Contents
Part A ..................................................................................................................................................... 1
Introduction ....................................................................................................................................... 1
Ethical Culture .................................................................................................................................. 1
Part B ..................................................................................................................................................... 2
The Size of Corporations .................................................................................................................. 2
The Environment .............................................................................................................................. 2
Conclusion ......................................................................................................................................... 3
Reference ............................................................................................................................................... 4
Part A
Introduction
The idea of ethical culture in an organization is a modern concept that has been used for just
25 years (Shafritz & Ott, 2005). In the 1970s, scholars were inspired to increase awareness of
organizational management due to Japan's market growth and the downturn in U.S. production.
By bringing corporate ethical culture to the research market through these studies, it has
become a regular headline in business studies and a catalyst for businesses to improve their
performance and growth (Denison et al., 2003).
Ethical Culture
The ethical culture is defined as a pattern of common views and assumptions that people derive
from conflicts (Schein, 1985). Key (1999) stated that culture is a common philosophy among
the members of an organization; thus, the ethical culture of an organization can be expressed
in the ethical values of an organization shared by its members. Sami et al (2016) referred ethical
culture as the moral quality of a working environment that is characterized as shared ideals,
norms, and values that can promote ethical behavior. An ethical culture aims to reduce the need
for enforcement of rules and to increase the use of principles that lead to ethical thinking in
complicated or unfamiliar circumstances. In order to build better ethical corporate cultures,
many organizations express fundamental principles to their staff by setting up ethics programs
and assigning ethics officers to monitor them. Ethical culture establishes shared values and
supports ethical decision-making and is led by senior management (Ferrell et al., 2014).
According to Ruiz-Palomino et al. (2012), ethical culture has been shown to have a positive
impact on employee happiness, affective commitment, and desire to stay. Ethical culture has
also been found to be significantly associated with worker's willingness to promote the
company to others. Employee commitment emerges from employees who feel that their future
is connected to that of the company and from the desire to make personal sacrifices for the
company (Jaworski & Kohli, 1993). Employees' perceptions that their employer has an ethical
culture contribute to increased productivity within the organization. It is crucial for employees
within an organization to share a mutual vision of trust. A corporate culture that incorporates
good ethical values and fair corporate practices can also enhance group creativity. Riivari et al.
(2012) reported a positive correlation between the ethical culture of an organization and
organizational innovativeness (behavioral, strategic, and process). One study by National
Business Ethics found out that values such as trust, honesty, and respect in the workplace will
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results in employees feeling less pressure to compromise ethical standards and observed fewer
unethical behaviors (ERC, 2014).
Part B
The study performed by Wood (2017) regarding business ethics reflections through 1992-2017
expressed concerns for the future of business ethics. The author discussed several areas of
business ethics that need to be focus on in the future, such as the size of the corporation and
the environment. PMB Technology Berhad, which is a company involved in upstream and
downstream aluminum and silicon products manufacturing, will be related to the study
conducted by the author in the following section.
The Size of Corporations
PMB Technology Berhad recorded a revenue of RM399.7 million for the year ended 31
December 2019 (PMBT, 2019). PMB Technology Berhad is a mid-size company that consists
of approximately 500 employees. As mentioned by the author, information regarding the code
of ethics practiced by the company can be found on its website. Researchers reported a 93% of
large U.S. firms reporting ethics codes by 1992 (Center for Business Ethics, 1992). A written
code of ethics has become a standard for large U.S. companies in the 1990s. Adams (2001)
found the lack of a corporate code of ethics has influenced both employee ethical conduct and
ethical expectations in a variety of ways. Employees who worked with corporations with a code
of ethics considered subordinates, colleagues, themselves, and in particular supervisors and
superiors to be more trustworthy than employees working in organizations who do not have a
formal code of ethics. In addition, employees in organizations with an ethical code observed
fewer constraints on their ability to act ethically and were less likely to be discouraged and
harassed for ethical behavior. The existence of regulation may mean that ethical behavior is a
value of the organization, thereby providing psychological reinforcement for and/or lessening
fears about negative impacts for acting ethically.
The Environment
There have been increasing concerns over the environmental decline in recent years, prompting
several businesses to concentrate on the adoption of environmentally sustainable supply,
production, and delivery processes. Such issues may emerge either from the set of beliefs and
values of the management of the business or from some pressure imposed by the public –
customers and organizations – in the assumption that an environmentally friendly management
approach would lead to the transmission of a favorable image of the company and its goods
(Cambra-Fierro et al., 2007). PMB Technology Berhad identified and prioritized a list of
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material sustainability matters in 2017, categorized into three main areas (delivering value
through innovation, developing capabilities & opportunities, and driving corporate
responsibility) aligned with the United Nations Sustainable Development Goals (PMBT, 2019).
To ensure sustainable supply chain practices, the company has introduced a procurement
guideline and arranging logistics and distribution strategically. The initiatives encourage
sustainable sourcing and minimize fuel consumption, emissions, and vehicle malfunctions
(UN12: responsible consumption and production). The company also focus on environmental
management by introducing several initiatives such as regular maintenance of trucks, plants,
and machinery to reduce greenhouse gases emissions, replacement of traditional fluorescent
lighting with LED lighting, transparent roof sheets, installation of latest and energy-efficient
equipment and machinery, and motion sensors for energy conservation, and investment in
recycling machinery and an Off-Gas System to minimize waste through recycling initiatives
(UN7: affordable and clean energy, UN12: responsible consumption and production, UN13:
climate action). Their ESH committee supervises the company's environmental attention areas.
The ESH committee has also been tasked with performing regular audits and assessments to
ensure smooth running and compliance of their operations. PMBT is planning to implement
ISO 14001:2015 Environmental Management System ("EMS") in 2020 to provide them with
the fundamentals of a practical approach to protect the environment and respond to changing
conditions in balance with socio-economic needs.
Conclusion
Business ethics certainly plays a vital role in maintaining a friendly working environment,
protecting shareholders and stakeholders' benefits, and keeping the environment in good shape.
Thus, a company should focus on improving ethical culture in the working environment and
ensure the code of ethics are followed by the board of director and the employees to cultivate
a healthy workplace.
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