Ethics leads to good business

Ethics leads to good business

By A.B. Susanto

This is the first of two articles on good business practice.

JAKARTA (JP): Questions about the ethics of business have been
increasingly asked recently. They are heightened by blatant
examples of irresponsible behaviors by "big business" and the
exposure of environmental damages and the tragic loss of human
lives.

In general, ethical questions ask, "What, in a given
situation, constitutes morally good and just behavior, what is
right and wrong?"

These questions burden us all with the responsibility of
understanding moral principles and of developing evaluations, and
applying criteria for our behavior. Corporate ethics is the
effort to answer these questions for one's business relationships
both inside and outside the firm.

A distinction must be made between the institutional dimension
of corporate ethics, which is demonstrated by the corporation as
a whole, and the personal dimension, which is demonstrated by the
executives.

Whenever it is asked whether a corporation should have an
ethical conscience, the answer is usually affirmative.

Society has the right to expect ethical behavior from business
players. But the underlying question remains: What, under
specific circumstances, is the right conduct or ethical behavior
for a business corporation?

Business ethics look at corporate profits, not for their own
sake, but with respect to the achievement of some basic human
good. What is the basic human good to which individuals and
corporations are supposed to contribute and at what price or
other social cost?

Answers to these questions are often not only inherently
complex, but also depend on complex cultural and personal values.
Ethical judgments are easy to arrive at in extreme cases of
misconduct, but difficult to make more generally and especially
in dilemma situations.

Different trades may pose different challenges to the
implementation of business ethics, but there is no need for
special business ethics for each and every trade. Possibly with
one exception, the pharmaceutical industry. Drugs are used
because people are sick, dying or have mental disorders. Consumer
sovereignty -- the freedom to choose or refuse a product -- is
limited in this industry's market.

Recently, society's image of private industry, and
particularly of large companies, has been shaped by skeptical
unease. Many believe that a company cannot simultaneously have
high principles and high profits. It is common to see many
companies are pursuing their profits unscrupulously at the cost
of the environment and the safety and health of consumers.

Within management circles, there is also widespread doubt.
Lower level executives or middle management often seem to feel
under pressure from upper level executives to achieve corporate
goals even if it is at the expense of personal moral standards.

Ethical conflicts seem to appear more often in the external
than the internal relations of a corporation. Marketing situation
ranks as those causing the most ethical conflict among
executives. This is due to the fact that executives are appraised
almost exclusively according to their financial short term
results, being rewarded for increases in sales, profit
improvements, and cost reductions, without considering long-term
social consequences.

Although many assume otherwise, there is not an "either/or"
relationship between ethical corporate conduct and profit. It is
the "gray areas" where the necessity for ethical reflection is
most needed.