Ethical Issues in Business

Ethical issues are often confused with legal issues. Ethical issues in business encompass a wide array of
areas within an organization’s ethical standards. Fundamental ethical issues in business include
promoting conduct based on integrity and trust, but more complex issues include accommodating
diversity, empathetic decision-making, and compliance and governance that is consistent with the
organization’s core values. Ethical standards are derived from societal mores and deep-rooted personal
beliefs about issues of right and wrong that are not universally agreed upon.

According to the Global Business Ethics Survey of 2019, 25% of employees still feel that their senior
managers do not have a good understanding of key ethical and compliance business risks across the
organization. In order to manage the ethical issues in business that arise in an organization, developing a
thorough understanding of what those issues can look like is first needed. Understanding how to detect
and, most importantly, deter these issues before they become a problem can ensure focus stays on
business growth and success instead of remediation.

BUSINESS ETHICS

Ethics means the set of rules or principles that the organization should follow. While in business ethics
refers to a code of conduct that businesses are expected to follow while doing business. Through ethics,
a standard is set for the organization to regulate their behavior. This helps them in distinguishing
between the wrong and the right part of the businesses. The ethics that are formed in the organization
are not rocket science. They are based on the creation of a human mind. That is why ethics depend on
the influence of the place, time, and the situation. Code of conduct is another term that is used
extensively in businesses nowadays. It is a set of rules that are considered as binding by the people
working in the organization.

Businesses should have a balance between the needs of the stakeholders and their desire to make
profits. While maintaining these balances, many times businesses require to do tradeoffs. To combat
such scenarios, rules and principles are formed in the organization. This ensures that businesses gain
money without affecting the individuals or society as a whole. The ethics involved in the businesses
reflect the philosophy of that organization.

Business ethics involves finding the answers to:

 How do managers decide what is right in

conducting their business?
 Once managers have recognized what is right,
how do they achieve it?

Four (4) Areas of Ethical Issues in Business.

I. Equity
This area helps to understand the importance of an employee’s perception of an organization’s
decisions, and the impact this can have on performance. Treating employees equitably enables
substantial organizational benefits while avoiding unethical operations and the corresponding
consequences. Treating them in a way that empowers a sense of fairness and equity is a critical
component to motivating positive employee behaviors.

The three (3) useful frames of reference when considering organizational equity are the following:

Distributive justice - simply the process of making sure an employee’s production output aligns with his
or her compensation. Concerned with the way in which things are shared between people.

Procedural justice - focuses on allowing all participating employees to have input and accountability
when designing operational processes. Concerned with the way in which something is done, or the
process which enables it.

Interactional justice - comes in two parts. The first is ensuring that employees are treated in a socially
positive and constructive manner. The second is ensuring nobody is left in the dark when important
decisions are made. Concerned with the way in which one individual socially encounters another.

Useful perspectives in considering fairness in the organization:

Distributive Simply put, the distribution of resources should

align with the value of an individual’s inputs. Of
course, this is more complex than salary. As a
manager, ensure that credit, bonuses, and benefits
are also distributed fairly.

Procedural Employees don’t only want compensation. They

also need input into the process, and shared
accountability in the decisions being made. When
designing the procedure of a given work group,
inclusion of everyone’s perspectives can lead to
substantially higher satisfaction, efficiency, and
fairness.

Interactional All members of an organization must both be

treated appropriately (from a social frame) and
informed respectfully (from an informational
frame). In short, employees should be treated with
propriety in discussions and shouldn’t be left in the
dark when important decisions are made.

II. Rights
Humans have all types of rights, including legal, moral, spiritual, natural and fundamental rights. A right
is an expectation about something you deserve or a way to act that is justified through a legal or moral
foundation. Duties are a direct result of the acceptance of rights. Each person has a duty to uphold or
respect another person’s rights, just as he has the duty to uphold your rights. Once a person accepts a
right, or is told as in legal rights, he must uphold that right for himself and others. For instance, you have
the right to free speech, but so does everyone around you. Even if someone is saying something you do
not agree with, you have a duty to respect his right to say it. You have a duty to respect, and sometimes
defend, the rights of others.

