This piece of work looks at the importances to the stakeholders that the ethics of the CEO and organization matches with references to Bill Gate during his tenure as CEO at Microsoft. Relevant academic literature such as ethics, business ethics, corporation, stakeholders were all explained however the reasons buttressing the importance's to the stakeholder that the ethics of the CEO and organization matches were given.
Ethics
This is a branch of philosophy that covers a wider range of things which have significant importances to life. It is about what is right or wrong, what is good or bad, fair or unfair, responsible or irresponsible, obligatory or permissible, what is goodness itself is, the ability of making moral choice, about a way to live a good life. Ethic tackles some of the essential question of life, which is how people should live and behave in particular situation. (BBC 2009)
Ethics draws it strength from the social environment, laws, norms, religion, established principles and the individual conscience. There are various ethics in different area of practice like medical ethics, legal ethics, business ethics, archeological ethics, accounting ethics, banking ethics, building ethics etc but we would concentrate on business ethics.
Business ethics
In today's world ethics in business have gain increasing popularity compared to the 80s and 90s. There is much pressure on businesses to act ethically. Ironically business are termed to a warfare of which the strongest survives, however it is pertinent to note that in battle any opportunity to cause as much damage as possible is utilized and the aim is to win the battle. So bringing the two words ethics and business together can be argued to be placing two incompatible nouns together.
Andrew crane et al 2007 argued that business ethics is "the study of business situation, activities and decisions where issue of right and wrong are addressed". It can be used descriptively when it is refer to the actual practice inherent in the business and can also be normative when it prescribes or outline how people should behave in a business situation appealing to some ethical standard. Joseph R. Desjardins et al 1990 argued that business ethics is "a philosophical study of both the mores and rules that are actually operating in business and the normative standards that are used in evaluating these practice". However business ethics is very sensitive and complex consisting of fundamental moral value and standards of behavior that make up the foundation for people in an organization in the process of decision making and interaction with stakeholder. Vernon R Loucks, Jr. (1987)
Corporation and stakeholder
Corporation is a legal form of organization owned by some group of individuals, charted by the state primary for business purpose however it is pertinent to note that corporations stand entirely on its legal status and ownership of assets. Joseph R. Desjardin et. al 1990
Legally a corporation is regarded as a person different from the owners and can sue or be sued. It is a limited liability which implies that in case of a winding up or liquidation, the owners only loses their contributions to the corporation which buttresses the point that the corporation is a separate entity from the owners. It is also assumed that a corporation is a going concern which also implies that it will continue operation for a foreseeable future.
The structure of a corporation is such that owners who have invested capital for profit delegate the control of the corporation in terms of operation to a team of managers who act on their behalf legally, a kind of principle delegating to an agent and are expected to run the corporation efficiency and effectively with the resources avail to them by the owner primarily for profit purposes. These managers now seek the cooperation of another group (employees/workers) which are hired at a cost to enable them produce goods or services which would be sold in the marketplace. In addition to the employee hired by the manager there also get inputs from supplier in order to produce goods or services. Corporations also pay a certain amount of their profit as tax to the government. The bottom line is there are lots of groups internally and externally who are affected by the achievements of an organization, these groups can be called stakeholder. Joseph R. Desjardin et. al 1990. However Freeman R. Edward (1984) argued that stakeholder are groups who can affect or is affected by the affairs of an organization. Andrew Crane et al 2007 argued the stakeholder to be groups or individuals who is either harmed by, benefits from or whose rights is violated or respected by a corporation. It is clear that the stakeholders have an interest in the corporation and there are as follows: competitors, government, customers, employees, shareholders, suppliers, host communities, trade unions etc.
Corporation as an ethical responsible agent
Ethics is all about right or wrong, what is good or bad, the ability of making moral choice, about a way to live a good life. It is pertinent to say that ethics is basically for human being living. The problem now is that a corporation though in the eye of the law is a legal entity separate from the owner, is an inanimate subject, so how do you ethically hold it responsible for its action? However going to the definition of what is a corporation; it is a form of organization opened by some group of individuals, charted by the law, primary for business purposes. Corporation can be said to be an idiot machine of which is operated by it operators. It is a medium used to achieve a means, which implies though a corporation is inanimate; it is fully packed indirectly with lives. It is essential to note that there are set of belief, values, right or wrong which can be said to be organizational culture formed by individuals that form the organization or people there delegate to run the organization on their behalf. This justify though a corporation looks inanimate it is actually living and has a way of doing business (culture). Organization normally have different hierarchy like the chief executive officer, general managers, managers of various department etc. this make up the management team who collectively contribute to the organization culture. It is also essential to note that in large corporation like Microsoft, no single individual can wholly influence the organization culture but it is a collective process and the majority value and belief dominates the organization culture. Joseph R Desjardin et al 1990.
