The aim of this business report is to analyse the ethical dilemmas arising from daily business operations, and to determine whether Colourful Corporation was ethical in its decision making, and to provide solutions for the management of future ethical issues. Having an established international base, Colourful Corporation conducts business transactions in both developing and developed countries. In doing so, Colourful Corporation is exposed to a wide range of ethical dilemmas which are the result of differing cultural values and norms. Segon (2011) proposes variable determinants of culture including religion, political and economic philosophy, education, language and social structure.
Different cultural values and norms account for opposing perspectives regarding what constitutes ethical behaviour. The complexities in this ever-evolving business environment have brought attention towards corporate business ethics as research has found that business ethics is closely linked to an organisation’s well-being (Svensson & Wood 2011, p.21). This has highlighted the importance of ethics education for employees of the company as education will lead to the development of ethical practices among individuals in the company as well as the corporation as a whole. Furthermore, according to Hill (2011), pressure from senior management to meet unrealistic performance goals can be an incentive for employees to engage in unethical practices.
It is concluded that:
business operations continue to be conducted in both developed and undeveloped countries, where ethical issues may arise as a result of differing culture views, consideration must be given; the Corporation must act ethically when dealing in its global business operations; the risk of undertaking unethical activities as a result of unrealistic performance expectations increases; a program should be adopted to support local communities where it is conducting business operations in order to fulfil its ethical and moral responsibility in line with Corporate Social Responsibility (CSR); a need to provide education and training to its employees on corporate business ethics in order to promote a strong corporate ethical culture; and the senior executive made the correct decision, by following corporate policy. It is the corporate policy that must be adjusted to include ethical considerations, assisting future business decision making processes. Subsequently, this may potentially prevent similar tragedies occurring as a result of Colourful Corporation’s actions. *
It is recommended that Colourful Corporation:
adopt the Global Reporting Initiative (GRI) framework ,which is the most widely used reporting framework for performance on human rights, labour, environmental, anti-corruption, and other corporate citizenship issues; encourage the needs of ethical behaviour within and by the corporation to the employees; contribute to charity in the form of providing facilities such as, schools and orphanages for the poor and unfortunate children in the developing country ; update the corporate policy to include ethical considerations required for each business making decision; create an ethical culture within the corporation by embracing the commitment to ethical standards; and engage with a reputable company to provide holistic business ethics training program for all levels of employees to increase ethical sensitivity and develop healthy organisational culture.
Introduction The Colourful Corporation has established a foreign entity within business operations, one which consists of a foreign subsidiary within a developed nation. Cognisant of good operational management, regular trips are carried out by executives to inspect and ensure that correct protocol and company policies are being adhered to. A few years ago, an executive of the Corporation was visiting and noticed that a subsidiary had employed a 12 year old girl. This was is in strict opposition to the Corporation’s own ethical code, and the 12 year old was replaced. Tragically, the 12 year old and her younger brother both died in their desperation to find food and survive. This tragic story found its way to the CEO of the Colourful Corporation, instigating the development of this business report. This report will evaluate whether the correct initial action was taken, and if a similar action would have been taken should the final story be known to the Corporation. There have been no limitations presented within this report.
Aim of report The aim of this business report is to analyse the ethical dilemmas arising from daily business operations, and to determine whether Colourful Corporation was ethical in its decision making, whilst providing solutions for the future management of ethical issues.
Issues Cultural Value and Norms According to Segon (2011), values and norms are core determinants of culture. These norms and value systems are affected by many variables, including religion, political philosophy, economic philosophy, education, language and social structure (Figure 1). Different variables can account for the perspectives and views across diverse cultural communities. Ethical issues and dilemmas may arise from business decisions depending on what the value and norms the organization is operating in, and accustomed to. Whilst different perspectives arise from varying cultural systems and bring diversity in the economic environment, the occurrence of ethical issues arising from business operations must be considered.
