Business Ethics


By

Manoj Somayaji
Kousar Hamza
Naveen Kumar G.S
Mahesh H.M
Management Students
AMC Engineering College
Bannerghatta, Bangalore
 


"If you build that foundation, both the moral and the ethical foundation, as well as the business foundation, and the experience foundation, then the building won't crumble".
                                                                                                               
Henry Kravis

History of ethics in business

Business ethics being part of the larger social ethics, always been affected by the ethics of the epoch. At different epochs of the world, people, especially the elites of the world, were blind to ethics and morality which were obviously unethical to the succeeding epoch. History of business, thus, is tainted by and through the history of slavery history of colonialism and later by the history of cold war. The current discourse of business ethics is the ethical discourse of the post-colonialism and post-world wars. The need for business ethics in the current epoch had begun gaining attention since 1970s.

 Historically, firms started highlighting their ethical stature since the late 1980s and early 1990s, as the world witnessed serious economic and natural disasters because of unethical business practices. The Bhopal disaster, and the fall of Enron are instances of the major disasters triggered by bad corporate ethics. It should be noted that the idea of business ethics caught the attention of academics, media and business firms by the end of the overt Cold War. Cold Wars, seen through pages of history were fought through and fought for American business firms abroad. Ideologically, promotion of firms owned by American nationals were presented as if it were freedom and the local resistance against the excess of American firms were labeled as communist upraising sponsored by the Soviet Block.

Further, even legitimate criticism against unethical practice of the firms were presented as if it were infringement into the 'freedom' of the entrepreneurs by activists backed by Communist totalitarians. This scuttled the discourse of business ethics both at media and academics. Overt violence by business firms have decreased to a great extent in the democratic and media affluent world of the day, though it has not ceased to exist. The war in Iraq is one of the recent example of overt violence by the liberal western states on the behalf of oil business interests

Meaning:

Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters).

Definition:

Business ethics (also known as Corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Applied ethics is a field of ethics that deals with ethical questions in many fields such as medical, technical, legal and business ethics.

Why business ethics?

Discussion on ethics in business is necessary because, business can go unethical, and there are plenty of evidences as in today on unethical corporate practices. Even Adam Smith, in whose name neo-liberal laissez-faire is advocated opined that 'People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices' Business does not operate in vacuum. Firms and corporations operate in the social and natural environment. By virtue of existing in the social and natural environment, business is duty bound to be accountable to the natural and social environment in which it survives. Irrespective of the demands and pressures upon it, business, by virtue of its existence is bound to be ethical, for at least two reasons: one, because whatever the business does affects its stakeholders and two, because every juncture of action has trajectories of ethical as well as unethical paths wherein the existence of the business is justified by ethical alternatives it responsibly chooses One of the conditions that brought business ethics to the forefront is the demise of small scale, high trust and face-to-face enterprises and emergence of huge multinational corporate structures capable of drastically affecting everyday lives of the masses.

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 should 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; Corporate Social Entrepreneurship
  • 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.

Short case studies:

Case:1 -Bank of America:

Abstract
When Steve Valdez went to a Bank of America branch to encash a check, he was denied service. The bank policy stipulated that if a person did not have an account with the bank s/he had to provide a thumbprint to have a check encashed. Valdez did not have a thumb but the bank still refused to serve him, citing bank policy.

Issues

   Ethics
   Compliance
   Policy

Introduction
In 2009, when Steve Valdez (Valdez) went to a Bank of America (BoA) branch in the Tampa area in Florida to cash a check, he was in for a shock. The bank refused to serve him unless he provided a thumbprint. And this, despite Valdez having a compelling reason for not complying with the demand - he was born without hands and wore prosthetic arms...

Case:2- Nokia:

Abstract

The world's leading mobile phone company, Nokia Corporation (Nokia), launched its 'Take-back' campaign in early 2009. The initiative, aimed at educating mobile phone users about the importance of recycling e-waste, had been launched in a number of countries since 2005.

Issues:

  Sustainability.
  Recycling.
  Awareness campaigns.

Introduction

On January 1, 2009, Nokia India, the Indian arm of the world's leading mobile phone company, Nokia Corporation (Nokia), announced its 'Take-back' campaign, aimed at educating mobile phone users about the importance of recycling e-waste . On the occasion of the launch of the initiative, D. Shivakumar, Managing Director, Nokia India, said, "If every Nokia user recycled just one unused phone, the discarded phone will live on in something new, as the material is used to make items like park benches, utensils etc."

Nokia first launched Take-back campaign in 2005 in Finland before which it ran pilot projects in the UK and Sweden during the late 1990s. It supported the concept of Individual Producer Responsibility (IPR) and the Take-back initiative was launched as an IPR initiative. According to the company, Nokia was very environment conscious and followed the 'Design for Environment' (DFE) process where it took into account environmental aspects in every phase of product development right from the beginning of the Product Life Cycle...

Conclusion:

For Business Ethics is a daring adventure into the world of business ethics. It offers a clear and accessible introduction to business ethics and also expands business ethics beyond its current narrow confines. It is ground-breaking in the sense that it invites a distinctively critical approach to business ethics, an approach that the authors argue is part and parcel of ethics.

With a thought-provoking glossary and recommendations for further readings, For Business Ethics is an essential purchase for students and practitioners alike. It is at once an introduction to business ethics and a challenge to anyone who wishes to take part in or change contemporary organized society.

References:

Business Ethics: Retrieved from:

  • http://www.icmrindia.org/Short%20Case%20Studies/Business%20Ethics/CLBE006.htm
  • http://www.informaworld.com/smpp/content~content=a738020694~db=all~jumptype=rss
  • http://en.wikipedia.org/wiki/Business_ethics
  • http://www.woopidoo.com/business_quotes/business-ethics.htm
  • http://www.icmrindia.org/Short%20Case%20Studies/Business%20Ethics/CLBE020.htm
     


Manoj Somayaji
Kousar Hamza
Naveen Kumar G.S
Mahesh H.M
Management Students
AMC Engineering College
Bannerghatta, Bangalore
 

Source: E-mail May 18, 2010

 

           

 

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