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Business ethics in the Philippines

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... 1526 Alejo José G. Sison and Antonette Palma-Angeles ... Uplift Quality of Life in Rural Com-munities', Philippine Daily Inquirer (October 8). Cabacungan, G. and R. Villadiego: 1996, 'Gotianun Starts Them Young; Yuchengo
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    ABSTRACT. The plurality of languages and eth-nicities, the geographic fragmentation, the predomi-nant Roman Catholic religion, together with the stillrelatively short experience in nationhood account fora very peculiar understanding of “business ethics” inthe Philippines. The rapid growth and liberalizationof the economy, coupled with the inequitable distri-bution of wealth, the destruction of the environmentand corruption are the main ethical concerns.Businesspersons and the academe endeavor to findcreative solutions for these unique challenges.   1. The semantics of business ethics  The Philippines is a multi-lingual society which,until the late 1980s, had three official languages– Pilipino, English and Spanish in addition toabout eighty-five other languages and dialects,depending on one’s linguistic criteria (McArthur,1992; Gonzales, 1992). Spanish has since thenceased being an official tongue; for despite thecountry’s having been a colony of Spain for morethan 350 years, Spanish was never really widely-spoken in the archipelago and it was retainedalmost exclusively for historical reasons. Englishfirst gained ground during the American periodin the early 1900’s as the medium of publicinstruction and of government. Due to the influ-ence of schools and the media, compounded bytechnological developments in the telecommu-nications sector, the survival of English in thecountry is as of the moment assured. Pilipinoresulted from a political decision taken in the mid1940’s to adopt Tagalog as the national language.Although at the time of its institution, Pilipinoor Tagalog was not the most widely used amongthe local tongues, and the reality of life has nowfinally caught up with the formality of the law.Nevertheless, there are other equally impor-tant elements to be reckoned with in theinformal Filipino linguistic landscape, aside fromPilipino, English, and Spanish. We have toconsider, in the first place, the dense and far-reaching network (   guanxi  ) set-up by severalgenerations deep of Chinese immigrants whosemother tongue is Fookienese. Representing lessthan 1 percent of the population, or less than700,000 in absolute numbers, ethnic Chinesenonetheless contribute 40 percent to the totalbusiness output of the local economy, or approx-imately $30 billion to the GDP (Roman andSebastian, 1996). Very much in currency is agroup of six taipans, George S. K. Ty, JohnGokongwei, Lucio Tan, Andrew Gotianun Sr.,Henry Sy and Alfonso Yuchengco, aside from Tan Yu, reputedly among the world’s wealthiestmen, without whose knowledge hardly anythingmoves in the local business scene (Chiongpian-Perez, 1996; Narisma, 1996a; Espina, 1996;Quimpo-Espino and Debuque, 1996; Business Ethics in Alejo JoséG. Sison   The Philippines Antonette Palma-Angeles  Journal of Business Ethics  16 : 1519–1528, 1997.© 1997 Kluwer Academic Publishers. Printed in the Netherlands.Alejo JoséG. Sison earned his doctorate in philosophy from the University of Navarre (Spain) in 1990, with a dissertation in the field of ancient Greek ethics. He has taught in the Faculty of Philosophy and Letters and in the International Graduate School of Management (IESE) of that same University. His research interests revolve around the interrelationship of ethics, economics,business and politics. At present, he is an Associate Professor of the University of Asia and the Pacific.Antonette Palma-Angeles received her doctorate in 1995 from the Katholieke Universiteit Leuven with a disser- tation on the philosophy on Hans-Georg Gadamer. She is currently chair of the Philosophy Department of the Jesuit-run Ateneo de Manila University in the Philippines.  Cabacungan and Villadiego, 1996; Debuque,1996a). This more than justifies the statementthat Chinese is in its own right also a languageof Filipino business. In the second place, we have to bear in mindthe impact of the other major Philippine lan-guages belonging to the Malayo-Polynesianfamily, such as Cebuano, Ilocano, Hiligaynon,Waray, Bicol etc. Their usage in the market placeand in business transactions immediately producesa climate of trust, thereby assuring one of preferential treatment usually accorded only toclose kin, even to the extent of softening theimperatives of the law and of the profit motive(Sison, 1996). The semantics of the term “business ethics,”therefore, cannot help but reflect the ethno-linguistic and cultural wealth of, or, from adifferent perspective, the complexity present in,the Philippines (Talisayon, 1990). The under-standing of Business ethics expresses the valuesboth particular and peculiar to each of the idiomscurrently used in the country.Among those who display a certain com-petence in English, around 65 percent of thepopulation belonging to superior socioeconomicand educational brackets, business ethics is under-stood in its American sense, as what is right andwrong in business. “Business,” just like any sortof rule-guided activities, possesses its own list of do’s and don’t’s, or “ethics.” Ethics has got to dowith rules, with what is legally allowed