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Business Ethics

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DOI: 10.13140/RG.2.2.31350.86082

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Artur Victoria
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Business Ethics
Artur Victoria

The debate about the ethical behaviour of organizations has taken place in administrative
practice as a way to survive paradigm of shifts and the hyper competition environment
experienced by companies in the western capitalist world and deregulated markets.

The question of business ethics has long been considered of minor importance with the
justification that in the business world it is not always possible to make decisions with the
clarity of right and wrong, foresee and decide who will benefit or harmed.

The company operates in an environment that is constantly changing due to social, market,
financial, technological changes. It is constantly urged to make choices about actions and
decisions that trigger consequences for individuals and the environment.

However, the constant struggle to remain in a highly competitive market is what has guided
business decisions. Capitalist countries and enterprises navigate with ease in moral
ambiguity since personal interest is seen as the engine of the economy.

In its discussion of ethics in organizations, Weber rescues two approaches to ethics - that of
conviction and responsibility.

The ethic of conviction is interpreted as one that is based on principles and is based on
moral and ideal norms. Its justification is due to universal duties, norms and values.

The ethics of responsibility is based on purpose and utilitarianism between purposes and
consequences.

With the discernment between the approaches of the ethics of conviction and responsibility
it is not difficult to understand why market economy organizations are guided by the ethics
of responsibility, justifying many of their actions and the means they use for the purposes of
profit and interest of some.

Regarding the discussion about ethics and socially responsible behaviour, corporations have
long been realizing that civil society has increasingly associated with the quality of goods
and services produced, other important ingredients.

Increasingly, loyalty and partnership are demanded from the company towards its suppliers,
constant concern with customer satisfaction and safety, quality of relations with employees,
the environment and society, even with competitors.

Ethics in management, this obligation has generated innumerable codes of business,

industrial, governmental and intergovernmental conduct, dealing not only with matters
directly related to industry, but also, in a more with good governance practices that seek to
ensure ethical behaviour in business and administration.

Respect for human rights, standards embedded in codes and guidelines created by civil
society groups, which require, inter alia, respect by companies for fundamental human
rights in their relations with the community in the countries where they act, prohibiting
acceptance and complicity in violations and abuses of human rights by governments and
ensuring that the security measures adopted by governments do not violate these rights.

The ideal of ethics in organizations can be translated into practices and behaviours adopted,
such as: participatory work; the feeling of individual interdependence; the spirit of loyalty to
the group, and collective responsibility. Also, a decision-making process more focused on
consensus than on managerial authority, can the desirable environment and to encourage
the practice of ethical behaviour, both individual and group.

The performance based on high ethical principles and the search for quality in
relationships is manifestations of corporate social responsibility.

At a time when business can no longer be held in complete secrecy, transparency has
become the lifeblood of business: it has become a factor of social legitimacy and an
important positive attribute to public image and corporate reputation.

The adoption of standards of ethical conduct that value the human being, society and the
environment is an ever more pressing requirement. Quality relationships are built on values
and behaviours that meet the needs and interests of the partners, generating value for all.

Socially responsible companies are better prepared to ensure long-term business

sustainability by being synchronized with the new dynamics that affect society and the
business world. The necessary involvement of the entire organization in the practice of
social responsibility generates synergies, precisely with the public’s on which it depends so
much, that strengthen its overall performance.

The company is socially responsible when it goes beyond the obligation to respect the laws,
pay taxes and observe the appropriate conditions of safety and health for workers, and does
this by believing that this will be a better company and will be contributing to the
construction of a society more just.

The practice of social responsibility reveals itself internally in the constitution of a healthy
working environment and conducive to the professional fulfilment of people.

The company demonstrates its social responsibility by committing itself to social programs
aimed at the future of the community and society.
Investment in productive processes compatible with environmental conservation and
concern for the rational use of natural resources also has important symbolic value, because
they are of interest to the company and the community.

With such initiatives, the company reveals its belief in the precept that only a healthy
society can generate healthy businesses.

