Beruflich Dokumente
Kultur Dokumente
Submitted By
Moitrayee Majumdar (wmp7104) Nitin Kumar Tonk (wmp7105) Vikram Arora (wmp7136) Dipyaman Paul (wmp7093) Dibyendu Dhara (wmp7092)
2011
Table of Contents
1 INTRODUCTION ............................................................................................................................... 4 1.1 1.2 1.3 1.4 2 Law and Ethics .......................................................................................................................... 5 Relationship between Ethics & Law .......................................................................................... 6 Nature of Ethics in Business ...................................................................................................... 7 Characteristics of Business Ethics ............................................................................................. 9
Status of the problem/ International and national ....................................................................... 12 2.1 2.2 2.3 2.4 2.5 Human rights:......................................................................................................................... 12 Labor: ..................................................................................................................................... 12 Environment: ......................................................................................................................... 12 Anti-corruption: ..................................................................................................................... 12 Problem and Codes of Business Conduct ................................................................................ 13 CORPORATE GOVERNANCE: RELATIONSHIPS WITH SHAREHOLDERS ............................... 13 RELATIONSHIP WITH EMPLOYEES ................................................................................... 13 RELATIONSHIP WITH OTHER ENTERPRISES ...................................................................... 14 RELATIONSHIP WITH THE GLOBAL COMMUNITY ............................................................. 15 RELATIONSHIP WITH GOVERNMENT AUTHORITIES ......................................................... 15 PREVENTION OF EXTORTION AND BRIBERY ..................................................................... 16
2.5.7 CREATION OF A CULTURE THAT FOSTERS SOUND BUSINESS STANDARDS AND CORPORATE PRACTICES ..................................................................................................................................... 17 3 Laws Affecting Business Commerce: ............................................................................................. 18 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4 Antitrust Laws: ....................................................................................................................... 18 Consumer Safety Laws:........................................................................................................... 18 Environmental Protection Laws: ............................................................................................. 19 Laws Affecting Business Occupations: ..................................................................................... 19 Laws Regulating Occupations: ................................................................................................ 20 Laws Governing Diversity:....................................................................................................... 20 Laws Promoting Occupational Health and Safety: ................................................................... 21
BUSINESS ETHICS, COMPLIANCE AND ENFORCEMENT MECHANISM AND THEIR EFFECTIVENESS . 22 4.1 4.2 4.3 Operational Activities ............................................................................................................. 22 Competitive Advantage .......................................................................................................... 23 Commercial Relationships ...................................................................................................... 23
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4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13
Corporate Social Responsibility............................................................................................... 23 Cultural Diversity .................................................................................................................... 24 Growth and Financial Security ................................................................................................ 24 Business Ethics Barriers .......................................................................................................... 24 Organizational Culture............................................................................................................ 25 Business Ethics and it Social Implications ................................................................................ 25 Economic Responsibilities....................................................................................................... 25 Green Technology and Waste Minimization............................................................................ 26 Government Policies .............................................................................................................. 26 Ethical Concerns ..................................................................................................................... 26 Environmental Risks........................................................................................................ 27 Industry s Sustainability .................................................................................................. 27 Ethics and the Environment ............................................................................................ 28 Information Security ....................................................................................................... 28 Legal aspects .................................................................................................................. 28 Corporate Environmental Strategy .................................................................................. 28
ROLE OF JUDICIARY ....................................................................................................................... 31 5.1 5.2 Definitions.............................................................................................................................. 31 What Are The Punishments For Breaking The Code Of Ethics? ................................................ 32
NGOs/Civil Society Groups and Business/Industry Associations................................................... 34 6.1 6.2 6.3 Role of NGOs .......................................................................................................................... 34 Role of Civil Society Groups .................................................................................................... 35 Business/Industry Association ................................................................................................ 36
The Advantages of Behaving Ethically ........................................................................................... 39 7.1 7.2 7.3 Reputation is the trust ............................................................................................................ 39 Consequences ........................................................................................................................ 39 Business activity ..................................................................................................................... 40
Conclusion: .................................................................................................................................... 41
References: ........................................................................................................................................... 42
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1 INTRODUCTION
Despite the recent rash of corporate scandals and the resulting rush to address the problem by adding more laws and regulations, seemingly little attention has been paid to how the nature of rules may or may not affect ethical decision making. Drawing on work in the law, business ethics, management and self regulations, this project explores how several characteristics of rules may interface with the process of reaching and implementing ethical decisions. Such a relationship would have practical implications for regulatory policy and managers of organization. The idea of self-regulation within legislative parameters can be interpreted as a move away from state responsibility and as a form of deregulation.Regulating self-regulation has always meant more emphasis on persuasion, such as collaboration, training and education, than on development or enforcement of any existing regulations. The self-regulatory approach in general include its inability to take account of relatively new forms of work, such as that associated with the private service sector, outsourcing work intensification and the casualization of work; its assumption of common interest in the workplace, which ignores unequal power between capital and labor; and the lack of recognition of the role of criminal law, largely because of this assertion of common interest. Alongside a deregulatory tendency ushered in by globalization and economic liberalism and not unconnected with it was a growing pressure on business to behave in a socially responsible manner. In a global economy, business itself is more pervasive and more powerful, while at the same time the power and scope of government was seen to be dismissed and heightened media activity led to far reaching criticisms of business. As well the move to a goal setting approach to employer responsibilities with fewer resources allocated to say inspection and enforcement in favor of more workplace initiatives, made promotion for corporate social responsibility (CSR) increasingly attractive for government agencies, in turn making it easier to justify self-regulation.
