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Ethical and Legal Consideration

“Ethics, also known as moral philosophy is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice, etc.”

“Law is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people.”

Laws are mandatory guidelines while ethics are voluntary guidelines. Man starts learning Ethics from the time of birth while laws, according to the requirement of specific actions to make them standardize. Laws are not always based on ethics. But there is a close relation of Law and Ethics. Ethics involve emotions while law is unemotional in its delivery. It is ethical to not break the law. Ethics guide how well we can obey the law. Sometimes ethics does not lead to Laws.

In international environment all firms should obey to legal and follow ethical rules and regulations. It requires little thought for most of us to know the socially responsible or ethically correct response to questions about breaking the law, destroying the environment, denying someone his or her rights, taking unfair advantage, or behaving in a manner that will become a cause of harm or damage for someone (Yucel, Elibol, & Dagdelen, 2009)

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Gaski (1999) suggests managers that it’s ethical guidelines to ‘obey the law’ and ‘act in your self-interest’. Gaski’s argument shows that manager must obey the law for the benefit of the company. In addition, managers may face situations where ethics, the law and self-interest are inconsistent. Consistency of an ethical principle with the law or self-interest does not mean that it is limited only to what the law or self-interest is the same ethical consideration must be there for the benefit of the others. Smith (2000) explained that Gaski may claim that any unethical activity could result in economic loss and is not in the firm’s interest.

Global companies must come to grip with the legal and ethical consideration in which they operate their business. They must need to establish an environment that promotes ethical behavior. Therefore, global organizations need to develop and enforce their own codes of ethics specifically to resolve the issues related to a multicultural and multinational business environment (Mahdavi, 2004).

Trevino et al (1999) explained that there must be consistency between policies and actions as well as dimensions of the organization’s ethical climate such as ethical leadership, fair treatment of employees, and open discussion of ethics that what hurts the most is an ethical culture that emphasizes self-interest and obedience to authority, and the perception that legal compliance programs exist only to protect top management from blame.

3.1 Legal but Unethical Behavior of Organizations

Some activities and beliefs may be legal, but not perceived as ethical at the same time. Same in the way, high speed of car is legally allowed but is not so ethical because high speed may become a cause of accident. On the same way organization also pay attention for ethical considerations which are not legal.

Marriott Corporation maintains very comprehensive ethics standards to which their employees must abide. Several years ago, the orientation program at Marriott Corporate Headquarters included a presentation on what was and was not considered acceptable. Although these rules were part of company policy, there is nothing illegal about any one of these items. However, in the Marriott Corporate culture, each was considered unethical.

Although much of the media are free, they are still subject to legal laws of liable of character, just as for profit programs. Simply because these programs are not earning a profit, doesn’t mean that they are not accountable under the same laws (Schnackengerg, Vega, & Warner, 2008).

Another example is the manufacturing practices of Nike, one of the largest manufacturers of athletics sportswear in the world. Nike produces the majority of its goods in South East Asia. Despite the profits of the Nike organization, its foreign workers are paid substandard wages and work long hours in bad working conditions. In 1996, the entry level wage at one of these factories was $2.20 per day. Labor groups were needed more wages for survival because the other companies were paid more. And as long as the company is meeting the minimum wage standards of the host country, there is nothing illegal about paying low wages. However, most Americans would look at these practices as unethical.

Arjoon (2006) explained that in 1999, Jesse Gelsinger, a healthy 18 year old, died of an experimental drug at the University of Pennsylvania. The principal research scientist had positioned himself to profit if the toxic drug had worked. The Gelsinger family was not fully aware of that conflict of interest and had not been adequately told of all the drug's dangers. So, these types of activities are legal even in the organizations but these are not ethical (Bodenheimer & Collins, 2001).

3.2 Illegal but ethical Behavior of Organizations

On the other hand, there are some behaviors which are illegal, but widely perceived as ethical. One example is taking office supplies from the company supply cabinet for personal use. Legally, this is considered theft, but many people see no moral or ethical problem and do it anyway.

Many companies write off the impact of software piracy in order to justify their belief that it is ethical. May be this activity prove as ethical but it is not legal of piracy of software without the permission and copyrights of the programmers. The study estimates that, of the 615 million new business software applications installed worldwide during 1998, 231 million, or 38%, were pirated. They estimate that this resulted in an $11 billion loss to software companies. [3] 

Ethics can be defined in different ways depending on the culture, e.g. in USA to be ethical means to respect the laws. But what is legal is not necessarily ethical, and one can interpret a law according to his/her objective. The strategy “Fight against action” can be also considered as an ethical one in regards to the company’s employees and shareholders (Hove, 2005).

The Nebraska case study exemplifies one complex dilemma in patient care: Law; ethics; nurses. They interface with each other in dramatic ways. Nurses need to be prepared for these challenges. Nebraska case study demonstrated why and how easily one’s clinical nursing practice can be significantly altered because of legal activities that may put nurses into legal, ethical and professional difficulties (Furlong, 2008). Rentmeester (2006) stated: “In negotiating uncertainties and responding to interesting, important, and complex questions and dilemmas in healthcare, it appears that health care professionals cannot rely solely on legal experts. Rather they must carefully disceen and collegially discuss moral reasons to respond with care to patients and to one another in difficult cases.” P(32)

Every person learns norms, values, good and evil, right and wrong from society where he lives and he decide on the basis of these standards that what is right and what is wrong. Rules are derived from Ethical Assumptions and vary from country to country due to Religious, Cultural or social standards. Some countries are so rigid and others are so dynamic in nature to adopt new rules. Country culture affect the organizational culture and organizations abide by laws based on Ethical Principles.

In the above mentioned case shows that most of the companies abide by laws and deliberate more on legal consideration than ethical consideration. Gaski (1999) suggests managers of the companies that it’s ethical guidelines to ‘obey the law’ and ‘act in your self-interest’. In most of the cases organizations focused on legal consideration for HR Practices like training, performance appraisal, fixed rate of wage, etc. In 1996, the entry level wage at one of these factories was $2.20 per day in Nike (International Company) which was fixed on the basis of their legal consideration. On the other hand ‘The Nebraska case study’ exemplifies the training of nurses for legal consideration. Therefore, the main focus of organizations is on legal consideration.

Arjoon, S. (2006). Corporate Governance: An Ethical Perspective. The University of the West Indies .

Anderson G. and M. Orsagh (2004), “The Corporate Governance Risk”, Electric Perspectives, 29(1), pp 68

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Schnackengerg, H. L., Vega, E. S., & Warner, Z. B. (2008). Podcasting and Vodcasting: Legal Issues and Ethical Dilemmas. Plattsburgh State University .

Smith, C. N. (2000). ETHICAL GUIDELINES FOR MARKETING PRACTICE: A REPLY TO GASKI & SOME OBSERVATIONS ON THE ROLE OF NORMATIVE MARKETING ETHICS. Center for Marketing Working Paper.

Trevino L., G. Weaver, D. Givson, B. Toffler (1999), “Managing Ethics and Legal Compliance: What Works and What Hurts”, California Management Review, 41(2), pp 131-151.

Woodcock, L. (n.d.). Legal and Ethical Issues in Multimedia: A Technical Perspective. School of Multimedia and Information Technology .

Yucel, R., Elibol, H., & Dagdelen, O. (2009). Globalization and International Marketing Ethics Problems. International Research Journal of Finance and Economics .


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