As proposed by Park & Voigt (2008), it is suggested that ‘values and norms have both a ‘direct and indirect impact on economic development.’ While a certain culture may impose certain working standards and conditions upon its workers in conducting its business operations, it’s important to consider the potential ethical issues surrounding these decisions. It’s vital the Corporation maintains ethical business practices in line with Australian standards. The visiting executive has acted in accordance with appropriate due care by their avoidance to use child labour in the procurement of producing goods and services. Ethics
The ethics dilemma presented, personal and business, must be afforded due consideration. ‘Business ethics are not divorced from personal ethics, which are generally accepted principles of right or wrong governing the conduct of individuals’ (Hill, 2011, pp.141). Hill (2011, pp.142) states that ‘several studies of unethical behaviour in a business setting have concluded that businesspeople sometimes do not realise they are behaving unethically, primarily because they simply fail to ask, “Is this decision or action ethical?”(Messick & Bazerman,1996)’. A process must be developed within the Colourful Corporation’s corporate policies, ensuring that each business decision considers the ethical impact that the decision may have on the community and its people. Figure 2 (Hill, 2011, pp.141) provides a number of generalisations, highlighting the complexity of ethical dilemmas, and that no one answer can truly be considered correct. However, consideration of each component will help to improve ethical behaviour.
As stated within the Californian Management Review (1999), there is differing advice from many academic sources. However, an important fundamental of ethics worth considering comes from the ’10 Guidelines for national corporations’ postulated by DeGeorge (1993), with the 2nd guideline stipulating that ‘every company must “produce more good than harm for the host country”’ (DeGeorge, 1993). Unrealistic Performance Expectations
The pressure from senior executives of the parent company to meet unrealistic performance goals that can only be attained by acting in an unethical manner (Hill et al 2011) is a factor that will result in unethical behaviour. There is a high probability that the local manager will make a decision that could potentially violate their own personal ethics and engage in unethical behaviour. The Colourful Corporation’s senior executive demanded that the local manager to replace the under-aged girl with an adult. The local manager followed the direction dutifully, replacing the under-aged girl, even though it may have violated his own personal ethics. Such unethical behaviour of the senior manager may affect the culture of the corporation as they set an example that other employees follow. Colourful Corporation can motivate and improve ethical behaviour by reinforcing a corporate policy that includes ethical considerations. Hill (2011) referred to how Hewlett-Packard (HP) reinforced ethical values of their employees through what they call the ‘HP Way’. The ‘HP Way’ stresses the need for confidence in and respect for people, open communication and concern for individual employees.
Education In recent years, there has been a paradigm shift towards corporate business ethics. Consequently, ethics education in corporations is of significance because the lack of anticipation and preparations in practical terms as well as philosophically by corporations may result in the company becoming vulnerable to public scrutiny (Morris & Wood 2011, p.275). This is because research has found that ethical issues have asymmetric relationships across an organisation, suggesting a need to define appropriate corporate policy, and measures with emphasis on the ethical perspective of the company’s business operations (Svensson & Wood 2011, p.21). In line with this, employees of the company should therefore be provided information on the company’s corporate policies in order to align individual business ethics with the corporation business ethic.
The following may be achieved by engaging with a reputable company-endorsed should be engaged to provide holistic ethical training program for all levels of employees within the corporation (Morris & Wood 2011, p.275). The author further emphasise that ethics training is able to inculcate ethical practices and behaviour within employees of the company by introducing critical awareness for moral dilemmas. The increase sensitivity among employees has developed a platform for a healthy ethical culture in the company. Hence, it is likely that the company can better manage stakeholders’ interest, as well as incorporating the idea of socially responsible behaviour in the company’s strategic actions (Sisaye 2011, p.277).
Moral Obligations Moral obligations, also known as corporate social responsibilities, refer to ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’ (EU Commission 2002, p.5). The economic and political transformations affecting the lives of young people are varied and complex. Researchers have also argued that the issue of child labour is contentious not only because many children work illegally, but also because their work concurrently involves interdependent realities of survival, participation, abuse and exploitation (Abebe & Bessell, 2011). Furthermore, Brekke and Nyborg (2005) stated that corporations with low social responsibility profile could be driven out of business. Therefore, it is important for corporation to consider moral obligations as a part of corporate policy.