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Law is a code of conduct which the authority in power prescribes for society. It basically differs from ethics in its option to use force if and when necessary and by the fact that it is backed by power. Laws are, by and large, fair and moral. But it is not easy to accept that laws can be the foundations of ethics, or even that laws can ensure ethical behavior. There are many situations in life, where just following the law does not make one ethical. For example, if your next door neighbor has just today lost their only son in a motorcycle accident, just when you wanted to celebrate the birthday of your only son with gaiety, music, guests, enjoyment and much merry making, there is no law to prohibit you from doing so. If you decide not to, it is because of the dictates of your conscience, not because of the dictates of the law. Your conscience, your ethical value system and your principles forbids you to rejoice when someone else nearby is in sorrow. The law has no role to play in such a situation. Moreover, not all laws have moral choice. There are many laws which do not involve any ethicality questions - for example, we are required to walk on the left hand side of the road. This is done to ensure traffic control and the traffic discipline, but a question of ethics is not involved here. Again, all moral and ethical actions do not involve the law. For example, it is ethical to love and respect your parents, but there is no law for it, except when they are deliberately mistreated by their children. Law represents the minimum standards of behavior expected from people. Merely following the law, does not make one ethical. Another aspect of the legal system is that it prohibits us of certain actions. It also spells out the negative consequences of our not following the law - that is legal punishment. However, ethical behavior encourages us to do certain things and explains the benefits, i.e., the positive aspects of this ethical behavior. For example, the law tells us not to steal, not to kill, but ethics tells us to do good, speak the truth, help others in distress.
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Thus there is a positive aspect inherent in ethical behavior, whereas the law is more concerned about negative behavior. Yet another aspect of the law is that ethics precedes the action, the law follows it. Ethics tells us what we should strive to develop in ourselves (high moral standards), on the other hand, law tends to be more concerned with the consequences of the negative action - what punishment would follow, who is guilty and how shall justice be done. Moreover, the law is a universally accepted, published document, whereas ethics do be not yet have a universally accepted, consistent and published concept - it is abstract, culture specific and left to the individual for interpretation and action. Again, the law clearly specifies what action would be taken against a person if he or she violates the provisions of the legal system. But, in case of ethics, there is no specific outcome of an unethical action. What would be the consequences of an unethical action is not very clear, not always the same and not universally accepted. An unethical action may have many repercussions and widespread consequences. Some Laws have nothing to do with morality because they do not involve serious matters. These include parking laws, dress codes and other laws covering similar matters.
Perhaps the easiest way to think about the relationship between business ethics and the law is in terms of a Venn diagram. If we think of the law as reflecting society's minimum norms and standards of business conduct, we can see that there is a great deal of overlap between what's legal and what's ethical. Generally speaking, most people believe that law-abiding behavior is also ethical behavior. But there are many standards of conduct agreed upon by society that are not codified in law. For example, conflicts of interests may not be illegal, but they are generally considered to be unethical in our society and are commonly covered in codes of ethics. So, the domain of ethics
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includes the legal domain but extends beyond it to include the ethical standards and issues that the law does not address. Finally there are times when you might encounter a law that you believe is unethical. For example, not so long ago racial discrimination was legal in the United States. Therefore, the legal and ethical domains certainly overlap to a large degree, but not completely. It is conceivable to think of something as being legal and unethical, or unethical but not covered by law.
LAW
Ethics
Overlap area
1. In business activities, most ethical questions could be of two types---overt and covert. Overt ethical problems like bribery, theft, sabotage etc are clear for everyone to see and are generally considered reprehensible. Covert ethical problems are more complex, types of problems occur in corporate acquisitions, marketing and personnel policies, capital investment, market war etc. They are difficult to locate, to eliminate and are consequently much more dangerous and threatening to business.
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2. For a decision to be ethical, it should possess the following characteristics. It should be: (a) RIGHT- that which is morally correct and due; (b) EQUITABLE-that which is just and equal; (c) GOOD-that which brings in the highest good for all concerned; (d) PROPER-that which is appropriate and acceptable; (e) FAIR-that which is honest and due; (f) JUST-that justice is not only done; but is also seen to have been done.
3. Ethics is unstructured, i.e., it does not have a structured format or framework. It is abstract in concept. Hence it does not have universal acceptance, mainly because: a. Ethics depends upon our moral standards; b. Moral standards depend upon our value system; c. The value system of people depend upon their background & childhood experience; & d. The background & experience of people are vastly different. Hence the ethical practices of people are also different.
4. Ethical decisions should express some obligations to others. The very concept of being ethical means that it results in some well for the larger society and not just for oneself.
