Business Ethics in South Africa
Gedeon J. Rossouw
Background
Business ethics both as a practice and academic field suffered under the apartheid regime in South Africa. During the final years of the apartheid era, South African corporations were barred by sanctions from participating in the world market. Consequently, they felt them selves compelled to find alternative access to world markets. Ingenious, but often illegitimate and immoral, ways were found to circumvent the sanction barriers. Such attempts at sanction busting were praised rather than repudiated by the government and the business community. This led to a business culture that endorsed immoral means of doing business as good business practice.
In the context of the liberation struggle against apartheid, immoral business practices were sometimes endorsed as legitimate means to achieve a moral end. Fraudulent actions and deliberate deceit were legitimized as necessary means to overthrow an illegitimate government. In was within this situation that the term ‘‘struggle bookkeeping’’ was coined.
Teaching
The emergence of business ethics as an academic field coincided with the demise of the apartheid regime. By the late 1980s the first courses in business ethics were introduced at a few business schools. Over the next decade there was a steady growth in the number of business schools that introduced courses in business ethics. By the turn of the twenty first century it had become commonplace to have at least an elective module in business ethics at business schools. There is no dominant model for teaching business ethics at business schools in South Africa. At some schools business ethics is part of the mandatory core curriculum, others offer it only as an elective, while others claim that it is integrated into all subjects offered.
Besides the courses at business schools, business ethics modules are also offered in a variety of other university disciplines, including philosophy, human resource management, business management, and accounting and auditing. The introduction of business ethics at undergraduate level – especially in commerce faculties – was triggered by business scandals that cast business and specifically the accounting and auditing professions in a negative light. In response to these negative perceptions, external pressure by professional bodies was exerted upon institutions of higher learning to include business ethics in the undergraduate curriculum.
A Technikons module on business ethics is included in the generic business management program. All Technikons in South Africa share a common generic curriculum. This generic curriculum is supposed to form 70 percent of the curriculum offered at each of the Technikons. The remaining 30 percent is complied on the initiative of the department or lecturer presenting the course. The generic business management program includes the theme of business ethics, but does not prescribe the content of business ethics. A recent survey on the teaching of business ethics at Technikons revealed that the business ethics module is in need of extensive development (see Alberts, 2002).
Research
The research agenda of business ethics is driven by the realities of post apartheid South Africa and the African context. The need to rebuild the moral fiber of the business community dominates that agenda. The bulk of research is focused on how ethics can be institutionalized in corporations. The two Corporate Governance Reports for South Africa published in 1994 and 2002 gave further impetus to this research by recommending that corporations should actively manage their ethics. In addition, corporate social responsibility, affirmative action, and HIV/ AIDS in the workplace have also attracted a fair amount of research. More recently, IT related ethical issues have also become part of the research focus.
Business Ethics Institutes
The proliferation of business ethics modules at institutions of higher learning also resulted in the emergence of centers and institutes with a business and professional ethics focus. Several such centers and institutes currently exist in South Africa. These institutes typically focus on being research and resource centers, while simultaneously providing consultancy services. The initiative for the formation of an African network of business ethics also originated in South Africa and eventually resulted in the formation of the Business Ethics Network of Africa (BEN Africa) in 2000. In 2003 BEN Africa had members in 25 African countries. BEN Africa publishes regular newsletters, presents an annual conference, and has its own website (www.benafrica.org).
Ethics in Business
In 1994, the year of South Africa’s first democratic elections, the first corporate governance report for South Africa was published. It soon became known as the King Report on Corporate Governance, named after Mervin King (SC) who chaired the committee that drafted the report. Commissioned by the main players in the private sector, the report adopted an inclusive corporate governance model, which advocated that boards of directors should not only pursue the interests of shareholders, but also be responsible to all their stakeholders. It also encouraged corporations to commit themselves to the highest standards of ethical behavior.
Although the recommendations of the King Report were not legally enforced, they were nevertheless embraced by corporate South Africa and became very influential. After the publication of the King Report the number of companies with codes of ethics increased sharply. In 2000 a second committee on corporate governance was convened which drafted the Second King Report on Corporate Governance, published in 2002. The King 2 report once more embraced the inclusive approach to corporate governance and extended it further. It went beyond the recommendation of King 1 in recommending a culture of triple bottom line reporting. Specifically with regard to ethics, it advised companies to engage with their stake holders in determining their ethical standards. It also advised companies to actively manage and institutionalize ethics. There is also an expectation that companies should account their ethics performance, submit it to independent verification, and ultimately disclose it to shareholders.
The King 2 report once more advocated a self regulatory regime where corporations are encouraged to adopt good governance as best business practice. Despite the lack of legal enforcement of the standards of governance recommended by King 2, they are widely endorsed by the South African business community. The recommendations of King 2 have since been reflected in the revised listing requirements of the JSE Securities Exchange, as well as in law reform that is still in the making. The public sector is also included in the scope of King 2.
King 2 distinguishes three areas of ethical obligation for business. First, there is organizational integrity, which refers to the standards of behavior adopted by the organization as well as the institutionalization thereof. Second, there are the internal social obligations of organizations that refer specifically to safety and health issues, employment equity, and the development of human capital. Special emphasis is placed on the responsibility of business with regard to HIV/AIDS and gender equity. Third, there are the external social obligations of organizations that focus mainly on corporate social responsibility, black economic empowerment, and societal transformation.
Bibliography
Alberts, E. (2002). Integration of business ethics in the curriculum of human resource management at Technikons in South Africa. Unpublished doctoral dissertation in Afrikaans. Johannesburg: Rand Afrikaans University.
Barkhuysen, B. (1999). A survey of the current status of business ethics as academic field in Africa. Unpublished masters’ dissertation. Johannesburg: Rand Afrikaans University.
Rossouw, G. J. (1997). Business ethics in South Africa. Journal of Business Ethics, 16, 1539 47.