Business and management ethics
Normative Philosophy in business ethics is focused upon the analysis of the behaviour of an organization with respect to a set standard as argued by George D. Chryssides and John H. Kaler (1993) . This method even though argued to risk the unreal philosophy by some authors is extensively used to analyse the behaviour of an organization for ethical and un-ethical behaviour. In this essay the normative theories are used to compare and contrast an ethical fund and un-ethical fund. For the discussion purposes, Ethical funds from Canada and Vice fund from United States of America are analysed using the theories of Normative Philosophy. A factual evidence of both the companies is first presented to the reader followed by the critical analysis in the form of discussion to the reader. This is followed by the conclusion on which the ethical fund and the un-ethical fund are identified based upon the results from the analysis.
2: Company Information
2.1: Ethical Funds
This company is a Canadian mutual fund investment company that pioneers in providing a wide range of mutual fund solutions to its customers in Canada. The company details extracted from the website (www.ethicalfunds.com) is presented to the reader below.
President & Chief Executive Officer: Don Rolfe
Year Formed: 1992 (The first Ethical Fund® (Ethical Growth Fund®) was launched in 1986)
Assets Under Management: $1.8 billion*
Number of Unit Holders*: 180,000
Number of Employees 243*
*As at February 2005
From the overview on the company annual report (2004) it is also clear that the company provides mutual funds solution to the customers with focus upon value added services and optimum rates of interest to provide maximum benefit to the clients. Furthermore, the policies of the company reveal that the company is not only interested in socially responsible investment but also explicitly stated that the investments will not be made in the following categories of business
Tobacco: The Company will not invest in the companies under the category of Tobacco manufacture and sales.
Military: Under this category the company will not invest in organizations that are involved in the manufacture weapons of destruction to support military action.
Nuclear: The company will not only refrain from investing in organization that employ nuclear reactor but also refrain from investing in companies that are involved in any for of nuclear business.
2.2: Vice Fund
Vice Fund is an US based mutual fund organization that provided investment advice to its clients through the long-term growth of the capital. The key facts about the organization extracted from the company’s annual report (2005) are as follows
President: Dan Ahrens
Assets Under Management: $31.482 million *
Number of Unit Holders*: Not Available
Number of Employees Not Available*
*As at February 2005
Unlike the Ethical Funds, the Vice Fund invests upon any organization irrespective of the nature of the business. The company also provides services through other subsidiary organizations like Generation Wave Fund.
The company also does not provide a standard set rate to the customers and does not take the liability for any minor changes in the market.
3: Discussion
Andy Crane and Dirk Matten (2003) argue that the normative analysis of the organizational behaviour and business ethics comprise of three essential tools (or theories) as discussed below
3.1: Objectivism
Andy Crane and Dirk Matten (2003) say that the objectivism whish is the synonym for ‘epistemological realism’ mainly corresponds to the factual analysis of the numbers (i.e.) the analysis of the company’s activities and their transaction policies that establish a logical track. This makes it clear that the Objective approach of the normative analysis is predominantly concerned with the ability of the organization to establish ethical behaviour through their business process and policies embracing the business.
In the light of the above statement, the insight into Ethical Funds makes it clear that the company not only provides a wide range of financial investment solutions but also discloses the information on the rate of interest and the returns guaranteed for the investment (if applicable). Alongside, the company’s annual report also justifies that the shareholders were provided with the complete information on the financial performance along with the return from the investment on every organization by the company during the financial year. Also it is clear from the company annual report (2004) that it provides services under only one business name. This makes it clear that the company is adhering an uncomplicated method of business management.
Vice Fund on the other hand provides financial investment solutions under two trading names namely Vice Fund and Mutuals.com This method of providing services under two different trading names obviously increases the complications in the management eventually leading to un-ethical business activities between the organizations. Also, the company does not disclose all the relevant information to the shareholders and investors thus making the business process more translucent rather than transparent method as in the Ethical Funds above.
3.2: Subjectivism
Subjectivism unlike, its counterpart above mainly concerns with a company’s external dealings like for example the kind of organizations that the company invest upon and the extent of risk etc. This also includes the organization’s responsibility to account for liability and protect the investment by the investors. This makes it clear that the subjectivism approach of the normative philosophy not only evaluates the external elements that influence the company but also provide the bigger picture on apprehending vital flaws in the business that leads to un-ethical business management. This makes it clear that this theory actually analyses the moral philosophy in a normative manner (i.e.) the subjectivism approach provides a logical approach to analysing the moral philosophy attributes of the business.
