Business Ethics: A Myth or Reality
"To survive, even to prosper, is not enough. We hanker to leave a footprint in the sands of time. We need to associate with a cause in order to give purpose to our lives. The pursuit of a cause does not have to be prerogative of charities. Nor does a mission to improve the world make business into a social agency. By creating new products, spreading technology and by raising productivity, enhancing quality and improving service, business has always been the active agent of progress." Charles Handy (Harvard Business Review 2002) Business is a social activity and, like all social activities it could not function unless certain moral prerequisites are fulfilled. An analysis of these and of the social and business structures conducive to morality form an important and frequently neglected aspect of business ethics. Further, morality of individual should not be separated from the morality of business procedures and institutions, and to my mind both should be judiciously integrated to the extent, possible. 1. THE MYTH OF AMORAL BUSINESS: The myth of Amoral Business expresses a popular, widespread view of global business. Like most myths, it has several variations. Many people believe the myth, or somewhat believe it. It expresses a partial truth and the same time it conceals a good deal of reality. The myth describes how many American businesses and many American businessmen and women perceive themselves and are perceived by others: business is concerned primarily with profit. To earn a profit, a business produces goods or provides services and engages in buying and selling. According to the myth, however, businesses and people in business are not explicitly concerned with ethics. They are not unethical or immoral; rather, they are amoral insofar as they feel that ethical considerations are inappropriate in business. After all, business is business. They are opposed to moralizing. Rexjournal ISSN 2321 1067 Renewable Research Journal Rexjournal Volume 3 Issue 3 Page 335 One of the interesting variations on the theme is that because many businesses are not explicitly concerned with ethics, some of them act unethically. One need only think of the many unsavory scandals that make newspaper headlinesaccounts of bribery, misrepresentation white collar crime, kickbacks, unsafe products, and insider manipulation of markets. Equally well known are the damages that some industries have wreaked on the environment and the prevalent disregard for the common good. According to the myth, businesses act unethically not because of a desire to do evil, but simply because they want to make a profit and therefore disregard some of the consequences of their actions. Scandals, environmental issues, and energy problems have all helped the reality surface now and then, but no new myth of Moral Business has resulted. For despite some progress made by business in developing ethical codes or instituting ethics training programs, most people do not yet believe that business has made ethics a primary concern and an overriding value in its decisions. What then is the hidden reality? What is the true relation of ethics and business, which is only slowly emerging? What are the indications of its emergence? Take the last question first. The breakdown of the Myth of Amoral business has been signaled in three fairly obvious ways: by the reporting of scandals and the concomitant public reaction to these repots; by the formation of popular groups such as the environmentalists and the consumerists; and by the concern of business in ethics, as expressed in conferences, magazines and newspaper articles, and by the burgeoning of corporate codes of ethical conduct. 2. ETHICAL ISSUES: This section briefly describes four highly visible ethical issues facing corporate America. These issues have been associated with the major ethical scandals of the early twenty first century. The issues are presented to provide concrete examples of the types of misconduct that should be identified and prevented through organizational ethics programs and ethical leadership. 2.1 Conflict of Interest: A conflict of interest exists when individuals must choose whether to advance their own interest of their organization, or the interests of some other group or individual. An illustrative alleged conflict of interest occurred when Citigroup made a $1 million donation Rexjournal ISSN 2321 1067 Renewable Research Journal Rexjournal Volume 3 Issue 3 Page 336 to the 92 street YMCA nursery school in Manahattan as an alleged quid pro quo so that financial analyst Jack Grubman's children could attend the exclusive school. Grubman, an analyst for Salomon Smith Barney, supposedly upgraded his rating for AT&T stock to help Sanford Weill, CEO of Citigroup, and the parent nursery school to gain admission for Grubman's children. Although Grubman denied elevating his rating for AT&T to gain his children's admission, they were in fact enrolled. To avoid conflicts of interest, employees must be able to separate their private interests from their business dealings. American companies were ranked fifth, behind Canada, Germany, Netherlands, and the United Kingdom in complying with anti corruption laws. Bribes also have been associated with the downfall of many managers, legislators, and government officials. 2.2 Fraud: When individuals engage in deceptive practices to advance their own interests over those of their organization or some other group, charges of fraud may result. In general, fraud is any false communication that deceives manipulates, or conceals facts to create a false impression. Fraud is considered a crime, and conviction may result in fines, imprisonment, or both. According to Neese, Ferrel, and Ferrel (forthcoming) fraud costs U.S. organizations more than $600 billion per year; the average company losses about 6 percent of total revenue to fraud and abuses committed by its own employees. The most common fraudulent activities reported by employees about their co workers are stealing office supplies and shop lifting, claiming to have worked extra hours, and stealing money or products. Communications that are false or misleading can destroy stakeholders' trust in an organization and may at times even be considered fraudulent. False and misleading advertising is increasingly a key issue in organizational communications. Abuses in advertising can range from exaggerated claims and concealed facts to outright lying. Such abuses range from the unethical, which they clearly are, to the illegal.