Essay Sample on Business Ethics: Essential for Companies to Understand & Be Responsible to Society

Introduction

Business ethics is one of the essential and specialized studies that companies need to understand them sufficiently to differentiate what is wrong or right in their day-to-day operations. A company needs to be smarter through an understanding of moral standards by its management to apply in running their institutions, deciding business policies, and modifying their behavior. Business ethics is not sufficient; the companies have to be responsible to the society it operates. This can be done through knowing the moral evaluation of the impact of their business in the community; this is done through corporate social responsibility. The paper analyzes, characterizes, and lastly assesses the article written by Hubert Horan in 2019 concerning its critics on Uber's operations, which the writer considers unethical and socially irresponsible. The paper incorporates the perspectives of both business ethics and corporate social responsibility to analyze the arguments of Huber Horan and then uses ethics and CSR theories to categorize the arguments.

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Horan's arguments contain aspects that are significant in business ethics and corporate social responsibility. The business ethics practices require firms not to cheat in their operations. The Horan argument that Uber recast its past results concerning profits and losses is unethical. The argument is an act of cheating by the company is trying to maintain good public figures to attract investors (Horan, 2019). The misstatement was intended to deceive investors into thinking the company is making a profit from its current operations. But in the end, when the company will be unable to pay the investors required returns, and then the company will be socially irresponsible to its stockholders.

Furthermore, the other important aspect is the responsibility assigned to management to be the custody of corporate social responsibility. Every management or executive of an organization should take the role of being responsible to the society and the company stakeholders. For the case of Uber, as illustrated by Horan, the company has shifted the vehicle costs to its drivers, which is not easy for the drivers to manage the expense (Horan, 2019). In this way, the company has not become responsible for its drivers as they have given the burden of maintaining and insuring the vehicles. The company has suppressed the drivers pay below the required minimum pays which is against the corporate social responsibility guidelines

The argument involving the artificial market power of Uber is unethical in the business setting. For a firm's efficiency and production to be considered ethical, the increase in productivity and efficiency was done to assist the company shareholders and not the company stakeholders. Most of Uber's improvements in its margin are due to the cut in the payments made by drivers despite their entry resulting from increasing in drivers demand.

Business ethics and social responsibility among companies are a constraint to their operations. The constraint is seen where if business strictly follows the ethics and become responsible to its stakeholders, there will be small improvements in the company margin. The improvement in Uber's margin, according to Horan's argument, was due to the company's act of not following ethics required in business. Also, not being socially responsible to its drivers, as they had to increase their output at the expense of drivers and raising the fares charged on passengers.

The argument that Uber has not solved the problems in the industry and has not increased productivity in the taxi sector implies the idea of corporate social responsibility (Horan, 2019). There is a need for companies to be responsible for what they do to and ascertain how it affects the external surrounding which is the effect on the whole industry it operates. Through charging higher costs, Uber has not assisted its customers, and it has destroyed its business growth potential.

In stockholder theory, the management of a company acts as agents of the owners of shares. Also, they work towards profit maximization as they put minimal moral obligations and fulfilling contractual and legal obligations to other companies' stakeholders. The argument that fits into this theory is the one argues that the investors of Uber seek to exploit the artificial market power in aim to maximize their returns (Horan, 2019). The strategy used the investors are not based on coming up with a company that makes a profit in a market that is more competitive by employing efficiency. The use of massive subsidies for growth rather than making more profits to pay investors was against the theory of stockholder. The theory focuses on making more rate of returns to investors through higher profits.

In stakeholder theory, the work of management is to satisfy all participants of the company by ensuring they balance the interests of both the stakeholders and shareholders of the company. The aim is to maximize the collective value or the aggregate benefit of all the business participants. The corporate social responsibility improves the total wellbeing, and the gains on welfare outweigh the shareholders' losses. The argument of Horan that is categorized into this theory is the one concerning higher costs of Uber compared to the competitors it displaced in the business. The theory advocates for the distributed benefits of the company to its stakeholders. But Uber has high costs diverted to its drivers, becoming a burden to them, and the payment the drivers receive is very low, and the passengers fare is high (Horan, 2019). The operations of the company do not satisfy its drivers and employees which makes the company not socially responsible.

The concept of Libertarian takes the argument that the narratives of Uber use Libertarian propaganda. Libertarian as a concept in business ethics requires companies not to interfere with market operations. Also, they have to offer justice through respecting stakeholders' negative rights, and companies have an affirmative duty to enhance the capacity of humans. Uber's top spending priority is public relations and manufactures its public image artificially and convinced both journalists and politicians. The company manipulated media to broadcast and push forward the narrative that the company is a successful innovator in its industry.

The social contract theory takes ethics as a solution to collective action problems. It unites the concept of morality and collective action problems seeking what is right or wrong and what is helpful to everyone in a business. From the argument that Uber is not able to get sustainable profit is a collective action problem. However, the social theory tries to address that problem, as without sustainable profit the company cannot meet the expectation of all its participants.

The strength of the arguments is seen in one of the arguments involving the unavailability of Uber to make a sustainable profit. The company offer subsidies to cut the costs of their operations which makes it hard to make a sustainable profit (Horan, 2019). The subsidies were to help in growth, which allows investors in the future at the expense of other stakeholders. Therefore, Jensen through agency theory, holds that shareholders give up products or fixed payments to get profit. Also, at the same time, the other stakeholders give up profit for a product or fixed payment; here, firms do not maximize more than one thing.

The strength of the argument is also seen where the costs of Uber are higher than its competitor's costs that the company displaced. The company is not socially responsible for its workers as they pay drivers lower pay. Also, fare charged to passengers is higher which does not go in line with what Bowie said. Bowies argued that to be ethical in business means considering all the interests of every stakeholder. Also, companies should include stakeholders in decisions that affect them without prioritizing the interest of one of the stakeholder groups.

Donaldson and Wash demonstrated business ethics and corporate social responsibility through combined duties, fairness, and outcome-based approaches to corporate social responsibility as a benefit to the stakeholder. The argument that Uber has not addressed the problems in its industry and has not improved the productivity of taxi shows the weakness of Horan arguments. This is because any company is primarily established to help its stakeholders and not to raise the overall industry performance. Heath supported the critique of the stockholder on the stakeholder theory, and he holds that market failure should not be exploited through cutting costs and displacing to other stakeholders.

Conclusion

In conclusion, the corporate social responsibility through its codes makes a positive difference in businesses and a company performing responsibly and ethically improves the operations of a company in the long run through addressing the interests of all stakeholders including the company stockholders.

Reference

Horan, H. (2019). Uber's Path of Destruction. American Affairs, 3(2), 108-133. Retrieved from https://americanaffairsjournal.org/2019/05/ubers-path-of-destruction/