The overview on Vice Fund’s investment strategies has revealed that the company invests upon any organization only focusing upon the rate of return from the investment rather than considering the nature of the business. This apparently increases the risk associated with the business and the investments of the organization. For example the investment in an organization in military sector will result in a loss when it becomes the prime target for terrorist attack. Also, the investment by the company in casinos and gaming organizations without having specific policies in the investment has increased the level of risk to a very high level.
Furthermore, it is clear from the exploration into the company’s website which states that the organization will not take any liability for loss due to a specific investment. This makes it clear that the company’s adherence to the business ethics is minimal or negligible. The above arguments also justify that the risk involved with the investment by the general public on this company is very high.
The factual representation of the company Ethical Funds on the other hand has revealed that the company adheres to strict policies on investment. This is not only as part of the social responsibility of the organization that attributes to the moral philosophy but also to the normative philosophy due to the fact that the company evaluates the risk associated with the investment. This makes it clear that Ethical Funds is not only operating at a lower risk level but also value the investment of the customers by refraining from investing on business sectors that involve high level of risk.
Furthermore, the company also takes special interest in investor benefits and also eliminates the liability through avoiding risk-involving investments. The rate provided by the organization are also competitive to that of the vice Fund counter part.
From the above arguments it is clear that the Vice Fun is not following an ethical route to the business management in the market.
3.3: Monism and Pluralism
The normative philosophy of analysing the business includes the Monism and Pluralism approach when the organizational policies on a single concept have multiple dimensions (i.e.) when the organizational policies have different sections that influence upon the same concept or terms and conditions. This approach as argued by James Surowiecki (2005) provides a profound analysis on the hidden clauses of the business terms that are essential to be identified in order to establish the validity of the business. Even through the hidden clauses appear¬ to be part of the moral philosophy, the fact that the information as such when analysed without performing a qualitative analysis (moral) justifies the approach under normative philosophy.
An investigation into the company policies with respect to the investors and investment by the organization reveals that the company adheres strictly to its policy with respect to the investment. It is also clear that company through the risk management by strictly refraining from investment on Nuclear, Tobacco and Military sectors of business justifies that the company’s policy on investment is strictly controlled by more than one conditional clause. Since this is for the company to invest, the funds deposited by the investors of the organization, this plural form of sections under one condition makes it clear that the organization is trust worthy for investment.
On the other hand, an insight into the Vice fund reveals that the company doe not have any set rules to follow in terms of the investment. This is clear from the varied range of company funds that comprises its investment. This makes it clear that the company’s high risk approach is also risks the investment by the clients in the organization. This singular approach where a set of policy framework is essential makes the company prone to risk.
Furthermore, the company’s multiple conditions on the investors end where it takes no liability for the loss on investment, further shows the plural approach of the organization in preventing the any liability to the customers.
4: Conclusion
The discussion on the two companies has revealed that Ethical Funds is more subjective, has an objective approach to the customer relations as well as the overall business and above all adheres pluralism in the investment of the money invested by the investors to the funds. Furthermore, it is also established that the company adheres to strict rules and regulations whilst performing the business transaction and also provides comprehensive information on the company’s policies, assets and other details.
It is also established that the Vice Fund the counterpart organization in the analysis not only involves high level of risk in the investment eliminating objectivism as well as the subjectivism through the high level of risk involved in the investment by the customers rather than accepting all or some of the liability. Furthermore, the pluralism established in the terms and conditions with the investors further makes it clear that the company is not adhering to healthy business methods.
It is also proved that the normative analysis of the business ethics adhered by an organization not only provides consistent results but also provides clarity in the discussion through the use of justifiable information to derive upon a valid decision.
Thus to conclude this report, it is clear that the Vice Fund is explicitly un-ethical in nature whilst the Ethical Funds is explicitly ethical in nature.
5: References:
Books
Andy Crane and Dirk Matten (2003), Business Ethics, UK: Oxford University Press
George D. Chryssides and John H. Kaler (1993), An Introduction to Business Ethics, UK: International Thomson Business Press
Journals and Reports
Annual report (2004), Ethical Funds, Canada
Annual report (2005), Vice Fund, United States of America
James Surowiecki (2005), The Wisdom of Crowds, UK: Abacus
