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Business ethics, how they influence the

day to day life of an organisation


(An Ethnographic Report on
Business Ethics)

Management in Context

By Ghufran Ullah Tahir


University of Bradford United Kingdom

For more reports on various topics

Contact: ghufran77@hotmail.com

Word count: 2471


Business ethics and how they influence the
day to day life of an organisation

It is argued that there is a strong business case for


ethics even in the business world , in that corporations
get multiple benefits by operating with a perspective,
broader and longer than their own immediate, short-
term profits. In order to explore it in detail what business
ethics means and how they influence the day to day life
of an organisation, I would first share an ethnographic
study conducted in one of the stores of Co-operative
Group, then we will disscuss what ethics particularly
business means, finally we will analyse what we learned
from the ethnographic study using the ideas from the
theories of business ethics.

This is Headingley Leeds, West Yorkshire. The Co-


operative Food Supermarket is situated on cardigan
road, Headingley, just 5 minutes drive from famous
Headingley Cricket Stadium Leeds. It is a medium-sized
Food supermarket with probably more than 1000sq. feet
shop floor area, with its own car parking facility. If you
notice, keeping the surrounding area in mind it is
unusual that you see the store of this size in the middle
of concentrated populated area. More notably, it is
licensed to serve alcohol 24hours a day, a visible
miracle of effective lobbying. Imagine drunken
customers coming to buy alcohol at 3.am, shouting and
making noise in the streets, reminding the neighbours
about the cost of having supermarket at a walking
distance from the house.
Shopping trolleys line up in car park to accompany you
during your visit. As you enter the store, warm puffs of
air from fan heater on top of entrance door, welcome
you. On your left hand side piles of baskets and on the
right hand side a strong man in green uniform
exchanges smile with you. He is obviously the security
guard.
I wonder how he can stand still for an eight hours shift
by the soft-drinks chiller. I feel that it is colder inside the
store than outside. The store is so bright and colourful
that I feel fascinated. A sign on fridge saying “Ethical
Water” draws my attention to itself, and the labels on
water bottles claim to be 100% chartable.
I see a shop assistant wearing black trouser and fleece
filling vegetable in green vegetable trays; green colour
inspired me to think about green fields where they were
grown. A pillar with posters on it saying “Fair Trade
Bananas” tells another story about making a living in
cruel world. All the fresh vegetable packed in plastic
knocks on human heart and asks “what are we doing to
this planet”.

But it is so fascinating to
see fruits and vegetable from all corners of the world
under one roof.
More notably the shoppers, there are customers from
vast ethnic backgrounds, Black, White, Asian and
Chinese all un-dividing, buying different kinds of food
from one place. But the store layout divides the food
into different sections, big signs hanging on ceiling;
guide the customers to different sections. In chilled
section I see a young sales assistant piling the empty
cardboard in a cage, probably for the recycling purpose.
By further navigating through the aisles I see,
promotional point of sales saying “Half Price”, “Buy One
Get One Free”, attract customers to buy and save. It is
not just point of sales that induce customers to buy
products, also there are leaflets in every aisle hanging
with shelves to invite customers to join as members and
earn shares in company.
I notice the prices are comparatively higher than other
supermarkets. Pillars all around the shop with beautiful
and colourful posters, draw attention towards Co-
operative’s Corporate Social Responsibility policy.
Poster are everywhere around the store saying, “we
were first to provide fair trade products”, “we are
helping to reduce poverty in Africa”, “our stores use
renewable energy”, “We are saving the environment”,
etc. In order to further explore the

co-operative I requested
the manager to spare some time to tell me more about
it. He took me to the warehouse, where I had the chance
to see, how things looked behind the scene.
I asked what being ethical means. “Being ethical means
doing business by following best practice values and
principles” he replied. “We were the first to introduce
fair trade products this dates back to more than 100
years.
Co-op is member’s owned, we don’t have any share
holders, just members. Our profits are distributed to the
customers, who are its members, and rest goes to
business and we also help to reduce poverty in Africa,
we are building wells there”.
He adds, “Our fair trade policy provides the producers in
poor countries a fair reward for their work”.
Why do you follow this “Ethical” policy I asked? He
replied “well, that is why we (co-op) were made. Our aim
is to create a better society. We serve the community”.
He explained all in good details and happily, I also got
the chance to speak to some of his other colleagues. So
far so good. But whenI pointed out that plastics were not
being put in recyling bins, he said, “recycling facilities
are there but people (at co-op) are too lazy to send
them”. I said bye to the manager and thought, the
coffee in my house had nearly finished, so why not buy
some. But sooner I saw the massive queues of
customers, I changed my mind. There were at least 10
customers in each of the three queues. With a deep
sigh, I put the jar back into shelf.
So, what do ethics mean in literature and what is it to
be ethical for a business.

