Business Law & Ethics
Assignment 1
Evaluative essay
Role of ethics in a partnership business
Table of Contents
Role of Ethics in a Partnership Business.........................................................................................3
Introduction..............................................................................................................................................3
The Importance of Ethics in Partnerships........................................................................................3
Challenges of Upholding Ethics in Partnerships............................................................................5
Conclusion...............................................................................................................................................7
References...............................................................................................................................................8
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Role of Ethics in a Partnership Business
Introduction
Ethics are important in any business as they act as the foundation in partnerships that
involve interdependency, co-operation, and delegation. Partnerships are defined as a process
whereby two or more people work together and this makes them susceptible to ethical problems
emanating from varying values, objectives or perceptions. For instance, there can be problems
such as the division of the profits, leadership in the management of the business or the future
direction of the business that can lead to conflict if not addressed. Ethics provide a way of
managing such issues and promote the right thing in any partnership between two or more
organizations. Ethical principles can enhance trust that is a common foundation of respect and
cooperation between partners (Kamila & Jasrotia, 2023). Ethical decision making also help in
preventing the occurrence of legal fights that may be damaging to the business and personal
relationship. For instance, ethical principles help the partners to address the conflicts in a
constructive manner and through negotiations than through confrontation. Also, ethics help in
the sustainability of the business as it ensures that the business practices are ethical, legal and
socially acceptable. A partnership that focuses on the ethical culture receives recognition and
trust from clients, investors and employees therefore gaining a competitive edge (Pembi & Ali,
2024). For example, Hewlett-Packard (HP) is a real-life case that depicts how ethical problem
solving between partners may lead to a great legacy while Arthur Andersen-Enron scandal is a
real-life failure that shows how unethical practice leads to a terrible consequence. This
evaluative essay discusses the importance of ethics in partnerships and the challenges
associated with it.
The Importance of Ethics in Partnerships
It is important for any partnership to be built on trust and ethical behavior is key in
fostering that trust. Partnerships are alliance that require the partners to work together and
share power, resources and risks and this makes it important to have clear, equitable and
accountable business relation. According to Lansing et al. (2023), the partners who demonstrate
their integrity on a regular basis create a virtuous circle of honesty and openness, making all the
participants of the partnership feel comfortable and safe. Ethics can reduce the likelihood of
miscommunication, helps avoid discord, and enhance the belief that the decision being made is
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in the best interest of everyone involved. The Enron scandal, which led to the collapse of Arthur
Andersen is a clear example of the disastrous effects of ignoring ethics. This lack of trust
between partners compounded by their negligence in the fulfilment of their professional and
ethical duties culminating in the collapse of the firm and the disgrace it once held (Soepeno,
2024). This case not only led to the collapse of a leading accounting firm but also depicted that
unethical behavior could make the relationship and business opportunities bleak. On the other
hand, Ateeq and Milhem (2024) elaborate that the business partnerships that are based on
ethical principles and that enhance trust are a perfect base for sustainable development.
Through fairness, ethical practices nurture relationship, cooperation and establish an
organization as a trustworthy and reliable member in the industry. Ethics enhance trust which is
the foundation for dealing with difficulties and identifying opportunities and attaining common
objectives thus proving that ethics are not only the right thing to do, but the smart thing to do for
businesses entering into partnership.
Disputes are normal in partnerships, however, the ethical aspect gives a guide on how to
address such issues in a way that will make the partnership even more robust. According to
Hyatt and Gruenglas (2023), the partners who value fairness, accountability, transparency, and
respect are in a better position to handle conflicts that may arise in the course of working
together without necessarily escalating them into major conflict. Ethics promote free
communication and equitable consideration of values, meaning that every partner is involved in
decision making.
Another example is the co- founders of HP, Bill Hewlett and Dave Packard where ethics
played a big part in their partnership. In its early years, the company struggled through many
disputes and issues in making decisions that would affect the development of the company.
Hewlett and Packard in their decision making process followed the ethical problem solving
model and based their approach on trust, values and team decision making (Delic, 2017). This
compliance with ethical principles served them not only to solve current conflicts, but also to
build a high level of ethical values that would define the actions of the company over the years.