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1.4
1. Ethical decisions differ with the individual perspective of different persons. Each person views the ethical question in terms of his or her own frame of reference. And this frame of reference is the persons own unique value system. Hence ethical decisions do not have unique solutions, but a multitude of alternatives. For example, In case of a Dam building project, the company loses Rest. 2 lac per day, if operations are stopped. One day during work, it is found that a worker is missing inside the dam. Work will definitely be stopped to search for the missing man. However, if the man is not found within a day or two, how long should work be stopped, inspire of the losses to the company, will depend upon the value system of the manager & what according to him is the ethical thing to do. Given the same situation, but a different manager, work will be stopped only unto what that manager thinks is the ethical course of action, or work may not be stopped at all.
2. Ethical decisions are not limited only to them, but affect a wide range of other situations as well. Similarly, unethical decisions do not end in themselves, but have widespread consequences. One ethical action is like a pebble thrown into a pond of water, it produces endless ripples in the pond, until it disturbs the water in the entire pond. Similarly the single unethical action is not limited to the individual in the company who commits it, but spreads within the entire organization and one unethical organization affects the entire industry.
3. Most ethical decisions involve a trade-off between costs incurred & benefits received. It needs to be clearly understood that costs & benefits, profits & responsibilities are two ends of a single spectrum. Both cannot be mixed simultaneously .If you want some benefits for your organization or for yourself; you need to incur some costs or make some sacrifice. Similarly, maximum profits cannot go hand in hand with maximum social responsibilities or maximum
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welfare obligations. Maximum concern for task or productivity cannot go hand in hand with maximum concern for people. There has to be a trade-off, a compromise. And this compromise, where it is done, how it is done, results in a decision being ethical or unethical. One cannot get everything for nothing.
4. The consequence of most ethical decisions is not clear. They are ambiguous in nature. The only certainty is that somewhere, sometime, somehow, something positive would result from an ethical decision and something negative from an unethical one. The consequences of both may not be immediate and may not be clear.
5. Every person is individually responsible for the ethical or unethical decision & action that he or she takes. Taking an ethical or unethical decision cannot be an impersonal activity as it involves the persons individual & unique value system along with his moral standards. The same is the case with ethical or unethical actions. Every person has to take decisions, & whether this decisions are ethical or unethical, will depend upon his own conscience & upon what he is comfortable with. His own value must justify his actions .For example, In case of parliamentary democracy, during a vote of confidence of a government, if the prime minister of the country pays bribes to a few independent MPs to buy their votes in the favor of the government, he is doing so, not for his own sake alone, but to save the entire government. In other words, the unethical action & decision of bribery, is taken on behalf of the entire government, & not merely on his own behalf. Yet he alone is personally & individually responsible for the crime, & not his entire government. Ex: in Hindu mythology Rants (Sage Valrico).
6. Ethical decisions are voluntary human actions .A person cannot escape his personal liability for his crimes by saying that he was forced to pay the bribe in order to get the job. All human beings have the freedom of choice & of free will. Even under compelling situations, many men have refused to divert from the
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ethical way of life. Hence, no one can excuse himself or herself of his or her actions by citing force of circumstances or pressure of men for his or her unethical activates. Hence all ethical or unethical actions are supposed to result from voluntary human actions & not from situations beyond their control.
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2.2 Labor:
y Business should uphold the freedom of association and the effective recognition of the right to collective bargaining. y y y The elimination of all forms of forced and compulsory labor. The effective abolition of child labor. Eliminate discrimination in respect to employment and occupation.
2.3 Environment:
y Business should support a precautionary approach to environmental challenges. y y Undertake initiatives to promote greater environmental responsibility. Encourage the development and diffusion of environmentally friendly technologies.
2.4 Anti-corruption:
y Businesses should work against all forms of corruption, including extortion and bribery (Source: www.unglobalcompact.org)
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2.5
2.5.1
A trusting relationship between management and shareholders is critical. Investors and lenders must be satisfied with the manner in which shareholders oversee the performance of management and participate in key decisions. Sound principles of corporate governance include the following:
Delineating in the company charter the respective roles and responsibilities of both management and shareholders.
y y y
Transparency of voting rules. Respect for the rights of minority shareholders. Open communications with shareholders through the provision of audited accounts and information about the progress and operations of the company.
A well-functioning board of directors who have the skills, the time, and the access to information needed to discharge its responsibilities effectively.
The board will act in a fiduciary capacity on behalf of all the shareholders.
2.5.2
Enterprises have an important responsibility towards their employees. A number of basic principles typically guide the attitudes of successful enterprises toward their employees:
y y y
Due regard for labor laws. Commitment to adequate standards of worker health and safety. Non-discrimination in the recruitment, compensation, and promotion of employees. Respect for the rights of workers to engage in union activity.
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Effective systems for consultation with employees on employment conditions and other issues that affect the employees.
Clearly stated and transparent policies relating to compensation, benefits, promotions, and other employment conditions.
Commitments by the enterprise for contributions to pension plans; and strict protection of the integrity of company-sponsored pension plans.
