Legally Enforceable Codes of Business Ethics Is Mandatory for Every Business - Coursework Example

Legally enforceable Codes of Business Ethics is mandatory for every Business Name: Tutor: Course: Date: Introduction The aim of this essay is to bring into context and answer the question whether legally enforceable codes of business ethics are mandatory in any business. To achieve this, arguments for and against enforcement of code of ethics is discussed. The essay is meant to capture the legal scope of business ethics and its applicability in the business spheres. Theorists have contrasted and termed as ‘intolerant’ the perspective of many corporate managers (Friedman 2000). There is a strong case for managers embracing a corporate culture founded on ethics in organizations seen to reinforce legal constructs. There are varied views from empirical studies in the subject of tax evasion. It succeeds in offering divergent views of tax evasion not being ethical, always ethical and sometimes ethical. The paper provides evidence from various companies regarded as ethical reiterates competitive behavior as having no justification and goes to distinguish ways in which parties can agree. It addresses issues relating to circumstances many businesses violates labor laws and challenges critics to meet certain rules (McDonald 2000). It develops a political dimension where leaders have to tolerate competitive advantages in international trade. This will feature dumping in international trade as a sensitive and urgent matter. It reiterates the effect of low priced goods from abroad which is regarded as social dumping (Alan & Steve 2003). Successful exploits in this study addresses the legality of enforcing codes of business ethics in every business. Description, Discussion and Application Arguments of business ethics according to Nash (1999) is ‘negative’ terming ethicists as far removed from the world of business practitioners. These theorists regard corporate managers as hardnosed and thick skinned which frustrates the efforts of integrating codes ethiccs into current business practices (Nash 1999). In considering the view taken by Nash, it is apparent that even though business ethics is essential and critical in every business, the actors which in this case are corporate managers may not be ready to inculcate them. This leaves many companies at loggerheads with the law. Moreover, Pro-ethicists are not confident with the level of unhealthy competition and the circumstances surrounding illegal business transactions and dishonesty dealings. Halliburton Inc found itself in the wrong when it was established that its officials had unfairly overcharged for drilling operations in Iraq of more than $1.3billion and a lawsuit prevailed to pay a fine of $559 million. In Ecuadorian Amazon, Chevron was accused of dumping 18billion gallons of toxic waste through a campaign of intimidation and involvement in killing protestors in Nigerian demonstrations. So if the law pushes these companies to ‘own up’, the other businesses will follow suit. The legality of business and adaptation to ethical aspects has been supported by McGee (2006) who described the ‘Oxymoron’ as a moral issue affecting payment of tax to the state. Earlier, Nash (1999) projected a practical dimension in which organization with entrenched codes of ethics and strong corporate culture serves to reinforce legal constructs of business ethics (MacGee 2006). Similar understanding was brought out by Powell and Zwoliniski (2011) who reviewed the moral and economic foundations of business as termed them as flawed. It laments on the practices of business in gross violation of labor laws and unhealthy competition. So, it infers that the law is weak in imposing fines and deterrence to unethical companies because they continue violating the law in full glare of state justice. There is need for companies to put greater emphasis on actualizing industry codes, policies and legal regulations. De-Con Mechanical Contractors in New York cheated more than 15,000 employees of their benefits while hiding $15million from tax collectors. Three officials were indicted for business records falsification. Perhaps this came as a deterrent and a preventive measure for unethical companies to enforce ethics and avoid imminent clash with the law. Friedman (1970) while contributing to the desire by businesses to increase profits notes some have a social responsibility not merely driven by profit motives. The author emphasized that corporate executive behavior should focus on meeting the various externalities such as employment, fighting discrimination and reducing polution levels (Moffat 2004). S-Oil of Korea is one company famous for campaigning for underprivileged people and senior citizens during winter. It not only beefed up various corporate social responsibility programs but also goes an extra mile to compensate victims of tragedies not related to their line of operations (Hunt, Kieker & Chonko 2000). The basis for legally enforcing business ethics is to have a level platform of corporate practice. It is pleasing to note that a company like S-Oil can walk the extra mile to volunteer in noble activities without playing the minimum game. Such companies have moral and not legal obligation to exercise corporate responsibility. Ethical suggestions