The Formation Of Bi Moral Societies Commerce Essay


In modern times, there are mainly two sets of principles guiding human behaviour in social life. One is associated with traditional morality which stress one's duty and obligation to others involving treating people credibly and reliably and giving priority to others' needs above one's own. However, this principle mainly takes effect among friends and family but its effectiveness in business management has been weakening. The other principle is related to self-interest. It means people make decision not based on the potential impact on others but primarily based on how to maximize their own interests. In the recent years, this principle has always affected not only personal behaviour but also organizational behaviour. Moreover, the behaviour of gaining profit at the expense of others has become increasingly morally acceptable and socially legitimate. Hendry (2004) holds that modern society has a feature of combining moral obligation and self-interest. Furthermore, the increasingly feeble traditional morality and the staggering growth of the morality of self-interest have lead to a bimoral society where the morality of both obligation and self-interest have legitimate status and there are also no definite determining standard which one should be applied in any specific situations. (Hendry, 2004)

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3. Approaches to morality

In Western philosophy and culture, there are various views and theories of what makes things positive and/or negative on a wide range. However, generally, there is an agreement on which type of behaviour is regarded as adverse, but there are differences in how these behaviors are discussed and explained because of people considering at different angels (Gilmore and Williams, 2009). Western philosophers have been arguing about the nature of good and bad for hundreds of years. They have identified a critical differentiation between approaches of considering morality as principles, duties and rights and those that regard morality as consequences. Both approaches are apparently consistent with some of the ways people considering morality in their social life.

3.1 Deontology

Deontology means people should take responsibilities of accepting duties, rights and principles in the society (Gilmore and Williams, 2009). This approach stresses that stand or fall is evident in the act itself without considering its consequences. For example, stealing is stealing itself but ignore the effects of the act. It often takes the form of lists of types of action that should been encouraged or refrained from absolutism. Scruton (1996) suggests people with morality are rational and capable of self-regulation and he cannot be plundered, abused or living without freedom. In terms of the application of this approach in business management, it emphasize that the employ in the labour market should be appointed by free choice (Friedman, M and Friedman, R., 1990). That is to say, for example, if employers enforce agreement with their instruction and regulation in the manner of the threat of violence or other degrading treatment, employees in this situation are evidently treated without ethics and morality. However, until now, there are unethical behaviors existing in the workplace all over the world. For example, a great many of companies always conduct the practice of paying workers part of their wages or pay them delayed.

3.2 Libertarianism

In the perspective of ethics aspect, libertarianism attaches importance to people's freedom of choice and consider it as the most critical aspect of moral standard. Gilmore and Williams (2009) state that a libertarian society is the society in which residents can get along well with others and enjoy their freedom at no expense of others. This approach advocates business in free market and it accepts that the free market has an invisible hand, where people seeking their own interests can be directed to be beneficial for others even if they have no intention to do that. Consequently, a free market can create effect common good spontaneously. However, Berlin (1969) argues that liberty cannot contribute to equality, justice, or a quiet conscience.

3.3 Utilitarianism

The utilitarianism perspective is based on cost-benefit analysis which considers behaviour as moral and ethical action if it can lead to the greatest amount of good for the great amount of people affected by the action. It is helpful for decision makers to consider thoughtfully. However, Mackie (1980) suggests this approach also has its own weakness that it is easy to ignore some people's interest because this approach encourages acceptable actions as long as the net effect is to increase the sum of net happiness. For instance, the process of globalization is recognized as a positive process which has made a great impact on global economy and modern life. However, a great many of people who are bothered or even destroyed by the globalization cannot obtain moral treatment.

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3.4 Virtue ethics

The classical Greek philosopher Aristotle defines virtues as desirable character traits that lie between undesirable extremes. Someone with high virtues is more able to live a valuable life which is not necessary related to particular levels of material well-being. This approach shows that people with virtuous characters can behave in a moral and ethical way. Thus, possessing virtuous character is the first step to ethical act (Crane and Matten, 2004). There are a great number of different ethical ideas coming from different regions all over the world. Both Western and Eastern thinking about right and wrong are strongly influenced by their cultural traditions which were formed over hundreds of years. Hofstede (1991) suggests Confucian Dynamism is a separate dimension in understanding the differences between national cultures based on values such as perseverance and thrift. These values, together with the familiar Confucian emphasis on hierarchy, will influence the behaviors and attitudes that are accepted and admired at work. For example, corporations should try their best to enhance their productivity not only for their own profit but also to save as many raw materials and to reduce pollution as they can with increasingly higher technologies. Therefore, as Girling and Williams state in 2009, in contemporary economy, understanding the influence of cultural contexts in different religions is increasingly important in business management for both domestic and multinational enterprises.

