ETHICAL ASPECTS OF CONTEMPORARY BUSINESS

ETHICAL ASPECTS OF CONTEMPORARY BUSINESS Aleksandar Damnjanovic Faculty of International Engineering Management, Belgrade, Serbia Dejan Dasic High school Academy of Business Economics, Cacak, Serbia Jelena Krstic Randjic High School of Professioanl Business Studies, Leskovac, Serbia Zoran Jovanovic Faculty of Management, Zajecar, Serbia Zoran Milojevic Hight Polytechics School, Kragujevac, Serbia

Summary: Bussiness ethycs and organizational culture becama important factor in bussines and organizations and companies heading that way have competitive advantages compared to the others. Organizations and companies known by their high ethycal standards and organizational culture could obtain good reputation, confidence and image and thanks to it overaverage profit. Ethycal behievour is helping by decreasing costs of bussines transactions, makes confidence between shareholders and increase prospects of more succesful team work, as well as keeping social capital necessary for doing bussines. Key words: Bussines ethycs, morality, codex, reputation, organizational culture. 1. INTRODUCTION In western bussines world there are numerous nongovernment organizations which are puting imoral behiavour of the owner and economic subjects on the „pillar of shame“. Having in mind above mentioned all the participants in bussines are makig efforts to satisfy not only low regulations but norms of the social morality as well. Differnt behiavour of the economic subjects could lead to the serious existentional problems of inmoral and nonethycal behiavour in the company. All around the world more and more companies are testing their aproach to the bussines ethycs. Sometimes very rare ethyc codexes became today more and more accusomed. Japanes word „kajoshi“ means to live and work together for the general welfare enabling that cooperation and mutual prosperity coexist with sound and fair compatition.All seasons, all societies , all communities in acordance

188

with their general goals and bussines conditions they are facing with have many values they are appreciating and becoming imperatives to the individual will which has to be fullfiled. 2. NEED FOR THE ETHYCAL BUSSINES Never before has bussines ethycs provoke so much interrest shawing that all the companies should have as their obligations unified ethycal codex within their companies toward their employees as well as externaly consumers of their products. The profit pressure of the factors of todays bussines could harm „ethos“ of the company. One of the most interessting etrhycal dylema of today is certainly question wether corporations or individuals within this corporations factors of morality. Michel Hoffman (2001: 60) stated that both standpoints are representing wrong extreme due to the justified concern where to put praise or verdict regarding to organized colectivities. If we claim that there are moraly responsible people – individuals that means we are not aware of the fact that colective entities as corporatioons, army, state, universities and commities working could not be rduced to the group of individuals or to explain on that way. Integrity of colective entities is more than the simple sum of their components, because individuals are making colective organized for cooperative goals, purposes, strategies, missions, politics, charters and everything giving identity to the colectiv and shawing its function. Answering to the above mentioned dylema author is concluding that the solution of the problem is in the way how the company works. Hewlett – Packard having one of the strongest corporation culture („do it like Hewlett – Packard does“) and with bussines phillisophy turned to the people insisting that Hewlett – Packard should not have rigid organization of the military type, but to enable to the prople to work freely aspireing towards generral goals on the way they determine for themselfs as the best for their field of responsibility. One of the bigest car producers in the world Japnese coompany „Mitsubishi“ has in one year reduced income for almost one bilion dolars thanks to its naive, inmoral and unethycal behaviour. Reason for this reduction was the fact that the compasny has tried in the year before to cover defects on its vehicles. Buyers have descovered that mistakes later and that reflected to decreased level of sales. So, the reason of bad bussines result was not an error (many of them could be repaired on time and reduce damage) but in suppressing of the defects what has shawed inmorality of the companiy bussines and decreasd confidance in it. But data about moral conduct toward the employees we found in 18. century by Robert Owen in his autobiography (Simon, 1919) where he says: „I have discovered fast the contrast between great attention dedicated to dead engine power and neglecting and underestimating of living human power“(Mirković, 1938: 83). This great humanist in the times of Napoleon wars and general brutal exploitation of the workers on the beginning of the industrialization is fully devoted to the rights of workers. He opened within his factory kindergarten and

