Running Head: ETHICS AND BUSINESS DECISION MAKING

Ethics and Business Decision Making

Shelly A. Brooks
Course: BE-308 Business Law
Instructor: Ms. Alicia Law

ETHICS AND BUSINESS DECISION MAKING

Ethics and Business Decision Making

According to Fundamentals of Business Law Today (2014), Miller defines business
ethics as the study of what constitutes right or wrong behavior in the business world and on how
persons apply moral and ethical principles to situations that arise in the workplace (p. 54).
Investopedia (Investopedia, n.d.) notes that the concept of business ethics in the United States
came into focus in the 1960s as society became increasingly aware of the environment and
societys contributions to its sustainability. This era saw an increase in toxic pesticides, careless
discarding of chemical waste and nuclear testing, among others, and scientists, as well as
conscientious citizens, began to voice their concerns and apprehensions through various media
(Environmental History Timeline, n.d.). Consumerism and civil rights also played a part in the
shaping of business ethics as the consumer-driven market became interested in where and how
products were made and how fairly employees were being treated and compensated (De George,
2015). Eventually, legislation changed over time to incorporate business ethics and into our
present day understanding of guidelines on business ethics and corporate responsibility. It is
important to note that business ethics are shaped by a societys norms and beliefs, but
globalization is narrowing the differences in what is right and wrong (De George, 2015).
Business ethics are important for various reasons. Customers are the driving force of any
business, and customers are more likely to do business with a company which treats its
employees fairly, conscientiously manufactures its products, practices honesty, and transparency,
and abides within the law. As such, it can be said that maintaining good business ethics could
lead to an increase in the bottom line. (Ogbari, Oke, Ibukunoluwa, Ajagbe, & Ologbo, 2016).
Treating employees fairly also helps a business monetarily. Older, more experienced staff
are often prized because of the wealth of knowledge they possess and the investment made by

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the company over the years. By retaining staff a company does not spend as much money on
training as if there is a high turnaround of employees. Long-time employees are oftentimes loyal,
show initiative, and work harder than unfairly treated employees. Additionally, there are other
expenses such as severance payments, temporary staffing, employing and training of new staff,
and possible loss of customers. (Curtis & Wright, 2001)
Additionally, there are certain standards of ethics required by law, and failure to comply
could lead to criminal charges. Blodgett noted in his paper titled Substantive Ethics: Integrating
Law and Ethics in Corporate Ethics Programs that companies should move to merge law into
corporate ethics programs to form a substantive ethics (Blodgett, 2011). Law evolved by stare
decisis, which is based on cultural values, norms and expectations (Miller, 2014). As such, law
and business ethics should mirror each other, but culture has changed over the years, shaped by
different perspectives and international input.
Miller (2014) notes that, among other things, business leaders can encourage their
companies to act ethically by being an example, hiring employees with good moral compasses,
educating staff, including ethical standards in job descriptions, and writing standards of ethical
behavior into company policy. It is also important to provide employees with a safe method of
raising concerns over ethics and other such matters. It is not enough to just state terms of ethical
behavior, one must embody it. Employees are more likely to follow if they understand that the
companys standards not only pertain to them as humble employees, but also to management
personnel. A manager who acts contrary to his or her spoken word on the subject, gives the
impression that ethical standards are not compulsory or are negotiable. If senior management
can get away with it, why cant a junior staff?

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A first-hand example is a senior management officer not being held accountable for noncompliance of risk-management conditions of financing noted in the banks contract or for being
allowed to overextend well beyond acceptable guidelines. If this officer, who is involved in
writing and enforcing policy, chooses and is allowed to ignore policy, does this not set a
precedence for junior staff if they become aware of the situation? The senior officer should have
complied with the banks policies as noted in the conditions of financing, and by doing so, set an
example for junior staff.
The hiring process is vital to employing honest and hardworking persons. The employee
must understand his or her role in maintaining ethical standards and adhering to policies and
procedures. The human resources officer must ensure due diligence is undertaken and
information vetted, so that they hire the person who is the best fit for the company, not only in
terms of education, experience, and knowledge, but also based on the companys ethical policies.
Standards of ethical behavior should be included in employee job descriptions, and employees
must be aware of the repercussions of unsavory behavior. Additionally, ongoing training should
be performed. (Valentine, Hollingworth, & Eidsness, 2014)
One of the most important document a company could possess is the policies and
procedures (P & P) manual. This document provides specifics on that must be adhered to in
order for a company function property and remain compliant with the law. Failure to abide by
the P & P rules could open a company to criminal activity and sanctions. The P & P notes how
work is to be performed and who is responsible for what. It should also include information on
the companys code of conduct and disciplinary policy. (NSW Government Industrial Relations,
2016).

