Discuss about the Ethical Issues in Bussiness Networking.
Business networking is an important aspect in the growth of any business or organization. It is a process through which one is able to establish cordial relationship with new clients and business partners. This can be achieved through face-face interactions, introductions in conferences, meetings or by social networks such as emails, websites, phones or Facebook. Business networking opens doors for new opportunities in your business as well as giving one a chance to market his or her ideas. Networking has numerous benefits to the organization; it helps make new contacts and referrals, keep at per with the new trends, helps in problem solving and also in sharing and obtaining knowledge and experience among other business people. With the increasing rate of business networking the issue of ethics has arisen which needs to be addressed so as to enhance business performance (Halinen and Jokela, p. 341). This paper therefore, discusses various ethical issues surrounding the concept of business networking.
Business ethics is a code of conduct that distinguishes wrong from right. It guides how a business should operate and carry out its operations. Business ethics all starts from the point of personal ethics. Honesty and fairness are key in carrying out the operations of a business. Fairness and honesty creates a fair competition while enabling the organization to achieve its objectives and goals. Ethical behavior in a business boosts the sales and profits thereby increasing productivity. It also attracts foreign investors as well as keeping the share price of the company high (Brickley et al., p. 1827).
In every business dealings and exchange, ethics has become an important element. Business networking is possible through resource ties, actor bonds and activity links which brings interdependence and therefore the issue of ethical concerns arise. The ties made in networking is expected to last and have some future returns. Due to the close social interaction that occurs in this relationship, then ethically right behavior or norms plays a key role in ensuring the sustainability of the relationship. Having the right ethical behavior can create a healthy and conducive business environment which could in turn be of benefit to the organizations and the created networks hence improving company’s performance and competitiveness. Ethics in business networking sets rules and regulations governing on what is wrong and right or the right and wrong behavior in business interaction. There are various issues which are of interest in business exchange and hence should be put into consideration. In networking you interact with people of different cultures, social norms and different language. Therefore, ethical issues become a crucial area that need to be addressed in relation to business networking (Aasland, p. 5).
Due to increasing environmental problems facing businesses today and the globalization process, ethical issues have also increasingly gone high. Ethics in business can affect the firm’s characteristics and networks, sharing of the information, operation processes, business exchange and interaction with other stakeholders and the society. Therefore, morally upright attributes such as loyalty, truthfulness, integrity, honest and fair competition are necessary for business networks to have a long-lasting effect (Håkansson and Ford, p. 135).
Various theories of ethics have been postulated that give moral principles and guidelines on how people should interact in business networks. Deontological, utilitarian and virtue ethics are some ethical perceptives that are in use in business environment today. Deontologists believe that as long as an action conforms to the set ethical norms then its justified to perform it. Utilitarian’s on the other side believe in the positive outcome of an action (greatest potential utility). Putting into consideration the benefits and costs of an action, it should not harm but have a positive outcome. They also believe that egoistic motivations are a drive to a person acting morally. Therefore, in organization set-up, the individuals would be driven by their urge to maximize their profits and be productive. On the contrary, virtue ethics puts the interests of other people first. It seeks to do good for others. In the supplier relationship for instance, virtue ethics demands equality and justice for each and every involved party despite the fact that the parties are located in different locations (Hunt and Vitell, p. 146).
Unethical behavior that may occur in the business networks has been illustrated by the virtue ethics. However, some people have tried to show the inefficiency of the virtue ethics in relation to business relationships. They argue that relational virtues as addressed by this theory is limited and therefore, when assessing its applicability, non-harming consequences of utilitarian theory should be indicated so as to be accommodative to other involved parties. Commitment to a relationship is key in ensuring the networks created lasts over long periods of time. It is morally upright to keep your promise and to be committed to whichever promise you make. Lack of commitment breaks the already established business ties which affects the business performance negatively. Nevertheless, parties can remain committed to a relationship if they know there is a reward to their contribution (Brass et al., p. 20).
Normative theories of business ethics are divided into two categories. The consequentialist theories which determines the right and wrong of an action depending on the results obtained from the said action. Non-consequentialist on the other hand determines the rightfulness and wrongness of an action depending on the character of the action or it’s intrinsic feature. The egoists in the consequential theory determines whether an action is wrong or right based on their own interest. If an action undermines their personal interest, its morally wrong but if it enhances their personal interest its morally right. These are the factors that influence how people interact in business networking. However, since it is voluntary to join a certain business network, one should ask how the network conducts its businesses, either ethically or unethically. Every human activity has an ethical aspect (Hasnas, p. 30).
There are three types of business networking influenced by normative theories; Utilitarian networking- its intention is to obtain as much benefits as possible in regards to economic advantages and in achievement of power, safety and protection. It’s through business networking one is able to find a new job, contracts and clients. Networking can help also ensure maintenance of customers and in acquisition of useful information (Melé, p. 495).
Emotional networking- it’s main aim is creating a pleasant and conducive relationship with other partners. Linked to what Aristotle termed as friendship for pleasure, and thereby you can find enjoyment and satisfaction from one another. Virtuous networking- looks at the positive ending of the action. It includes willingness of the person to help others in need without being forced. Also, contributing positively to the network gives one a great feeling of satisfaction. Despite all these, networking requires time, effort as well as money (Solomon, p. 1031).
