Business Ethics Nature - Literature review Example

Business Ethics Nature Table of Contents Article 3 Introduction 3 An Overview of the Essence of the Article 3 Discussion 4 Identified Issues and Recommended Solutions 8 Who Are the Stakeholders Being Impacted 9 Conclusion 10 Article 2 12 Introduction 12 An Overview of the Essence of the Article 12 Discussion 13 Identified Issues and Recommended Solutions 16 Who Are the Stakeholders Being Impacted 18 Conclusion 19 References 21 Article 1 Introduction The essay discusses about a newspaper article titled “Harvard Business School Dean on Ethics and Global Education”. It was published by The New York Times in the year 2013. The very essence of the report is to review the article covering certain aspects of business ethics. In this article, the author, Joyce Lau illustrated the opinions of the dean of Harvard Business School regarding ethics and its importance in global education. Numerous ethical problems have been identified in the article which impact on the business of multinationals in foreign nations. Besides, the article highlights the aspect of culture which can also have an impact on ethical business performance (Lau, 2013). The objective of the report is to discuss the article in brief regarding the essence of its topic and ethical aspects. The report also discusses the ways of resolving the identified issues of ethics and culture faced by people. An Overview of the Essence of the Article The article discusses about globalisation, cultural shock and significance of teaching business ethics. It is a common awareness that business and ethics are not companionable, due to this reason, business at times contributes to unethical manners of commercial activities. Several business scandals, in recent times, prove the fact that unethical business activities are prevalent in organisations. However, unethical activities have their own costs. Due to these inherent costs, which are related with unethical business activities, this trend is gradually changing since executives distinguish that unethical business decisions have an influence on the goodwill of an organisation (Lau, 2013). The article also emphasised on teaching business ethics in universities. Ethics in this context is considered as a set of principles people use in order to determine whether their actions are good or bad. Every organisation faces certain ethical consequences. Ethical organisations attract quality employees and the prevailing ethical practices result in higher level of job satisfaction. It is a common fact that in the long run, ethical organisations can financially overtake unethical organisations (Lau, 2013). Discussion The article discusses about globalisation and the impact of culture on making adjustments in a foreign nation. Furthermore, the article also discusses about understanding the importance of business ethics in modern day business environment. In this context, it can be stated that globalisation is creating universal standards for commercial activities and these activities are becoming more demanding in multinational organisations. Since more multinational organisations are adopting these standards, it becomes ever more vital for every business to develop companywide core principles, standards of behaviour and relevant policies which are in tune with the world ethics and compliance environment (Dutton, 2011). The article states about cultural shock which is experienced by students who arrive in a foreign country for the purpose of study or for occupation. In a foreign nation, people require to make certain adjustments. In essence, cultural shock is common for every individual when they experience an unaccustomed mode of life in a new nation. To put in simple words, cultural shock is considered as a simple travel to other sort of life. In modern days, cultural shock plays vital part in intercultural communication and in associated disciplines such as cross-culture education (Dutton, 2011). The multinational organisations have to predominately deal with the notion of cultural shock amid a number of their expatriate employees. Due to increased globalisation, they require to foster certain culture of ethical activities in every nation where they operate in order to ensure better management of international workforce and better understanding of adoption of corporate values. Every nation comprises certain complex legal and regulatory aspects which need to be obligated by multinational organisations. Thus, better understanding of culture can help to fulfil the compliance of the complex legal and regulatory ethics (Olaru & Gurgu, 2009). Business ethics exist in several methods and realities comprising basic human communications, admiration for cultural differences and faith that the colleagues will perform in honest way. Honesty in business can facilitate to maintain trustworthiness. The essence of international ethics is based on self-understanding, acceptance for cultural differences, appreciation for the uniqueness in culture and inquisitiveness about the unknown cultural aspects. Without individual pursuit about experiencing new boundaries and performing with other people, having their own perception, the professional life would be unexciting (Olaru & Gurgu, 2009). The article discusses about learning business ethics. It stated that people should be prompted