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Ethical issues in business

Ethical issues in business






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    Ethical issues in business Ethical issues in business Document Transcript

    • Q. what ethic/moral are best applied to thebusiness world? Is it ethical for corporate to usephysiological research to manipulate people throughmessage? What is the most appropriate way to handleethical issue when they arise?ANS: - Managers are faced with ethical and moral decisionmaking in business dealings everyday. The way people makeethical decisions in their personal lives most times is notthe same way that people make these decisions when they arein a business environment. Business decisions need to begrounded in ethics, but the manager also needs to makedecisions that are in the best interest of the companyhe/she serves. This is where moral dilemmas can come topass. Two possible solutions that can help managers sortout these moral dilemmas are; deliberative methods whosegoal are decision making and deliberative methods whosegoal is edifying perspectives. Several models need to bereviewed in order to determine which method best fits theparticular moral dilemma that the manager is faced with.Ground RulesManagers may find themselves in ethical business situationsthat require decisions to be based on morally confusingsituations. "A moral dilemma is a situation in which peoplejudge that morally they ought to do one thing (A) andmorally ought to do another thing (B), and sometime a third(C), or even a fourth thing (D) as well, however theycannot perform all of these mutually exclusive optionstogether," (Lurie & Albin, 2006). Some situations mayrequire a manager to face competing values, and toughdecisions must be made in order to determine which moralvalue appears to be stronger than the other. As an example,a manager who is obligated to protect proprietaryinformation about an organizational layoff in the comingmonths may also have to address a conflict with thisknowledge as it relates to a friend who will becomeaffected by this layoff. Would this manager make the samedecision if they had knowledge that was going to affect aclose relative? What if the scenario included both parties;would the manager make the...Business ethics is crucial tooverall society well being and corporate organizations, ifto view the issue from the business standpoint. Publicconfidence is ethical business operation is only yet torecover, as of February 2004, 75 percent of Americans foundthe image of big corporations either “not good” or even 1
    • “terrible”. The crucial step when it comes to businessethics – is to admit existence of a problem that isessentially based in the difference in the corporate valuesof different stakeholder groups. While society wants toreceive well paid jobs, the focus of many organizationsremains on cost minimization and maximization ofproductivity levels. While society wants to purchase goodsat the lowest prices possible, businesses are normallyprofit seeking entities. Finally, it is crucial for societyto sustain environmentally clean surroundings, whereas forbusiness – this goal is followed by additional costs. Theseconflicts are fundamental to the nature of business, it iscrucial for managers to find the balance between differentstakeholder groups including workers, customers, companyowners, and the larger community.Rapid technologic and scientific innovation followed byglobalization makes the need to balance betweenstakeholders needs even more difficult. Ethical standardsand practices often are not even able to keep withscientific innovation such as cloning. When it comes tobusiness practices issues arise with U.S. job outsourcingto Third World community, valuation of intangible assets inthe new technological era (Mayer, 2004). Despite the risingdifficulties, it is crucial for managers to find thebalance – otherwise a company might cease to exist unableto compete in the market place.The role of business ethics in contemporary marketplaceshould be mainly discussed from the pragmatic approach. Inorder for business to exist, there must be a community ofpotential buyers and sellers, whereas this community andoverall public morality are the two indivisible andintegrated parts. Obviously, in order to preserve business,organizations must sustain a certain level of morality inorder to successfully function and remain competitive. Asbusiness are interested in the first place in profitabilityof an enterprise, they are, therefore, interested inmaintenance of a positive corporate image. Consequently,businesses are interested in ethical practices.Consequently, marketplace is realizing undervaluation andinvestors are less likely to put own money to generateprofits. The effect on economy overall is direct – whileseries of scandals created a boom in the stock market, noweconomy is developing at a lower rates, as the cost offunds to be used in business is raising. As such, therelationship between ethical malpractice and economic 2
