Business Ethics in the Business World - Research Paper Example

?Running Head: Business Ethics Business Ethics in the Business World A Research Paper Ethical principles are all but hard d into the human psyche, and thus manifest in all areas of everyday living. The business world is no exception to this, and relies on the proper practice of business ethics by its inhabitants in order to continue working as it should. The concept of business ethics touches on all kinds of topics and issues, always seeking to determine which action in a set of choices is the right thing to do - and then to choose that course of action. The concept of business ethics originated in the 1960s, a time where the public began to demand that corporations actually contribute to the common good, and has since become a popular subject for research. Whether the subject concerns the pursuit of profit, employer-employee relations or corporate social responsibility, there are multiple ways of going about the practice of business ethics. That being said, it should always be remembered that, as with everything else, there exist right ways and wrong ways of understanding and then practicing business ethics. Introduction The History of Business Ethics as an Academic Endeavor Ethical principles exist to provide order, stability and some semblance of morality to an otherwise chaotic world. These are best exemplified in the written laws created by man, such as the Constitutions of various countries, as well as the scriptures subscribed to by members of various religious denominations. Even without these written laws, the concept of natural law is hardwired in human beings through the concept of conscience, which should hint at the importance of ethics in our everyday lives. The world of business, naturally, is no exception. Applied in such a context, these principles come into play in all aspects relating to business matters, especially when moral or ethical problems arise. Organizations and individuals alike demonstrate their grasp of business ethics in everything they do. In fact, business ethics may encompass a whole world of subjects on its own, many of which touch on the nature of the relationship between an organization, its employees, its clients and its stakeholders. Regardless, the main point that comes into play is that of the concept of right and wrong - whether a given course of action is right and just with respect to all parties involved (Smith, 1952). The origins of the entire concept of business ethics date back as far as before the Christian Era, having first been discussed in ancient times by Cicero (Goldin, 2006). His view on the matter, one in line with the principles of Stoicism, mainly holds that no single set of moral principles can apply to all aspects of everyday life. This means that, while the business world is still bound by principles of morality, these principles are not necessarily the same as those ascribed to by laypeople; indeed, businessmen have every right to the pursuit of profit, as it is their way of contributing to society. At the same time, though, such right only extends insofar as it does not conflict with the common good, at which point the latter should always prevail. This directly ties into the related concept of corporate social responsibility (CSR), which in turn helps ensure that an organization consistently complies with ethical standards (Wood, 1991). In the academic context, on the other hand, business ethics is a fairly new topic of interest. Baumhart (1961) was probably the very first to discuss the subject in his studies, and is actually credited by DeGeorge (2005) as one of the main proponents of academic business ethics. At the time, the Cold War as well as the Vietnam War was well under way, and America as a whole was experiencing rapid paradigm shifts with respect to business and even society itself. In fact, it was during this time that most of the corporate giants we know today were born. Of course, the rise of these corporations also had certain detrimental consequences, some of which earned them the ire of the public. As further explained by DeGeorge (2005), it was in response to this that the whole concept of social responsibility was born. While making money remained the end goal, corporations now had to demonstrate how they did their part in promoting the common good, or otherwise compensating for their faults and transgressions as perceived by the public. Business schools, too, adapted to this shift in priorities as they began to teach classes in social responsibility. Books began to be written on the subject, most notably by authors such as Norman Bowie, Vincent Barry and Manuel Velasquez, and were even used in the many of the aforementioned classes. Given how this has gone on even into the present day, it can be said that business ethics is indeed an important concept anyone seeking to work in that field should know. And with good reason, too; while moneymaking is of course the main objective when doing business, there are rules and standards that must be observed. Failure to do so leads to bad public relations and, inevitably, to bad business. The Focus on the Corporation in Academic Business Ethics As a rule, every corporation in this day and age will have a vision-mission statement indicating their goals and objectives, and especially how society at large stands to benefit from the pursuit of the same. This ties