about their responsibilities in business. It also stated that organisational culture can determine the behaviour of people in an organisation. The case of Enron has been cited in the article which is considered as one of the biggest examples of cultural corruption which failed the adoption of ethical business conduct. Thus, it becomes essential for organisations to develop a united culture which can adhere to the high echelon of business behaviour in every international operation while valuing the local employees and civilisations (Olaru & Gurgu, 2009). Ethics in business has been the primary considered factor in recent corporate scandals such as Enron. Thus, the article intends to attract more attention towards ethical behaviour of organisations. It can therefore be stated that ethical issues are essential for academicians as ethical problems continue to impact on the business. Ethical aspects also have the strength to generate financial crisis. Thus, the impact of unethical conducts in business and the expenses which are related with it cannot be ignored. The article states the fact that in order to develop business with integrity, there is a need for educating the present learners to be truthful. In several circumstances, people find themselves in certain conditions that make them to lose the moral valuation. Thus, it is the objective of the management in every organisation to establish the business with high level of truthfulness. Management should provide the type of guidance, culture and training which can support proper patterns of behaviour (Moore & et. al., 2006). Lau (2013) stated that corrupted culture can result in cheating and bribing activities in organisations. Ethics can assist in dealing with corruption. Corruption misrepresents the foundation of competition between organisations and causes misallocation of resources, thereby decelerating the financial improvement. Thus, a strong business foundation is required in order to inhibit the unethical business practices in organisations. It is the individual belief which has an impact on the activities while performing job related tasks in organisations. The behaviour of employees provides the best indications about the underlying organisational system. Behaviour also reflects the level of commitment towards honesty, respect and truthfulness. Strong business ethics in organisations requires making tough decisions (Moore & et. al., 2006). Nowadays, organisations as complex systems are evolving on the international prospect and ethics constitute a vital part for good management in those organisations. The quick growth of international business and globalisation necessitate pursuing certain basic agreements on satisfactory business practices across nations. With this concern, one vital ethical challenge of globalised business is observed as cultural diversity. The modern convergence of globalisation and ethical diversity are liable to bring about several ethical challenges which are faced by businesses in present days (Napal, 2010). The article highlights that managing ethics in a foreign nation is a challenging task because what seems ethical in one nation may be unethical in the other nation. Every nation has certain uncertain business conducts and thus organisations and people who desire to perform in foreign nations need to deal with several types of unethical business activities. To cite an example, the article describes that in developing nations there are unethical business problems with respect to product quality, employment practices, partiality and bribery among others. Thus, organisations performing in developing nations need to consider these aspects. In this context, the author stated that “when in Rome, do as the Romans do” (Lau, 2013). This denotes the fact that while operating business in abroad, people need to encounter ethical aspects which are clouded by the specific cultural aspects. This attitude is also termed as ethical contingency which suggests that any business activity can be used if the local culture accepts it (Napal, 2010). In this context, it is worth mentioning that there are two theories on business ethics which are ethical relativism and ethical imperialism. Ethical relativism proposes that every ethical standard is comparative, on the other hand, ethical imperialism believes that “there is only one set of ethics” (Peng, 2008). Americans usually believe that ethical values must be used universally. Due to this reason, several American organisations encounter ethical problems in foreign markets. In practice, neither of these approaches is accurate. In extreme circumstances, ethical relativism requires accepting any local business practices, whereas, ethical imperialism can result in antipathy and repercussion among local culture (Peng, 2008). The article taught about importance of teaching business ethics in modern day environment. The author states that there is nothing integrally unethical about any business. It is the behaviour of individuals which can set forth ethical and unethical behaviours. In order to encourage ethical behaviour, the only way to achieve is through education and communication. From the viewpoint of relationship, focusing on ethics comprises treating people with esteem and morality. Good people management technique comprising concentration on communication skills and way of