are derived from the writings of Adam Smith and directed to policitians who are the only ones capable of enforcing legal conditions preferable to all businesses (Hunt, Kieker & Chonko 2000). The view by Adam Smith was also supported by Singh (2011) who emphasized the determination to explore corporate code of ethics and establish its uptake by corporate managers. It provides for an objective view of countries and corporates which have embraced business code of ethics (Singh 2011). The law is applied beyond the national boundary and concerns all business trading within and beyond borders. The British turkey farmers in 1995 realized how to reduce costs when they began to export turkey to France (Moffat 2004). They had earlier termed the French turkey as ‘bad’ and not fit for consumption in Britain. The French went up to the courts and retained the right ship their turkey meat across the strait to Britain (Moffat 2004). This was seen in the way French farmers reacted to the British government quest to damage the reputation of their turkey meat. The French relied on the usefulness of legal institutions in safeguarding adverse and rogue business practices. This affirms the case that the law should apply to all businesses within and without national boundaries. Allan and Steve (1993) on the ethics of dumping especially in international trade found it imperative and sensitive issue seen in the low priced goods is dumped abroad. It asserts that dumpophobia reduces the risk of consuming low priced goods and provides a platform for competitive trade. It offers a political perspective for leaders to pass laws and regulations supporting competitive advantage in international trade. Toffler (2001) writes that events shaping the minds of individuals may be uncertain given the state of politicized and incited communities. She laments that such events may inspire or horrify society given that its impact on business ethics will be difficult to predict. Tree Island Steel Ltd of Canada in 2013 complained that alloy steel wire or cold drawn carbon from Israel, Spain and China are cheap and causing or threatening the sustainability of domestic market in Canada. The object of litigating on international trade does not hold much criticism among scholars who promote competitive advantage. Consumers benefit from cheaper and quality finished goods even if coming from abroad. The essence of trade tariffs and surcharges are prohibitive in national scale. This dimension will not require such business in the country of origin to exercise business ethics of fair pricing since they have competitive advantage. Such businesses will not be required to comply with any ethical law regarding prices. This view is related to that of Moffat Black (2004) who wrote on business ethics and social responsibility in which he focused on social advocates and consumers on social implication of their business activities. The Ethics and Compliance Officer Association (2009) emphasizes the need to develop legal advice and evidence that supports an ethical organization. It demonstrates the interrelationship between legal compliance and ethical culture (Moffat 2004). Codes of ethics are legally enforceable as seen from numerous cases in which companies have successfully sued each other for damages caused. There is a narrow divide that convinces business theorists on the practicability of embracing business ethics especially in corporate America (Alan & Steve 2003. Wal-Mart was accused of conducting unethical trade practice of which it dismissed an order of fire incident in Bangladesh. The clothing giant failed to address issues involving other stakeholders and lead firms. This shows that companies are domineering in countries with weak laws and regulations. They fail to take responsibility by deliberately locking any room for negotiations with the aggrieved parties. Business ethics will be mandatory for such businesses which have failed internal ethical processes. According to McDonald (2000) companies can develop formulaic codes, training programs, hotlines and ethics officers who can provide a realistic understanding of business ethical practice. General Motors is one such company which has recently called upon stockholders to exercise social responsibility while pursuing profits by all means (Arthur 2000). The managers still regard the custodians of business ethics a standing on the ivory tower. However, it contradicts the demand from Sweatshops to bear responsibility over unhealthy competition and violation of labor laws (Ouchi 2000). It can be established that some companies are increasingly getting sophisticated with flawed economic and moral foundations. Sweat shops competitive behavior has no justification and should meet codes of ethics and rules. There are more recent figures of KPMG reports on corporate codes of ethics on empirical studies of trends in Sweden, Canada and Australia (Moffat 2004). These countries should increase applicability of corporate code of ethics which has increased its prevalence especially content and focus (Toffler 2009). Business leaders have a huge responsibility and the power to profile their organizations culture. In the business world we live in, better understanding of ethical culture is needed. This also informs business leaders to create monumental impact on