Ethics and Morality in Business

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In order to explain this subject in the most direct and easy way we have to identify and find the difference between ethics and morality. Additionally to this we have to highlight that business ethics is not only related to social responsibility or some social actions the enterprises do, this is a very common mistake even experts in the subject do.

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Commonly, ethics and morality have been used as synonyms, however, they are very different and should be very well identified in order to avoid confusion. Morality refers to the way a person acts and reacts according to their values, and to be clear, each person have different values. This leads to different individual moralities.

Ethics are philosophical subject which studies if the morality used is adequate or not. To be simple with this subject, it can exist moral without ethics, however, it cannot exist ethics without moral, because as explained before ethics are used in order to analyze the moral.  When we talk about ethics, in fact we are talking about moral philosophy.

In order to evaluate moral there have been established some ethical principles, which are universal and must be shared and respected by everyone even though their values, and morality are different. Brugger (1948) states that rules of customs are added to the laws of moral, which apply precepts of themselves to specific actual situations.        

As part of philosophy, ethics is more focused on the why something is done, and comes from the ethics principles mentioned before, while moral focuses on what should be done, according to the inherited values of each person. Moral is also related to norms and judgments. Norms are the generic behaving rules, and judgments are the application of them to a particular case.

In the enterprises exist a wide range of morals. It is the business ethics which are in charge of confirm if what the people inside the company are doing the right thing or not, based on the ethics principles the enterprise relies on.

When the enterprise is involved in order to make a decision, the moral of each person inside of it is not enough, they have to look for a group moral. Business ethics is important because in this way people can create organizational values, and think about every consequence that will happen according to their actions, and take the responsibility of it.

The ethical principles mentioned before, all together create a concept of a person, who has dignity (autonomy principle), someone who is sensitive (non-maleficence principle), that is social (justice principle), and with aspirations (beneficence principle). These principle do not define the person as someone that can be buy easily, and makes agreements with other in order to maximize their interests. Talking about business ethics without taking in consideration people and their dignity is nonsense because the respect towards someone is really important. Enterprises have a really big contribution to this because they are in charge of providing wealthy, work security, development of the employee in an integral way.

Ethical principles

Mainly there are four main ethical principles.

a) Autonomy principle

In this principle it is established that every person is free to do what they want, unless they start interfering with someone else’s freedom. This gives them the freedom to make choices, hold view, and take actions based on personal values and beliefs.

b) Non-maleficence principle

This principle is based on doing no harm to others, and if there is no option, to do the less harm as possible. The objective of it is to not create nor increase the damages already existent, in order to not interfere with other people’s autonomy principle.

c) Justice principle

This principle is based on the Human Rights in order to keep human dignity, to deliver the same rights and information to everyone. To make sure that if something creates advantages for someone, it does not only does not create disadvantages for others, but creates advantages for them too. In business, usually stakeholders are always craving for more, despite of what can happen to the others. So this principle is very important in order to keep a balance between objectives and people.

d) Beneficence principle

In business this principle aims to achieve the maximum benefit for the maximum amount of people possible. It complements with the non-malefence principle, because while one aims to no harm others, the other one aims to benefit them. Empathy has a great impact on this principle.

Corporate ethos

Enterprises function according to the people who are working within it, so it is important that a corporate ethos exist in it. Corporate ethos is the union of characteristics which help an enterprise to create products or services and to fulfill goals and benefits (not only economic). Most of the time this corporate ethos is a goal for the stakeholders of the company, in order to have a company managed ethically.

Conscience and practice are important in business ethics. Being conscious means having the knowledge and the will to do something voluntarily considering moral and their own values.

There are different levels of corporate ethos, the first level is the preconventional, where the individual’s criteria to differentiate the good from the bad, while the bad is questioned towards positive consequences. In this level exists two states, orientation to punishment and obedience’ and instrumental and relativist orientation’, in the first one the goal is to avoid harm, and the fear to a punishment as a consequence of an action, while the second one is when the actions are made by convenience, in order to fulfill the own needs. According to Logsdon (2005) some companies are located in this level, because they look for their own interests (state 2) and avoid bad consequences for the company (state 1).

The next level is the conventional, where the goal is to fulfill desires and achieve social approval. In here there are also two states, orientation to concordance’ and orientation to law and order’. The first state, says that an action is not bad if the intention behind it was good, and the other is the respect towards the law and the search of the social order. Enterprises in this level works in the same way as the other enterprises in the same sector.

The last level is the post-conventional, where the social approval is not necessary, it mainly focus on the own criteria. Two other states are included,?legal orientation of the social contract’ and ?ethical principles orientation’. The one related to the social contract seeks social consensus accepting the conflicts that can happen in the conclusions, and the other one are based in a consistence and logic universality. The enterprises which are in this level respect other enterprises and look for having an ideal enterprise and which is the benefit it gives to society.

