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Importance of ethical decision making in business
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Making ethical business decisions in business
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Merck had developed an antibiotic, Ivermectin that was used to treat parasites in animals. Dr. William C. Campbell, a Merck senior researcher, found evidence that the same drug might be effective against the parasitic worm that causes river blindness. After much consideration, Merck decided to research Ivermectin’s effectiveness in preventing river blindness. That research, including human clinical trials, showed that the drug indeed was effective with no side effects. After searching for an organization that would pay for the distribution of the human version of the drug, called Mectizan, without success, Merck decided to give the drug itself, at no cost, to everyone who needed it and set up its own committee to oversee distribution. In the little more than a decade since that announcement, river blindness has been virtually eliminated as …show more content…
Because many people consider philanthropy to be a completely voluntary or discretionary aspect of corporate social responsibility, failure to be philanthropic is generally not considered as unethical; some may question whether it is a corporate ‘‘responsibility’’ at all. (Brian K. 2005) The caring approach seems much more realistic to use in terms of how people in business actually make decisions, as well as how they should make decisions. Managerial experience and observation of managers leads to conclude that morally and economically effective managers consider possible effects on other individuals, not amorphous groups, unless those groups are very homogeneous in nature. These managers think about themselves as well as others. When faced with conflicts they try to find the actions that fit the particular situation the best, intuitively understanding that each situation is different and deserves full consideration itself, and not some
Many companies are now looking into their business practices and how it benefits society. Corporate responsibility continues to be impacted as consumer awareness to global issues grows. For example, a small locally owned grocery store located in a metropolitan area just closed the doors to two stores located in high-crime-rated areas of the city due to no financial gains. The store just added a health conscious section for consumers that requested a need for it in the store, even though the cost and marginal is higher than most options in the store. With all of that going on the owner of the store was approached by a local food bank for one day old products that can be donated to them to help the community. The owner declined to help by citing that he feels by help he is opening a chance for loss of revenues due to employees not being honest. He thinks that his employees will just say that products are being donated when they are stealing.
Business performance of organizations are primarily steered through good ethics and corporate social responsibility, and such business practices have become an integral part in order to conduct successful business operations in today’s highly competitive and dynamic environment (Joyner & Payne, 2012). Ethical business practices are widely implemented in small or large enterprise as the growing need of social responsibility and environmentally proactive practices are recognized by these businesses. Hence businesses should be conducted in a way that it not only benefits the owners, employees or customers but the society and community at large (Smith, 2008).
The problem to be investigated is the conflict that can arise within companies between doing what is right (or moral) and doing what is often viewed as more important the attainment of corporate goals. This conflict is highlighted in the case study involving Fannie Mae (FM). (Jennings, 2009) In this case, corporate executives choose to focus on corporate goals and meeting the market expectations, ignoring any moral issued witch conflicted with the attainment of their goal. (Jennings, 2009) To understand the reasons for the executives actions and learn from their mistakes and misjudgments the following topics are reviewed: 1) ethics and social responsibility, 2) the importance of devolution, 3) the power and value of incentive plans, 4) the rational for legitimate income smoothing, and 5) the impact of pep talks.
An increasing large number of firms are developing mission statements that also attempt to define the social and ethical boundaries of their strategic domain. Some firms are actively pursuing social programs they believe to be intertwined with their economic objectives, while others simply seek to manage their businesses according to the principles of sustainability – meeting humanity’s needs without harming future generations. For example, Unilever has launched a variety of programs to help developing nations wrestle with poverty, water scarcity, and the effects of climate change. The firm’s motives are at least as much economic as moral. As environmental regulations grow stricter around the world, the firm must invest in green technologies or its leadership
Every business entity has social responsibilities. The four theories of social responsibility are the maximization of profits, moral minimum, stakeholder interest and corporate citizenship. Social responsibility goes hand in hand in regard to a company’s ethical standing. As a company, it’s crucial to have high ethical standards. The Ethisphere Institute ranks businesses annually to be named on their honorable and highly recognized list of the World’s Most Ethical Companies. These organizations are evaluated in terms of their ethics and compliance programs, corporate citizenship and responsibility, culture of ethics, governance and leadership, and innovation and reputation. One of the companies
Merck was one of the largest pharmaceutical companies in the world. Merck was about to lose patent protection of two of its best selling drugs, which had been a significant part of their $2 billion annual sales. Merck began putting millions of dollars into research (up to $1 billion) and within three years, Merck was able to discover four powerful medications. Profits weren’t all that Merck cared about; Merck’s founder believed that "medicine is for people. It is not for the profits." • He also believed that following the “medicine is for people” philosophy would lead to profits and had yet to fail.• River Blindness is caused by parasitic worms, which can be found in the Middle East, Africa and Latin America.• These places are developing, so many citizens are poor. • The worm larvae can enter the body through fly bites, with some people getting thousands a day. • Worms can cause grotesque growths, but the major problem lies in reproduction when millions of progeny are released in the system. •The resulting itching is so intense the infected have committed suicide. • Eventually, the larvae may cause blindness. • Two existing drugs could kill the parasite, but have serious, potentially fatal, side effects. • The only safe combative measure available was insecticides that eventually lose potency with immunity of the flies. • The average drug takes $200 million in research and 12 years time to produce. • In order for companies to stay in business (and ease human pain), they must make complex decisions about which drugs offer the most promise. • Investing time/money into drugs for rare diseases is risky (because the pool of recipients is small). • There are enough people with river blindness ...
