Organizations’ management departments play critical roles in ensuring that employees execute their roles according to the formulated rules that guide their operations. One of the mechanisms of managing employees is orienting them to a common organizational behavior through the prescription of common organizational codes of ethics. In this context, ethics refers to standards of behaviors or conducts.
It involves the evaluation of individual values, the possession of knowledge on communal principles, and individual standards (Byrne, 2011). It also entails the development of the capacity to make well-informed choices in addition to the realization of the impacts of the choices both in the short-term and long-term basis.
Where choices result in undue repercussions that may impair an organization or individual’s achievement of the set standards of conduct, codes of ethics demand that such persons take the responsibilities of the repercussions of their choices. This paper investigates the principles of business ethics management. Besides, it examines its roles in organizations by reviewing five scholarly articles.
Importance of Business Ethics Management
Ethical issues emerge in every function of management in an organization. For instance, through HR, the management has a noble role in ensuring recruitment and maintenance of talented and highly effective workers who are capable of realizing an organization’s goals and objectives. Thus, an organization needs to evaluate constantly the personal profiles of a large number of people from whom to select the most qualified personnel.
Social media constitute an important way of contacting many people both rapidly and in a cost-effective manner. For instance, LinkedIn constitutes an acceptable mechanism of evaluating potential candidates for a given job opening. LinkedIn profiles houses voluntarily published past employment details of people.
However, using such information to inform the decision of recruitment introduces ethical questions of the reliability and dependability of such information to provide a true account of the information publisher. Is it then ethically appropriate to use unreliable sources of information to inform decision-making processes within an organization such as recruitment decisions?
Several theories explain how people react when they encounter certain unethical situations. These theories fall into normative approaches and descriptive approaches (Yassin, 2012, p.4). In the perspectives of normative approaches, ethics essentially define various values and principles, which guide decisions and behaviors. Descriptive approaches perceive ethics as constituting what is considered an ethical organizational, individual, or societal behavior.
Whether from descriptive or normative contexts, several studies note the roles of ethics in the enhancement of business values. For instance, Byrne (2011) notes that organizations that are socially ethical and responsible experience reduced risks due to high sensitivity and capacity to control the changing external environments.
On the other hand, Soutar, McNeil, and Caron (1995) associate consumer boycotts and lawsuits with negative publicity resulting from the negation of businesspersons from taking into incorporation the long-term impacts of engaging in unethical behavior.
Engaging in ethical business behaviors has costs, which do not only express themselves in terms of time but also money. For instance, in the hospitality industry, Pettijohn (2008) asserts that organizations gain from the resources invested in inducing ethical behaviors in terms of increased profits due to higher employee morale and productivity.
Therefore, even although an organization may encounter higher expenses following its strategic decisions to run an ethical firm in the short-run, long-term gains may form important grounds for engaging in such an endeavor.
The link between ethics and employee morale and productivity is critical upon considering the existence of evidence that links employee morale and job satisfaction together with a workforce committed to the organization (Pettijohn, 2008, p. 547).
The above claims highlight the importance of focusing on business ethics management. This focus may be accomplished through the application and enforcement of codes of conduct, principles, and rules on ethical behaviors in management.
Upholding this strategy is perhaps crucial upon considering Pettijohn’s (2008) claim that many people prefer working in organizations, which possess a positive ethical environment, which results in higher job satisfaction, less stress, and higher ratings of organizational commitment by employees.
Upon bearing in mind the benefits of adopting business ethics in managerial approaches in an organization, an important question that arises is how the concepts are significantly embraced in different organizations, whether profit-making or non-profit-making organizations.
Different organizations seek to fulfill different goals and objectives. In organizations whose operations are inspired by the concepts of capitalism, one of the noble objectives to increase returns to the owners who are the shareholders. In the execution of this mandate, Byrne (2011) asserts that organizations should not breach human rights as an important practice in ethical management.
However, the article is concerned that studies in business ethics do not include illicit businesses. For example, Byrne (2011) says that although illicit businesses “violate human rights, they have been largely ignored by business ethicists” (p. 497).
