What is Ethics? Ethics First Assignment by MuddsarMughal


									                   Hamdard University Islamabad


              Business Ethics

Submitted By:

                Muddsar Hussain

Submitted To:

                Mam Saima

What is Ethics?

Ethics is concerned with what is right or wrong, good or bad, fair or unfair, responsible
or irresponsible, obligatory or permissible, praiseworthy or blameworthy. It is associated
with guilt, shame, indignation, resentment, empathy, compassion, and care. It is
interested in character as well as conduct. It addresses matters of public policy as well
as more personal matters. On the one hand, it draws strength from our social
environment, established practices, law, religion, and individual conscience. On the
other hand, it critically assesses each of these sources of strength. So, ethics is
complex and often perplexing and controversial. It defies concise, clear definition. Yet, it
is something with which all of us, including young children, have a working familiarity.

Ethics and Morality
This makes ethics sound like morality. This is intentional on our part. Like most
contemporary texts, ours will treat ethics and morality as roughly synonymous. This is in
keeping with the etymology of the two words. Moral derives from the Latin
word moralis. Moralis was a term that ancient Roman philosopher Cicero made up to
translate the ancient Greek ethikos into Latin. Both mean, roughly, pertaining to
character; but today their English derivatives deal with much more than character.
It is tempting to seek a general definition of ethics before discussing any particular
ethical topic. Although we have said a little bit about what we take ethics to be, we have
not offered such a definition; and we will not do so. Demanding a definition at the outset
can stifle discussion as easily as it can stimulate it. We offer one of Plato's dialogues as
a case in point.
In the Euthyphro we find Socrates and Euthyphro meeting each other on the way to
court. Socrates is being tried allegedly for corrupting the youth by encouraging them to
believe in "false gods" and for making the better argument appear the worse. Euthyphro
is setting out to prosecute his father allegedly for murdering one of his servants.
Socrates expresses surprise that Euthyphro would prosecute his own father, and he
asks him for an explanation. Euthyphro appeals to the justice of doing this. Socrates
then asks him to define justice. Euthyphro offers some examples of justice and injustice.

Socrates rejects them all on the grounds that they are only examples, whereas what he
wants Euthyphro to tell him is what all just acts have in common that makes them just.
That is, what Socrates demands is a definition that captures the essence of justice in all
of its instances. Unfortunately, Euthyphro attempts to satisfy Socrates' demand rather
than challenge its reasonableness. All of his efforts fail miserably, and the dialogue
ends with Euthyphro indicating he must leave to get on with his business. The
implication is that Euthyphro is going off to prosecute his father without the least grasp
of the value in which name he is acting, justice.
As much as we might desire the sort of definition Socrates and Euthyphro were seeking,
it seems an unreasonable demand. At best, this might come at the end of an inquiry
rather than at its beginning. Morality, like science, should allow room for piecemeal
exploration and discovery. It should not be necessary to provide a comprehensive
definition of justice in order to be able to say with confidence that sometimes drawing
lots is a just procedure, having the person who cuts the pie get the last piece is just,
compensating people for the work they do is just, denying women the right to vote is
unjust, punishing the innocent is unjust, and so on. Further reflection might reveal
special features these examples all have in common, or at least special ways of
grouping them. But having a solid starting point does not require having a well worked
out definition of the concept under consideration.
18th century philosopher Thomas Reid has some useful advice for those interested in
developing a systematic understanding of morality. He compares a system of morals to
"laws of motion in the natural world, which, though few and simple, serve to regulate an
infinite variety of operations throughout the universe." However, he contrasts a system
of morals with a system of geometry: A system of morals is not like a system of
geometry, where the subsequent parts derive their evidence from the preceding, and
one chain of reasoning is carried on from the beginning; so that, if the arrangement is
changed, the chain is broken, and the evidence is lost. It resembles more a system of
botany, or mineralogy, where the subsequent parts depend not for their evidence upon
the preceding, and the arrangement is made to facilitate apprehension and memory,
and not to give evidence.

Reid's view has important implications for how we should characterize moral
development. On the botanical model, access to basic moral understanding need not be
an all or nothing affair. Its range and complexity can be a matter of degree, and
confusion in one area need not infect all others. Understanding how different, basic
moral considerations are related to one another can be a matter for discovery (and
dispute) without our having to say that those whose picture is incomplete or somewhat
confused have no understanding of basic moral concepts.

