Business Ethics and Rational Policies
Business ethics is a fertile field for philosophical investigation with many dimensions as a result of systematic evaluation of norms and values. Ethics and moral policies are solid instruments that can enhance the survival of a corporation or lead to its failure. It is argued that the failure in ethical leadership has been because of the preoccupation with self and humanistic thinking on autonomy (Knights and O’Learyn 2005). At the same time, it is suggested that many managers are poorly prepared to deal with success, and that a strategic direction is never “set” (Ludwig and Longenecker 1993). Hence, answering whether an action or policy is fair enough for each affected entity, thus moral-ready to be established, is not only critical but also extremely valuable for the status of the corporation and the people behind the legal entity as the most crucial cell in each organization. At this point, it is important to mention that the terms of morals and ethics are considered equivalent and will be used interchangeably, as morals are concerned with the principles of right and wrong behavior, and ethics is moral principles that govern an individual’s behavior or the conduct of activity.
Ethics is a branch of philosophy that has been developing for at least 2,500 years, since the time of Socrates, Plato, and Aristotle when their theories advanced to provide a set of principles of human conduct (Brickley, Smith, and Zimmerman 2000). The evolution of business ethics has been very similar to the evolution of social ethics (Lee 1926). We do not have an international agreement on one definition about the subject of business ethics as different social groups, such as philosophers, political scientists, business academics, corporate agents, and trainers, have rather different points of view, due to the subjectivity of ethics. The eighteenth-century philosopher and author of the Wealth of Nations, Adam Smith (1723 to 1790), drew attention to the fact that efficient economic transactions frequently rely on self-interested or profit-oriented motives (Borchert 2006). In his view, profit seeking and self-interested activity in business is common, as the “invisible hand” and free market operations lead to the inevitable corporate interest that is against the common good. Additionally, Keynes (2009) stated that the moral problem is concerned with the love of money, as the money motive equals to nine-tenths of the activities of life, while the German philosopher Immanuel Kant (1724 to 1804) focused on the power and limits of human reason as a powerful source for cognition and deliberation.
For the purpose of this book, we could conclude that business ethics relies on individual behavior in the context of norms, values, moral principles, and the endogenous code of conduct. Individuals make decisions endlessly on how to behave as each choice can be conceptualized as an action with concrete approaches and perceptions before, during, and after the action in the form of consequences. Hence, business ethics involves examining appropriate restrictions on the pursuit of interest where the actions of individuals and corporate policies affect other entities by generating conflicting values. Ethics also reflects the culture of an organization, thus achieving a sustainable level of morality that is critical for the rational implementation of corporate policies. Violating common moral rules is not the way to achieve corporate goals. Instead, corporate policies should be rational and consider the entities that will be affected by them.
Consequently, Jones (1991) claimed that ethical decisions must be both legal and morally acceptable to the larger community, while unethical decisions are either illegal or morally unacceptable. However, this definition on ethical judgment of a decision can be challenged by the fact that ethical practices are not always legal, while unethical practices are not illegal necessarily. Agents and corporations as legal entities have the right to act in a variety of methods, and sooner or later, they must cope with legal but unethical, and ethical but illegal dilemmas.
For instance, during a financial crisis or an urgent situation such as a pandemic outbreak followed by a market lockdown, a corporation may need to reduce its workforce in an attempt to increase its profit ratio and therefore retain its sustainable position or to decrease its costs regarding its resources. Layoffs, following all the required procedures by local and international law, are legal in terms of contract rules. But, are they ethical as well? Indeed, we cannot change the legal part for our interest, at least in the context of ethical corporate practices, but leading an employee to unemployment for unreasonable profitability reasons violates an aspect of business ethics and the code of conduct. However, at the same time, the agent can defend this position by mentioning that if the corporation does not reduce its workforce, then the whole company will be at a high risk, which can lead to bankruptcy and serious negative impact for both the corporation and employees. Additionally, pay cuts are not a useful alternative to layoffs because workforce reduction harms the morale less than pay cuts, while the monetary worth of the latter practice is not enough to retain many employees (Bewley 1998).
