Aware Of Business Ethics example essay topic

Introduction Background The literature being studied is an article written by Hellen O's ullivan, the Director of Scientific Methods Australia. The article entitled "Business ethics are set to set to stage a comeback" was published on the 75th page of The Australian Financial Review on the 6th February 1990. Literature Review Basically, the article discussed several important issues about business ethics. One of the most prominent was the remark she made about business ethics making a comeback. The conclusion was made upon the fact that business ethics are becoming more and more popular among business practitioners as the era of 'Me-generation', and its obsession with greed and profit at any cost draws to a close.

Besides that, another notable issue addressed was the positive correlation between business ethics and corporate performance. She suggested that recent corporate failures resulted from a singularly motivated strategy of making profits. She also noted that the 1990's avalanche of corporate collapse could be all attributed directly or indirectly to the decline in business ethics. The third issue raised was the role of managers or business leaders to actually uphold business ethics. She suggested that the formulation of a sound ethical code of practice should be a part of every company's strategy and that it is the first responsibility of every business leadership. Procedures I have made a research regarding the issues identified in the literature mainly through a computer-assisted research service - LEXIS-NEXIS Academic Universe at web From this particular research I have gathered altogether sixteen (16) articles.

These articles are published in various journals, namely The Economist, Harvard Business Review, Time, Newsweek, Information Week, Accounting Age, PR Week, Business Mexico, The National Journal, Fleet Owner as well as Malaysian Business. All these articles are written by reputable authors, who are either academician or practitioners. Besides that, I also did some library research. From here, I have chosen two (2) books on Strategic Management, which have sections and topics relevant to the issues addressed in the main literature.

Findings & Analysis Issue 1 In 1990, O's ullivan said that business and personal ethics are ripe for a comeback as the era of the Me- generation and its obsession with greed and profit at any cost draws to a close. The presumption she made a decade ago has seemed to come through in the new millennium, as companies are now increasingly wonder not only what constitute ethical corporate behaviour, but also how to get their employees to observe it both locally and globally. Management schools nowadays teaches courses on the subject to their students and you can even study at any number of good schools for a graduate degree in Business Ethics as revealed in The Economist (22nd February 2000) and the article written by Clive Crook in The National Journal (24 April 1999). The change of the perception towards business ethics is so apparent today.

The business community in the 1980's perceived business ethics as a contradiction in terms. Those who practise them were often ly seen as na " ive and worst, unambitious. This is totally vice versa to the current thinking. For instance, Professor Richard De George of the University of Kansas shatters the myth of business ethics being a contradiction in terms by using simple logical analogy. He stated that if business is viewed a amoral i.e. it is not expected to behave according to the moral rules and it is not appropriate to do whatever necessary to increase profit, then there would be no surprise when a business acted immorally. The uncovering of bribes and corruption would not be news.

The presence of business ethics is so apparent today. According to the article entitled "Doing Well by Doing Good" published in the Economist, in the United States there are various ethics industries including consultancies, conferences, journals as well as corporate conscience awards. Accounting firms like Price Waterhouse Coopers offers to audit the ethical performance of companies. The Ethics Officer Association USA with 650 members today began with only a dozen members in 1990. This proves that business ethics and its awareness is really picking up. Another interesting revelation is about trucking firms in the US.

In the article "The Value of Values" published in Fleet Owner November 1999, David Cullen admitted that even companies like the trucking companies, which have managed to get so far without social conscience are now faced with the increasingly awareness and demands as regards to ethical practice. He said that in the new millennium, corporations would be operating under many watchful and demanding eyes. As regards to the trucking industry per se they are obliged to act ethically towards 6 sets of stakeholders: owners / shareholders / investors; employees / contractors; customers; suppliers / vendors; local community and society in general. It is interesting to know that all these are being stressed and explained in specially conducted programs for people in various fleet industry. A survey results to actually illustrate the current level awareness of companies in serving their community was demonstrated in an article written by Jennifer Zaino - "Companies Give Back to their Communities" in the Information Week. In the research survey done recently of 250 IT and business managers regarding business ethics, only 11% say their companies do not have programs to support employee involvement in charitable causes.

The article entitled "Doing Well by Doing Good" published in The Economist, raised the issue of bribery and corruption. It stated that American Companies have been bounded since 1977 under the Foreign Corrupt Practices Act. It also reveals that now, all Organisation for Economic Cooperation and Development (OECD) countries have agreed to a convention to end bribery. However, many companies turn a blind eye when intermediaries make such payments.