in neatly with what has been said above - that the public needs assurance that these corporations do, in fact, contribute to the common good, and that they do, in fact, do their best to make up for any faults they may have. Even though making money has and will always be the end desired by these corporations, they need to do it the right way. Leisinger (2007) explains that, cutthroat though the competition among corporations in the business world may be, it needs to be done with integrity. That is, corporations need to pursue their goals with as little in the way of social, ecological or political damage as possible. Doing so is held to be an indication of good management practices, which has a way of generating good press - which will only benefit the organization itself in the long run. Of course, it must also be understood that corporations are neither capable of or obliged to address all the major issues that exist in the world. A balance in the mutual interests of corporations and of society must exist for both parties to benefit equally. Society, too, has its own role to play. It is generally agreed upon that the good practice of business ethics, as demonstrated by a keen sense of corporate social responsibility, can actually increase an organization's profits. However, while this notion is indeed true, few are aware of the actual extent to which profits will be enhanced. For instance, while most corporations understand that having good CSR makes it easier to earn the respect and patronage of the public - and, in the process, encourage loyalty among employees. Needless to say, practicing corporate social responsibility is very much beneficial to organizations - in fact, more than they know (Robins, 2011). An article by the Economist Intelligence Unit (2008) expounds on this, adding that while the practice of CSR may not always yield an immediate increase in profit, it goes a long way in ensuring an organization's long-term health. It relies greatly on how an organization manages its impact on society and on the environment. From there, an organization must then maximize its contribution to the economy, even as they balance this out with the consequences brought on by their operations to the society and the environment in which they operate. The Treatment of the Employment Relation in Academic Business Ethics It is not only the shareholders of an organization that stand to lose or gain in the process. Indeed, the organization is also answerable to its employees and consumers, and even to the society at large. If the organization succeeds and flourishes, multiple parties are benefited; conversely, the failure of an organization also spells detrimental, possibly even disastrous, consequences for all other parties involved with it. Therefore, whenever an organization incurs losses, it is not only the money of that particular organization that is lost. Among the aforementioned parties, the employees are most acutely affected by any losses or gains incurred by their employer. Thus, the relationship between an organization and its employees should never be viewed solely based on the economic implications. Rather, it must be understood as interdependent in nature, with each party having moral obligations it must live up to. Both of them rely on the other for prosperity; the demise of the organization leaves its employees with no livelihood, while the loss of its employees robs the organization of the ability to pursue its goals with any reasonable expectation of success (Josephson, 2010). First and foremost, employers ought to advance and protect not only the interests of the organization as a whole, but also those of the employees. Employees must be seen as stakeholders in their own right, rather than expendable pawns the organization may discard at a whim. Indeed, business ethics with respect to an employer's relations with his employees requires that he treat their welfare as a business obligation and objective in its own right. This means that employees deserve just as much loyalty from the organization as do the shareholders, and must never be taken for granted. Their grievances should never be overlooked or downplayed; moreover, employees with legitimate concerns ought to be able to bring them up without fear of reprisal. In times of upheaval, such as organizational restructuring, care and concern must never be discarded. Conversely, employees ought to demonstrate the same loyalty and respect to their employer. Needless to say, the moral obligations between employers and employees are a two-way street. The Treatment of Transnational Issues in Academic Business Ethics A good example of this is of the situation in Africa, which has long been known for being home to some of the poorest people in the history of the world (Larson et al, 2011). In light of the constant armed conflicts plaguing the region, death is a grim reality experienced and witnessed firsthand by the African people. Sickness and starvation have all but become a way of life for them as well, and are arguably even more painful ways to die, as compared to the relatively painless death brought on by bullets. Luckily, they are not completely helpless in light of the aid that has steadily been extended to them for years. For instance, the members of Doctors Without Borders (2012) has long been known to extend their help and expertise to those who need it most, such as the people of