Corporate social responsibility (CSR) involves going beyond the interests of the firm and requirements of law to contribute in developing a sustainable environment and a better society (McWilliams and Siegel, 2001). Yet Vogel (2005) claims that regulation is required to ensure that companies comply with a standard of CSR. Unethical practices create negative images of organisations, however through adopting CSR; profitability may be increased through the positive image that society creates (Pava and Kraus, 1997). While Friedman (1970) argues that corporations are responsible for obtaining shareholder’s funds in a profitable and legal way, therefore not engaging in corporate philanthropy. Friedman’s view is egoistic, whereby acting to promote the greatest impact for the company compared to adopting a utilitarian approach which focuses on achieving the greatest good for the majority (Beauchamp and Bowie, 2004). Organisational performance is evaluated on three factors; economic prosperity, social justice and environmental quality (Elkington, 1997), emphasising the significance of companies adopting an ethical stance in the modern business world. This assignment will address the role ethics and CSR play in organisations through applying case studies to examine whether companies adopt CSR for the enhanced reputation and competitive advantage or the social and environmental impact. The role of regulation within CSR will be investigated due to corporate scandals and environmental disasters which raise concerns over the ethical perspective of companies.
While going through my academic program, I have learned the importance of organizations having to integrate strategic planning in accordance with ethics and social responsibility practices; it is necessary for an organization’s survival. As such, an organization needs to implement its mission, strategy, and vision while considering the stakeholders and general public. My academic program has brought me to this realization and provided me with a means to effectively associate the implications of an organization’s ethics and social responsibility from a strategic perspective. When integrated effectively, establishing these components within the organization’s strategic plan has the capacity to largely benefit the organization's daily operations, which in turn, affect overall profit.
An ethical issue is present in a situation when the actions of a person or organisation may harm or benefit others. (Jones, 1991) The problem that Bolt faces is that a section head has breached managerial ethics by using company assets for his own personal gain. This breach has resulted in the formation of an ethical issue as it has caused the corporate social responsibility of the business to be in disrepute. Corporate social responsibility refers to ‘the obligation of organisation management to make decisions and take actions that will enhance the welfare and interests of society as well as the organisation.’ (Samson and Daft, 2012) There is potential for a culture of theft and fraud to be created as well as a breakdown in the ethical structure of the company ...
Nonprofit organizations are usually assumed to carry out their interactions with donors, employees, clients and other partners in an ethical manner, primarily because not-for-profit organizations are seen as serving altruistic purposes (Ingram, n.d.). True altruism focuses on an ethical behavior that results in doing good to people without expecting anything in return. Thus, leaders in non-profits are expected to make decisions that result in the benefit of their clients, rather than themselves. Unfortunately, nonprofits have recently come under a lot of scrutiny because of historical lapses in carrying out the decision-making process in an ethical manner. Non-profit leaders are usually tempted to carry out decisions in the same way as their
In an atmosphere where the number one priority is to make as much money as possible, many question rather or not corporate responsibility is possible. Corporate responsibility represents “a corporation’s social and environmental obligations to its constituencies and greater society (Argenti 2013).” In a profit driven environment, there are several factors that can influence or encourage corporations to also consider greater society in the course of their decision making and subsequently in their priorities as well. The process in which corporations make these decision or the deterring elements that show corporations effect on the community that it serves or the community surrounding it, is a viable realm of analysis in the discussion of corporate responsibility. An article perfectly explicates the Corporate responsibility as,
Although the net that is cast over those considered is large, attempting to appease everyone is not only a noble goal, but a sound one as well. It is not possible to make everyone happy, but the act of trying can alleviate concerns a stakeholder might have. This stakeholder theory shares many similarities to the humanity formulation of categorical imperative. The shareholder theory is using employees and such as only a means to an end whereas the stakeholder also holds these employees as an
Daniel Terris, chief of the International Center for Ethics, Justice and Public Life at Brandeis University, has given a fascinating portrayal and evaluation of a morals program at one of the world 's biggest protection temporary workers, Lockheed Martin. In 1996, another system that depended on a prepackaged game (much like Clue) that utilized characters from the Dilbert funny cartoon was presented. Terris respects much about this system, which was initiated by Lockheed 's CEO, Norm Augustine-even while he brings up that the putting of obligation on every specialist for the right measurements of his or her activities may occupy consideration from the ostensibly more vital moral obligations of senior administration and the ethical complexities of aggregate choice making. As it were, that affected individual, the organization itself, have its obligations to people, in general, great, despite the fact that it will be unable to appreciate the efforts of other individuals who plays their business activities in a righ way. (Terris, 2005)
Research on ethical problems, however, has been largely confined to business organizations, no doubt because they are numerous, powerful, close to money and its potential evils, and strongly tied to other institutions in society. Serious studies of the ethics and ethical attitudes of businessmen reveal much uncertainty about what constitutes ethical behavior, and even about whether ethics are important. Ethical behavior does not consist of clear-cut choices between right and wrong. Managers incorporate ethical implications into decisions along with other criteria only if they... ... middle of paper ... ...
It seems obvious that large corporations have a tendency to ignore the negative effects of their actions in favor of profit. This example, although sensationalized, still says to me that with power comes responsibility. It affirmed my belief that a corporation’s goal cannot be just to provide profit to shareholders, but there must also be an element of social responsibility.