Unintended consequences when a duty to uphold someone else’s rights conflicts with your own rights.
Ethical conflicts must be viewed by looking at the end results of any action and how they affect the
freedom or rights of others. Social or personal costs must be identified and weighed; rights cannot be
the only consideration when making ethical choices.

Corporations have the right to seek a profit. It is the duty of the employees to do whatever they were
hired to do to promote profitability. The corporation cannot violate the rights of its employees or society
just to seek a profit. For instance, the company cannot pay employees less than minimum wage or make
them work dangerous hours to increase profits. Companies cannot resort to immoral behaviors such as
bribery, substandard quality or false advertising, which may violate the rights of other companies,
company stakeholders, individuals or society.

III. Honesty

Honesty is a key characteristic of a business because it sets the tone for the kind of work culture that
you want to create, provides consistency in workplace behavior, and builds loyalty and trust in
customers and prospects. Running a business that takes pride in being ethical and socially responsible is
a challenge, and many companies end up cutting more than a few corners in the name of profit. If you
dig deeper into those companies, you’ll probably find that honesty isn’t prized as an important
characteristic. However, it’s nearly impossible for a business to build trust if honesty isn’t a guiding
principle in how that company handles every aspect of its work process. In business, honesty isn’t only
about doing things the right away, it’s also about expressing the values in which a company is founded.

 It establishes work culture

 It creates consistent workplace behavior
 It builds trust with customers

IV. Exercise of Corporate Power

A corporation has the power to do anything necessary or convenient to carry out its business and affairs.
Generally, corporation may be formed for any lawful purpose. A corporation may not engage in business
or activities that are expressly unlawful or prohibited. Additionally, corporations may not operate as a
bank, trust company, savings association, insurance company, cemetery organization, abstract or title
company, cooperative association, or labor union. Corporations may not engaged in a business requiring
a license if they are unlicensed. Limitations on corporate businesses or purposes may be included in the
certificate of formation.

It is not necessary that corporate powers be expressly defined or granted in the corporation’s governing
documents; rather the general grant of powers to a corporation is deemed “sufficient” for the
corporation to carry out its purposes. The governing documents may, however, place limitations on
corporate powers and purposes, and such express limitations control over and contrary rule of law or
provision.

MAKING ETHICAL DECISIONS

Ethical decision-making is a discipline. It is an approach to identifying and resolving issues in the business
context. Of course, it occurs in many other contexts. Nor can ethical business decision-making be boiled
down to just “doing the right thing.” There is more to it than that. An effective ethics and compliance
program, by definition, translates into ethical business decisions.

Applying ethics in the business context requires an awareness or sensitivity to ethical issues that may
arise and a method to resolve relevant issues as part of an overall decision. To ensure adequate
examination of ethical issues, there are a number of basic questions that can be examined. This
approach can be applied in a variety of contexts and can be modified as appropriate to fit a company’s
profile.

Here are some suggested questions to unearth and examine the

ethical considerations of a specific decision.

 What are the relevant facts of the issue? What do we know

and what do we not know? Do we have enough facts to
make a decision?
 What are the options? Have we identified all relevant
options and examined all possible options?
 Will the company’s decision damage someone, some group
or stakeholder(s)? How important are these concerns?
 Does the decision present positive and negative alternatives
resulting in a trade off?
 Does the issue involve more than legal compliance or
economic efficiency?
 Which option will result in the greatest benefits with the least harm? What option best serves
the company’s interest?
 Which option is most consistent with our corporate values?
Questions can provide a standard framework for important corporate decisions at the management,
senior executive and corporate board level. Legal compliance is a minimum requirement – you cannot
make an ethical decision if you violate the law. However, a legal decision does not mean that it is an
ethical decision. The consideration of business ethics factors is tied to corporate values, the culture of
the company, and the company’s standing with its stakeholders and the public.

COMPUTER ETHICS

Computer ethics is "the analysis of the nature and social impact of computer technology and the
corresponding formulation and justification of policies for the ethical use of such technology.... [This
includes] concerns about software as well as hardware and concerns about networks connecting
computers as well as computers themselves."

The Computer Ethics Institute provides their Ten Commandments of Computer Ethics as a code of
computer ethics:

1. Thou shalt not use a computer to harm other people.

Proportionality

The benefit from a decision must outweigh the risks.