In urge to answer the question of when is exchange relationship ethical, understanding the concept of fair sharing and the role played by personal and interpersonal relationship, is essential. Ethical behavior and ethics in general have received much attention in relation to exchange relationships. In business networking, there is always exchange of ideas as well as future exchange of products and services. For an ethical relationship to be achieved, some traits are a must. Trust, commitment, equity, fairness, respect, transparency, responsibility and integrity are some of the positive virtues required in networking. Some authors however, believe these virtues as not a necessity of an ethical behavior but believe they are outcomes of ethical behavior. That these attributes are generated by the fact that an individual is ethically upright. Despite the fact that ethical behavior in business interactions means abstaining or refraining from the opportunistic behavior, the organizations only does so when they can benefit. And so, many organizations aim at safeguarding their interest at the expense of fair exchange (Gundlach and Murphy, p. 40).
Distributive justice which is an aspect of virtue theory puts more emphasis on fairness in the ethical exchange behavior. In business networking, the involved parties express their views in order to achieve an amicable decision making process. Therefore, procedural justice also comes in as it ensures there is fairness in the integration process of the views expressed by the parties (Luo, p. 347).
For a successful networking process, some ethical attributes such as sharing goals and resources, acting in good faith and in acceptable manner are essential. Otherwise, the unethical behavior such as misuse of power, abuse of trust, opportunism as well bringing harm to other parties, will affect business networking negatively. Misuse of trust or acting in bad faith is whereby an entrepreneur is in networking process but his intention is to take advantage rather than respecting legitimate norms of the network. Hiding relevant information from other parties with the aim of taking advantage of them as well as leaking information are bad virtues. These unethical behavior affects interactions in the business sector (Zuber, p. 162).
Ethical behavior plays a vital role in the sustainability of business networks. Ethical behavior ensures companies interact well and thereby reaping maximum benefits from each other. It’s important for each and every involved party to act morally right since the parties involved are divergent having different views and interests. Given the divergent nature that comes with networking, it’s prudent to put concerns of every person at heart. In exchange relationships, ethical norms have been emphasized as the governance mechanism. Business networking is established with an aim of continuity. To take the performance of your organization to a higher level. This is only possible if both parties act ethically and therefore, relationship continuation and future positive outcomes would be guaranteed (Treviño et al., p. 650).
Competition in businesses can either be positive or negative. In the field of business networking competition can be seen as unethical and sometimes people refer to such scenarios as greed for power. Other authors however view market competition as an ethical act contrary to the believe of many. Ethical behavior is encouraged in business networking as well as in other societal sectors so as to promote peaceful co-existence and improve performance. Many companies and organizations have come to realization that ethical behavior is not only a moral obligation but also a smooth process of conducting business hence having a true competitive advantage. Unethical behavior usually affects the performance of competitors. In this world of changing technology and rapid innovation, sharing of information and knowledge becomes a critical issue. In a business network composed of competitive industries, the issue of information leakage becomes critical. Also the issue of equal contribution so as to avoid free-rider problems amongst the parties is a critical area that needs to be addressed ethically (Kulik et al., p. 715).
Many individuals desire to be morally upright with few exceptions of course. However, some factors may affect ethical behavior observed in a person. Stages of moral development may contribute to how a person behaves at a specific stage. Research shows that at every successive stage, moral judgement of an individual deteriorates. During the pre-conventional stage, an individual upholds the set rules and regulations so as to avoid the punishment that may appear in the event that he or she doesn’t adhere to them. The person also only follows the rules, if it’s of immediate interest to him. In the conventional stage, a person lives to please people close to him and only fulfills the obligations to which he had promised. In the last stage-the principled stage, an individual values rights of others and respects them despite what the majority or the society may feel. A person also follows ethical principles which he believes are right despite the fact they may be against the law. Therefore, depending on which stage a person is, he will behave differently. Individual characteristics due to different beliefs and view of what is right and wrong, individual strengths, ego and locus of control are also determinants of how a person will ethically behave (Aragon, p. 25).
Ethicalness is vital in value creation. The main reason why organizations prefer networking, it’s because they can increase value of their products through different views from other parties. Morally upright ethics ensures great performance and satisfaction to every party involved and eventually there is a possibility of value accruing. The idea of distributional justice in networking enhances fairness in sharing and exchange of information and thereby improving partner’s commitment to each other, avoids opportunism and lessens need for monitoring and relational risk. On the other hand, unfair treatment causes division amongst themselves causing conflicts thereby weakening incentives to ethical behavior. Questions always arise on whether a business network expressing high ethical standards in its operations can out do an unethically operating network. However, despite the fact that some organizations can misuse power and abuse other trusts as well as perform all other unethical behavior so as to succeed and outdo others, a network where there is fairness will grow together (Johnson et al., p.1150).
An ethically operating network also has a good reputation. Having a good reputation can attract other quality partners hence improving on your business operations. It can also enhance the existing relationships enabling the involved organizations achieve their goals and objectives. It important however, for every member to involve themselves in ethical practices since unethical practice of one member can tarnish the image of the whole network (Cravens et al., p. 209).
Conclusion
Ethics plays a major role in the interaction of organizations. Ethical behavior in business networking, improves the performance for the whole chain of networks. It also creates value for its employees through satisfaction of their needs and creating a positive ethical reputation.
References
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