Ethical approach of the founders helped to highlight, how internal conflicts could be addressed
properly without negative impact on the overall partnership goals and objectives. Analyzing their
approach, it is possible to state that the focus on ethical principles had a profound impact. This
made Hewlett and Packard solve the ethical issue, which is a vital aspect in any partnership that
is to be effective. However, while their approach helped ensure that both partners felt valued
and were understood, it also meant that both people needed to be prepared to take
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responsibility and be flexible with their own agendas. This balance between the two founders
was important in ensuring that conflicts did not arise and that both could focus on the direction
of HP moving forward. This ethical framework was not only helpful in addressing the short term
issues but also helped HP in its long term success especially in developing the culture of
innovation and teamwork.
The strategy applied by Hewlett and Packard also reveals a possible weakness of
ethical leadership in cooperation. It is most probable that due to the emotional and financial
stakes present from the company’s infancy, specific decision-making processes in setting up the
business were particularly challenging. Perhaps, their ethical approach could have been under
pressure to produce poor results when dealing with increased external pressures such as
fluctuations in financial situations or competitions. However, the example clearly brings out the
fact as emphasized by Hewlett and Packard, that ethical leadership entails constant caution and
flexibility in the face of emerging situations. Finally, their success makes it possible to note how
ethics can positively influence partners’ well-being and engagement while also showing that
maintaining the ethical norm is a continuous process that must involve all interested parties
(Sucipto et al., 2023). Their case also shows that ethics is not just the moral high ground, but a
dependable and effective business foundation that can lead and sustain partnership in the face
of current and future crises.
In addition, ethical decision-making promotes a proper conflict solution, thus reducing
the level of resentment and increasing the level of unity. According to Xing (2022), as opposed
to conflicts being a cause of separation, if formed based on ethical principles, partnerships show
how conflict can be used as a way of strengthening relationships. This way, ethics provide
stability that not only solves current problems but also prevents future ones, proving that it is
possible to be both profitable and ethical. Another crucial aspect of ethics can be applied to the
issue of distribution of both profits and risks. Ethical partnership ensures all the partners feel
valued for the contribution they are making to the partnership so that there is no feeling of being
used or exploited. There can be conflicts between the two firms over the utilization of resources
hence detrimental to the partnership and the business. For instance, Ben & Jerry’s is a prime
example of best practices regarding ethical practices in profit-sharing and being socially
responsible. The founders did not only provide equality in the company among its founders but
also the employees and the community as a whole. This commitment to fairness not only
benefited their partnership but also awoke their brand image; establishing a customer loyalty
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(Benmelech, 2021). Ethical practices in profit distribution assert that the business environment
is harmonious and every partner works with one vision in mind; the achievement of the business
objectives. In addition, partners can maintain fairness to avoid legal actions and get negative
publicity, strengthening industry stability.
Challenges of Upholding Ethics in Partnerships
Nonetheless, it cannot be argued that ethics plays a significant role in partnerships,
although sustaining the partnerships may prove difficult because of the challenging dynamics of
collaborative decision-making and partners’ divergent agendas. According to Carpenter (2023),
to ensure that the partnership benefits from the resources and expertise, there are usually
conflicts of interest between individual and the collective benefits of the partnership. For
instance, in a partnership formed out of a family, bias towards a family member is unethical in
business. This may cause sectionalism from other partners or employees, thus posing internal
rivalry that is damaging to the business. Also, partners may differ in another way by their
perception of fairness or transparency which is a challenge in enforcing ethical standards.
However, though striking a balance between self-ambition and the goal of the business, one has
to be firmly wedded to ethical standards, which can be rather difficult.
One of challenge is rooted in external conditions that include high competition or
fluctuating financial markets. In highly competitive industries, there may be an urge to beat
competitors forcing partners to engage in some unethical practices like issuing misleading
information or even compromising on quality. Likewise, Tang et al. (2022) explains that, in
situations where the firms are financially stretched, partners may want to compromise on
ethicalities to reduce costs or make immediate profits. For instance, employees, particularly
those from the retail sector in failing firms, may suffer from unfair dismissal and wage cuts and
lose their benefits in the process. Although some of these choices might offer short-term
solutions, they rebound into unfavorable outcomes like tarnished images, lawsuits, and
deteriorated staff and shareholder relations.