Only some companies like Motorola for example have accounting systems to spot kickbacks by noting differences between what the customer pays and what a vendor receives. Bob Wallace in his article published on the 19th February 2001 argued that the awareness and inclination towards business ethics might also due to stricter rules imposed by authorities. Some companies pursued the ethics virtue simply to avoid legal penalties. Besides that, he also commented on the role played by NGOs and the media in giving business ethics a great push. Issue 2 In her article, O's ullivan implied the positive correlation between business ethics and corporate performance. In regards to that matter, most literatures share the same view.

Given the current awareness and demand on ethics, companies nowadays have to admit the fact that any unethical behaviour or conduct could be detrimental to their reputation. Thus, companies's social performances have also become a crucial factor as investors interest toward a company's ethical behaviour and social contribution has significantly grown. This might also due to the development of new techniques that enabled the measurement of such performance. This is being discussed in the Accounting Age (15th February 2001). The article also quoted Britain's Environment Minister Michael Meac her saying that investors, insurers bankers and others are increasingly aware of business ethics. And at the heart of this agenda is environmental reporting.

Diego Arria in Time Magazine suggested that in order to flourish in the upcoming millennium, businessmen must take the initiative within their communities by adopting practices of social solidarity and participating in educational programs for the benefit of the least favoured workers. Wheelen & Hunger in the Strategic Management & Business Policy text supports O's ullivan's theory by stressing, "what goes around comes around". They proposed that corporations are likely to be rewarded for its responsible actions either in the short or long term. Quite a number of good examples that supported the 'theory' that O's ullivan suggested were demonstrated in The Economist 27th February 1999. The example on Disney's plants which were accused of conducting the business unethically in a way that they ill-treated their employees by forcing them to work up to 16 hours a day, 7 days a week without overtime. Realising the detrimental consequences that might arise, Disney responded to the alarming allegation and had their plants inspected.

As a result they closed down the Guo Nian Garment factory to demonstrate their serious attention towards ethical issues. Another similar example illustrated in the article was the case of Nike. Nike, who fell foul of the activists in 1997, also responded quickly to solve the issue pertaining to their misconduct allegation. Nike decided to allow activists to inspect all its plants and the result was in their favour. Unlike previous years, nobody turned up on the 3rd annual "Protest Nike Day". The Economist 22nd April 2000 revealed that some companies had also suffered from their own unethical conduct.

Shell for example had suffered a couple of blows to its reputation in 1995. One from its attempted disposal of the Brent Spar oil ring in the North Sea. The other one was over the company's failure to oppose Nigerian Government's execution of a human rights activist (Ken S aro-W iwa) in a part of Nigeria where Shell had extensive operations. Shell was forced to rewrite its business principles and had created an elaborate mechanism to implement them. Body shop too has had its problems. In 1996, it stood accused of exploiting the Kaya po Indians of Brazil and had to fight back with details of how they had ensured that the indigenous people do not become dependent on the company.

All these articles seemed to imply that any activities of business organisations, which is considered unethical by the public would be detrimental to their reputation and in the long run if not mended could cost them their business. The Economist 22nd April 2000 on the other hand, suggested that companies could also benefit from conducting their business ethically. This was illustrated through the example of a big chemical company on their mission to achieve 'zero pollution'. When the senior executives were called by Ed Freeman, a teacher in ethics at the Darden Business School, University of Virginia and told about the idea, they were horrified.

But three weeks later, they returned and admit that they could actually end pollution and at the same time save money. Freeman argued that the conflict between ethics and business might be a lot less than we think. This supports the theory of positive correlation between ethics and business performance as suggested by O's ullivan earlier. Ilya Adler in Business Mexico 1st December 1998 disputed the discriminatory hiring practice in Mexico, which revealed persistent racism, sexism and ageism. She said that experience has shown that many widely held beliefs about the impact of social variables on job performance are simply wrong. She referred to the success of U.S. companies to prove that there is such thing as good ethics and good business.

Ronnie C. Chan in Newsweek, 8th February 1999 outlined three reasons contributing to the Asian economic crisis. One of it is the lack of professional management and business ethics. An article in Malaysian Business 16th January 1997 shares the same view. It stated that if bribery, corrupt practices and favoritism in business dealings become the norm rather than the exception in the society, it will lead to a decline in the economy as well as social values. Simultaneously, unethical business practices pose a hidden cost of doing business. For instance, a businessman who offers a bribe to obtain a licence would ultimately pass this extra cost to the consumers in the form of increased prices.

