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Research on the ethical issue – conflict of interests
1.1 Definitions of key terms
Business ethics refers to the moral and ethical aspects of the practices of business (Jones, Parker & Bos 2005, p. 149), or to put it simple, business ethics is about what is right or wrong, good or bad of the certain human behaviours (Sunita 2005, p. 123). And there are various types of business ethics issues and one of them is the conflict of interests.
A conflict of interest exist when an individual must choose whether to advance the personal or the company’s interest or those of the other groups or individuals (Ferrell & Fraedrich 2011, p. 70). The conflicts of interests seems to be inevitable because for every employee, he or she would have different roles, personal roles such as sons and daughters, or parents and also roles in the companies such as role as a manager or marketing specialist, and because of these different roles, the issues of conflict of interests happen a lot in our real life.
1.2 Different situations of conflict of interests
1.2.1 Personal interest vs Company interest
The first scenario of the conflict of interest is when the personal interest runs into contradiction with the company interests. For example, one may get take bribe from the company’s competitors to assist the competitors in competing with company.
1.2.2 Non-neutral position
The second usual scenario in which the conflict of interest may probably happen when some one who is expected to be in a neutral position but some relationship has not been actively avoided. For example, one manager is going to hold a lucky draw but his families are also participating the activity. Then he would be considered as in a non-neutral position because of the existence of the relationship between he and his family which damages the reliability as an independent lucky draw activity holder.
1.2.3 Company interest vs public interest
Another situation where conflict of interests could also happen is when company’s interest run into conflicts with the public interest. For example, the CEO of a company could at the same time plays the role of a member of some non-for-profit organizations, there could be conflicts of interest when the CEO do things for the company’s interests and put aside the public interest.
2. Research question: why it is an ethical problem?
The reasons why the conflict of interests could be an ethical problem are related to the significant impacts of the conflicts of interests to the right or wrong issues in the business operations, employees behaviors as well as to the company’s culture and value developments.
2.1 Compromised obligations
Fist of all, obligations could be compromised by the conflict of interests. For example, in a very simple case, one employee accepts a quite gift from the customers or other companies which seems to be normal case, but if the gift is quite valuable or important to the employees and under such situations the conflict of interest could happen, and the employees to obligation to the company could be compromised because he or she could have some preference over the company that provides this gift. Therefore, it is true that a conflict of interest arises when an employee has a personal or financial relationship that interferes with his obligations to the company (Pride, Hughes & Kapoor 2008, p. 41). It is an ethical problem because such conflict of interests seem to be inevitable and hard to be defined and measured in the real scenarios.
2.2 Both interests could be right
When taking other interest groups’ gifts or money could be easily identified as quite wrong because employees are not expected to do so, in other situations, such right or wrong issues are not crystal clear to be identified. For example, one may need to choose between family or business when there are emergencies happening in his or her personal life while the company also needs him or her urgently to handle the jobs, under such situations, it could be said that both interests are decent and the individual have different roles to play. Therefore, when one chooses family or work as the priority, here comes the problem, it is a right choice or a wrong choice, we need to have more theories to support any ethical decision makings.
3. Literature review: deontological view and utilitarian view
3.1 Conflicts of interests in the deontological view
The deontological ethics refer to a type of moral philosophical theory that seeks to ground morality on a moral law or norm which moral agents have an obligation to conform (Kuusela 2011, p. 22). Hence the deontological ethics is considered as a duty centred ethics, and according to John Mizzoni (2010, p. 104) a central ethical rule in the deontological ethics is that we should not consider people as means but should respect them as human beings. According to this theory, in term of the topic of conflict of interests, there are three major implications that we can see from this theory: firstly, we should do the things that are right. There are many traits that are perceived as valuable or should be owned by everything such as honesty and helping the disabled, as a result, we should do these things that are right; secondly, we should not do or we should avoid doing things that are wrong. Because duties usually state some banned behaviors, for example, most company policies would have such description of the employee duty that employees should not take the bribes any groups that will affect the justice and their professionalism in the work place.