This concern raises questions about the existence of an immoral organization, which can be considered socially unfit. In response to this query, Byrne (2011) asserts that the investigation of illicit businesses over their compliance with business ethics encounters challenges due to a lack of scholarly contention on the definition of an illicit business.
Even though Byrne (2011) fails to respond to the question of whether unethical or immoral organizations exist, he provides examples of conducts within corporations, which amount to the violation of principles of business ethics such as corporate crime and involvement in organized crimes. This finding explains why illicit businesses are not incorporated into the discussion of business ethics (Byrne, 2011).
Major issues emerge in the interpretation of how malpractices such as corporate fraud amount to unethical behaviors that are necessary for consideration in business ethics management, especially when viewed from the context of fundamental human rights. People embezzle funds from organizations and start their income-generating activities that enable others to earn a livelihood.
Earning decent livelihood constitutes a fundamental human right. Although this assertion does not seek to justify engagement of organized crimes in an organization, Byrne (2011) maintains that some controversial enterprises that are considered unethical provide a livelihood to persons who do not have other alternative sources of income.
Yassin (2012) investigated the importance of business ethics management in Islamic economic systems. He deployed secondary qualitative data from the literature on Islamic economic systems, capitalism, and neo-liberal economic systems. He claimed that the capitalist economic system operates under forces of demand and supply with its players being concerned mainly with profit maximization (Yassin, 2012, p.2).
This observation suggests that the players engage in businesses in a manner they deem fit for them without considering the implications of the business operations on external actors or stakeholder. This claim justifies the necessity for the adoption of alternative economic systems such as Islamic systems.
Yassin (2012) reveals that Islamic business ethical practices only support those practices whose sources can be traced from Allah (God) through revelation to the chosen messengers and teachings in the Holy Qur’an. In this sense, practices such as capitalism and neo-liberalism that are developed to resolve many of the challenges of capitalism are unethical business practices. Human beings construct such practices (Yassin, 2012, p.6).
Major aspects of business ethics management from the context of Islamic business practices involve the responsibility for individual actions, trust, security for people’s property, enhancing self-discipline, and natural justice (Yassin, 2012). Any conduct that breaches these moral norms amounts to unethical behavior.
The Islamic business upholds moral principles to suggest the importance of establishing different economic theories that can curb corporate vices such as corruption while enhancing the conformity to human rights, fostering environmental protection, and keeping practices of money laundering under check.
Yassin (2012) confirms that the adoption of Islamic business ethics and practices together with principles of corporate social responsibility in business ethics management practices in the contemporary organizations can aid in the resolution of many morally unjustified actions within organizations.
CSR encompasses having a sense of competence and control, acceptance of cultural diversities, and having plausible information about the purpose of engaging in socially benefitting activities and projects (Yassin, 2012).
Thus, firms operating in all industries may experience immense success through the prescription of common acceptable codes of work ethics. This move leads to the enhancement of good public image with the ultimate result of increased success in terms of productivity and profitability.
Amid the discussion of the likelihood of Islamic economic business systems to offer alternative solutions to organizations that run the Darwinian principles of survival for the fittest, Yassin’s (2012) research methodology introduces challenges in terms of the reliability of his inferences.
It mainly discussed Islamic ethics in business management from a quantitative viewpoint while negating the quantitative aspects. The number of secondary sources of information is also limited by the existing limitations on the narrow literature on Islamic business management from an Islamic ethical and moral perspective.
Soutar, McNeil, and Caron (1995) discuss the institutionalization of theoretical paradigms of business ethics in Australian organizations. The researchers focused on a small sample of organizations, specifically the ones that are situated in Perth, Australia. The research design was based on direct interviews on companies’ representatives.
They were asked, “if their companies were institutionalizing ethics, why this imitative was undertaken, how this was taking place and the specific issues that were being addressed in the institutionalization process” (Soutar, McNeil & Caron, 1995, p.603). The researcher found that the perception of external organizations’ stakeholders on ethical business conducts was the key driver and motivator for organizations to institutionalize business ethics.
This process was accomplished through ethics training programs, as opposed to writing down acceptable codes of conduct in many organizations, although formal business ethics programs were institutionalized in some companies (Soutar, McNeil & Caron, 1995). However, the main concern for these programs was not delivering optimal values to owners but creating external stakeholders’ good perceptions.
