Government and other
stakeholders of the business are emphasizing the relevance of ethical practices
by business organizations. In recent years, we have seen many unethical
behaviours taking place in the operations of certain businesses worldwide. This
makes the society unsafe for upcoming businesses, healthy competition, and
practice is an issue which is increasingly being given proper attention in the
business world today. Businesses are recognising that more and more customers
are becoming ethically conscious day-in-day-out. It is now being proved in
recent studies that many investors use the ethical behaviour of a company in
the society as a yardstick for choosing company to invest in. In order to
remain sustainable and competitive in the global market, many businesses have
recognised the need to adopt good ethical practice.
concept of theoretical approaches to business ethics
and theorists have propounded various theories on what can be considered
morally acceptable and unacceptable. Among these theories are:
a. Teleology (Consequentialist
approach to ethical reasoning involves justifying an action by the outcomes or
results achieved by such action. From this fact, it is evident that
consequentialism is based on two principles:
What is morally right
or wrong depends only on the outcomes or results of an act.
The more good
consequences can be produced by an act, the better that act.
According the consequentialists,
the results achieved by an action or a decision determines whether to
categorize it as an ethical or unethical one. In assessing what the best
consequences are, consequentialism is not very informative unless combined with
other theory. Utilitarianism and egoism are the most influential forms of
In the utilitarian
approach to ethical consideration, emphasis is laid on the amount of good and
harm which might be derived from an action or a decision i.e. judge a particular
action or decision by the total amount of happiness or unhappiness it creates.
For example, when a company decide to move its manufacturing plant from one
location to another, what would be the amount of good i.e. happiness caused and
amount of harm i.e. unhappiness that the movement would create. The utilitarian
approach to business ethics is also evident when analysing a particular action
or decision on cost benefit basis. For example, when all the costs incurred
from an action are added and compared with the resulting benefits. If the
benefit is more than the cost, the action may be considered ethical.
According to a
utilitarian, if the amount of good appears to outweigh the amount of harm in
the course of movement, the decision is considered as being ethical. But if the
reverse is the case, it is an unethical decision. A good reference for this is
in the quote of John Stuart Mill in his Greatest Happiness Principles. He
quotes that “Actions are right in proportion as they tend to promote happiness,
wrong as they tend produce the reverse of happiness”. In a nutshell,
utilitarianism says that an action that is ethically right in a given situation
is the one that produces the most happiness and least unhappiness for the
largest number of people. Relating the concept of utilitarianism to today’s
business, an organization that weighs the amount of influences its decisions
and actions has on the numbers of stakeholders and use it as a basis of moral
standards is said to adopt a utilitarianism approach.
Egoist theories define
right and wrong in terms of the consequences to one’s self. In any ethical
decision making situation, an egoist would weigh and choose among alternatives
those that would contribute in the largest amount to his/her personal self
interest. Before doing this, critical consideration would have been done in
assessing the effects of such action or decision on his/her physical, mental or
emotional welfare. An egoist theories is evident in today’s business where a
particular organization base its ethical values on actions and decisions which
it can to a very large extent, derive its primary purpose or objectives.
b. Deontological Theory
This theory is also
referred to as “duty-based theory” of business ethics. This is
because the word deontological was derived from the Greek word deon meaning
duty. Rather than focusing and attaching what is morally right or wrong to the
consequence that an action or a decision brings, deontologists based their
decisions about moral right and wrong on broad and universally acceptable
ethical values such as honesty, fairness, duty, respect for human beings etc.
According to the deontological approach, some actions or decisions would be
considered wrong even they created consequences that were good while others
would be viewed as good even when bad results were achieved. For example, an
auditor embracing deontological approach would likely insist on telling the
truth about a company’s financial difficulties even if doing so might put the
company out of business and his/her job on the line.
denies that what ultimately matters is not the consequences of an action but
the action itself. Deontology is mostly related to Immanuel Kant, a German
philosopher. The deontological theory is evident in many businesses today
where organization critically put into
consideration their business activities so as to be fair, accountable and
transparent in their dealings with stakeholders.
c. Virtue Theory
Virtue ethics are normative ethical theories which
emphasize virtues of mind and character. Virtue ethics is a
broad term for theories that emphasize the role of character and virtue in
moral philosophy rather than either doing one’s duty or acting in order to
bring about good consequences. A virtue ethics is likely to give you this kind of moral
advice: “Act as a virtuous person would act in your situation.”