    • stagnation is direct – ethical scandals undermine publictrust, whereas business, investors, and society overall arethe ones to bare the costs of unethical practices ofindividuals. Consequently, the role of ethical behavior incontemporary marketplace from the value created for societycan hardly be overestimatedBusiness ethics is a form of applied ethics that examinesethical principles and moral or ethical problems that arisein a business environment. Applied ethics is a field ofethics that deals with ethical questions in many fieldssuch as medical, technical, legal and business ethics.Business Ethics is the application of Ethical values to thebusiness world. It applies to any and all aspects ofbusiness conduct. Business ethics is relevant to theconduct of individuals and also relevant to the conduct ofthe business organizations as a whole. In the increasinglyconscience-focused marketplaces of the 21st century, thedemand for more ethical business processes and actions(known as ethicism) is increasing. Simultaneously, pressureis applied on industry to improve business ethics throughnew public initiatives and laws (e.g. higher UK road taxfor higher-emission vehicles). Businesses can often attainshort-term gains by acting in an unethical fashion;however, such antics tend to undermine the economy overtime.Business ethics can be both a normative and a descriptivediscipline. As a corporate practice and a careerspecialization, the field is primarily normative. Inacademia descriptive approaches are also taken. The rangeand quantity of business ethical issues reflects the degreeto which business is perceived to be at odds with non-economic social values. Historically, interest in businessethics accelerated dramatically during the 1980s and 1990s,both within major corporations and within academia. Forexample, today most major corporate websites lay emphasison commitment to promoting non-economic social values undera variety of headings (e.g. ethics codes, socialresponsibility charters). In some cases, corporations haveredefined their core values in the light of businessethical considerations (e.g. BPs "beyond petroleum"environmental tilt). 3
    • Overview of issues in business ethicsGeneral 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 companys 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 take-overs, 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.Ethics of accounting information • Creative accounting, earnings management, misleading financial analysis. • Insider trading, securities fraud, bucket shops, forex scams: concerns (criminal) manipulation of the financial markets. • Executive compensation: concerns excessive payments made to corporate CEOs and top management. • Bribery, kickbacks, facilitation payments: while these may be in the (short-term) interests of the company and its shareholders, these practices may be anti- competitive or offend against the values of society. Ethics of human resource managementThe ethics of human resource management (HRM) covers thoseethical issues arising around the employer-employee 4
    • relationship, such as the rights and duties owed betweenemployer and employee. • Discrimination issues include discrimination on the bases of age (ageism), gender, race, religion, disabilities, weight and attractiveness. See also: affirmative action, sexual harassment. • Issues arising from the traditional view of relationships between employers and employees, also known as At-will employment. • Issues surrounding the representation of employees and the democratization of the workplace: union busting, strike breaking. • Issues affecting the privacy of the employee: workplace surveillance, drug testing. See also: privacy. • Issues affecting the privacy of the employer: whistle- blowing. • Issues relating to the fairness of the employment contract and the balance of power between employer and employee: slavery, indentured servitude, employment law. • Occupational safety and health.All of the above are also related to the hiring and firingof employees. A employee or future employee can not behired or fired based on race, age, gender, religion, or anyother disciminatory act.Ethics of sales and marketingMarketing, which goes beyond the mere provision ofinformation about (and access to) a product, may seek tomanipulate our values and behavior. To some extent societyregards this as acceptable, but where is the ethical lineto be drawn? Marketing ethics overlaps strongly with mediaethics, because marketing makes heavy use of media.However, media ethics is a much larger topic and extendsoutside business ethics. • Pricing: price fixing, price discrimination, price skimming. • Anti-competitive practices: these include but go beyond pricing tactics to cover issues such as manipulation of loyalty and supply chains. See: anti- competitive practices, antitrust law. 5