Africa. This is in addition to the many industrialized countries and private organizations that have taken it upon themselves to do their part in alleviating the suffering experienced by the African people, be it through dole-outs in the form of basic necessities, or through more long-term forms of assistance such as military aid (Vasquez, 2005). Even then, though, much still remains to be done. Even so, this just goes to show that, fortunately, there are those who are not so single-minded in the pursuit of economic goals as to be numb to the suffering of others. While the cynics will argue that these countries and organizations wanted to look good, it ought to be pointed out that they cared enough to take initiative with respect to the sufferings of the African people. These organizations seized the chance to do the decent thing, in a good example of having a good grasp of corporate social responsibility - and of business ethics by extension. Criticism of the Focus and Implicit Methodology of Academic Business Ethics According to Fieser (2012), there are three ways in which standards of business ethics are commonly derived. One can view business ethics as a means to profit or as a need to stick to the letter of the law, or as a need to fulfill moral obligations. All of the above conceptions are right to some extent, yet have glaring flaws in their logic. For instance, the notion of business ethics as a means to profit oversimplifies by assuming that good ethics practices automatically equates to good business, which is not always the case as, among other things, what may be considered ethical (and therefore profitable) in one area may not necessarily be so somewhere else. The legalistic approach also has problems of its own, the most egregious being that what is considered 'legal' may not always be 'moral' - which, really, is what ethics is all about. Lastly, to derive business ethics from general principles of morality would be difficult; given their abstract nature, one may find them tricky to apply properly in certain situations;. No matter which view one opts to take, however, moral principles must always be counterbalanced by economic viability - and vice-versa. Cynical as it sounds, this means that one can best uphold moral principles and business ethics when he can afford to do so. When an organization is profitable enough that it can afford not to cut corners, the temptation to do so is not as strong as it would be in times of adversity. Conclusion The most that can be said about the concept of business ethics is that it is easy to understand, but much more difficult to apply consistently. Organizations need to be able to care enough about society and the general public even as they strive for success and superiority. However, they also need to maintain a decent level of focus so as not to be derailed from their own objectives. This means that while an organization must make money, it must not trample others in its pursuit of economic goals. Conversely, while the concepts of business ethics and corporate social responsibility are well worth taking to heart, one must take care not to compromise organizational goals in the process. As has been said, a proper balance needs to be struck between the two in order to arrive at maximum profit for all parties involved. References Baumhart, R. (1961). How ethical are businessmen? Harvard Business Review, 39(4), 6-9. DeGeorge, R. T. (2005). A history of business ethics. Santa Clara University. Retrieved on November 27, 2012 from http://www.scu.edu/ethics/practicing/focusareas/business/conference/presentations/business-ethics-history.html. Doctors Without Borders (2010). About us: History and principles. Retrieved on November 27, 2012 from http://www.doctorswithoutborders.org/aboutus/. Economist Intelligence Unit (2008). Corporate citizenship: Profiting from a sustainable business. Economist Intelligence Unit Limited 2008. Fieser, J. (2012). Business ethics. The University of Tennessee at Martin. Retrieved on November 27, 2012 from http://utm.edu/staff/jfieser/vita/research/Busbook.htm Goldin, O. (2006). Ciceronian business ethics. Studies in the History of Ethics. Retrieved on November 27, 2012 from http://www.historyofethics.org/112006/112006Goldin.shtml Josephson, M. (2010). Responsibilities in the employer-employee relationship. In Business Ethics and Leadership. Retrieved on November 27, 2012 from http://josephsoninstitute.org/business/blog/2010/12/responsibilities-in-the-employer-employee-relationship/. Larson, J., Guffey, J. and Espana, J. (2011). Micro loans: A solution to the plight of Africa’s impoverished. Journal of Academic and Business Ethics, 3(1), 1-5. Leisinger, K. M. (2007) Corporate philanthropy: The “Top of the Pyramid”. Business and Society Review, 112(3), 315–342. Robins, R. (2011). Does corporate social responsibility increase profits? Business Ethics. Retrieved on November 27, 2012 from http://business-ethics.com/2011/05/12/does-corporate-social-responsibility-increase-profits/. Smith, A. (1952). An inquiry into the nature and causes of the wealth of nations. Chicago, IL: University of Chicago Press, p. 55. Vasquez, I. (2005). The false promise of aid to Africa. Washington Times. Retrieved on November 27, 2012 from http://www.cato.org/pub_display.php?pub_id=3979 Wood, D. (1991) Corporate social performance revisited, The Academy of Management Review, 16(4), 691-718. Read More