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Procedia Economics and Finance 26 ( 2015 ) 1068 – 1073

2212-5671 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of Academic World Research and Education Center doi: 10.1016/S2212-5671(15)00931-4

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Is the success possible in compliance with ethics and deontology in business?

Adela Mariana Vadastreanua, Dorin Maierb*, Andreea Maierc aNational Institute of Research and Development for Isotopic and Molecular Technologies and Technical University of Cluj-Napoca

bThe Bucharest University of Economic Studies and Technical University of Cluj Napoca cTechnical University of Cluj-Napoca

Abstract

The road to success for companies in today’s economic environment is more demanding than ever and the capacity of adapting to the rapid changes is compensatory in order to resist on the market. The managers struggle, daily, with increasingly complex problems, caused by fierce competition in the market but also from the rising demands of customers. In this context, managers are tempted to pick an easy way, a shortcut, which will give them an advantage over the competitors. Usually this shortcut is in contradiction with the request of ethics and deontology in business, however many managers ignore this situation and choose to make short-term profit. This leads to the following question: Is it possible to be successful by respecting the ethics and deontology in business, considering that some of the competitors have an advantage through non-compliance to these requests? The research made in this article approach this sensitive aspect of business ethics and offer some practical solution and recommendation for managers, highlighting the ethics principles and the consequences of an unethical behaviour. This paper is written such that any manager, regardless of the experience or knowledge, can have a clear image over business ethics and to be sure, that success can be achieve by respecting ethics and deontology in business. © 2015 The Authors. Published by Elsevier B.V. Peer-review under responsibility of Academic World Research and Education Center.

Keywords: ethics, business ethics, deonthology, business succes

* Dorin Maier. Tel.: +40748348793;.

E-mail address: [email protected],

© 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of Academic World Research and Education Center

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1. Introduction

The road to success for companies in today’s economic environment is more demanding than ever and the capacity of adapting to the rapid changes is compensatory in order to resist on the market. The managers struggle, daily, with increasingly complex problems, caused by fierce competition in the market but also from the rising demands of customers. In this harsh environment the temptation of choosing an easy solution, for resolving everyday problems, is very high, although usually the easiest solutions bring short-term profit it can affect the long-term profit or event the survival of the company.

This article approaches the idea of ethics and deontology in business, taking into account the new challenges of the current economic environment. In our study we were a bit influenced by the Romania’s economic context, where ethics and deontology in business are two concepts differently understood by each company, or in many cases this concepts are similarly to a degree of naivety.

The concept of business ethics is presented in Belak, (2012) as a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. This applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

2. The importance of ethics in business

Ethics refers to an individual's moral judgments about right and wrong. Decisions taken in an organization can be taken by individuals or groups, but everyone has to be influenced by culture. The decision to behave ethically is a moral; employees must decide how they act. This may involve the rejection of the route that would lead to the greatest short-term profit.

According to the research made ethical behavior and corporate social responsibility can bring significant benefits to a business (***, 2015b), the principal benefits are:

attract customers to the company's products, thus boosting sales and profits; increasing productivity; attract more employees who want to work, reduce recruitment costs and allow the company to obtain the

most talented employees; attract investors and keep the company's share price high, thereby protecting business from takeover.

In opposition with these benefits, an unethical behavior or lack of social responsibility of enterprises can damage a company's reputation.

In other studies (Strobel, 2010; Fassin, 2000) related to the business ethic the authors consider that business ethics includes the ensuring that the highest legal and moral standards are respected in relationships with people from the business community. This includes the most important person in your business: your client. Short-term profit compared with the cost of losing a customer is deadly in the long term for your business.

The ethical behavior for a company requires making good business decisions based on a "code of ethics" set. This code of ethics must take into account:

identify general principles that would lead to fair trade practices. verification and revision by the association of basic standards. consider that ethical issues are not always a single answer without blemish. write specific statements that you and others will help in making ethical decisions every day. apply the code of ethics of a manual of policies and procedures to identify major rules for the operation

of your business. train your employees (and family members) to make decisions about business ethics.

