e-business for ethics in business. W W W for World Wealth & Welfare

Business ethics is good (with respect to fairness, justice, civic commitment to socially acceptable, virtuous) business, (political, government) conduct in relations with internal and external stakeholders. Based on Corporate Social Responsibility beyond legal compliance in the responsiveness of an organization to social issues, it covers the legal, moral, philanthropic and economic duties of the organization.

Corporate Social Performance reflects and is valued in terms of the principles, policies and processes of the organization as these impact on its environment (society, especially the stakeholders), giving the social reputation of the organization.

Stakeholders : those with an interest or share in claims or rights resulting from the company's actions, decisions or inactions. Consist of :External stakeholders - consumers, government, residents, competitors, suppliers, natural environment, regulators, trade bodies, civic institutions, social pressure groups, the media
Internal stakeholders - workers, investors, management, customers, strategic partners.

Environment: A business organization has a task (production) environment, industry environment, legal/judicial environment, technolgical environment, political environment.

Types of ethic: compensatory justice, distributive justice, hedonistic ethic, market ethic, Means-Ends, revelation, utilitarian.

Typical areas of Unethical Corporate Practices & Tricks:

- Safety of products, workers, environment
- Discrimination and harassment based on sex, race, origin, religion, disability, class
- Pollution - toxic wastes, pesticides,
- Worker exploitation : unequal treatment, procedural injustice in evaluation of staff, weight and height requirements for employment, pregnancy penalisation techniques, Unrightful dismissal, unfair workloads, worker-lock-out, unfairly stringent control of whistle-blower,
- Outright Illegal practices: deceit, fraud, false accounting (such as false payments)
- Corrupt practices: bribery,
- Conflicts of interest, defying gag-testing, Insider trading
- Overemphasis of profits at high social cost
- Invasion of privacy, using lie-detectors, spy cameras, eaves-dropping, drug testing, honesty testing,
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Some Statistics:
(source: OECD)
Of the 500 largest US companies, 23% were guilty of and were penalised for criminal or serious civil misbehavior. Among the top 50 firms, the percentage was even higher. Sectors low in ethics include car-sales, advertising, insurance, real estate, stockbrokers and lately the marketing of Information Technology and Communication ITC.

A typical area of serious and common unethical practice concerns top executive pay. An extreme example of this is Larry Ellison, Oracle Corporation's Chief Executive who single-handedly and impulsively picks and fires company board members, boasts of never paying dividends to shareholders and pays himself $710 million a year for his part-time Oracle job; while also holding, directing and earning other pay on a number of other companies outside Oracle in each same calendar year. That on average, director pay was 182 times that of their average worker in 1998, calls for public outrage. The immensity of Larry's apparently unethical self-aggrandissement stands out when one realizes that his pay is a hefty 8352 times that of Oracle managers (at $85000) and well over 12000 times that of ordinary non-managerial. In fact, Larry's pay is higher than the entire revenue (mind you, not just the profit) produced by the thousands of Oracle workers in all the four Scandinavian countries, plus the Benelux countries (Netherlands and Belgium) combined. That is, Oracle employs perhaps 3000 people in 7 countries just to pay Larry's wage alone, with no room left to pay those workers nor other Oracle production costs nor even company tax.

Refugees: World politics, poverty and lack of both peace and freedom of movement have created refugees numbering more than 21 million world-wide in July 2002. This is more than the population of many whole countries. Of these, 9 million were in Asia, 5 million in Europe, 4 million in Africa, 1 million in North America, nearly 800,000 in South America and about 82,000 in Oceania.

Good Ethical Business Practice
An organization that seriously pursues good ethical business practice
- uses code of conduct, has independent corporate ombudsman, trains staff in ethics,
- management shows moral values, communicates with openness, candor, and fidelity,
- encourages whistle-blowing, adopts ethical (social) audits, considers company's spill-over effects,
- avoids misleading advertissement, clearly labels and honors its product warranties,
- has employees relations manager, management grievance committee,
- has good corporate governance, effective board distinct from management,
- has audit committee and nominating committee for board membership,
- elaborates on its corporate public policy at strategic management level through formulation, evaluation and implementation,
- identifies, measures, monitors and evaluates its social strategy in its audit (social accounting, reflecting its active scan of its environment),
- has issues management strategy and process in place, uses public affairs management distinct from public relations management.

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Methods for Business ethics:
Stakeholder management:
- Identifies who stakeholders are, in what stakes, which opportunities and challenges posed, responsibilities to them;
- Plans and implements strategies for them, with rational long-term proceess of ethical leadership management;
- Promotes stakeholder cooperation as opposed to marginalisation, alienation, illegitimisation

Additional Methods
- Political risk analysis, policy evaluation, cost-benefit analysis,
- Global code of conduct reflects: wages, hours, discrimination, environment, monitoring procedures, product quality and safety, hearing procedure,
- Scan the environment for leading events, authorities, literature, orgs, political jurisdictions; as to who, what interests, influence, perceptions & power relationships exist in reality; ranksing for relevance, impact, action, criticality, urgency.

Honouring fundamental human rights to : - free movement and association, free speech, property ownership, privacy, freedom from torture, physical security, political participation, fair trial, be informedand heard, safety, choice, and minimal education, due process & fair treatment of workers, healthy work environment,

Anti-Discrimination to Protect groups: minorities, women, elderly, disabled, religious affiliations,
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: Some Recent Ethical Issues:
Creative (fraudulent) accounting
Excessive executive pay
Use of internal transfer prices to dogde tax and avoid higher wages
Advertising - exaggerated claims, facts conceilment, ambiguous advertising, subliminal advertising, sex-tied ads, deceptive labelling,
Waste disposal, toxics, radioactive substances, industrial gases,
Deforestation,
Water quality and volume impacts,
Land degradation, endangerment of biodiversity.

Some Recent Cases:
Nestle baby-feeding campaign,
Sweat-shop, child- and labor exploitation for production for Nike, Reebok, Dutch fluid supplier to Antilles
Health hazard food chain contamination by Dutch-Belgian animal feeds suppliers (pigs, chicken, cattle),
Brewers, tobacco adverts to get women and children to smoke,
Chrysler odometer disconnection to resell own company-used cars,
Dow Corning silicon breast implant probe,
Texaco racial discrimination lawsuit.

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References and Readings on Business Ethics

• George Edward Moore Principia Ethica (Cambridge University Press)
  
• Adam Smith Theory of Moral Sentiments ISBN 0-86597-012-2
  
• John Kenneth Galbraith The good society: The humane agenda ISBN 0-395-71328-5
  
• Betrand Russell 1)Freedom and government 2) Styles in Ethics. In our changing morality 3)Principles of social reconstruction 4)Political Ideals 5) History of Western Philosophy
  
• A.B.Carroll & A.K. Buchholtz Business and Society: ethics and stakeholder management ISBN 0-324-00103-7 (prepared by David A Vance)
• Additional Reading on Ethics
  For more references resources and databases

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