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Generally speaking, business ethics is a normative discipline, whereby particular ethical 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 some 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. OVERVIEW OF ISSUES IN BUSINESS ETHICS General business ethics
See also: Corporate Abuse , Corporate Crime . Professional ethics Professional ethics covers the myriad of practical ethical problems and phenomena which arise out of specific functional areas of companies or in relation to recognized business professions. Ethics of finance and accounting
Cases: Accountancy Scandals , Enron , WorldCom Ethics of human resource management The ethics of Human Resource Management (HRM) covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee.
Ethics of sales and marketing Marketing which goes beyond the mere provision of information about (and access to) a product may seek to manipulate our values and behaviour. To some extent society regards this as acceptable, but where is the ethical line to be drawn?
See also: Criticism Of Marketing , Memespace , Disinformation , Advertising techniques. Cases: Benetton . Ethics of production This area of business ethics deals with the duties of a company to ensure that products and production processes do not cause harm. Some of the more acute dilemmas in this area arise out of the fact that there is usually a degree of danger in any product or production process and it is difficult to define a degree of permissibility, or the degree of permissibility may depend on the changing state of preventative technologies or changing social perceptions of acceptable risk.
See also: Product Liability Cases: Ford Pinto scandal, Bhopal Disaster , Asbestos / Asbestos And The Law . Ethics of intellectual property, knowledge and skills Knowledge and skills are valuable but not easily "ownable" objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise.
Cases: private versus public interests in the Human Genome Project International business ethics and ethics of economic systems The issues here are grouped together because they involve a much wider, global view on business ethical matters. International business ethics While business ethics emerged as a field in the 1970's, international business ethics did not emerge until the late 1990's, reflecting the international developments of that decade.3 Many new practical issues arose out the international context of business. Theoretical issues such as cultural relativity of ethical values receive more emphasis in this field. Other, older issues can be grouped here as well. Issues and subfields include:
Ethics of economic systems This vaguely defined area, perhaps not part of but only related to business ethicsThe view that business ethics encompasses the ethics of economic systems is taken in (e.g.) 4; chapters 6 and 7 give a wide overview of the area., is where business ethicists venture into the fields of Political Economy and Political Philosophy , focussing on the rights and wrongs of various systems for the distribution of economic benefits. The work of John Rawls ( 1921 - 2002 ) is a notable contribution. THEORETICAL ISSUES IN BUSINESS ETHICS 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 for 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. 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 marketplace are those that place profit maximization above everything else. However, some point out that self interest 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 stockholders, and that these duties consist of more than simply obeying the law. They believe a business has moral responsibilities 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. Professors 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-principles 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 developing 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 a 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. Rushworth Kidder developed a fascinating way to address ethical conflicts. He calls it a "trilemma". Instead of feeling stuck in a choice between violating your ethics and doing something painful but ethical, he suggests exploring if there is a third, unexplored option. BUSINESS ETHICS IN THE FIELD Corporate ethics policies Many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly-generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters. An increasing number of companies also requires employees to attend seminars regarding business conduct, which often include discussion of the company's policies, specific case studies, and legal requirements. Some companies even require their employees to sign agreements stating that they will abide by the company's rules of conduct. Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment. Others believe that corporate ethics policies are primarily rooted in utilitarian concerns, and that they are mainly to limit the company's legal liability, or to curry public favor by giving the appearance of being a good corporate citizen. Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly. Sometimes there is disconnection between the company's code of ethics and the company's actual practices. Thus, whether or not such conduct is explicitly sanctioned by management, at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool. To be successful, most ethicists would suggest that an ethics policy should be:
