Five Emerging Ethical Issues for Business in the 21st Century

Introduction

Business organizations of the twenty-first century must survive in some of the most challenging times in history. In addition to the pressures of competition brought about by globalization, the forces of democracy have made business organizations accountable to far more stakeholders than those of a few decades ago, when firms were primarily responsible to their owners and to the law. Recent social changes, including globalization, have made various social groups interdependent with respect to their interests. As a result, business organizations find themselves facing responsibility towards a wide range of stakeholders, including the government, owners, employees, environmental groups, the media, and the general public. These groups have acquired the power to promote or curb the growth of business organizations and have also developed expectations and standards of behavior for them. The recognition of these changes has raised a number of ethical issues for business organizations in the twenty-first century.

The issues discussed in the following sections relate to the ethical responsibility of business organizations to be fair and honest when providing information to the public; to treat their employees honestly and ethically; to act ethically rather than being driven purely by economic gain in the sourcing of factors of production and raw materials; to recognize their responsibility towards a broader set of stakeholders; and to make ethical use of environmental resources. The findings illustrate that the ethical environment for business organizations will continue to be shaped by the growing interdependence of various stakeholders and by the spread of globalization and democratic attitudes in society.

Ethical Communication and Reporting

The ethical reporting of information emerged as one of the most pressing challenges for business organizations at the start of the twenty-first century. The Enron and Arthur Andersen scandal that broke out in the early 2000s served to highlight the significance of ethical communication and reporting. Enron had underrepresented its losses to shareholders, and the auditing firm Arthur Andersen had assisted the company in doing so. The episode sensitized the public to the importance of ethical communication in business, as in other spheres of life. The perpetrators of the fraud clearly did not lack wealth, material comfort, or status. What caused them to commit fraud on such a massive scale relates directly to their moral values and sense of ethics. This incident helped bring ethical communication to the forefront of business management and leadership by illustrating the extreme implications and costs of unethical communication in business.

Dresp-Langley (2008) illustrates, using a case study, how the communication contract for business organizations is being reshaped to incorporate the need for ethical communication. Ethical communication relates to the accuracy and appropriateness of the message. It requires business managers and leaders to communicate information honestly and accurately to the best of their knowledge. As business stakeholders become more and more interdependent, they rely on information provided by other stakeholders to make decisions. It is therefore important for that information to be accurate and complete, so that a distorted picture of the situation is not conveyed. Being ethical in communication also requires the communicator to anticipate the needs and interests of other stakeholders and to provide them the information they need, even if it has not been explicitly requested.

Ethical communication is also an integral part of leadership within an organization. When leaders communicate information openly and honestly, they inspire the trust and confidence of their workforce, which motivates employees to put forth high levels of productivity and effort. During the recent economic recession, when thousands of people around the world lost their jobs, organizations faced a serious ethical challenge in managing downsizing decisions. Organizations that were able to convey difficult information in a transparent and considerate manner were more likely to experience greater cooperation and understanding from employees, and were better positioned to prevent serious declines in morale among those who retained their positions.

Ethical Employment Practices

Due to developments in communication and transportation over the past few decades, the frequency and scale of migration across the world has increased considerably. As a result, societies have become less homogeneous than they once were — particularly in modern capitalist democracies, where social freedoms have attracted large numbers of migrants from developing countries. These changes have produced a far more diverse workforce than existed two or three decades ago. It is therefore necessary for managers and organizational leaders to demonstrate non-discriminatory employment practices. Any discrimination in employment is likely to create resentment among the affected groups and generate friction between various ethnic and minority communities. Ethical employment practices require business organizations to actively seek candidates from diverse communities and social groups, and to create environments in which those individuals can grow both personally and professionally. Organizations perceived as failing to do so tend to lose social capital and face growing public criticism.

The growing sensitivity toward ethical employment practices is reflected in equal employment opportunity legislation in the United States, which requires business organizations to actively seek candidates from diverse communities. However, Alder and Gilbert (2006) argue that organizations need to go beyond the law to pursue genuinely ethical hiring practices. Gender diversity has also been recognized as an area in need of attention. Research into gender diversity in business organizations has shown that while organizations may hire increasing numbers of women, female representation in management positions remains discouraging. Reference has traditionally been made to the invisible "glass ceiling" that prevents women from climbing the corporate ladder into strategic roles.

In addition to gender and ethnic diversity, ethical employment practices involve fair treatment for all employees and job candidates, unless a specific characteristic is directly related to the ability to perform job responsibilities. Business organizations must therefore review their employment practices to ensure they do not discriminate on the basis of color, ethnicity, religion, nationality, marital status, gender, or sexual orientation. Discrimination on these grounds can have more serious consequences today than in the past. As societies become increasingly diverse and democratized, many minority groups have become organized and gained considerable political power. Associations to protect the rights of ethnic minorities and people of diverse sexual orientations have emerged. Organizations may consequently find themselves facing legal suits or damaging negative publicity if they are found to discriminate in their employment practices.

Conclusion

In the twenty-first century, the ethical context for business is increasingly shaped by the growing interdependence of economic interests, social roles, and ethical values in society. Among the most significant ethical issues emerging for business organizations are ethical communication, ethical employment, ethical sourcing, corporate social responsibility, and environmental responsibility. Most of these issues relate less to what business organizations do and more to how they do it. Society has become increasingly sensitive to the power of business organizations. A driving force behind this shift has been the growing democratization of society and the values of equality and fairness. Society now expects greater accountability and open communication from business organizations and demands that their social responsibilities be commensurate with their economic power — including being ethical in their communication, in the way they use societal resources, and in the way they treat their employees.