It is frequently said;
teach our children the difference between right and
wrong. Those of suspicious turn of mind will ask exactly
whose conceptions of right and wrong are to be planted
in the minds of the young. Even Plato in his dialogues,
‘Meno and Protagoras’ faced the difficulty of saying
what virtue is.
There are three different forms of ethics: descriptive,
normative, and philosophical. Descriptive ethics refers to
the general beliefs, values, attitudes and standards that,
as a matter of fact, guide behaviour. (Benn, 1998)
The word ethics was derived from the Greek word
ethos, meaning “custom”. Thus descriptive ethics
examines the typical beliefs or values that determine
what is customarily done.
Normative ethics prescribe what we should believe or
value. The difference between descriptive and normative
ethics, therefore, is the difference between what is and
what ought to be. Philosophical ethics is to think
about the legitimacy of the standards and norms
themselves, to seek a rational justification for our ethical
principles. In this sense “ethics” refer to a branch of
philosophy that systematically examines more abstract
questions about how humans ought to live. (Desjardins
and McCall, 2000)

Narrowing down the topic now we


seek to know what“Business Ethics” mean.
“Business ethics is the study of business situations,
activities, and decisions where issues of right and wrong
are addressed”. (Laura, 2004).
By right and wrong we mean morally right and wrong as
opposed to, for example, commercially or financially
right or wrong. Moreover, by business ethics, we do not
mean only commercial businesses, but also government
organisations, charities and other organisations
(Clarkson, 1995).
Here the question arises how ethics is different from the
law. Surely the law is also about issues of right and
wrong?
This is true, and there is considerable overlap between
ethics and the law. The law might be said to be a
definition of the minimum acceptable standards of
behaviour. But not every ethical aspect is covered by
law. For instant being faithful to girlfriend is not a legal
thing, but an ethical issue. So the ethics start where law
ends. (Crane and Mattan, 2004)

What is CSR then?


Corporate social responsibility (CSR) is about how
businesses align their values and behaviour with the
expectations and needs of stakeholders - not just
customers and investors, but also employees, suppliers,
communities, regulators, special interest groups and
society as a whole. CSR describes a company's
commitment to be accountable to its stakeholders. CSR
demands that businesses manage the economic, social
and environmental impacts of their operations to
maximise the benefits and minimise the downsides.
(www.csrnetwork.com)
It means corporations have social responsibilities as
humen do, making corporations, artificial humen. hmmm
that is interesting.
But the purpose of business is to make profit. How can a
business make profits, if it just cares about ethics? Are
ethics not conflicting with very purpose of business,
because doing business means making money, money
and money. Isnt it?
(Luijik, 2001) points out that the very notion of
business ethics might be seen as somewhat suspicious
as it implies that ethics is something, that not originally
present in business, or, even worse, something which is
opposed to business; Don’t think so.
Making profits is a responsibility itself, towards those
who have invested in it, and the society as well.
Businesses provide jobs, making profit do promote
desireable social ends. But offcourse, not at the

expense of others.
Many businesses do harm the society, environment and
they do manipulate even their own employees.
(Behrman, 1988).
But the question is, are these corporations accountable
in some way for the consequences for their actions. If
yes, then to whom? Are they only accountable to their
shareholder, or all stakeholders, or to the whole society.
Should there be any accountability at all in the first
place.
Many theorists contend
that a business has moral duties that extend well
beyond serving the interests of its owners or
stockholders, and that these duties consist of more than
simply obeying the law. (Davis and Blomstrom, 1975).

A business has moral responsibilities to stakeholders,


people who have an interest in the conduct of the
business, which might include employees, customers,
vendors, the local community, or even society as a
whole. The stakeholders have certain rights with regard
to how the business operates, and this includes even
rights of governance.

Since the corporations now shape and influence so much


of public life in modern societies, since in effect they are
political actors, they have to become more accountable
to society. (Carroll and Buchholtz, 2006).

Lets returning back to the Co-operative. The idea of


making a company, which is owned by its customers and
employees is different to those traditional companies
owned by one or more bignosed wealthy persons, and/or
shareholders, of which, majority of them never come to
see the places they own. Co-op’s founders must have
faced the enormous challenges of gathering enough
members to raise enough money to start up a business.
But the co-operative is not a chartible organisation or
only for members, it is a commercial business like others
run for profits, the difference is in its formation.
There is one more thing different here, unlike others,
each member has only one share in the company, so all
memebers have equall voting power. Does it not raise
some interesting questions about its management at
corporate level, its board of directors etc. They must
have a lot less pressure of shareholders than the
directors in other companies face. No shareholder would
bother much having just one share of worth only two
pounds.
The most important are its claims of being ethical. Its
vision of creating a better society is enough to attract
environmental conscious customers to shop at it and
even join as members. As you navigate through the
aisles, you see the slogans like “Co-operative means
Ethical”, “we were first to provide fair trade products”,
“we helping to reduce poverty in Africa”, “our stores use
renewable energy”, “We are saving the environment”,
“we are trustworthy”, all these slogans try to impress its

