LEVERAGING INDUSTRY 4 0 THE NEED FOR VIETNAMESE BUSINESS TO EMBRACE GLOBAL BUSINESS ETHICS Nguyen Thi Ngoc Anh, PhD National Economics University Abstract The Fourth Industrial Revolution, also known[.]
LEVERAGING INDUSTRY 4.0: THE NEED FOR VIETNAMESE BUSINESS TO EMBRACE GLOBAL BUSINESS ETHICS Nguyen Thi Ngoc Anh, PhD National Economics University Abstract: The Fourth Industrial Revolution, also known as ‘Industry 4.0’, is changing how business functions Technology and digitization now enhance labor productivity, increase economic output, create more skilled jobs, and provide huge socioeconomic gains for all economies There are several articles dealing with the issue of the sustainability of business in the context of Industry 4.0 These articles point to the benefits of these developments as well as the challenges that mankind has to face as a result The following article approaches this issue of sustainability from an ethical perspective It addresses the global ethical issues inherent in Industry 4.0, emphasizing the importance of business ethics The article analyses current business ethics in Vietnam in comparison with global business ethics The author finds that there are likely to be significant benefits in enhancing Vietnamese business ethics as Vietnam integrates into the global economy Keywords: Sustainable development, the Fourth Industrial Revolution, Industry 4.0, business ethics Sustainable Development in Industry 4.0 and Ethical Issues Industry 4.0 is characterized by a fusion of technologies that is blurring the lines between the physical, digital and biological spheres There are specifically nine technological advances that have created the Fourth Industrial Revolution: autonomous robots, simulation, horizontal and vertical systems integration, the industrial Internet of Things (IoT), cybersecurity, cloud, additive manufacturing, and augmented reality, as well as big data and analytics (The Boston Consulting Group, 2015) 346 The First Industrial Revolution used water and steam power to mechanize production, the Second Industrial Revolution used eletricity to create mass production, and the Third used electronics and information technology to automate production When compared with these previous industrial revolutions, Industry 4.0 is evolving at an exponential rather than a linear pace It is disrupting almost every industry in every country The breadth and depth of these changes herald the transfomation of entire systems of production, management, and governance, and also all kinds of organizations In 2015, while setting the global goals for 2030, the UN specially outlined 17 major goals and 169 targets for humanity The overarching aim is to “end poverty, protect the planet, and ensure prosperity for all” (UN General Assembly, 2015) Accepted by world leaders and fomulated as a continuation of the Millennium Development Goals, these goals are separated into five major categories: People, Planet, Prosperity, Peace, Partnership Figure Ps of Sustainable Development, Source: UN Sustainable Development Goals, 2015 347 There has been a great deal of commentary concerning our ability to reach the Sustainable Development Goals (SDG) According to Tsvetkova, the challenges in achieving the five types of SDG vary Some goals and targets are regarded as too ambitious, too vague, or just unachievable in the time remaining Compared to their predeccessors, it should be noted, the SDG are extremly wide in scope and cover a far greater range of needed actions (Tsvetkova, 2017) However, no one can deny the human significance of the SDG, which are indispensable outcomes that humanity in general, and each country in particular, must attain To achieve the SDG, each country, each organization or enterprise, and each individual must address ethical issues Industrial Revolution 4.0 and Global Ethical Issues According to Plutschinski, Industry 4.0 could yield greater inequality, particularly in its potential to disrupt labor markets As automation substitutes for labor across the entire economy, the global job market could be increasingly segregated into “lowskill/low pay” and “high skill/high pay” segments, which in turn will lead to an increase in social tensions (Plutschinski, 2017) Plutchinski cites the estimate made by Bilger from the Wharton School of Business, that “all the developed nations on earth will see job loss rates of up to 47% within the next 25 years” because of artificial intelligence, robotics, and other technology that is to be ushered in Many workers will be disillusioned as their own real incomes and those of their children will continue to stagnate An economy that offers only limited access to the middle class is a recipe for democratic malaise and dereliction (Plutschinski, 2017) The network economy fostered by Industry 4.0 will lead to monopolies, which have a dangerous side effect, because in every network the benefit for all participants increases as new participants join While the old industrial economy is driven by scale effects, the new information economy is driven by network effects The key concept of the new economy is “positive feedback” Its success is self-replicating Co-working spaces in the network economy are booming The share of virtual work is increasing 348 while the share of manual work decreases There is a reasonable concern that “clickworkers” could become the day-laborers