ETHICS AND BUSINESS DECISION MAKING

An example of this, it is a requirement in the local banking industry to obtain and verify
due diligence information such as identification and source of funds. There are also certain
criminal databases that must be checked to ensure that the potential client was not involved in
criminal activity or is the subject of a criminal investigation. Accepting persons with such
history could expose the bank to possible unintended criminal involvement. Additionally, an
employee is obligated to report any suspected activity. Failure to do so, in some cases, could
lead to fines and imprisonment. (Cayman Islands Monetary Authority, 2012)
As noted in the Fundamentals of Business Law Today (Miller, 2014), Miller that dutybased ethical standards derive from religious beliefs and philosophical reasoning. For example,
the criminal acts of murder and theft are two items that come from the ten commandments of the
Christian bible. Miller (2014) further states that outcome-based ethics, on the other hand, adopt
the belief that if most people benefit from an action or inaction, then the action or inaction is
morally correct.
According to the George S. May International Company, as noted by Miller (2014), there
are six guidelines that an employee can use to evaluate whether his or her actions are ethical.
These includes questions of legality (the law), policies and procedures (rules and procedures),
values, conscientiousness (conscience), trustworthiness (promises), and mentorship (heroes)
(Miller, 2014).
Adherence to the law is an important aspect of acting ethical. One cannot go wrong by
following the moral minimum; however, in some cases, doing the minimum is not considered
sufficient, as it oftentimes relates only to one aspect of the companys obligations such as
compliance, and does not transfer to corporate responsibilities such as to the community (Miller,
2014). Additionally, one can no longer plead ignorance of the law (Miller, 2014). It is

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everyones responsibility to know the laws governing his or her field of employment. If there is
any doubt, it is incumbent on the employee to seek information to guide him or her in his or her
actions.
Previously noted policies and procedures are put in place to protect the company by
providing clear guidelines on how to perform ones work. These policies and procedures are
written based on the governing laws. Failure to comply with these rules puts the company, its
shareholders, suppliers, and employees at risk. Often, the company is charged for noncompliance and the employee may lose his or her job or may face fines and/or imprisonment.
Recovering from reputation damage is difficult both for the company and the individual.
Hundreds of lives could be affected by if a company is forced to downsize or close due to loss of
sales, etc. (Intuit Quickbooks, n.p.)
Miller notes that values refer to the spirit of the law (2014, p. 61). The spirit of the
law is defined as the interpretation of the law as opposed to its literal meaning (Garcia, Chen, &
Gordon, 2014). Does this then mean that values are only as good as ones interpretation of the
law? Garcia, Chen, and Gordon (2014) provided an example in which two pictures of a vehicle
parked over a line is depicted. In one picture, the parking line that is crossed infringes on
another parking spot, breaking both the literal and spirit of the act; in the other, it is over a line
that separates the wall from the parking spaces, breaking the literal, but not spirit of the act as
another person is not inconvenience.
If you feel guilty over your actions or inaction, chances are your decision is unethical.
We each have our set of moral guidelines, which were shaped during our upbringing and is
influenced by our education and interactions with others. When faced with a new situation that
seems sketchy and there is no policy or guidelines for how to deal with the item, your moral

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compass should be your guide. How would you feel if your decision became public knowledge?
Would you be satisfied that you acted in a prudent and ethical manner? (Miller, 2014)
Brian Tracy noted in an article on leadership qualities published via Entrepreneur that
honesty and integrity are one of the most important qualities of great leadership (Tracy, 2016) .
Tracy further stated that dishonest companies might seem profitable in the short run, but sooner
or later, they pay the consequences, as noted in the Enron example (Tracy, 2016). In my
experience, the local construction field is a prime example of how dishonesty can affect multiple
people. Companies that defraud persons tend to be shunned by financial institutions and might
be placed on a black list. Customers are inconveniences, and at times financially strained,
when a construction project runs into cost overruns or is delayed because of a contractors
dishonesty. The financial institution is forced to grant additional money to assist with the
completion of the structure so that their security is satisfactory. However, owners of the
company can simply cancel their Trade and Business License and open another construction
company with under a different name. This happens, at times, despite complaints filed against
companies and its owners. Sooner or later, these companies eventually go out of business.
According to Miller (2014) ethical issues that might arise in the context of international
business transactions derive from differences in culture, religion, and law, among others. Culture
is shaped by norms and beliefs, and laws are influenced both by religion and culture (Miller,
2014); therefore, an understanding of a countrys culture, religion, and law are paramount in
effectively establishing fruitful international relations. Prior to attempting international business,
one should study the foreign countrys norms, beliefs, and laws. What is normal in western
culture, for example, may not be normal in eastern culture. In fact, a British couple visiting
Dubai was jailed and fined in 2010 for drinking alcohol and kissing at a restaurant because these

