Those in philosophy added a theoretical framework to the area that had been previously lacking. Within that framework they integrated both the personal responsibility approach that ethics in business emphasized and the social responsibility of business approach, which they pushed explicitly into the ethical realm by applying ethics to economic systems, to the institution of business, and especially to corporations. Common sense morality and the ethics in business approach that I described are fine for the ordinary, everyday aspect of ethics in business.
Employees shouldn't steal from their employers, and companies shouldn't cheat their customers. No one needs an academic business ethicist to tell them that. And if that is all business ethics had to contribute, it would indeed be superfluous. But what the business ethicists could add is not only arguments that show why most common sense judgments are indeed correct, but also the tools by which the morality of new issues could be intelligently debated.
They could and did also join that debate—the debate for instance on whether affirmative action is justifiable, and even more basically, what affirmative action means. Ethicists analyzed and defended workers' rights, the right to strike, the ethical status of comparable worth in the marketplace, what constitutes bribery and whistle blowing, and so on. One need only look at the journals for the wide variety of issues that have been clarified, discussed, and argued—often to a conclusion. The moral status of leveraged buyouts, of greenmail, of outsourcing, of restructuring, of corporate governance raise complex issues to which ordinary common sense morality has no ready answers or obvious intuitive judgments.
It is odd that no company would think of making a serious financial commitment without extensive study, but some people think that moral judgments should be made instantaneously and require no thought, study, debate or time.
Levi-Strauss, long noted for governing by values, knew enough that it had a high level committee study whether it was appropriate to operate in China for three months before coming to a decision.
If those in business ethics wrote only for themselves, however, one could well question the relevance of what they wrote to business. What they wrote helped inform a large number of teachers who teach business ethics, and in turn has influenced a large number of students who have gone on to be practitioners.
Moreover, many of those in business have also turned to the writings of those in business ethics, or have asked them for guidance as consultants on issues or for help in writing corporate codes or designing training programs. The media as well frequently turns to those in the field for guidance, help, or sound bites. Many of the academics in business ethics have made an effort to open a dialogue with those in business, and have frequently been successful in doing so.
The audience, therefore, has been not only colleagues and students, but also corporate managers and the general public. Mediating between the academic in his or her office and the corporate executive have also been a host of non-academic consultants, many of whom use the scholarly material to become informed about the state of the art and the arguments for or against various positions. Some of these act not only as intermediaries but, in a sense, as translators, translating technical jargon into business-speak.
The development of the field, moreover, was not restricted to textbooks and courses. What differentiates earlier sporadic and isolated writings and conferences on ethics in business from the development of business ethics after the mids is that only in the latter period did business ethics become institutionalized on many levels. By the mids there were at least courses in business ethics taught across the country to 40, students.
Not only were there at least twenty textbooks in the area and at least ten casebooks, but there were also societies, centers and journals of business ethics. The Society for Business Ethics was started in The first meeting of the Society for Business Ethics was held in conjunction with the meeting of the American Philosophical Association in December in Boston.
Other societies turned increasing attention to business ethics, including the Social Issues in Management Division of the Academy of Management, which had been established in Other societies emerged, such as the International Association for Business and Society.
Still other societies, some specialized, and some general were formed as well. Many individual European nations in turn established their own ethics network or business ethics society. In general, the European approach to business ethics has placed more emphasis on economics and on social structures, with less emphasis on the activities of corporations as such, than the U.
Both approaches were captured in the International Society for Business, Economics and Ethics, which was founded in That society in turn helped national groups throughout the world to develop local or regional societies of business ethics, so that now there are societies in a large number of both developed and less developed countries. Simultaneous with these developments were the founding of centers for business ethics at a variety of academic institutions, and the establishment of a number of journals dedicated to business ethics, in addition to those journals that carry articles in business ethics among others.
The Bentley College Center for Business Ethics was founded in and continues as one of the leading business ethics centers. Over a dozen more appeared within the next ten years, and many others have been established since then around the United States and in countries around the world. The Markkula Center includes business ethics as one of its areas, as we well know. A number of other journals in the field have appeared since then.
The field has continued to develop as business has developed. By the mid s business had clearly become international in scope, and the topics covered by business ethics expanded accordingly. The focus on multinational corporations has been broadened in the light of the globalization of business to include ethical issues relating to international organizations, such as the World Trade Organization. Similarly, just as business has moved more and more into the Information Age, business ethics has turned its attention to emerging issues that come from the shift.
By business ethics was well established as an academic field. Although the academicians from the start had sought to develop contacts with the business community, the history of the development of business ethics as a movement in business, though related to the academic developments, can be seen to have a history of its own.
Business ethics as a movement refers to the development of structures internal to the corporation that help it and its employees act ethically, as opposed to structures that provide incentives to act unethically. The structures may include clear lines of responsibility, a corporate ethics code, an ethics training program, an ombudsman or a corporate ethics officer, a hot or help line, a means of transmitting values within the firm and maintaining a certain corporate culture, and so on.
Some companies have always been ethical and have structured themselves and their culture to reinforce ethical behavior. But most companies in the s had paid little attention to developing such structures. That slowly began to change, and the change became a movement when more and more companies started responding to growing public pressure, media scrutiny, their own corporate consciences, and, perhaps most importantly, to legislation.
We have already seen that big business responded to criticism in the s by turning to corporate social responsibility, and the movement can be traced back to that period. Civil Rights Act of was the first piece of legislation to help jump start the business ethics movement. The Act prohibited discrimination of the basis of race, color, religion or national origin in public establishments connected to interstate commerce, as well as places of public accommodation and entertainment.
Many corporations added equal opportunity offices to their human resources department to ensure compliance, and in general the consciousness of business about discrimination, equal opportunity, and equal pay for equal work came to the fore. This in turn led to more consciousness of workers' rights in general, and of corporate America's need to respect them. Occupational Safety and Health Act of enforced the mandate to take those aspects of workers' rights seriously.
In the same year the Environmental Protection Act forced business to start internalizing the costs of what had previously been considered externalities—such as the discharge of toxic effluents from factory smokestacks. In , following a series of scandals involving bribery by U. The Act was historic because it was the first piece of legislation that attempted to control the actions of U.
The Act prohibited U. A number of companies prior to the Act had already adopted the policy of refusing to pay bribes as a matter of ethical principle. IBM, among others, was known for adherence to this policy, as was Motorola. The Act forced all companies to live up to the already existing ethical norm. Its critics complained, however, that it put U.
In General Motors and a group of other U. The signatories agreed that they would not follow the discriminatory and repressive apartheid legislation in South Africa and would take affirmative action to try to undermine apartheid not only by not following the existing South African apartheid statutes, but also by lobbying the South African government for change.
Adherence to the Principles was seen as a way by which American companies could ethically justify doing business in South Africa. They were adopted in part as a response to public pressure on the companies to leave South Africa. The Principles have become a model for other voluntary codes of ethical conduct by companies in a variety of other ethically questionable circumstances. By the s many companies had started reacting to calls for ethical structures, and more and more started adopting ethical codes and instituting ethics training for their employees.
Each wave of scandals, which seemed to occur every ten years or so, resulted in more pressure for companies to incorporate ethics into their structures. In the Union Carbide disaster at its plant in Bhopal, India, which killed thousands of people and injured several hundred thousand, focused world attention on the chemical industry.
This led to the chemical industry's adopting a voluntary code of ethical conduct known as Responsible Care, which became a model for other industries.
In , in response to a series of reported irregularities in defense contracts, a special Commission Report on the situation led to the establishment of the Defense Industry Initiative DII on Business Ethics and Conduct, signed by thirty-two it soon increased to fifty major defense contractors.
Each signatory agreed to have a written code of ethics, establish appropriate ethics training programs for their employees, establish monitoring mechanisms to detect improper activity, share their best practices, and be accountable to the public. The DII became the model for what has been the most significant governmental impetus to the business ethics movement, namely, the U. Federal Sentencing Guidelines for Corporations. That law took the approach of providing an incentive for corporations to incorporate ethical structures within their organizations.
If a company could show that it had taken appropriate measures to prevent and detect illegal and unethical behavior, its sentence, if found guilty of illegal behavior, would be reduced considerably. Appropriate measures included having a code of ethics or of conduct, a high-placed officer in charge of oversight, an ethics training program, a monitoring and reporting system such as a "hotline" , and an enforcement and response system.
The result was a concerted effort on the part of most large companies to incorporate into their organizations the structures required. This led to the development of a corporate position known as the Corporate Ethics Officer, and in to the establishment of the Corporate Ethics Officer Association.
The most recent legislative incentive to incorporate ethics in the corporation came in the Sarbanes-Oxley Act of , passed as a result of a rash of scandals involving Enron, WorldCom, Arthur Andersen and other prominent corporations. The Act requires, among other things, that the CEO and CFO certify the fairness and accuracy of corporate financial statements with criminal penalties for knowing violations and a code of ethics for the corporation's senior financial officers, as well as requiring a great deal more public disclosure.
Corporations have responded to legislative and popular pressure in a variety of ways. The language of social responsibility rather than explicitly ethical language is still probably the most commonly used. Achieving an acceptable ethical framework for businesses to operate has been a journey for the United States, starting over years ago, primarily for protecting factory workers during the spread of the industrial revolution to the shores of New England.
Since then, ethical practices have evolved into a complex set of codes that attempt to oversee the billions of transactions executed on the daily. With the greater ability to conceal illicit business practices, the role of maintaining an ethical perspective will be increasingly valued as the world economy continues to expand. Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.
The Gilded Age of the United States not only gave rise to rapid industrialization, but also the debate over business ethics. The subject of business ethics has been quite relevant since the rise of business within the United States, under the period of rapid industrialization, better known as the Gilded Age in the late 19th century.
The Beginnings The economy of the United States changed profoundly following the period of outstanding economic growth in the late s. Industry Reborn After the end of World War II, the United States experienced some of the highest sustained economic growth that the world has ever seen. Financial Grievances The stock market reached new heights throughout the late 20th century, driving greater interest for the establishment of ethical standards in a financial environment.
Current Issue Volume 64, Issue 1 Fall California Management Review Berkeley-Haas's Premier Management Journal Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business. Fordham Law Review. Accessed June 1, Business Essentials. Sustainable Investing. Real Estate Investing. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Business Essentials Guide to Mergers and Acquisitions. Business Business Essentials. Key Takeaways Business ethics guide a company's operations and includes such things as environmental issues, social responsibility, and employee-employer relations.
While laws related to business ethics to exist, it is up to each business to establish a code of ethics within the company. Business ethics saw a notable shift in the s when more companies started embracing social responsibility. Business ethics saw another transition phase in the s and s when philosophy shifted from pure authoritarianism and towards greater collaboration. One of the most important ethical considerations in recent years is maintaining consumer privacy while companies mine user information for valuable marketing data.
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