Business Ethics

Business Ethics

Introduction

Ethics is the quest for an understanding of what is good or right for human individuals and an evaluation of the kind of action and states of affairs that can foster the “good” and the “right”. Business ethics sets these questions within the context of organizations in general and business organizations in particular. In terms of ethical theorizing, business ethics reflect the variety of normative perspectives to be found in pluralistic societies such as rights, responsibilities, duties, interests, and virtues, and much of the business ethics literature addresses the decisions and actions of individual organizational members in these terms. However, the unique perspective of business ethics centres on questions of collective moral agency and on the issues that arise from this in terms of what it might mean to talk about “ethical” organizations. Corporations are moral agents in the sense that they act intentionally, but not all corporate action is redescribable in terms of individual actions. Werhane develops a view of corporate action as collective “secondary” action: she argues that although “primary” (individual) actions within corporations happen as a result of corporate decision taking and policy making, the corporate “act” is neither re-describable in terms of the aggregate of individual actions nor is it reattributable in every instance to any person or persons. The implication is that, because corporations are moral agents, in the sense that collective “secondary” actions are attributable to their agency, they are morally responsible for their outcomes and thus can be held accountable for them.

“Good” business therefore demands an organizational culture that combines a degree of ethical sensitivity with organizational systems that are effective in handling ethical issues. However, there is a distinction to be made between organizational approaches that codify ethical requirements, and those that attempt to “build ethics in”. Compliance with legal and regulatory frameworks will not alter perceptions and behaviours: corporate moral self-governance requires an approach that reaches beyond compliance. Paine demonstrates the value to organizations of adopting an “integrity” strategy as opposed to a “compliance” strategy. In an organization that competes with integrity ethical values become the frame of reference for choice of direction, the drivers of decision taking, and the unifying force that identifies and strengthens corporate purpose. Paine's article is representative of a business ethics literature that takes an “agent-centred”, as opposed to an “actcentred”, approach to ethics in business. This perspective emphasizes that if businesses can be ethical in a cultural and systemic sense they are more likely to do the morally right thing when it comes to business decisions. It also holds the possibility that ethically “good” business decisions are likely to result in “good” business in the sense of value creation and effectiveness.

Business has become global and corporate, moral, and social responsibility has to be exercised in cross cultural contexts where legal and regulatory structures are inadequate to provide guidance. In tackling this issue DE GEORGE identifies the need for background institutional frameworks that would regulate the power of multinational corporations to exploit weaker market ...