(Source: http://www.onlineethics.org/cms/9423.aspx Chapter 2: What is Ethics? (Section I- A Guide To Teaching the Ethical
Dimensions of Science) Author(s): Michael S. Pritchard, Department of Philosophy, Western Michigan University & Theodore
Goldfarb, Department of Chemistry, State University of New York at Stony Brook
From: Ethics in the Science Classroom: An Instructional Guide for Secondary School Science Teachers)

A History of Business Ethics

The term 'business ethics' is used in a lot of different ways, and the history of business
ethics will vary depending on how one conceives of the object under discussion. The
history will also vary somewhat on the historian—how he or she sees the subject, what
facts he or she seeks to discover or has at hand, and the relative importance the
historian gives to those facts. Hence the story I'm going to tell will be somewhat different
from the story someone else might tell in various particulars, and I hope that instead of
being a dull recitation of facts it might in fact prompt some discussion at the end by
those who would tell a somewhat different story.
The story I will tell has three strands, because I believe the term business ethics is used
in at least three different, although related, senses. Which sense one chooses therefore
gives priority to nature of the history of the topic. The primary sense of the term refers to
recent developments and to the period, since roughly the early 1970s, when the term
'business ethics' came into common use in the United States. Its origin in this sense is
found in the academy, in academic writings and meetings, and in the development of a
field of academic teaching, research and publication. That is one strand of the story. As
the term entered more general usage in the media and public discourse, it often
became equated with either business scandals or more broadly with what can call

"ethics in business." In this broader sense the history of business ethics goes back to
the origin of business, again taken in a broad sense, meaning commercial exchanges
and later meaning economic systems as well. That is another strand of the history. The
third stand corresponds to a third sense of business ethics which refers to a movement
within business or the movement to explicitly build ethics into the structures of
corporations in the form of ethics codes, ethics officers, ethics committees and ethics
training. The term, moreover, has been adopted world-wide, and its meaning in Europe,
for instance, is somewhat different from its meaning in the United States.
The "ethics in business" sense of business ethics
In this broad sense ethics in business is simply the application of everyday moral or
ethical norms to business. Perhaps the example from the Bible that comes to mind most
readily is the Ten Commandments, a guide that is still used by many today. In
particular, the injunctions to truthfulness and honesty or the prohibition against theft and
envy are directly applicable. A notion of stewardship can be found in the Bible as well as
many other notions that can be and have been applied to business. Other traditions and
religions have comparable sacred or ancient texts that have guided people's actions in
all realms, including business, for centuries, and still do.
If we move from religion to philosophy we have a similar long tradition. Plato is known
for his discussions of justice in the Republic, and Aristotle explicitly discusses economic
relations, commerce and trade under the heading of the household in his Politics. His
discussion of trade, exchange, property, acquisition, money and wealth have an almost
modern ring, and he makes moral judgments about greed, or the unnatural use of one's
capacities in pursuit of wealth for its own sake, and similarly condemns usury because it
involves a profit from currency itself rather than from the process of exchange in which
money is simply a means. He also gives the classic definition of justice as giving each
his due, treating equals equally, and trading equals for equals or "having an equal
amount both before and after the transaction." In the West, after the fall of Rome,
Christianity held sway, and although there were various discussions of poverty and
wealth, ownership and property, there is no systematic discussion of business except in
the context of justice and honesty in buying and selling. We see this, for instance, in
Thomas Aquinas's discussion of selling articles for more than they are worth and selling

them at a higher price than was paid for them 3 and in his discussion of, and, following
Aristotle's analysis, his condemnation of usury. Nonetheless he justified borrowing for a
good end from someone ready to lend at interest.
Luther, Calvin, and John Wesley, among other Reformation figures also discussed trade
and business and led the way in the development of the Protestant work ethic. R. H.
Tawney's Religion and the Rise of Capitalism argue persuasively that religion was an
essential part in the rise of individualism and of commerce as it developed in the
modern period. The modern period, however, sought the divorce of the religious from
the secular and politics from religion. In the process, economics and economic activity
were similarly divorced from religion and joined with politics to form what was known as
John Locke developed the classic defense of property as a natural right. For him, one
acquires property by mixing his labor with what he finds in nature.7 Adam Smith is often
thought of as the father of modern economics with his An Inquiry into the Nature and
Causes of the Wealth of Nations. Smith develops Locke's notion of labor into a labor
theory of value. In modern times commentators have interpreted him as a defender of
laissez-faire economics, and put great emphasis on his notion of the invisible hand. Yet
the commentators often forget that Smith was also a moral philosopher and the author
of The Theory of Moral Sentiments. For him the two realms were not separate. John
Stuart Mill, Immanuel Kant, G. W. F. Hegel all wrote on economic matters and just
distribution. Karl Marx, however, stands out as the most trenchant critic of capitalism as
it had developed up through the Nineteenth Century, and Marx's critique in one form or
another continues up to today, even when not attributed to Marx.
Marx claimed that capitalism was built on the exploitation of labor. Whether this was for
him a factual claim or a moral condemnation is open to debate; but it has been taken as
a moral condemnation since 'exploitation' is a morally charged term and for him seems
clearly to involve a charge of injustice. Marx's claim is based on his analysis of the labor
theory of value, according to which all economic value comes from human labor. The
only commodity not sold at its real value, according to Marx, is human labor. Workers
are paid less than the value they produce. The difference between the value the
workers produce and what they are paid is the source of profit for the employer or the