These principles do not limit the right of an enterprise to enforce discipline on its labor force or to terminate workers in accordance with applicable law.
2.5.3 RELATIONSHIP WITH OTHER ENTERPRISES
A relationship of mutual trust in which all parties benefit is the most significant aspect of relations between partners in joint ventures, contractual arrangements, or business relations with other enterprises. The reputation of a company is its most valuable asset. Once the reputation of an enterprise is tarnished, it is very difficult to gain trust with the same or other business relations. A number of basic principles that typically promote mutual trust in business relations include:
y y y y
Commitment to excellence in products and services; Commitment to gain respect and trust in all business relations; Respect for the sanctity of contracts and business relations; In case of a commercial dispute, a willingness to negotiate and compromise in order to reach an amicable solution.
Respect for the sanctity of rule of law, including abiding in a timely manner with decisions of any court, arbitral panels, or other administrative bodies.
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2.5.4
As a company is an integral part of the community in which it operates, a sound relationship with the community is essential. Caring for the environment is a responsibility of the enterprise towards the immediate community, but it also extends to all communities and areas whose environment may be affected by the enterprises activities. Enterprises must:
y y y y
Be sensitive to concerns of the local population; Communicate with the local population; Abide by all applicable environmental laws and regulations; and Show tolerance for people of other cultures, races, beliefs, and countries.
2.5.5
Well-managed enterprises are law abiding enterprises. To maintain a sound relationship with governmental authorities, enterprises must:
y y y
Pay all taxes that are owed and due; Abide by all mandatory government and local regulations; Obtain all governmental permits, licenses, and approvals required to do business;
Deal with government authorities on an arms length basis, and make no attempts to improperly influence governmental decisions;
Establish transparent procedures regarding transactions engaged in by enterprises with any government agency or official or in dealings with any enterprise owned or controlled by a government agency or official; and
In transactions with any government agency or officials or with any enterprise owned or controlled by a government or government official, include appropriate
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provisions to ensure compliance with international or national codes against extortion and bribery.
2.5.6
Principles concerning prevention of extortion and bribery are intended as a method of self-regulation by businesses. The voluntary acceptance of these principles by enterprises will not only promote high standards of integrity in business transactions, whether between enterprises and public bodies or between enterprises themselves, but will also protect enterprises that are subject to attempts at extortion. The business community objects to all forms of extortion and bribery. The highest priority should be directed to ending extortion and bribery involving politicians and senior officials. Bribery and extortion threaten democratic institutions and cause grave economic distortions. All enterprises should observe both the letter and spirit of the following rules:
y y
No one may, directly or indirectly, demand or accept a bribe; No enterprise may, directly or indirectly, offer or give a bribe, and any demands for such a bribe must be rejected;
Enterprises should take measures reasonably within their power to ensure that any payment made to any agent represents no more than an appropriate remuneration for legitimate services rendered by the agent; that no part of any such payment is passed on by the agent as a bribe or otherwise in contravention of these principles;
All financial transactions must be properly, accurately, and fairly recorded in appropriate books of account available for inspection by the board of directors as well as by auditors. Enterprises must take all necessary measures to establish independent systems of auditing in order to bring to light any transactions that contravene these principles. The enterprise must then take appropriate corrective action;
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The board of directors of the enterprise should periodically review compliance with these principles, and take appropriate action against any director or employee who acts in a manner inconsistent with these principles;
Contributions to political parties or to individual politicians may be made only in accordance with applicable law, and in accordance with all applicable requirements for public disclosure of such contributions.
2.5.7
CREATION OF A CULTURE THAT FOSTERS SOUND BUSINESS STANDARDS AND CORPORATE PRACTICES
Ultimately, for an enterprise to live by sound business standards and ethical practices it must develop a culture that fosters such standards of integrity. This effort must be led by management and key shareholders. Steps that management and key shareholders may take to promote this positive attitude throughout the company include:
The preparation and dissemination within the company of a code of conduct for employees;
y y y
Employee training; Encourage proper conduct and sanctions against misconduct; and Creation of an ethics office and ethics officers to advise and educate employees, and provide guarantees for confidential counseling.
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The Consumer Protection Act 1986 is a social welfare legislation which was enacted as a result of widespread consumer protection movement. The main object of the legislature in the enactment of this act is to provide for the better protection of the interests of the consumer and to make provisions for establishment of consumer councils and other authorities for settlement of consumer disputes and matter therewith connected. In order to promote and protect the rights and interests of consumers, quasi judicial machinery is sought to be set up at district, state and central levels. These quasi judicial bodies have to observe the principles of natural justice and have been empowered to give reliefs, of specific nature and also to impose penalties for non compliance of the orders given by such bodies. The main object of these bodies is to provide speedy and simple redressal to consumer disputes. It is one of the benevolent pieces of legislation intended to protect the consumers at large from exploitation.
