There are 5 reasons for fostering good business ethics, which are gaining the goodwill of the community, creating an organization that operates consistently, fostering good business practices, protecting the organization and its employees from legal action, and avoiding unfavorable publicity.
Companies do not only earn profits from their products or services but they also need to take fundamental responsibilities to society. Some organization can donate money while some others can provide their resources to support non-profit or charitable organizations. This will help gain the good will of community and maintain loyalty with their customers. The second reason is consistent operation and this is the need of stakeholders including shareholders, employees, customers, suppliers, and the community. The consistency will help retain customers, reduce turnover rate of employees, improve their morals and get higher priority from suppliers and business partners. The next reason is protecting organization and employees from legal action, this is especially important to prevent misconduct in the workplace by establishing code of conducts. The final reason is avoiding unfavorable publicity because it can affect directly to the reputation of a company.
Differences of ethics from morals and laws
Ethics is the belief about what is right and what is wrong within a small group, an organization or a community while morals is the personal belief of an individual in that group. Laws are rules that are enforced by legal institutions and they tell people what they can and cannot do. Some acts can be immoral or unethical but they still can be legal. For example, abortion is legal and also medically ethical, however, many people consider it immoral.
The case of Sony BMG in 2005 is an example where moral principles were not applied consistently. It was revealed that music CDs by Sony BMG had used copy-protection technology called XCP and it silently installed a rootkit on computers. The problem is that all the process was done without users’ knowledge and consent. More seriously, the rootkit created a major security hole that hackers can take advantage to get access to users’ computer. After that, Sony provided a rootkit removal program, however, it just cloaked the XCP software and not really removed the rootkit. The fix even created greater security risk. Those issues were discovered by Mark Russinovich, he posted to his blog all the details of the rootkit and shown his disapproval on the moral principles of Sony BMG.
“Not only had Sony put software on my system that uses techniques commonly used by malware to mask its presence, the software is poorly written and provides no means for uninstall. Worse, most users that stumble across the cloaked files with a RKR scan will cripple their computer if they attempt the obvious step of deleting the cloaked files.
While I believe in the media industry’s right to use copy protection mechanisms to prevent illegal copying, I don’t think that we’ve found the right balance of fair use and copy protection, yet. This is a clear case of Sony taking DRM too far.”
I would have done differently if I had been in Sony BMG’s position. At least, users should be informed that a software will be installed on their computer and it should not be cloaked to hide from users. Moreover, when Sony BMG tried to solve the situation by releasing the rootkit removal tool, they should not created a cloaking tool and exposed users to more security risks. Although finally Sony BMG reimbursed their customers $150 to repair damage, the incident damaged their reputation significantly.