current business behavior that is clearly connected to the accepted societal standards (McDonald 2000). The best standards of practice should be supported and encouraged by the business community. In this globally evolving and rapidly growing economy, it is wise to consider and reflect on the role of standards and business ethics (Pogge 2005). The obvious challenges of formulating effective, cross-cultural standards and corporate values are inevitable. One way has been suggested to confront these challenges. Assessing the organizational strengths and reviewing its internal weaknesses of business ethics while taking advantage of the opportunities and cushioning from threats is imperative. Any free-enterprise and especially a private-property system, a corporate executives are bound by rules and regulations (Moffat 2004). Since they are employees of the owners of the business, they have a direct responsibility to their employers. Their role is to conduct the business in compliance with their desires mainly making as much money as they can but while adhering to fundamental societal rules, those embodied in ethical custom and in law (Singh 2011). The justification of wage restraint by trade unions, pollution of environment due to actions of companies, dishonest promotions and advertisements, misreporting of financial statements among others are agency conflicts naked and clear. Surbodination of members interest for general purpose has untold consequences on workers (Morris 2002). The concept of business ethics is steadily gaining strength as corporations, governments, and citizens are staring to understand the significance of morally reputable societal business practices. Business code of ethics should be legally enforceable to limit insider trading, incidents of bribery, and money laundering. These are significant concerns that have over the past resulted in adoption of ethics programs and strict law enforcement in more than half of Western corporations (Verbeke, Ouwekerk & Peelen 2006). A breeding ground for violations is created when ethics program only exists on paper and not in the minds, hearts, and actions of the company’s employees. Ethics scandals have serious lessons to be learned from once-great companies toppled. Current regulators and legislators are now holding business leaders accountable by creating appropriate culture and ensuring appropriate mechanisms are put in place such as ethical programs (Luther, DiBattista & Gautschi 2007). Business ethics prevails through policies advocated by groups and individuals within the civil society and special interest gropus. For instance, anti-sweatshop movement pressing for OSHA-style safety regulations and better living wages is easily predicted by economic theory to causing adverse consequences on workers. The standard economic theory informs the existence of economic mechanisms or unique moral principles challenging defenders of sweatshops as providing a means of livelihood to a group that could otherwise be poor (McGee 2006). Learning to prioritize ethical issues; situation, problem, or opportunity is essential in understanding business ethics. An ethical issue requiring individuals to choose from a variety of actions evaluated as wrong or right, or unethical ethical is objective (Verbeke, Ouwekerk, & Peelen 2006). Such a choice in business involves evaluating monetary profit against what an individual considers as suitable conduct. Proper judgment of ethics of a decision is by looking at a circumstance from a competitor’s or customer’s perspective (Moffat 2004). For instance, what would be the legal consequences of liquid-diet manufacturers making unfounded claims regarding their products? Is it illegal and morally wrong for an auditor to concede in divulging his/her clients’ trade secrets to competitors for a monetary token? Is it proper for a salesperson to omit facts regarding a product’s poor safety record during customer presentation? These are questions with legal implications and demands that decision makers to assess the ethics of her or his choice (Arthur 2000). Shortcomings in business ethics affect people at local, national, regional and global at different lattitudes (Zwoliniski & Powell 2011). Some have direct effects with higher immediacy. For instance, the increasing complexity of current vehicles means that fewer people can evaluate the suitability of repairs ocassioned by mechanics or the fairness of the charge for undertaking the repairs. The choice to pursue or advance own personal interests as opposed to that of others leads to conflict of interest. A corporation manager is vested with ensuring the profitability of the company for its stockholder-owners to obtain a return on investment (Luther, DiBattista & Gautschi 2007). The manager owes his or her investors responsibility of which if she/he makes decisions rewarding selfish power or money at the behest of broader company goals (Wimbush, Shepard & Markham 2007). Conclusion This paper has explored various theories and concepts regarding legality of enforcing business ethics. It has agreed with Nash (1999) that ‘the business practitioners are far removed from business ethics’ and requires legal enforcement. However, there are companies that apply moral ethics in business performance and establish ethics as mandatory in any of