3.2 Conflicts of interests in the utilitarian view
A contrasting view of ethics is the utilitarian view. The history of utilitarian ethics could be dated back to the 18th century, one classical theory of this kind is proposed by John Stuart Mill who created the concept of Utilitarianism which suggests that the rightness or wrongness of any action is dependent entirely on the outcomes that derive from it (Parsons, P. J. & Parsons, P. H. 2008, p. 41). The idea and core value and beliefs of the utilitarian view is still unchanged today, and the theory is widely applied. And because the results are usually measured in quantity and comparisons are made regarding which result are better than the rest in term of the utility, the utilitarianism can be characterised as a quantitative and reductionist approach to ethics. There is one basic assumptions in the utilitarian theory which is that the utility of the results should be measure based on perspective of the “overall happiness”. Though the utilitarian theory or the consequentialism seems to be offer a solution to all the ethical problems that include the conflict of interest by claiming that the final results of the alternative choices could help decide which choice is the best, there are some critics. For example, as claimed by Helga Kuhse and Peter Singer (2006, p. 3), the approach adopted by consequentialism has its defects, it does not take into consideration of the nature of some behaviors because some things such as killing an innocent is always wrong regardless of how good the results could be.
According to the utilitarian view, there is no such necessity to consider whether any ethical disputes are right or wrong because the utilitarian view of point always looks at the results and how good results are rather than whether they are achieved in a right way or wrong way. Therefore the focus put b the utilitarian ethics is totally from the deontological ethics which seeks to ground morality on a moral law or norm which moral agents have an obligation to conform. To put it simple, utilitarian view takes care of the results regardless of how they are achieved. As a result, it will be a good choice while the value of the expected results will be maximized.
4. Critical discussion
From the analysis above and the literature review of two major contrasting views regarding how ethical disputes should be handles and choices should be made, we can see that there are both advantages and disadvantages by applying these two different theories in handling the various conflict of interests that we have listed above.
4.1 Advantages and disadvantages of applying the deontological view
The major advantage of applying the deontological view in handling the conflict of interest is that it ensures that employees will fullfill their roles as managers, vice presents, common staffs to the company in term of royalty to the company for example. But the problems of apply this theory are also siginificant, because of the focus on doing the right things, it may be difficult to close the deal and bring immediate work efficiency and effectiveness to the company as whole. For example, one may adhere to the rule that one should not provide or receive bribe, then under the influence of some hidden rule in the industries, the company may probably lose a lot of oder if they do not take into consideration of these rules which could be influential and powerful to the immedate business success. And when a company is going to go through bankrupcy, it would be meaningless to talked about duty any more. Another problem is that this theory does not address one of the example that we have disscuss in which both interests in conflit could be necessary and needed by an indivdiual. It does not provides suggestions regarding how choices should be may and whose interest should be put as the top priority.
4.2 Advantages and disadvantages of applying the utilitarian view
In term of advanrages, the utilitarian approach makes sure that the overall happiness should be put as priority and also once adopted it involves very few disputes in deciding the choices because the choices according to the approach is in many cases very clear. But the disadvantages of applying the utilitarian view in handling the conflicts of interests are also very bad. On one hand, it encourages people to treat other people as means rather than human beings who should be respected, and secondly, it will allow pepole to engage on some things very bad or widely considered wrong behaviors in order to achieve the overall happiness.
We can conclude that each of the two approaches have advantages and disadvantages and the best solutiion could be to apply these two approaches when appropriate rather than using only one method.
Ferrell, O. C. & Fraedrich, J. 2011, Business Ethics: Ethical Decision Making & Cases. Natorp Boulevard Mason, OH: South-Western Cengage Learning. p. 70
Jones, C., Parker, M. & Bos, R. 2005, For Business Ethics. New York: Routledge. p. 149
Kuhse, H. & Singer, P. 2006, Bioethics: an anthology. Oxford: Blackwell Publishing. p. 3
Kuusela, O. 2011, Key Terms in Ethics. New York: Continuum International Publishing Group. p. 22
Mizzoni, J. 2010, Ethics: The Basics. New Jersey: John Wiley & Sons. p. 104
Parsons, P. J. & Parsons, P. H. 2008, Ethics in public relations: a guide to best practice. London: Replika Press Pvt Ltd. p. 41
Pride, W., Hughes, R. J. & Kapoor, R. 2008, Business. Natorp Boulevard Mason, OH: South-Western Cengage Learning, p. 41
Sunita 2005. Politics, Ethics and Social Responsibility of Business. New Delhi: Swatantra Bharat Press.