Paper on Ethics & Values in Business

PAPER ON ETHICS & VALUES IN BUSINESS

CONTENTS

Abstract
Introduction
Changing Corporate Landscape
Business Ethics

Approaches to Ethics
Four Views of Ethics
Overview of Issues in Business Ethics

§ General Business Ethics

§ Professional Ethics

§ International Business Ethics

Theoretical Issues in Business Ethics
Ethics in Manufacturing Industry

Ethics in the Education Sector
Ethics in IT Industry
Ethics in Food Industry
Ethics in Media & Advertising Sector
Benefits of Managing Ethics at Workplace
Conclusion

ABSTRACT

The corporate world – an integral part of our lives, the soul of a country’s economic growth, a world filled with hustle – bustle 24*7, a world that generates employment for every second person you meet... But, sadly, it is also the domicile of power games and foul play and this is the reason why a look at ‘ETHICS AND VALUES IN BUSNIESS’ is critical and relevant.

Business has created wealth that has given an unprecedented number of individuals’ financial control of their lives. It has expanded a person’s horizon infinitely, broken down all perceivable barriers. In short, business has been a prime mover in making it possible for millions to pursue their lives in a wealthy, healthy, rational and exciting world.

Yet no other human institution has been so plagued by suspicions of immorality. "Business ethics," the old joke goes, "Isn't that a contradiction in terms?"

Business ethics is a form of the art of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions ~ Ethicism, is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws.

This paper takes a peek into the enterprises that have proved that there is room for ethics and values in business. See how ethical corporates already are and how their ethics facilitate them to be leaders in their industry.

SCOPE OF THIS PAPER:

Understanding ethics and the concept of Business Ethics
Impact of ethics in the

§ Manufacturing Sector

§ Education Sector

§ IT/ITES & BPO Sector

§ Food Industry

§ Media and Advertising

Cases and Examples

INTRODUCTION

Of the Institutions that have contributed to the quality of human life, business ranks with science, art, and education. Business has created the wealth that has given unprecedented numbers of individuals’ financial control of their lives. It has expanded immeasurably the range of goods and services available to individuals. It has broken down countless centuries-old barriers of racial, sexual, religious, and ethnic prejudice. And it has been the vehicle for countless numbers of individuals to develop their fullest potentials in achieving their dreams. In short, business has been a prime mover in making it possible for millions to pursue their lives in a wealthy, healthy, rational and exciting world.

Yet no other human institution has been so plagued by suspicions of immorality. "Business ethics," the old joke goes, "Isn't that a contradiction in terms?"

The credibility of the term 'Business Ethics' has come into question, in recent times as 'business ethics' is increasingly being considered an oxymoron. It is generally believed that business and ethics cannot coexist and organizations are said to thrive on unethical practices. Business ethics, as far from being a contradiction in terms, has become one of the most important areas of managerial competence and responsibility. The ethics question warrants exploration on several levels: -

1. At the macro- level: focusing on the ethical rightness of the system.

2. At the corporate-level: focusing the decisions that impact others.

3. At the individual-level: within an entity.

The major issues in business ethics can be classified into four areas:

The relationship between business and consumers
The relationship between employers and employees
The nature and value of special forms of business organization—most notably, that of the corporation
The nature and value of financial markets

The issue of the proper scope of government regulation cuts across these four categories. Miscellaneous issues such as waste disposal ("the environment") and investing in morally dubious foreign nations (such as Communist China or Iraq) are often debated in the business ethics literature, but are primarily issues of political theory and so do not fit into the above business ethics categories.

Changing Corporate Landscape

Increasing number of Corporate Scandals
Concern towards the wealth creation process

§ It’s Mr.Clean vs. Ms Controversial (12/7/2007)

§ BJP smells a scam in wheat import contracts (12/7/2007)

§ Sweet & Sour: Light on calories, light on value? (23/6/2007)

§ Fresh battle: China plays down food-safety troubles (14/6/2007)

§ BP CEO quits over scandal (02/05/2007)

§ Siemens CEO, dogged by bribery affair, quits (26/4/2007)

§ Nasdaq founder Macklin dead (02/02/2007)

§ Siemens chief quits as co faces bribery, corruption charges (21/4/2007)

§ CFOs find it ‘ suffocating’ these days (29/1/2007)

§ Ex-Cendant chairman gets over 12 years in jail (19/01/2007)

~Source: Economic Times, Mumbai

Ø According to a specials report in Times of India; It is disgraceful that the poverty ratio is 28% (according to a recent government estimate) after half a century of independence. Why so?

It is because, despite spending enormous sums, the government has failed dismally to provide every village with the basics of growth.

BUSINESS ETHICS

The concept of Business Ethics has come to mean various things to various people, but generally it's coming to know what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders.

Caveat emptor: This ancient Latin proverb let the buyer beware, tells us that business ethics has been a societal concern going back a long ways indeed.

Ethics is not an exact science. People define Ethics in accordance with their own set of values which differ depending on time, place and culture. Webster's defines Ethics as "the discipline dealing with what is good and bad or right and wrong or with moral duty and obligation." The word derives from the Greek word meaning "moral," a Latin word with roots in "mores" or "customs"—in other words the values held by society.

Business Ethics is a form of the art of applied ethics that examines ethical principles and moral or ethical problems that can arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions ~ Ethicism, is increasing. Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws.