owner of the means of production. If workers were paid the value they produced, there
would be no profit and so capitalism would disappear. In its place would be socialism
and eventually communism, in which all property is socially (as opposed to privately)
owned, and in which all members of society would contribute according to their ability
and receive according to their needs. The result would be a society (and eventually a
world) without exploitation and also without the alienation that workers experience in
capitalist societies.
Marx's notion of exploitation was developed by Lenin in Imperialism: The Highest Stage
of Capitalism, in which he claims that the exploitation of workers in the developed
countries has been lessened and the workers' conditions have improved because the
worst exploitation has been exported to the colonies. His criticism has been adapted by
many contemporary critics who claim that multinational corporations derive their profits
from the exploitation of workers in less developed countries.
Marx appealed to the workers of his time and helped start the labor movement, which
improved the situation of the workingman. Marx's collaborator, Frederich Engels, saw
the world as divided between those who follow Marx and those who follow religion, and
the Marxists sought the hearts and minds of the workers. Refusing to yield the moral
high ground, Pope Leo XIII in 1891 issued the first of the papal encyclicals on social
justice, Rerum Novarum. As opposed to Marx, it justified private property, while seeking
the answer to exploitation in the notion of a just wage, which was one sufficient "to
support a frugal and well-behaved wage-earner," his wife and his children. Later popes
followed Leo's example. Pope Pius XI in 1931 wrote Quadragesimo Anno, which
morally attacked both Soviet socialism and laissez-faire capitalism, a theme continued
by Pope John Paul II in Laborem Exercens (1981) and Centesimus Annus (1991). The
U. S. Catholic Bishops in 1984 issued a Pastoral Letter on the U.S. Economy along the
same lines, although more open to the U. S. free enterprise system. The aim of the
encyclicals was not to propose any particular economic system but to insist that any
system should not be contrary to Christian moral principles and should improve the
conditions of the masses of humanity, especially of the poor and the least advantaged.
Hence although the popes were critical of existing economic structures, the emphasis in

the pulpits was still primarily on individuals living up to the demands of morality,
including the giving of charity to those in need.
The same is true of the Protestant tradition as of the Catholic, even though there is no
central authority to issue documents such as the encyclicals. Perhaps the most
influential protestant figure in this regard was Reinhold Niebuhr whose trenchant critique
of capitalism in Moral Man and Immoral Society9 became the basis for courses in
seminaries and schools of theology. In 1993 the Parliament of the World's Religions
adopted a Declaration of a Global Ethic that condemned "the abuses of the Earth's
ecosystems," poverty, hunger, and the economic disparities that threaten many families
with ruin.
The idea of ethics in business continues until the present day. In general, in the United
States this focuses on the moral or ethical actions of individuals. It is in this sense also
that many people, in discussing business ethics, immediately raise examples of immoral
or unethical activity by individuals. Included with this notion, however, is also the
criticism of multinational corporations that use child labor or pay pitifully low wages to
employees in less developed countries or who utilize suppliers that run sweat shops.
Many business persons are strongly influenced by their religious beliefs and the ethical
norms that they have been taught as part of their religion, and apply these norms in
their business activities. Aaron Feuerstein is a prime example of someone whose
actions after fire destroyed almost all of his Malden Mills factory complex kept his
workers on the payroll until he could rebuild. He has stated often and publicly that he
just did what his Jewish faith told him was the right thing to do.
This strand of the story is perhaps the most prominent in the thinking of the ordinary
person when they hear the term business ethics. The media carries stories about Enron
officials acting unethically and about the unethical activities of Arthur Andersen or
WorldCom, and so on, and the general public takes this as representative of business
ethics or of the need for it. What they mean is the need for ethics in business.

Business Ethics as an Academic Field
Business ethics as an academic field, just as business ethics as a corporate movement,
have a more recent history.

