Theories of Ethics Application to Corporate Entities

Theories of Ethics Application to Corporate Entities

Abstract

In the course of doing business, the most significant responsibility placed on the corporations is the fiduciary duty. This means that their actions must always be geared towards ensuring the interests of the stakeholders are best-taken care of. In this regard, there is a legal responsibility placed on these businesses lest they suffer the consequences of a breach of the laws of the land. On the other hand, there is an equally important duty that the corporations have in their survival in the business. This is the ethical aspect of their operations. Take for instance a business that plays by the rules, pays its taxes, takes care of the environment, and upholds the interests of its stakeholders but violates the ethical conduct saying it does not have a rapport with the surrounding community due to violations of its corporate social responsibility. In other words, it does not hold its integrity in its dealings though it remains in the course of the law in its action. Would such a business suffer consequences in the long run? This paper seeks to explore how the theories of ethics-deontological, teleological, and virtue, apply to businesses in a bid to establish whether businesses have a moral responsibility. Further, the relevance of these theories to Herzon’s ‘Three Faces of Leadership’ will be established.

The moral responsibility of the business organizations

If we were to assume that businesses operated on their own without human input, we would rightly assume that they lack moral responsibility as they are like any other tool of the trade. However, this is not the case as the businesses are operated by humans who indeed have a responsibility to uphold the moral bearing of society. The stakeholder theory holds that the corporate entity has a fiduciary duty towards its stakeholders. This obligation towards the owners does not mean that the responsibility towards the others in the society is negated. If anything, the fiduciary duty and the moral responsibility toward society and those that the business is in contact with must be adhered to concurrently. While the moral minimum for any corporate entity is not to cause harm, they ought to go beyond that and do good. So, do businesses have a moral responsibility?

It should be noted that an individual does not abandon their moral commitment when they are hired by a corporation. However, these personal values conflict with the organizational values in the course of upholding the fiduciary obligation (Nash, 2014). The executives of a business organization have responsibilities towards other constituencies such as labor unions, government, suppliers, and suppliers. Whereas the obligations towards these other players in the business may not always be in tandem with the fiduciary obligation, that does not mean that the executives will ignore them. The conflicts that arise require a balancing act between fulfilling the duties of the owners of the business and the personal values of the individuals running the business.

The business can be viewed as part of an intricate system where it is placed at the pinnacle of the system where there is interdependence between the business and its environment. Without the suppliers, customers, employees, and so on, the business would not thrive. The relationship between the business and all that there exists some interdependence dictates that each party must act in a way that maximizes bonds in the relationship for there to be maximum benefits. The corporate entity is, therefore required to adhere to the utilitarian theory that holds that actions are morally right if their net outcome is happiness for the greatest number of people (Sinnott-Armstrong, 2015). The actions of the corporate entity should be guided by the amount of happiness that they elicit not only among the stakeholders with which their greatest responsibility lies but also among all the other players involved. Take for instance the case of a business that defaults payments to its suppliers, has poor working relationships with its employees, and does not take care of the environment in the community where it is based. While such a business may be fulfilling its core mandate of raking in maximum revenues, it may be doomed to fail in the long run due to fallouts with these important players. The survival of the business organization is thus dependent on benefiting a maximum of all the concerned parties rather than just fulfilling its fiduciary obligation.

Apart from the duties, rules, and consequences of the corporate entity, the need to adhere to the code of conduct for any business cannot be over-emphasized. One would contend that a business needs to operate in an environment of integrity for its benevolence to the affected parties. However, the centrality of virtue in any business dealings puts the corporation on the need to uphold very high moral regard in its actions (Hursthouse & Pettigrove, 2016). Every business has a code of conduct that acts as the internal guide to the way the organization conducts itself about the other parties. The moral culture of a business which is in the long run embedded in the organization’s code of conduct and sometimes passed along to become the industry’s shared code of conduct is developed from internal social criticism (Sonenshein, 2015, p. 476). The agreeable moral principles are passed along to define how the business relates to it employees and the outside world. These principles become the standards with which the conduct of the business organization is judged by the outside world. As such, the achievement of the fiduciary obligation is hinged on the way customers relate to the business. The manner in which the corporate entity carries its activities is thus a major determinant of how the general public views the business.

Conclusion

The three theories of ethics ethics, consequentialism, and duties and principles relate to the ‘Three Faces of Leadership’ in that they address the concepts of business leadership that the text addresses. Some of these are ethics, inspiration, virtue, and faith which are linked to the organizational culture and values. Since the business depends on the inputs of individuals who are guided by personal principles in their interactions with others, the ethical principles that apply to humans also apply to the business. The conduct of the business must be in such a way that it promotes the greater good of all the involved parties rather than just fulfilling its fiduciary obligation. The business organization must also adhere to the set business standards and principles for it to rake maximum revenues from its activities for the sake of its stakeholders. Lastly, the integrity of the business in the society determines how it performs regarding the generation of profits. As such, business organizations are not just tools of the trade but entities from which moral responsibility is expected.

References

Hursthouse, R., & Pettigrove, G. (2016, December 8). virtue ethics. Retrieved from Stanford Encyclopedia of Philosophy: https://plato.stanford.edu/entries/ethics-virtue/

Nash, L. (2014). Frameworks for ethical analysis. In K. Andrews, Ethics in Practice (pp. 14-46). Cambridge, MA: Harvard University Press.

Sinnott-Armstrong, W. (2015, October 22). Consequentialism. Retrieved from Stanford Encyclopedia of philosophy: https://plato.stanford.edu/entries/consequentialism/#ClaUti

Sonenshein, S. (2015). Business ethics and internal social criticism. Business Ethics Quarterly, 15(3), 475-498.

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The PowerPoint presentation explaining a holarchy of systems uses the metaphor of an automobile which, as an instrument of travel, is without moral responsibility. Yet, the human driver does have a moral responsibility. The question is posed, “Do businesses have a moral responsibility?”

Analyze and Explore how these theories of ethics would apply to business with regard to the notion of the “moral minimum.”
Explain how these theories of ethics have relevance (or not) to Herzon’s “Three Faces of Leadership” presented in his chapters 1-3. You may use your own organization to provide suitable examples.

Additional Resources:

Deontological: http://plato.stanford.edu/entries/kant-moral/
Utilitarian: http://plato.stanford.edu/entries/consequentialism/#ClaUti
Virtue: http://plato.stanford.edu/entries/ethics-virtue/
You must defend your rationale with progressive logic, using citations from the course readings to frame your personal observations.

This paper will be no less than three or no more than five pages. All sources will be acknowledged using APA standards.

Written Assignments for this course are due by the close of course weeks 4, 6, and 8. The Final Project is due on the Sunday before the close of course week 10. Prior approval of topic and direction is required by the close of week 7.

APA format is mandatory (headings, title, abstract and conclusion, in-text citations, list of references.) Essays should be 3-5 (min-max) pages in length, using 12 pt type, 1 inch margins. Support your rationale with relevant quotes and citations from course materials. Headings, bulleted lists, and exhibits are always helpful to the reader and contribute to the overall organization of the paper.