189

shools of new type , first modern working shools in the history. He has opened first trading shop on nonprofit basis selling all groceries, milk and other necessities 25% cheaper than in the other shops, but payable only in cash! Normal working time was everywhere 17 hours a day, but in his shops only 10. „He has started first to build houses for workers with the gardens, to establish saving units and to improve by all means prosperity of his workers“ (Rozenberg, 1949: 241-253). Relation between the employers is differnt in every country. In Japan paternalizm is part of the bussines. „Task of the big corporations is not only to produce goods but to take care for their empolyees“ Main goal in this field is to increase and making good will between the employers and their workers, higher confidence and productivity as well as better conditions and standard of living. „Improving of the empolyee and of his knowledge makes intelectual capital of the company which gives new products, improve existing quality, increase productivity and higher efectivity“ (Dašić, 2012: 181). In recent days many organizations, economic subjects within their companies are taking their bussines rules and regulatoins, codexes and ethycal aspects are having very important role in their bussines (Dašić, 2014b). Dee George thinks that mostr of the people in bussines is not conducting nonethycaly or malicious. Tghey are considering themselfs in privat and in bussines life as ethycal persons explaining that one is not expecting from bussines to be occupied with ethycs. He mentione further that myth of inmoral bussines represents not only the way how many people in bussines world and out of it are understanding bussines today, but the way how many of them would like to understand it as well. It is expecting from the companies to act moraly in every sence when establishing their brand“ (Di Džordž, 2003: 19-20). Naomi Klain (2002: 8-9)in her book „No Logo“ is not agree with opinion of Dee George. Astronomic growth of wealth and culturological influences of multinational companies during last twenty years could be documented followed until one at first sight naive idea developed by manadgement teorists in the middle of eightiest years of the last csntury: succsessful corporatioons primarily should produce bbrands and identities and not products. However, she quote that more and more world known companies is not building its brands on ethycal way. As a proof to mentioned she is mentioned her visit to Jakarta where Indonesians in feverish conditions in the factories sewing and sticking labels of multinational companies like Nike, textile female workers are not older than 21 years earning 2 dolars a day. In one factory producing cloths Calio Indah Citra in Jakarta she was during the strike spending much more time. The reason for strike was organized due to forced overtime labor less payed than official dayli wages. It is pure irony that the people living on the equator do not have needs for coats and word wardrobe in their vocabulary, and to more confusion, Canadians are faced with very cold winters in the clothings produced by younjg Asian girls in tropic climate and inhuman working conditions, she said in „London Fog“.

190

Author noticed that none of the stories does not ilustrate growing discontent with the culture of corporative branding of international movement against Nike – most exposed and persistant campaign against this mark in media. Scandals of Nike exploiting factories were subject of countless newspaper articles and columns. Nike factories in Asia were constantly criticed and everydays attention of TV stations. In short, huge media campaign was organized against this company. It received townsand of protest letters and even Nike charitable became controversal. General discontent with nonethycal and inmoral bussines activities shawed on every possible ways and differnt slogans were invented (table 1). Table 1. Slogans of international movement against Nike Just don`t do it Just Don`t Nike, do it just Justice. Do it, Nike The Swooshtika Just Boycott It

Ban the Swoosh Nike-Fair Play Nike Soyez sport Just Duit Nike- Nein, Ich Kaufe Es Nicht

Source: Naomi Klain No Logo, p. 264.

Some companies are overrating what is moraly expected from them if it is about not dismissing of workers or opening companies in rural comunities In both cases they became example or models for the others to follow them or competing with them. 3. ETHICAL RULES, CODEXES AND REPUTATION Due to enormous profit from oil it was concidered that Norwegians shall neglect all branches of economy, creating big differnces, became lazy and uninterested. In vast norwegian safe available in every moment to checking of each citizen havinh almost 600 bilion dolars in shares of eight townsand most stronger companies in the world. This succsess is obtained thanks to „ethycal counsel of fund“. Goal of mentioned ethycal counsel is to secure stabile ground out of oil profit for the future and generations to come, securing social models which are understanding high social beneficies, small social differences. Professional codex is seting demands to the members of professions which are not allways in accordance with loyalty and obediance expected by many of the employers. Any activity treated as a profession and the role that it could play is allways about people playng various professional roles and members of profession. They are all man first of all and after that members of profession. Therefore is no special ethics allowing to the members of some professions to do as professionals something immoral against the other people. Japan is a country with more than one hundred million citizen, but with just bit more lawyers than in Serbia having eight million citizen. When two japanes