Moreover, this is the reason why business ethics is a field of so many conflicts between individuals and their perceptions. The ethical issues faced are of an unprecedented scale in terms of the range of their implications within corporate policies and practices. We have learned from corporate history that we cannot manage such complex and systemic issues through ad hoc interventions. We cannot use principles and ignore current challenges. We must recognize that business ethics is not a temporary task and that we must always behave considering morals in order to indicate where, when, and how to intervene.
Indeed, the corporate world and economy in general consist of individuals and entities that each one has its own moral principles, goals, and interests. In this regard, new approaches, thoughts, and trends toward equilibrium alleviate the need for rationality of individual agents, maximization of resource utility, and moral behavior. Implementation of the past or current ethical business models is not always acceptable as practitioners must develop their mindset capacity for moral entity consideration and adapt to change. This implies that the extension of the existing models and the application of new moral concepts have the potential to bring new insights on how to leverage the human factor, while the corporate culture is associated with moral principles aligned to both internal norms and social beliefs.
Corporate governance as a set of principles, policies, laws, and decisions is responsible for integrating its own customs to employees from the highest to the lowest levels. Building a governance system that enhances business ethics is one of the most important and demanding challenge. The corporate governance system is crucial for an organization and it is almost as important as its primary business plan. When executed effectively, it can prevent corporate failure, scandals, fraud, and in general retain or develop the corporation in a sustainable way. A business without an effective system of corporate governance cannot succeed in the prism of increased internationalized corporate competitiveness.
It is important to mention that there are three strategic types of organizations: (1) defenders (organizations operate in a more stable and predictable environment), (2) analyzers (organizations operate in both stable environments and markets where new products constantly required), and (3) prospectors (organizations operate in unpredictable environments), followed by a fourth called reactors (organizations operate in an environment of inconsistencies among its strategy, technology, structure, and process) as a form of strategic failure (Miles et al. 1978). Policy makers must understand the strategic organizational goals and realize how business ethics can be applied through the available human resources (HR) of the organization. Practitioners must contribute to business success by developing rational policies. This indicates that there is a clear and fair vision, a set of integrated moral values, and a comprehensive code of ethics that fits into the present and future business needs. Human resources must know what is expected of them, they must understand the corporate goals, and most importantly their accountabilities within business operations. Ethics can provide workforce with commitment and motivation, while this positive attitude can enhance the implementation of rational policies.
Behave rationally is not just a simple action. For instance, optimality of mechanisms relies on the assumption that people behave rationally (according to their preferences), making the complexity of (optimal) mechanisms irrelevant (Huck and Weizsäcker 1999). Indeed, this process is limited by an individual’s capacity to recognize, understand, evaluate, and react to complex conditions. A lack of ethics has been routinely displayed as a willingness to exploit corporate consumers, competition, investors, and employees for profit and the interests of the owners.
At this point, it is important to mention that the owner of an organization can be a single individual or a group of individuals. There could be a division of responsibilities between the board as being the chairman of the company, and the executive responsibility for business operations in terms of chief executive. These individuals are the representatives of shareholders. In terms of the latter, either there is one individual as the owner with 100 percent ownership or more than a single individual with a smaller proportion of shares, they elect their representatives such as the board of directors with executive and nonexecutive directors for corporations, and they hold the ultimate responsibility for their organizations’ success or failure, and consequently, the implementation of ethical or unethical policies. Hence, claiming apologies after implementing such practices is not enough, either it is a single individual, an executive, or the shareholders of the legal entity. Business ethics needs policies that incorporate morals for the benefit of both corporate interests and human beings. In other words, having the capital to pay billions of dollars for fines and settlements due to various illegal activities does not give a corporation the permission to be unethical.
Human behavior includes limits to computational ability, willpower, and selfishness in the context of behavioral economics (Camerer 2014). This means that ethics borrows from neighboring sciences, such as norms (sociology), sociality (anthropology), psychophysics (theory about prosperity), and self-development and control (neurosciences). So, behaviors are mind-controlled, difficult to predict, and they can be affected by the environment in which an individual operates. Therefore, technology became very popular in recent decades because techniques such as machine learning allows instant or short-term exploration of many variables and defines new approaches where possible. Advanced and intelligent machines are doing tasks that no one expected were capable of being performed, while technology becomes embedded within businesses, societies, and even the human body, having a substantial impact on workplaces (Mantzaris and Myloni 2018). Additionally, the use of technology is inevitable in terms of coping with the risk dimension. Most of the financial decisions occur as a series of risks due to potential consequences of each decision. However, risk management is important not only in terms of financial instruments but also in the context of behavioral analysis and evaluation. Corporate policies can be described as important factors for eliminating such risks; however, provided that the use of the human factor is inevitable in many workplaces due to its unique characteristics, avoiding such conditions of risk is very difficult to achieve.
