How to Improve the Business Environment

The concept of social legitimacy is based on the premise that business relationships between a company and a particular stakeholder will not irresponsibly damage the legitimate interests of other stakeholders. Legitimate is used in a broader sense than legal. It implies an entitlement which is recognized by others as correct.

Justification

Justification means that the action is acceptable to both affected and interested parties. Very often the affected party is being overlooked.

Confidentiality

Despite the need for openness, in some areas, such as customer data, employee data, citizen data and others, confidentiality is crucial. It is a source of added value to these groups.

Sincerity

Sincerity excludes pretending and leads to doing what is right, not only is what dutiful. It covers also honesty, respect for others and adherence to promises.

The importance of the above mentioned pillars is interrelated and changing in different situations. Within the democratic and market reforms in post-totalitarian countries, these pillars themselves are being built / re-built. In the transition and adjustment periods, there may be tensions or even conflicts among individuals pillars. The most problematic relations are between legality, legitimacy and justification. We may assume that the reconstruction of the entire legal system and functioning of courts is at the core of this disharmony.

Responsibility (accountability) is another related concept which needs further specification. In the context of building the national integrity system we are not concerned with the so called causal responsibility which may be characterized as a relation between one event and another when the former causes or helps cause the latter. We should focus on moral (personal or collective) responsibility when ones role is defined by virtue of moral, legal or some other sort of rules. In business ethics debate, a considerable attention has been paid to the problem whether collectives such as nations or formal organizations may bear responsibility. There are some very influential critiques of collective/corporate responsibility arguing that corporations and other formal organizations are at best legal but not moral entities. They can be held legally liable, but only human beings have moral responsibility. Among the main arguments for the existence of corporate responsibilities the following ones can be mentioned: A firm (an organization) is qualitatively different from an individual and other entity such as community or country. Since the organization makes decisions and takes actions, it can be qualified as an actor. Its actions affect people, and these actions can be evaluated from a moral point of view. A company or organization is capable of moral behaviour and, therefore, has a moral responsibility.

The Federal Sentencing Guidelines adopted in the U.S. A. in 1991 represent an important input into this debate and especially in the cultivation of business practices. This model of good corporate citizenship is designed on the basis of compliance approach and stresses the concept of due diligence. It requires companies set up compliance standards to be followed (communicated, trained, enforced sanctioned).

Personal, as well as collective, responsibility requires two conditions: freedom and intention (awareness of the moral character of an action). Basically, responsibility involves three components: the subject who bears responsibility that cannot be completely determined by rules and laws; for what the subject is responsible (the spheres of responsibility); and the authority to whom the subject is accountable. We have to go further and try to evaluate the degree of responsibility or the kind of the ethical challenge involved. It is suggested in the business ethics literature to distinguish between minimal ethical requirements, positive obligations beyond the minimum, and aspirations for ethical ideals. The first degree includes basic ethical norms such as do not kill, not rob, not exploit, etc. Going further means that it is becoming more and more difficult to find consensus than in the first case. Here is a broad space of freedom and inspiration companies (acting with integrity) can use to define their mission, build their culture and reputation.

From a very vague concept of social responsibility of the whole system, where it was hard to find concrete bearers of this responsibility, and to define their responsibility in a totalitarian regime (the condition of freedom was not fulfilled), which by its behavior in fact discredited the idea of social responsibility, at present we find ourselves in a very different environment. With democratization of our societies and market of the economies, new actors have emerged. They play various roles in the economy, and have also various interests. Consequently, companies and other organizations in this new system have to deal with various new stakeholders (mainly shareholders, management, employees, competitors, suppliers, creditors, local community where the business operates, global community). What is their responsibility towards the stakeholders? This is a crucial question which is being raised by businesses all around the developed world, and also by the academic sphere. Neither business, nor academics have fully answered this question. Moreover, there is not a consensus on the stakeholders’ model itself (in some perceptions, only shareholders are important). I would like to even broaden this problem and to interpret it in the political and economic context of emerging market economies. The identification of various responsibilities from both sides could help to improve the business environment and even to clarify some basic concepts or categories of the market system.