or sociallyaccepted, as opposed to what is frowned upon,prohibited, or penalized in whatever form, inbusiness practice. Business, on the other hand, isa very specific and defined field of humanendeavor. For some, it is a chosen occupation,career, or profession which, due primarily to itseconomic consequences, has become a focus of public concern. In other words, public concernover business does not at all arise from anypurportedly inherent value which such a class of activities may have, but solely from their externaleffects of harm or benefit on the general state of well-being of those concerned. “Business ethics”therefore refers to some problem-solving tech-niques designed to help the practitioner whenconfronted with dilemmas Those unavoidablesituations wherein one is addressed by conflictingor exclusive demands, and whatever alternativecourse of action is to be followed by undesirableconsequences (Ortiz and Sison, 1995). Any kindof link between business ethics and moral goodor evil is down-played, if not altogether erased,on the basis of the conviction that as principles,the latter are purely personal, intransferable, andprivate. These principles are generally deemed tobe inaccessible to any meaningful or relevantpublic scrutiny; over these, nothing other thannon-interference, tolerance, and a healthy skep-ticism should prevail. Surprisingly though, suchfreedom and liberality with regard to internaldispositions and beliefs are readily made com-patible with a strict and endless casuistry orhair-splitting in the judgments concerningexternal actions.Business ethics corresponds to a wide rangeof concept pairs in Pilipino. On the immediatelevel, business ethics implies what is tama  (right,correct) and what is mali  (wrong), what is pwedeor hindi bawal  (allowed, legal) and what is bawal  (prohibited, illegal) in pangangalakal (trade,business). On a level, there is a reference to whatis mabuti  (good, beneficial, useful) and what is masama  (evil, pernicious), albeit in a highlyutilitarian and instrumental rather than in anabsolute moral sense. That is to say, what is mabuti  in pangangalakal  is what is profitable andbrings prosperity; whereas what is masama  is whatconstitutes a losing proposition. Of course therealso is a term for what is just ( makatarungan  ), buthardly does this bear on the ordinary conduct of business. The appeal to justice seems to berestricted either to legislation or to the courts,which is an arena different from that of business.Aside from being non-confrontational in manner,Filipinos also happen to be non-litigious andavoid bringing their conflicts, business-related orotherwise, to the courts of justice. Instead, theyprefer to have recourse to arbitration proceduresbrokered by neutral third parties, such as elders,in order not to upset the much prized pakikisama  or smooth interpersonal relationships. Further-more, influenced perhaps by their Chineseneighbors, Filipinos have developed a very highregard for luck, buenas  or swerte  , considering it tobe a much sought after though not alwaysmorally deserved good in business.1520 Alejo JoséG. Sison and Antonette Palma-Angeles    The ultimate basis of the Filipino psyche forits judgments in the realm of business ethics rests,however, on the concepts of kasalanan  (sin) and mabuting gawa  (virtuous action), which are clearlyof a religious extraction. About 92 percent of thepopulation adheres to the Christian faith andtherefore subscribes to the morality encapsulatedin the Decalogue. Of special incidence to ourcase are the Seventh and the Tenth Command-ments, concerning respect for property, and to alesser degree, the Eighth, referring to trust-worthiness. A kasalanan  is something forbiddenon account of its being, primarily, an offenseagainst God, a violation of his manifest Will, andsecondarily, an offense against one’s fellow oreven against oneself, in his irrevocable dignity asa creature or a child of God. As such, a kasalanan  deserves to be punished, either in one’s earthlyexistence or in the afterlife. On the other hand,a mabuting  gawa is a conscious and deliberatedeed performed by man in accordance withGod’s Will. For such an action one may reason-ably expect a reward, either in this life or in thenext, from God. In addition, we must rememberan important feature of the Christian mindset. The absolute value of one’s future immortality,and the relativeness of one’s the present life.Business ethics finally acquires a flavor bothlocal and religious through the National PastoralPlan of the Second Plenary Council of theCatholic Bishops Conference of the Philippines(1993). Drawing from the well-springs of ChurchSocial Doctrine, it advocates a moral andspiritual vision of society which counts, as itsbasic principles, on integral development, social justice, a preferential love for the poor, anattitude of respect and responsible stewardshipover nature as material creation, and the non-espousal of any particular ideology, be it liberalcapitalism, or marxist collectivism. In conse-quence, it admonishes all Church sectors, amongother things, to work actively for the end of themanufacture and trade of arms; to address crucialissues such as agrarian and industrializationconcerns, the exploitation of women, children,and migrant workers, foreign debt, internationaltrade, etc.; and to undertake collections for theimmediate relief and rehabilitation of the poorand the needy. 