    • • Specific marketing strategies: greenwash, bait and switch, shill, viral marketing, spam (electronic), pyramid scheme, planned obsolescence. • Content of advertisements: attack ads, subliminal messages, sex in advertising, products regarded as immoral or harmful • Children and marketing: marketing in schools. • Black markets, grey markets.Ethics of productionThis area of business ethics deals with the duties of acompany to ensure that products and production processes donot cause harm. Some of the more acute dilemmas in thisarea arise out of the fact that there is usually a degreeof danger in any product or production process and it isdifficult to define a degree of permissibility, or thedegree of permissibility may depend on the changing stateof preventative technologies or changing social perceptionsof acceptable risk. • Defective, addictive and inherently dangerous products and services (e.g. tobacco, alcohol, weapons, motor vehicles, chemical manufacturing, bungee jumping). • Ethical relations between the company and the environment: pollution, environmental ethics, carbon emissions trading • Ethical problems arising out of new technologies: genetically modified food, mobile phone radiation and health. • Product testing ethics: animal rights and animal testing, use of economically disadvantaged groups (such as students) as test objects.Ethics of intellectual property, knowledge andskillsKnowledge and skills are valuable but not easily "ownable"as objects. Nor is it obvious who has the greater rights toan idea: the company who trained the employee, or theemployee themselves? The country in which the plant grew,or the company which discovered and developed the plantsmedicinal potential? As a result, attempts to assertownership and ethical disputes over ownership arise. 6
    • • Patent infringement, copyright infringement, trademark infringement. • Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. • Even the notion of intellectual property itself has been criticised on ethical grounds: see intellectual property. • Employee raiding: the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess. • The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them. • Bioprospecting (ethical) and biopiracy (unethical). • Business intelligence and industrial espionage.Ethics and Technology The computer and the World Wide Webare two of them most significant inventions of thetwentieth century. There are many ethical issues that arisefrom this technology. It is easy to gain access toinformation. This leads to data mining, workplacemonitoring, and privacy invasion. Medical technology hasimproved as well. Pharmaceutical companies have thetechnology to produce life saving drugs. These drugs areprotected by patents and there are no generic drugsavailable. This raises many ethical questions.International business ethics and ethics of economicsystemsThe issues here are grouped together because they involve amuch wider, global view on business ethical matters.International business ethicsWhile business ethics emerged as a field in the 1970s,international business ethics did not emerge until the late1990s, looking back on the international developments ofthat decade. Many new practical issues arose out of theinternational context of business. Theoretical issues suchas cultural relativity of ethical values receive moreemphasis in this field. Other, older issues can be groupedhere as well. Issues and subfields include: • The search for universal values as a basis for international commercial behaviour. 7
    • • Comparison of business ethical traditions in different countries. • Comparison of business ethical traditions from various religious perspectives. • Ethical issues arising out of international business transactions; e.g. bioprospecting and biopiracy in the pharmaceutical industry; the fair trade movement; transfer pricing. • Issues such as globalization and cultural imperialism. • Varying global standards - e.g. the use of child labor. • The way in which multinationals take advantage of international differences, such as outsourcing production (e.g. clothes) and services (e.g. call centres) to low-wage countries. • The permissibility of international commerce with pariah states.Foreign countries often use dumping as a competitivethreat, selling products at prices lower than their normalvalue. This can lead to problems in domestic markets. Itbecomes difficult for these markets to compete with thepricing set by foreign markets. In 2009, the InternationalTrade Commission has been researching anti-dumping laws.Dumping is often seen as an ethical issue, as largercompanies are taking advantage of other less economicallyadvanced companies.Ethics of economic systemsThis vaguely defined area, perhaps not part of but onlyrelated to business ethics, is where business ethicistsventure into the fields of political economy and politicalphilosophy, focusing on the rights and wrongs of varioussystems for the distribution of economic benefits. The workof John Rawls and Robert Nozick are both notablecontributors.As part of more comprehensive compliance and ethicsprograms, many companies have formulated internal policiespertaining to the ethical conduct of employees. Thesepolicies can be simple exhortations in broad, highly-generalized language (typically called a corporate ethicsstatement), or they can be more detailed policies,containing specific behavioral requirements (typicallycalled corporate ethics codes). They are generally meant toidentify the companys expectations of workers and to offer 8
