6: Practice of Ethics in Business

It is now time to revisit Business Ethics in

Practice and in order to do that we will deal
with issues related to
A better understanding of business ethics
Factors that impact organizational ethics
Understanding of whether a company is
ethical in conducting business
How ethical values emerge in business
organizations

6.1 Towards a Better Understanding

of Business Ethics
In order to have a broader understanding of the
concept and its various aspects, one can look
for answers to a number of the following type:
What Are Workplace Ethics?
What Is an Ethics Officer?
What does "You Reap What You Sow" Mean?
What is a Business Process?
What are Banking Ethics?
What is Informed Consent?
What is Capitalism?

6.2 Towards a Better Understanding of

Business Ethics: 10 Questions
Do you prefer social
isolation?
How can the public ensure
that a company adheres to
correct business ethics?
Can anyone do my
business ethics homework
for me? Rather than doing
the work myself and
gaining an understanding of
ethics that would help me
better navigate the
business world?

Why is it necessary to apply

business ethics?
Is business ethics a part of
company activities, or it is merely
a response to societys call?

Which one of (a) metaethics

(analytical ethics, attempt to
understand metaphysical,
epistemological, semantic,
psychological presumptions and
commitment), (b) normative ethics
and (c) applied ethics is best for
making business decisions and why?
Can anyone examine critically What are consequences of greed in
term of politics or economy of the
the inevitability of ethics in
country?
business activities?
How do businesses that you know
Which moral philosophy you
treat their employees, or care for the
feel is best suited for making
business decisions and why? community and environment?

6.3: Is a Company Ethical in

Conducting Business?
In order to find the answer look at the following:
Whether the company is responding to the
demand for ethicism
What is the ethics coverage
What special factors the company is
considering, and
How does the company handle ethical
dilemmas.

6.4 Responding to the Demand for Ethicism

Ethicism, the demand for more ethical business
processes and actions is increasing in the consciencefocused marketplaces of the 21st century. More
pressure is now applied on industry to improve business
ethics through new public initiatives and laws.
Businesses do continue to attain short-term gains by
acting in an unethical fashion, but such behaviors tend
to undermine the economy over time.
In the end, it is up to the public to make sure that a
company adheres to correct business ethics. If the
company is making large amounts of money, they may
not wish to pay too close attention to their ethical
behavior. Alternatively, there are companies, although
not many, that pride themselves in their correct business
ethics.

6.5 Some Examples of Unethical Companies

Minute Maid, Tropicana, Nestle bought fruit
juices from South America but these suppliers
rely heavily on child labor (especially in
harvesting fruit); parents may not oppose, but the
harm is already done;
Child labor in sewing soccer balls in San
Miguello (Mexico); children are earning, but
earning low and they are not going to school
Nike child labor abuse, unsafe working
conditions, violations of local regulations in
manufacturing products in contracts with
independent operators in Asia.

6.6. Role of Culture, Norms and Laws

Organizational ethics and responsibility are
shaped by national culture most businesses
develop within nations by adopting dominant
national cultural values, beliefs, practices,
behaviors (e.g., obeying national laws and
regulations, conforming to national norms);
both laws and norms reflect national cultural
values and together, they outline right and
wrong business behavior; not everything is
written, businesses do conform them in their
actions.

6.7 Role of Top Management and CEOs

Every organization, especially its top management should know
that unfair practices or corruption/bribery escalates cost, calls
for manipulation in management and the associated strains,
invites petting the trade unions and so on. Also if they violate,
they loose the moral right to insist ethical norms for others.
Top managers values are evident at an organizations founding
or with a new CEO. The top management
Play role models in ethics;
Influence organizational ethics
Shape organizational culture, often with written statements
such as the organizations vision, purpose, mission or values
Create ethics, positive cultures by articulating organizational
purpose in terms of a combination of social and business
goals; and
Design a reward system that does not patronize unethical
behavior.

6.7.1 Managers Responsibilities

Managers do more than sign off on an ethics plan
they can not behave unethically to demoralize
employees or even provoke them to leave their jobs;
also, others follow the leader while managers are to
create examples.
Managers may
Define appropriate ethical standards,
operate in a socially responsible way;
address the issues of child labor or work safety;
Compensate for the loss of job positions for
employees at home (because of shifting production
abroad)

6.8 Creating Business Ethics the Key Focus

Businesses create value: investors earn profit; workers
earn incomes; consumers get products and services. But
in instances businesses companies, firms behave in a
way not acceptable on different grounds. Businesses
behave ethically means that they maintain ethical
standard norms, values, beliefs, and practices. However,
the ethical standards vary in different cultural
environment and need to be standardized in a cross
cultural context.
While talking about ethics in business, we deal with the
behavior of
Organization to its employees
The employees towards their organization and
The employees and organization towards other
economic agents

6.8.1: Three Faces of Ethics

Treatment of employees by their organization
(how an organization treats its employees):
Hire the best people to provide ample
opportunities for skills an career development
Provide appropriate compensation and benefits
Respect personal rights and dignity of each
employee
However, there might be problems with wage
ranges and benefits, working conditions and
the environment, career prospects and child,
women and labor rights.

6.8.2: Three Faces of Ethics

Treatment of the organization by its employees
(how employees treat their organization):
Conflicts of interest [suppliers offering gift to a
company employee influences purchases which may
not be the best; employee may accept the favor
because he has festivals, something to offer to the
family or friends, needs like treatment, or recovery
of losses in gambling etc.; the employee will do bad
purchases or divulge company information to
competitors]
Secrecy and confidentiality
Honesty and integrity [making long distance phone
calls by using the office line, stealing supplies,
padding expense accounts etc]

6.8.3: Three Faces of Ethics

How employees and organization treat other economic agents:
customers, competitors, suppliers, labor unions and all other
stakeholders.
Pricing escalating prices on every available grounds, a
serious issue in CSR
Product quality effect of the product on health,
environment, psychology and social norms diseases,
change in mindset- drugs, violence, sex
Sensitive products scarcity and price pharmaceutical,
fuel, kerosene, candles, salt
Company behavior with government and local people in
starting and operating business, sale of products and
services;
Distribution of dividends against shares/stocks,
manipulation of share prices;
Handling suppliers and dealers;
Handling labor unions a special issue in ethics; labor
unions may be (a) pro-self, (b) pro-industry, and (c) prolabor

6.9 Concluding Remark

Large companies like Phillips, Nissan, Daewoo,
Whirlpool, Hewlett Packard have developed Code of
Ethics: written statement of values and ethical standards
that guide the firms actions. Toyota, Siemens, General
Mills, Johnson & Johnson have written guidelines on
how to treat suppliers, customers, competitors and other
constituents.
These companies however, need to decide on whether and
how to apply the Guidelines/Code of Ethics prepared
for home countries in countries where they have
subsidiaries.
Organizational practice and corporate culture
Top leaders to play role models in ethics;
If they violate, they loose the moral right to insist
ethical norms for others;
Unfair practices or corruption/bribery escalates cost,
calls for manipulation in management and the
associated strains, invites petting the trade unions and
so on.