Application
of
Business Ethics Values in Companies
In the Special Region Yogyakarta
In the Special Region Yogyakarta
Sri
Haryani
Lecturer from college of management sciences, YKPN Yogyakarta, Indonesia
(bundaninik@gmail.com)
ABSTRACT
Business
ethics can be described as a business or a company
whose entire activity is based on ethical
values. The company is not
only pursuing purely economic interests but
also the interests of stakeholders overall. Although
business ethics has been believed by many parties provide benefits in maintaining the viability of the company, but in practice it was found
unethical business. The analysis of
the existence of unethical business
in Indonesia, among others, due to the prerequisite that has not been adequate, in example a society that uphold ethics and
law enforcement are relatively
weak. Ethics violation
will not cause rejection or pressure from the
community. In practice, companies
implementing ethical values in various forms, such as codes of ethics, code
of conduct, corporate social responsibility
and good corporate
The results of
this study indicate that in general the
company's emphasis on ethics at a moderate level, which is 3.916 of the scale of
5. Time/long operation have a
positive impact on corporate emphasis
on ethics. Long
operation to give confidence and stability for the
company to implement ethics
in business activities.
Business sectors affect the level of
emphasis on business
ethics, in which different
stakeholders gives a different
effect in implementing ethics in their business activities.
Keywords:
ethics, business ethics, principle of ethics, old business, and business fields
1. INTRODUCTION
1.1. BACKGROUND
Economic
globalization also led to a global business competition. Local companies not
only face the same competitors in the region, but also a global company in
Indonesia. Various types of local businesses such as fried chicken, grocery
stores, snack, furniture, constructions, etc. must now compete with global
company. In conditions as above, some companies can survive and thrive, but
there is also a decrease and even go bankrupt. Companies trying hard to win the
competition, but often because the situation is quite difficult, they were
forced to close to unethical or even unethical. They tend to just obey the
rules of law which sanctions have clear and binding, compared with the sanction
of business ethics is not straightforward. This is compounded by the weak rule
of law in Indonesia, so that violations of existing laws and legal sanctions
are often not enforced.
Business
ethics can be described as a business whose entire activity is based on ethical
values. That is, in an ethical business interests of various parties
(stakeholders) need to be balanced. For example, a furniture company concerned
parties such as suppliers, retailers, consumers, advertising companies,
government, community, physical environment, and of course the employees in the
company itself.
Although
business ethics has been believed to be many benefits in maintaining the
viability of the company, but in practice it was found unethical business.
Analysis of the existence of unethical business in Indonesia, among others, due
to inadequate pre-requisite, namely people who uphold ethics.
Ethics
violations will lead to rejection from society, either in the form of rejection
of goods or services produced or rejection of the existence of the company. Society can sue
the company was closed, as it is considered unethical. In a society that less ethical holds (such
as Indonesia),
not enough or no pressure
for companies that are unethical. This condition is used by businesses with no heed to ethics in business.
In addition to the
requirements as above, reluctance to run the business according to ethical
business due to the assumption that the application of ethics will have an impact on costs. This will indirectly reduce the level of benefits. While a violation of
ethics does not carry significant consequences for its business.
1.2. PROBLEM FORMULATION
Formulation of the problem
posed in this study is how the ethical emphasis of the companies that are in
Special Region of Yogyakarta, seen from the nine (9) Principles of ethics,
namely adherence to the rule or law, honesty, transparency, accountability,
responsibility, fairness, empathy, togetherness, and independence. The second formulation of the problem is how this business
field and time/long operation to influence the level of emphasis on business ethics.
1.3. RESEARCH OBJECTIVE
The research was conducted
with the primary objective to know how the emphasis of existing business in the Special Region of Yogyakarta on business ethics. In addition, this
study aims to
see how the long operation and field
of business affects the company's
emphasis on business
ethics.
1.4. BENEFIT OF RESEARCH
Some of the
benefits gained by the implementation of
this research are: know suppression
of the existing business in Yogyakarta Special Region of ethics in business, give information in relation to the long operation and field of business to ethical emphasis. The results can also be utilized by the parties concerned and interested in
the enforcement of business ethics such as government, business associations,
consumer organizations, the private ombudsmen institutions, and education in
disseminating and enforcing ethics.