    • guidance on handling some of the more common ethicalproblems that might arise in the course of doing business.It is hoped that having such a policy will lead to greaterethical awareness, consistency in application, and theavoidance of ethical disasters.An increasing number of companies also requires employeesto attend seminars regarding business conduct, which ofteninclude discussion of the companys policies, specific casestudies, and legal requirements. Some companies evenrequire their employees to sign agreements stating thatthey will abide by the companys rules of conduct.Many companies are assessing the environmental factors thatcan lead employees to engage in unethical conduct. Acompetitive business environment may call for unethicalbehavior. Lying has become expected in fields such astrading. An example of this are the issues surrounding theunethical actions of the Saloman Brothers.Not everyone supports corporate policies that governethical conduct. Some claim that ethical problems arebetter dealt with by depending upon employees to use theirown judgment.Others believe that corporate ethics policies are primarilyrooted in utilitarian concerns, and that they are mainly tolimit the companys legal liability, or to curry publicfavor by giving the appearance of being a good corporatecitizen. Ideally, the company will avoid a lawsuit becauseits employees will follow the rules. Should a lawsuitoccur, the company can claim that the problem would nothave arisen if the employee had only followed the codeproperly.Sometimes there is disconnection between the companys codeof ethics and the companys actual practices. Thus, whetheror not such conduct is explicitly sanctioned by management,at worst, this makes the policy duplicitous, and, at best,it is merely a marketing tool.To be successful, most ethicists would suggest that anethics policy should be: • Given the unequivocal support of top management, by both word and example. 9
    • • Explained in writing and orally, with periodic reinforcement. • Doable....something employees can both understand and perform. • Monitored by top management, with routine inspections for compliance and improvement. • Backed up by clearly stated consequences in the case of disobedience. • Remain neutral and nonsexist.Religious views on business ethicsThe historical and global importance of religious views onbusiness ethics is sometimes underestimated in standardintroductions to business ethics. Particularly in Asia andthe Middle East, religious and cultural perspectives have astrong influence on the conduct of business and thecreation of business values.Examples include: • Islamic banking, associated with the avoidance of charging interest on loans. • Traditional Confucian disapproval of the profit- seeking motive. • Quaker testimony on fair dealing.ETHICS ISSUES SPECIFIC TO PSYCHOLOGICAL RESEARCHAND WAY TOHADLE ETHICAL ISSUE Deception. Although deception has been a continuing issuefor the discipline over the past 40 years or more,potentially new concerns may arise under the new policy.Because of the roundabout way in which we had toreintroduce the possibility for deception through a waiverof informed consent, and delete the very clear treatmentthat had been in earlier drafts, there may be somedifficulty with approvals of such research under the newpolicy. That there have been no concertos raised to date ispromising; however, because of it being a continuing issue,we need to be prepared to address such problems if and whenthey arise. 10
    • Deception entails many kinds of activities Deceptions carrange from simply giving cookies to see if it leads togreater helping behaviour to purposely leaving money totest honesty (Sieber, 1994). These many ways and variedpurposes for deceptions must be examined to consider whichis methodologically necessary and which is ethicallyproblematic. Simply using the term deception to cover allsuch situations invites REBs and others to thinksimplistically about the ethics of deception inpsychological research. More helpful to REBs would beSiebers detailed analysis (1992) of the most commondeceptions (false purpose, bogus device, role deception,and false feedback about the self), each occurring in 10%or more of deception research in 1992, and a casebookillustrating their application and accompanying debriefings(see also Sieber, Iannuzzo, & Rodriguez, 1995). Tiis wouldguide REBs and researchers to consider the purpose servedby die deceptions and of the appropriate ethical responseto remove any misconceptions or emotional reactions createdby the situation.Introductory Psychology Subject-Pools. The longstandingpractice of psychology departments to create subject poolsof students enrolled in introductory psychology courses whoare required to participate in a certain number ofexperiments in exchange for marks in the course is a strongrival to deception as a target for ethical criticism andchallenge. The new ethics review process that broadens themix of persons reviewing research encourages probably thefirst critical review of this practice in a number ofyears. In several universities already, the traditionalstructure of the subject pool has had to undergo revision.Procedures to guide these revisions are available (Chastain& Landrum, 1999). Chief criticisms are that the requirementis coercive, the alternative activity that is offered isnot equivalent to research participation, or theeducational rationale for the practice is inadequate tojustify giving marks. Most of these criticisms can beaddressed but require changes in practice and considerablework on the part of the department. I suspect that thepractices in most departments will be greatly improved bythis review and revision.CIA Research Ethics Activities. The Canadian PsychologicalAssociation has a major responsibility to see that theethics policy is appropriately administered for thediscipline and its members. The purpose of this article is 11
