Voluntary codes are internal arrangements embraced by organizations to promote desirable behaviors in the market environment (Steiner & Steiner 2012). These codes of ethics are guided by different moral theories that support the welfare for all. For instance, deontological models explain why ‘the voluntary consent of individuals and corporations is essential’ (York 2009, p. 103). Corporations can promote the best business practices while at the same safeguarding the rights of different stakeholders. Since these codes are non-legislative, corporations that embrace them have higher chances of realizing their business objectives.
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The supply chain is known to affect the lives of many consumers and environments. Many companies acquire raw materials from suppliers and eventually deliver finished products to their customers. This supply chain process attracts many players. The logistical operations involved tend to affect the integrity of the natural environment. That being the case, a voluntary code will ensure the players involved throughout the supply chain process are ethical (Kline 2010). This code of ethics will assure more customers and stakeholders that the company’s business model satisfies the most desirable standards.
Such codes will encourage employees and consumers to promote meaningful practices that can protect the natural environment. More customers will be informed thus improving the level of public confidence (Vogel 2010). The organization will also acquire new ideas from different stakeholders to improve its logistical procedures. The codes make it easier for corporations to stimulate effective business processes. The approach minimizes negative social, economic, and environmental impacts (York 2009).
Businesses with voluntary codes of ethics find it easier to improve their public images (Teira 2007). Waldman (2011) believes that effective codes have the potential to complement various supply chain regulations. An ethical company will also establish positive relationships with different stakeholders and regulatory agencies. The created positive public image will attract more business partners thus improving the level of profitability.
Effective codes for supply chain networks make it easier for corporations to deliver their products to many global consumers. The end-users will be happy to be associated with different companies that engage in sustainable practices (Vogel 2010). Finally, the corporations will be admired because of their effective corporate social responsibility (CSR) philosophies (Teira 2007).
Limitations of Voluntary Codes of Ethics
Voluntary codes have the potential to deliver numerous benefits to many companies. However, such codes can result in significant negative effects if they are not managed professionally. To begin with, codes not supported by effective actions will become misleading and eventually affect business performance. A company with ‘a poorly-implemented voluntary code will face negative publicity’ (Wheelen & Hunger 2010, p. 17).
The other major drawback of these codes might not be inclusive, effective, or transparent (Waldman 2011). Companies using such codes might decide to offer misleading audit reports to paint positive corporate images. Corporations can decide to report specific activities to appear clean. This challenge results in ‘an ethical dilemma regarding the issues of auditing and reporting’ (Vogel 2010, p. 76).
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Some companies can use such codes to prevent international competitors from doing business in specific regions (Vogel 2010). This argument shows clearly that some firms can use such voluntary codes to pursue unethical business objectives. The involvement of different stakeholders can, therefore, be appropriate for dealing with these shortcomings. The practice will ensure more corporations have realistic voluntary codes.
List of References
Kline, J 2010, Ethics for International Business, Routledge, New York.
Steiner, J & Steiner, G 2012, Business, Government, and Society: A Managerial Perspective, McGraw Hill, New York.
Teira, D 2007, ‘Milton Friedman, the statistical methodologist’, History of Political Economy, vol. 39, no. 3, pp. 511-527.
Vogel, D 2010, ‘The Private Regulation of Global Corporate Conduct: Achievements and Limitations’, Business and Society, vol. 49, no. 1, pp. 68-87.
Waldman, D 2011, ‘Moving forward with the concept of responsible leadership: three caveats to guide theory and research’, Journal of Business Ethics, vol. 1, no. 1, pp. 9875-9883.
Wheelen, T & Hunger, D 2010, Concepts in Strategic Management and Business Policy, Pearson Prentice Hall, Upper-Saddle River.
York, G 2009, ‘Pragmatic Sustainability: Translating Environmental Ethics into Competitive Advantage’, Journal of Business Ethics, vol. 85, no. 1, pp. 97-109.