Ethics empowers business
Businesses cannot just concentrate on earning more and more through any means and tactics. They are responsible to the communities and the environment in which they operate. This is corporate social responsibility (CSR). Ethics of doing business responsibly is integrated into CSR in one way or the other.
A community, a business or a group generally has accepted lists of principles or guidelines prescribing its members the what is wrong and what is wrong. These guidelines and accepted principles are ethics.
Some of the ethical issues in business are employment practices, human rights, environmental problems, bribery and corruption and moral obligations for the big companies.
However, these issues are not always clear-cut. Ethics differ with cultures. Giving and receiving a gift may be regarded as respect in one culture while it is regarded as bribery in others. ILO advocates child labour is unethical but India has large number of children working in industries. Even in Australia, large number of children between 14-18 years work.
The cause of unethical behaviour comes from personal ethics, organizational culture, decision-making processes, leadership and unrealistic performance expectations.
There are four major philosophical approaches to ethics besides Utilitarian and Kantian ethics, right theories and justice theories.
1. Friedman Doctrine
2. Cultural Relativism
3. Righteous moralism
4. Naïve immoralism
Noble-prize winner Milton Friedman claimed in 1970 that the companies are not required to do social responsibilities beyond the requirement prescribed by law. He says, going beyond what has been told in law might actually decrease the productivity.
Cultural relativism says the firms must adapt to the cultures in which it is operating. To its extreme, it says slavery is accepted if is ingrained in culture. Similarly, righteous moralism states the culture of the country in which a multinational company operates should form the basis for its subordinates and subsidiaries in other countries as well.
Colombia is a classic example of naïve immoralism where the business managers pay to local drug lord to ensure his business runs smoothly. While others regard this to be unethical, the Columbians business managers regard this to be ethical because everyone is doing.
Ethical decision-making in business is very tough. There are five things business managers can do to boost ethics in their business: hire and promote ethical people, build ethical organisational culture, consider ethical dimension of business decisions in decision making process and develop moral courage.
To make sure that decisions are made in an ethical and legal manner, managers should consult applicable codes of ethics, international accords and relevant domestic laws.