customers. So did
the store manager, he tried his best to convince me that
co-operative indeed is an ethical business.
But it is hard to justify 24hour licesnce to serve alcohol
as to be equally ethical, while being in the middle of
populated area. Can someone still call himself ethical
while his neighbors cant sleep peacefully at night
because of him.
But I should not neglect the positive side of having a 24
hours store in one’s neighbourhood. Only those can
understand its benefits, who ever had ear pain in middle
of night.
Charging the customer a higher price for goods, using
the monoply power in the area can not be called ethical
either.
Having a business mission “creating a better society”
may inspire those companies, who openly neglect the
social and environmental issues. Co-op does full range
of fair trade products. Fair trade products gaurantee the
producer their fair part.
It is fact that these huge national and multinational
companies make their profits in millions and even in
billions, but the poor farmers in developing countries
who produce raw materials, still struggle to feed their
families.
The thing that I liked the most that I could see the foods
from all over the world here. We all love curries, don’t
we? Then it makes me think, does the food travel from
other continents not contribute to pollution? Many of
the fruits and vegetable could be grown locally with little
efforts.
The posters advertising ethics were being effectively
used for marketing.

I struggle to decide whether co-operative is an


Ethically conscious firm “one that realises that ethics
are useful and important for corporate image. Whose
Ethical behaviour is enlightened self interest” OR is it
Ethically engaged firm “One which wants to do the
right thing. Has a code of ethics, but ethical culture is
not fully integrated in the firm”. (Lee, 2008)
Companies use their ethical work as marketing strategy,
and manipulate those customers who care about
environment and the society. Some corporations start
CSR programs for the commercial benefit they enjoy
through raising their reputation with the public or with
government. (Knight,1980).

In conclusion, increasingly conscience-focused


marketplaces of the 21st century, the demand for more
ethical business processes and actions is increasing.
Today most major corporate websites emphasise on
commitments to promote non-economic social values
under a variety of headings e.g. ethics codes, social
responsibility charter etc. (Harwood, 1996). As we have
seen at co-operative the ethical claim are so high that
they took the form of its business mission. More
companies are taking positive initiatives e.g. promoting
fair trade, using renewable energy, moving towards
decreasing food mileage, etc. Shareholders and
investors themselves, through socially responsible
investing are exerting pressure on corporations to
behave responsibly. Non-governmental organizations are
also taking an increasing role, leveraging the power of
the media and the Internet to increase their scrutiny and
collective activism around corporate behavior. (Carroll and
Buchholtz, 2006). This is now upto the society how they re-
act to the loud claims of these organisations of being
ethical. The consumers have to judge themselves the
intentions of companies for adopting the attractive CSR
policies. But at least some are moving towards taking
positive steps of caring about the communities they
serve.
A specail thanks to store managers at Co-operative
Food, Cardigan Road, Leeds, West Yorkshire.
Mr. Asif Khan, Mr. Steve Machin, Ms. Carol Redfern,
Mr. Abdul Azam

References:
Behrman, Jack N. (1988). Essays on Ethics in Business and the Professions.
Englewood Cliffs, NJ: Prentice Hall

Carroll, A.; A. Buchholtz (2006). Business and Society: Ethics and Stakeholder
Management, 6th ed. Mason, OH: Thomson/South-Western.

Clarkson, M. (1995). "A stakeholder framework for analyzing and evaluating


corporate social performance". Academy of Management Review. Vol.20, pp.92-
117.

Crane, Matten (2004). Business Ethics, New York; oxford university press.

Davis, K.; R. Blomstrom (1975). Business and Society: Environment and


Responsibility, New York: McGraw-Hill.

Desjardin, J. and McCall, J (2000), Contemporary Issues in Business Ethics. 4th


Ed. Stamford; Thomson Learning

Hartman, Laura (2004). Perspectives in Business Ethics. Burr Ridge, IL


:McGraw-Hill

Harwood, Sterling (1996). Business as Ethical and Business as Usual. Belmont,


CA: The Thomson Corporation

Knight, Frank (1980). The Ethics of Competition and Other Essays, University of
Chicago Press

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University of Bradford.
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Van Lujik, H.J.L (1990). Recent Developments in European Business Ethics’.


Journal of Business Ethics, 9: 537-544

http://www.csrnetwork.com/csr.asp (accessed on 10-12-2008)