Law and ethics assignment on: Business ethics theories and principles
Introduction:
Business ethics matter in every small and big organization, be it a manufacturing firm, government firm or any private business, ethical principals are exercized by the management. Taking this discussion in account, a brief introduction of business ethics’ thoeries and principles have been outlined at the initial section of the essay. Afterward, the ways also have been illustrated in which such theories have influenced the activities of management. Further, the discussion is taken forward with the description of ethical implications of the thoeries and principles on the business and management. Next, the essay also attempts to explain the sustainability of those thoeries and principles.
Business ethics:
As far as business ethics is concerned for the discussion, it is obvious to discuss the term ethics first. From an ordinary point of view, ethics is a notion of understanding the appropriate difference between the right and wrong. It is linked with a conceptual frameowrk of an organization’s business which helps determining right, wrong, bad, improper and unlawful acts of the people who are associated with that business. Moreover, according to the management and business people, business ethics first is concerned with avoiding the breaching of immoral law related to an individual’s work related performance. Second, it states that one should avoid the actions resulting in civil law that goes against the organization. Finally, business ethics recommends avoiding the unlawful acts which may harm the reputation and image of the company (Crane & Dirk. 2007). In this context, theories and principles of business ethics and ethics of business have been outlined in the next section of the essay.
Nonetheless, it is made a point to be noticed that the management has to meet the economic expectations as well as has to take care of the ethical liabilities simultaneously. Therefore, each and every person and department of the organization from top to bottom is involved in order to meet those responsibilities. First principle of ethics in business states the ethics of care and well being of the people. Then, it talks about the ethics of virtue or the ethics based on moral aspects’ evaluation of an individual or a group. In addition, to demonstrate on what is right and what is wrong, an enterprise should confirm that there should be no favoritism among the people of the organization based on caste, religion, race and colour. Additional, the ethical principles include utilitarianism, efficiency, justice, legal and moral rights. In support, these principles can be explained with the help of business ethics’ theories’ description (Management innovations, 2008).
Theories and principles:
Stakeholder theory:
Therefore, the first normative theory which can be explained here in the discussion is stockholder theory. According to this theory, the stockholders of an organization give the directions to the managers and therefore the managers are liable to follow those directions. Next theory which comes forward in light is stakeholder theory of business ethics. It states that an organization’s management should take care of the interest of all stakeholders equally. If in any case, the situation of conflict arises due to different interests of stakeholders, the steps should be taken out for the achievement of optimum level of balance. The rights and the requirements of all stakeholders of the company should be made certain. Finally, the social contract theory of ethics in business assures the social responsibility of a business towards its society, government, and customers. In general, it can be said that social responsibility is related to develop the society’s welfare (Bishop, 2000).
Kantian theory:
Furthermore, Kantian theory can also be delineated in this regard. Kantianism is regarded as an ethic of duty/responsibility in which categorical imperative is the unconditional control of moral law. Immanuel Kant who was the German philosopher articulated the most effective and potential vision of business ethics that is measurable by the correctness of rules instead of consequences. Not only these noticeable statements he made, but also recognized the rules and rights that are accepted universally. They are freedom of speech and conscience. In sum, organization should brought fair & clear policies and procedures forward in order to maintain the ethical environment (Bowie, 1999).
Besides, according to Kant business ethics is to provide the employees full opportunity to put into effect on their jobs. It also demonstrates that workers should be provided sufficient salary for their survival along with their desires’ satisfaction.
Consequently, principles of business ethics also reveal that each level of management should be involved in decision-making process in order to make their active participation before the implementation of decisions. In sum, the assurance of relationship among stakeholders’ governance by the rule of of justice is also ensured with the help of well-designed procedures. It is also ensured thorugh business nethics that workers’ moral development is not being interrupted by anyone (Kant, 1994).
Egoism & utilitariansim:
In addition, there are some other thoeries of business ethics that based on egoism and utilitarianism. In this context, egoism theory talks about the overlapping of morality with an individual’s or company’s self-respect. In contrast, there can be multiple egoists in this regard such as personal, impersonal and psychological egoists. Next, utilitarianism theory of ethics affirmed that one should act in a way that generates most happiness affecting amximum number of people. It also discusses that produced happiness should have the prospect of long term not immediate or short term. The actions whose outcomes are not certain or definite, should be avoided. In addition, a transparent and straightforward standard should be formulated to test the policies and procedures (John, 1998).
Furthermore, it is noticed that the actions which are performed with integrity brings the natural success to the business of an organization. Therefore, integrity is considered with one of the best characterisitcs of business ethics. In sum, it also has been made a point that the people worjing with integrity are derived by some key principles and in turn itv affects the business’ decisions and behaviors. On the other front of business ethics, there are a few ethical issues which should be addressed by management. That can be interests’ deviations, resources and tools’ awful & unlawful use and finally the mismanagement of contracts, misleading the employees and corruption (South University. 2012).
Influence of business ethics’ theories and practices:
These thoeries and principles of business ethics have influeneced the working ways of management of an organization. Ethics play a significant role in long term of a business. Firstly, utilitarian thoery of ethics in business changed the way management conducts its business. Therefore, management introduces and establishes alternative acts that are clear and transparent for employees. Afterward, the list of individuals is prepared who may be affected by these actions. In contrast, thebalance of benefit to destruction is evaluated by the management in order to know on how the individuals has got affected. Finally, management decides to select the best possible and suitable act for an individual which will maximize the overall utility. This process of theoretical framework results in the highest balance of benefit to destruction (Mitchell & Neubert, 2009).
