But whether it was reforestation or cutting down on pollution or increasing diversity in the workforce, social responsibility was the term used to capture those activities of a corporation that were beneficial to society and usually, by implication, that made up for some unethical or anti-social activity with which the company had been charged.
The business schools responded by developing courses in social responsibility or social issues in management—courses which continue to thrive today. For the most part, in the s such courses put an emphasis on law, and the point of view of managers prevailed, although soon that of employees, consumers and the general public were added. The textbooks paid no systematic attention to ethical theory, and tended to be more concerned with empirical studies than with the development or defense of norms against which to measure corporate activity. The history of the social responsibility movement is a story in itself and one that different people are writing somewhat differently.
One version, by Archie Carroll, describes social responsibility as a pyramid that encompasses the four types of responsibility that businesses have: At the bottom is economic, then legal, then ethical and then philanthropic. And although some representatives of corporate social responsibility claim that they did business ethics before business ethics became popular and although some claim that what they do is business ethics, that is not the story of business ethics I am going to tell today.
Business ethics as an academic field emerged in the s. Prior to this time there had been a handful of courses called by that name; and a few figures, such as Raymond Baumhart, 11 who dealt with ethics and business. For the most part ethical issues, if they were discussed, were handled in social issues courses.
Theologians and religious thinkers, as well as media pundits continued writing and teaching on ethics in business; professors of management continued to write and do research on corporate social responsibility. The new ingredient and the catalyst that led to the field of business ethics as such was the entry of a significant number of philosophers, who brought ethical theory and philosophical analysis to bear on a variety of issues in business.
Business ethics emerged as a result of the intersection of ethical theory with empirical studies and the analysis of cases and issues. Norman Bowie dates the birth of business ethics as November , with the first conference in business ethics, which was held at the University of Kansas, and which resulted in the first anthology used in the new courses that started popping up thereafter in business ethics. In three anthologies in business ethics appeared: In the first single-authored books in the field appeared: Velasquez, Business Ethics: Concepts and Cases.
The books found a ready market, and courses in business ethics both in philosophy departments and in schools of business developed rapidly. As they did, the number of textbooks increased exponentially.
The field developed very similarly to the field of medical ethics, which had emerged ten years earlier in the s, and the name paralleled that of the earlier field—although even whether the term "business ethics" should be adopted was discussed among the relatively small group that was engaged in starting what has become a field. The seminal work of John Rawls in , A Theory of Justice , had helped make the application of ethics to economic and business issues more acceptable to academic philosophers than had previously been the case.
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Whereas most of those who wrote on social issues were professors of business, most of those who wrote initially on business ethics were professors of philosophy, some of whom taught in business schools. What differentiated business ethics as a field from social issues in management was 1 the fact that business ethics sought to provide an explicit ethical framework within which to evaluate business, and especially corporate activities. Business ethics as an academic discipline had ethics as its basis. While social responsibility could be and was defined by corporations to cover whatever they did that they could present in a positive light as helping society, ethics had implicit in it standards that were independent of the wishes of corporations.
To that extent, 2 the field was at least potentially critical of business practices—much more so than the social responsibility approach had been. If we take Archie Carroll's pyramid, those in business ethics did not see ethics as coming after economics and law but as restraints on economic activity and as a source for justifying law and for proposing additional legal restraints on business when appropriate.
As a result business ethics and business ethicists were not warmly received by the business community, who often perceived them as a threat—something they could not manage, preaching by the uninformed who never had to face a payroll. The development of the field was far from easy, and those academics working in it initially also found a cool reception both from their colleagues in philosophy departments and from those in business and in business schools.
The former typically did not see business as a philosophically interesting endeavor, and many of them had an anti-business mind-set. The latter questioned whether philosophers had anything of interest to bring to business. The initial efforts were tenuous, and more and more people entered the field who were often ill-informed, or who, in fact, adopted polemical attacks against or positions in defense of business. Many observers dismissed business ethics as a fad that would pass. Many misunderstood its aims and envisioned it as providing justification or a rationale for whatever business wanted to do.
It took a number of years for the field to define itself, incorporate standards of scholarship and rigor, and become accepted. As a field, business ethics covered the ethical foundations of business, of private property, and of various economic systems. Related issues, such as the environmental impact of business actions, were included in most courses and texts, as were, with increasing attention, the activities of multinational corporations.
As a field, business ethics included a good deal, but not all, of what was covered in social issues courses and texts, as well as giving structure to discussions of ethics in business. As it emerged by the middle of the s it was clearly interdisciplinary, with the lines between philosophy and business research often blurred. Initial discussions of business ethics introduced students to two of the basic techniques of moral argumentation, that used by utilitarians who hold that an action is right if it produces the greatest amount of good for the greatest number of people , and that used by deontologists who claim that duty, justice and rights are not reducible to considerations of utility.
Other approaches were soon introduced including natural law, virtue ethics based on Aristotle , and the ethics of caring often associated with a feminist approach to ethics. An initial philosophical discussion that arose concerned the moral status of corporations and whether one could appropriately use moral language with respect to them, or whether the only proper objects of moral evaluation were human beings and their actions. That controversy has not completely subsided, but most authors take into account the fact that most people do attribute actions and policies to corporations as well as to the individuals within them.
What did the development of business ethics as an academic field add that common sense morality couldn't handle; and who was the target audience? 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.
BUSINESS ETHICS (Encyclopedia)
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 European Review in January 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.
Oxford University Press, 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. Self-monitoring of adherence to a corporation's stated principles and self-adopted standards is becoming more common, and some companies have voluntarily adopted monitoring of their practices, policies and plants by independent auditors. The notion of a Triple Bottom Line, which involves financial, social and environmental corporate reporting, has been adopted by a number of companies.