The second strand of the story that I shall tell has to do with business ethics as an
academic field.
The 1960s marked a changing attitude towards society in the United States and towards
business. The Second World War was over, the Cold War was ever present, and the
War in Viet Nam fostered a good deal of opposition to official public policy and to the so-
called military-industrial complex, which came in for increasing scrutiny and criticism.
The Civil Rights movement had caught the public imagination. The United States was
becoming more and more of a dominant economic force. American-based multinational
corporations were growing in size and importance. Big business was coming into its
own, replacing small and medium-sized businesses in the societal image of business.
The chemical industry was booming with innovation, and in its wake came
environmental damage on a scale that had not previously been possible. The spirit of
protest led to the environmental movement, to the rise of consumerism, and to criticism
of multinational corporations.
Corporations, finding themselves under public attack and criticism, responded by
developing the notion of social responsibility. They started social responsibility
programs and spent a good deal of money advertising their programs and how they
were promoting the social good. Exactly what "social responsibility" meant varied
according to the industry and company. But whether it was reforestation or cutting down
on pollution or increasing diversity in the workforce, social responsibility was the term
used to capture those activities of a corporation that were beneficial to society and
usually, by implication, that made up for some unethical or anti-social activity with which
the company had been charged. The business schools responded by developing
courses in social responsibility or social issues in management—courses which
continue to thrive today. For the most part, in the 1960s such courses put an emphasis
on law, and the point of view of managers prevailed, although soon that of employees,
consumers and the general public were added. The textbooks paid no systematic
attention to ethical theory, and tended to be more concerned with empirical studies than
with the development or defense of norms against which to measure corporate activity.
The history of the social responsibility movement is a story in itself and one that different
people are writing somewhat differently. One version, by Archie Carroll, describes social

responsibility as a pyramid that encompasses the four types of responsibility that
businesses have: At the bottom is economic, then legal, then ethical and then
philanthropic. And although some representatives of corporate social responsibility
claim that they did business ethics before business ethics became popular and although
some claim that what they do is business ethics that is not the story of business ethics I
am going to tell today.
Business ethics as an academic field emerged in the 1970s. Prior to this time there had
been a handful of courses called by that name; and a few figures, such as Raymond
Baumhart, who dealt with ethics and business. For the most part ethical issues, if they
were discussed, were handled in social issues courses. Theologians and religious
thinkers, as well as media pundits continued writing and teaching on ethics in business;
professors of management continued to write and do research on corporate social
responsibility. The new ingredient and the catalyst that led to the field of business ethics
as such was the entry of a significant number of philosophers, who brought ethical
theory and philosophical analysis to bear on a variety of issues in business. Business
ethics emerged as a result of the intersection of ethical theory with empirical studies and
the analysis of cases and issues.
Norman Bowie dates the birth of business ethics as November 1974, with the first
conference in business ethics, which was held at the University of Kansas, and which
resulted in the first anthology used in the new courses that started popping up thereafter
in business ethics. Whether one chooses that date or some other event, it is difficult to
identify any previous period with the sort of concerted activity that developed in a short
period thereafter. In 1979 three anthologies in business ethics appeared: Tom
Beauchamp and Norman Bowie, Ethical Theory and Business; Thomas Donaldson and
Patricia Werhane, Ethical Issues in Business: A Philosophical Approach; and Vincent
Barry, Moral Issues in Business. In 1982 the first single-authored books in the field
appeared: Richard De George, Business Ethics; and Manuel G. Velasquez, Business
Ethics: Concepts and Cases. The books found a ready market and courses in business
ethics both in philosophy departments and in schools of business developed rapidly. As
they did, the number of textbooks increased exponentially.

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The field developed very similarly to the field of medical ethics, which had emerged ten
years earlier in the 1960s, and the name paralleled that of the earlier field—although
even whether the term "business ethics" should be adopted was discussed among the
relatively small group that was engaged in starting what has become a field. The
seminal work of John Rawls in 1971, A Theory of Justice, had helped make the
application of ethics to economic and business issues more acceptable to academic
philosophers than had previously been the case. Whereas most of those who wrote on
social issues were professors of business, most of those who wrote initially on business
ethics were professors of philosophy, some of whom taught in business schools. What
differentiated business ethics as a field from social issues in management was 1) the
fact that business ethics sought to provide an explicit ethical framework within which to
evaluate business, and especially corporate activities. Business ethics as an academic
discipline had ethics as its basis. While social responsibility could be and was defined
by corporations to cover whatever they did that they could present in a positive light as
helping society, ethics had implicit in it standards that were independent of the wishes of
corporations. To that extent, 2) the field was at least potentially critical of business
practices—much more so than the social responsibility approach had been. If we take
Archie Carroll's pyramid, those in business ethics did not see ethics as coming after
economics and law but as restraints on economic activity and as a source for justifying
law and for proposing additional legal restraints on business when appropriate. As a
result business ethics and business ethicists were not warmly received by the business
community, who often perceived them as a threat—something they could not manage,
preaching by the uninformed who never had to face a payroll.
The development of the field was far from easy, and those academics working in it
initially also found a cool reception both from their colleagues in philosophy departments
and from those in business and in business schools. The former typically did not see
business as a philosophically interesting endeavor, and many of them had an anti-
business mind-set. The latter questioned whether philosophers had anything of interest
to bring to business. The initial efforts were tenuous, and more and more people
entered the field who were often ill-informed, or who, in fact, adopted polemical attacks
against or positions in defense of business. Many observers dismissed business ethics