Ethics officers Ethics officers (sometimes called "compliance" or "business conduct officers") have been appointed formally by organizations since the mid-1980s. One of the catalysts for the creation of this new role was a series of fraud, corruption and abuse scandals that afflicted the U.S. defense industry at that time. This led to the creation of the Defense Industry Initiative (DII), a pan-industry initiative to promote and ensure ethical business practices. The DII set an early benchmark for ethics management in corporations. In 1991, the Ethics Officer Association was founded at the Center for Business Ethics (at Bentley College, Waltham, MA) as a professional association for those responsible for managing organizations' efforts to achieve ethical best practices. The membership grew rapidly (the EOA now has over 1,100 members) and was soon established as an independent organization. Another critical factor in the decisions of companies to appoint ethics/compliance officers was the passing of the Federal Sentencing Guidelines for Organizations in 1991, which set standards that organizations (large or small, commercial and non-commercial) had to follow to obtain a reduction in sentence if they should be convicted of a federal offense. Although intended to assist judges with sentencing, the influence in helping to establish best practices has been far-reaching. In the wake of numerous corporate scandals between 2001-04 (affecting large corporations like Enron, WorldCom and Tyco), even small and medium-sized companies have begun to appoint ethics officers. They often report to the Chief Executive Officer and are responsible for assessing the ethical implications of the company's activities, making recommendations regarding the company's ethical policies, and disseminating information to employees. They are particularly interested in uncovering or preventing unethical and illegal actions. This trend is partly due to the Sarbanes-Oxley Act in the United States, which was enacted in reaction to the above scandals. A related trend is the introduction of risk assessment officers that monitor how shareholders' investments might be affected by the company's decisions. The effectiveness of ethics officers in the marketplace is not clear. If the appointment is made primarily as a reaction to legislative requirements, one might expect the efficacy to be minimal, at least, over the short term. In part, this is because ethical business practices result from a corporate culture that consistently places value on ethical behavior, a culture and climate that usually emanates from the top of the organization. The mere establishment of a position to oversee ethics will most likely be insufficient to inculcate ethical behaviour: a more systemic programme with consistent support from general management will be necessary. The foundation for ethical behavior goes well beyond corporate culture and the policies of any given company, for it also depends greatly upon an individual's early moral training, the other institutions that affect an individual, the competitive business environment the company is in and, indeed, society as a whole. RELIGIOUS VIEWS ON BUSINESS ETHICS Many faiths have extensive literature and legal code on the accumulation and use of wealth; and many businesses rely on these ethical guidelines, both as a result of the religious beliefs of owners and managers, and as a way of ensuring that their actions meet the otherwise unwritten ethical standards of local communities. Christian business ethics In Christianity , the basis of this Theology is the Old Testament and the New Testament . For example, or Usury . Jesus referenced this especially when one lends to another believer, the idea being that, as a Christian with an eternal mindset, ultimately God is our rewarder and lending to a fellow believer should be left to god to reward over collecting nominal interest. Jewish business ethics The basis of all Jewish Law is the Torah ; here there are more Commandments concerning the Kashrut (fitness) of one's money than the kashrut of food (see 613 Mitzvot ). These laws are developed and expanded upon in the Mishnah and the Talmud (particularly in Order Nezikin ), and are then delineated in the major Codes Of Jewish Law (e.g. '' Mishneh Torah '', 12th c.; '' Shulkhan Arukh '', particularly '' Choshen Mishpat '', 16th c.). A wide array of topics on business ethics are discussed in the Responsa literature. The literature also addresses the ethical dimension. Shabbat'' 31a) that in one's judgement in The Next World , the ''first'' question asked is: "were you honest in business?" See the related discussion of Judaism's approach to "livelihood", under Torah Im Derech Eretz and Divine Providence . Muslim business ethics For Islam , the basis of these laws is the Qur'an , and they are amplified in the Hadith . Muslim wealth ethics include avoidance of the exploitation of people in need through lending them money at interest ( Riba ) and prohibitions against False Advertising ; under Islamic law, if a vendor sells an item by making false claims about it, the customer has the right to have the transaction cancelled. RELATED DISCIPLINES Business ethics should be distinguished from the Philosophy Of Business , the branch of Philosophy that deals with the philosophical, political, and Ethical underpinnings of business and Economics . Business ethics operates on the premise, for example, that the ethical operation of a private business is possible -- those who dispute that premise, such as Libertarian Socialists , (who contend that "business ethics" is an Oxymoron ) do so by definition outside of the domain of business ethics proper. The philosophy of business also deals with questions such as what, if any, are 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 the 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. NOTES SEE ALSO
REFERENCES General references
Jewish references
Christian references
Muslim references
EXTERNAL LINKS General
Journals
External links with religious perspectives
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