The Evolution of Business Ethics
In a three-page paper, excluding title page and references page, complete Each of the following:
• Summarize the development of business ethics over the past several decades, including the rise of social issues in business.
• Describe the major changes and events that gave rise to the present focus on business ethics.
• Provide examples of how these changes impact current business philosophies and reporting practices.
• In your conclusion, discuss how your values and principles relate to the evolution of business ethics.
“A man without ethics is a wild beast loosed upon this world.”
Albert Camus
Critics have been complaining for years that business schools focus too much on teaching how to maximize shareholder value and only a limited amount on the ethical and social aspects of business leadership (Holland, 2009 as cited by Cavaliere, Mulvaney &Swerdlow, 2010). After 30 years in operations management, I have to totally agree. In my career, for example, I have seen customer shipments go out with empty boxes (the tape drives had not arrived in time) just so the revenue could be claimed for the quarter. On the larger scale we have had our share of business scandals, such as the savings and loan meltdown in the 80s, Enron, WorldCom, and Tyco scandals of the early 2000’s that really cast a negative light on the ethical deficiencies in the business world. It is very clear that the path taken has not proven to be the correct one (Cavaliere, et al, 2010). This course is a fantastic opportunity for you, as part of the next source of leaders, to learn new concepts to do it better that the previous generation.
As you do this week’s readings (chapters 1~2), keep in mind that business ethics is derived from our professional experience and personal moral foundations. What I am saying is that there is more to ethics than just the business sector. The theories and concepts that you will learn about in the next six weeks will not only benefit your employers but society as a whole.
Ethics is actually the study of morality that goes back to the early Greek times. The text does an excellent job of reflecting that history so we will not dwell on that portion here. I want to take a few minutes to expand on the theories presented and put them into a professional context that may help understanding them better (they can be confusing at times). As an adult, we have to make conscience decisions every day that reflect our moral beliefs and, at times, those decisions could have severe impacts on someone’s life. There are two situations discussed (a trolley car & cannibalism) that serve as perfect examples of the challenges of making that ethical decision.
Is Ethical Capitalism Possible?
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Remember that with ethics, there is not a right or wrong answer- just different ones. Every person’s experiences and social beliefs mold their personal character that we use in business. What is right for one person may not be right for another. Of the three theories discussed in the text (normative, utilitarianism, and descriptive), you will experience many ethical decisions that may be handled differently because of your prospective. Let’s take a high level look and see if it makes it clearer for you.
Normative:
Normative (sometimes called prescriptive theory) is a tool to answer the questions of how things out to be (people out to be honest, etc). Ethics is about what ought to be, not what is. We need to understand the fundamental principles and concepts before you can decide if it is you’re prospective or not. These are the general ethical foundations (Ursery, 2002):
Rationality: All legitimate moral acts must be supportable by generally accepted reasons. For example: repeated misconduct or poor performance (an ongoing failure to meet expectations of the job).
Least Harm: There are times in which we have to a make a choice (as with the trolley in the video). The key is to make the decision that hurts others the least.
Consistency: Moral reasons, including moral actions, if they are valid, are binding on all people at all times in all places given the same relevant circumstances. For example: religious beliefs that we should not kill.
Impartiality: In business this principle forbids us from treating one employee differently than another when there is not a good reason for it. We are impartial and do not allow personal bias to be involved. For example: enforcing the attendance policy equally for all in your department.
Openness: When examining moral differences between ourselves and others, we may discover that it is we, not they, who are morally wrong. We must be open to changing our view. For example: understanding different religious views and prospective.
This video does a very good job of presenting some situations that you could very easily see in your careers. As you read this week’s material, consider how you would handle the situations presented from a normative perspective:
• The new diet pill and the question of the cancer possibility?
• How about the situation of the cigarette company going international since sales in the US has decreased because of the governmental regulations?
• How about the company posting a big sale a day earlier than it actually did to hit their revenue numbers?
Business Ethics : 21st Century Perspective
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Utilitarianism:
Utilitarianism can be traced back to the works of Jeremy Bentham, who lived in 18th century England. He was a reformer that believed that the most promising way of reaching an agreement was to choose a decision that would bring the greatest benefit to society once the harms had been taken into account. His motto is now a very familiar one -“the greatest good for the greatest number” (Velasquez, Andre, Shanks & Meyer, 1989).
Over time there have been many changes so that today there are many versions of the principle. For example, Bentham defined the benefits as being between pleasure and pain. Today utilitarian’s describe the benefits and harms in terms of the satisfaction of personal preferences or in purely economic terms. Some examples of utilitarianism ethics (Velasquez, et al, 1989; Shukla, 2011):
• Bombing of Hiroshima and Nagasaki- how can the deaths of thousands of people be justified as resembling morality? At that time it was known that the Japanese were in the process of developing atomic weaponry themselves and that many nations could be wiped out.
• Oliver North and the Iran-Contra affair-he justified the fact that he lied to congressional committees because he considered the lives of hostages and the middleman (used for dealing with the Iranians) as being at risk if he told the truth.
• Airline pricing- the premium price that is paid by business class travelers (those that can afford higher prices) are used to ease the burden of having to charge more to the economy class passengers (those who can least afford higher prices).