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A third class of commercial laws governs how companies treat the natural environment. This is one of the primary functions of governmentto preserve the long-term health and prosperity of people when unregulated markets fail to do so. In the 2000s, the costs of disposing both toxic and nontoxic waste products increased substantially. Land has become more scarce and expensive. So to protect it, more laws are being passed to regulate the way products are disposed of. Stricter air pollution regulations have also been passed to, among other things, limit acid rain caused by the emissions of coalfired power stations.(Whole forests around the world have been killed by acid rain.) Similarly, there is increasing realization that our seas are becoming over polluted and overfished. Laws and regulations now govern the size of fish catches and oil drilling at sea throughout Canada, Alaska, the Gulf Coast, and elsewhere. Unfettered by laws and regulations, unethical companies will simply maximize their own short-run returns at the expense of the environment and the people in it. Future generations will not only suffer physically because of pollution but also economically as the worlds natural resources are depleted. The long-run consequences future generations faces when these companies exploit the environment are not part of their business models. Legal regulations can change this, however. When companies are forced to pay the real cost of obtaining valuable inputs and properly disposing of their waste products costs they would otherwise impose on the rest of us in terms of the wastes cleanup, the higher health costs we experience, or the depleted resources we no longer have access to their incentives change
Many types of laws have been passed to prevent unethical practices related to business occupations: laws regulating occupational qualifications, laws governing business diversity, and laws promoting employee health and safety.
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In many countries regulations exist that specify the skills, qualifications, and experience people must possess to be hired for government occupations. Air traffic controllers, tax auditors, schoolteachers, firefighters, and police officers, for example, all must have certain credentials. This serves the public interest because it ensures people have the skills they need to properly serve the public. It also prevents people from being hired for whom they knew versus what they know. Certainly, no person wants to feel he or she wasnt hired or promoted Because the person who was went to the same school or belonged to the same club as the boss. Unethical hiring practices also mean that best people are not being hired. They are not being put to their most highly valued uses, so there is a loss in social welfare, and the public interest is threatened.
Laws governing diversity seek to create a level playing field for people in the job market. Once again, the goal of these laws is to foster the hiring, promotion, and retention of people based on their ability to do a jobnot based on their ethnicity, religion, gender, age, and so on. If a company decides it needs to lay off workers, for example, the layoffs cannot unfairly affect a particular group of employees, such as workers over 50, or women or minorities. The procedures used to decide who should be hired, promoted, or laid off have to be defendable in court. One reason such laws are necessary is to lessen the impact of the psychological bias called the similar to me effect, which research shows is a common tendency. As the name implies, people commonly tend to recruit, promote, and retain people from within their own religious, ethnic, or age groups because its easier dealing with people who are more like themselves. Diversity laws help prevents this from happening by making it illegal to choose between people on no job-related grounds.
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A final set of laws governs how companies must protect the health and safety of their employees while on the job. Most companies make the need to protect their employees from harm a major priority. But because abiding by health and safety regulations can be expensive, other companies do not or they take shortcuts to save money. For example, in 2001 a huge power generator blew up in one of Fords car plants killing several employees and inuring many others. Although Ford had generally followed U.S. health and safety laws, it became clear to investigators that Ford could have been more proactive. For instance, it could have better trained the workers responsible for repairing and servicing the generator. Instead, the workers had been allowed to take shortcuts that saved them time and Ford money, which indirectly may have contributed to the explosion.
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4 BUSINESS
ETHICS,
COMPLIANCE
AND
ENFORCEMENT
It is enormously significant for management to behave in ways that are ethical and consider the greater good of the organization and its employees. Since ethics plays a major role in business management future managers therefore need to be aware of the positive and negative implications with ones behavior and hence this will allow them to think about how ethical and unethical behavior has future effects. One of the main roles of business ethics in business management is for managers to act as a role model by demonstrating ethical behavior in order to set a leading example for other employees to look upon.
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Another role of Business Ethics in business management involves creating a competitive advantage by creating imaginations that are collectively multifaceted, complicated to reproduce and exceed through with significant time subordinate. The Companies who creates association with shareholders based on trust, honesty, and business are in a great situation to gain a benefit over organization which does not .The cause constituting is that formulating corporation and trust between shareholders considers time, which successively conducts to commonly favorable worth accuse that assist increase compensation which guide to enhanced performance.
Business ethics also plays a vital role in helping an organization in creating a comprehensive convinced collective image which is believed to be the basics for structure fortunate industrial contribution through numerous objectives of the public interest and relation. However, business ethics is also central in generating faith and trust between an organization and its stakeholder. Furthermore, a firm with a superior representation can more simply effective customers that manipulate the achievement of the as partners, investors, customers and employees. Therefore Business Ethics highly contributes to enhanced performance.
CSR undeniably plays a very important role in Business Management. CSR plays a major role in building a sustainable development for business concern in a considerable comportment. It has further observed that the CSR of the Companies contributes numerous kinds of business activities that comprise enhanced reputation of the firm and superior retention and loyalty. In addition it created by The Sustainable Development of the World Business Council for on CSR and this sector companies create a vital
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position in insuring risk, recognizing market share, improving value of the firm and asserting support of the customers.