Benefits of the decision should be distributed fairly to those who share the risks. Those
who do not benefit should not carry the burden of risk. Even if judged acceptable bry the
principles, the decision should be implemented so as to minimize all of the risks and
avoid any unnecessary risks.

2. Thou shalt not interfere with other people’s computer work.

3. Thou shalt not snoop around in other people’s computer

files.

4. Thou shalt not use a computer to steal.

5. Thou shalt not use a computer to bear false witness.

6. Thou shalt not copy or use proprietary software for which

you have not paid.

7. Thou shalt not use other people’s computer resources without authorization or proper compensation.

8. Thou shalt not appropriate other people’s intellectual output.

9. Thou shalt think about the social consequences of the program you are writing or the system you are
designing.
10. Thou shalt always use a computer in ways that ensure consideration and respect for your fellow
humans.

As technology advances, computers continue to have a greater impact on society. Therefore, computer
ethics promotes the discussion of how much influence computers should have in areas such as artificial
intelligence and human communication. As the world of computers evolves, computer ethics continues
to create ethical standards that address new issues raised by new technologies.

COMPUTER ETHICS ISSUES

I. Privacy

Human beings value their privacy and the protection of their personal sphere of life. They value some
control over who knows what about them. They certainly do not want their personal information to be
accessible to just anyone at any time. But recent advances in information technology threaten privacy
and have reduced the amount of control over personal data and open up the possibility of a range of
negative consequences as a result of access to personal data. In the second half of the 20th century data
protection regimes have been put in place as a response to increasing levels of processing of personal
data. The 21st century has become the century of big data and advanced information technology (e.g.
forms of deep learning), the rise of big tech companies and the platform economy, which comes with
the storage and processing of exabytes of data.

The following types of moral reasons for the protection of personal data and for providing direct or
indirect control over access to those data by others can be distinguished (van den Hoven, 2008):

 Prevention of harm
 Informational inequality
 Informational injustice and discrimination
 Encroachment on moral autonomy and human
dignity

Privacy Concerns

Hacking – is unlawful intrusion into a computer or a

network. A hacker can intrude through the security levels
of a computer system or network and can acquire
unauthorised access to other computers.

Malware – means malicious software which is created to impair a computer system. Common malware
are viruses, spyware, worms and trojan horses. A virus can delete files from a hard drive while a
spyware can collect data from a computer.

Data Protection – also known as information privacy or data privacy is the process of safeguarding data
which intends to influence a balance between individual privacy rights while still authorising data to be
used for business purposes.
Anonymity – is a way of keeping a user’s identity masked through various applications.

II. Security (Accuracy and Confidentiality)

An attempt to avoid such undesirable events as a loss of confidentiality or data integrity refers to
computer security. Security systems attempt to prevent fraud and other misuse of computer systems
and act to protect and further the legitimate interests of the system's constituencies. The ethical issues
involving security arise from the emergence of shared, computerized databases that have the potential
to cause irreparable harm to individuals by disseminating inaccurate information to authorized uscrs,
such as through incorrect credit reporting. The ethical duty of confidentiality is defined by the British
Medical Association as "the principle of keeping secure and secret from others, information given by or
about an individual in the course of a professional relationship". Consent is the means by which we are
authorized by an individual to process information about them based on their informed understanding
of what we intend.To include identifiable patient information in an e-mail message or on a Web site in
the absence of a patient's express consent would constitute a breach of confidentiality. Obtaining
consent should involve making the patient aware of any risks to his or her privacy and the arrangements
in place to protect it.

Security tends to be the progeny of scandal. Today computer `security' is typically perceived to mean
keeping hackers (those attempting unauthorized computer
access) and other troublemakers from your private data. But
what if such troublemakers are part of the system, or even
own it? Clearly, a simple `cops and robbers' model does not
offer enough protection, highlighting the need to ensure data
security at multiple levels. The risks are internal, external, and
random, and can result in data damage, falsification, loss, or
leakage. It is helpful to imagine your connected system as
resembling a data stream right from your keyboard to that of
the recipient, and to consider the risks along the way.