The simplest definition of ethics and moral values would be to not distinguish between the two and say that they describe what is right and what is wrong in human behavior and what ought to be. Business ethics are the desired norms of behavior exclusively dealing with commercial transactions. Moral values are deep seated ideas and feelings that manifest themselves as behavior or conduct. If we know the consequences of our actions we can convert values into rules of behavior that can then be described as ethics, i.e, Values + Knowledge = Ethics

In the business world, ethics often are displaced by greed when there is a periodic frenzy of rising stock market prices. Inevitably, a steep downturn then inflicts losses on investors and on businesses with a concomitant reduction in the work force. An excessive competitive spirit tends to induce unethical business practices so the business world becomes a battlefield where the normal rules are flouted, skirted or simply disregarded. The ensuing instability is bad for the economy and for the government.

TWO BROAD AREAS OF BUSINESS ETHICS

1. Managerial mischief. Madsen and Shafritz, in their book "Essentials of Business Ethics" explain that "managerial mischief" includes "illegal, unethical, or questionable practices of individual managers or organizations, as well as the causes of such behaviours and remedies to eradicate them." There has been a great deal written about managerial mischief, leading many to believe that business ethics is merely a matter of preaching the basics of what is right and wrong. More often, though, business ethics is a matter of dealing with dilemmas that have no clear indication of what is right or wrong.

2. Moral mazes. The other broad area of business ethics is "moral mazes of management" and includes the numerous ethical problems that managers must deal with on a daily basis, such as potential conflicts of interest, wrongful use of resources, mismanagement of contracts and agreements, etc.

THREE APPROACHES TO ETHICS

The field of ethics, also called moral philosophy, involves systematizing, defending, and recommending concepts of right and wrong behavior. Philosophers today usually divide ethical theories into three general subject areas or three main approaches to ethics - Normative Ethics, Descriptive Ethics and Meta-Ethics.

NORMATIVE ETHICS:

This was the prevalent form of ethics in philosophy until the end of the 19th century. What things are good and bad and what kind of actions / behavior are right and wrong. It involves how people ought to act on the principles, how they make moral choices, and how rules apply to individual lives. It includes a consideration of the importance of human freedom, and a discussion of the limits of a human's responsibility for moral decisions and for the consequences of actions. Consideration for the role of conscience in moral decision making is also a part of Normative ethics. This may come from an established group of culture, such as the Christian tradition, or it may be based on some other way of thinking. This is the traditional way of doing Ethics.

DESCRIPTIVE ETHICS:

It is the study of ways in which different people and different societies have answered moral questions. It can be described as moral sociology or moral anthropology, a description of the moral code prevailing in different societies. It involves different approaches inside one society to the resolution of ethical problems.

META-ETHICS:

This is sometimes called moral philosophy or philosophical ethics. This group attracts most interest today. It seeks to understand the meaning and function moral language, of ethical terms like good and bad. It looks at the logic used in arriving at the conclusion of an argument that justifies a moral choice. Posing an ethical question illustrates the different ways the two positions respond to it. If you asked the question "Is pre-marital sex right," a Normative Ethical answer would be more concerned with the reasons why it might be right or wrong, how they relate to certain teachings, or traditions of, say the Christian Church, or some other group. A meta-Ethical response would be more interested in what you mean by right, and what it means by a right sexual action as opposed to a wrong one. Meta Ethics has produced a number of different schools, which we will look at over the coming few weeks:

§ Ethical Naturalism (Definism)

§ Ethical Non-naturalism (Intuitionism)

§ Ethical Non-cognitivism (Emotivism)

FOUR VIEWS OF ETHICS

Recent corporate scandals including Enron, WorldCom, Tyco, and ImClone may cause many to conclude that corporate has no ethics. The term ethics refers to rules and principles that define right and wrong conduct.

FOUR VIEWS OF ETHICS

1. UTILITARIAN VIEW of ethics says that:

§ Ethical decisions are made solely on the basis of their outcomes or consequences.

§ Greatest good is provided for the greatest number

§ Encourages efficiency and productivity and is consistent with the goal of profit maximization

2. RIGHTS VIEW of ethics is concerned with respecting and protecting individual liberties and privileges such as the rights to privacy, free speech, and due process.

§ Respecting and protecting individual liberties and privileges

§ Seeks to protect individual rights of conscience, free speech, life and safety, and due process

§ To make ethical decisions, managers need to avoid interfering with the fundamental rights of others

3. Theory of Justice View of ethics is where managers impose and enforce rules fairly and impartially and do so by following all legal rules and regulations.

§ Organizational rules are enforced fairly and impartially and follow all legal rules and regulations

§ Protects the interests of underrepresented stakeholders and the rights of employees

4. INTEGRATIVE SOCIAL CONTRACTS theory proposes that ethical decisions be based on existing ethical norms in industries and communities in determining what constitutes right and wrong.

§ Acts are moral when they promote the individual’s best long-term interests, which ultimately leads to the greater good

§ Individualism is believed to lead to honesty and integrity because that works best in the long run

OVERVIEW OF ISSUES IN BUSINESS ETHICS

GENERAL BUSINESS ETHICS

This part of business ethics overlaps with the philosophy of business, one of the aims of which is to determine the fundamental purposes of a company. If a company's main purpose is to maximize the returns to its shareholders, then it could be seen as unethical for a company to consider the interests and rights of anyone else.

Corporate social responsibility or CSR: an umbrella term under which the ethical rights and duties existing between companies and society is debated.

Issues regarding the moral rights and duties between a company and its shareholders: fiduciary responsibility, stakeholder concept v. shareholder concept.

Ethical issues concerning relations between different companies: e.g. hostile takeovers, industrial espionage.

Leadership issues: corporate governance.

Political contributions made by corporations.

Law reform, such as the ethical debate over introducing a crime of corporate manslaughter.

The misuse of corporate ethics policies as marketing instruments.

PROFESSIONAL ETHICS