Ethical Principles in Business

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Table of Contents

Confucianism
Moral Sensitivity
Overconfidence
Confirmation
Mindfulness
References

Confucianism

Confucianism ethics is based on the importance of gaining a strategic organization. According to Confucianism, alignment between the company’s methods and person’s conduct is significant for attaining the unanimity of the group. Three dimensions of eligibility are necessary: between people, between employees and workers, and between business strategy and atmosphere (He, 2011).

The case of DoCoMo, a Japanese company, is an example of the beneficial application of Confucianism (He, 2011). Uncertain and quickly-changing market demands to employ resilience and speed while making decisions. DoCoMo’s success was based on the quick design of a social network. The most important factor contributing to the company’s high achievement was the high rate of integration and value reflection the company had with its partners (He, 2011).

In my opinion, the morality of Confucianism is justified. This ethical principle allows the companies to achieve high results both within a firm and with the partners. The integration allows business partners to achieve the aims and responsibilities and establish high rates of engagement. Such an approach makes the employees within a company closer and leads to better alignment with external partners.

Moral Sensitivity

One of the components of moral behaviour is moral sensitivity: the ability to detect an ethical problem, including how one’s actions will influence other people. This principle takes its roots from Kantian’s ethics and deontology and presupposes, giving priority to moral duties rather than results (Thomas, 2015).

In Brook and Christy’s study (2013), it is mentioned that business school students are inclined to participate in unethical activities if that may enhance their business achievement (Brook & Christy, 2013). However, the importance of moral sensitivity is emphasised by many professionals. Parrish (2016) mentions the case of a man who has four different account books: for his family, bankers, the Internal Revenue Service, and the last one reflecting the real situation (Parrish, 2016). The author considers it time-consuming and costly, let alone unethical.

I consider the principle of moral sensitivity an integral part of any business. However, popular the company might be, if it loses trust, it loses everything. Thus, I find ethical behaviour and thinking about the impact of one’s actions on other people a crucial element of success.

Overconfidence

The principle of overconfidence involves the CEOs having too much trust in their power, which leads to adverse outcomes for the companies. The most common result of overconfidence is the failure of merger decisions (Malmendier & Tate, 2008).

As the research by Chen (2010) shows, the cases of CEOs being overconfident bring adverse outcomes for the companies. There are two basic explanations for the narcissistic conduct of CEOs: prejudices in information mechanism and consequences of unprejudiced subjective mistakes (Chen, 2010). Thus, CEOs’ decisions may be based not only on the desire to increase profits for personal benefit but also on the misinterpretation of the real situation (Chen, 2010). While overconfidence sometimes brings positive results, in most cases, it leads to adverse outcomes for the company’s financial state and future reputation.

I find overconfidence a negative strategy as it brings losses to the firms. Overconfident leaders do harm not only to themselves but to whole corporations. Such conduct puts many employees in unfavourable conditions. Therefore, overconfidence is an unethical principle.

Confirmation

Among the negative business approaches, there is confirmation bias. This tendency involves a strong belief in the information confirming one’s initial position rather than the information contradicting it.

Warren Buffett is a good example of avoiding confirmation bias (Dooley, 2013). In order to bring the best outcomes for his investments, Buffett suggests two options. First, one should be conscious of confirmation bias and admit that one’s opinion may be overshadowed by it. Second, one needs to look for and perceive the information which contradicts to one’s current ideas (Dooley, 2013).

Confirmation bias is an unfavourable approach as it disables the leader of trying new methods which may bring positive outcomes. I would not apply this method as it would diminish opportunities to succeed. A strong leader should be ready to experiment and seek for best solutions. Confirmation bias is the opposite of overconfidence. While employing the latter means too much belief in oneself, applying the former shows too little faith in one’s power, which is inevitably negative for the company.

Mindfulness

Mindfulness is one of the key aspects of renewal. While it may sound too delicate to be a component of leader’s strenuous activity, mindfulness, in fact, is imperative for maintaining resonance. Concentration involves being completely aware of one’s self, of others, and of the circumstances surrounding the person (McKee, Johnston, & Massimilian, 2006).

A good illustration of the benefits of mindfulness is the success of Roberto Nicastro, the CEO of UniCredit Banca in Italy (McKee et al., 2006). At the beginning of his career, Nicastro noticed that being a leader could be aggravating and isolating. The burden of obligations and a constant need to impact people made Nicastro think that the pressure was getting overwhelming. However, he did not want to be impacted by “sacrifice syndrome” leading to fatigue and prostration (McKee et al., 2006, p. 1). Thus, Nicastro employed mindfulness by being “awake and aware” and continuously paying attention to himself and the events around him (McKee et al., 2006, p. 1).

I find this principle rather beneficial as it saves the leader from burnout and makes successful work possible.

References

Brook, C., & Christy, G. (2013). Doing right in business: can action learning develop moral sensitivity and promote ethical behaviour? Action Learning: Research and Practice, 10(3), 214-229.

Chen, S. (2010). The role of ethical leadership versus institutional constraints: a simulation study of financial misreporting by CEOs. Journal of Business Ethics, 93(S1), 33-52.

Dooley, R. (2013). How Warren Buffett avoids getting trapped by confirmation bias.Forbes. Web.

He, N. (2011). Case study on the influence of Chinese traditional philosophy to the enterprise management. Journal of Management and Strategy, 2(3), 73-76.

Malmendier, U., & Tate, G. (2008). Who makes acquisitions? CEO overconfidence and the market’s reaction. Journal of Financial Economics, 89(1), 20-43.

McKee, A., Johnston, F., & Massimilian, R. (2006). Mindfulness, hope and compassion: a leader’s road map to renewal. Ivey Business Journal, 70(5), 1-5.

Parrish, S. (2016). The profit potential in running an ethical business.Forbes. Web.

Thomas, A. (2015). Deontology, consequentialism and moral realism. Minerva – An Open Access Journal of Philosophy, 19, 1-24.

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