Ethical Issues in Business Organizations (Essay Sample)

Ethical Issues in Business Organizations Name Institutional Affiliations Course Number Course Instructor Date Introduction In today’s complex global business environment, businesses, face a plethora of ethical issues. Equally, business ethics remains a highly discussed topic and debate within the corporate world. In practice, ethical business practice is the application of ethical morals and values to everyday business activities, processes, policies, and behavior. Ethics within a business set-up is a concept that does not discriminate in its application. Rather, it applies to all and sundry who are employed within a business organization regardless of their rank, position, or nature of work. According to Grigoropoulos (2019), ethics is non-negotiable and applies to all organizational employees equally. Broadly defined, ethical behavior may encompass a wide range of values of principles by which employees are required to align. It encompasses all undertakings or actions that are related to morality, integrity, positive management practices, and honesty (Grigoropoulos, 2019). All the same, globalization is a concept that has greatly influenced the way business activities are undertaken. The complexities of the modern business environment coupled with globalization and constant technological advancements present many ethical challenges in business management. This paper acknowledges the inter-relatedness of today’s business environment and the constant ethical challenges within different businesses. Consequently, it identifies and ranks five primary ethical issues that affect businesses today including data privacy and security, corporate social responsibility, employee rights and labor practices, supply chain ethics, and financial misrepresentation and insider trading. Afterward, an impact analysis of these ethical issues is conducted, and key recommendations are provided, putting emphasis on social responsibility. Ethical Issues Data Privacy and Security The rise of the digital economy means that many businesses have access to vast amounts of data. This may include user information, personal information of clients and customers, information regarding products being sold, and general information that denote preferences as to what consumers like or not. Big data is a concept that is well-known in today’s digital economy. These are tremendously large data sets meant for computational analysis purposes to identify trends and particular themes (Howe III & Elenberg, 2020). It has been proved that businesses that leverage big data for their research purposes are likely to do well within their market niches. This is because, through an analysis of big data, they are able to identify important trends in the consumption of their products and services, the target market, and other information regarding client relationships with their products or services (Howe III & Elenberg, 2020). However, while big data is capable of revolutionizing business operations for good, they raise fundamentally serious ethical issues with regard to data privacy and security. That is, businesses and organizations must devise creative solutions to manage user information and big data in a way that does not compromise the online security and data privacy of other users. In the past, many organizations have fallen prey to massive data breaches that resulted from incompetent data privacy and security policies. Therefore, businesses must institutionalize effective policies that protect data privacy and security in their business operations. Corporate Social Responsibility (CSR) In conducting their business activities, business organizations, and companies actively interact with the environment and society at large. In many ways, organizational business activities have the potential of affecting the environment and society. This has been evident, especially in large companies that deal in manufacturing. They contribute to a lot of environmental degradation and pollution. However, this is just one of the many examples of ways in which companies’ business activities affect the environment. Consequently, businesses are required to go beyond profit-making and contribute positively to the community. Corporate social responsibility is one such way of positive contributions. According to Tripathi and Singh (2014), corporate social responsibility is “the deliberate commitment to improving community well-being through discretionary business practices and contributions of corporate resources.” Therefore, a socially responsible company cares about customers, employees, suppliers, the environment, and the general members of the community. Employee Rights and Labor Practices Employee rights and labor practices generally address the professional ethics and rights of employees within an organization. Employees are a crucial asset to a business organization. An ethical business will often maintain the satisfaction and happiness of its employees by providing decent wages, a safe working environment, and a healthy work-life balance among others (Monteiro et al., 2021). However, this may not be the case in many organizations. For example, the provisions of these enabling factors invoke a lot of ethical issues. These may arise within the contexts of discrimination at the workplace on the basis of gender, ethnicity, nationality, and other factors, workplace bullying, unproductive work-life balance, and poor wages among others (Monteiro et al., 2021). Organizations must seek ways to address these pertinent ethical issues to achieve optimum labor practices. Supply Chain Ethics Undoubtedly, supply chain ethics is an integral requirement for maintaining both turnover of goods and socio-corporate relationships along the supply chain of a business. While some businesses have local supply chains, many multinational businesses have global supply chains. Therefore, sourcing raw materials and labor within the realms of global supply chains is loaded with many ethical issues including forced labor and environmentally harmful practices (Sánchez-Flores et al., 2020). In the past, studies have reported that multinational companies, especially labor-intensive ones, go after cheap labor by setting up their companies in developing nations. The consequences are that most of these employees are often not taken care of well through employee welfare protection schemes. In extreme scenarios, child labor has been rampant where such organizations take advantage of the naivety of children and employ them, often in deplorable work environments. In the wake of globalization, business organizations must address these ethical challenges associated with global supply chains. Financial Misrepresentation and Insider Trading From a legal perspective, courts have often regarded insider trading as a type of fraud, specifically, security fraud. However, insider trading poses great ethical concerns to an organization when it is considered illegal. According to the U.S. Securities and Exchange Commission (SEC) (n.d.), insider trading can be legal or illegal. The illegal nature of it involves, “ buying or selling a security, in breach of fiduciary duty or other relationship of trust and confidence, while in possession of material, non-public information about the security.” Together with financial misrepresentation, insider trading withholds important financial information through misleading financial reports and fraudulent accounting schemes (Cumming et al., 2015). Therefore, investors are not furnished with material and true information as to the financial standing of a business organization. Such misled investments for part of the large ethical issues associated with financial misrepresentation and insider trading. Ranking and Justification Based on the media and review of literature importance, the ethical challenges analyzed above can be ranked in the order of data privacy and security, corporate social responsibility, employee rights and labor practices, supply chain ethics, and lastly financial misrepresentation and insider trading. Data privacy and security tops the list due to the ongoing digital transformation of businesses and increasing cybersecurity threats. Evidence from different scholarly studies shows support data privacy and security as one of the most important ethical issues in today’s economy. According to Britz (2020), we are currently living in an information age where economic activities are information-based. He argues further that because technology keeps advancing, we are likely to experience more ethical issues concerning access to information and data privacy. Therefore, the most critical ethical issue is the loss of privacy as well as the possible misuse of data (Shamsuzzoha & Raappana, 2021). Corporate social responsibility ranks second as companies are under greater scrutiny for their environmental and societal impacts. While this is one of the primary reasons that make CSR an important ethical issue, there are other equally compelling reasons. Ideally, adhering to ethical standards in environmental and societal impacts help them build a positive reputation which is important in attracting customers (Gheraia et al., 2019). Therefore, acting in a careless and non-responsible way jeopardizes a company’s reputation with its stakeholders. Employee rights and labor practices come third due to the ongoing debates about wage disparities, job security, and workplace safety. Its level of ranking is premised on the fact that it affects only those in the employment sector unlike the first two whose effects cut across all stakeholders that deal with a business organization. Positive labor practices are important ethical considerations of an organization. Addressing disparity in wages equally addresses the issues of inequality in the employment sector (Pechacek, 2023). Equally offering an enabling workplace environment and sa...