    • not to address the CPA Board; however, it is helpful forresearchers to be aware of actions that can be taken ontheir behalf. Researchers also need to realize thateffective resolution of problems that the new ethics policyand review process create can only be dealt with by acollective response of the membership, thus requiring thateach researcher submit to CPA the issues, problems, andsolutions to special ethics problems encountered in theirpersonal research.The several concrete steps CPA might undertake include: (1)Continuous monitoring of problems with the ethics reviewprocess; (2) Representations to SSHRC and to the Tri-Council Advisory Group on matters of ethical concern to thediscipline to bring about refinements, additions or evenchanges to the TCPS; (3) Preparation of a casebook ofethics issues and solutions; and (4) Using CPA publicationsas a special forum for ethics issues. The latter two ofthese merit elaboration. Although the CPA Code of Ethics isan excellent document in which we all have great pride, acasebook of protocol issues and solutions is ideal forpromoting consistency of ethics response by REBs with apractical issue to resolve, such as guiding approvals ofdeceptions that require waivers of informed consent, and indefining appropriate debriefings to accompany certaindeceptions. The casebook would be particularly helpful toanswer questions by community representatives and other REBmembers who may be unfamiliar with the range of acceptedpractices within psychology.CPA publications must be used to promote proper treatmentof research ethics within the discipline. A researcharticle, review or essay on ethics in every issue or so ofCanadian Psychology (CP) and a regular column on ethics inPsynopsis would help to advance ethical study design and116 make it integral in the thinking of most researchers.The American Association of Anthropology (Gallagher,Creighton, & Gibbons, 1995) publishes anonymously submittedethical dilemmas and decisions within its AnthropologyNewsletter. Because not all editors will have theinclination or time for this, CPA should considerappointing a person specifically responsible for researchethics who would monitor the ethics scene, develop a columnreporting on ethics developments and issues for Psynopsis,and solicit and review scholarly material on researchethics to be published as part of GTe Conclusions 12
    • In conclusion, ethical regulation is an element that hasbeen permanently added to the design and conduct ofpsychological research. Regrettably, some researchers havebeen reluctant to acknowledge this fact. A number of yearsago, I argued (Adair et al., 1985) for the need to giveattention to research ethics in the method sections ofresearch articles. Simply including a brief paragraph ortwo devoted to the special ethics problems encountered andhow the study has been designed to address them seemedappropriate to accurately describe the method followed inthe study and helpful to advance the ethical conduct ofresearch. This write-up probably would be no more than abrief paragraph, but it would be useful to others whosubsequently employed the same paradigm. Once reporting ofethics procedures becomes commonplace, we would soon nolonger regard the ethics review process as simply anappendage or add-on to data collection. The ethics reviewprocess would become routine. Rather than policing ormonitoring by outside regulation, more effective ethicalresponse would be made by sensitive researchers who hadinternalized ethical standards and appropriate behaviours.But before this occurs, we have to raise the profile ofresearch ethics. The introduction of the TCPS was designedto achieve this higher profile. Federal oversight of theethical conduct of human research is here to stay. Ratherthan expend our energies grumbling about the policy oropposing its implementation, our thinking and effortsshould be focused on activities that improve the reviewprocess, and contribute to the satisfactory evolution andadministration of the policy. We need to nurture a cultureof research ethics independent of ethics committees, byeducating students to have a positive view of the researchethics review process. For example, to conclude on anoptimistic note, rather than regarding them as obstacles toresearch, researchers should look "to ethical directives asmethodological challenges" to research practices that maybe met by new ideas for advancing psychological science(Rosnow, 1997, p. 346). During the preparation of thisarticle, the authors research was supported by a grantfrom the Social Sciences and Humanities Research Council ofCanada. An earlier version of this paper was presented asan invited address to the annual meeting of the CanadianPsychological Association, June 2000. 13