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as a fad that would pass. Many misunderstood its aims and envisioned it as providing
justification or a rationale for whatever business wanted to do. It took a number of years
for the field to define itself, incorporate standards of scholarship and rigor, and become
As a field, business ethics covered the ethical foundations of business, of private
property, and of various economic systems.) Although the field was concerned with
managers and workers as moral persons with responsibilities as well as rights, most
attention was focused on the corporation—its structure and activities, including all the
functional areas of business, including marketing, finance, management, and
production. Related issues, such as the environmental impact of business actions, were
included in most courses and texts, as were, with increasing attention, the activities of
multinational corporations. As a field, business ethics included a good deal, but not all,
of what was covered in social issues courses and texts, as well as giving structure to
discussions of ethics in business. As it emerged by the middle of the 1980s it was
clearly interdisciplinary, with the lines between philosophy and business research often
Initial discussions of business ethics introduced students to two of the basic techniques
of moral argumentation, that used by utilitarians (who hold that an action is right if it
produces the greatest amount of good for the greatest number of people), and that used
by deontologists (who claim that duty, justice and rights are not reducible to
considerations of utility). Other approaches were soon introduced including natural law,
virtue ethics (based on Aristotle), and the ethics of caring (often associated with a
feminist approach to ethics). An initial philosophical discussion that arose concerned the
moral status of corporations and whether one could appropriately use moral language
with respect to them, or whether the only proper objects of moral evaluation were
human beings and their actions. That controversy has not completely subsided, but
most authors take into account the fact that most people do attribute actions and
policies to corporations as well as to the individuals within them.
What did the development of business ethics as an academic field add that common
sense morality couldn't handle; and who was the target audience?

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Those in philosophy added a theoretical framework to the area that had been previously
lacking. Within that framework they integrated both the personal responsibility approach
that ethics in business emphasized and the social responsibility of business approach,
which they pushed explicitly into the ethical realm by applying ethics to economic
systems, to the institution of business, and especially to corporations.
Common sense morality and the ethics in business approach that I described are fine
for the ordinary, everyday aspect of ethics in business. Employees shouldn't steal from
their employers, and companies should cheat their customers. No one needs an
academic business ethicist to tell them that. And if that is all business ethics had to
contribute, it would indeed be superfluous. But what the business ethicists could add is
not only arguments that show why most common sense judgments are indeed correct,
but also the tools by which the morality of new issues could be intelligently debated.
They could and did also join that debate—the debate for instance on whether affirmative
action is justifiable, and even more basically, what affirmative action means. Ethicists
analyzed and defended workers' rights, the right to strike, the ethical status of
comparable worth in the marketplace, what constitutes bribery and whistle blowing, and
so on. One need only look at the journals for the wide variety of issues that have been
clarified, discussed, and argued—often to a conclusion. The moral status of leveraged
buyouts, of greenmail, of outsourcing, of restructuring, of corporate governance raise
complex issues to which ordinary common sense morality has no ready answers or
obvious intuitive judgments. It is odd that no company would think of making a serious
financial commitment without extensive study, but some people think that moral
judgments should be made instantaneously and require no thought, study, debate or
time. Levi-Strauss, long noted for governing by values, knew enough that it had a high
level committee study whether it was appropriate to operate in China for three months
before coming to a decision.
If those in business ethics wrote only for themselves, however, one could well question
the relevance of what they wrote to business. What they wrote helped inform a large
number of teachers who teach business ethics, and in turn has influenced a large
number of students who have gone on to be practitioners. Moreover, many of those in
business have also turned to the writings of those in business ethics, or have asked

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them for guidance as consultants on issues or for help in writing corporate codes or
designing training programs. The media as well frequently turns to those in the field for
guidance, help, or sound bites. Many of the academics in business ethics have made an
effort to open a dialogue with those in business, and have frequently been successful in
doing so. The audience, therefore, has been not only colleagues and students, but also
corporate managers and the general public. Mediating between the academic in his or
her office and the corporate executive have also been a host of non-academic
consultants, many of whom use the scholarly material to become informed about the
state of the art and the arguments for or against various positions. Some of these act
not only as intermediaries but, in a sense, as translators, translating technical jargon
into business-speak.
The development of the field, moreover, was not restricted to textbooks and courses.
What differentiates earlier sporadic and isolated writings and conferences on ethics in
business from the development of business ethics after the mid-70s is that only in the
latter period did business ethics become institutionalized on many levels. By the mid-
1980s there were at least 500 courses in business ethics taught across the country to
40,000 students. Not only were there at least twenty textbooks in the area and at least
ten casebooks, but there were also societies, centers and journals of business ethics.
The Society for Business Ethics was started in 1980. The first meeting of the Society for
Business Ethics was held in conjunction with the meeting of the American Philosophical
Association in December in Boston. Other societies turned increasing attention to
business ethics, including the Social Issues in Management Division of the Academy of
Management, which had been established in 1976. Other societies emerged, such as
the International Association for Business and Society. Still other societies, some
specialized, and some general were formed as well. A number of European scholars
became interested in the American developments and organized the European
Business Ethics Network (EBEN), which held its first meeting in 1987. Many individual
European nations in turn established their own ethics network or business ethics
society. In general, the European approach to business ethics has placed more
emphasis on economics and on social structures, with less emphasis on the activities of
corporations as such, than the U. S. approach does. Both approaches were captured in

