Factors Influencing Ethical Decisions in Tendering Process

Question:

Imagine yourself in a situation where you are a manager in a government establishment. A bid has been submitted to your office for supply of new computers and your best friend’s company (Radax) is one of the bidders. Your friend has spoken to you about the bid and you have realized that Radax does not have the best bid. Describe the ethical concerns that have arisen from this scenario. Do you think your choice would be most affected by your individual moral development or by the cultural values of the organization for which you work? Explain. 

Ethical decisions are decided by the culture and the environment of the business (Bernardi & Hayashi , 2013). Something are accepted in some cultures which may not be accepted in other cultures. For example, in the united States’, people exchange gifts during Christmas while in Asian countries gift giving is considered important to build business contacts. Businesses are built for the economic profit of the organizations involved and any kind of personal relationship formed between the parties may lead to one party benefiting more from it (Davidrajuh). It is important that the business aspect of things is maintained and the tasks are executed under the watch of the leaders of the organization. In case of business relationships, personal relationships also suffer because of the stressful environment.

In the current case, there are ethical scenarios as personal relationships are involved. Businesses are meant to facilitate interchange of transactions between two parties for economic benefit. The management has a number of responsibilities like division of work, discipline, unit of command and direction, subordination, equity, centralization, remuneration etc. (Venugopalan, 2011). Some of the ethical aspects involved in the tendering process include:

• The party with the best offer has be to awarded the contract in spite all personal relations and contacts
• The party should be evaluated on the basis of the price, quality of goods and previous work history only.
• All information should be circulated equally among the parties and no parties should be given any further importance.
• There should not be any kind of discrimination and everyone has the opportunity to be awarded the tender given he sticks of the specified criteria.
• It is the responsibility of the management to employee proper jurisdiction to handle the issue and keep a watch over things.
• The organization should make sure it is not viewed as an unethical organization in the eyes of the general public.
• The management has to make sure that the existing reputation of the firm is maintained and examples are laid out for in terms of the ethical practices of the firm.
• Gift giving in the tendering process could lead to legal action being taken against the parties

Some of the things to be kept in mind while awarding a tender to any party are (Ray et al., 2006):

• There should be proper measures and tools to share the conflict of interest if any.
• All parties should have equal information and the same should be communicated in a good manner to the interested manner before the proceedings start. The conditions specified should be the same in all aspects and points for all the interested parties.
• All things required by the legislature as well as the trade practices should be adhered to by the parties interested in the transaction.
• Cost of the bidding should be borne by the principal’s
• The confidentiality of information should be maintained and stuck to by the organization inviting tenders.

The buyer and the seller both need to maintain the code of ethics before making any decisions or offer.

In this particular case, the manager may decide to award to tender to Radax based on his personal relationships with them and he may even not get penalized or questioned for the same as the same may be regarded as a normal business transaction that meets the specified criteria. However, it is up to his moral judgment whether he deems the activity as ethical or unethical. He is in a state of conflict between his personal thinking and his business ethics.

There are different factors that constraint business relations of any company and they include (Davidrajuh):

1. Law: They are imposed by the government through ex post sanction. When performed, the law makes criminal conduct.
2. Market: Regulation of prices of goods and services is done by the law.
3. Code: Physical constraints like geography, mode of communication etc. make up the code.
4. Norms: Social norms are the informal methods of the community and the society.

Ethics is said to have a directoral role in this framework i.e. it guides the way the constraints exercise their power. Hence, there is an importance of human flourishing as the ultimate constraints and eventually on the business transactions.  

In any business environment, upbringing and academic past play a role that cannot be denied. The most important out of all these are values that an individual has. These values guide the decisions made by him all throughout the process. According to the social contract theory, the agents should be responsible for taking care of the needs of the society and that the agents should interact in such a way that the results yield the overall good the society, This shows that business decisions involve some kind of understand as to what is perceived as right and wrong by the individual himself. The social contract theory is made up of the welfare component and the social justice component (Fritzsche, 2007). Being able to understand one’s own values and articulate them is very important to make important business decisions and decide his overall behavior (Journal of values based leadership – Valparaiso University, 2008). The three criteria mentioned for moral behavior include (Chmielewski, n.d.):

• Neutral Vs Prescriptive
• Encouraging Vs Discouraging
• Judgmental Vs nonjudgmental

The Role of Personal and Cultural Values in Ethical Decision Making

It is important that we understand how our own values affect the environment around us. Lawyers receive advice that they should listen to their own moral values and make professional decisions (GREEN*). Corporate culture plays an equally important role in deciding the behavior of an employee. There is a good alignment between the employee’s own values and that of the employer when the connection is good and powerful.

Culture of an organization is the result of the shared beliefs, interactions and values of the people and how it changes their behavior over course of time. The behavior within the organization should be consistent overall. It holds the entire organization together and drives members to commit for a better change. There is also a direct relationship between ethical behavior and organizational culture (TrenÄÂín and John Graham Vysoká Škola Manažmentu, no date).

The factors holding the culture in place include (Deloitte, 2015):

1. Values of the organization
2. Role of middle level management
3. Accountability
4. Incentives
5. Consistency of information
6. Comfort in employees in speaking up
7. Justice

A good and healthy balance of these parameters lays the foundation of good business ethics in the culture of the organization.

If these parameters are engrained in good spirit in the organization, it is said to have built a good foundation of business ethics in its culture. Moral and ethics are different terms because morality depends from person to person. One person’s moral values may allow him to do something will another person’s values may not. The value system of the members of an organization should be same so that they can make consistent business decisions. 

Conclusion

It can be said that my own personal values will guide my decision to grant the tender to Radax. Whether, my value system allows me to value my personal relationships more and think that the matter is not grave enough will decide who gets the tender. The culture of the organization I work for will act as a supporting factor and previous examples and cases will help me make the decision eventually. If my seniors and co employees have laid down standards that I feel I need to adhere to, I will be bound to make rational ethical judgments.  

References: 

Chmielewski, C. (n.d.). The Importance of Values and Culture in Ethical Decision Making

Davidrajuh, R. (n.d.). Exploring Ethical Implications of Personal Relationship in Dyadic Business Exchanges .

Deloitte (2015) ‘Corporate culture: The second ingredient in a world-class ethics and compliance program’.

Finegan, J. (1994) ‘The impact of personal values on judgments of ethical behaviour in the workplace’, Journal of Business Ethics, 13(9), pp. 747–755. doi: 10.2307/25072584

Fritzsche, D. (2007). Personal Values’ Influence on the Ethical Dimension of Decision Making. Journal of Business Ethics.

GREEN*, B. A. (n.d.). The Role of Personal Values in Professional.

Harrison, K., & Galloway, C. (2005). Public relations ethics: A simpler (but not simplistic) approach to the complexities.

Rahman, A. (2014). Leadership Ethics and Culture: A Comparative Note Between United States and China. International Journal of Business and Management Invention.

Steidlmeier, P. (1999). Gift Giving, Bribery and Corruption: Ethical Management of Business Relationships in China. Journal of Business Ethics.

TrenÄÂín and John Graham Vysoká Škola Manažmentu (no date) ‘The role of corporate culture in business ethics’.