Business Ethical Dilemma For The Era Of Globalization: A Case Study

Description

Describe about the Business Ethical Dilemma for the Era of Globalization.

In this era of globalization, ethics have emerged as an important dimension of business (Whitaker & Godwin, 2013). Today, the stakeholders expect that the organizations and employees should have ethical standards. In an organizational setting, people often come across various ethical dilemmas (Frederickson, 2013). The ethical dilemmas or the moral dilemmas could also occur in people’s personal life. Here, I would like to discuss an ethical dilemma of my professional life. I have not used the real names of the people and the organizations involved. I was working as a procurement officer in a small spare parts manufacturing firm in Australia. The company (ABD Inc.) was a mid-size spare parts manufacturing unit of 250 employees. We were a team of 7 people who used to handle the procurement for the firm. Our task was to meet the suppliers, negotiate about the prices and do the quality check. Mark was the procurement manager and I used to report directly to Mark. We used to work in very tight schedules and Mark demonstrated good confidence in his team members. We were rarely questioned about the procurement deal that we made. As a part of our daily work, we had to meet several new suppliers in the region and compare their offerings with the offerings of the existing supplier.

As a part of my daily work, I meet with a supplier Frank. He was able to give the supplies at a lower price. When I enquired I found out that he usually import the products from China and as a result Frank had the price advantage. However, his products were not high quality products. A random sampling of few products demonstrated that the products lacked reliability. Therefore, I did not have any deal with Frank and I updated the same in the internal system of the company and I communicated the same to Mark. The very next week, I received a call from Mark to discuss the deal with Frank. He told me that there is a cost pressure from the senior management and ABD Inc. should close the deal with Frank. I told him about the quality of the products and I told him that this deal should not be signed. He insisted to have the deal with Frank, as it would be beneficial for ABD INC., Mark and procurement team of the company. I was not able to understand this at the beginning. Later, Mark told me that Frank approached him and guaranteed monthly gifts for a minimum business for $5000. In fact, Mark forced me to have the deal with Mark. Personally, I did not want to compromise on the quality and this was the reason that I rejected Frank as a supplier. But, after the meeting with Mark, I was in a big ethical dilemma. I was not sure about the way out, I tried but I was not able to convince Mark. I finally decided to escalate the things to the manager of Mark. Sara was the manager of Mark and I told the entire incident to her. Mark was not happy with my decision and Sara decided to cancel any deal with Frank. It was a bad mark on the professional career of Mark. However, I believe that this decision was good for the company in long term. Therefore, I would rate my decision as 8 out of 10.

Analysis

The decision of escalating the things to Sara could be discussed from the perspective of various ethical theories. The three normative ethical theories and dilemma can be discussed as:                       The egoism theory of ethics as explained by Gobble (2015) suggest organizational ethics more often than not begins and ends at the organizational chart illustrating the who reports.  Designing an organization to survive and support change will take moving around the formal lines on the organizational chart for an organization to become flatter and collaborative (Gobble, 2015).  Lorinkova, Pearsall and Sims Jr. (2013) suggest that although empirical researchers advocate empowerment leadership over directive leadership to enhance team performances, the empirical data is not clear that it supports enhancing team performances.  Gobble (2015) suggest empowered leadership will use behavior that emphasizes collaborative decision making the focus more on the development of knowledge and experiencing positive interpersonal relationships. The egoism theory is a traditional theory of ethics and virtue. After the egoism theory, various new theories have emerged that holds well in the contemporary field of management. However, the egoism theory is still used widely across different areas of ethics.

This theory suggests that the action is morally right if the action promotes the self-interest of actor (Plunkett & Sundell, 2013). The interest could be a short-term interest or a long-term interest. Generally, the ethical egoism is associated with the long-term interest of the actor (Chakraborty & Kumar, 2013). This ethical theory deals only with the actor and not with the surroundings or the environment of the actor. In this theory, the analysis of any decision is based on the personal or the self-interest (Jefferson & Sacks, 2015). The application of this theory on the above ethical dilemma would suggest that I should have taken the step that was best suited for me (Blackstone & Rustroom, 2006). When I was in the situation, I considered the wellbeing of organization. The application of this theory suggests that I should have analyzed the situation from my perspective (Elina & Erika, 2012). For me, probably, the best alternative was to agree to the Mark’s decision. This way, I would have gathered his trust and confidence. It would have helped me to get early promotion.

The egoism theory of normative ethics has the drawback that it could not be used from the perspective of multiple stakeholders. This theory provides only a singular view of the problem or issue at hand (Forcehimes, 2015). Based on my admittedly limited understanding of organizational design and ethics, I would argue that the egoism theory of normative ethics has had enduring impact on organizational design and ethics.  I do believe, however, that it is difficult to separate completely the personal perspective and the organizational perspective when dealing with the ethical dilemmas in the professional scenarios (Ferrell, 2014).

Utilitarianism is a theory in normative ethics holding that the best moral action is the one that maximizes utility. Utility is defined in various ways, but is usually related to the well being of sentient entities (Sternberg, 2012). The advocates of this theory believe that a successful organizational ethical values requires a deep understanding of the context for which the organization is being designed.  This requires an understanding of the environment in which the firm operates, “the business strategies and models it will use to compete, and the capabilities it needs to compete”. The utilitarianism theory of ethics suggests that the decision should have increased my utility (Kaufmann & Carter, 2011). Now, there are different ways to define the utility. Personally, I think that my utility is enhanced when my organization does well (Michael & Greg, 2014). Therefore, in the context of above ethical dilemma, this theory would suggest that I had taken a correct decision (Mulvey, 2012).

