Business Ethics reflect in the activities and mindset of corporates, compel them to operate responsibly and within the bounds of moral constraints. These also dictate the behaviours and policy responses of businesses in difficult ethical situations and indeed form the basis for good corporate governance practices.
In August 1970, Ford Motors began producing the Ford Pinto with a public commitment that it would cost exactly $2,000, to enable it compete with foreign companies that then dominated the market for subcompact cars. The product was rushed and during crash tests, it was discovered that 8 of 11 Ford Pintos suffered potentially catastrophic gas tank ruptures and other safety defects. But the cost-benefit analysis of using the current gas tank was $49.5million and including safety features was $64million. Ford decided that the cost to strengthen the gas tank integrity outweighed the cost of deaths and injuries arising therefrom and chose not to upgrade the gas tank with safety features, thereby placing profit over people.
The application of ethics ensures that business is not tunnel-visioned to profits alone but takes into consideration the treatment of shareholders, employees, consumers, suppliers, competitors, the environment, society at-large, regulators, and all other stakeholders. This in turn fosters employee productivity, good corporate social responsibility practices and investor confidence.
National Ethics clearly have a wider application and can be defined as morally acceptable standards of behaviour applicable within the bounds of a country. Section 23 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) provides that, “The National Ethics shall be discipline, integrity, dignity of labour, social justice, religious tolerance, self-reliance and patriotism”. National Ethics can be a legal framework spelling out acceptable moral conduct for individuals and organisations and they can also be unwritten moral standards, beliefs and ideals shared by members of the society, the sum total of which translates into the way individuals and businesses are expected to conduct themselves.
National Ethics and Business Ethics should intersect at some point as the world of business does not exist in vacuum. Businesses exist within society along with its values, culture and norms. Ethical business practices are influenced by global best practices and the nuances of each organisation are reflected in policies tailored to meet the organizational peculiarities.
Given the correlation between these two sides of a coin, can business ethics possibly exist outside national ethics? In Nigeria, there is an Ethics and Value Compliance Office, established by the Federal Government to promote National Ethics, raise moral standards, abolish corrupt practices & abuse of power. Additionally, on the 19th of August 2020, the Federal Executive Council (FEC) approved the National Ethics and Integrity Policy which outlines basic principles and values that obligate Nigerians and all who reside within Nigeria to commit to uphold the core values of Patriotism, Professionalism, Personal Responsibility, Integrity, Voice and Participation, National Unity and Human Dignity. In the United States of America, the Principles of Ethical Conduct regulate the activities of Government Officers and Employees supervised by the US Office of Government Ethics. These reflect both countries deliberate attempt to institutionalise and codify National Ethics.
Whilst recognising the importance of written national ethics, one cannot but acknowledge the fact that National Ethics permeate our collective standards of morality and are reflected in attempts by both the private and public sectors to prevent ethical misconduct and promote accountability. On the part of government, some of these attempts include the establishment of integrity and ethical watchdog bodies (EFCC, ICPC). Informal National Ethics are the foundation of promoting ethical considerations through regulations, corporate governance considerations, labour law protection, consumer protection laws etc. We see a focus on responsibility and transparency in the Nigerian Code of Corporate Governance (NCCG) which was introduced to ‘promote public awareness of essential corporate values and ethical practices that will enhance the integrity of the business environment.’ The Code requires that all organisations be committed to professional business and ethical standards by formulating a Code of Business and Ethical Conduct (COBEC).
Thus, National Ethics, in any form, must exist for Business Ethics to thrive. However, where codified standards are not in sync with reality, it is difficult for Business Ethics to thrive. According to the World Economic Forum’s Global Competitiveness Index 2017-2018 – ranking Nigeria 125th/137- the most problematic factors for doing business in Nigeria include corruption, inefficient government bureaucracy, crime, theft and poor work ethics in the national labour force. Bribery, corruption and general instability of policies mirror an erosion of National Ethics, such that even where there are regulations encouraging good Business Ethics, abysmal implementation, corruption, lack of patriotism and a myriad of issues trump good Business Ethics. It would appear that the incentives for practicing good business ethics are not domiciled with government, but reside with the respective organizations, guided by their intrinsic values. Business Ethics may very well thrive without codified National Ethics, as businesses if properly incentivised have the capacity to self-regulate. However, it is highly unlikely for business ethics to thrive in the absence of informal National Ethics, as the general unethical slant of the nation is likely to choke efforts to do the right thing.
Bisi Adeyemi is the Managing Director/CEO, DCSL Corporate Services Limited. Kindly forward comments and reactions, if any, to badeyemi@dcsl.com.ng