Business Imperatives in the Changing Global Environment - Term Paper Example

Introduction The general ethics can be broadly defined as the value system of conduct that form the basis of mutual interaction amongst the people in a society. Though some of these values evolve to embrace the changing times and others may interpret it differently under different situation but the universal acceptance of what is right and what is wrong has given them a strong foothold to withstand the adversities of the time. In the field of business, ethics encompass the principles and values that govern the various aspects of business paradigms. Indeed, the controversies regarding the moral responsibilities and ethical considerations in the decision making process are the inherent challenges that must be understood in the wider perspectives of business’ vision and mission. The paper would thus, be discussing the most crucial aspects of an ethical business. Major ethical theories and their relevance in business Consequentialist ethics is defined as the acts or behavior that is determined by the consequences of that act or behavior which generally must be beneficial in content. ‘The principle of utility states that an action is right if it produces the greatest balance of pleasure or happiness and unhappiness in light of alternative actions’ (reading 1, p 3). Popularized as act utilitarian theory, the actions, that are designed to benefit or have beneficial cascading effects on others, are morally and ethically right. Benthams theory is important because it promotes morally correct ethical actions that are designed to maximize happiness for maximum people. According to Act Utilitarian of Jeremy Bentham, an action that results in the happiness of one and all is a good act. Bentham and other utilitarians like Mills found it a revolutionary theory because it reflected ‘human motivation… and it had dear application to political and social problems of their time’ (Reading 1, p 4). In the contemporary times, it becomes highly difficult because of the diverse ideologies and differing value system to satisfy large populace. Indeed, it is one of the crucial compulsions of the globalization that people should strive towards common goals of universal values. Emmanuel Kant believed that the principle of ‘categorical imperative’ can govern all human beings and can be broadly defined as Rules of Universality and Rules of Respect (Reading 1, p 7). The first one makes says that people at all time must act appropriately and the second rules promotes the value of respect and says that well being al all individuals is important and therefore, one should not use others for their own vested interests or gratification. I think Kantian deontology is highly credible in the contemporary environment of advancing technology and rapid globalization. It promotes the concept of universality and highlights a rational approach that can be applied universally. The actions must be based on duty and such that one would expect from others in the same circumstances. The Enron scandal is a case in point where the CEO of the company had misused public funds for his own vested interests and gratification. Wallace, an eminent social scientist had also propagated that it is the wisdom that is gained through the practical experiences that decides the right course of action that must be followed in different circumstances, adapting to the changing socio-ethical parameters. Also known as Wallace’s theory of ‘ethical contextualization’, Rosen (2003) in his book says that Wallace was of the view that ‘intelligent moral behavior is always based on the understanding of how ethical principles have been applied in the past and the ends that have been served by those applications’. He further argues that ‘marvelous plasticity of response… involves the ability to adapt old routines to new circumstances’ (ibid, p28). I consider Wallace’s theory highly relevant in business because it helps to resolve ethical dilemma in business by looking at ‘contextual’ causes. It also condemns the actions of Enron’s CEO because he not only embezzled from the public fund but also violated the trust of the stockholders and various stakeholders who had put their faith in his leadership. The Friedman’s Stockholder’s Theory emphasizes capitalistic accruement of wealth for few. He says that primary responsibility of the corporate executive is to his or her owners (stockholders) which ‘generally will be to make as much money as possible’ (reading 2, part 1 p 34). He asserts that individuals have social responsibility and not corporations because they are ‘artificial person’. I do not agree with Friedman primarily because businesses and corporations are intrinsically linked to people and their welfare should be central part of their business strategy. At the same time, corporation’s mission and vision are inherently linked with the interests of the masses. ‘Business is about how customers, suppliers…. Communities, managers interact and create value. To understand business is to know how these relationships work’ (Reading 3, Cht 1, p 45). Hence, business must exhibit and develop credible image through welfare activities and proactive participation in the community development in order to expand their profit. Both Wallace’s ethical contextualization and Kantian deontology support the concept of social responsibility and CSR as it would it would be responsible act that would yield benefits for the company as well as for the people at large. Issues in Business ethics Ethical consideration in decision making is integral part of good business. In the contemporary environment of rapidly evolving business dynamics, ethical considerations and values in one’s professional life have become vital to the personal and organizational growth. Various normative theories of ethics and moral philosophies serve as guiding principles in business decision making and help develop code of organizational ethics. Due to vast diversity in the issues within the business compulsions, the management often comes across ethical dilemma that needs to be resolved efficiently and timely. Personally my values are focused towards ethical considerations, keeping sustainable development, environmental conservation, affirmative actions and accountability as intrinsic part of all my business plans and actions. In the contemporary environment, accountability and environment compulsions have become critical to the survival of the human race and therefore, necessitate genuine efforts to promote accountability in one’s action. In the recent times, the scope of accountability has widened to include the emerging new paradigms of changing social values and issues which have significant impact on the overall socio-economic development of the society. Indeed, the highly competitive nature of emerging new models of global business has increased the risks and responsibilities of the organizations and made it imperative for