- Internal Code :
- Subject Code : BUS300
- University : Kings Own Institute
- Subject Name : Business Ethics
Business Ethics and Sustainability
Contents
Introduction.
Corruption in Organizational Scenario.
Forms of corruption.
Forms and levels of corruption in an organization.
Individual-level corruption.
Group or organizational level corruption.
Types of corruption.
Workplace bribery.
Extortion.
Unauthorized use of confidentiality.
Misuse and misrepresentation of power
Organizational fraud.
Trading in influence.
Minimizing the corruption.
Developing a system of review..
Fostering open and flexible communication.
Creation of a safe and protected workplace environment
Employee training and management
Conclusion.
References.
Introduction to Business Environment Ethical Problems
The system of moral and ethical beliefs in the organizational evidence that guides the values, beliefs, culture, and decisions of a business and the individuals within the same represents the business ethics (Mitchell et al. 2020, p. 6). The organizational businesses and their effective management have been facilitated during years of globalization as a result of innovations, technologies, and global workforce practices with the enhancement of digitalization and cross-cultural adaptations. Besides the recent eruptions in the business developments, ethical issues, misconduct, and corruptive practices have appeared to be the continual strengthening factor in the business environment as a concern for the degradation of the prominence in the business facets.
Organizations and business entities in an everyday-phenomena find numerous issues that are more likely to cause disruption and risky interaction of business activities in an overall manner. Issues in relation to ethical conduct can arise in various areas like management extortions, behavioral discrimination and human resource exploitation, corruption and bribery, health and safety malfeasance, and many more (Brief and Smith-Crowe 2016, p. 390). This report aims to analyse the the approach that an organization might have to manage business ethics.
Corruption in Organizational Scenario
As defined by Nichols (2017), corruption in the organizational or workplace context refers to the shift from functional or constructive ranges to dysfunctional or bad as a result of any misuse or hampering the authenticated system of work in the organization or business field. Corruption and corruptive activities have taken a great spread in the business contexts with the advent of globalized workforce practices eventually in the causation of self-belongingness and personal identity recognition in the business frameworks. The urge for rapid personal development in the professional range in the current scenario has been a vital force for increased psychology and mindset of employees towards unethical treatments that finally gives rise to acts like bribery, extortion, hampering the ethical conducts, playing with the confidentiality, and privacy of the company, etc. in order to extract personal beneficial insights out of it.
However, at some point in organizational misconduct, not just the individuals but a group of few organizational personnel that seeks to attain similar interests in the place of focus, seems to develop and get into the activities of corruption in a whole that raises the bar for organizational corruption. According to Arellano Gault (2017), corruption as an organizational process occurs as a consequence of the misfunctions and denormalization of human resource practices and ethics in the place by the upsurge of behavioral and non-identifiable sources like cooptation, incrementalism, and compromise of the human resource personnel in the business arena.
Forms of Corruption
According to Nichols (2017), corruption and unethical involvements in the business practices and perspectives have a higher chance of affecting the organizational branding, systems, positioning, and even performance and productivity. Corruptive activities in any business or organization often occur as a hidden process and event in the environment which certainly impacts the organizational image and brand value either internally or externally or both ways.
Forms and Levels of Corruption in An Organization
Corruption has been identified as the threat or abuse to the entrusted power and authority in the engagement of unethical and illegal activities to the organization or workplace for personal interests or gain. However, this personal interest can be based on two levels viz. individual and group level both.
Individual-level corruption
Usually, corruption occurs from the sides of an individual from the decisions made for the personal interest and welfare in the organization. The study has revealed that the organizational personnel or business employees that beholds the appeal to achieve rapid gains like financial interests, recognition and position in the place, etc. are more prone to be involved in the corruption activities that generally associate bribery, extortion, misuse of power and position, un-authorization of confidentiality, stealing, etc. at an individual or personal level.
Group or organizational level corruption
According to the study by Gorsira et al. (2017), looking at the ‘bad barrels’ is equally important as that of the ‘bad apples’ since corruption or unethical acts does not only occur at the individual but also the group level with the motive of fulfilling group needs or opportunistic enrichment in the place of work. The certain focus groups active in the service of organizations aim to get their interests in the workplace get fulfilled for the sake of achievement of personal interests such as recognition in the place of work, group-based approach on financial interests and gains from the organization, implacable practices in opposition of the organizational discriminations with the groups, and many other reasons that give rise to corruption at the organization.