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the International Society for Business, Economics and Ethics, which was founded in
1989. That society in turn helped national groups throughout the world to develop local
or regional societies of business ethics, so that now there are societies in a large
number of both developed and less developed countries.
Simultaneous with these developments were the founding of centers for business ethics
at a variety of academic institutions, and the establishment of a number of journals
dedicated to business ethics, in addition to those journals that carry articles in business
ethics among others. The Bentley College Center for Business Ethics was founded in
1976 and continues as one of the leading business ethics centers. Over a dozen more
appeared within the next ten years, and many others have been established since then
around the United States and in countries around the world. The Markkula Center
includes business ethics as one of its areas, as we well know. The first issue of
the Journal of Business Ethics appeared in February 1982; the first issue of
the Business Ethics Quarterly in January 1991; and the first issue of Business Ethics: A
European Review in January 1992. A number of other journals in the field have
appeared since then.
The field has continued to develop as business has developed. By the mid 1980s
business had clearly become international in scope, and the topics covered by business
ethics expanded accordingly. Thomas Donaldson's The Ethics of Business Ethics (New
York: Oxford University Press, 1989) was the first systematic treatment of international
business ethics, followed by Richard De George's Competing with Integrity in Internal
Business (New York: Oxford University Press, 1993). The focus on multinational
corporations has been broadened in the light of the globalization of business to include
ethical issues relating to international organizations, such as the World Trade
Organization. Similarly, just as business has moved more and more into the Information
Age, business ethics has turned its attention to emerging issues that come from the
By 1990 business ethics was well established as an academic field. Although the
academicians from the start had sought to develop contacts with the business
community, the history of the development of business ethics as a movement in

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business, though related to the academic developments, can be seen to have a history
of its own.

Business Ethics as a Movement
Business ethics as a movement refers to the development of structures internal to the
corporation that help it and its employees act ethically, as opposed to structures that
provide incentives to act unethically. The structures may include clear lines of
responsibility, a corporate ethics code, an ethics training program, an ombudsman or a
corporate ethics officer, a hot or help line, a means of transmitting values within the firm
and maintaining a certain corporate culture, and so on. Some companies have always
been ethical and have structured themselves and their culture to reinforce ethical
behavior. Johnson & Johnson's well-knownCredo was written and published by General
Robert Wood Johnson in 1943. But most companies in the 1960s had paid little
attention to developing such structures. That slowly began to change, and the change
became a movement when more and more companies started responding to growing
public pressure, media scrutiny, their own corporate consciences, and, perhaps most
importantly, to legislation. We have already seen that big business responded to
criticism in the 1960s by turning to corporate social responsibility, and the movement
can be traced back to that period.
The U. S. Civil Rights Act of 1964 was the first piece of legislation to help jump start the
business ethics movement. The Act prohibited discrimination of the basis of race, color,
religion or national origin in public establishments connected to interstate commerce, as
well as places of public accommodation and entertainment. Many corporations added
equal opportunity offices to their human resources department to ensure compliance,
and in general the consciousness of business about discrimination, equal opportunity,
and equal pay for equal work came to the fore. This in turn led to more consciousness
of workers' rights in general, and of corporate America's need to respect them. The U.
S. Occupational Safety and Health Act of 1970 enforced the mandate to take those
aspects of workers' rights seriously. In the same year the Environmental Protection Act
forced business to start internalizing the costs of what had previously been considered
externalities—such as the discharge of toxic effluents from factory smokestacks.