of digital modernism Industry 4.0 will change not only what we do, but also who we are It will affect our identity and all the phenomena associated with our identity, such as our sense of privacy, our notions of ownership, our consumption patterns, and the time we devote to work and leisure, as well as how we develop our careers, cultivate our skills, meet people and nurture relationships (Plutschinski, 2017) Issues now arising include whether it is acceptable for a business to review an individual’s Facebook or other social networking account; whether, when shopping, the fact that QR codes and microchips give a consumer’s information to business – including their location, what they are looking at, and what they have done in the last day (via cell phone tower triangulation) is problematic for that individual; and whether the individual’s nonprofessional life should be subject to the ethics of the corporation when they are not at work This final issue is in essence the question of whether an individual is a citizen first and then an employee, or an employee first and then a citizen (O.C Ferrell, Fraedrich, L Ferrell, 2016) According to Pride and O.C Ferrell, global ethical issues also surround the acquisition and sale of data Cloud computing has instigated a new paradigm Business must understand that it is no longer appropriatedevelop strategies based on past practices Instead progressive businesses begin with petabytes of information and look for relationships and correlations in order to discover new business trends Big data deals with massive date files obtained from structured and unstructured databases (Pride and O.C Ferrell, 147) What once was thought of as intrusive is now accepted and promoted Only recently have people begun to ask whether this level of information collection by business is acceptable Companies are becoming more sophisticated in understanding their customers through the use of predictive analytic technologies Such technologies, as well as advances in consumer behavior research, have reduced the consumer’s ability to choose independently Business now knows how to better manipulate data at an elemental level 349 Scientist are already struggling with such dilemmas As we enter the new industrial era, we need a new set of codified morals to become global principles Global principles are integrity statements about foundational beliefs that should remain constant as businesses operate globally These principles address issues such as accountability, transparency, trust, the natural environment, the safety of employees, human rights, the importance of property rights, and compliance with legal requirements The principles are designed to focus on areas that pose many challenges to the ethical conduct of global business Ten global ethical principles that O.C Ferrell and L Ferrell offer are a valuable suggestion in the present context Global Principles for Ethical Business Conduct 10 Require accountability and transparency in all relationships Accountability requires accurate reporting to stakeholders, and transparency requires openness and truthfulness in all transactions and operations Comply with the spirit and intend of all law Laws, standard, and regulations must be respected in all countries as well as global conventions and agreements developed among nations Build trust in all stakeholder relationship through a commitment to ethical conduct Trust is required to build the foundation for high integrity relationship This requires organizational members to avoid major international risk such as bribery and conflicts of interest Law supporting this principles include the U.S Foreign Corrupt Practices Act, the U.K Bribery Act, OECD Convention, and UN Convention against Corrution Be mindful and responsible in relating to communities where there are operations The communities where businesses operate should be supported and improved as much as possible to benefit employees, suppliers, customers, and the community overall Engage in sustainable practices to protect the natural environment This requires the protection of the long – term well-being of the natural environment including all biological entities as well as the interaction among nature, inviduals, organizations and business stratergies Provide equal opportunity, safety, and fair compensation for employees Employees should be treated fairly, not exploited or taken advantage of, especially in developing countries Laws supporting this principle include equal opportunity legislation throughout the world Provide safe products and create value for customers Product safety is a global issue as various governments and legal systems sometimes provide opportunities for firms to cut corners on safety All products should provide their represented value and performance Respect human rights as defined in the UN Global Compact Human rights are a major concern of the UN Global Compact and most other respected principles statements of international business Support the economic viability of all stakeholders Economic viability supports all participants in business operations Concerns such as fair trade and payment of a living wage are embedded in this principle Respect the property of others Respect for property and those who own it is a broad concept that is an ethical foundation for the operation of economic system Property includes physical