By analyzing this six principles that an ethic code should consider we can see that most of the time ethics is more about a decision than of a learn knowledge. This leads to the understanding of how the process of making decision can have a positive effect on the company’s performance. We have identified in the literature (***, 2013) four aspects related to the process of decision-making:

Problem definition requiring a decision. Often we draw conclusions about a situation without even taking the time to clarify the issue.

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Consider alternative solutions to the problem. There is always more than one solution to any problem. Think about the possibilities before taking action.

Identify the consequences of alternative solutions. There are many different possible consequences for choosing different alternatives. Entrepreneurs need to think about the consequences that may result from their decisions, both short and long term.

Collect more information, if you do not have sufficient, to make the right decision. This is where company policy and procedure guide might help employees deal with any problem.

Business ethics is implemented to ensure that there is a certain level of trust required between consumers and various forms of market participants with businesses.

3. Principles of business ethics

If we consider ethics by philosophical point of view we can see that many philosophers consider ethics as "behavioral science" that includes fundamental ground rules by which we live our lives. Ethics is the branch of study that deals with what is good of action for humans. Ethics is a requirement for human life. It is among us to decide the course of action. Without it, our actions should be random and pointless. If we consider a rational ethical standard, we are able to correctly organize the objectives and actions to achieve our most important values.

From the business point of view we the concept developed in time and it can mean different things to different people, but generally comes to know what is right or wrong at work and to do what is right - in terms of effects of products / services in relations with stakeholders. We consider that the importance of business ethics is critical in times of fundamental change - such as those faced by businesses today. In times of fundamental change the past values are now strongly questioned. Many of these values are no longer met. Therefore, there is no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Perhaps most importantly, the role of ethics in the workplace helps to ensure that when leaders and managers struggle in times of crisis and confusion, they retain a strong moral compass.

Competitiveness, ambition and innovation will always be the most important for success in business, but they must be governed by ethical fundamental principles. The success in business is usually very hard to obtain but very easy to lose. In today’s environment, where the access to information is open for everyone, including customers the decision of choosing a product / service is influenced by those information. Another aspect is related to the fact that customers have now the power to use internet and to offer a feedback of the product/service not only directly to the company but also to other future customers. In this context how people judge your character is critical for sustainable success, because it is based on trust and credibility. Both essential goods may be destroyed by actions, or are perceived to be unethical. Thus, successful executives must be concerned with both their character and their reputation. Whether a man is like a tree and reputation like a shadow. Your character is what you really are. Your reputation is what people think about you.

The importance of reputation for a company is reflected in the research work existed in the literature. The character is determined and defined by your actions under 12 ethical principles illustrated in fig. 1 (***, 2015).

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Fig. 1. The main principle of business ethics (author processing)

If we analyze figure 1 we can observe that the first principle is Honesty. This principle state that it is necessary to

be honest in all communications and actions, because ethical principals are, above all, trustworthy and honesty is the cornerstone of trust, they are not only truth they are honest and sincere. If we talk about ethical principals it is clear that they do not deliberately mislead or deceive others by making false statements, exaggerations, partial truths, selective omissions, or any other means and when needed reliable information relevant and correct wrong impressions actually.

The second principle is Integrity. According to this principle maintain personal integrity is very important due to the fact that earning the trust of others is made through personal integrity. Maintaining the integrity often requires moral courage, inner strength to do the right thing, even if it may cost more than they want to pay.

The next principle, the third one is Keeping promises. Ethical principals can be trusted because they make all reasonable efforts to meet the letter and spirit of their promises and commitments, they do not interpret agreements in an unduly technical or legalistic, to rationalize failure or create justifications to escape their commitments.

The fourth principle is Loyalty or to be loyal in other ethical principles. Ethical principals place a high value on protecting and promoting the interests and legitimate expectations of companies and their peers. Even if in some cases the principle of loyalty is used as an argument for a wrong solution, in case of the ethics principles it is important not to put loyalty above other ethical principles. A common situation is when an employer decides to accept other jobs, ethical principals provide reasonable notice to comply with their former employer's proprietary information, and refuse to engage in activities that would take unfair advantage of their previous positions.