2. The major challenges that business 2.ethics faces In the past two years the Philippines has beguncalling itself Asia’s newest “tiger cub”(International Herald Tribune, 1995; Universityof Asia & the Pacific, 1995, 1996; TheEconomist, 1996). A visible sign is the infra-structure mushrooming in Metropolitan Manilaand in the country’s other key growth centerslike “Calabarzon,” Metro Cebu, Davao, Cagayande Oro and Gen. Santos City. The economy hasregistered growth levels that seemed unattainablesix years ago. Even skeptics say that today’seconomy has never been as buoyant. The countryposted real growth of 5.5 percent in 1995,according to the Asian Development Bank. Thefigure has been established at 7.1 percent for thefirst half 1996 and has been forecasted bygovernment to be anywhere between 7.1 and 7.8percent in 1997. Although no economic growthor a very sluggish one would pose a graverproblem, and despite the fact that the country ismerely catching-up with its East Asian neighbors,there is no doubt that such a rapid growth ratecould also trigger-off severe economic disloca-tions, constituting in themselves serious ethicalproblems.Filipinos are at last benefiting from a greateravailability of consumer goods. There is even aninitiative to further relax retail trade laws so asto convert Metro-Manila into “Asia’s nextshopping capital,” just in case the MainlandChinese government is unable to fulfill itspromises regarding post-June 1997 Hong Kong.With the proliferation of shopping malls in thecapital region, one could say that consumerismis becoming a constant in the lifestyle of agrowing segment of the population. Importliberalization has allowed many products fromneighboring Asian countries to enter the market,pushing local manufacturers to be more com-petitive in terms of quality and cost. Thebreaking up of monopolies (particularly intelecommunications) and the privatization of many government-owned corporations haveresulted in greater competition, better service forconsumers, and lower prices. The privatizationof Philippine Airlines, for decades the sole carrier Business Ethics in The Philippines  1521  within the archipelago, has led to at least fournew local companies providing domestic airtransport. The statistical repercussions of liberal-ization on the country’s trade balance aside, wewould still have to consider its immediatelyadverse effects on the heretofore protected agri-cultural products and industries, and on thefamilies that have traditionally depended onthem.  There is a palpable sense, therefore, that thebusiness climate has been invigorated afterdecades of lethargy during the Marcos dictator-ship and the Aquino presidency. Economicgrowth apparently has even translated into amodest decline in poverty. The political stabilityand the formal guarantees of a democratic processnotwithstanding, there has been an alarmingnumber of business-related peace and orderirritants – such as bank heists and the kidnapingof wealthy industrialists and their families, par-ticularly those of Chinese descent – which stillhave to be effectively addressed. The newfound – and private sector-led – vigorof the Philippine economy is not without itscosts. The gross national product may haveconstantly increased since 1991 but PresidentFidel V. Ramos himself is cautious. He warns that“[growth] means little if not translated into realchanges in the quality of life of the majority of our people.” Two failures in the “quality of life”indices are particularly relevant to the Philippinesand to the country’s business sector. First is thecontinuing lack of equity in income. Eventhough estimates by the National Economic andDevelopment Authority indicate a nearly 5percent decrease in the number of poor familiesfrom 1991 to 1994, more than a third of Filipinohouseholds still falls below the poverty line.Second is the irresponsible treatment of theenvironment that may put in jeopardy a sustain-able form of development for the country.Incidents like the Marcopper mining disaster inMarinduque and the cyanide poisoning of nearly30,000 kilos of fish in Manila Bay are painfulreminders that environmental recklessnessremains widespread.A business enterprise has a direct, positiveimpact on poverty not only by providing jobs butalso by treating its workers fairly (that is, bypaying salaries commensurate to their efforts andneeds) and by acting in ways not inimical to theinterests of the parties affected. A business enter-prise promotes environmental sustainabilitythrough clean, conservationist technologies andpractices. Aside from its economic contributions,a business enterprise advances the quest for ahigher quality of life if its policies and activitiesare guided by a sense of social responsibility orof “good corporate citizenship.” Unfortunately,the drive for competitiveness has not pushedmany Filipino businesses toward acts of socialresponsibility. Instead of striving for higherproductivity and excellence, many have found iteasier to raise their competitive edge throughunfair labor practices and corrupt or illegaltransactions. They rationalize these as necessaryfor business survival and, on a bigger scale, forthe country’s continued economic expansion.Low wages, sweatshop-style operations, or anunending cycle of temporarily hired “casuals”brings about competitiveness, not through betterquality or higher levels of productivity, butthrough cheap, abundant, low-skilled labor.Furthermore, the country ranks high in thesurveys of most corrupt nations conducted byboth by Transparency International of Berlin(Lehner, 1996) and the Merchant InternationalGroup of London (Larner, 1996). Regardless of whether the corruption prevalent in thePhilippines is of the purportedly “efficiency-producing” and not of the “efficiency-reducing”kind, such practices do not add long term valueto business performance. On the contrary, theyundermine investors’ confidence at the same timethat they encourage waste, inefficiency andincompetence. Neither corruption nor unfairlabor practices can provide a stable foundationfor long-term future economic and businessgrowth. 