In an organizational setting, this theory can work bests when there is a synchronization in the definition of the utility of various stakeholders. According to Frooman (1999) “to be really useful to a firm trying to manage its stakeholders, stakeholder theory must provide an account of how stakeholders try to manage a firm” (p. 192). The first step to managing conflicting needs of stakeholders is to conduct a stakeholder analysis and determine which stakeholder group will have the greatest impact and conversely which organizational action will have the greatest impact onto the stakeholder group (Wood, 2012).  According to Frooman (1999) “urgency, legitimacy, and power” are key stakeholders’ attributes, which an organization needs to pay attention (p. 193). To ignore or alienate stakeholders means the likelihood of failure (Boatright, 2006). The dilemma in utilitarianism theory of ethics is prioritizing which stakeholders have the most influence (Taran & Bett, 2015).  There are so many opinions and not all bear the same weight.  A considerable action plan for these voices is in stakeholder mapping in order to prioritize interests and influence.  Two main areas where stakeholders have the most influence that companies consider is in urgency and power (Ingenbleek & Immink, 2010).  Companies can identify the levels of stakeholder influence and strategize how to avoid the “more contentious directions,” focus on areas of common interests, or “persuade, educate, or possibly reject” stakeholder input (Taran & Brett, 2015, p. 60).  The most effective route of managing conflict appears to be in anticipating the conflict, identifying urgency, and either recognizing stakeholder power or who to give power to.  This approach maximizes a best-case scenario (Mari & Anna, 2013).  In the end, there will most likely still be stakeholders whose wants were not met and are unsatisfied with company decisions.  As the saying goes, “you can’t please everyone”. The bottom line of utilitarianism ethical theory is that the overall utility of the actor should be increased and I can say that this happen in my case (Knights, 2006). For me, the utility was all about the organizational values and wellbeing and my decision was able to safeguard and upheld the organizational values. It can be said that the utilitarianism theory of ethics is used widely in various personal and professional areas. The organizations have been using the utilitarianism theory of ethics to develop an ethical culture in the organization. It also enables the organization to uphold the moral values within the organization.

Immanuel Kant gave the ethics theory of duty. He viewed knowledge of and acting on one’s duty as the key element. Indeed, he saw context as being of minor importance (Cassirer, 2016). This ethical theory suggests that the action should be based on the duty (Huhtala & Feldt, 2013). In the above case of ethical dilemma, there are two ways to apply this theory.

Case 1: I can apply this theory as I have a duty towards my manager

This case would suggest that I should fulfill all the request of my manager as that is the part of my duty (Ess, 2002). It means that I should not have escalated the things to Sara. It was my duty to obey Mark and the ethical practice was to agree to whatever Mark had to say. This theory suggests that duty is the priority of the employees of the organization and it is important that all the stakeholders of the organization must fulfill all their duties.

Case 2: I can apply this theory as I have a duty towards my organization

This case would suggest that the employees should look for long-term duties and not short-term duties. With the bigger picture in mind, I can realize that I was serving my organization and I was not serving my manager (Boening, 2006). Therefore, any commitment of duty, that I had, was towards the organization and not the manager. This case would suggest that my action to escalate the things to Sara was a good step as it helped the organization to avoid any trouble in the later point of time. It is expected that the employees would continue to show high ethical standards towards their organization. It is also important that the organizations should create a platform where employee can fulfill their ethical duties. 

This theory suggests that the people should act rationally in the moral and ethical dilemmas (Jung, 2010). The advocates of this theory suggest that man is the moral actor and the actions should be based on the duty that binds the man with the organization (Elspeth & Susan, 2012). The Kant theory is also used widely in the organizations. This theory of ethics has gained far wider acceptance in the large organizations and it is expected that the use of this theory would further increase in the professional setting.

All the above theories have practical implications in the contemporary field of management. It is important that the people should have a holistic understanding of these theories before selecting any particular theory.

When I look back at the ethical dilemma, I have a feeling of satisfaction as I feel that I took the right course of action. In my opinion, understanding and acting to address the ethical and strategic interests of all stakeholders is essential if organizations are to avoid public battles with stakeholders that damage trust and create ill will (Minka, 2014).  Still, I am not sure what I should have done differently.  Perhaps there are simply some circumstances when doing all the right things still produces unfavorable results.

When I analyze the application of the three theories to the decision that I took, I feel happy with the utilitarianism ethical theory. I feel happy with this theory as this theory suggests that my action was correct. I am personally, not very happy with the application of egoism theory of ethics as this theory considers only my views and perspective and not the perspective of organization. This is the reason that the decision that I took is not in line with the application of egoism theory of ethics in this ethical dilemma. I even like the Kant’s theory of duties. I think, the application of this theory is in line with my decision if consider my duty and my loyalty towards the organization. I have personally liked the utilitarianism ethical theory as this theory considers the viewpoint of various stakeholders in the organization.

If I were in the same situation again, I would take the same decision. I do not want to go against my manager. However, I would do this if my decision is for the long-term benefit of the organization as in the end, me and my manager serves the organization. I agree with Mark that for-profit organizations need to balance the interests of all of their stakeholders, but that they must also generate profits for shareholders and ethical values for the organization. If I am in the same situation I would again escalate the things as it would be morally correct path.

I can say that I have learned a lot from this ethical dilemma. All the three theories of normative ethics are effective. The application of these theories can vary based on the individual cases (Chao & Chen, 2016). It is important that the people should realize that the application of these theories could produce different results. In the end, right or wrong are very subjective terms and the definition of the words like ethics and moral values can change from people to people and from organization to organization. I believe that it is important that the right and wrong at the personal level should match with the right and wrong at the organizational level. It would enable the organizations to  get the maximum from the employees and it would also ensure that the employees can work with high ethical standards.

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