Apart from that, there is also the social cost. A developer who compromises the quality of materials are jeopardizing the safety of home buyers and residents. Tan Sri Ahmad Sari (Chairman of The Malaysian Institute of Islamic Understanding) was quoted as saying in a national seminar on business ethics, that corrupt business practice is a dangerous disease especially when those who indulge in it receive accolades, status and recognition. Unethical businessmen interested in pursuing short-term goals will have their deeds backfire on them. Issue 3 O's ullivan opined that it is the role of managers or business leaders to actually uphold business ethics. Ilya Adler in Business Mexico agreed on Sullivan's view.

Adler added that companies should encourage managers to take ethics more seriously, and managers should see such issues as part of their job, rather than simply as something in the way of 'more important' chores. Hill & Jones in the Strategic Management text has no objection. They stressed that managers must use their leadership position to incorporate an ethical dimension into the values they stress. At Hewlett Packard for example, Bill Hewlett and David Packard, the company's founders, propagated a set of values known as the HP Way.

David Cullen shared the same view. In his article, Cullen commented that today's corporate leaders must bear the responsibility not only for their actions and those taken by the companies under their stewardship, they must also be prepared to answer all environmental or legal policies linked to the past deeds. Therefore it is important that they take the lead in planning and formulating a proper code of conduct to ensure that the company does not drift from the appropriate ethical path. Similarly, Bob Wallace agreed that corporate leaders have the responsibility to take the lead in formulating the company's code of conduct or corporate policies. He said so when commenting on a fatal accident involving a worker doing company business on a cell phone while driving.

He revealed that few companies' IT managers and human resource professionals have developed corporate policies for mobile workers that set ground rules for use of mobile devices and addressed his hope for the trend to change. According to Wallace, one IT manager who actually took the lead is John Hill, CIO of industrial gas trucker Praxair Technology Inc. Onboard computers are standard equipment in Praxair's fleet of 1500-plus trucks, and the company provides mobile phones for its field sales force. In 1998, Hill helped establish a company policy that stipulates drivers must pull off the road before using the devices. Breaking the rule can mean dismissal. Hill also suggested that all companies should do the same.

Another good example was illustrated in The Economist 22nd April 2000. It tells the story of Pat Gnazzo of United Technologies, one of U. S's defence and engineering giant who presided over an international network of 160 business ethics officers from The Ethics Officer Association, distributing code of ethics in 24 languages all around the world. However, deciding on what is ethical is not an easy job for business leaders, especially for those in multinational companies. Ethics is a highly subjective matter, depending on the culture of countries involved.

Certain practices are considered 'less ethical' in some countries as compared to others. Take software piracy for instance. Software companies wouldn't want to invest as much in developing new products because they cannot expect any return on their investment in certain parts of the world. A current statistics on software piracy taken from Harvard Business Review September 1999 revealed that in the United States, pirated software is estimated to be 35% of the total software market, and industry loses are estimated at 2.3 billion per year. Imagine the loss in Germany with 57% piracy rate, 80% in Italy and Hong Kong and almost 100% in most Asian countries! The 1995 annual report of the Software Publishers Association connects software piracy directly to culture and attitude.

Thomas Donaldson in Harvard Business Review suggested that business leaders should clearly understand the culture of different countries in developing ethical standards. For instance, what may feel like bribery to an American may in keeping with Japanese long-standing tradition of giving gifts. Therefore, it is important that business leaders are aware of cross-cultural issues so that they would not make a mistake in deciding what is 'good' from 'bad'. Donaldson stressed that when it comes to shaping ethical behaviour, companies must be guided by three principles.

(1) Respect for core human values, which determine the absolute moral threshold for all business activities. (2) Respect for local traditions. (3) The belief that context matters when deciding what's right and what's wrong. Conclusion It is a proven fact that business ethics and its practice has grown tremendously since the past decade.

Corporate organisations are treating their employees better, giving back to the society and conducting their businesses in a manner that is ethically accepted in today's business society. It is really a pleasant sight. However, the motives and intention hidden behind it is still questionable. Is it because of the increase in their awareness? Or is it possible that this dramatic change in business behaviour is just due to the threat of litigation?

Even when talking about awareness, is regarding the awareness of businesses itself realising that they need to do the right thing operate ethically? Or is it the awareness of the society leading to a high demand in ethics. I believe that there are still businessmen out there who are still 'pure capitalist' worshipping Adams Smith's theory and have profits as their sole motivation. The only thing that bounds them is the law. As pathetic as it may seems, that is the reality of the business world. There will still be some elements of self-interest attached.

This is being stressed in the discussion of the second issue, which suggested the positive correlation of corporate ethical behaviour and performance. Companies are aware the detrimental effects of acting unethically, thus they have to engage in ethical behaviour. All in all, it is all up to the corporate leaders to decide what is good and what is bad. They are the ones that should choose to portray the company as conscientious member of the society at large or as culprits!

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