For instance, some human judgment patterns can be understood as imperfect by machine learning machines, thus the unstructured patterns expressed by human resources can be unreliable in an advanced, quite demanding, and competitive globalized business environment. For a human, more information input has a greater impact on confidence instead of better accuracy; while for an intelligent machine, it can result in greater predictive accuracy and increased efficiency. Additionally, many practitioners treat employees as a means to an end in terms of exploiting them to create value. However, this point of view can be evaluated from a twofold approach: either we can treat human resources as a mechanical part of an organizational system in terms of production in which people can be easily substituted due to a potential performance downturn, or we can take advantage of people’s skills in order to create and add value to the corporate outputs by leveraging human’s creativity, emotions, imagination, innovative ideas, senses, morals, and better understanding of what consumers (humans) actually need.
Machines form one part of the debate, while the other part is the employment of identical or near-identical biological copies of individuals, or in other words, clones. Reproductive cloning, as a practice of cloning a whole organism, such as a human being, to create a new individual is already a technological miracle of our age. Furthermore, some scientists believe that it would be ethically justifiable in at least some cases (Strong 2005). Additionally, therapeutic cloning, as the process of cloning pieces of deoxyribonucleic acid (DNA) or cells for therapeutic purposes, is partly legal in many countries, while reproductive cloning is strictly forbidden. Making human clones is unnatural. However, given that some corporations may promote unethical practices that are against human well-being, as they use people as a mere means, cloning could be a beneficial, efficient, and rational approach for creating an organism that has enabled its human-centered attributes instead of trying to develop artificial intelligence. Whether we agree on this, it could be our common future.
So, why is cloning worth mentioning in terms of business ethics and rational policies? Creating a genetic copy of an individual violates the right to genetic uniqueness. However, cloning or machine intelligence could be used over the exploitation of human beings as corporations would be legally able to employ such creations to increase social welfare. Thus, it is essential to develop business ethics in such a way they cover as much as possible of these emerged technologies and genetic capabilities. So, could a clone human being behave rationally and morally? If we believe that artificial intelligence is capable of moral behavior, which is already true in some cases, then yes, any entity would be able to implement moral practices and develop moral awareness. But, is it harmful for humanity to risk of having clones? Ethically, it could be very difficult to accept the process of creating human beings, particularly for increasing corporate productivity rates, rather than in cases when people cannot have biological children due to health reasons. People and corporations may accept this as an inevitable process of financial maximization and rational resource exploitation, but there will always be some individuals with several major arguments on this process.
Therefore, if it is in the best of our interest to employ third-party entities in order to produce goods and services, and given the existence of a universal and rational guide of strict policies on how to control this process globally, then business ethics cannot be against such a practice. However, considering that technology cannot eliminate the internal driving force of human willingness to work and create value, business ethics is more about human behavior and not about how machinery could exploit moral law. For instance, it is important to develop guidelines on how to control the collective or individual guilt in terms of entity responsibilities. Hence, we need fundamentals on how to make rational policies as an attempt to create a framework for human activity and utility in corporate environments, considering various dimensions and emerging challenges.
Ethics and Policy Relationship
Ethics and policy present a strong relationship in terms of their impact on each other. The process of policy making requires ethical awareness in order to conduct a moral set of principles, while the latter can be implemented only if there is a comprehensive set of moral policies. Additionally, ethical decision making can be influenced by codes of ethics, as they have a solid impact on the behavior of corporate agents (Schwartz 2001). Hence, ethics can be applied only by the existence of rational and moral policies, and vice versa. The goal of policy making is to guide individuals to produce rational outcomes. It can be concluded that policies are part of a general strategy that aims to develop and exploit organizational resources. Thus, a moral policy can facilitate and accelerate this process and lead to moral achievements.