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In 1977, following a series of scandals involving bribery by U. S. firms abroad including
the Lockheed $12 million bribery case that led to the fall of the Japanese government at
the time, the U. S. government passed the Foreign Corrupt Practices Act. The Act was
historic because it was the first piece of legislation that attempted to control the actions
of U.S. corporations in foreign countries. The Act prohibited U. S. companies from
paying large sums of money (or their equivalent) to high level government officials of
other countries to obtain special treatment. A number of companies prior to the Act had
already adopted the policy of refusing to pay bribes as a matter of ethical principle. IBM,
among others, was known for adherence to this policy, as was Motorola. The Act forced
all companies to live up to the already existing ethical norm. Its critics complained,
however, that it put U. S. companies at an unfair disadvantage vis-à-vis companies from
other countries that were permitted to pay bribes. The U. S. government applied what
pressure it could to encourage other countries to follow its lead, and finally twenty years
later the OECD countries agreed to adopt similar legislation.
In 1978 General Motors and a group of other U. S. companies adopted what are known
as the Sullivan Principles, which governed their actions in South Africa. The signatories
agreed that they would not follow the discriminatory and repressive apartheid legislation
in South Africa and would take affirmative action to try to undermine apartheid not only
by not following the existing South African apartheid statutes, but also by lobbying the
South African government for change. Adherence to the Principles was seen as a way
by which American companies could ethically justify doing business in South Africa.
They were adopted in part as a response to public pressure on the companies to leave
South Africa. The Principles have become a model for other voluntary codes of ethical
conduct by companies in a variety of other ethically questionable circumstances.
By the 1980s many companies had started reacting to calls for ethical structures, and
more and more started adopting ethical codes and instituting ethics training for their
employees. Each wave of scandals, which seemed to occur every ten years or so,
resulted in more pressure for companies to incorporate ethics into their structures. In
1984 the Union Carbide disaster at its plant in Bhopal, India, which killed thousands of
people and injured several hundred thousand, focused world attention on the chemical
industry. This led to the chemical industry's adopting a voluntary code of ethical conduct

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known as Responsible Care, which became a model for other industries. In 1986, in
response to a series of reported irregularities in defense contracts, a special
Commission Report on the situation led to the establishment of the Defense Industry
Initiative (DII) on Business Ethics and Conduct, signed by thirty-two (it soon increased
to fifty) major defense contractors. Each signatory agreed to have a written code of
ethics, establish appropriate ethics training programs for their employees, establish
monitoring mechanisms to detect improper activity, share their best practices, and be
accountable to the public.
The DII became the model for what has been the most significant governmental impetus
to the business ethics movement, namely, the 1991 U. S. Federal Sentencing
Guidelines for Corporations. That law took the approach of providing an incentive for
corporations to incorporate ethical structures within their organizations. If a company
could show that it had taken appropriate measures to prevent and detect illegal and
unethical behavior, its sentence, if found guilty of illegal behavior, would be reduced
considerably. Appropriate measures included having a code of ethics or of conduct, a
high-placed officer in charge of oversight, an ethics training program, a monitoring and
reporting system (such as a "hotline"), and an enforcement and response system. Fines
that could reach up to $290 million could be reduced by up to 95 percent if a company
could show bona fide institutional structures that were in place to help prevent unethical
and illegal conduct.
The result was a concerted effort on the part of most large companies to incorporate
into their organizations the structures required. This led to the development of a
corporate position known as the Corporate Ethics Officer, and in 1992 to the
establishment of the Corporate Ethics Officer Association.
The most recent legislative incentive to incorporate ethics in the corporation came in the
Sarbanes-Oxley Act of 2002, passed as a result of a rash of scandals involving Enron,
WorldCom, Arthur Andersen and other prominent corporations. The Act requires,
among other things, that the CEO and CFO certify the fairness and accuracy of
corporate financial statements (with criminal penalties for knowing violations) and a
code of ethics for the corporation's senior financial officers, as well as requiring a great
deal more public disclosure.

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Corporations have responded to legislative and popular pressure in a variety of ways.
The language of social responsibility rather than explicitly ethical language is still
probably the most commonly used. Self-monitoring of adherence to a corporation's
stated principles and self-adopted standards is becoming more common, and some
companies have voluntarily adopted monitoring of their practices, policies and plants by
independent auditors. The notion of a Triple Bottom Line, which involves financial,
social and environmental corporate reporting, has been adopted by a number of
companies. Other popular reporting mechanisms include corporate environmental
sustainability reports and social audits, which vary considerably in what is reported and
how it is reported. Ethical investing is another aspect of the movement, and mangers of
ethical investment funds have begun proposing stockholder proposals as a means of
encouraging more ethical behavior on the part of corporations in which they own stock.
Nor is the business ethics movement confined to the Unites States. Other countries
have adopted legislation similar to that of the United States, and the UN has developed
a voluntary Global Compact for Corporations. The Compact, which was endorsed by all
governments, contains nine guiding principles, which focus on human rights, labor
standards, and the protection of the environment. Over 1,500 companies world wide
have joined the compact, and it seems likely that more and more will feel the pressure
to become signatories and to abide by the required standards.
The business ethics movement, like business ethics itself, has become firmly
entrenched. The concern for ethics in business continues. Business ethics as an
academic field contributes discussion forums, research and teaching that inform both
ethics in business and the business ethics movement. The business ethics movement is
responsive to the other two and in turn has interacted with them. All three together
make up the history of business ethics in its broadest sense.
From an academic perspective, looking back over the past thirty or so years, a lot has
been accomplished. A historian deals with the past and not the future. But looking to the
future, it is easy to see that there is still a lot to do. Both globalization and the march into
the Information Age are changing the way business is done and the ethical issues
businesses face. If business ethics is to remain relevant, it must change its focus

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If there is anything that the story I've told can teach us, it is that business ethics is
neither a fad as some claimed early on, nor an oxymoron, as so many lamely joked. It is
a vibrant, complex enterprise developing on many levels, with the three strands I've
mentioned intertwining in complex, dynamic and fascinating ways. We can expect all
three to remain vibrant and interacting for the foreseeable future.

