ed. Homann, K., Koslowski, P. & Luetge, C. Ashgate Publishing Limited, England. Shehab, S. (2011) Anti- strike law effective? Al-Ahram, 31 March - 6 April 2011 Issue No. 1041, http://weekly.ahram.org.eg/2011/1041/eg5.htm Washish, N., (2011) Regional thoughts, Al-Ahram, 31 March - 6 April 2011, Issue No. 1041, http://weekly.ahram.org.eg/2011/1041/ec82.htm World Commission on Environment and Development (WCED) (1987) Our common future. Oxford: Oxford University Press, 1987 p. 43. 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