191

businessman shake hands confirming agreement, they both are taking moral duty to guaranty it with their business honor as well. If one of them fails to fulfill the obligation, even if it is based on given word only and not on signed contract, his career as a manager is finished and he is treated as unhonest man with whom nobody wants to have business. However, some nonprofit organizations like Rotary International have codex of the members conduct. Platons ethycs is founded on happiness for all and not of each and every person and could be realized fully only in perfect world (Žepić, 1923: 63). Four questions test is codex for the conduct of all Rotarians 1 in the world. Respect of this rules lead to progres in all the filds of life. Since 40-this of the last century lot of Rotarians are using simple formula as meassure of its profesional and bussines existance: four question test. It is not containing contraverse or pluralistic concepts carrying enemies passion. This formula was primary made only for professional activities not having any claims but four simple questions what is part of bussines ethycs. This questions are (Shepherdson, 2007: 28): • Is it true that I am honest ? • Is it honorable for all participant ? • Shall it go in favor of friendship and good will ? • Shall it be used for wellbeing of all participants ? Four question test was developed in 1932. by Herbert Taylor, rotarian from Chikago and president of Rotary International for the year 1954/55. This questions are not an codex, religion, duty or something similar, but stimulus for selfeducation living in world deeply subordinated by ideological, political and religious differences. Rotarians all ovder the world can use four question test for building of the culture starting on the working place spreading to all filds of life There is interesting story hown four question test made. Herbert Taylor had in his hands position of vice-president of famous „Jewel Tea Company“, but he has refused the candidacy and enter the company threaten with risc of bunkruptsy Club Aluminium Products Company. Looking to the ways for save the company from bunkruptsy this question came to me wrote he later. Very religiuos after long thinking he started wit writing of directives of hundred words reduciing it from seven to four writen on the paper on his working table As on its table were a lot of bussines decisions which should be taken every day he began to check to what extent some coompany is holding to the principle he wrote in paper. He was shocked with the knowledge how often their bussines retreat from them. After presenting directives to the menagers of different departments and obtaining their suport whole company has accepted test, remembered by all 1

It is a worldwide organization of professional and business leaders that provides humanitarian service, encourages high ethical standards in all vocations and helps build goodwill and peace in the world. Rotary International is a nonpolitical and nonreligious organization, open to all cultures, races, and creeds. (Dašić, 2014a)

192

employees and started to be used as criteria for establishing of new bussines culture. Most interesting is that his colegues from work, his department managers, one of them being ortodox Jew, one scientist, and one presbitarian accepted four questions test immidiately. They agreed that this four questions totaly corespond to future bussines philosophy which should pull out them from bussines problems. First under the magnifying glass economic propaganda. All evil, compromiting and discriminating statement about competitors were ejected from the adverstiment and other sorces of publicity. Employees were asked to learn this questions in order to became guide for the whole company having as the consequence better and friendly relation between deliverers, employees and customers. Much relaxed atmosphere was made, atmosphere of understanding and good will. That happend in the year 1932.when the company was having bussines loss of nearly 400.000 townsand dolars and the only capital was credit by the bank reducing salary of Mr. Herbert I. Taylor for 6.100 dolars. In the year 1937. Burden of debts and interest rate was put down and in the next 15 years company has realized more than milion dolars in dividend and nett value of the company raised to 2 milion dolars (Dašić, 2012). Roger Classens (2014) identifies as one of the brand functions reputation. He stated that brand become a promise which in time develop itself in reputation. Good reputation is not accidental in many goals set to build reputatioon beside strict cidexes of behaviour, culture, openness in conduct and as main goal quote „firm ethycal behaviour“. Ying Fan (2005:3) in his work engaged with problems what is to be understood as ethycal branding remembering that although athycs is very complex qeusteion where every branding is identified with ethical marketing to every brand necessary not only economic and financial evaluations and criteria, but moral evaluations and criteria as well. Author have noticed that as some brand is stronger or more succsessful his marketing strategy is more under magnifying glass of the public and in colisioon with ethical and moral attitudes. For example he quotes Microsoft Company whose working power represents microcosmos of the new world order on the market of working force. Company has for soma employees top of the dreams, constant employed with full working time and all benefits that follow. Their earnings are very high although it is not close to what the management of the company is earning. However beside this ideal picture about 4000 – 6000 employees are circulating on part time. They are together with permanent employed doing the same jobs and the only way to make difference is color of their badges: permanent workers wearing blue and part time workers orange ones. Ying Fan noticed that whatever the company bussines result was in recent tima thea are allways under constant eyes of public regardles if something goes wrong, smal incident or big crisis, guilt is taken by brands: image of the brand and reputation of the company are allways victims. He noticed that brands are easy