4. Corporate responsibility in modern society

In the current modern world, especially in the west, the power and influence of business in society is increasingly greater (Crane and Matten, 2004). However, business interests and socially public interests are often considered as different and could even lead to competition and conflict. They seem to pursue different goals in different ways and for different reasons. For example, during the global economic crisis, a number of companies in the US have trouble in financial statement and the American government invested huge amounts of money into these companies, such as AIG, to help them pull through the difficult situation. However, during this difficult time, ignoring the public pressure, many high managers in these companies still rewarded high salary to themselves which roused people's great wrath and suffered moral stigma. Jackall (1989) and Snell (2000) disclose that ethical norms of organizational behaviour are obviously different from public standards of conventional morality. Hendry (2004) suggests that the huge energy generated by modern enterprises released in the contemporary global free market should not be used to destroy society but to serve it in return. Similarly, Gilmore and Williams (2009) insist that organisations always act intentionally and their behaviors can have positive or negative effect on individuals, groups and even the whole society at large. Thus, in order to understand what are positive and negative behaviors conducted by organisations, it is important to concern with the ethical desirability of organizational objectives and practices.

4.1 Shareholder interest view

Friedman (1970) holds that the purpose of a business is to earn as much money as possible for its shareholders within the rules of law, competition and ordinary decency. The reason is that the shareholders are in possession of the company and they constitute principals whose duty to the shareholders is to use any possible means to defeat competitors and finally maximize their own interests in the market. Thus, it is not hard to understand managers' behaviors for this purpose are often considered as a lack of morality. However, on the other hand, in the shareholder view of business, an employer has legal duties to his employees and must treat them without indecency. Employers should understand that employees are committed to help the company to earn money for the owners. In fact, in actual workplaces, employees are often treated unfairly and managers could even exploit them to maximize their own interests. Accordingly, employers ignore the notion of its social responsibility involving a wider range of responsibilities rather than just making money for their owners or themselves. Thus, based on this view, it is evident to see that employers' behaviors of simply focusing on self-interest and preferring to put a few people's benefits ahead of the community and even the whole society are the typical performance of lack of social responsibility.

4.2 Stakeholder interest view

The idea of stakeholder shows that business operation is not only for shareholders but also for customers, suppliers, the local community and even society at large. Paine (2003) suggests that it is insufficient for managers to consider their responsibility solely as producing financial interests to shareholders. Increasingly, company leaders may perceive an accountability that goes beyond their regulatory duties. The perception of the corporate social responsibility (CSR) to business has sparked much attention in modern times. According to Gilmore and Williams' research, a public commitment to CSR seems to be required of major corporations today, although the depth of that commitment may differ. For example, in nowadays, increasingly corporations will also consider their contribution to society and environment such as reduction of pollution to some extent, as an important aspect when reviewing their holistic performance. In the viewpoint of public, CSR initiatives are regarded as good business. Thus, to order to compete for customers and talent recruitment and retention, the corporation must be considered as responsible and concerned. Porter and Kramer (2006) suggest that effective CSR actions are likely to be those that are associated with the competition and sustainability of a business. For instance, an excellent manager in a company should exert every effort to benefit not only in terms of the productivity or short-time profitability, but also in terms of customer preferences and customer satisfaction to products and services. Besides of profit organisations, non-profit organisations should also actively take social responsibility even though they have no shareholders to enrich. For example, as a government department, it is essential to consider residences as its most important stakeholder to support because staff in a government office obtains salaries from the government revenues and revenues are always from common people. As another example, in order to a good hospital, doctors in the hospital should act with commitment and accountability because it is not hard for most people to realize whether the hospital is excellent or not according to the obtained service and the health-care level. If the hospital cannot be satisfied by patients, it is difficult to survival for a long time. Consequently, based on the view of stakeholder interest, it is essential for both profit organisations and non-profit organisations to realize that excellence involves much more than self-interest and it involves more people can be framed as responsibility.

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5. Organisations in a bi-moral society

Drucker (2001) insists that the purpose of business is not to maximize its profit, but to satisfy its customers. However, Friedman (1970) shows that general business corporations have only one social responsibility which is to increase their own profits. It means that he contradicted that business should take social responsibilities in general. In the meanwhile, he advocates that social businesses should be encouraged to take responsibilities in the form of such as providing employment, promoting work environment, avoiding discrimination and reducing pollution. From this view, it is evident to see that organisations' social responsibility is an active commitment to improving social conditions, such as a positive responsibility for producing good products and services. In today's society, increasing modern corporations have paid much attention to the perception of legitimacy. Suchman (1995) states that legitimacy is involved with the actions of an entity which are desirable and appropriate in some socially constructed system of norms, values and beliefs. With increasing public voice on CSR, the possession of legitimacy may help a company to void certain kinds of external pressures while the company may lose its operation in certain domains of action without legitimacy (Pettigrew, 2009). Thus, companies are likely to consider access to resources and stakeholder support as one of the important aspects which can impact organizational survival. As for employers and mangers in business, Friedman's argument which is also mentioned above is that mangers must only conduct only for company owners to make as much money as possible and social responsibility are more likely to result in a large expense of organizational financial gain. However, it is doubtable that top management in the company is only interested in earning financial rewards for themselves. In any rate, what they desire and what they are interested in are different in fact (Chryssides and Kaler, 1993). Chryssides and Kaler (1993) suggest that managers are also part of social people and they are also looking forward to living in a society where negative social facts such as wide unemployment, discrimination and air pollution can be avoided even if this may make side effects on their dividends. In addition, managers in a company are not only principals of shareholders. On one hand, management is employed as employee by the company which is invested by shareholders; on the other hand, management is always committed with duties of such as managing and taking care of the fortune of the whole entity, in the view of which managers are not simply employees. In order to keep business healthy and sustainable, managers in the company must balance the various claims of conflicting stakeholders. Specifically, shareholders prefer more financial rewards while employees prefer higher salaries and more staff welfare. Customers prefer more investment spent on product quality and design innovation while the local community may prefer more public facilities such better parks and daycare facilities. Simply, top managers have to keep the relationship among stakeholders in balance. Otherwise, if these relationships become unbalanced, the company will probably have difficulty in sustainable development and even survival. For example, workers' salaries are too high and product quality is too low, it is not difficult to imagine that the amount of customers will significantly decline. Be conditioned by the decrease of profit, suppliers are possible to obtain money delayed. If this negative situation continues for a long time, shareholders may lose confidence for the company and then withdraw their investment capital, which has a negative effect on stock price of the company and make it difficult to raise new capital in financial market. Thus, proper understanding of management is very essential for modern corporations. Evan and Freeman (1993) hold that people should form a perception that the reason for paying financial returns to shareholders is not because they own the company but because their support is important for business development and that they have a legitimate claim on the company. Similarly, accurate treatment for other groups of stakeholders should also be implemented appropriately.

