Adam Smith concept of the invisible hand postulates – in the wealth of Nations – (Invisible Hand, 2007) that the pursuit of self-interest of each individuals is done undoubtedly if they are left alone to do so, which interestingly also provides the well being of all. The capitalist approach of observing individuals also challenges the morale, which is taking in consideration here. Should Smith theory of ‘invisible hand’ be proven to be true, then Kant basis of obligation to promote the general good will enter in conflict with the Smith theory’s pursuit of self-interest.
As for the renowned hand-of-government concept economists argue that corporations should not be addressed as moral identities and that Smith’s views is not approved in the context. The hand-of-government argument would assume that increased profits would only benefit corporations. For that reason, societies need the presence of the government as a first aid. Hence, the need of creating consistent systems that will supervise and keep track of external activities that are performed by corporations, (Moral responsibility and Corporations, 2007).
John Stuart Mills and the injustice concept show that no justice involves the violation of the rights of some identifiable person. Ethically, on the grounds of a utilitarian point of view, Mill explains that an individual right to obtain something in the society is protected by laws and that should be no objection for an individual to posses a claim since warranty is included on that law. (Hamburger, 1961). In discordance to Kant the fact that an action can be said as right or wrong will be dependant to the entitlement that rules created provides. In the other hand, Kant’s approach remains that an action is wrong because is reasonably wrong and not because God or any Law has imposed to societies to be said wrong and finally that duties should be conducted regardless.
Further, Kant’s concept is also exemplified by atheists who see morality as part of common sense and are not guided by any other influences apart from what it is reasonably acceptable in societies. Cases of bribery and corruption usually occur between two countries that maintain very a very close relationship in the area of business dealt. This relationship induces the practice or bribery in large scale.
In a different concept of good practices in ethics David Hume postulated the Agent, Receiver, and Spectator in Moral Sense Theories. Moral agents are the entities who perform a immoral action, such as offering bribes, the receiver are potential business competitors affected by those bribes and the spectator is the person or entity who witnesses the acts of bribery (David Hume (1711-1776), Moral Theory).
Hypothetically, a case of bribery can be demonstrated as follow: Pegasus is a corporation, which provides fast communication through circuits, computer peripherals and other means of media. Pegasus International Inc sees China as a growing fast market and identifies the lack of wireless communications in this country. Willing to develop and introduce such service in great mass for the Chinese population, Pegasus initiated an internal project to put this service running. The only problem would be that China only accepts franchises of local districts, and from region by region, city by city. Implementing such service in these regions from a overseas source will require Pegasus Inc. to apply for a License, which is mainly denied for external business. (Hackworth & Shanks, 2007). The payoff required to obtain a ‘license’ has been done by unknown companies in the form of bribes, which now the Pegasus Inc. would have to decide whether it undertakes or not. The revenues for having the service introduced in China are of millions of dollars a year.
In the end the CEO of the Pegasus Inc. found easier to pay a local agent in China to obtain this license and pass it for the Pegasus Inc. so that they can start trading in the local areas in China. The example case of bribery above is of great occurrences in the business world, which can be difficult for laws and international institutions to oversee thoses practices.
In the proposed sample of corruption above, one of the solutions to the problem would have been to contacting the companies that operate wirelessly in China and propose the benefits for allowing Pegasus Inc. operating in the country. Pegasus would ethically be providing a much faster link of communication without the need of cabling, would improve the services in B2B and will also open job vacancies with higher pay than the local service providers. The opportunity for Pegasus Inc. will also arise as a form merging to the local service providers and by stating the benefits if doing so.
Ethics and morality follow two different concepts. Ethics regards the individual character including what is meant to be a ‘good person’ and is the social rules that governs and limit our conduct, especially the ultimate rules concerning right and wrong, which is called morality, (Shaw & Barry, 2001). Even though the word ethics is used mainly in academic circumstances, both words – ethics and morality have been used interchangeably in many occasions. Organisation cultures may find normal the practice of accepting gifts from suppliers, or any other business. It is of the responsibility of the leader of the organisations as ho identify what is reasonably acceptable and create official rule to limit the number of cases, which can be interpreted as bribes or corruption.
A realistic example of bribery was confirmed by Exxon when paid politicians to introduce their business objective in Italy. The amount was a staggering $59 million. (Shaw & Barry, 2001). A second case of corruption was found only after the suicide of a United Brands chairman which revealed that bribes amounting to $1.25 million was paid to a Honduran official so that export taxes were reduced.
Participating on the sharing of any unregistered income as part of bribery practices are usually not discussed in organisations. Managing directors and CEOs would (for the sake of stability) not mention such practices in their meetings of any kind. These practices occur without being noticed by the top management. However, no matter how sad it may sound, business practices overseas that may sound impossible to go well, in fact do succeed are because they are likely to have been integrated in any sort of bribery.
This is when laws that supervise the international trade must examine carefully the transactions. A good deal between two major companies from different countries or region upon the acceptance of bribery will definitely promote system of monopolies between favourable companies and subsequently the creation of Cartel.
In conclusions the conduction of bribes in foreign corporations could put out of business firms, which have laws stopping them from accepting bribes (ethics ignored). The non- participation in bribes can lead companies in a position being left out in the international trade which can result the loss of billions a year in income. However, the money made through the system of corruption are normally never taxed and therefore, not accounted as an indicative of a nation’s wealth by the end of a financial year.
The 1977 Foreign Corrupt Practices Act FCPA invigilates the US for any practices considered as form of bribes. In the history of the U.S. trading, companies used to pay off foreign officials for business favours. Since then the practice became a crime. An average of $300 million were paid to officials and the money were may have certainly be invested overseas, (Shaw & Barry, 2001)..
In short, the main issue for accepting unregistered cash is that a country loses out with financial contributions that never are reinvested in the country where the money came from. International institutions must act in a way to enforce the authentication of transactions through the supervision of reliable entities. Business ethnics can only be achieved if each individual regulates common sense, not because it is said to be right to pursue the decision but because the solution will promote a reasonable good effect in everyone.
References:
Daniels, J & Radebaugh, L, International Business, Environmental and Operations, 2nd edition, New Jersey, Pearson Education, Inc, 2004, p. 3.
David Hume (1711-1776), Moral Theory. Retrieved, June 16, 2007 from
Ehrenfeld, J, The Roots of Sustainability, MITSloan Management Review, Vol. 46, no 2, Winter 2005, pp. 22-26.
Ethics and Business, 2004. Retrieved June, 17 2007, from
Hackworth, M & Shanks, T, 2007, The Case of the Million-Dollar Decision. Retrieved June 17 2007, from .
Hamburger, J. ‘Religion and “On Liberty’, In A Cultivated Mind: Essays on J.S. Mill Presented to John M. Robson, edited by Michael Laine, 139-81. Toronto: Univ. of Toronto Press, 1961, pp 139-181
Invisible Hand, 2007. Retrieved June 21, 2007, from .
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Moral responsibility and Corporations, 2007. Retrieved, June 15, 2007, from
Shaw, W & Barry, V, Moral Issues in Business, 8th edition, United States of America, Thompson Learning, Inc, 2001, p. 4, 65, 370, 371, 373.
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