communication can help to accomplish the reasonability of individuals in business. Organisations are expected to fulfil the moral responsibilities of corporate citizenship and also consider the ethical aspects such as employee involvement and cultural diversity in order to encourage ethics in business. Identified Issues and Recommended Solutions Several issues have been identified in the article. The first issue is cultural problems which are faced by students in increasingly globalised world. In this context, it can be stated that while moral guidelines can be similar across cultures, their applications to certain conditions can vary across nations. Thus, finding experimental information about the area of deviation and convergence regarding ethical culture is quite vital for ethics in global business practices. Education in the field of business ethics must keep pace with the economic improvement and growing global business practices. In order to deal with the cultural issues, there is a requirement for cross-cultural communication which can help to manage the cultural deviations (Napal, 2010). The other issue identified in the article is cultural adjustment for people and organisations in different nations. In this context, it can be stated that the influence of cultural adjustment cannot be misjudged. The different cultural aspects are strong determinants of ethical thinking among people. Ethical thinking can arrive from demographic aspects as well as organisational aspects which impact on the decision making of people. There are certain instances where deviations in understanding result in ethical problems. Such problems commonly come across in international business premises. Thus, there is a requirement for implementing more productive approaches and enforcing ethical communication at both national and global level in order to reduce the possibility of problems arising from such deviations (Napal, 2010). The third and most significant issue identified in the article with respect to business ethics is corruption. The increased pace of globalisation has enhanced the requirement for forecasting the potentiality for corruption, since the level of corruption differs from nation to nation. Corruption can cause serious problems to business and economy as a whole. Thus, conducting business in international context necessitates new cultural expressions, new way of thinking about the right and the wrong conducts and consideration regarding modern communication technologies. It can be stated that people and businesses can choose to grow by broadening international business horizon. They need to visualise the potential of cultural misunderstanding regarding rules, ethics and strategies. This validates putting more emphasis on education and superior communication if organisations desire to be cost-effective and to secure ethical conjunction in foreign nations. People performing across different nations are expected to have basic theoretical outlines which can help them in the business activities (Napal, 2010). Who Are the Stakeholders Being Impacted Ethics invades every stakeholder interfaces comprising employees, customers, lenders, dealers and government among others. Each day people experience a multitude of ethical problems and every decision and action an individual makes throughout a day has an impact on other people. Every decision and activity is dependent on ethical evaluation. An ultimate ethical condition is one in which an individual has good intentions and acts on the basis of good outcomes. The most unethical condition is one where an individual has bad intentions and acts on the basis of negative outcomes (Collins, 2009). Ethics is above all about the curiosity of stakeholders in the way of their business relationship. Ethical business practices can definitely result in increased trust among stakeholders, and they would gladly be associated with commercial transactions. Since, more and more businesses with different cultural and historical experiences interrelate in the international economy, the possibility for misinterpretation on the basis of different prospects and poor communication is also exaggerated. As more organisations either choose or are forced to compete globally, ethical problems unavoidably arise. This makes it imperative to provide stakeholders with requisite information by appropriate communication channels in order to maintain the level of trust and reduce dishonest business practices (Collins, 2009). Conclusion It is a fact that moral inadequacy is reality of life. Thus, it is requisite for organisations to develop certain systems and to observe the moral inadequacies within the work culture. In reality, average people are considered as moral, but not saint. They have their own set of moral challenges to deal with, such as greed, fury, jealousy, desire and pride. Thus, it can be stated that accomplishing moral perfection in human being is difficult. However, managerial challenge is to organise the business activities in such a way which respects the self-respect of people, because it only requires one unethical conduct to ruin the self-esteem of people as well as organisational reputation. Because of human characteristics, and possible negative complications of unethical work based activities on organisational performance, ethics need to be managed carefully (Collins, 2009). Article 2 Introduction The essay is based on the article namely “Corporate Ethics Do Matter” by John Durie published in the year 2013. It was published by “The Australian” newspaper which discusses about the impact of corporate ethics on business. In this article, John Durie had demonstrated how ethical standards are becoming a vital component for business. Furthermore, the article also describes about the increasing regulations due to several industrial occurrences. Two important issues that have been observed in the article are the importance of corporate ethics and related increasing regulations which seem to have gone too far for several organisations (Durie, 2013). Focusing on this aspect, the essay analyses the essence of the article and debates briefly about these two issues. On the basis of discussion, certain recommendations have also been provided for organisations to deal with the ethical issues. An Overview of the Essence of the Article The central issue of the article is obedience of ethical standard in business. The article states that since organisations are not abiding by the highest ethical standards, it has resulted in strong regulatory conditions. Due to this reason, businesses have started to believe that regulators have gone too far in order to maintain compliance with the business ethics. The very essence of the article is to demonstrate the importance of corporate ethics in business. It can provide several benefits to organisations such as attracting customers, enhancing sales, minimising employee turnover and attracting more investors to the business. On the other hand, unethical aspects can ruin the reputation of an organisation by encouraging malpractices. As a result, it not only minimises the confidence of customers, but also makes the organisations less appealing to the stakeholders (Durie, 2013). Discussion The key issue that has been identified in the article is business ethics. It has certainly been one of prime attractions of media and people in recent times because of recent corporate corruptions. The wave of corruption in recent years particularly in the financial segment calls for more ethical standards in the business. As the article states that ethical conducts have considerable influences on the work culture in financial segment. It makes people to behave in a responsible manner. Ethics is usually a confused aspect as there are no clear moral compasses which help to guide the organisations towards ethical behaviour. However, if organisations operate under the supposition that business has a moral duty to perform honourably then it can help to collate appropriate behaviour in workplace. In this context, it can be stated that unethical behaviour is manifested in organisational activities which are believed to be offensive according to general standards of business. Unethical activities can interrupt the congruence in the relationship between the organisation and its stakeholders, because they violate the ideas of morality and impartiality (Weiss, 2008). As professionals, businesspersons need to possess high ethical standards; they must be the spearheads in developing better ethical guidelines for the industry. However, from the article, it can be observed that in reality, the industry has not done its bit towards ensuring more ethical business practices (Weiss, 2008). Violation of business ethics has resulted in the introduction of strong regulatory system. Thus, there are substantial arguments about this topic whether the regulatory actions need to be strengthened or not. It is being argued that business experts are deeply aware about unethical activities, still current tendency of corporate scandals have depicted that educated people are vulnerable to unethical actions. Thus, the article also confers about taking regulatory actions on businesses which are quite vulnerable towards conducting unethical activities (Weiss, 2008). Strong regulatory system serves several objectives such as it can control the competition, protect the customers, encourage impartiality and security and provide for enforcement against wrongdoing. The corporate scandals have represented the failure of inner corporate control and self-regulation by every organisational member. Greediness of individual leaders, ineffectual performance of board and inefficiency of banks and other financial organisations are conspired with committing fraudulent activities. Corporate scandals cannot be instigated without support of other governmental as well as non-governmental industry players. The recent sub-prime crisis demonstrates how the whole financial system comprising banking and lending are involved in the greedy activities (Weiss, 2008). These activities postulate the importance of regulatory systems. Meanwhile, the article states that increasing regulatory concern is the consequence of regulatory recovery from the recent financial crisis. In this context, it is worth to mention that regulations provide a baseline, framework and minimum standards for differentiating satisfactory from undesirable business conducts. Morals, motivations, principles and encouragements to conduct right activities are necessary in organisations to ensure business ethics. The regulatory system can support in establishing these aspects in business (Weiss, 2008). Regulation plays a vital part in encouraging