Organizations firmly consider that long run financial feasibility is in the interest of all stakeholders and that by integrating CSR into their organization, it will play a role of providing long term development and financial protection for those shareholders and to preserve or improve their position in market for instance safety and health consideration at employment, management development and training all assist to support security, stability, and effectiveness inside the workforce.
These are the few sectors of ethical consequences that firm would come across throughout the exercise of Business Ethics. The two main barriers an organization may encounter are:
o o
Corruption is essentially dishonest and at times completes illegal, inducing damage to the economy, individuals and public life, and, if conventional, may support planned
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misdeed in the Companies these kinds of elements are not exist and they should be careful regarding these kinds of elements which will be harmful for the management point of view Counterfeiting or the production of fake goods, that is the cause of the theft of rational property, is one more region of ethical distress in the firm with the barriers above, deference for the unfeigned brand drops when multitudes of counterfeits are produced that conduct to low execution by the organization.
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commercial shareholders, like that fair-paying works for personnel and superior choice, fairly-priced merchandise for consumers. Effectual obligations necessitate carrying business concern legally and economically. Companies responsibilities of the ethics exit outside of the legislation by deflecting impairment or social consequences regarding moral of the people consideration and behaving what is correct, exactly, average and handling.
organizations is affected negatively due to high initial costs of implementation (e.g. the expense of a new filter which reduces the number of harmful waste products into the air) and lesser quality of products due to restriction on components used, therefore fewer sales, resulting in a less competitive organization.
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the firms and individuals must perform ethically and with predisposition towards cultural, social, environmental and economic consequences. Determined for social obligation helps people, authorities and Companies members have an optimistic affect on development, business and society with a positive involvement to outcome (George, et al, 2009). In current natural life numerous customers have been upset by extensively advertised instances of impostor by administrators and abusive goods developed by some firms. As outcomes customers have become more cognizant of whom they are doing trade with and those goods customers should purchased. Many companies who are looking for long-term profitability are looking for ways to become more socially responsible.
If the environmental risks of the organization are small but the market opportunities are large, then the organization could be seen as offensive, or being proactive. For example, a waste collection Inc who is helping the environment by collecting waste has high market opportunities because they could use their optimistic elements as a marketing implementation for example, a chemical Inc who is highly legislated may lose competitive advantage (Denis, 2009).
This means that organizations should be highly integrated with governments in terms of sustainable development. The way that the Companies strategy is implemented is evidence that a lot of companies are operating in the fourth era. However, some companies are not in this era and so many models have been developed to try and identify where companies are in terms of a progression towards an environmental strategy, and the relationship between strategy and the environment.
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According to the Companies shopping with attitude survey, 72% of consumers are more concerned with ethics and the environment than they were ten years ago and 60% of consumers are manufactured to not produce goods that did not assemble their ethical expectations. The 28% may take an apathetic, skeptical or defeatist view over ethical consumerism. It has 72% of consumers are interested in how ethical a business by the Companies strategy (Jeffery, 2009). It is wise for an organization to respond to ethical consumerism. First of all, organizations need to be informed of what issues consumers are concerned with so they need to do their research. The Companies does the following as a response to ethical consumerism.
The centre apprehension of outsourcing ethics is secret information and data safety. Chief Privacy Officers are extremely apprehensive about correct data safety practices. If people outsourcing associate does not have sufficient data safety process, it may be prudent to continue clear of them. Everyone arrogates to be ethical. Though a clear perspective of the parameters for identify organizations with ethical conscience will be difficultness, some elements are vivid.
Legal perceptions may differ from one nation to the other and ambiguity could arise when a dispute occurs, leaving both parties in a fix. The association becomes easier when the parties have a legal, moral and ethical obligation to comply with the agreement, with due respect to international law.
Ethical program and model might be detailed as the capacity and instruction of a firm over the long expression, preferably which corresponds its imaginations to its converting surround and in contribution its customer, markets, and buyers as so to gather
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shareholder prospect (Elaine, 2000). Therefore, environmental plans must be the identification above, plus an appearance of a firm assurance to the environment; so where an organization tries to meet stakeholder expectations, this must be in balance with the protection of the environment.
Corporate ethics is taking on increased prominence at U.S. companies, according to a recent survey by Deloitte and Corporate Board Member magazine. Eighty-three percent of companies surveyed have developed formal codes of ethics or conduct. And more than 98 percent of survey participants agree that an ethics and compliance program is an essential component of corporate governance.
These findings should come as no surprise, given the heightened attention paid to corporate ethics over the last couple of years, as well as the business imperative to strengthen ethics programs in response to Sarbanes-Oxley.
But although many companies have taken the fundamental first step of establishing a code of ethics, results are decidedly mixed concerning other activities designed to improve corporate ethics.
For example, when asked if compliance with their code of ethics is tracked, only about 75 percent of companies that have a code said they actually check to make sure it is being adhered to.
Slightly lower numbers were recorded for corporate performance in educating their employees on business ethics. Only about 68 percent of companies surveyed provided training to their employees on the requirements and responsibilities contained in their code of ethics. Further slippage can be seen regarding the allocation of resources to ethics activities. When asked if their company had an ethics officer (either full- or parttime), only 55 percent answered in the affirmative.