Moral development occurs not only in people but also in organizations and enterprises, by the principle that in these groups exist people coordinated in order to achieve a goal. If enterprises develop themselves as moral agents they can develop stakeholders as well.

Theory of the stakeholders

Baurmann (1996) explains that the existing cooperative forces of the market are not strong enough to ensure a reliable moral behavior. The continuous networks of exchange relationships and personal dependences in a market society is too narrow to match the cooperative behavior with the own interests of the participants of the market. As a result, people start having an asocial and non-cooperative behavior in order to accomplish their goals. Cortina (1997a) explains this problem, in a different way, when doing business in the market, the goal is not to make only one part the winner, but to make all of them winners of something, in other words, all stakeholders should have a positive result after business were made, and not only the actionists.

According to Cortina (1994), human reason is dialogic, meaning that in order to solve problems dialogues are required, this principle is applied as well to morality and ethics. In order to establish which regulations are morally correct it is necessary the existence of dialogue among the affected people and giving as a result a mutual agreement stating that these regulations are correct. Apel and Habermas formulated a position called dialogic ethics, where every person that have the ability to communicate is a valid interlocutor, without exceptions. Garca-Marza (2003: 42) says the objective of establishing this in enterprises, is to change the conflict culture that has reigned among the enterprises for decades, with a cooperation culture, where dialogue between stakeholders exist in order to seek a greater benefit for all the participants.

Freeman (1984: 25) defined stakeholders as all the groups that can be affected by the attempt from the enterprise to achieve its goals’. The stakeholders’ theory bases mainly on the existence of a multiple comprehension in the enterprise, every participant in the actions of the enterprise have interest in the enterprise, not only the workers or owners of the enterprise.

Argandora (1998) affirms that the common good theory, is suitable enough to develop the stakeholders’ theory, because the common good theory indicates that the main duty of the stakeholders is contribute to the enterprise goal, not only by doing their job or investing money on it, but also by creating the adequate environment where all the participants get what they think they deserve from the company, not talking only about dividends and wages, but about something deeper, the acknowledge of having contributed to something bigger.

The importance of companies surpasses the economic aspect, it affects directly into the sociopolitical system, and it plays a great role in a society. The social performance a company offers is crucial to the maintenance of society.

Business ethics

Essentially business ethics is the discipline of knowledge that studies the regulatory issues of moral nature that exist in the business world.

Business ethics is usually divided in two big parts (O’Fallon and Butterfield, 2005):

  • Normative ethics: which goal is to offer guidance to the workers on how they should behave and act. It is based mainly in moral philosophy and theology.
  • Empiric ethics: which focus on the prediction and explanation of the real behavior of workers in a business environment. It is based in management pragmatism

While applying business ethics it is important to find a balance between ethical principles and economic interests. In essence business ethics is a mean and an end in a company. It focus on improving the quality of life of the stakeholders, promoting the wealth generation, and forging the corporate ethos. According to Smith, business ethics is ?the reflection on the legitimacy of business and implementation in his management of human values.’

The most common ethical practices are:

  • Declarations or codes of conducts
  • Good governance actions
  • CSR reports
  • Audits and certifications of business ethics
  • Decision-making process
  • Creation of ethics committees

However the implementation of one or more of these practices does not ensure that the company is acting ethically. It is important that the mission of the company is aligned with the business ethics, so these practices can be done and implemented in the company. It is vital to have in mind three important things.

  1. What are the expectations from business ethics: comprehend that the company works in order to give a service to society, and that employees are human beings and not merely instruments.
  2. Why business ethics are important: in developed countries, enterprises are the main agents of change, they have the power to influence in a positive way the society. By integrating ethics to companies, all the stakeholders can align with the company goal.
  3. To who is it important: to employees it provides them a professional development and a wage, to actionists, revenues according to the values of the company, to providers, the security that they are working with a transparent company which they can rely on, and to clients, high quality products and services at a reasonable price.

As a matter of fact, business ethics, cannot exist if there are no businesses, so enterprises must be economically sustainable, and in order to achieve sustainability they should follow three principles.

  1. Profitability principle: It is necessary that a company gets profits in order to fulfill actionists, employees and achieve the goals of the company.
  2. Quality principle: It is necessary to manage the resources in an optimal way in order to deliver the best possible benefit to the stakeholders. Basically, it consists in having the best result with the highest efficiency possible.
  3. Competitivity principle: It is a must to keep competitive in the market in order to achieve the goal of giving the best possible benefit to stakeholders.

Business ethics levels

There exists three levels in order to analyze business ethics within a company. We also have to take in consideration the existing interconnection between them.