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acts went against Dubais public decency norms (BBC News, 2010). The aforementioned acts
are normal social activities in American and British culture, but could land you 30 days in jail
and a 200 fine (BBC News, 2010). A business person (or just about anyone) visiting Dubai,
would therefore be cautious of his or her actions in public and ensure that they follow acceptable
norms. Likewise, a company seeking to do business in Mexico, would need to understand the
macho, power-driven Mexican culture and choose its representative accordingly (Villatoro,
Chang, & Lane, 2014).
It might be tempting for a company to bend laws governing their business transactions
when they are overseas in order to gain a competitive edge or simply move a compulsory process
along (Miller, 2014). Paying bribes to quickly register a company or overlook non-complying
requirements is still practiced, especially in developing countries; however, the vast majority of
these cases go unreported. Between November 17, 2016 and December 9, 2016, The New York
Times reported on 10 bribery cases including a case involving JPMorgan Chase and unfair hiring
practices in China (The New York Times, n.p.).
As noted, the study of ethics is important for various reasons. All parties stand to win
with prudent leadership and a corporate culture of ethical standards and policies that apply to all
members of staff, including management. These ethics must also govern international
commerce. If a company does not break laws whether by abiding by the moral minimum or by
choosing to stand by higher moral and ethical standards, it should not, then, choose to loosen its
standards when doing business in a foreign country. The commercial world is moving toward an
international code of ethics, but enforcement of the laws are sure to be a challenge.

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References
BBC News. (2010, April 4). Jailed dubai kissing pair lose appeal over conviction. Retrieved
from BBC News: http://news.bbc.co.uk/2/hi/uk/8602449.stm
Blodgett, M. S. (2011). Substantive ethics: integrating law and ethics in corporate ethics
programs. Journal of Business Ethics, 39-48. doi: 10.1007/s10551-011-1165-6
Cayman Islands Monetary Authority. (2012). Law and Regulations. Retrieved from Cayman
Islands Monetary Authority:
http://www.cimoney.com.ky/regulatory_framework/reg_frame_law_reg.aspx?id=372
Curtis, S., & Wright, D. (2001). Retaining employees - the fast track to commitment.
Management Research News, 56-60.
De George, R. T. (2015, November 17). A history of business ethics. Retrieved from Santa
Clarita University: https://www.scu.edu/ethics/focus-areas/business-ethics/resources/ahistory-of-business-ethics/
Environmental History Timeline. (n.d.). Sixties 1960-69. (unknown, Editor) Retrieved December
5, 2016, from environmentalhistory.org: http://66.147.244.135/~enviror4/20thcentury/sixties-1960-1969/
Garcia, S. M., Chen, P., & Gordon, M. T. (2014, September). The letter versus the spirit of the
law: A lay perspective on. Judgment and Decision Making, 9(5), 479-490.
Intuit Quickbooks. (n.p.). The dangers of non-compliance for your business. Retrieved from
Intuit Quickbooks: http://quickbooks.intuit.com/r/hr-laws-and-regulation/the-dangers-ofnon-compliance-for-your-business/

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Investopedia. (n.d.). Business Ethics. Retrieved December 5, 2016, from Investopedia:

http://www.investopedia.com/terms/c/code-of-ethics.asp
Miller, R. L. (2014). Fundamentals of business law today. Stamford: Cengage Learning.
NSW Government Industrial Relations. (2016, December 11). NSW Government Industrial
Relations. Retrieved from Workplace policies and procedures:
http://www.industrialrelations.nsw.gov.au/biz_res/oirwww/pdfs/workplace_pp.pdf
Ogbari, M. E., Oke, A. O., Ibukunoluwa, A. A., Ajagbe, M. A., & Ologbo, A. C. (2016).
Entrepreneurship and business ethics: Implications on coporate performance.
International Journal of Economics and Financial, 6(S3), 50-58.
The New York Times. (n.p.). Bribery. Retrieved December 10, 2016, from The New York Times:
http://www.nytimes.com/topic/subject/bribery
Tracy, B. (2016, December 7). The importance of honesty and integrity in business. Retrieved
from Entrepreneur: https://www.entrepreneur.com/article/282957
Valentine, S., Hollingworth, D., & Eidsness, B. (2014). Ethics-related selection and reduced
ethical conflict as drivers of positive work attitudes: Delivering on employees'
expectations for an ethical workplace. Personnel Review, 43(5), 692-716.
Villatoro, J., Chang, J., & Lane, S. (2014). Research of ethics, values and cross-cultural
differences on china, mexico or the united states. Journal of Technology Management in
China, 9(2), 133-154.