Such challenges are made worse by power relations within partnerships. In cases where
one partner contributes most of the capital, has more experience, or is in a leadership role, they
can usually force decisions that reflect their self-interests. This may cause imbalance which may
lead to unfairness and a sense of inequality that makes the other partners to feel abounded or
forced to do something they do not want. Such dynamics are detrimental in the long run
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because trust and collaboration are pivotal for building a healthy ethical structure. Generally,
partners may stop believing in the partnership and existing conflicts may increase and
undermine the stability and sustainability of the business (De Klerk & Swart, 2023). These have
been enhanced by the lack of a well-defined structure and code of ethics to guide the partners
when dealing with such incidents or even values. It is important for companies to adopt robust
professional code of ethics that clearly lays down expectation on behavior, decision making and
also conflict of interest to mitigate these challenges. Through proper management of
partnership, internal disagreements can be handled adequately so that ethical principles may
continue to guide the partnership and its success.
Another important issue is that ethical norms are not constant, making another important
difficulty for partnerships. In light of these, partnerships should not be rigid while navigating
through the political realm as they seek to align themselves with the ever-evolving norms and
cultures of society as well as the regulations governing the partnerships. This environment calls
for a reconsideration of many organizational practices and structures to meet newly recognized
ethical and legal requirements. For example, concern towards the natural environments and the
society has made business operatives focus on corporate social responsibility and
sustainability. Some of the partnerships that do not meet these new standards may encounter
public outrage, fines and penalties from the law, loss of customer confidence and this greatly
affects a partner’s image and financial health (Rizvi, 2019). Addressing these dynamics calls for
certain preventive strategies, for example, frequent ethical guidelines audits and revisions,
emphasis on the transparency of partners’ cooperation, and encouragement of constant
development. Still, this process may become critical for small partnerships that have less
access to funds and people compared to their rivals. According to Nguyen et al. (2021),
evaluating ethical issues, updating the working practices, and educating the staff to comply with
new ethical requirements usually require considerable amount of time, energy, and money,
which can put pressure on the partnership. Accompanying these situations, disputes may
appear on distinct perceptions of the transforming ethical standards or the ways to address
those changes concerning prior business goals and objectives. However, when organizations
are unable to adapt ethically with the intention of making a change, their failure to do so could
cause future problems such as loss of reputation, decreased customer loyalty and reduced
competitiveness in a more sensitive consumer environment. Some of these changes can then
be used as successful strategies to enrich partnerships ‘brands, foster trust with groups of
stakeholders, and make the partnerships sustainable. In addition to the risks management,
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partnerships are also able to continuously learn ways of being ethical and present themselves
as organizations dedicated to the best ethical practices, which makes it clear that flexibility and
responsibility are among the key factors for success in the constantly evolving ethical
environment.
Conclusion
Ethics are important in partnership businesses because they create and sustain trust,
maintain equity and underpin the potential for long-term growth that a partnership can achieve.
Ethical trust fosters a good relation between partners, employees, and other stakeholders
because it assures them of respect. This is because, fairness in sharing profits, tasks, and
decisions makes all the partners to feel that they are important and this will increase their
motivation, thus decreasing chances of having disputes. Real-life cases like Hewlett-Packard
(HP) and Ben & Jerry’s show how ethical compliance can help partners maneuver around
potential obstacles, and consolidate their focus on ethical standards which then leads to stability
and growth. Hewlett and Packard, the founders of HP, provided a great example of ethical
problem solving and Ben and Jerry’s focus on fairness and social justice not only improved their
image but also their profitability. On the other hand, the Arthur Andersen-Enron scandal is one
of the worst instances of ethical failures where lack of ethics and professional standards not
only led to the collapse of a company but also to the loss of public confidence. These examples
thus emphasize the crucial role that ethics play in decision-making and corporate actions since
unethical actions have legal implications, financial consequences and negative effects on the
company’s image. Such cases prove how pertinent ethic is in decision making and in handling
affairs for unethicality brings legal consequences, loss and company image loss. Ethical
compliance is not only a legal requirement but is a business advantage that should be pursued
in support of the interests of the partnership and the general public. Thus, the integration of
ethics into partnerships can guarantee not only the economic efficiency of the activity but also
stability in the context of potential problems and uncertainty, making the cooperation of partners
sustainable in a competitive market environment.
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