Additionally, theory present by Kant is used by the organizations and its main emphasis is on universal morality. According to this, management has made an agenda that employees must nbe treated by their superiors as they want to be treated by the employees. With the help of Kant provided theory of categorical imperative, the businesses and management has ruled out some unlawful practices such as bullying, corruption, theft and fraud. Moreover, companies have started making fair and clear decisions which are based on employees’ justice. Apart from this, ethics of virtue has made a great impact on almost every business. It has been noticed that ethics of virtue is not a frameowrk of rules and regulations that are imposed on the employees, but rather a system which holds personal characterisics . It states that if these characteristics are practiced in regular life then each individual will make right and ethical choice in any multifarious condition (Hsing-Chau Tseng, 2010).
Consequently, there are many ways through which influence of business ethics can be perceived. As stakehoder thoery demonstrates that each stakheolder’s interest should be taken care equally, it makes shareholders, employees, customers, government, suppliers, competitors and civil society more responsible towards the business of that organization they are associated with. In this regard, ethical shareholders take the accountability of greater level of profitability of organization. Management gives the employees opportunity to be ethical and integrate their goals with organizational goal. On the other hand of business ethics, customers also become liable to use the products ethically and with full responsibility. In contrast, management of a company utilizes the business ethics in practices and seeks long term relationship and profitability with suppliers (Gonzáles & Guillén, 2002).
Ethical implications:
One question always arises regarding ethical expertise while discussing about business ethics. For this, moral implications can be made out for organizations and the quality of management. First, management should focus on the value of stakeholders and should consider their legitimate and illegitimate expectations. Organizations should reveal and make visible what they are doing and acting upon and besides it, the consequences of their actions should also be revealed. In addition to it some relativistic aspect can be considered by the management. From this perspective, primary aspect is secularist mentality which puts a moral point of view. The ethical implication of it articulates that ethical laws and principles are not imposed upon the employees from the top level management. All the rules which are made in terms of business ethics are people made which suggest reasonable is what they say is fair and unjust is what they say is not right (Sullivan, Haunschild & Page. 2007).
Accordingly, another frontage of it has focused on some surveys and practices of business ethics, which leads to the implications of business ethics for business. One of those surveys has pointed out that there are a few dimensions of ethics in business that can impact the overall moral decision making of an organization. Taking that survey into account, a scale can be introduced by the management in order to evaluate various facades of business ethics and its theories which are into practices. Ethics is a wide topic to be studied from a business’ perspective but altogether it consists of some applications to be taken into care. It is seen that ethical theories’ idea of an individual may not be accepted by other individual. Therefore, it is necessary to frame a collective set of ethical principles and theories so that entire organization could be symbolized by using it rather than exercising a regular approach (Velasquez & Knapp. 2011).
Moreover, t\he organizations can specify each employee’s duty and responsibility so that it will be able to maintain the relationship between an employee and the environment around him/her. In sum, ethics programmes can be fostered for the employees as well as for superiors. Through such programmes, managemenmt can ensure the prevention, detection and eleminitation of the misconducts and unlawful acts. In this context, formal codes can be created for the employees to be considered during their work. Ethical committees should take the charge of development of etyhical policies and in addition they should investigate and evaluate the compnay’s actions and violations. Besides, a system of ethical communication should be brough forward for receiving reports of abuse of unlawful acts from the employees so that necessary action can be taken out for guidance and prevention of such acts (Ferrell, Thorne LeClaire & Ferrell, 2000).
Sustainability of theories and practices:
Additionally, the implications have been noticed from shareholders’ value maximization perspective which has discussed about the impact of disclosure at social level on the value of firm. One of those studies illustrates that investors have been successful in internalizing their future and potential benefits with the help of ethical theories and principles. Therefore, managers are suggested to make such strategies on account of revealing stakeholders’ ethical values and beliefs (Hillman & Keim, 2001). Finally, the sustainability of these business ethics theories can be described in terms of this utilization in the organizations by the management.
Sustainability is considered one of the most strategic issues of any organization which depends upon company’s value and status in the market and among its competitors. It is known by economic, environmental, social and socio-environmental performance of the organizations. It is also expected that the sustainabiloity should be bearable, viable and equitable from every perspective (Witt, 2012).
Conclusion:
On the basis of overall discussion, it can be said that every organizations should have ethical responsibilities to be taken into consideration. Ethics and morals are helpful to know on what is going right and what is going wrong in the organization and among the employees. It is also considered very helpful in overcoming the problems related to safety standards and working atmosphere of the organization and on the other hand maintains the employees’ privacy at work place. In contrast, there are theories and principles of business ethics which come forward for the support and lead the way to quality of management of an organization. These theories are regarded as normative theories of ethics in business. Two main theories are utilitarianism and categorical imperative theory given by Kant.
Utilitariansim ethical theory concentrates on an action performed by an individual and its consequences and on the other hand, Kantian ethical theory talks about an individual’s intention. Both of these theories influence organizations in business world. These theories and principles provides the organizations a suitable process to be followed which generates satisfaction among the employees, increase the level of profitability and productivity. It also satisfies every stakeholder by giving their interests’ full concentration and importance ethically. Apart from this, employees are ensured to be treated equally and like more of a person first rather than worker working in the company. Afterward, implications have also been discussed in this paper. In this framework, the authors talked about the value of stakeholders to expect their future benefits. Nonetheless, study presented that it is not essential that every ethical theory or principle is required to get profitable investments. They are considered best for stakeholders’ satisfaction which results in better financial performance of the company.
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