3. Business ethics activities in the 3.business world In the North American experience, the majorityof business ethics activities initiated by businesspractitioners may generally be classified into theformulation of ethical codes, the provision of 1522 Alejo JoséG. Sison and Antonette Palma-Angeles   some ethical training, and the establishment of corporate ombudspersons (Dunfee and Werhane,1996). Although many of these activities havearisen from well-meaning persons in the com-munity, devoid of ulterior motives other than thefurthering of the ethical cause itself, we cannotignore the fact that the offering of legal oreconomic incentives have positively influencedtheir implementation. Considering the Filipino’sspontaneity and tendency to (re-)act purely onthe basis of feeling, coupled with his innateaversion towards rational structures, to evaluatethe local business community in accordance withthis three-point standard alone would yield a verylimited and inaccurate view of the situation of business ethics in the country. We do not mean, however, that Filipinobusiness organizations do not possess ethicalcodes. Many a professional organization, such asthe Financial Executives Institute of thePhilippines, has one; so do the Bishops-Businessmen Conference for Human Develop-ment, the Institute of Internal Auditors of thePhilippines, and the Philippine Association of National Advertising, to name a few more. Non-profitprofessionalorganizationsapparentlypossessa heightened ethical consciousness compared toprofit-oriented firms, although an increasingnumber of the latter are beginning to elaboratecodes as well. Upon reading these documents,one cannot ignore the conclusion that they havebeen penned only in servile compliance with aforeign affiliation, and that no effort has beenmade to adapt them to local circumstances. Thatis why although more multinational firms withoperations in the Philippines have ethical codesthan the autochthonous ones, results and prac-tices from the two are comparable. Besides, manycodes display an excess of lofty desires to thedetriment of practicality (e.g. Members shallendeavor to sustain unity and harmony amongthemselves) or they simply restate the obvious(e.g. Transactions of dealers must always be in fullcompliance with the applicable laws and regula-tions). Either they are not action-oriented orthey lack teeth – in the form of sanctions andpenalties for violations or non-compliance – inorder to be taken seriously. For the vast majorityof corporations operating in the Philippines, theelaboration of an ethical code is a mere item intheir desiderata; that is, if they have not yetdecided, overcome by defeatism perhaps, thatethical training is beyond the scope of thecorporation, belonging more properly to thespheres of the home, schools, and churches.And even when ethical codes have alreadybeen drawn-up, the problems of making theseunderstood to all concerned, eliciting consensusover and commitments to them, and effectivelyputting their provisions into practice immediatelysurface: To whom should these programs beentrusted? What qualifications should we lookfor in the trainers? Could they be found amongthe employees of the company or should theybe source from the outside? But then again, justhow much value could an eventual consultantcontribute to the ethical efforts of the firm? Howmuch information about the firm would one bewilling to give the consultant and would this beprudent? and so forth. Rules and regulations, thebasic materials of which ethical codes are made,could only be as good as their implementation.Unless the above listed questions are respondedto, ethical codes would never actually form partof corporate culture. This should be the morevalid long-term goal rather than the simplewriting of the ethical codes themselves, whichwould then become superficial. Taking intoaccount this host of difficulties, it is quite under-standable that very few Filipino business organi-zations have engaged in formal ethics educationfor their constituents, notwithstanding the neces-sity and the benefits of so doing.In this regard, the experience of the FinancialExecutives Institute of the Philippines is certainlyunique. On the occasion of its monthly GeneralMembership Meetings, through its Ethics Board,it has sponsored and organized both independentsessions and programmatic seminars on corporateand professional ethics not only for the financeexecutive but also for the senior general manager.As a matter of fact, it has even embarked on thepublication of a volume, Ethics and FilipinoEnterprise. Theory and Cases. (Sison et al.,forthcoming), intended to serve as a basic textfor business ethics in undergraduate-andgraduate-level university curriculums. This is inaddition to a tradition among its members of  Business Ethics in The Philippines  1523
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