Soutar, McNeil, and Caron (1995) observe that compliance to laws in the Australian context does not constitute a major motivator for institutionalizing business ethics, as opposed to the American organizations. Additionally, the interviewed company representatives stated that good corporate citizenship was not a major concern for institutionalism of business ethics in the Australian organizations (Soutar, McNeil & Caron, 1995).
Although some organizations never considered implementing programs for the institutionalization of business ethics, the work of Soutar, McNeil, and Caron (1995) suggests that ethical organizations are important for the general wellness and positive associations of organizations by both internal and external stakeholders.
From the context of their sampled organizations, practices that were considered in the business ethics management include mitigation of fraud and non-engagement in organized organizational crimes such as exploitation of employees (Soutar, McNeil & Caron, 1995).
Business ethics management constitutes an important aspect for enhancing organizational success not only in the profit-making organizations but also in nonprofit-making organizations. Bouckaert and Vandenhove (1998) evaluate the importance and relevance of business ethics management in nonprofit-making organizations. The authors assert that the core concern of business ethics management stems from the principles of corporate social responsibility.
The concerns of the roles of business ethics management in enhancing employee satisfaction aim at increasing the productivity of an organization to increase profitability levels. Consumers are also more likely to buy products that are produced by socially corporate responsible organizations.
In this sense, CSR as a core value that is considered in business ethics management aims at increasing the profitability of an organization by improving its brand image. The fact that non-profit-making organizations do not engage in profit-making endeavors raises the question of whether business ethics management is relevant to them.
Bouckaert and Vandenhove (1998) claim that appropriate versions of principles that are used to enhance business ethics in profit-making organizations can also be adopted in the nonprofit-making sector.
For instance, they claim that the principal concern in profit-making organizations is to create an ethically responsible organization to the shareholders while the main concern in the nonprofit-making organizations is creating an ethically responsible organizational authority (Bouckaert & Vandenhove, 1998, p.1076).
Consequently, business ethical elements manifest themselves in non-profit-making organizations in terms of organizational authority liability. Managers in these organizations have a responsibility to deliver social value to their owners. Any malpractice that violates this objective amounts to unethical conduct. This suggests that non-profit-making organizations engage in social contracts with parties they serve.
Social contract theory presents conducts, which are ethical and moral within society as an essential contract that is entered between people and society. Bouckaert and Vandenhove (1998) observe that it constitutes a “hypothesis that explains how society originates together with the presumed relationship between its members, how they incur responsibilities, and their rights” (p. 1075).
The theory emphasizes people should not infringe on the rights of others while exercising one’s rights during social interactions. In nonprofit-making businesses, an attempt to engage in a practice that infringes the success of an organization to deliver social benefits to people in a social contract with it amounts to unethical acts.
Business ethics management focuses on practices that uphold and determine what is morally right to do by considering the impacts of managers’ actions on organizational stakeholders. Although different economic systems are embraced in different nations, just like the Islamic economic systems in Islamic nations, business ethics management is important across all organizations.
Guided by the perspective of corporate social responsibility concerning the pillars of stakeholder theory, business ethics management is important in portraying corporations’ brand in positive ways to both internal and external stakeholders, and hence a benefit in both for-profit and non-profit-making organizations.
Bouckaert, L., & Vandenhove, J. (1998). Business Ethics and Management of Non-Profit Making Organizations. Journal of Business Ethics, 17(9), 1073- 1081.
Byrne, E. (2011). Business Ethics Should Study Illicit Business: To Advance Respect for Human Rights. Journal of Business Ethics, 10(3), 497-505.
Pettijohn, C., Pettijohn, L., & Taylor, J. (2008). Salesperson perceptions of ethical behaviors: Their influence on job satisfaction and turnover intentions. Journal of Business Ethics, 78(4), 545-557.
Soutar, G., McNeil, M., & Caron, M. (1995). A Management Perspective on Business Ethics. Journal of Business Ethics, 14(8), 603-611.
Yassin, A. (2012). Does Ethics Matter in Corporate Business Management From View Point of Islam? Kuwait Chapter of Arabian Journal of Business and Management Review, 2(2), 1-9.