their business dealings. It has found out that the moral justification of ethics in business is found in honest and fair practice. Companies need to be honest and fair which are fundamentals of business ethics and constitute the decision makers’s general values. Legally speaking, businesspersons are required to adhere to all applicable regulations and laws (Trevino 2001). Furthermore, obedience to the law is not holistic, they are also require to protect employees, customers, competitors, clients without misrepresentation, deception, discrimination, or coercion. Since managers desire to maximize their shareholders profit, they cannot exercise business ethics in entirety. External systems like courts have to literally force them to accept responsibility and ensure ethical businesses. Competition for market and ownership determines fairness. Communications is critical in ethics since misleading, false advertising, and tactics of personal-selling annoys customers resulting in business failure. Product quality and safety truthfulness affects consumers (Ouchi 2000). Many supplements sold by small, autonomous marketers like in pharmaceutical companies provide dietary supplements with limited testing and regulation. The businesspersons’ behaviour toward suppliers, customers, and others at workplace generates ethical anxiety. Ethical behaviour should dictate how a business keeps company secrets, fulfilling responsibilities and obligations, and keeping away from undue pressure that can prevail on others to act unethically (Schwepker 2001). Because of the authority of their position, managers have a great influence on the actions of their employees. Business ethics should deter and uphold moral actions at workplace. For instance, ethical issue prevents company employees for copying trademarks, copyrights and patents (Moffat 2004). Many businesses violate the code of ethics deliberately while only a few uphold. In the nut shell, the definite answer on whether legally enforceable code of ethics being mandated to each business is a Yes. Business ethics are morally acceptable, legally enforceable and applicable to all businesses (Nash 1999). Ethics scandals have serious lessons to be learned from once-great companies toppled. This is even a relief since current regulators and legislators are now holding business leaders accountable by creating appropriate culture (Alan & Steve 2003). Reference list Alan, W & Steve, H September 5, 2003, Dumpers welcome, Forbes magazine, Vol. 152 Issue 2, p250-250. Arthur, A 2000, Ethical concerns and reputational risk management: A study of leading UK companies. OUP. Ethics and Compliance officer Association, 2009, Ethical culture building: A modern business Imperative. Ethics Resource Center. Friedman M September 13, 2000, The Social Responsibility of Business is to Increase its Profits. New York Times magazine. Hunt, S D, Kieker, P L & Chonko, L B 2000, Social responsibility and personal success: A research note. Journal of the Academy of Marketing Science, 18: 239- 244. Luther, H, DiBattista, R A & Gautschi, T 2007, Perceptions of what the ethical climate is and what it should be: The role of gender, academic status, and ethical education. Journal of Business Ethics, 16: 205-217. Maitland, I 2005, The limits of Business Self-Regulation, in : California management review 27:3, 132. McDonald, G 2000, Business ethics: Practical proposals for organizations. Journal of Business Ethics, 25(2): 16 McGee, R W 2006, Three views on the ethics of tax evasion. Journal of Business Ethics, Springer, 67: 15-35. Moffat, B 2004, Business ethics and social responsibility, Marketplace Journal. Allan Press Morris, M H Schindehutte, M Walton, J & Allen, J 2002, The ethical context of entrepreneurship: Proposing and testing a developmental framework. Journal of Business Ethics, 40(4): 331-361. Nash, L L 1999, Intensive care for everyone's least favorite oxymoron: Narrative in business ethics, Business Ethics Quarterly, Vol, 10. Pp 277-290. Ouchi, W G 2000, Markets, bureaucracies, and clans. Administrative Science Quarterly, 25: 129-141 Pogge, T W 2005, World poverty and human rights. Ethics and International Affairs, 19(1), 1–7. Schwepker, C 2001, Ethical climates relationship to job satisfaction, organizational commitment, and turnover intentions in the sales force. Journal of Business Research, 54: 39-52. Singh, J B 2011, Determinants of the Effectiveness of Corporate Codes of Ethics: An Empirical Study, Journal of Business Ethics, Springer. 101:385–395. Toffler, B L 2009, Ethics in the new millenium, International Business Ethics Institute, Vol 4, Issue 1. Trevino, L K 2001, A cultural perspective on changing and developing organizational ethics. Research in Organizational Change and Development, 4: 195-230. Verbeke, W Ouwekerk, C & Peelen, E 2006, Exploring the contextual and individual factors on ethical decision making of salespeople. Journal of Business Ethics, 15: 1175-1187. Wimbush, J C Shepard, J M & Markham, S E 2007, An empirical examination of the multi-dimensionality of ethical climate in organizations. Journal of Business Ethics, 16: 67-77. Zwoliniski M & Powell, B 2011, The Ethical and Economic Case against Sweatshop Labor: a Critical Assessment, Journal of Business Ethics, Springer science and business media. 107:449-472. Read More

