Describe the different approaches to business ethics.

Describe the different approaches to business ethics.

Answer:

Different companies adopt different approaches to business ethics. It depends on their prioritization of ethical practices in conducting business. Some companies accord highest priority to the achievement of organizational objectives and business targets; ethical practices may have to be compromised. Some companies give almost equal priorities to both. Some companies give very high priorities to ethics and values; management and strategic functions are governed or dictated by this.

According to Rossouw and Vuuren (2003), approaches adopted by various companies to deal with business ethics may take one of the four forms.

Unconcerned or ethical non-issue approach:

This approach is adopted by companies whose management who incorporates a philosophy that business goal precedes ethics. Such companies believe that organizational objectives and business targets are the foremost. Business must grow; profit should be generated and maximized. These companies plan and adopt strategies which may follow general legal and business principles, but may be ethically unsound.

Ethical damage control approach:

In companies in this category, ethical values are undermined and not given much importance but they fear adverse publicity or scandal. So, the objective in this approach is to protect the company from adverse publicity. To avoid such a contingent situation, there is a need for rejecting unethical behaviour and introducing corporate governance safeguards through ‘window-dressing’ ethics. 

A company may generally ignore or condone questionable methods or actions which may help to achieve business targets or improve its market position so long as it does not publicly tarnish the image of the company.

Ethics compliance approach:

In this approach, companies are conscious that they should comply with ethical standards and requirements. Companies which adopt a compliance approach adhere to certain practices to demonstrate their commitment to ethical conduct: make the code of ethics visible and a regular part of communication with employees, form ethics committees to give guidance on ethical matters, introduce ethics training programmes etc.

Ethical culture approach:

In companies with this approach, ethical business practices are rooted in the organizational culture itself. The top management/CEO believes that high ethical principles embedded in the corporate culture should guide the managers and staff. 

The ethical principles contained in the company’s code of ethics and/or corporate values are seen as integral to the company’s identity and image. The prevalence and success of the ethical culture approach depends heavily on the personal integrity of managers who create and nurture the culture.