Another principle is Correctness or strives to be fair and just in all dealings. Fundamental do not exercise their power arbitrarily and do not use deception or indecent means to obtain or retain an advantage or to take unfair advantage of another's mistakes or difficulties. Ethical guidelines show a commitment to justice, equal treatment of persons, tolerance and acceptance of diversity.

The sixth principle is Care. Ethics principles imply to demonstrate compassion and a genuine concern for the welfare of others, trying to accomplish business goals in a way that causes the least harm and the most good.

The seventh principle deals with Respect for others or treating everyone with respect. Ethical principals demonstrate respect for human dignity, autonomy, privacy, rights and interests of all who have a stake in their

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decisions; they are polite and treat all people with equal respect and dignity, regardless of sex, race or national origin.

Respect the law is the eighth principle. Ethical principals comply with the laws, rules and regulations relating to their business activities.

The ninth principle is Concern for excellence. Ethical principals pursue excellence in their duties, are informed and prepared, and constantly strive to increase competence in all areas of responsibility

The tenth principle is Leadership which exemplifies the honor and ethics. Ethical principals are aware of their responsibilities and opportunities driving position and try to be good role models for their own ethical conduct and helping to create an environment where principled reasoning and ethical decision making are highly appreciated.

Reputation and morale is the eleventh principle. Ethics executives understand the importance of their own and their company's reputation and the importance of proper pride and morale of employees.

The last principle is Responsibility. Ethical principals recognize and accept personal responsibility to ethical quality of their decisions and omissions to themselves, their colleagues, their companies and communities.

4. Consequence of unethical behavior in business

As we have seen there are some main principles that a company should take in to consideration in order to have long-term benefits. These principles are in a way connected, thus if a company does not respect one principle this will compromise the other ones to. If for example a company does not respect the law automatically it cannot be honest or integer and also the reputation and morale are affected. In this sense we have proposed based on the literature (Grace,2005; Dubrin, 2008, Audi, 2012), in fig. 2, a clear representation of the possible consequence of an unethical behavior, that in the end could led to the disappearance of the company.

The big risk of the unethical behavior is that the consequences are interconnected and as it can be seen in the figure one consequence leads to another and in the end this could damage the company and, as we have highlighted above, the short term benefits are in most cases comparatively smaller compare with long-term consequences.

Fig.2. The consequence of the unethical behavior for companies

In the current economic context, the violating of the business ethical principles comes as a convenient solution

that brings short-term benefits, but this solution on the long term will represent a source of continuous expenses.

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Most of these expenses are related to hide the unethical behaviors. In most cases hiding the unethical practice cannot be done and a part of the truth will come out and then the fame and reputation of the company will be affected. Having tarnished reputation the company will obviously lose various clients and business partners and in the end it will disappear.

5. Conclusion

In recent years, the competitiveness of the business environment has changed dramatically. Companies began to lose market share to be swamped who were able to provide high quality products with lower cost and with greater variety. Facing today with the age of globalization, huge varieties of international relations are developed. In this context, the sensitivity business ethics needs to take them seriously and well understood. The need for a ethical behavior from all parties involved comes also from the human evolution point of view, considering that correct competition bring more innovative ideas and more benefits for companies and their clients.

The research described here contributes to the extant empirical research on business ethics. It shows how a virtue orientation affects attitudes in management practices and how an understanding of certain virtues can help in making better decisions, both ethically and in relation to success in business

Based on the case study research, this paper aims to suggest that enterprise awareness of importance of business ethics implementation can be of essential meaning for its long-term existence, success, growth, and development.

Modern enterprise ethical behavior demands conscious and positive attitude towards the planning of enterprise core values, culture, ethics, norms, and climate in a way that stimulates such tax accounting, which will importantly influence enterprise's long-term development and success

Acknowledgements

This paper benefited from financial support through the National Institute of Research and Development for Isotopic and Molecular Technologies, Cluj-Napoca, Romania.

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