However, Friedman (1970) insists that companies will suffer financial loss from taking social responsibility. It means there must be participate in the process of buying and selling who will pay out cost. Either shareholders will obtain lower profit, or customers will pay more money to buy goods. Thus, by a process of self-interest, employers' preference and so on, managers are more likely to behave unavoidably as more conservative rather than society at large (Chryssides and Kaler, 1993). In terms of profitability, increasing companies need to enhance their own competition in the market during pursuing profit while in short time, it seems that companies who are competing in business have to loss benefit when marketing. However, in a long time period, it is beneficial for companies to develop sustainably if it persists on the principle of bring tangible benefits. Increasingly businesses have been perceived that taking social responsibility is beneficial for both their stakeholders and themselves. Although companies are not persons, they are instead made up of persons. Moreover, individuals always play various roles in their real lives. That is to say, an individual is not only a seller in business but also a consumer in daily life. Thus, every company should exert his effort to take appropriate responsibilities. For example, in an initiative of donation for earthquake, increasingly responsible companies are trying their best to help others in the way of both raising money and goods and materials, which is an effective act to take social responsibilities. Meanwhile, their donation action can effectively enhance the public impression and also a good chance for propaganda, which can improve their profitability as well and make them able to obtain more salaries than ever before. So this process is virtuous circle.

Besides that, the fact that the rise of human resource issues is often related to the value accusation of especial corporate executives discloses that more attention should be paid to such as CSR and the relationship between business and society. This is often seen as an important aspect of affecting company profitability. Thus, businesses realized that winning social legitimacy and respect is increasingly important for business development. Lenssen (2007) suggests that companies behaving morally are pursuing two objectives. One is competitiveness and the other is social cohesive force. Whilst, he concludes that the relationship between the two objectives is complex because there are likely to be tradeoffs. That is to say, social cohesive force does not always promote corporation competitiveness but it can do so. For example, as a tobacco company, in order to enhance their profitability, they are always trying their best to sell as many cigarettes as they can. But at the same time, they are always persisting to print slogan of health hazards of smoking on the every packing box, which may have negative effects on its income. Thus, it is a challenge for business management to combine general social responsibility and economic development.

6. Recommendations

In the bimoral society, moral obligation and self-interest are compatible. Actually, it is hard to conclude that moral obligation is necessarily positive for common good and the perception of self-interest is negative for social development completely. To some extent, self-interest can motivate people to take effort to make progress and improvement which can contribute to social advancement at the same time. In fact, both individual and social developments are resulted from the interaction between moral obligation and self-interest. The two principles both have their own advantages and weaknesses. So, if only human being can take actions to manage them appropriately, they can be applied effectively in proper situations. Meanwhile, it is unwisely to take advantage of market regulation, government intervention and corporation management separately because each measure is limited. For example, there is an argument that a free market can correct corporate behaviour independently to transform decision making towards moral projection. However, a laisser-faire market made America into depression in the early twentieth century. Without The New Deal, it is hard to say American economy can be recovered effectively. But on the other, depending on government adjustment completely is also negative, even though government intervention may necessary as a measure of improving corporate social responsibility. For example, if government enacts laws or takes other forms of regulation to limit business behaviors, there would be little space left for organizational further development, which is also adverse for common prosperity. In terms of corporation management, it is encouraged for companies to take active action to contribute to balance self-interest and common good. For instance, they can improve performance management systems to reward managers for business successful initiatives in both business and society area (Smith and Lenssen, 2009). However, only legitimate systems of incentives are not sufficient, even though they are necessary and positive for corporation responsibility. In short, if various measures such as market regulation, government intervention and corporation management should be taken together, then it is more effective and efficient to keep balance between personal interest and collective interest and between corporate interest and social interest. Then, there is very reason to believe that bi-moral society will have a bright future.