However, positive data also emerged from the survey, with progress being made on several fronts. For example, better than 95 percent of companies said their code of
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ethics applied to every member of their organization, including senior management and board members. And more than 90 percent of companies with global operations said their code covered both their domestic and foreign outposts. Among the highlights of the survey are the following questions and responses, along with our comments on the results.
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5 ROLE OF JUDICIARY
A relationship exists between law and ethics. In some instances, law and ethics overlap and what is perceived as unethical is also illegal. In other situations, they do not overlap. In some cases, what is perceived as unethical is still legal, and in others, what is illegal is perceived as ethical. A behavior may be perceived as ethical to one person or group but might not be perceived as ethical by another. Further complicating this dichotomy of behavior, laws may have been legislated, effectively stating the governments position, and presumably the majority opinion, on the behavior. As a result, in todays diverse business environment, one must consider that law and ethics are not necessarily the same thing.
5.1 Definitions
Law can be defined as a consistent set of universal rules that are widely published, generally accepted, and usually enforced. These rules describe the ways in which people are required to act in their relationships with others in a society. They are requirements to act in a given way, not just expectations or suggestions to act in that way. Since the government establishes law, the government can use police powers to enforce laws. The following chart defines the terms in the definition of law above.
y
Consistent If two requirements contradict each other, both cannot be termed a law, because people cannot obey both.
Universal The requirements must be applicable to every one with similar characteristics facing the same set of circumstances.
Published The requirements have to be published, in written form, so that they are accessible to everyone within the society.
y y
Accepted The requirements have to be generally obeyed. Enforced Members of society must be compelled to obey the law if they do not choose to do so voluntarily.
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The word ethics is derived from the Greek word ethos (character), and from the Latin word mores (customs). Together they combine to define how individuals choose to interact with one another. In philosophy, ethics defines what is good for the individual and for society and establishes the nature of duties that people owe themselves and one another. The following items are characteristics of ethics:
y y y y y y
Ethics involves learning what is right and wrong, and then doing the right thing. Most ethical decisions have extended consequences. Most ethical decisions have multiple alternatives. Most ethical decisions have mixed outcomes. Most ethical decisions have uncertain consequences. Most ethical decisions have personal implications.
It is important to note that there is also a difference between ethics and morality. Morality refers both to the standards of behavior by which individuals are judged, and to the standards of behavior by which people in general are judged in their relationships with others. Ethics, on the other hand, encompasses the system of beliefs that supports a particular view of morality.
5.2 What Are The Punishments For Breaking The Code Of Ethics?
If an organization has disobeyed the ethical code or deviated from it in any way, they are liable in a court of law. Common corporate crimes committed by companies are: 1. Breaking anti-trust 2. Environmental laws These kinds of crimes see organizations fined for millions of pounds. It is important for large organizations to be fined amounts which are reasonable in terms of how much the company makes. If a multi-million pound company commits an environmental crime, for example, mass fly-tipping, they must pay the consequences of perhaps a fine of up to 2 million.
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It is the responsibility of the company to maintain an ethical approach to their employees the consumer. It is often the case that the public may have to flag up any ethical problems that become apparent, as it is sometimes easier to see clearly inside from the outside, as it is to see inside when you are on the inside. The competitive nature of the global business market means that companies have to set higher targets, work their employees harder and ultimately make more profit than ever before. This however, is problematic because not all business corporations have the time or resources to ensure that an ethical policy is being followed. Yet considering the heavy fines that a corporation is likely to be served, it is more important to avoid deviating from a code of ethics than it is to focus on profit and pay up the fine. Some well-known examples of unethical behavior demonstrated by corporations are: MacDonalds using poor quality meat and raising cattle in poor conditions Primark exploiting sweat shop workers in developing countries Some coffee shops inadequately paying suppliers who are often from less economically developed countries (LEDCs) Ethical business is more important for companies who trade oversees, as there are more implications involved when unethical behavior is demonstrated to another country and causes its native people physical hurt or financial trouble. The business world carries many implications for local life on a community level throughout the world. The Fair Trade Association was established to abolish western businesses and their tendency to take advantage of disadvantaged workers in LEDCs. If you are employed in a corporation and you think the ethical values are not being considered in the carrying out of daily tasks, it is important you notify your manager of this immediately. A fine could be detrimental to the company is it is a small business.
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6 NGOs/Civil Associations
Society
Groups
and
Business/Industry
effectively regulate the areas in NGOs operate. Even in countries with proper regulation, self-regulation is seen as a way of going beyond the legal minimum to promote higher standards of governance and accountability. NGOs need to maintain societys trust and to do diversify source of funding and attract other donor makes self-regulation a necessity. Self-regulation can be achieved in many different ways along a continuum between two extremes: Code of conduct are self regulatory mechanisms where groups of organizations agree on standard governing their conduct, with each promising to abide by established norms.
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liberalization of economies and politics in the last decade creates an enabling environment for civic activism. All of this presents an unprecedented opportunity for civil society and other non-state agencies - who really represent the main stakeholders in any scheme of good governance and low corruption environment to play an enhanced role in the anti-corruption struggles in the country. The question is what role
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can civil society play in the fight against corruption or self-regulation in corporate world? How may this role be enhanced?