Linking computers together means that you can access other

people's data, but it inevitably follows that this allows others to
access data on your own system. Until such time as individual
computers or networks are linked together they resemble `islands'
of electronic data. Security on a data island is simple: reassuringly
firm borders trap all unauthorized entrants. However, when you build bridges by creating a network link
this approach on its own is inadequate. When a computer connects to the Internet, it loses its island
status by compromising the integrity of its `borders'. Any potential benefits of connecting must be
weighed against the risks to your own data. In a healthcare environment, this data is often of a highly
sensitive nature. Even connecting a home computer may expose data, such as banking details, which
you would prefer to remain private.

III. Ownership of Property

Intellectual property is defined as any work that is creative and includes inventions, literary works,
images, and symbols. With the introduction of the Internet, laws surrounding intellectual properties
have changed significantly. The three types of laws that protect intellectual property are copyrights,
trademarks, and patents.

 Copyright — legal form of protection that is given

to the author (could be an organization,
individual, and group of individuals). In order to
meet the requirements for copyright protection,
the authors of the software have to prove that
the program contains an original expression of
ideas. Ideas themselves could not be a subject to
copyright protection.
 Patents — protection for any invention whether
it be a product or process in the field of technology. Patents not only prevent independent
creation but also copying. If two people invent the same item, the first person to file the patent
has exclusive rights to the product, while the other person must ask the patent holder for
permission to use the original patent. Patent infringement is the violation of the rights secured
by the owner of a patent, when someone makes an unauthorized use of anthers patent.
 Trademark — recognizable symbol, word, phrase, logo, design, or a combination of these things
registered legally to differentiate one company’s products or services from another’s. The main
purpose of a trademark is to make products or services of the particular company recognizable
to the public. Consumers often rely on the labels attached to the products or services to
examine their quality or source.

IV. Equity in Access

Several factors can limit access to computing technology. The economic status of the individual or the
affluence of an organization will determine the ability to obtain information technology. Culture also
limits access, for example, when documentation is prepared in only one language or is poorly translated.

For many years, this concern was known as the digital divide, and, for the most part, it referred to
whether populations had access to hardware, specifically to computers. As technology evolved and
became more complex and nuanced, however, so too did the breadth of this concern. Now, discussion
of the digital divide is framed in terms of whether a population has access to hardware, to the Internet,
to viable connection speeds and to the skills they need to effectively use it. As such, the nomenclature
has also changed, with a national conversation that now frames the matter as one of digital equity.
Digital equity refers to whether people can access and effectively use the technology necessary to
participate in modern society. Another phrase, “digital inclusion,” denotes efforts to remedy deficits in
digital equity. Simply put, digital equity is what cities and states want, and digital inclusion is the work
they and their partners are doing to create it.
 V. Environmental Issues

Environmental concerns are those where the

manufacturing and use of computers has had a negative
impact on the environment. Resources are needed to in
order for computers to be produced, distributed and
used. Metals and plastics are used to manufacture
components, while energy is expended in distributing
equipment and in using it. Computers with high-speed
printers allow for the production of printed documents
faster. However, paper comes from trees, and ends up in
landfills if not properly recycled.

Many computers, such as web servers, domain name servers and data centres, need to be left running
continuously. This requires lots of energy to maintain. Additionally, businesses, organisations, schools
and homes all now have greater access to technology. Many computer components are either hard to
recycle or contain toxic materials, such as lead. All of this means that computers have a heavy impact on
the environment, which is unlikely to decrease in the near future.

VI. Artificial Intelligence

Both knowledge engineers (those who write the programs) and domain experts (those who provide the
knowledge about the task being automated) must be concerned about their responsibility for faulty
decisions, incomplete or inaccurate knowledge bases, and the role given to computers in the decision-
making process. Further, because expert systems attempt to clone a manager's decision-making style,
an individual's prejudices may implicitly or explicitly be
included in the knowledge base.

Inequality. How do we distribute the wealth created by

machines?

Our economic system is based on compensation for

contribution to the economy, often assessed using an hourly
wage. The majority of companies are still dependent on
hourly work when it comes to products and services. But by
using artificial intelligence, a company can drastically cut
down on relying on the human workforce, and this means
that revenues will go to fewer people. Consequently,
individuals who have ownership in AI-driven companies will make all the money.

Humanity. How do machines affect our behaviour and interaction?