A plethora of approaches exist in terms of policy-making methods: one of the most common and widely contested is the cost–benefit analysis (CBA) as a useful approach to compare the costs of providing the same beneficial outcome in different ways (Layard and Glaister 1994) and to estimate the strengths and weaknesses of alternatives in order to make a rational decision. In other words, this analysis provides the policy maker or the decider the essential tools to evaluate whether the benefits of a decision outweigh its costs. There are many other approaches such as the stages model, the behavioral decision theory (Edwards 1961), the punctuated equilibrium theory (PET) as a theory of organizational information processing (True, Jones and Baumgartner 2007), the rational choice theory (Boudon 1998), or the multiple streams framework theory (MSF). All these theories can be implemented in the context of ethics, considering multidimensional factors and the involved parties.
Policy is a course of action adopted or created by a policy maker, such as a government, a local community that is authorized to rule and control the public, or policy makers in a corporate environment, in response to different problems. A government regularly has several complex challenges as it must create a sustainable framework for each entity that belongs to a community in terms of law, economics, politics, environment, culture, and many more. However, given that the size of some companies is even greater than nations, in the context of their financial resources and impact on people, corporate policy making becomes even more important for society. Particularly, gigantic companies in the technology industry are larger than some countries of the world in terms of their annual revenues, financial and nonfinancial resources, and stock market value exceeding the sum of national income. Therefore, policy is about making choices, while moral policy is about making ethical choices.
Consequently, the well-being and development of the global economy and of worldwide entities can have a significant effect on policy making. Undeniably, the economy as a concept of trading of goods and services in terms of exploiting comparative advantages of entities and individuals is a major driver for implementing ethical policies. When an economy or a set of economic policies are not performing well, other policy priorities such as ethics and how to behave morally are likely to become secondary. For instance, often when a financial crisis and depression occur, no community is capable of retaining its moral behavior due to the circumstances that deactivate their moral thinking process. Thus, when some conditions bolster negative corporate policies, such as strict productivity goals, efficiency rates that use human resources as mere means or the establishment of a corporate culture of punishment and strict work conditions, individuals cannot implement ethical activity even they have good intention to do so.
On the contrary, when an economy or a set of economic policies are performing well, individuals tend to either recover any losses of the past crises, while developing methods and ethical ways on how to avoid future turbulences, or exploit any resource available in order to achieve personal goals and serve individual interests, even if such an activity was unethical and irrational compared with other entities. Moreover, people tend to behave unethically even when they are worried that the financial situation could potentially trending downward just by following rumors, despite other rational solutions in terms of alternative partnerships and new investments. Therefore, business ethics and other sensitive issues such as environmental or societal policies are likely to be implemented when an entity can secure its financial sustainability. Policies incurring huge costs are usually among the first casualties of the decisions that do not consider ethics as their core element.
Policies are not isolated from the rest of the regulation and the importance of ethics as a stability factor. Indeed, many aspects are associated with policy making, whether they have a significant impact on the validity and fairness toward the entities involved. The feedback received during test and pilot times is essential for the development of a sustainable relationship between ethics and policy. Information and data gathered is always the best method of moral entity consideration as it enables individuals with engagement opportunities, while it supports policy makers of demonstrating ethical principles. Thus, multiple policies in different areas and issues can result in a comprehensive set of guidelines that play a critical role on how to behave rationally and ethically.
Framing a moral and rational policy requires a multidimensional analysis of the objectives, planning potential strategies and alternatives, and considers the means to be used to achieve efficiency, given the available resources and environmental conditions. This process is crucial for the implementation of business ethics, and development of a moral awareness that must be strong enough to cope with corporate dilemmas depending on various factors and circumstances. In most cases, social and cultural values and norms drive policy makers to create frameworks that are compatible with societal perception and ethical fundamentals, even if people do not want to follow intentionally. For instance, if for a given community, a corporation that pollutes the environment during its operations is the only source of income for the people in the area, then most of them will ignore ethics in order to survive.