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simply setting standards and procedures. Civil servants should be hired and assigned transparently and should receive compensation adequate to support their families properly without resorting to corruption. Business leaders must also recognize, however, that good public governance requires resources. Reasonable civil servant compensation, for example, tends to reduce corruption, but it must be paid, in part, with the taxes that businesses pay. Failure to pay business taxes when the government is trying to reform makes reform efforts virtually fruitless. Being part of the solution to this challenge of developing a market economy requires paying the enterprises fair share of the cost of government. There are several obstacles to good public governance, including practices that enable enterprises to influence government policy improperly. Enterprises operating in many markets have adopted the practice of forming patron relationships with individual public officials as a means of securing government contracts and preferential treatment. Many large and successful enterprises strive to capture the state by securing the passage of laws or obtaining licenses that benefit them over other enterprises. What many think of as state capture is the effort of a firm to shape the laws, policies, and regulations of the state to its own advantage by providing illicit, illegitimate, and non-transparent private gains to public officials. Such practices may offer short-term gains, but they are a major source of business risk and market instability.
State capture is also a cause of poor public governance, because decrees issued to benefit one enterprise or organizations injure the economy as a whole by undermining competition. An enterprise that engages in state capture has a stake in maintaining conditions of poor public governance, including weak state institutions and ambiguous laws and regulations. State capture seriously impedes the development of the rule of law. It creates conditions under which effective and efficient enterprises support ineffective and inefficient enterprises. World Bank studies show an association between state capture and poor governance in emerging market economies.
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To foster stable conditions for economic growth, responsible business leaders should help establish clearly defined laws and practices regulating how businesses might influence government decision-making. RBEs conduct their business with government on a transparent basis. They organize themselves around issues of mutual concern with other enterprises to lobby the Government under applicable laws and procedures.
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Several advantages result when companies and their managers behave in an ethical way. First, companies known for their ethical behavior enjoy a good reputation.
Goodwill, and confidence others have in a company such that they want to do business with it. A company with a good reputation will find it easier to do more business and obtain resources from stakeholders. Behaving ethically is therefore the economically right thing to do because it increases a companys profits.
7.2 Consequences
A second reason for companies to behave ethically is because when they dont, the government (and taxpayers) has to bear the costs of protecting their stakeholdersby providing laid-off employees with health care and unemployment benefits, bailing out pension plans gone bust, or seeking compensation for shareholders. If all companies in a society act socially responsibly the quality of life for people as a whole Increases. Experts point to Japan, Sweden, Germany, the Netherlands, and Switzerland as examples. In these countries, organizations act in a highly ethical way towards their stakeholders. As a result, crime, poverty, and unemployment rates are relatively low, literacy rates are relatively high, and socio cultural values promote harmony between different groups of people.
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It affects all aspects of peoples lives, so the way business behaves toward stakeholders affects how stakeholders will behave toward businesses. You reap what you sow, as the adage goes. Everyone agrees that business managers must understand finance and marketing. But is it necessary for them to study ethics? Managers who answer in the negative generally base their thinking on one of three rationales. They may simply say that they have no reason to be ethical. They see why they should make a profit, and most agree they should do so legally. But why should they be concerned about ethics, as long as they are making money and staying out of jail? Other managers recognize that they should be ethical but identify their ethical duty with making a legal profit for the firm. They see no need to be ethical in any further sense, and therefore no need for any background beyond business and law. A third group of managers grant that ethical duty goes further than what is required by law. But they still insist that there is no point in studying ethics. Character is formed in childhood, not while reading a college text or sitting in class.
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8 Conclusion:
No other element in business life can profit so greatly for such a small investment. Lacking this, no other element can cost business so dearly. CEOs who commit their companies to ethics have done so in the name of maximizing long term profits and fostering the health of their organizations. Benefits of an ethics program include: 1. Providing organizational guidelines for business integrity in turbulent times.
2. Helping employees deal with ethical issues they face daily on the job.
4. Creating an insurance policy to help ensure that company policies and procedures are legal.
6. Reinforcing the values associated with quality management, strategic planning, and diversity management.
8. Improving society.
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There is already something odd about this question. It is like asking, Why are bachelors unmarried? They are unmarried by definition. If they were married, they would not be bachelors. It is the same with ethics. To say that one should do something is another way of saying it is ethical. If it is not ethical, then one should not do it. Perhaps when business people ask why they should be ethical, they have a different question in mind: what is the motivation for being good? Is there something in it for them? It is perfectly all right to ask if there is a reward for being good, but this has nothing to do with whether one should be good. It makes no sense to try convincing people that they should be good by pointing to the rewards that may follow. One should be good because good is, by definition, that which one should be.
References:
Books:
Business Ethics, Corporate Social Responsibility and Globalization for the Common Good by KAMRAN MOFID (SHEPHEARD-WALWYN (PUBLISHERS) LTD). Business Ethics The Law of Rules,workingpaper_19_michael
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