ESSAYS

Essay on Ethical Theory and Ethical Conduct

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Good ethical practices in business promote the moral and economic existence of free enterprises around the world. An ethical system affects all aspect of a business. It is therefore important to consider business ethics as one of the governing factors in establishing the role of business in the community and to the entire global economy.

According to Angeles (1966, p. 1), business ethics is the code of morals or body of principles which governs the conduct of the businessman in his relationship with the government, the public, his customers, and competitors. He emphasized the purpose of business ethics which is to help us determine what business practices are right and what are wrong in the light of modern moral standards.

The importance of business ethics in today's competitive economy cannot be denied. According to Mares (2005), adherence to moral standards on the job can have positive influences on society by promoting strong ethical behavior in all aspects of life. Any ethics system presents a mixture of moral and economic rules and challenges which every business must follow in order to viewed publicly as a good business organisation.

There are different ethical theories that guide the different business practices of today's modern entrepreneurs. Consequentialist theories (Shaw & Barry, 1995:p55) are based on the assumptions that the moral rightness of an action is determined solely by its results. If the consequences are good, then the action is right. If they are bad, then the actions are wrong. Consequentialists determine what is right by weighing the ratio of good to bad that an action is likely to produce.

By contrast, nonconsequentialist theories or deonotological theories contend that right and wrong actions are predetermined by more than the likely consequences of an action. Nonconsequentialist do not necessarily deny that consequences are morally significant, but they believe that other factors are also relevant to the moral assessment of an action.

Egoism Theory

One consequential theory according to Shaw and Barry is Egoism (Shaw & Barry, 1995). Egoism advocates self-interest first as one of its guiding principle. In business, this theory cannot be considered a moral theory at all. Anyone who offers advice to other people must represent his or her own interest. It is not objective in its justification for any business decision as it is always influenced by own individual interest first. Decisions made are not for the good of the entire industry but for the good of the individual or organisational interest.

Therefore, it takes no definite stand against certain outrageous acts like stealing, racial and sexual discrimination, and business fraud which are important business concerns that need to be carefully addressed by any business policies. Unethical practices related to these issues undermine the good name of a business and the entire industry in general. Stealing can come in the form of business espionage. Business fraud can be in the form of adulteration, misbranding, and short-changing of customers (Miranda, C & Miranda, G, 1985:p.140-142).

Discrimination allows the organisation to save on costs but they may end up disregarding potential sources of knowledge and expertise. Any good consequences done to the company arising from these fraudulent and irregular actions implies that the action is right from the beginning till the end. It was further suggested that Egoism consider an act to be morally right if and only if it best promotes the individual or an organisation's long term interest. These interests can come in the form of protecting their business advantage and business profits. Therefore, it is imperative that the business would do anything, regardless of the consequences of its decisions and actions to further their welfare. They may also advance the interest of others but still, the underlying primary objective of this kind of action is to get something in return. Reciprocation benefits the interest of the organisation in another strategic way.

Egoism is good for a business whose sole objective for existing only for the sake of earning profits. In today's global economy, a business which practices Egoism will not survive the harsh reality of evolving business trends and strategies.

Another ethical concern which, by principle would likely consider actions as right is when employees or managers adopt practices which senior managers or the strategic leader would consider unethical (Thompson, 1997:p.171). Using questionable methods of persuasion and lying to promote certain products could be considered unethical and would likely spread around given the signal that everyone is doing it, and therefore, it is right. Such actions would always be seen as unethical but for some organisations, they will be at least condoned or even encouraged. It therefore looks more like a self-preservation move than a moral strategic business innovation.

Utilitarianism Theory

Barry and Shaw identified another consequential theory which is Utilitarianism. This theory greatly contrasts with the Egoism theory because it takes into account everyone affected by the actions of the organisation. However, since Egoism and Utilitarianism are classified as consequential theories, both theories agree that rightness and wrongness are solely a function of an action's result and consequences. What distinguishes one from the other is their answer to the question of consequences for whom?

Since Utilitarianism considers everyone affected by certain actions, this theory provides a clear and straightforward foundation for formulating and testing policies for the strategic business direction of the organisation. Barry and Shaw said that a business policy is good if it promotes the general welfare more than any other alternative. This theory provides an objective and attractive way of resolving conflicts of self-interest (as opposed to Egoism's inability to resolve conflicts of self-interest). Individuals within an organisation make decisions based on a conformity to the general good of the organisation. Actions and decisions made by individuals within the group are recognized as either right or wrong and therefore, different. These differences allow the organisation to grow and mature into adapting their decisions to suit the current business situations. This sets the right environment for formulating realistic and workable decisions and policies which are anchored on a higher level of moral and ethical considerations.

There are concerns related to the effects of Utilitarianism on individuals. Shaw and Barry tried to identify some of these inquiries by looking at how individual interests are undermined. A certain employee, though qualified for a position, will have to give way to another candidate for promotion so that the organisation's interest can be preserved. A farmer will have to give up his land for a dam project (for a fee) because the dam will provide irrigation to a lot of farmers and generate electricity to his community. All of these situations address the issues of whether Utilitarianism is just or unjust and whether it promotes individual happiness to a certain level or not.



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