Background of bill Gate
Bill gate is currently the chairman of Microsoft Corporation a software company he founded in 1975 with Paul Allen. Since founding the company from 1975-2008, he had held position of CEO and software architect on which on 1st July 2008, he resigned the position of CEO of Microsoft. He is been admired by many for his philanthropic nature as he has pledge lots of money fighting killer diseases like malaria, tuberculosis through the bill and Melinda gate foundation.
Microsoft is being criticized of its business tactics which are considered to be anti competitive and exploitation of monopoly power in the marketplace of which some of these cases have been upheld by antitrust law courts in the US and Europe with severe financial penalties inflicted on it. The corporation continues to face accusation of poor and unfair tactics in its style of doing business.
How important is it to stakeholders in a company that the ethics of the CEO matches those of the organization?
Knowing full well that stakeholders are affected by an organization directly and indirectly, it is very essential that the ethics of the CEO who is the highest ranking corporate officer matches those of the organization because of the inherent benefit below:
Good reputation
This is an essential intangible asset to an organization. It can be said to be the perception, opinion in the subconscious mind of the people as a result of experience with the organization's way of doing business. It is the same as having a good name of which offers a fantastic competitive advantage to an organization, no wonder it is jealously guarded by organization all over the world. Lynch (2006) argued that it is a strategic standing of an organization in the eye of its stakeholders availing the organization opportunity to communicate favourablely about itself which provides a real competitive advantage rivals cannot match. Most importantly, a loss of reputation can be very devastating to the organization as this might result to boycotting of its products or services, massive drop in its market share price, bad publicity which can distort the cause of the organization in terms of profit making. Laura Hartman 2005
In the case of Microsoft, it is clear that it's close to a monopolistic organization that jealously stamps its presences in the marketplace through cutthroat means exploiting its monopolistic power to limit competition of which these allegations have been upheld in antitrust law suits in America and Europe. Truly the business world is a battle field of which Microsoft is doing all it can do to protect its interest and remain a monopolistic company which can be argued to be unethical, however on the other side is Bill Gate a well known philanthropist that have donated millions of pounds to charity sitting as the CEO of the organization. It is very important to all stakeholders the ethics of Bill Gate as the CEO matches those of Microsoft the corporation because this would give it a significant competitive edge and advantage compared to what it might have presently. The company might think it is a monopoly which implies that the consumers have no choice but the day an alternate that can match the products of Microsoft comes up, it doesn't matter the price, the company would loss a significant market share.
Maintaining investors confidences
Investors are individuals, group of individual, institution that invests capital in a corporation for the purpose of reaping a reward (profit). There can be called the shareholders of a corporation as well as stakeholders.
In the present world situation nobody wants to be associated with bad ethics, talk more of people that have "hard earned money" to invest. In fact no sane investor would invest fund in a business with moral issues especially where there are alternatives. Even those that have already invested before these issues would probably be looking for a way of bailing out of the investment, which will adversely affect the market share price of the corporation.
In the case of Microsoft despite the fact it is a monopolistic company, it has lost a significant number of investors as a result of its style and methods of doing business which is considered by many as being unethical but on the other side Bill Gate a well known philanthropist sit as the CEO of the corporation, quite ironical. It is very important for all the stakeholders that the ethics of the CEO and the organization matches as this will instill confidences in the investors maintaining them and even attracting more investors and eventually earn public acceptances and recognition for the organization as being an ethical conscious organization which can be a competitive advantage to the corporation. Norman M. Scarborough et at 2009
There are arguments that just like the corporation being an inanimate subject, the CEO is a position within the organization which have specific roles and responsibility to the organization legally, and ethics have nothing to do with this position. Well based on the fact that it is a position (inanimate) and anybody that sits on this position, his/her personal ethics shouldn't disrupt the fulfilling of the duties and responsibilities to the organization's goal. Legally this is correct but it is pertinent to note that a human being sit on that position which implies that the position is quite alive and aware of ethics irrespective of its legal responsibilities and duties to the organization. However with the increased pressure on businesses to act ethically, it is essential to all stakeholders that the ethics of the CEO and the organization matches as this would give the organization a competitive advantage in the market place.