193

targets for all bad events in the company and reputation of the company built in many years and investing big financial amounts could be ruined over night. Author concluded that every effort to explain ethics of the product or brand have to start with admiting thatnproduct could not be fully ethical without reserve. Therre will be allways some potential for negative enlargement, and it is not to belive that the requests of all potential customers will be satisfied with any of the products offered. Any request for moral elevation or in connection to the product, brand or company will remain allways open for certain form of critic in media, consumers or interest groups. „There are numerous proofs that consumers are full of doubts regarding ethical and ecological requests (Kangun and Polonsky, 1995; Mendelson and Polonsky, 1995, National Consumers Counsel, 1996) and decisions to place to any companies head above ethical fence should not understand easy. At least, company have to research all aspects exposed to criticizm“ (Crane, 2001: 369). American Marketing Association (AMA) is promoting highest standards of professional ethic norms and values for its members and in the year 2004.ethic document was accepted under the name „Ethic norms and values for merketers“ which in one line says: „People in marketing have to understand that they are not serving only their companies but acting as managers in society creating and encouriging efective transactions which are part of wider economy“. In this role marketers should accept highest ethical norms and ethical values: sincerity, responsibility, fairness, transparency, openess, appreciation of basic human dignity etc (Brenkert, 2011: 311-314). 4. CONCLUSION Bussines ethic is trying to draw attention of the economic subjects to systematical approach to moral problems. It is engaged not only with negative explanations why some doings are wrong, but shawing to some moral ideals. This ideals could be taken in acount by building of the brand. Ethical conduct in bussines is creating confidence and companies recognized by their ethical standards have competitive advantages comparede to the competitors. Ethicaly organized behaviour is creating good reputation of the bussines subjects which are applying it regularly in their work reflecting positive to total bussines activities and image of the company. Organizational culture, codexes and ethical and moral rules are helping to the companies to be successful regardless their obligation to the shareholders to achive most haigher profit. REFERENCES [1] Brenkert D., (2011) Marketinška etika, Službeni glasnik, Beograd [2] Crane A., (2001) Unpacking the Ethical Product, Journalof Business Ethics, 30, 4; ABI/INFORM Global. [3] Claessens R., (2014) Branding and corporate culture, (1.10.2014).

194

[4] Dašić D., (2012) Azbuka Rotarija, Narodna biblioteka, Jagodina. [5] Dašić D., (2014a) Točak kao symbol i zaštitni znak, Leskovački zbornik,54. [6] Dašić D., (2014b) Etički aspekti marketing miksa neprofitnih organizacija, Poslovna ekonomija, br. 2, 315-330. [7] Di Džordž R., (2003) Poslovna Etika, Filip Višnjić, Beograd. [8] Fan Y., (2005) Ethical branding and corporate reputation, Corporate Communications: An International Journal, Volume 10, Number 4 [9] Hofman M., (2001) Šta je potrebno za postizanje visoke moralnosti kompanija U: Poslovna etika, priredili Džon Dramond I Bil Bein, Clio, Beograd [10] Klein N. (2002), NO LOGO: bez prostora, bez izbora, bez posla, bez logotipa, V. B. Z., Zagreb. [11] Mirković M., (1938) Razvoj ekonomske misli u XIX veku, izdavačko I knjižarsko preduzeće Gece kona A. D., Beograd. [12] Rozenberg D., (1949) Istorija političke ekonomije, Beogradski univerzitet, Beograd. [13] Shepherdson N., (2007) The Four-Way Test means business, The ROTARIAN, Rotary’s magazine, september 2007. [14] Žepić M., (1923) Pregled Grčke Književnosti, štampala i izdala knjižara Kraljevskog sveučilišta i Jugoslovenske akademije, Zagreb.

195