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.