Business ethics

„Business ethics” is a term used in a lot of ways and its meaning will vary depending on how the one who uses it conceives the subject under discussion. The history of the term also depends on historian’s vision and the facts he takes into consideration to define the term.

I consider that there are three main uses, related, but which have slight differences between them. The sense one uses gives priority to different historical facts, and this says a lot about someone’s vision and acceptation concerning this matter. The primary sense of the expression is related to the recent business developments and I would link this sense to the early 70’s, when this term came into the common use, first in the United States. The origins of this sense can be found in academic writings, meetings, in the academic teaching and research and of course in publications. There is a broader sense, which takes us with the thought at the origin of the business concept (which, in the beginning meant commercial exchanges and later evolved to economic system). The third meaning corresponds with the movement within business, the movement which suggests introducing ethics in corporation’s structure and which suggests that ethics should be the base for all business activities.

This term has been adopted world wide, and of course that there are cultural differences between the acceptations, and of course that its meaning in Europe will be different from the meaning in the United States. In the broadest sense, ethics in business is just the application of the moral and ethical norms in the business world. The best example is the Bible, which guided several generations of humanity, with its Ten Commandments, and which is still used by many today. If we analyze deeper the problem, it is obvious that the truthfulness, honesty and theft and envy prohibition are directly applicable. Moving from religion to philosophy, Plato, in the Republic and Aristotle in his Politics have both discussed the economic relations and their philosophical and ethical implications.  In Aristotle’s Politics we can find the classic definition of justice: a commercial transaction should end with both parties “having an equal amount both before and after the transaction”.

Business ethics

After the fall of Rome, when Christianity held sway, there were various discussions and writings about wealth and poverty, but we cannot point any systematic discussion of business, except in the context of honesty (justice) in selling and buying, so strictly related to commerce.

Thomas d’Aquina, for example, takes into discussion selling articles for more than they are worthy, at a higher price than the one which has been paid for them, and condemns usury, just like Aristotle.

Luther, Calvin and Wesley, Reformation figures open a new historical period since they discussed trade and led the way in the development of a new ethic. This modern period sought the divorce of the religious ideology and business. In this process, economics and all the related activities have split from religion and joined with politics. In these early times the political-economy was formed. Locke developed, in his works, the defense of property as a natural right and Smith continued the development of this concept in the labor theory of value. These modern times brought into attention the laissez-faire economics concept and emphasized on the invisible hand notion. Stuart Mill, Kant and Hegel were also important voices who talked about economic matters and distribution of goods, but Marx stands out as the most trenchant critic of capitalism.

Business ethics concept evolved along time, as the economic theory did, in the same time with the activity. A very important thing pointed by Marx is that the only commodity not sold at its real value, according to Marx, is human labor, and this can be easily explained by the fact that the workers are paid less than the value of what they produce. If they were paid exactly as much as they produced, profit would disappear, and the economic activity would be worthless. Marx claimed that capitalism was built on labor’s exploitation and here is the controversy: where are the ethics, the justice and the honesty in this system? After Marx writings about these economic issues, there has appeared the response of the Church, which didn’t propose any economic system, but insisted that the chosen system should not be contrary to Christian moral principles.

Nowadays there are a lot of voices and the opinions are spread about business ethics. There is a common direction, unanimous approved by all religions, which was also expressed in 1993, when a Declaration of a Global Ethic has been adopted by the Parliament of the World’s Religions. This act condemns “”the abuses of the Earth’s ecosystems,” poverty, hunger, and the economic disparities that threaten humanity.

This idea of ethics in business is present today too, and its presence is more stringent than always, because the competition became very rough and the methods, the strategies companies use to get profit are more and more aggressive and the direction the economy is moving towards is interesting to analyze in relation to the concept of business ethics. When the discussion is open about business ethics and business ethics code, the examples of immoral or unethical activities are raised. It is important to take into consideration that many business persons are influenced by their beliefs, religious or not, and by the ethical norms which have conducted them through life. The best example is Aaron Feuerstein, who, with his actions, almost destroyed Malden Mill complex and kept the workers on the payroll until the complex was rebuilt. He often stated that he did what Jewish faith told him was right to do. There are many other stories, like for example the case of Arthur Andersen or WorldCom, and the public often mentions them when business ethics matter rises into a conversation. As in all systems in this Universe, a collection of norms or rules is required, and this need of ethics is obviously visible in the economic system too.