2. THEORY STUDY AND CONCEPTUAL FRAME WORK
2.1. BUSINESS ETHICS
Big Indonesian
Dictionary gives the definition of ethics is a science of what is good and what is bad, as well as moral rights and
obligations. What is considered
good and bad and moral right and obligation is to be used
either in the process of determining the reason, decision making and behavior
resulting from the reasons and the decision. Laura Nash defines business ethics
as a study of how one's moral norms are applied in the activities
and objectives. Business ethics deals with three areas of managerial decision
making, namely: first, to choose how the law should be and how to follow the
law. Second, choose the issues of economic and social development outside the
legal domain. Finally, choose whether to give priority to the interests
personal or corporate interests.
Individuals who hold a strong ethic in his life, he
has a greater tendency to apply ethics in business activity. Because there has
been internalized ethic in him, so that its activities will be colored by
ethical values, including in business activity. Business people to formulate
business ethics based on morality and values are believed to be the truth, so
that there is seemingly no clear distinction between business ethics with
personal ethics.
Business activities are based on ethical values required for long-term success. Ethical behavior is reflected in how the relationships that occur in the business chain, such as with suppliers, employees, distributors, and consumers. Each link in the relationship must always keep the ethic that underlies the belief that business relationships can be maintained. Ethical behavior is one of the main components in building corporate reputation.
Business activities are based on ethical values required for long-term success. Ethical behavior is reflected in how the relationships that occur in the business chain, such as with suppliers, employees, distributors, and consumers. Each link in the relationship must always keep the ethic that underlies the belief that business relationships can be maintained. Ethical behavior is one of the main components in building corporate reputation.
Internally, the application of ethics will improve
employee performance and loyalty to the company. Companies
that implement ethics,
it will pay attention to employees'
rights fully. This will impact on increasing
employee loyalty and performance.
2.2.
THE SOURCE OF BUSINESS ETHICS
As a standard that will be the basis of
reason, influence behavior and decision-making
processes, business ethics refers to a variety of sources. The meaning
here is a reference source that something which was the reason, influence
behavior and decision-making process was assessed correctly. Sources of ethics
among others, come from four (4) main source of religious, philosophical
systems, cultural experiences, and the legal system (Haryani and Imam: 2007).
2.2.1.
Religion
Religion is a system that govern faith
or belief and worship of Almighty God and the grammar rules that relate to
human interaction with humans and their environment. Religion aims to lead
people to salvation. The central role of religion is what makes religion as a
source of ethics.
Source of ethical values derived from
religion is explicit and implicit in scripture, doctrine, history of the
prophets, and the interpretation of religious leaders. Within each religion
contains a variety of rules, calls, appointments, and threats about various
aspects of life, including in business activity. For example, Al Qur'an load
restrictions to reduce weight, fraud, and hoarding. Business people who adhere
to religion, then he will not do weight reduction activities, fraud, and
hoarding, because such actions are prohibited by religion.
2.2.2.
System of Philosophy
Philosophy according to Big Indonesian
Dictionary is the underlying theory of mind or an activity. While it is defined
as the ethics and moral values that are used both in the process of
determining the reason, decision making and behavior resulting from the reasons
and the decision. Therefore, the underlying philosophy of mind and human
behavior is in line with ethics.
When business people will apply ethical
values in business activity, the majority come from the philosophy of ethics,
namely as a value of the underlying nature of mind and behavior. Philosophical
system can be used as the source of ethical values as the result of a
philosophy which is thought to underlie the nature of mind and behavior will
result in an assessment of something that is judged good or bad and something
that is considered right or wrong (Haryani and Imam: 2007).
2.2.3.
Culture
Culture is a standard, rules and values
that are believed and practiced by a group, community, or society and are
passed from generation to generation (Haryani and Priest: 2007). Forming one's
culture so that it behaves as expected and accepted that culture. A value that
is believed and considered both by the particular culture may be judged
otherwise by another culture or a value which in the past is relevant, but is
now considered irrelevant.
In situations where there is interaction
between people of different cultures, there will be interaction between
cultures. This intercultural interaction would indirectly introduce someone to
a different culture, so they automatically lead to mutual acceptance of foreign
cultures. They respect the culture that believed or embraced by others, so it
can be said to accept the culture as something that is considered good.
2.2.4.
Legal system
Law
is coercive rules, created by the official authorities, which determine human
behavior in society, and result in penalties against certain violations.