The policy-making process starts with the identification and definition of a problem. This initial stage of policy making is the most crucial as it forms the rest of the stages in a way that if the definition of a problem is based on incorrect information, then the policy will end up being incorrect as well, while it will have unethical consequences. Moreover, it is essential to recognize that problem solving requires a policy. Ignoring issues and circumstances cannot resolve a given problem, thus practitioners must be able to realize a situation and its conditions. Then, it is important to shape a set of approaches, improve past policies, and accordingly form a policy that secures development considering the various critical factors. It is not possible for policy formulation to eliminate the emergence of new problems and the presence of unprecedented conditions; hence, it is mandatory to debate during this stage of the policy-making process.
Consequently, policy legitimation and implementation are followed by policy evaluation as a process of information feedback that enables constant development and considers the consequences of policy implementation, as well as new ideas on how to make the policy even greater than its previous version. It is vital to remember that new challenges are always emerging, and in order to cope with those challenges and address new methods and policies to eliminate their negative impact on various factors, practitioners must find ways to make rational and ethical decisions, communicate the change to other involved parties, and how the latter will be influenced and motivated in order to implement such policies.
It is momentous to respect individual needs and concerns when making decisions affecting the beliefs, morals, positions, roles, prospects, or security of other entities. It is critical to provide equity and treat other individuals fairly, for instance, establish a work–life balance that enables individuals to deal with their personal and work obligations. Additionally, in terms of business ethics, working conditions must be healthy, safe, and pleasant for people, while the quality of working life must be satisfying, inspiring, and without pressure or stressful conditions that could negatively impact human resources.
One of the most important core policies is corporate determination to give equal opportunities to all individuals, irrespective of sex, gender, race, disability, age, marital status, or other specified conditions. For instance, it is worth noting whether there is a difference between sex and gender, as an notable part of corporate policies, when it comes to concrete conditions and job requirements. This is supported by the fact that many job positions are related to sex and gender requirements, so it is important to consider such criteria and be clear why you exclude alternatives. Many scholars distinguished between the two terms defining sex as the given biological differences between males and females, depending on one’s sex organs, chromosomes, and hormones, while gender is about a choice, as some individuals decide to behave as being a female, despite being biologically a male, and vice versa. Through times, various theories have developed on how to avoid misunderstanding in terms of sex and gender differences, as sex is a biological fact, while gender is a social construction that can be untied from biology in some cases.
Thus, corporate policies must deal with this development as gender roles can change. Sex and gender can be easily confused as attempts to clarify the terminology have not been successful (Unger and Crawford 1993). In some cases, the two terms are being used interchangeably as synonyms, while in other cases the term sex instead of gender has become politically incorrect. For instance, scholars suggest including questions in data collection about sex at birth and current gender identity (Westbrook and Saperstein 2015). This is quite interesting in terms of corporate policies on data collection about their human resources and on how to ethically manage this set of sensitive data and accordingly the individuals themselves. Consequently, the use of “the terms sex when reporting biological factors and gender when reporting gender identity or psychosocial or cultural factors” is recommended, thus demographic and other data must be analyzed by sex, gender, or both (Clayton and Tannenbaum 2016, 1864), depending on policy requirements and goals, as well as the conditions on which the policy maker considers a set of variables. It is critical to develop a relationship of trust between the corporation and other entities.
Also, practitioners must treat employees equally in terms of their skills and qualifications, hence accept everyone’s capabilities without direct or indirect discrimination. Furthermore, human resources can present some hidden capabilities; thus, it is important to consider their potential, rather than their current situation alone. However, it is essential to mention that even if a corporate policy is following this process of equality, this does not mean that the organization is aligned with ethics and meritocracy in each case. In many situations, people tend to treat some individuals more favorably under similar circumstances. This is a physiological process as the relevant legislation and codes of practice are not enough to eliminate an individual’s internal beliefs, thus abolish bias in areas such as resourcing, promotion, pay, performance, and individual development. For instance, financial incentives can be a serious potential source of bias (Marnet 2005), so corporate policy makers should consider practices on how to eliminate such challenges.
Managing diversity requires much more than a degree or training certification. Hence, due to the complexity of a business environment and the characteristics of a community, there must be alternatives in policies that explain further approaches when a situation is not written in terms of a code of conduct and corporate policies. This suggests that a policy maker can implement rational discrimination decisions. In some cases, you can use rational factors such as when you want an individual with a degree in business administration for a specific job. It is not discrimination when a condition is positively correlated with a task that requires a specific set of knowledge, capabilities, and adaptive willingness.