Several sectors of society - consumers, NGOs, trade unions, among others -, aware of their
roles, are increasingly exerting a powerful pressure on companies and the government,
seeking to find solutions to change the situation.

Corporate social responsibility is gaining momentum in this scenario where economic

globalization alone has not been able to promote the prosperity and social justice desired by
the various social actors.

It is possible to affirm that the society's expectation regarding the behaviour of companies
will continue to grow. There are indications that the tendency in the coming years is to
increase activism and a more combative stance on the part of NGOs, social movements and
trade unions. In addition, there is an increase in the number of more qualified opinion
formers, who are analyzing in greater depth the socially responsible practices of companies.

Companies, especially those operating in the global scenario, face a double challenge: on
the one hand, they are pressured by the market to reduce costs and efficiency gains; on the
other hand, they need to find competitive differentials that strengthen the image, the
reputation and provide longevity to their businesses, in a way allied to an effective action in
the process of social transformation.

Thus, socially responsible management is the factor that can contribute to the evolution of
companies in this process. By embracing an effective commitment to ethics and the social
and environmental sustainability of the planet, companies will be fully exercising their social
responsibility and helping to build a better world for all.

Conceptual and evolutionary aspects of business ethics

The term ethics, derived from the Greek word ethos, means custom, habitual way of acting,
nature. A similar meaning is attributed to the Latin expression “mos, moris”, from which
derives the word moral.

Ethics is the part of philosophy that studies the morality of human acts, as being free and
ordered to its ultimate end. Ethics was defined as an inquiry about nature, based on
morality. It is also understood as moral judgments, standards and rules of human conduct,
with an emphasis on the determination of what is right and what is wrong.

On the term ethics, the American dictionary The American Heritage Dictionary presents the
following definition: "it is the study of the general nature of morality and specific moral
options; moral philosophy; and rules or standards that prescribe the conduct of members of
a liberal profession.

Ethics - studies of judgments of appreciation referring to human conduct susceptible of

qualification from the point of view of good and evil, either in relation to a certain society or
in an absolute way.

Most business ethics concepts concern rules, standards, and moral principles about what is
right or wrong in specific situations in relationships that occur in the business environment.
In simpler terms, one has to realize that business ethics comprises principles and standards
that guide behaviour in the business world.

Their actions are in accordance with the set of rules or conduits accepted by the society /
community of the organizational environment.

A company is considered ethical if it adopts an ethical stance as a business strategy, that is,
to act honestly with all those who have some kind of relationship with it, the stakeholders.
Customers, suppliers, partners, employees, government and society as a whole are involved
in this group.

Its values, strategies and expectations should take into account this entire universe of
relationship. Performance must also be assessed in terms of the effort to fulfil its public
responsibilities and to act as a citizen organization.

The attention and interest in adopting ethical behaviour for the conduct of business and
business strategies, considering the most remote market transactions carried out by man,
are relatively recent.

The first debates involving ethical business issues occurred in the 1960s and especially in
countries of German origin. During this period, ethics education began in the Faculties of
Administration and Business, especially in the USA, when some philosophers came to bring
their contribution. In this way, philosophical discipline, allied to business reality, opens
space for ethics applied to the field of business.

In the following decade, multinational corporations, mainly from the USA and Europe,
began to expand through subsidiaries across all continents. Cultural differences - new and
different ways of acting and conducting business - found by subsidiaries in other countries,
led to the creation and development of corporate codes of ethics.

In the 1980s, in the USA and Europe, mainly due to the efforts of university professors who
dedicated themselves to teaching business ethics in business schools and MBA programs,
the first publications on the subject appeared, highlighting the first specific scientific journal
in the area of administration, the Journal of Business Ethics.
Between the 80's and 90's spaces appeared where ethics were discussed in business
practice; a number of academic networks (the Society for Business Ethics in the United
States and the European Business Ethics Network in Europe) and specialized magazines
(Business Ethics Quarterly, Business Ethics and European Review) and encyclopaedias have
been published. Encyclopaedic Dictionary of Business Ethics in the USA and Lexicon der
Wirtschaftsethik in Germany). These initiatives were followed, the organization of special
forums and the creation of the International Society for Business Economics, and Ethics
(ISBEE).