Types of Corruption
Workplace bribery
The most common form of corruption, bribery, is when an authority of trust accepts or intends for the enjoyment of undue advantages whether financial or material and immaterial valuables, to exercise and consume it at a particular individual or group level (Dion 2020). Used interchangeably with bribery, the Kickbacks refers to financial entertainments provided to an individual or group in the businesses for receipt of a project or contract.
Corruptive practices in the organization, especially the form of bribery has been a moderate to the high type of corruptive practice followed within. Bribery is widespread, especially in the modern developing countries irrespective of the location, race, religion, income, profession, etc. The act of bribery often gives birth to ineffective and unhealthy economic results of the firm as it imposes a heavy undue advantage to be consumed from the business systems leading to the long-term effects of degradation and unfair approach follow-ups in the region.
Elliott (2010) has illustrated in its studies about the introduction and exercise of corruptive issues on JP Morgan company, the enforcement of the Foreign Corrupt Practices Act (FCPA) in integration with the U.S. Securities and Exchange Commission (SEC) on which, led the company for the dispute of violating the regulations of FCPA to bribe employees and use kickbacks method by settling the penalized charge and forfeiture as a measure towards discontinuance of corruption in the workplace.
Extortion
The less occurring yet threatful type of corruption has been described to be extortion that occurs when an individual attempts to intake the resources or property of the organization by threatening to commit violence or accusing the victim of a crime, etc. Extortion, be at individual or group level, involves a higher degree of threat involved (Dion 2020).
In the modern arena of technological advancements, the process of extortion has taken the digitalized image and hence has raised the scope of just extortion to cyber extortion in the organizational and business practices. In addition to this, the increased adaptability and familiarity of digitalization and IT-applications among the global citizens have led to increased cyber extortions in the organization, which has become both a ban and a boon. For instance, as depicted by Carter (2016) that Nokia as one of the leading telecommunication companies in the global market was reported to pay millions to cyberhacker and criminals in order to pause the causation of release of its encrypts for the sake of preventing the company from drowning its customer privacy.
Unauthorized use of confidentiality
The most common and increasing form of corruption involves the unauthorized use of confidentialities of the organization as it involves the intended threat and unauthorized use and misleads of confidential information of the organization for personal success in the matters of making money or status directly from the audience in the place by corrupting the indoor activities of the business (Sharma et al. 2019, p. 948).
Organizations often carry and handle the private and confidential documentations to the best possible for the sake of concealing the safety and internal practices of the firm evident in its profitability. Any unwanted, unknown, and unethical fetching, theft, use, violation, manipulation, or publicity of such from the sides of organizational parties or externals arrives as the major cause of concern.
Misuse and misrepresentation of power
Being posted or designated at higher-level positions of authority in the organization, an employee or individual is placed with a handful of powers and authorities for the flourishment of the organization and its processes, which, in the matters of corruption, are to be utilized in an unethical or inappropriate way to leverage personal enrichments from the organizational view by utilization of the similar power.
Usually, almost every organization suffers the corruption in way of misuse and misrepresentation of employees’ power and authority in ways of bullying of employees, manipulation of resources, bossism, authoritative initiation, etc. to develop a personal profit out of it (Giurge 2017, p. 20).
Organizational fraud
Ramamoorti (2019) has stated the fraud in an organizational context refers to the corruption at both individual and group levels includes as unethical and false documentation and commitment with the aim to deceive people or organizations by intended fetching of properties and resources for personal utilization and consumption by the doer.
Organization frauds from the side of employees have always been part of the organizational process since traditions. Loss of documents, tools, appliances, and other resources of the firm by employees and employee groups in the firm for either personal benefits or for the motive of causing harm to the organizational resources have been the most common corruptive activity in the arena.
Trading in influence
Trading in influence or influence peddling has been referred to as a form of corruption which involves the exertion of improper and destructive influence over a sectorial or departmental decision-making process in return for an undue advantage, generally by the force of individuals or groups with a prominent political position, connections, and powers in the place for the sake of gain or favor consumption from it (Slingerland 2010).
The Dutch DSB (Dirk Scheringa Bank) case reveals as one of the widely popularized cases of trading in influence as the firm was charged and penalized by the AFM (The Dutch Authority for Financial Markets) under the abolition of regulations and violating the rules on mortgage interests for personal convenience and profits. The influence-peddling case in the focus bank arrived as a result of the utilization of the prominent position by the bank in the market for the taking up of undue advantages.
Minimizing Corruption
The level and degree of regulative power in the way of minimization of corruption and unethical proceedings and their tolerance intensity depends on the strength and durability of the business firm in the domain. A startup business might fail to tolerate the negatives of the corruption whereas an endured business firm may find it easy or under the power to cope up with the same (Lipinsky et al. 2019, p. 355).
