Appendix A: Debate on Ethical Leadership
Our group participated in an ethical debate conducted in the framework of the Seminar 4 which was devoted to the discussion of the idea presented by one of the business schools which considers ethical leadership to be impossible under the conditions of economy focused on shareholding. All of the students worked in teams which were given the task to be either for or against the statement and represent the arguments to support their points of view. The next task for the teams was to provide critical evaluation of the given suggestions which was followed with individual presentation of every student’s point of view regarding the discussed topic.
Regarding a Business Ethics lecturer Mike Gustavsson, it is within reason to assume that ethics application seems not appropriate for him under the conditions of the current situation in business. As a professional, he is supposed to claim that the subject he teaches is of great importance in the educational system. His disillusionment happened owing to the influence of his daughter, Anna. The change of her individual point of view on the societal issues to the so called bonus interests was due to her new job at the hedge fund as a fund manager. Mike Gustavsson concludes on the basis of normative non-consequentialist theories that top managers can behave within the established ethical norms only of there is an efficient set of rules developed for the directors. Therefore, ethical behaviour of his daughter is questionable so far. However, this argument is also not perfect since it does not take into account the possibility of various unfavourable business or personal situations within any enterprise. There can be considerable pressure put upon the managers with the aim of preventing the insolvency of the company and acquiring immediate profits despite the consequences and against the moral principles.
The point of view of the Chief Operating Officer Jan Edwards is the opposite. Working for a prosperous enterprise, she cannot accept the idea of impossible ethical leadership under the conditions of corporate management. Her ultimate goal is providing gainful employment and assistance to a large number of workers; so it means she acts in the utilitarian manner. Being efficient from the point of view of social benefits, such incentives can impact the business affairs in a negative way, taking the time of the top managers and diverting their attention from more important business matters.
Mei-Hua, the third character, advocates the idea that coexistence of ethics with generation of profit is possible. According to her, legal business implies ethical conduct since the decent professional behaviour is one of the major factors of morality in business. It should be noted, however, that the presented argument is rather ambiguous. Mei-Hua claims that the company becomes more profitable and gets more money to be donated to various charities provided that different schemes of tax avoidance are developed and applied. She follows the rules and acts in accordance with the utilitarianism principles; however, the government gets reduced amounts of taxes, and public needs and interests (free education, pension, social benefits, etc.) do not get sufficient support.
The fourth character, Deshi Chen, adheres to the idea of meaninglessness of ethical leadership in the framework of the business environment nowadays. He defines the corporate government codes as restraints of company’s prosperity. According to the theory of stages of cognitive moral development presented by Kohlberg (1969), Deshi bases his opinions on individual gains and rewards, being at the pre-conventional level. Psychologically, he is focused on the selfish interests. Moreover, the Business Ethics as a school subject seems unnecessary for him since it is not related to money-making. However, substantial growth of any business is possible only to two major factors: established relations with the suppliers and customers and increased profitability; thus, his argument can be put aside.
To sum up, on the basis of all the presented and discussed arguments I have concluded that the economy oriented towards gaining profits cannot be efficient without ethical leadership as its integral part. The moral codes are extremely crucial in the modern business environment as the business models of the companies need certain frameworks to work within. Therefore, the importance of those institutions which aimed at introducing the ethical leadership principles into daily routine is crucial.
Appendix B: The Case of Ethical Dilemma
A case study related to essential business ethical concerns was a subject for group discussion conducted within the seminars (Seminar 1 and 5). Identification of six characters that had their specific moral dilemmas was done on the basis of the details obtained from a short description of the presented situation.
An accountant executive named Borries faces a dilemma: whether to go on holiday and meet the parents of his girlfriend as it has been planned or to respond to the urgent claim of an important client, stay in the office, and finish the project. This ethical decision has a direct impact on both the reputation in business and personal relationships. Moreover, there are additional minor ethical concerns related to the situation. The reaction of his girlfriend and her parents can be different. They may either support Borries or condemn him for urgent cancellation of the holiday plans. Furthermore, the company manager whose major care is the profit of the business can make different decisions as well. Borries can either experience great pressure so that he stayed in the office or he can be given an opportunity to leave for holidays. Moreover, the uncertain character of negotiations regarding the performance of the project can either make the client-company turn to the rivals of Borries’ company or they can proceed with their cooperation. Besides, the colleagues of Borries can either support him for his devoted attitude to the company or criticize his neglect of personal relationships.
The course of the Business Ethics has provided me with extensive knowledge of the subject and the ability to use descriptive frameworks and normative theories to analyze various dilemmas. That knowledge enables me to discuss the ethical case of Borries more efficiently. According to the factor of moral intensity which was introduced by Jones (1991, p. 372), Borries’ ethical case is at the medium level of intensity. However, other important contributing factors make the magnitude of consequences rate significant. Those factors include caring about the relationships with the girl and the reputation of the company. The rate of the social consensus is medium; that is determined by Borries’s close surrounding which influence the ethical side of the action. He takes into account the reaction of his colleagues, the interests of his girlfriend, her parents, authorities, his manager, etc.
The effect probability rate can be estimated as medium since it is determined with such auxiliary details as the opportunities to pay a visit to the parents in the future, previous holidays taken from the office, etc. The proximity and temporal immediacy rates are high, since the claim of the client-company is urgent and the decision is to be made promptly, while the relationships with the girl and work on the project are long-term. The ethical issue is related to a limited number of people, in particularly the colleagues, the girl and her family, the company and Borries; therefore effect concentration of the made decision is medium. It can balance the intensity of the ethical case.
Furthermore, Mitchell (1997, p. 855) introduced the so called Stakeholder Salience framework, according to which the dilemma solution can either affect some individuals or be influenced by them. Borries has made up his mind to terminate the holiday and devote his time to the project. Thus, it can be claimed that the interpersonal relationships with the co-workers and his girlfriend are less significant than the ambitions, potential career rewards and personal interests. It cannot be assumed with certainty whether Borries is selfish in his decision, since the case details merely prove his eagerness to save the company from the project failure and loss of the client. It can also be assumed that successfulness of the project can result not only in the improved corporate prosperity and additional contracts, but also in Borries’ outstanding business opportunities, career progress and increased earnings for his future family with the current girlfriend. According to the normative theories, Borries was able to act in the utilitarian manner and break the moral rules provided that the results are beneficial for the majority of the involved parties. Finally, the judgment of Borries is based not only on his own expectations, or the hopes of the closest people, but also on the interests of others; thus, he is at the stage four of the conventional level, according to the stages presented in the CVD theory of Kohlberg (1969).