The new business ethics

Both entrepreneurs and administrators are beginning to recognize that the desire for
infinite accumulation and limitless consumption requires unbridled exploitation of natural
resources, which are increasingly scarce. Also, the high ecological costs, because of the
threat they pose to the population and to the planet, are putting devastating companies in a
very delicate position. After all, the interests of this type of business conflict with the
interests of the collectivity.

One of the most sensitive ethical issues facing managers today is the control and vigilance of
society for activities that generate aggression to the environment. Companies that are
sensitive to this reality have their survival strengthened, as there is a growing demand or
preference for those not only focused on production and profit, but also concerned with
solving broader problems such as the preservation of the environment environment and
social well-being.

It is perceived that, even in the field of business, apparently the least propitious for ethical
applications, there has emerged an increasingly urgent need for its study. Following this
logic, capitalism itself needs to rediscover its rules, for adopting ethical standards means
having good business and long-term partners. Codes of conduct, regulations, social
responsibility, appropriate policies and transparency are examples of how companies can
develop their ethics in relationships with stakeholders and with society as a whole.

It is often found that business managers, in an attempt to increase the chances of survival of
the current economic model, are reviewing positions and adopting more ethical practices in
the conduct of their business and in the management of companies. It is not about idealism
or nobility of attitudes. It is the very need for survival that drives the current business model
to be more ethical.

Basically two problems led executives and management theorists to turn to ethical issues.
They realized that the absence of ethics and the simple defence of self-interest endanger
the survival of companies and therefore their own jobs.
It is as if the need for survival is imposing on organizations an urgent resumption of ethical
attitudes and values. After all, what company would survive and thrive in an environment of
economic, social and environmental failure?

The society that is emerging at the beginning of this century has three closely related
economic requirements, each with an independent force:

1) The need to supply the required consumer goods and services;

2) The need to ensure that such production and its use and consumption do not have an
adverse effect on the current well-being of the general public; and

3) The need to ensure that they do not adversely affect the lives and well-being of future
generations.

The last two requirements are in frequent conflict with the first, a conflict that strongly
manifests itself in the economy and in daily politics. The common reference is the effect on
the environment.

Companies, within this perspective, cannot continue to generate high ecological costs in
their operations, as their interests would be colliding with those of a society increasingly
worried and demanding about the necessity and urgency of preserving the environment.

When the company cares about environmental and social welfare issues - obviously ethical
concerns - they increase their chances of survival, as society develops a positive image in
relation to this type of organization. When they start to act less predatory and savage,
everyone wins, although often the intentions behind this attitude cannot be considered
truly altruistic.

It is not difficult to perceive the existence of a very fertile field for the application of
business ethics and evidence demonstrating ethical conduct, effectively gives good results,
financial and non-financial.

Having ethical standards means maintaining good business in a more lasting way.

Smart businesspeople know that business success and ethical practices interrelate. They
focus on a business goal that goes beyond simple day-to-day business and they know that
lasting relationships are those based on trust and mutual respect.

Whatever contractual relationship is established, the conditions have to be good for both
parties. A product is only good or deserves the preference, when it satisfies the customer's
need or desire, etc. Profitability, in other words, stems from the kinds of judgment that
stakeholders make about how businesses conduct their business.

Also, when people work for an organization that they believe to be fair, where everyone is
willing to give of themselves for the accomplishment of tasks, where behaviours that denote
fidelity, honesty and zeal are striking, people work at a higher level. The values around them
become part of them and they see the client as someone to whom they owe the effort to
create the best product or the best service.

Many organizations mistakenly believe that there is no correlation between integrity and
financial performance.

Integrity and performance complement each other.

