Business Ethics : An Oxymoron ?
To ignore evil is to become an accomplice to it.
Martin Luther King Jr.
US $1 trillion dollars (US $1,000 billion). This is a conservative estimate for annual worldwide bribery as estimated by World Bank Institute in 2004. This estimate does not include the extent of embezzlement of public funds (from central and local budgets), or from theft (or misuse) of public assets.
Furthermore, the $1 trillion estimate does not include the full extent of ‘tainted procurement’, but only the bribe fees associated with such procurement.
Thus, looking at the above data, it is not surprising that Business ethics is still considered an oxymoron by many. It is a matter of grave concern that this amount of $1 trillion exceeds the GDP of many countries. Only 15 countries of the world have a GDP above $1 trillion.
Significant losses in investment, private sector development, and economic growth to a country, or to the increases in infant mortality, poverty and inequality, all result from corruption and misgovernance.
However the positive side is that there is lower skepticism now with the concept of ethics in organizations. Large number of studies are being conducted focusing on the benefits of organizations being ethical. In a recent workshop that I conducted for a board of directors for a listed company, the members believed with confidence that Business ethics is not an oxymoron and that it actually pays to be ethical.
Also, my Phd thesis was on ‘Ethical Business Practices and Corporate Financial Performance: An empirical analysis’. It showed a positive correlation between the practice of ethics in organizations and certain financial variables.
In addition what is heartening to see is the recent establishment of the UK Modern Slavery Act 2015, which provides the needed leadership.
It (“the Act”) introduces a number of measures to combat slavery and human trafficking. In addition to creating new criminal offences, powers of enforcement and measures to protect victims, it introduces requirements intended to eliminate slavery and trafficking in global supply chains. It gives the UK the same wide-reaching ethical remit as regards slavery and trafficking as the Bribery Act 2010 gives it in the field of bribery and corruption.
Thus, though compliance is about adherence, good governance cannot be achieved by compliance alone. However acts such as the one above and the Indian act on CSR gives us a focus, a direction about the intention of countries.
Lynn Sharp Paine in her book ‘Value Shift’ says: The law does not generally seek to inspire human excellence. It is no guide for an exemplary behaviour. Those who define ethics as legal compliance are implicitly endorsing a code of moral mediocrity for their organisation.
Thus we have to be proactive in our approach to ethics and not just compliance based. The development of an economy needs a more ethical approach by organizations. We will grow faster once we stop considering Business Ethics as an oxymoron and make ethics a natural way of operating.