Halliburton Inc found itself in the wrong when it was established that its officials had unfairly overcharged for drilling operations in Iraq of more than $1.3billion and a lawsuit prevailed to pay a fine of $559 million. In Ecuadorian Amazon, Chevron was accused of dumping 18billion gallons of toxic waste through a campaign of intimidation and involvement in killing protestors in Nigerian demonstrations. So if the law pushes these companies to ‘own up’, the other businesses will follow suit.

The legality of business and adaptation to ethical aspects has been supported by McGee (2006) who described the ‘Oxymoron’ as a moral issue affecting payment of tax to the state. Earlier, Nash (1999) projected a practical dimension in which organization with entrenched codes of ethics and strong corporate culture serves to reinforce legal constructs of business ethics (MacGee 2006). Similar understanding was brought out by Powell and Zwoliniski (2011) who reviewed the moral and economic foundations of business as termed them as flawed.

It laments on the practices of business in gross violation of labor laws and unhealthy competition. So, it infers that the law is weak in imposing fines and deterrence to unethical companies because they continue violating the law in full glare of state justice. There is need for companies to put greater emphasis on actualizing industry codes, policies and legal regulations. De-Con Mechanical Contractors in New York cheated more than 15,000 employees of their benefits while hiding $15million from tax collectors.

Three officials were indicted for business records falsification. Perhaps this came as a deterrent and a preventive measure for unethical companies to enforce ethics and avoid imminent clash with the law. Friedman (1970) while contributing to the desire by businesses to increase profits notes some have a social responsibility not merely driven by profit motives. The author emphasized that corporate executive behavior should focus on meeting the various externalities such as employment, fighting discrimination and reducing polution levels (Moffat 2004).

S-Oil of Korea is one company famous for campaigning for underprivileged people and senior citizens during winter. It not only beefed up various corporate social responsibility programs but also goes an extra mile to compensate victims of tragedies not related to their line of operations (Hunt, Kieker & Chonko 2000). The basis for legally enforcing business ethics is to have a level platform of corporate practice. It is pleasing to note that a company like S-Oil can walk the extra mile to volunteer in noble activities without playing the minimum game.

Such companies have moral and not legal obligation to exercise corporate responsibility. Ethical suggestions are derived from the writings of Adam Smith and directed to policitians who are the only ones capable of enforcing legal conditions preferable to all businesses (Hunt, Kieker & Chonko 2000). The view by Adam Smith was also supported by Singh (2011) who emphasized the determination to explore corporate code of ethics and establish its uptake by corporate managers. It provides for an objective view of countries and corporates which have embraced business code of ethics (Singh 2011).

The law is applied beyond the national boundary and concerns all business trading within and beyond borders. The British turkey farmers in 1995 realized how to reduce costs when they began to export turkey to France (Moffat 2004). They had earlier termed the French turkey as ‘bad’ and not fit for consumption in Britain. The French went up to the courts and retained the right ship their turkey meat across the strait to Britain (Moffat 2004). This was seen in the way French farmers reacted to the British government quest to damage the reputation of their turkey meat.

The French relied on the usefulness of legal institutions in safeguarding adverse and rogue business practices. This affirms the case that the law should apply to all businesses within and without national boundaries.

Read More