The entrepreneur who obtains a rapid financial gain, either by margin of extortive profits; of
contracts or leonine or abusive to suppliers; the exploitation of the labour force, the
reduction of the quality or the useful life of its products, it will certainly be able to obtain a
slightly higher profit in a certain period, but the confidence that lost by its bad behaviour,
can never be reintroduced in their business relations.

Ethical failures lead companies to lose important customers and suppliers, making it difficult
to establish partnerships.

The practice of partnerships is increasingly common these days. When establishing

relationships, in addition to raising cultural and commercial affinities, ethical conduct is also
verified.

In this sense, surveys attest that when an organization acts correctly, the lifetime of the fact
in the public's memory is five minutes. At the other extreme, the memory of a misconduct,
of a transgression of ethics can last for many years.

Recovering the name of a company, when it is found and public some slip, is very difficult.
Public perception could have a direct impact on the company's profits.

A company's reputation is a primary factor in commercial, formal or informal relationships,

whether these relate to advertising, product development or human resource issues.

In today's national and global economies, too, the personal behaviours adopted by
administrators affect the image of the company to which they work.

Thus, if the company wants to compete successfully in the national and global markets, it
will be important to maintain a solid reputation for its ethical behaviour of its executives.

The organization that adopts transparency and ethical posture as a management and action
policy and strategy will have the result reflected in image and success, even if it is not in the
short term. This is because these practices naturally provide greater visibility of the
company to different audiences.

Ethical behaviour contaminates those who take part in it and observe it. For example, when
working or negotiating with confidence, security increases and long-term relationships are
created.
 Reflections on corporate social responsibility and ethics
The practices of corporate responsibility or citizenship express the conviction that the
company has to exercise its interactive function in society, influencing, proactively and with
a sense of fairness, the community that is in its environment.

The use of capital, human labour and natural resources for the transformation of all this
wealth into products or services, wages and profits, was the maxim of the economic growth
of savage capitalism, which fortunately must be overcome and replaced by the vision of
economic development and social sustainability.

Organizations that internalize social responsibility in their strategies - from planning to

action - and have a socially responsible management, they establish ethical standards in the
relationship with their different stakeholders, creating value for society.

Awareness of the importance of playing a citizenship role with society is already a reality
among several corporations in the market segment. There is a growing number of
companies creating foundations or participating in initiatives to support social causes as a
form of retribution to society.

Unfortunately, however, many entrepreneurs do it the wrong way, and in two ways. First,
because they think that with the simple donation of resources, whether material, financial
or human (for example, incentive to volunteer their employees) to social causes, they are
already acting with social responsibility. Second, by the utilitarian use of the image that
positively projects itself in society.

The character of such initiatives, whether eminently philanthropic, welfare or propagandist,

is not the exercise of the true and essential sense of social responsibility, which is to
contribute to greater social equity, ethics and respect for present and future generations.

Such reflection, however, does not intend to invalidate welfare initiatives, which are very
welcome, given the enormous social inequality that afflicts our country, as they serve to
help and alleviate, albeit in an emergency, the reality of extreme poverty and misery of
countless Brazilian families.

Corporate social responsibility truly outweighs this topical sense, since it is neither
assistentialist nor utilitarian in what refers to the return provided by the corporate image, in
the face of a more conscious, vigilant and selective society.

Corporate citizenship refers to leadership and support for socially desirable goals, the
community that lives within it, specifically partners, leaders and employees, and the
community of its external environment. Their attitudes originate with the planning, with the
determination of strategies and with the conducts and values of the administration to the
accomplishment of the pre-defined business objectives.

At this point, ethical and social responsibility issues are intertwined, some cannot be
conceived without the existence of others, and there is even a relation of interdependence.

Ethics is not a product that is for sale somewhere and can be purchased by the company.

Equally, social responsibility is not a good or service to be produced, nor can it be made
available to the public. It is rather a set of values and principles that need to be internalized
in the organization.

Ethical conduct and practices of social responsibility, when considered within the
organization can represent: adoption of high standards of personal conduct towards
shareholders, executives and employees; fair remuneration, valorisation of talent and the
individual effort of professionals; participation in results; encouraging personal
development; quality of life; transparent communication, honesty, cooperation, adequate
use of the necessary resources for production, among others.