In view of this, a corporation must develop and establish core policies to acknowledge cultural and individual differences in terms of their behavior and needs, thus utilize individual’s talents, values, and norms to create a productive business environment. For instance, many studies stated that age requirements should not be set out on job advertisements. Petit (2007) suggested that age influences the probability of being invited to a job interview, leading to a significant hiring discrimination. If a machine with intelligent software was responsible for analyzing the application data of candidates and employees and then make the most rational decision on whatever a corporation needed, this problem could be eliminated. However, when a human is responsible for deciding, and even if the advertisement is according to the law and eliminates any discrimination issues, rational behaviors is less likely to be achieved at any stage of operations. Therefore, age discrimination cannot be avoided if a human decision maker cannot exclude his or her personal perceptions toward a rational decision.
Therefore, given the strong subjective feelings of humans, practitioners must develop their mindset capacity in terms of moral awareness, considering that we should respect the rights of other entities, reward them with equality and meritocracy, provide the opportunity for development, and advance flexible practices with respect to their personal life patterns and style. Accordingly, employees must behave in consideration of the same optimal business culture and act in the context of a discipline policy that informs employees on what is expected of them in work, and most importantly, what could happen if they violate corporation’s policies. It is fair to demand more as a worker, but it is also important to behave in accordance with the principles of natural justice.
Consequently, it is worth noting that group rights must not eliminate individual rights. Particularly, a very complicated relationship exists between the rights of an individual and a group of individuals as it is often believed that whatever most people want to do is the best fit for everyone. However, this claim is not powerful enough to cope with alternatives. Practitioners should be able to find advanced methods and policies that can treat minority beliefs with respect. Larger groups and decisions made by the majority should allow room for improvement in terms of hearing what the minority believe and what new ideas could eventually increase the value of perceived policies. Thus, creating a stabilized corporate environment is a very difficult and demanding process, as it requires additional effort from all individuals and groups of individuals, in terms of finding a balanced point of reference, considering rational alternatives and ethical practices.
Additionally, it is not reasonable to implement someone’s idea just to claim that you respect minorities, especially if this idea is insufficient for most people and entities. Also, it is not tolerable to legally restrict the freedom of individuals in the name of group solidarity. However, it is essential to evaluate all the alternatives and be cooperative in order to generate better policies and practices through a process of policy development with the given restrictions due to the available resources. Hence, minorities should attempt to understand and realize with respect whatever the majority wants, while the larger community could frame policies and make everyone’s status better than before as they consider minority’s alternatives that may could be more efficient in some cases.
The workplace as an environment that is governed by a set of policies and behaviors in a corporation must be inspired by a cooperative status that recognizes everyone’s contribution. Making rational policies about challenges such as sexual harassment and bullying is essential for a corporation. However, making rational policies on learning how to avoid the existence and development of such issues is more important than just coping with them after their demonstration. Prediction of an individual’s behaviors and making reasonable and good use of available data such as complaints and suspicious theories can be more efficient than establishing inflexible principles that cannot be applied under various circumstances.
Additionally, while business ethics is about the moral issues on the domain of an organization, we must be concerned about economic ethics as well in terms of the moral dimensions within the entire economy and social conditions. “Under conditions of competition, individuals cannot comply with moral norms in case this leads to higher costs which in turn leave them worse off than their competitors” (Luetge 2005, 110). Particularly, it is impossible to eliminate external factors in business operations, while it is also impossible to isolate an individual from his or her external environment. This implies that corporate policies cannot be sufficient enough if they do not reflect both the internal and the external environment in which the entities that the set of policies involves are operating. Thus, economic ethics, concerning the ethical outcome of economic policies, is an essential and fundamental part of policy making.
Different types of systems that are used by corporations in order to rationally exploit their resources and increase productivity have a strong impact on ethical awareness of their members and the society in which they operate. Since the ancient era, when Aristotle did not see ethics and economics as distinct disciplines, these aspects are closely intertwined. It is not about the Western societies or the perceptions of specific groups of people as globalization has eliminated most of the differences among economic models. In response to globalization and the increasing interdependence of global issues in the fields of economics, culture, politics, and the environment, global ethics and common moral norms emerged.