  • Macro level

It analyzes ethics with a wider scope, mainly in the economic, politic and social environment. It is taken in consideration the economic systems that affect and establish the working environment of the company.

The disciplines related to this level are sociology, politic and economic sciences and anthropology.

  • Meso level

Here is where organizations do the job of moral agents, by working with different groups from organizational structures with people that interact among each other but have different interest and purposes. It is primordial the ethical reflection to establish good government policies, for the departments which take the most important decisions, for procedures and rules to assimilate ethics in daily work.

  • Micro level

In this level what is analyzed is the interaction of a person with other persons, other stakeholders groups, even with the own enterprise. In here they can study how the individual acts as a professional, and as part of a group of stakeholder, regarding his values and principles. These level analyzes topics such as moral harassment, bribes, use of privileged information, etc.

The meso and micro level are the ones that should have more emphasis because in these levels it is analyzed the relation and influence of the person on the company and vice versa.

Ethics dimensions

The consequences of the actions a person does is directly linked according to the level the individual is acting. There will be times when they act as an individual, while others will be as part of a company. There exists four ethics dimensions.

  • Ethics of privacy:

It is related to the private life of the individual. The decisions the individual takes are influenced merely by its personal beliefs and personal identity

  • Professional ethics:

It is related to the performance it has as a professional. The decisions the individual takes are influenced by the professional excellency, and his profession vision

  • Civic ethics:

It is related to the individual as a citizen. The decisions the individual takes are influenced by the impact they would have in society, and the conviviality of the people who are around it

  •   Organizational ethics:

It is related to the performance the individual has in an organization. He has to represent what the company is committed to do, acting with the organization culture and a corporate ethos.

It exists an interdependency between these dimensions, because an individual has to live with the four dimensions constantly. If there is something wrong in one of the dimensions it can affect the others, the same happens with a positive event.

In the first three dimensions the ethical agent is the individual itself, while in the fourth is the organization representative, which represents a corporative identity and a way to do things right.

Millennials

Barford & Hester define millennials as a generational group born since the early 1980s until early 2000s, which are characterized for having grown in a time with technological breakthroughs, which then have been embraced by this generation. According to many researchers millennials have a unique ability which is use effectively networked digital communication technologies in order to accomplish a wide range of tasks. Some researches have shown that millennials work collaboratively, gathering information quickly and sharing it readily (Howe & Strauss, 2000; Tapscott, 1998; Zemke et al., 2000), respect diversity, value multiculturalism, and are resilient (Zemke et al., 2000).

However, Howe and Strauss (2000) agree that millennials had had more individual attention than other generations at home and school, leading into a struggle when working in an unsupervised work environment.

Characteristics

According to Crespo (2014) by the year 2020, this generation will make more than one third of the global workers. Several studies affirm that this generation is the most consumist, rush in order to get their labor freedom and having an adult life. Have a special concern with the nature, and prioritize their personal environment over the work and social environment. Main (2013) describes them as lazy, narcissistic and prone to jump from job to job. This generation prefers to work from home, and they agree as well that millennials they last few time at work, because of the high expectative they have from the job. This way of life helps them to experiment a lot of new things (Begazo & Fernandez, 2015).

Some of their main characteristics are:

–         Creativity:

They are convinced they have a great potential, but in order to develop it they need good bosses and the right tools. (Medina, 2009)

–         Short-term focus:

They focus on tasks with high reward in short period of time, so they put a lot of effort in short intervals

–         Open-minded

They are sure that working is a way and not an end, so they can do it anywhere and anytime.

–         Team workers:

Prefer to work in group, organize their time in order to finish quickly the tasks and have more time for themselves.

–         Eco-friendlies and socially responsible:

Sensitive with social topics, they seek to preserve the environment and spread the word about it. (Pinaud, 2013)

–         Multitasking

Working under pressure with good results

–         Egocentric

Loyal to themselves and friends, but not to companies.

Research question

As mentioned before, in a few years millennials are going to be the next great work force with almost 75% of the working market, so they should be aware of the importance of business ethics, in order to lead companies to fulfill their goals without breaking the law, or making some businesses under the table. Additionally to this, I decided to work in Latin America because in this part of the world is where lots of corruption scandals have been appearing in the last 5 years. In conclusion, in this investigation my goal is to find out if millennials are conscious of the importance of business ethics and try to discover some their thoughts about this topic related to society. To finish with this, hereby the research question:

How important are business ethics for millennials from Latin America?

Sub-research questions

Business ethics play an important role in enterprises?

Enterprises apply ethical practices?

Business ethics play an important role in society?

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Ethics And Morality In Business. (2019, Dec 04). Retrieved September 29, 2022 , from
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