Other popular reporting mechanisms include corporate environmental sustainability reports and social audits, which vary considerably in what is reported and how it is reported. Ethical investing is another aspect of the movement, and mangers of ethical investment funds have begun proposing stockholder proposals as a means of encouraging more ethical behavior on the part of corporations in which they own stock. Nor is the business ethics movement confined to the Unites States.
Other countries have adopted legislation similar to that of the United States, and the UN has developed a voluntary Global Compact for Corporations. The Compact, which was endorsed by all governments, contains nine guiding principles, which focus on human rights, labor standards, and the protection of the environment. Over 1, companies world wide have joined the compact, and it seems likely that more and more will feel the pressure to become signatories and to abide by the required standards. There is an interaction between economic and aesthetic concepts of values that necessitates a cultural concept of economics, looking at the cultural dimensions of economic institutions, management and political economy.
So Koslowski considers that the ethical economy consists of three fundamental areas of analysis: The theory of the ethical presuppositions of economics; 2. The economic theory of ethics; and 3. The economic and ethical theory of goods and value-qualities of culture. Together, this can be said to form an ethical economy of human institutions Koslowski Koslowski considers this ethical economy as a return to the older practical philosophy, founded by Aristotle, Kant and Adam Smith. It is the task of ethical economy to reintegrate this approach in economic thinking.
This means that ethics should not only be abstract philosophical metaethics, but also concrete ethical reflection about human action in concrete social circumstances. Economic ethics in the ethical economy must be practical ethics dealing with concrete life situations of human action Koslowski Why do we need ethical economy today? What is the need to focus increasingly on the development of this economic ethics, expressed in political economy, business ethics and administrative ethics?
Koslowski mentions three important reasons for developing such an ethical economy:. The first reason is the problem of unintended side-effects of economic action externalities. Side- effects are consequences for society, nature and culture of economic action. They are both problems and reasons for the need for economic ethics. Human power over nature is increasing, therefore practical ethical action and responsibility is important.
In his analysis of side-effects Koslowski refers to thermodynamics and to the necessity of economic systems to adapt and cope with their environments. Our power to destroy the world due to unintended consequences of our actions necessitates ethical reflection about economic externalities Koslowski The second reason of the rediscovery of the human person in the social sciences means that there is no autonomy of scientific and economic reason in economic sciences.
There is always a human element. Economics cannot be a pure physical and natural science because it relies on human action and intelligence. The third reason is that it is necessary to have a normative dimension of economic action because the economic element has been generalized to all spheres of society. When the economic system is generalized it brings with it the need to deal with the social and ethical elements of economic action.
Koslowski argues that the differentiation of society has led to the generalization of one subsystem, namely the economic subsystem. At the same time there has been increased separation between the sphere of work and the sphere of leisure. But the economic and instrumental approach has also started to dominate the sphere of leisure. However, this cannot be accomplished without a concern for the cultural dimensions of economic action.
Therefore, we need to integrate ethics and economics when we deal with the generalization of the economic approach to all spheres of society. A political and ethical economy is needed because of the extension of economics to all parts of society. Indeed, Koslowski defines his ethical economy as a post-modern economy moving beyond the modernist economy of Hobbes, Mandeville and Adam Smith and also Marx, separating ethics and economic action. The attempt to make economics into a mathematical and mechanistic theory thus separating ethics and economics has failed.
Accordingly, Koslowski was very open to postmodernism since he wanted to be open to new elements of ethics and economics Koslowski Althammer criticizes the instrumental character of the framework conditions as it is proposed in the theory of order ethics. Instead we can say that the ethical economy searches to define the ethical basis for the economy as suggested by Koslowski. Ethics cannot be reduced to economics.
Rather, it is necessary to define the correct ethical conditions for economic action with regard to definition of the good in relation to ethical decision-making in the economy. The instrumental economic approach is criticized by the ethical approach as not being sufficient for dealing with the ethical conditions of a good society.
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The order ethics approach, as suggested by Karl Homann on the basis of the US-professor Buchanan, does not take in account these ethical conditions of the economy. The ethical economy approach is, according to Althammer, also critical to the principles of discourse within the theory of communication ethics. This approach is considered as contradictory since the communication dialogue without power is impossible. Moreover, the neutral moral point of view is not really possible. It is not possible to define the moral basis of this communicative approach to the ethical economy.
Instead, Althammer proposes to base the ethical economy on natural law and a Catholic societal ethics. This approach looks at the natural-law foundations of the economy as based on individual rights and capabilities i.
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With this approach, the Catholic natural-law thinking tries to define the limits of the market economy in relation to the economic action of the market. This approach defines normative systems of economic order that go beyond the ethics of the market as suggested by the order ethics school of Homann and his colleague Ingo Pies.
The capability approach, following Sen and Nussbaum, represents such a normative approach to the ethical economy within the welfare state. Concepts of corporate social responsibility, corporate citizenship and social entrepreneurship find their meaning within the framework concept of the social welfare state.
Ethical economy is not only business ethics or managerial ethics, but it is rather the strong effort of the ethical economy approach to develop a general normative political economy to regulate the economic market. This economy focuses on the concept of the social welfare state in relation to the regulation of the economic market.
The position of the ethical economy integrates philosophical reflections about the justice and constitutional foundations of the market in the reflections about ethics of economy. The aim of ethical economy is not only to study the ethics of the market, but also to look at the societal institutions of the welfare state and find the right relations between market and state.
One way to discuss this is the reflections about the minimum conditions of the social welfare state based on social support to individuals, for example in form of minimum basic income. My question is, now: How can we set up a research program to reinitiate the ethical economy, for economic ethics to be operationalized?
What would be the major tasks of research in ethical economy today? Is there a room for a research project of ethical economy? Topics for the analysis in terms of ethical economy are: