Analyzing Business Ethics: Whistleblowing's Impact on Organizations

This essay delves into the realm of business ethics, focusing on the significant impact of whistleblowing on organizational structures and stakeholder relationships. It begins by defining business ethics and its two dimensions, descriptive and normative, before analyzing how ethical principles affect different parts of an organization, including management, employees, and stakeholders. The essay uses whistleblowing as a key ethical phenomenon, linking it to deontological theory, which emphasizes the duties and obligations individuals have in decision-making processes. The analysis explores the negative impacts of whistleblowing on management, the effects on stakeholders, and the resulting erosion of trust. The essay also highlights potential positive outcomes, such as policy changes within organizations, and provides a real-world example of whistleblowing through the Seven Eleven wage fraud case in Australia. Furthermore, the essay reviews the role of different stakeholders towards whistleblowing, exploring ethical theories like utilitarianism. It identifies the moral responsibilities of employees, management, and government, and how organizations can regain their lost image through ethical conduct. The essay concludes that whistleblowing is inevitable in the current business scenario and shapes the ethical behaviors of stakeholders.

Running head: BUSINESS ETHICS
Business ethics
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Introduction
Business ethics is considered to be a form of professional ethics and applied ethics which
helps in examining different ethical principles or ethical problems which can arise within the
business environment. The ethical issues can arise in different in the business environment and
different parts of the business operations as well. The ethics are able to affect different aspects of
the organization and the behaviour of individuals as well. Business ethics can be divided into two
major dimensions which are, descriptive ethics and normative ethics (Chell et al. 2016).
The analysis in the essay will be based on the ways by which ethics are able to affect
different parts of the organization like, management, employees, stakeholders and the
organization. The ethical phenomena or step which has been considered for the analysis is
whistle blowing. The essay will be able to provide an insight based on the effects that ethics have
on the departments of an organization and the operations as well.
Analysis of business ethics
Whistle-blowing is considered to be a process which is based on the intention of an
individual to prevent something which is not ethically correct. The process of whistle blowing is
based on information which is not revealed in a normal way. The deontological theory can be
linked to the process of whistle blowing within the organization. This theory is related to people
who are engaged in the duties and obligations which they have in the decision making based
process in the organization. The theory also states that the person who follows the deontology
theory needs to follow the obligations which they have towards an individual or the entire
society (Halinen and Jokela2016). The promises which have been made by the deontologist are
always followed and they are committed towards the people to whom these promises are made.

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The ethical behaviour of the management of an organization is affected by whistle
blowing related activities by some individuals. Whistle blowing normally takes place when an
individual does not support some activities that are being performed within the organization by
the management. The effect of this activity is considered to be negative for the management. On
the other hand, the other stakeholders of the organization are also affected in a huge manner by
whistle blowing. The customers of an organization are thereby informed about different
unethical activities that are performed by the management (Kolk2016).
The lack of trust of employees on the management of an organization is considered to be a major
effect of whistle blowing. This can have an adverse effect on the employees if they believe that
the management is not operating according to the standards which have been set. Deontologist
are thereby prone to whistle blowing based activities as they are concerned about the effects of
the organizational operations on their work process and commitment levels. Whistle blowing can
have major effects on the organization which include, increase of stress, mistrust and termination
of the employee who has blown the whistle (Kumar and Steinmann 2015). The changes which
can take place in the policies that are followed by the organization is considered to be a major
positive effect of effective whistle blowing.
A major example of whistle blowing which has taken place in a modern organization is
based on the wage fraud related issue which had taken place in the seven eleven stores in
Australia. The internal whistle blowing which had taken place in the store had been able to affect
the operations of the organization and the employees as well. The wages which have paid to the
employees of Seven Eleven stores were quite less than the standards which have been set by the
Australian government. The scam had come after a joint inspection was made by Business Day
and ABC’s Four Corners (Smh.com.au 2019).