them to become proactive participants in the development of society at large. Business imperatives in the changing global environment Contemporary time necessitates conceptualization of sustainable development in all our ongoing projects. We must realize the urgent need to promote ecological balance that our advancing technology and globalization has disturbed. Mill also asserts that ‘positive encouragement towards good acts and development of moral conscience’ promote good feelings. It is essential in business that we nurture and build this feeling in favor of the principles which will ultimately bring about greater potential for happiness in society’ (Reading 1, p 86) . It is our intention that we should facilitate steps to ensure regeneration and safeguard of natural resources. Natural resources must be used with wisdom and planning so they are passed on to next generation in a flourishing state. Corporate Social Responsibility or CSR is another area that needs to be adopted within the wider goals and objectives of the organizations. It can broadly be defined ‘in terms of the responsiveness of businesses to stakeholders’ legal, ethical, social and environmental expectations, is one outcome of these developments’ (UNIDO, 2002). It must be incorporated as essential part of organizational culture to proactively participate in the community development processes and promote sustainable development through delivery mechanism of its strategic goals and objectives. Corporate governance is yet another vital ingredient of ethical business practice that facilitates the creation of business environment within and outside the organization that would effectively meet the challenges of the time. Ticker (2009) asserts that in the contemporary environment, corporate governance needs to reflect the interests of all the main stakeholders and be more participative, less secretive and more transparent. The transparency in the Corporate Governance would create effective control measurements that would safeguard the interest of all its stakeholders, investors and business partners. In the fast changing environment of globalization, business compulsions have become more stringent in their nature and factors like accountability, responsibility and reliability have become important pre-requisites for business to create a credible environment for their trade and investment. Enron’s case study shows that the lack of necessary control mechanisms, not only corrodes the trust of the investors but they have long term repercussion on their market credibility and performance outcome. Effective mechanisms of internal controls of the company could have prevented what happened at Enron. Thus, modules of effective corporate governance ensure that scandals like Enron and WorldCom do not get repeated and violate public trust and credibility. The social changes brought about by rapid globalization, have changed the socio- cultural values of a country. To meet the challenges of the emerging pluralistic societies, managing diversity has become a crucial issue with the businesses if they want to maintain competitive edge over their rivals. The affirmative actions are important plans and programs of the employers to create conducive atmosphere to promote inclusion of cross cultural workforce. It promotes a work environment where people enjoy equal rights and opportunity, irrespective of their nativity, color, gender or social status. I think these are effective ethical practices in business that encourage mutual respect and understanding amongst people from diverse cultural background. Thus, provide business with more credibility amongst its various stakeholders. Critical aspects of ethics in business Ethical conduct is all about making choices and one’s value system and religious beliefs lend credence to one’s action in making those choices. Michael Josephson (1997), an eminent sociologist has proposed six values or ‘six pillars of characters’ as the ground rules for ethical decision making. Trustworthiness ensures that commitment to its various stakeholders are met, responsibility towards its employees, customers and various stakeholders in terms of their welfare, honesty in business practice and ethically delivered operations and work paradigms, respect that promotes honoring the worth and dignity for others, fairness supports equality and impartiality and caring encourages caring attitude and genuine concern for the welfare of others. These values clearly endorse the wider welfare of society and have huge ramifications for the firms. There are five ways a firm can gain leverage in the competitive business environment: by solving commitment problems with employees; by solving commitment problems with customers; by solving commitment problems with firms; by reflecting consumers’ moral values; and by reflecting employees’ moral values (reading 2 part 3, p 268). They are the various positive ways a firm is able to build trust and credibility that positively impacts the performance outcome of the organization. Indeed, these values corroborate with my ideas of business ethics and must become part of organizational culture. Conclusion The guidelines in the code of conduct help the individuals and the organizations to adjust and influence the working environment within the prescribed parameters. The ethics must be intrinsic part of a business’ mission and vision and which should help develop an organizational culture that promotes harmonious interactions within the workforce coming from different cultures, race, ethnicity and nationality. The value based conduct plays vital role in the actions and reactions of the people in the work place. An intrinsic sense of responsibility ensures understanding and cooperation among the colleagues whether they are their junior or their seniors. They go a long way in overcoming the conflicting values which may result due the diversity that the work place represents in term of human resource. In the end, one can conclude all the actions and events involving different people are based on the strong ethical considerations that must promote the welfare of the people. In the field of business, the controversies regarding the moral responsibilities and ethical considerations are the inherent challenges that must be understood in the wider perspectives. It is important that all issues have multifaceted solutions and efforts must be made to disseminate information that promotes better understanding of the issues so that appropriate steps could be taken. (2012) Reference Josephson, Michael. (1997). Making Ethical Decisions. 4th Ed. JIE. CA. Reading 1 Reading 2 Reading 3 Rosen, Frederick (2003). Classical Utilitarianism from Hume to Mill. Routledge, pg. 28. Ticker, Bob. (2009). Corporate Governance: Principle, Policies and Practices. Oxford University Press. UNIDO Report. (June 2002). Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries. Available from: [Accessed 18 July 2010]. Read More