Artificially intelligent bots are becoming better and better at modelling human conversation and
relationships. This milestone is only the start of an age where we will frequently interact with machines
as if they are humans; whether in customer service or sales. While humans are limited in the attention
and kindness that they can expend on another person, artificial bots can channel virtually unlimited
resources into building relationships.

Even though not many of us are aware of this, we are already witnesses to how machines can trigger the
reward centres in the human brain. Tech addiction is the new frontier of human dependency. On the
other hand, maybe we can think of a different use for software, which has already become effective at
directing human attention and triggering certain actions. When used right, this could evolve into an
opportunity to nudge society towards more beneficial behavior. However, in the wrong hands it could
prove detrimental.

Artificial stupidity. How can we guard against mistakes?

Intelligence comes from learning, whether you’re human or machine. Systems usually have a training
phase in which they "learn" to detect the right patterns and act according to their input. Once a system
is fully trained, it can then go into test phase, where it is hit with more examples and we see how it
performs.

Obviously, the training phase cannot cover all possible examples that a system may deal with in the real
world. If we rely on AI to bring us into a new world of labour, security and efficiency, we need to ensure
that the machine performs as planned, and that people can’t overpower it to use it for their own ends.

Racist robots. How do we eliminate AI bias?

Though artificial intelligence is capable of a speed and capacity of processing that’s far beyond that of
humans, it cannot always be trusted to be fair and neutral. We shouldn’t forget that AI systems are
created by humans, who can be biased and judgemental. Once again, if used right, or if used by those
who strive for social progress, artificial intelligence can become a catalyst for positive change.

Security. How do we keep AI safe from adversaries?

The more powerful a technology becomes, the more can it be used for nefarious reasons as well as
good. This applies not only to robots produced to replace human soldiers, or autonomous weapons, but
to AI systems that can cause damage if used maliciously. Because these fights won't be fought on the
battleground only, cybersecurity will become even more important. After all, we’re dealing with a
system that is faster and more capable than us by orders of magnitude.

Some ethical questions are about mitigating suffering, some about risking negative outcomes. While we
consider these risks, we should also keep in mind that, on the whole, this technological progress means
better lives for everyone. Artificial intelligence has vast potential, and its responsible implementation is
up to us.
 VII. Unemployment and Displacement

The hierarchy of labour is concerned primarily with

automation. As we’ve invented ways to automate jobs, we
could create room for people to assume more complex roles,
moving from the physical work that dominated the pre-
industrial globe to the cognitive labour that characterizes
strategic and administrative work in our globalized society.
Look at trucking: it currently employs millions of individuals
in the United States alone. What will happen to them if the
self-driving trucks promised by Tesla’s Elon Musk become
widely available in the next decade? But on the other hand, if
we consider the lower risk of accidents, self-driving trucks
seem like an ethical choice. The same scenario could happen
to office workers, as well as to the majority of the workforce in developed countries.

VIII. Misuse of Computers

Computers can be misused at the workplace in a variety of different ways. From accessing inappropriate
Internet sites to copying copyrighted material, such as music, video or software, employees can make
offenses against the employer corporate policies. In addition, non-work related Internet activity, such as
visiting sport sites, bidding online, trading stocks, shopping online, and collecting and sending jokes to
co-workers may also infringe Information Security or Information Technology (IT) resources policies.

It is known that one of the most common ways of

computer misuse in the workplace is the
utilization of corporate e-mail and the Internet for
private use. Most companies use Internet as a
powerful business tool, but sometimes the misuse
of that asset could turn out to be very expensive
as it consumes IT resources and affects negatively
employee productivity, in addition to compromise
security. Some businesses accept the personal use
of IT resources at the workplace, but there is a
faulty line that divides what is right and wrong in
terms of personal use. Other more serious offenses may include access to unauthorized or confidential
material, cyberstalking, identify and information theft, hacking, embezzlement, child pornography etc.
Internal computers can also be used to commit fraud against the employer or its customers or suppliers.
In some cases involving an employee accessing certain types of illegal websites, a company may be
subject to criminal investigation. Computer related evidence can also be used to investigate cases of
bribes.
Failures to protect the internal network can put companies in situations where information systems can
be compromised, private or confidential information leaked, or even computers being used by criminal
networks via botnets. In cases like this, companies may find its computer systems confiscated for
inspection as part of criminal investigation, in addition to being subject to damages in reputation.