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The whistle blower in this case was Sam Pendemwho was a student from Australia and he came
to the country in the year 2011. He worked in different stores of the organization which were
located in Gold Coast based region. Sam had to work for long hours in the stores and did not
receive any proper break as well. He was paid around 10 Dollars per hour. The underpayment
was highly widespread in the organization and had a negative effect in the organizational
operations. This can be considered to be a major ethical issue that has affected the reputation of
the organization and the employee base as well. The whistle blowing based activity can be
considered to be a major step which has been able to affect the operations of Seven Eleven stores
in a huge manner (Pearson 2017).
Role of the stakeholders towards whistle blowing
Even though the phenomenon of whistle blowing is becoming common in the recent
time, it is also important to review the role of the different stakeholders towards whistle blowing.
This is due to the reason that majority of the whistle blowing are being emerged in the workplace
and thus it is important for the organizational stakeholders in acting with the highest level of
morality towards this phenomenon (Dalton and Radtke 2013). In this case, the ethical theories
can be considered due to the reason that according to the utilitarianism theory of ethics, any
actions will be considered as ethical if the end results are having major benefits for the larger
sections. In accordance to this theory, emergence of whistle blowing is due to publicize the
wrong doings in the workplace and this is being done in view to the larger benefits to the
stakeholders. For instance, whistle blower Robert Ferro leaked the information about how
Northrop Grumman sold faulty electronic equipment to the United States government. Thus, it
can be concluded that leakage of this information caused helped the entire stakeholders including

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the government and thus according to the utilitarianism theory of ethics; this act can be referred
as ethical (Trongmateerut and Sweeney 2013).
However, it should also be noted that morality is important for each of the external and
internal stakeholders associated with the concerned firm. Employees are one of the major
stakeholders for the business organizations and it is identified that majority of the whistle
blowing activities are being emerged from the side of the employees only. Thus, it is important
for the employees to be more aware to the facts and should more inclination towards the larger
benefits over their individual concerns (Henik 2015). This is much relevant in the current time
due to the reason that some of the companies are maintaining strict standards for their employees
in respect to the whistle blowing, which refrain themselves from supporting these activities. On
the other hand, it is also important for the management to act morality in view to the whistle
blowing activities. This is due to the reason that it is the management, which will face the initial
negative response due to the whistle blowing. However, in this case also, it is the responsibility
of the management to further investigate the matter and identify the key factors. If the whistle
blowing activity proved right and ethical then it is their moral responsibilities to protect the
whistle blower. Moreover, this act will prove the business organization as more ethical among
the stakeholders. For instance, in the case of the Northrop Grunman, the whistle blower is being
awarded with $ 325 million (Lavena 2016).
Other stakeholders including the government are also having prime responsibilities
towards the whistle blowing activities. This is due to the reason that it is responsibilities of the
government, which will investigate the information got leaked by the whistle blower and support
accordingly. Moreover, government is working towards the larger and social goods. Thus, it is
important for them to be more moral in view to the whistle blowers. There are number of laws

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initiated by the government in protecting the whistle blowers such as False Claim Act of the
United States. According to this act, whistle blowers will be protected only if they are employee
and they are complaining about any fraud in the workplace (Rachagan and Kuppusamy 2013).
Thus, it can be concluded that government is also having larger responsibilities of morality in
view to the phenomenon of whistle blowing. Organization as a whole is also one of the most
affected entities due to the whistle blowing activities as their brand images are getting hampered.
It is also denoting that organization as a whole should also show morality in dealing with issue in
order to regain the lost image. There are number of instances where the ineffectiveness of the
companies caused amplification of the issues to the further stage. For instance, emission gate
scandal faced by Volkswagen further got amplified due to their non-acceptances to the
accusations. This caused further damage in their ethical considerations.
Conclusion
Thus it can be concluded that whistle blowing is one of the major phenomenon in the
current business scenario and it is inevitable. In respect to the ethical considerations, these
activities are being perceived by unethical by some of the entities and stakeholders. In this essay,
it is identified about how whistle blowing activities can shape the ethical behaviors of different
stakeholders. In addition, the moral responsibilities of the stakeholders towards the whistle
blowing are also being identified.

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