As an academic field, business ethics has its origins in the mid 1970’s, when the specific literature started expanding and the number of writings rose. The starting point is the first conference in business ethics and business ethics code matters, which was held in November 1974 at University of Kansas, and resulted in the first anthology of courses, used afterwards in many universities in U.S.A. Along with the birth of this new academic field, new concepts appeared, like social responsibility, which was embraced by many companies, and many of the businesses liked to call themselves social responsible in the relation with the customers and generally on the market. Just like many other concepts, in its early years, social responsibility did not have a certain definition, it varied from company to company, but in time the term was developed and analyzed and finally clarified.  The business ethics field covered the foundations of business from an ethical perspective, but also private property and economic systems too. This field emerged in the middle of the 80’s and it was clear from the beginning that it is an interdisciplinary field, with some border lines between philosophy and pure business blurred.

The basics of common sense morality are very important for the ordinary, every day aspects of business. So, very simple: employees shouldn’t steal from the employers, and companies should not cheat their customers. Slowly, teachers and students, but philosophers too started writing business ethics articles, about new ideas in this field which helped very much in creating a definition for business ethics. Apart from the early development of this field, there have been a lot of articles and courses having this theme appeared. By 1980’s there were more than 500 courses of business ethics in the U.S, and they were followed by more than 40,000 students. In 1980, the Society for Business Ethics was started, and after many other associations and organizations have appeared between 1980 and 1989, all approaches have been captured in the International Society for Business, Economics and ethics, founded in 1989. This society helped national groups to develop local and regional societies of business ethics, wrote business codes, and now there are this kind of societies even in the less developed countries.

The business ethics as a movement, the third acceptation of this term, refers to the development of the internal structures of an organization, and includes clear lines of responsibility, the corporate business ethics code, ways of transmitting values and organizational culture from generation of employers and employees to another generation and so on. Since the business ethics has been promoted as a movement in the business world, a lot of business ethics cases have been brought into public discussions and criticism became more and more important in the matter of business ethics. Business ethic codes became a must for companies, and this offers them credibility and creates a better image in customers’ eyes. Moreover, it is likely to believe that a company which follows a certain business code is more trustworthy than a common company which has not adopted this social responsibility concept and has not integrated it in its activity.

The business ethics movement is a continuous developing process occurring in the business world, and as a field, business ethics contributes to this process with all the discussions, forums research and teaching which inform entrepreneurs and future entrepreneurs through business ethics articles and not only. The movement is responsible for creating concept’s history and a strong link exists between these three acceptations of the business ethics term. Looking at the past it is easy to reveal what has been accomplished, but what is more important is the future. It is obvious that there is still a lot to do, and both Informational Society and globalization have a significant influence on business ethics evolution.

Business ethics

Discussing the importance of ethics in business is challenging but we must take into consideration that making business ethically is directly referring to the conduct of individual business people, not necessarily to the standards of the business as a whole. The main advantage of having an ethical business is that you might satisfy better your customers, and integrating trust and correctness in the relationship between you as a company and the customers, but also in the relationship between you as an employer and your employees or between your company and other companies shows that your company is stable and you are worth to exist on the market and offer your products/services to customers. Of course, there must be a balance in a company’s activity, and the focus on the profit should not be lost or changed with focus on ethics. If a company or its managers exercise a special care in achieving the set up goals related to employees, customers and suppliers they are usually rewarded with a high degree of honesty, loyalty and productivity.

Ethics in business is often perceived as an oxymoron or a controversy, but there is a level where ethics can easily be introduced in the business activity, and understanding the importance of ethics in business is the first and the most important step in achieving a trustworthy and favorable image on the market you operate on. As a manager, you can easily reach information about importance of ethics in business, and there are plenty of informational resources, like business ethics articles, which compile all the information necessary for integrating this concept in your activity. Business ethics cases, which have been brought into discussion along history are also a good source of information and following the old rule of learning from your and others’ mistakes will highlight the problematic aspects and will show you how to handle them. Even there isn’t a business ethics clear definition, analyzing the different approaches on this concept, you can create your own business ethics code and you can incorporate it in your activity.