Formally apply the law within a society or nation. Law can be codified and
formalized ethical values. Yet the law can not cover and accommodate all
ethical values in society.
In
situations where an ethics codified or formalized in law, is often seen as a
decrease in the degree of ethics. Ethics should be followed by the public,
regardless of whether or not there are legal sanctions. However, the presence
of a law could be interpreted as an operational and practical explanation of ethics
to regulate people's lives for the better (Haryani and Imam: 2007).
The legal system can be a source of
ethical business behavior to determine which one is considered good and what is
not good behavior, and behavior which are inaccurate and which are assessed
correctly. Determining the size of the good-bad and right- wrong can be seen
whether the behavior of a company violates the law in a country or not. An
ethical business behavior is assessed, one of them if it does not violate any
applicable laws.
2.
3. PRINCIPLES OF BUSINESS ETHICS
In practice
the company basing its business activities on the values that are considered good. Among the values that made ethical principles, Haryani and Imam codified into eight (8) and added one of the five principles
of the togetherness.
2.3.1.
Complience with the rules and principles of Law
According to the principle of complience
to the rules and laws, companies and institutions must abide by the rules and
laws. In general, a company incorporated in a particular country will follow
the rules and laws of the country. But if the company was operating in another
country, then the company must follow the rules and laws of other countries.
2.3.2. Principle of honesty
The principle of honesty means that all individuals in the company or
institution must uphold honesty attitude of duty which they are responsible.
The principle of honesty in a broad sense not only about material things, but
also non-material such as information, words, and deeds.
2.3.3.
Transparency/openness
The principle of transparency is to be
willing to do the principle of transparency in implementing the decision making
process and put forward relevant material information both about the services,
products, companies or institutions and policies to stakeholders. The principle
of transparency is necessary to a mutual communication between individuals in
the company.
2.3.4.
Accountability
The principle of accountability with
regard to clarity of functions, implementation, and accountability of manager,
so that management can efficiently and
effectively. One way to achieve accountability is done by preparing a job description which determine the duties,
responsibilities, and accountability.
2.3.5.
Responsibility
The principle of responsibility is a
principle of conformity in the management of the company or institution with obligations
to all stakeholders. Fulfillment of obligations concerning the scope of
liability to both internal and external stakeholders about what they are
entitled to.
2.3.6.
Fairness
The principle of
fairness based on
the management of companies or institutions of
justice and equality in
fulfilling the rights of
stakeholders that arise due to
contractual and applicable
regulations. Thus in the same case, then everyone should
be treated equally. Because the principle of fairness is also based on justice,
so that in deciding something needs to consider fairness in general.
2.3.7. Empathy/compassion
The
principle of empathy is the treatment principle to the stakeholders as the
company would be treated. In principle, if the company does not want to be lied
to, then the company will not lie to anyone. If companies want to be treated
fairly, then the
company
will treat everyone fairly,
and so forth.
2.3. 8. Togetherness
According to
the principle of togetherness of all
individuals are required to further the interests of the company or institution
rather than the interests of individuals
or groups. Facilities
and benefits enjoyed by all individuals, as well as difficulties and problems
should be shared.
2.3.9. Independence
The principle of independence is a
situation in which a company or institution professionally managed without
conflicts of interest and pressure from any party. This principle requires the
determination of management, not only because of the pressure that can cause
stress but also the possibility of reduced revenues.
2.4. INSTITUTIONALIZATION OF BUSINESS
ETHICS
Awareness of the need for businesses to
implement ethical values in business practices intensified. This is partly
due to pressure from various parties, particularly from the global society that
requires businesses to pay more attention to environmental issues, human
rights, labor rights, and protection to children and women.
Institutionalization of business ethics
to be one important indicator of commitment in implementing business ethics at
the internal level of the company. Forms of institutionalization of business
ethics, among others: code of conduct,
code of ethics, corporate social responsibility, and good corporate governance.
2.4.1. Code of Conduct
Code of conduct is a set of rules
outlining the responsibilities of or proper practices for individuals, groups,
or organizations. Many companies develop codes of conduct that will guide the
company's internal, such as Five Principles from STIM YKPN Yogyakarta that consisting of Honesty, Togetherness,
Transparency, Participa-tion, and Insights into the future.
There are many codes of
conduct that would serve as guidelines for community members. For example for
Muslims will obey a code of conduct Pillars of Islam (Five Pillars of Islam)
which consists of the creed (belief), prayers, alms, fasting, and pilgrimage. For the whole of
society Indonesia
will behave in accordance with the Pancasila which consist of Divinity,
Humanity, Unity, Democracy and Justice.
2.4.2. Code of Ethics
According to Big Indonesian Dictionary,
codes of ethics can be defined as the norms and principles are accepted by
certain groups as a basis for behavior. Corporate codes of conduct drawn up as
a reference for all parties within the firm and outside parties relating to the
business of the company in performing its duties and decision making. In
detail, the company is preparing a code of conduct with the aim to develop good
behavior in accordance with high ethical standards for the corporation,
directors and all employees and to develop good relationships with external
parties.
2.4.3. Corporate Social Responsibility (CSR)
Corporate social responsibility or CSR
is better known by the company's efforts to balance the commitment to groups
and individuals in its environment, including customers, other businesses,
employees, and investors (Griffin & Ebert: 2002).
Context of social responsibility is more
emphasis on concern the company against the interests of stakeholders in the
broad sense of the company's concern for the interests of the company alone.
The Company is responsible for its actions and activities that impact on
certain people, society and the environment in which companies conduct their
business activities, so it does not have a negative impact on certain parties
in the community.
2.4.4. Good Corporate Governance (GCG)
Good corporate governance (corporate
governance) a set of
rules that define the relationship between internal and external stakeholders,
such as managers, creditors, employees, suppliers,
etc. Implementation of good corporate governance
encourage healthy competition and a conducive business climate, which in turn
will menunjanga growth and economic stability.
Given
the importance of the implementation of good corporate governance at the
enterprise or institution, the government established the National Committee on
Governance (NCG) to develop Code of Good Corporate Governance Indonesia.
Guidelines covering aspects of transparency, accountability, responsibility,
independence, and fairness and equality. These aspects are intended to achieve
business sustainability by taking into
account the interests of all stakeholders.
2.4.5. Why companies should behave ethically?
Application
of business ethics in the company require
prerequisite people who uphold ethics. Thus the existence of ethics
violations will lead
to rejection of society, both the
rejection of products (goods
or services) and
the rejection of the existence of
the company itself. In the absence of
preconditions as above, there are no consequences in the form of moral sanction,
social sanction, as
well as legal sanctions for companies who ignore
ethics. However, when
analyzed further, then there are consequences.
2.4.5.1. Companies will lose competitiveness
Competitiveness of companies one of which comes
from human sources. With the human resources that are
unethical, then the company does not earn the trust of stakeholders, such as
employees, customers, suppliers, competitors, and others. Distrust impact on
the demands presented to companies that will add costs to the company.
Additional costs will lead to rising prices, or if the price is fixed, than the profits will be reduced.
2.4.5.2. Companies will left consumers
Availability
of similar products or substitute products in the market caused consumers to
have a great opportunity to choose. Unethical corporate customers will soon be
abandoned, either to switch to other similar products or products that are
substitutes. Similarly, unethical broker/intermedia-ry
will also abandoned its
customers and will switch to another intermediary
or it will buy
directly to the manufacturer.
2.4.5.3. Company will bring legal consequences
Unethical
business behavior can impact on the stakeholders, whether customers, suppliers,
distributors, employees, governments, and communities. In certain cases where
the demands put forth enough material economic or significant influence,
stakeholders will submit the matter to court. Litigants in court take time and no small cost. Moreover, if the
company is found guilty then the company will lose materially.
2.4.5.4. Impact on company's good name
Defamation
may be caused by a valuation firm guilty in court. Besides consumers, consumer
organizations and other institutions such as the Healthy Competition can also
provide an assessment of whether or not ethical business behavior. This
assessment will impact the company's good name.
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Sonny, A. Dr., (1998), Etika Bisnis: Tuntutan
dan Relevansinya (Business Ethics:
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Laura, (1990), Good Intentions Aside: Manager’s Guide to Resolving Ethical
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Nasional Kebijakan Governance, (2006), Pedoman
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Ketut, (2004), Etika Bisnis dan
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UU
NO 8 tahun 1999, tentang Perlindungan
Konsumen (Law No. 8 of 1999, on Consumer Protection).
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