Business Ethics

Contents

1 General definition

2 Related disciplines

3 Typical issues in business ethics

4 Conflicting interests

5 Some ethical issues and approaches

6 Corporate ethics policies

7 Ethics officers

8 Religious views on business ethics

8.1 Jewish business ethics

8.2 Christian business ethics

8.3 Muslim business ethics

9 Political theories and business ethics

9.1 Property rights, libertarians, and Marxists

9.2 Libertarian socialist view

General definition

Business Ethics is the branch of ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and aany special duties or obligations that apply to persons who are engaged in commerce. Those who are interested in business ethics examine various kinds of business activities and ask, „Is the conduct ethically right or wrong?“

Business ethics is a form of applied ethics, a branch of philosophy. As such, it takes the ethical concepts and principles developed at a more theoretical, philsophical level, and applies them to specific business situations. Generally speaking, business ethics is a normative discipline, whereby particular eethical standards are assumed and then applied. It makes specific judgements about what is right or wrong, which is to say, it makes claims about what ought to be done or what ought not to be done. While there are ssome exceptions, business ethicists are usually less concerned with the foundations of ethics (metaethics), or with justifying the most basic ethical principles, and are more concerned with practical problems and applications, and any specific duties that might apply to business relationships.

Related disciplines

Business ethics is related to the philosophy of business, which deals with the philosophical, political, and ethical underpinnings of business and economics. The philosophy of business deals with matters such as what, if any, are a the social responsibilities of a business; business management theory; theories of individualism vs. collectivism; free will among participants in the marketplace; the role of self interest; invisible hand theories; the requirements of social justice; and natural rights, especially property rights, in relation to tthe business enterprise.

Business ethics is also related to political economy, which is economic analysis from political and historical perspectives. Political economy deals with the distributive consequences of economic actions. It asks who gains and who loses from economic activity, and is the resultant distribution fair or just, which are central ethical issues.

Typical issues in business ethics

While hardly exhaustive, some typical issues addressed in business ethics include accounting and financial standards; advertising deception; animal rights (e.g., in agriculture); black market sales; bbribery and kickbacks; ebusiness legal business intelligence and industrial espionage; political contributions; competition versus cooperation; corporate governance; corporate crime; competitive disinformation; creative accounting; discrimination and affirmative action; dumping; employee rights and duties; environmental issues; hostile take-overs; illicit drug testing; insider trading; fiduciary responsibility; globalism; grey marketing; key employee raiding; labor union strikes and union busting; marketing, sales, and negotiation techniques; covert marketing research and scientific testing; negligence; patent and copyright enfringement; payola and kick-backs; planned obsolescence; ponzi schemes; predatory pricing; price discrimination; price fixing); privacy rights of employees and customers; professional conduct; product churning; product placement; promotions; product liability and product defects; property rights; pyramid schemes; sex in advertising; sexual harassment; slave and child labour; spamming; hostile take-overs; tax avoidance and tax evasion; telemarketing; tort law; trade secrets; undercover marketing; and whistleblowing.

Conflicting interests

Business ethics can be examined from various perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole. Very often, situations arise in which there is conflict between one or more of the parties, such that serving the interest of one party is a detriment to the other(s). For example, a particular outcome might be good for the employee, whereas, it would be bad ffor the company, society, or vice versa. Some ethicists (e.g., Henry Sidgwick) see the principal role of ethics as the harmonization and reconciliation of conflicting interests.

Some ethical issues and approaches

Philosophers and others disagree about the purpose of a business in society. For example, some suggest that the principal purpose of a business is to maximize returns to its owners, or in the case of a publicly-traded concern, its shareholders. Thus, under this view, only those activities that increase profitability and shareholder value should be encouraged. Some believe that the only companies that are likely to survive in a competitive markeplace are those that place profit maximization above everything else. However, some point out that self interst would still require a business to obey the law and adhere to basic moral rules, because the consequences of failing to do so could be very costly in fines, loss of licensure, or company reputation. The economist Milton Friedman is a leading proponent of this view.

Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholderes, and that these duties consist of more than simply obeying the law. They believe a business has moral rresponsibilities to so-called stakeholders, people who have an interest in the conduct of the business, which might include employees, customers, vendors, the local community, or even society as a whole. They would say that stakeholders have certain rights with regard to how the business operates, and some would even suggest that this even includes rights of governance.

Some theorists have adapted social contract theory to business, whereby companies become quasi-democratic associations, and employees and other stakeholders are given voice over a company’s operations. This approach has become especially popular subsequent to the revival of contract theory in political philosophy, which is largely due to John Rawls’ A Theory of Justice, and the advent of the consensus-oriented approach to solving business problems, an aspect of the „quality movement“ that emerged in the 1980s. Philosophers Thomas Donaldson and Thomas Dunfee proposed a version of contract theory for business, which they call Integrative Social Contracts Theory. They posit that conflicting interests are best resolved by formulating a „fair agreement“ between the parties, using a combination of i) macro-principles that all rational people would agree upon as universal principles, and, ii) micro-princples formulated by actual agreements among the interested parties. Critics say the proponents of

contract theories miss a central point, namely, that a business is someone’s property and not a mini-state or a means of distributing social justice.

Ethical issues can arise when companies must comply with multiple and sometimes conflicting legal or cultural standards, as in the case of multinational companies that operate in countries with varying practices. The question arises, for example, ought a company to obey the laws of its home country, or should it follow the less stringent laws of the ddeveloping country in which it does business? To illustrate, United States law forbids companies from paying bribes either domestically or overseas; however, in other parts of the world, bribery is a customary, accepted way of doing business.Similar problems can occur with regard to child labor, employee safety, work hours, wages, discrimination, and environmental protection laws.

It is sometimes claimed that a Gresham’s law of ethics applies in which bad ethical practices drive out good ethical practices. It is claimed that in aa competitive business environment, those companies that survive are the ones that recognize that their only role is to maximize profits. On this view, the competitive system fosters a downward ethical spiral.

Corporate ethics policies

Many companies have formulated internal policies pertaining tto the ethical conduct of employees. These policies can be ...