ethical behaviour in organisations. This is mainly true where regulatory systems oversee business activities. The significance of regulations to business ethics is larger where the concentration is on the conduct of organisations contrasted with people. There is no consensus about how conservative concept of actions and intentions should be applied to organisations. The concatenation of these two aspects requires regulations to express standards of morally driven business activities (Ferrell & et. al., 2009). The latest financial crisis depicts that the avoidance of future ethical calamity necessitates concerning about financial risk taking behaviours of stakeholders. Therefore, every portion of financial system comprising organisations and regulatory systems must embrace the business ethics linking responsibilities to stakeholders (Ernst & Young, 2010). Ethics provides an organisation a better way to look at the business, develop the operational procedures and establish a culture for enhancing market reputation and accomplishing overall objectives. Business ethics also provide knowledge and skills to the employees with strategic and operational duties (Ernst & Young, 2010). Starting with the regulations, business ethics can help to remind the members of an organisation about obvious proscriptions. Therefore, regulations result in signifying concepts to the organisations about what’s decent, ethical and respected in the business. The discussion on the article implies that organisations can do far more than what has been prescribed in the law. Therefore, regulations help to narrow down the activities of organisations which can add value to the business (Ernst & Young, 2010). The article also describes the increased concerns of regulators on the business. Regulations and compliances have become amid the major risks for business. The regulatory risk has exceeded because of recent credit crunch scenario. For the financial segment, risk of violating regulations is increasing with severe worries about poorly planned regulatory reactions on financial crisis. Harmonisation among governments worldwide has possibility of increasing the risk of uncoordinated and conflicting new regulations. Due to this reason, banks and other organisations have expressed concerns that increased regulations can lead to over regulated segments and increased protectionism, averting multinational organisations from effectively performing the business activities (Ernst & Young, 2010). Identified Issues and Recommended Solutions Several issues have been identified in the article. Among them, the most important issue is corporate ethics in organisations. The recent boom in corporate ethics has arrived because of several occurrences such as corporate scandals and recent economic crisis among others. From the article, it can be observed that several organisations are actively trying to establish ethics in the working culture. To cite an example, it can be stated that HSBC Australia has increased its ethical compliance workforce from 120 to 1000, bearing annual expenses of about US$300 million. Ethics underpin everything people do and thus it generates trust among the stakeholders (Durie, 2013). Thus, unless organisations follow good corporate ethics, the outcomes can be severe. The code of ethics in an organisation articulates what we should expect from the business. It also helps to prompt that people and organisations are bound by the regulations. Violating the ethical conducts denotes disciplinary measures and in the worst scenario can result in loss in business. Therefore, in order to ensure corporate ethics in the business practices, the first phase is to elect the board members carefully which can reflect the importance of stakeholders. The board members must comprise both independent and non-independent directors who are liable for ensuring employee obedience with the code of ethics (Pfarrer, 2005). Organisations are composed of certain cultures which can determine the ethical behaviour. Establishing corporate ethics requires conducting a proper evaluation of corporate culture from the viewpoint of approaches, insights, morals, standards of conduct, burdens to commit wrongdoing, communications, risks and weaknesses. After addressing these aspects, organisations must pay significant considerations towards corporate values and adopt the ethical policies in the work culture. Organisations can also select ombudsperson who can organise the ethics strategies and who can serve as a supporter for employees and board members involved in ethical problems. In this context, it is worth mentioning that no corporate ethics can be abided by unless top executives and leaders support it. Hence, executives must ensure that they put high importance in supporting and spreading the subjects or notion of business ethics (Pfarrer, 2005). In order to be operative, corporate ethics must be publicly distributed to every organisational members and stakeholders. Failure to proactively discuss and distribute the ethics can result in incompetence and ultimate undesirability. An effective corporate ethics must be observed as a living document, i.e. it must be flexible enough to adjust to the regulatory changes and needs to be updated when necessary. Furthermore, ensuring effective corporate ethics necessitates training of the members comprising