assets as well as the protection of intellectual property Source: O.C Ferrell, Fraedrich, and L Ferrell, Business Ethics – Ethical Decision Making and Cases, 11th edition, Cengage Learning, 2016, p 302 350 Ethical dilemmas are a new focus around the world No nation, organization, business or individual can ignore global business ethics when entering the global economy As mentioned above, the purpose of this article is to address the ethical business issues that Vietnam needs to pay attention to when integrating into the global economy in the context of Industry 4.0 Identifying Business Ethics in Vietnam Today Vietnam is still a developing country Vietnam's development is also a process of gradual improvement in both the mode of operation of the Vietnamese market economy and the social institutions based on that economy Business ethics in Vietnam has been posing problems both in terms of theory and practice For developed countries, business ethics have been considered by entrepreneurs to be a business development strategy, as the way to grow a business In these countries, business ethics are viewed as the decisive factor in the sustainable development and increased profitability of an enterprise This has been proven by many scholars studying the business practices of large companies in the United States and other developed countries (Hoffman, Frederick, Schwartz, 2001) This is because, in a country with a developed market economy, every company in a given business is always an organic part of the whole economy As a result, business decision-making behaviors and business practices are subject to social norms and regulations in both moral and legal terms In other words, in developed countries ethical standards have become indispensable to every business person, and for every business The entire legal system in these countries has played a major role in preventing business activities that violate social ethics in general, and business ethics in particular Moreover, in developed countries, because of institutional arrangements, including more sophisticated business ethics, adherence to business ethics creates value in terms of prestige, brand, product quality and customer service, by attracting more and more customers, and driving the company's productivity Meanwhile, in countries with less developed economies, such as Vietnam, due to their nascent legal systems, the opportunities for economic and social development are limited by the monopoly of the 351 state economy, corruption, and special interest groups The role of law is to regulate the identification and prevention of unethical business practices At present, Vietnam is building a socialist-oriented market economy under the control of the state, and considers this model of economic development in line with Vietnam's realities and trends in global economic development Vietnam has experienced 32 years of doi moi economic reforms, but the market economy is still in the process of perfecting both market mechanisms and social institutions This means that gaps persist in terms of business models and the legal environment for business activities Many businesses have not complied with the law If a country’s business law is incomplete, and business structures are unclear, business behavior is opportunistic, snatching at profit The serious business ethics violations that the community has suffered so far, due to the lack of formal governance of business conduct, are gradually being supplanted by compliance with the law, and refraining from acting in a manner contrary to the public interest It has been clearly shown that when the legal system is incomplete, the gaps that persist will increasingly encourage businesses to violate business ethics In Vietnam, there have been many profitable enterprises that have violated environmental regulations The General Statistics Office shows that 80% of Vietnam's industrial parks are in violation of environmental regulations Each year, Vietnam is suffering from environmental pollution equivalent to 5% of GDP While this stands at 10% in China, if current environmental pollution increases, Vietnam could actually overtake China in pollution The World Bank's assessment also shows that in Vietnam is causing up to 5% of GDP annually In addition to this general damage, Vietnam has been spending up to US $ 780 million annually for the treatment of diseases caused by pollution Many companies that have violated rules against fraud, counterfeit and imitation products, have been eventually discovered and penalized, but delays in prosecution have inadvertently created businesses that disdain business law, and repudiate the concept of business ethics In recent years, when a number of businesses have been dealt with by the law, these businesses and even the general public have taken the 352 ... the ethical business issues that Vietnam needs to pay attention to when integrating into the global economy in the context of Industry 4. 0 Identifying Business Ethics in Vietnam Today Vietnam... organizations In 201 5, while setting the global goals for 203 0, the UN specially outlined 17 major goals and 169 targets for humanity The overarching aim is to “end poverty, protect the planet, and... practice For developed countries, business ethics have been considered by entrepreneurs to be a business 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