For instance, the 2008 financial crisis fueled globalization awareness, while the 2020 coronavirus pandemic triggered discussion on reversing globalization as it halted the economic activity and trade connections across the world through massive lockdown of workplaces and cities, resulting in the rise of nationalism, protectionism, and economic depression. Billions of people were being forced to evacuate public places and quarantine themselves as a strict and mandatory measure to protect human life over virus exposure. In both the situations, millions of people lost their jobs and unemployment rates increased dramatically, due to the enormous impact of the financial turmoil. Corporations had to react urgently on unpredictable conditions, while sometimes they did it by scarifying business ethics.
Globalization has a strong impact on applied ethics, on areas such as bioethics, labor ethics, and corporate social responsibility. For instance, globalization includes the development of methods on issues such as communication with colleagues from other countries; supervision of people with different culture; interaction with suppliers, consumers, and investors from all over the world; and management of a strategic plan, budget, and risk on a worldwide basis. Additionally, rights in various international human rights instruments are understood to be universal in nature, belonging to all persons by virtue of their common humanity (Chapman 2009). Hence, corporations often use universal policies; either they operate in the United States, Europe, Asia, or the South hemisphere. We are not in a world where there are city-states or country states anymore in the context of being capable of living and growing without trading with other entities and economies. In other words, we must exploit the comparative advantage of each country’s resources in order to create a rational economic environment of constant development and well-being.
Corporations as part of the economy or otherwise stated as part of the sum of global financial entities, including governmental revenue and nonprofit institutions, must maximize their value in terms of serving their own needs and goals. It is worth noting that even nonprofit or nongovernmental organizations record revenues in order to satisfy their own needs, such as expenses for staff and facilities, though they work toward improving human welfare and the well-being of society. Particularly, the substantive vision of nonprofit and governmental organizations is usually described in terms of the mission of the organization and the activities the latter undertakes in the pursuit of the mission, though there are many similarities with for-profit organizations (Moore 2000).
Indeed, nonprofit organizations pursue the social and economic benefits of a positive and sustainable structural scheme, as well as reputation and social impact. However, as entities that are organized in terms of corporate structure are fundamentally focused on how to serve their own needs to retain a sustainable position in order to secondarily serve the consumers’ and societal needs. Thus, corporate globalization as a process that removes some barriers to international trade, while others are constructed, allow the achievement of corporate goals and the rational exploitation of available resources for any form of organization. A global corporation is an added-value inventor and provider, while each company should find a unique added value in the context of differentiation over competitors (Sera 1992).
Hence, policy making is essential for the stability of an economic society as the latter cannot satisfy its needs without organized and structured entities such as corporations that are confronted with the making of goods and services. Determining who will do one task and who does another is a great challenge for corporate agents. However, policies must be developed in a way that they exploit competition, which fosters innovation and promotes the spread of new ideas and concepts. For instance, making products only as good as the competition forces to do could be characterized as an unethical practice, but at the same time quite common around the world, as organizations want to maximize profit ratio compared to competition, rather than produce the best product or service they can immediately.
There is a powerful connection between workforce behavior and corporate performance, and this can easily decrease the level of moral awareness of individuals. Therefore, practitioners must develop policies in terms of planning, organizing, leading, and controlling in order to ensure a work climate with ethical fundamentals that influence the behavior and activity of individuals. Employee empowerment can be achieved only through a relationship of trust, openness, growth, and consciousness. It is critical to increase employee satisfaction and team performance as an attempt to develop strong bonds between individuals and cope with legal, economic, political, cultural, and environmental challenges that have a significant impact on corporate operations and efficiency.
Business ethics and rational policies are instruments that can enhance the survival of a corporation or lead to its failure. Having its roots back at least 2,500 years, business ethics has developed rapidly, while the behavior of individuals is being affected by ethical dilemmas and moral-related circumstances. Practitioners must develop their mindset capacity for moral entity consideration and adapt to change. Building a corporate governance system that enhances business ethics is one of the most important and demanding challenges. There is no universal method of policy making, while the latter is not isolated from the rest of regulation. Managing diversity is crucial for the work climate, and globalization plays a critical role by having a solid impact on applied ethics and corporate practices.