Group Members

Name Student No
TSENGERERAI M MUHAMBA R103506V
WONDER MABANDE R179486T
TENDEUKAI CHIPERE R177841P
TERERAI ZHOU R178075B
SHEPHARD CHAGWEDERA R177489E
TAWANDA SHUMBAYAONDA R179599F
BLESSING MANGWIRO R176172H
THOMAS MARONGA R176173H
TONDERAI KUREWA R0723516X
VALENTINE MASHIRI R179597Q
SLYVESTER MUSIRA R145634N
SAMANTHA NHENDE R179848M

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Question 1

Discuss the relevance of Business Ethics in the modern world of materialism. In your
analysis relate the theories of rational self-interest and moral salience as they apply to
business ethics. (25 Marks)

Business Ethics

The definition of business ethics is the set of moral rules that govern how businesses operate,
how business decisions are made and how people are treated. In business, there are many
different stakeholders you have to answer to: customers, shareholders and employees.
Determining what to do when an ethical dilemma arises among these different interests can
be extremely tricky, and as such business ethics are complex and multi-faceted. Some
business ethics are imposed, for example, the Securities and Exchange Commission governs
the way investment bankers and stock brokers do business

There are also business decisions that do not fall within the guidelines of the law, in which the
business person must make their own ethical or moral judgments. For example, when moral
rules are applied by a corporation to determine how best to treat its employees, shareholders
and customers. In the instance of accounting ethics, accountants of publicly-held corporations
depend upon complete honesty and transparency. A lack of business ethics allowed the
management at ZIMRA to not behave with honesty, openness and responsibly when importing
personal vehicles into the country. As a result, fraud was committed, and management were
held legally liable for their breach of business ethics.

Materialism is the attitude of someone who attaches a lot of importance to money

and wants to possess a lot of material things over interpersonal relationships. It is a form of
philosophical monism which holds that matter is the fundamental substance in nature.
According to the modern world of materialism in the business world, companies focus on
making profits, acquiring wealth for the shareholders at all costs. In Zimbabwe when
reporting financial performance companies do not report about environmental degradation
but focus on profits only. For example, Lafarge makes huge profits although they pollute the
air, affecting residents in the surrounding community within which they operate.

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Dangers of Materialism on society and business

The desires to get rich quick, greed, insatiable love for materialism, power tussle and social
malaise have almost caught up with most managers. That is to say, the love for money is the
root of all evils. Man and woman, young and old have new dimension of corruption indulgence
on daily basis. The main causes of corrupt practices are greed and insatiable love for
materialism.

Materialism is now integrated into the normal way of life and is regarded as fastness. This
evil of materialism has brought about the fast decline of our economy and has also limited
opportunities for the poor masses.

Rationale Self Interest/Egoism

Self-interest refers to actions that elicit the most personal benefit. Adam Smith, the father of
modern economics, explains that the best economic benefit for all can usually be
accomplished when individuals act in their own self-interest. His explanation of the invisible
hand reveals that when dozens or even thousands act in their own self-interest, goods and
services are created that benefit consumers and producers.

Moral salience is defined as the extent to which the firms behaviour is morally noticeable to
the stakeholder. Moral salience is a function of both the moral intensity of the firms behaviour
and the relational intensity of the firm-stakeholder psychological contract. We apply this moral
salience construct to firm misconduct to develop a model of trust repair that is based on
goodwill, and moderated by the firms stakeholder culture.

Is Business ethics still relevant in the modern day world of materialism?

You might think the above question is an easy one for businesses to answer? Surely acting
ethically makes good business sense? As with all issues in business studies, there are two
sides to every argument:

The advantages of ethical behaviour include:

Higher revenues from positive consumer support

Improved brand and business awareness and recognition

Better employee motivation and recruitment

New sources of finance e.g. from ethical investors

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The disadvantages claimed for ethical business include:

Higher costs e.g. sourcing from Fairtrade suppliers rather than lowest price

Higher overheads e.g. training & communication of ethical policy

A danger of building up false expectations

Maintaining business ethics is a worthy goal for all corporations, but not always possible or
advantageous. The reality is that upholding these arbitrary obligations comes with severe
disadvantages. In many ways, abiding by a self-imposed standard of business ethics may
impede a companys ability to eke a profit when others are far less likely to abide by similar
unenforceable ethical obligations.

Analysis

In the analysis of the relevance of business ethics in the modern day world of materialism,
relating to the theories of rational self-interest and moral salience as a group we found that;

1. The economic environment in Zimbabwe discourages moral salience. This is due to the
fact that the economy is marred by unstable economic, political, social, legal and
technological environments which do not guarantee business existence. Businesses are
mostly impacted because their profits are already eroded such that engaging in corporate
social responsibility will be an unnecessary cost.
2. Rational self-interest theory in business ethics is applicable to firms operating in
developing countries like Zimbabwe while moral salience is mostly applicable to firms
operating in the developed countries like USA, UK and Canada. This is due to the fact that
firms in the developing economy need to survive by minimising all costs associated with
doing business.
3. Most companies and employees are motivated by self-interest and making profits for the
shareholder. As a result, companies reward good performance through bonus, profit share
and share allocations as they understand that employees are motivated by self-interest.
4. Very few companies genuinely practise moral salience unless it furthers the interests of
the company e.g. most corporate social responsibility Initiatives are motivated to bring
clients on board and not necessarily for care of the society and environment. For example
ZB bank sponsoring MSU students sporting activities in order to secure business retention.

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In conclusion, despite being often misunderstood rational self-interest is very relevant in the
modern day world of materialism because:

While the term self-interest has negative connotations, it does not necessarily imply
greedy or immoral behaviour. Self-interest just means that you seek your goals. In fact,
your self-interest might lead you to study hard for your math test, give money to your
favourite charity or volunteer at a local school.

Self-interest doesnt always lead to price gouging, corruption and cheating even
though sometimes it does.Most often it is held in check by competition, because other
self-interested people are competing in the marketplace , For example if I were a baker,
the only way I would be able to earn your dollars is to produce bread that is better,
cheaper or more convenient than the bread produced by the other bakers in town. If I
were to increase my price too much, you would likely buy bread from my competitors.
Thus, competition is the regulator, a check on self-interest because it restrains my
ability to take advantage of my customers.

Self-interest is the fountain of economic growth. It is the catalyst for innovation and
production. But it can also be the prime mover behind violence and corruption.
Needless to say, business ethics and capitalism go hand in hand. If either is left without
the other, the economic blessings of self-interest will never be known.

Rational self interest in business ethics is advisable. However, it should be pointed out
that whatever the business does to remain as a going concern should be done ethically
and while observing the laws of the land within which they operate. Unethical and
illegal ways should not be practiced in the quest to survive and grow.