constant education. An efficient corporate ethics must demonstrate the stakeholders about negative consequences of the breach of ethics. Apart from this, organisations should develop a list about those conducts which are considered as immoral as well as should provide corresponding penalties for alleged violations. All at once, organisations should encourage cooperation by performing collaterally with employees. Components of both obedience and ambition can augment ethics. The principal-agent theory states that in order to ensure cooperation in corporate ethics, external motivations must be provided to the employees. It can develop faith, values, social customs and other aspects of corporate culture in determining positive behaviour (Heath, 2006). The second most important issue identified in the article is risk of increasing regulations for organisations. It has become a matter of high concern that in extensive financial segments, regulatory reforms have the possibility to destroy the value of shareholders. More regulations can weaken the capability of the industry to captivate risks and enforce a competitive disadvantage while enticing capital, concerning other financial market players. In a wider sense, increasing regulations also limit the capability of the industry to fulfil the social and financial functions. In present days, organisations require to reconstruct trust and perform in accordance with governmental guidelines, regulators and overall public anticipations in order to demonstrate that their commercial acts are free from any type of systematic risks (Pfarrer, 2005). There are uncertainties over regulations on business performance, which can impact on investment and capability of an organisation to perform. Thus, increasing regulation is a subject of theoretical debate as apparent from the article where different participants in order to enhance their own benefits bend the rules and in doing so invite more regulations to the business. Regulations indeed are vital for business ethics, but there should not be ay uncertainty in regulations. In this context, it is recommended that organisations can take several measures in order to deal with the increasing regulations in business. Firstly, organisations need to plan beforehand about the possible changes in regulations, rather than waiting for regulations to be levied. Secondly, any reactions to regulations necessitate organisations to consider any substitute picture of business. Attempting to react to any new possible regulatory standards can work in favour of organisations (Ernst & Young, 2010). Who Are the Stakeholders Being Impacted Business ethics serve as a guide for organisations in assisting the employees to define what activities are ethical. It is essential to specifically prescribe what behaviour is offensive. Business ethics is also necessary for businesspersons to indicate that they are serious about contending against unethical conducts in business. Similarly, developing effective code of ethics signals that organisations are proactive and are interested in issues which impact on the stakeholders (Weiss, 2008). With corporate ethics, the major stakeholders who are impacted are the consumers, investors, shareholders and employees. An ethical business which listens to these groups of people in any manner would feel the effect on their activities. Corporate ethics can cover the wellbeing of employees, show awareness about investors and shareholders along with fulfilling the requirements of customers (Weiss, 2008). The stakeholders are attempting to force organisations to accept extensive ethical liabilities. Due to several adverse economic impacts, stakeholders have become increasingly effective in influencing the business activities of organisations. The increasing public awareness about the impact of unethical conduct has caused considerable changes in the viewpoint of several businesses (Weiss, 2008). Conclusion Considering the laid out factual aspects in the article, it can be concluded that every organisation must maintain high level of integrity through ensuring business ethics. Business ethics can help to ensure better reputation of an organisation in the market. It is evident that ethical behaviour has become a necessary component for every organisation. Although unethical conducts can provide advantages in the short run, in the long run, it can generate possible disasters to the organisations. Thus, in order to avoid the risks in the long run, organisations need to embrace corporate ethics. Furthermore, the violation of corporate ethics can lead to regulatory actions on business. Increasing regulations are pressing organisations to act in a more ethical manner which provides apparent advantages to the business. References Collins, D., 2009. Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance. John Wiley & Sons. Dutton, E., 2011. Towards a Scientific Model of Culture Shock and Intercultural Communication. Journal of Intercultural Communication, No. 27. Durie, J., 2013. Corporate Ethics Do Matter. The Australian. [Online] Available at: http://www.theaustralian.com.au/business/opinion/corporate-ethics-do-matter/story-e6frg9io-1226605491398 [Accessed April 23, 2013]. Ernst & Young, 2010. The Top 10 Risks for Business. The Ernst & Young Business Risk Report. 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