Most virtue ethics theories take their inspiration
from Aristotle who declared that a virtuous person is someone who has ideal
character traits. These traits derive from natural internal tendencies, but
need to be nurtured; however, once established, they will become stable. For
example, a virtuous person is someone who is kind across many situations over a
lifetime because that is her character and not because she wants to maximize
utility or gain favors or simply do her duty.
issues that can affect the operational activities of today’s business
An ethical issue can be
described as a problem, situation or opportunity which requires individuals,
group or an organization to choose among several actions those which must be
evaluated as right or wrong, ethical or unethical. Hence, an ethical issue from
business point of view is a subject matter which raises questions about the standards
of conduct or behaviours which are being adhered to by the company separate
from the financial motives. In some situations, certain ethical issues may
require the company to undertake behaviour which is unprofitable if it adheres
to one set of standards or profitable if adheres to another set of standards.
For example in the UK, while employing women at lower rates of pay than men may
have been considered acceptable according to the business ethics of the 1960s,
it was not by the 1970s and indeed the Equal Pay Act which was passed in 1970.
Examples of ethical issues faced by today’s businesses are:
a. Environmental Issues
Environmental issue is
becoming an area of increasing concern for every business nowadays. Considering
the growing concerns of global warming, many businesses now strive hard to
reduce their emissions of carbon dioxide and encourage the production of more
energy-efficient equipments and appliances. The objective is to stabilize
greenhouse gas concentration in the atmosphere at a level considered less able
to trigger dangerous climate change. Other environmental issues that can affect
the operational activities of today’s business are in the aspects of water
utilization and pollution, responsible sourcing and waste management i.e. recycling.
For example, the Coca-Cola Company has environmental issue in India when it was
reported by some communities that its operation has led to shortage of water,
water pollution and illegal toxic dumping. This really affects the operation of
the company. Other recent issue that raised ethical questions is that of BP
Gulf oil spills.
b. Employment Issues
These are issues
relating to working for, or taking up a role in an organization. Examples of
issues arising from discharging one’s duties in the workplace are:
occurs when individuals are not being treated accordingly in the workplace.
Examples of areas where discrimination may occur are in pay, promotion and
performance evaluation. Also, racial and sexual discriminations in an
organization create ethical issues which can in turn affect the operations of
such organization. In the UK, employers must not discriminate base on the
aforementioned factors and if found guilty in any aspect by any employer, such
employer will be liable.
Equal Opportunities and
Diversity: On the ground of being operating ethically, many organization give
proper attention to equal opportunity during the process of recruitment,
selection, staff training etc. They also promote diversity in every aspects of
their business operation by employing and dealing with different people of
different nationalities, backgrounds, cultures, people with disabilities etc.
All these go a long way in influencing business operations. For example,
failure to give equal opportunities may leads to high rate of staff turnover,
reduce employee morale and the rate of absenteeism in an organization.
c. Advertisement and Marketing
The process of creating
awareness for products and services, the means of distribution, the ways in
which product/service are priced and the promotional strategies adopted are
business area that generates potential ethical issues. For example, false or
misleading marketing communications i.e. the use of deceptive sales tactics can
jeopardize customer’s trust in a company. Also, charging unnecessary and
unjustifiable high price or engaging in price fixing for a product or service
may be considered unethical by buyers or users. These can affect business
operations. Many businesses try to adopt ethical standards for advertising and
marketing and this goes a long in influencing how they operate. Labour Utilization
The manners in which
labour is being used and paid for in the production of goods and provision of
services constitute a major issue to business ethics. For example, utilising
labor at below minimum wage, not complying with health and safety standards,
poor working conditions etc are current ethical issues in today’s business.
Also, it was revealed recently that the amounts of money paid as wages to
workers by companies in some part of Asian and African countries are by far too
low compared to the amount of labor utilized for production.
In the UK and other
parts of the world e.g. US, consumers have rights to quality products and
services. That is the reason why businesses, during their process of production
give proper attention to methods adopted in the process of production and
standards laid down by regulations. On the ground of being ethical in
operation, businesses now engage in proper product labelling, packaging, honest
advertisement, safe and quality products etc all for protecting consumer’s
This report has
revealed that good ethical practices by businesses are very significant to the
realisation of organizational success. A business organization that embraces
ethical ways of conducting its business affairs is more likely to achieve
employees’ commitment, loyalty and satisfaction which in turn lead to quality
of works and increased performance than unethical one. Such business will also
portray good organizational value in the eyes of the stakeholders. It is also
concluded that adopting good ethical behaviour will increase being competitive,
business sales, profit, customers retention and loyalty and investments to
mention a few.
Since the relevance
of business ethics cannot be downgraded in today’s business world, it is highly
recommended that business organization embrace ethical practices. Businesses
should handle ethical issues such as discrimination and equal opportunities in
the workplace in the best possible manners. Obviously business do operates in
vacuum, environmental issues such as energy utilisation, minimising waste and
recycling should be properly addressed so that business operations will not be
negatively influenced by stakeholders.