These behaviours, which must permeate the whole organization, from time to time, from
the top management to the smallest productive units, end up projecting out of the
organization.

In addition, there are other ethical and socially responsible behaviours that give visibility to
the external public and express themselves through: durable partnerships with suppliers,
sustainable use of natural resources, adoption of measures to protect and preserve the
environment; honest accounting and fair tax collection; obedience and contractual equity;
safety, health and consumer satisfaction; involvement with the next community etc.

Most organizations, regardless of size, can develop social responsibility initiatives that
contribute to the satisfaction of their internal employees. To cite a few examples, such
initiatives can be expressed through the planning of the activities that are internally
developed, the adequacy of the facilities and equipment, the quality and transparency of
internal communication, the personal and career development opportunities that the
organization offers.

Also included in these initiatives are the planning of cultural or recreational activities;
continuing education, obtaining health and retirement plans, and benefits to employees and
their families; psychological support; of ecological awareness and education programs,
among many others.

The organization's relationship with all stakeholders needs to be developed on the basis of
ethical behaviour, so that it results in reciprocity in treatment. This principle applies to all
aspects of negotiation and relationship with customers and suppliers. It is also applicable
with respect to employees. Respect for their individuality and collective feeling, including
union representation, should be a basic rule. The same value applies to the community and
to any entity or individual that maintains contact with the organization.

In this area, the provision of community services by the employees is encouraged,

supported and recognized by the organization. For example, the organization and its
employees can influence the adoption of higher standards in education by communicating
occupational requirements to schools and other educational entities belonging to the
communication where it is inserted.

The leadership and involvement of organizations depend on their availability in human and
financial resources. However, some organizations, however small, can increase their
involvement by participating in activities in cooperation with others.

Aspects of environmental management

Environmental management, as well as other management techniques - financial,

production, marketing, resource, and quality - is being used by modern companies wishing
to survive in a globalized market, growing in requirements as to preservation and proper use
of natural resources.

Environmental management in small companies has the following main objectives:

a) Manage the tasks with regard to policies, guidelines and programs related to the internal
and external environment of the company;

b) Maintain, in conjunction with the area of occupational safety, the health of workers;

c) Produce, with the collaboration of the entire leadership and workers, environmentally
compatible products or services;

d) To collaborate with the economic sectors, the community and the environmental
agencies so that productive processes are developed and adopted that avoid or minimize
aggression to the environment.

The objectives and goals inherent to environmental management in companies must be

correlated with the other management strategy, and not as an isolated component.
Environmental responsibilities, together with economic and social responsibilities, form the
basis of sustainable development, according to the paradigms of production and
consumption of a society that is transformed day by day.

To carry out an environmental management system, everyone in the company needs to be

aware of the set of activities that this decision ends, that is, the relevant tasks and
attributions that are as follows:
Define the environmental policy / guideline for the company, its parent company and all its
units;

Develop global, specific environmental objectives, targets and programs for local action;

Define the functional structure and allocate qualified people;

Organize an environmental database;

Assemble a system of environmental data collection defined by unit;

Measure and record environmental data regarding: water, energy, fuel, waste generation,
waste and disposal; emissions of pollutants, consumption (paper, printed matter, plastics,
cleaning products, etc.);

Prepare environmental reports specific to critical areas;

Make an inventory of environmental laws, regulations and standards;

Make isolated environmental inspections in critical units;

Implement and carry out environmental monitoring; elaborate and implement

environmental management programs;

Implement and implement environmental awareness and training in different sectors and
organizational levels;

Disclose environmental information and results to advertising media;

Define and deploy awards;

Develop and disseminate environmental guidelines for suppliers, consumers, employees

and shareholders;

Conduct environmental impact assessment under legal terms for deployment, operation,
expansion or deactivation of enterprises;

Issue environmental performance reports;

Propose and execute corrective actions;

Perform environmental audit spontaneously and / or by legal requirement;

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