Developing translucent and clear protocols
The formulation of clear and systematic organizational protocols and regulatory frameworks proves to leverage higher standards of ethics to the firm. In the absence or lack of clear standard guidelines, people in the business arena tend to develop their own set of rules. Hence, timely management and formalization of operative protocols must be inherited to limit the employees’ activities on the organizational line (Goldsmith et al. 2016, p. 252).
Developing a System of Review
Development, formalization, and implementation of the regulatory frameworks in any business organization does not provide it to be completely safeguarding its protocols until a regular and routine review of the systems and procedures is done. For the sake of managing the business entities and organizations from the corruptive practices, an organization must regularly review and follow-up the records and transactions along with the protocols to ensure the safety and wellness factors in support of the firm (Djurdjevic et al. 2017).
Fostering Open and Flexible Communication
Communication has been proved as one of the basic yet feasible ways of providing and impressing employees with a sense of affection and belongingness in the business environment (Djurdjevic et al. 2017). Hence, the development of a holistic and cross-hierarchical communication system can reduce the encouraged negative emotions in the minds of employees towards its organization and thus towards the development of self-belongingness emotions leading eventually to the neglect of unethical mindsets in regard of the organization.
Creation of A Safe and Protected Workplace Environment
An organization and its culture that greatly values the safety and healthy environment in the place for employees may find its organization or business to stand in the ethical positioning level. As a performance metric, the employment of health and safety conduct in the workplace environment has been also evident to cause its impact on the ethical and unethical practices within (Bangwal and Tiwari 2019, p. 269). The lack of safety and protected environment and conduct in the organization may lead employees to develop the thought of utilizing malafide interests for their own sake to carry out other profits on behalf of the safety approaches in the field of work.
Development and thought of safety measures in the organizational arena is quite a responsible factor that gives rise to such unethical situations and hence minimization of such gaps can prove as a fostering to the concerned issues minimization.
Employee Training and Management
Employee training as a part of organizational well-being and prosperity has a greater significance and consideration in managing the efforts to minimize and eventual degradation of risk-arising situations that come with the effect of corruption and unethical measures. For the sake of management of organizational privacy and security concerns in a well-managed technique, the regular training in order to acknowledge and train members for the enablement of distinguishing practices between ethics and corruption must be adhered to.
For the effective resolution and elimination of corruption in practices, the focus must be on providing anti-corruption training about the different perspectives of ethics and corruption in the organizational framework, explaining the potentially corrupt situations in work, preventing the situations by the involvement of organizational actions in a formal manner, training about the maintenance of confidentiality, legal provisions for corruption, and many more (Hauser 2019).
Conclusion on Business Environment Ethical Problems
Corruption and unethical treatments in the organizational frames have become a global problem with the advent of the need for proof of personal identity and power in the place of work and enjoyment of unauthorized services for personal enrichment and consumption. Also, the up-gradation in the needs and demands of people in the livelihood facets and also the dependency on the positional and monetary powers have revealed a great platform of corruptive practices to evolve out from the organizations leading to increased unorganized, illegal, and unethical considerations in the business environment. Henceforth, assessment for the need for controlling the corruption practices has become a necessity and its identification of measures of control as a prominent need for ethical and organic administration of businesses.
References for Business Environment Ethical Problems
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Bangwal, D. and Tiwari, P. 2019. Workplace environment, employee satisfaction, and intent to stay. International Journal of Contemporary Hospitality Management, 31(1), p. 268-284. https://doi.org/10.1108/IJCHM-04-2017-0230.
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Carter, J.S., 2016. Pay up or else: the ins and outs of cyber extortion insurance coverage. Risk Management, 63(10) p.32-36.
Dion, M. 2020. Bribery, extortion, and “morally ambiguous” leadership in organizations. Journal of Financial Crime. https://doi.org/10.1108/JFC-05-2020-0092.
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Gorsira, M., Steg, L., Denkers, A. and Huisman, W. 2018. Corruption in organizations: Ethical climate and individual motives. Administrative Sciences, 8, 4. https://doi.org/10.3390/admsci8010004.
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Sharma, S.K., Sengupta, A. and Panja, S.C. 2019. Mapping corruption risks in public procurement: Uncovering improvement opportunities and strengthening controls. Public Performance & Management Review, 42(4), p. 947-975.
Slingerland, W. 2010. Trading in Influence: Corruption Revisited. [Online]. Available at: https://www.law.kuleuven.be/integriteit/egpa/egpa2010/slingerland_trading-in-influence.pdf. [Accessed on: 06th September 2020].
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