(By Richard T. De George

Management & ethics

Doing business globally opens the arena for conflicts in norms. Many multinational
companies have codes of ethics, mission statements, and integrity policies guiding their
practices. However, when operating outside of their boundaries they confront different
sets of norms which sometimes conflict with their home based ones. In this conflict of
norms, occasionally the ethical issue is not seen to be the same by the parties
concerned. Child labor is prohibited in the U.S. not only by law but also, by the policy of
American firms. However, in Pakistan, there is no legislation against child labor. In fact,
child labor in Pakistan, is considered positive as it improves the family's income and
keeps children off the streets and away from worst danger.12 In this particular case,
child labor is viewed as an ethical issue from the American perspective whereas,
children left to the streets is considered the ethical issue from the Pakistani point of
view. The American manager confronting the Pakistani manager, both are looking at the
same situation but responding oppositely to it. They are behaving in response to their
respective cultural norms.

To further complicate this situation, the ethical theories used to aid in moral reasoning
give rise to different results in response to the same conflict of interests. The
teleological method of utilitarianism seeking to maximize happiness would be used to
weigh and measure options in moral choice. The deontological method, on the other

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hand, would seek the moral rules in question and then choose the most important rule
('prima facie') in determining the moral decision to be taken. Let's take a concrete
example of an ethical dilemma to illustrate these ethical theories.

If we take the same ethical dilemma of child labor, the utilitarian method of reasoning
could actually be in favor of it. Viewed from the different stakeholders involved, the extra
income gained from the child would maximize happiness for the most. The family
benefits, the child is safer with his/her mother at work than in the streets and the
company gains in lower costs. In contrast, the deontological method would look for the
moral rules/norms being violated. Child labor, if considered the most important rule,
(though one could see the question of survival arising for the child's family as well);
would take action against this practice and perhaps put a stop to it or find an alternative
solution. If the family's survival were more important, than a solution addressing that
issue would be found as well as one for discontinuing child labor. Some companies
came up with a program to educate children while paying the families for future work the
children would provide from the age of fourteen, as this is the minimum age set by the
U.N. charter covering child labor.

How can managers deal with these different ethical evaluations of the same issue ?
How can they know what would be the right response? How can they grapple with the
different cultural interpretations of the same situation? Cultural relativism hinders efforts
for ethical universalism.

If no child labor were considered as a universal moral principle, then in this case the
national culture would have to abide by this principle and/or prescribe that moral rule.
How can we apply universal rules as Kant suggested with his notion of the 'categorical
imperative' in a world wrought with cultural relativism? If values and norms differ in
importance from culture to culture, how can we establish universal norms to guide our
moral choices? The 'human rights' charter is an attempt to universalize some basic
moral principles, but here again what do we mean by 'human rights’? Is it just an
occidental invention or do these principles apply to everyone regardless of their cultural
bias? Is it understood in the same way for all to really be 'universal'? When certain

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cultures emphasize individual rights and freedom and others stress the role of the
individual vis à vis the social group (collectivism) perhaps these 'human rights' spring
from different cultural assumptions than others.

Ethics in management can change and develop as human progress continues. In the
case of new industries, such as internet, the rules are being made as we go along.
Based on the common practices and experiences of those using this mode of
communication, norms are being formulated.

When peoples customs start changing, here too, we observe modifications in ethical
positions. For example, euthanasia has become normalized, formalized and legalized in
the Netherlands. Here the medical profession based on its Hippocratic Oath to conserve
and preserve life is put into question now asking it to administer death under certain
conditions (as the 'quality' of life is defined).

The role of ethics in management is also dependent on the level of responsibility the
company is willing to take. The pro-active mode would characterize a company that
believes strongly in its mission as moral (or at least for the benefit of society). It would
respond as a trend setter to some of the ethical dilemmas. The re-active mode, would
be the companies though aware of social responsibility, respond to immediate situations
rather than anticipating them. The passive mode leads the company to deviant behavior
by refusing responsibility. There are two main extremes found in the corporate world:
profit on one side and human safety, which constitute an ethical spectrum.

Ethics & ethical theories

How can managers grapple with the different evaluations of the 'same' action which are
embodied in different languages and cultures and described differently?

Let's take a look at some ethical dilemmas using several different ethical theories of
evaluation concerning the 'same' event / action and then look at the interpretation of the
ethical dilemma itself from the cultural perspective:

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Ethics overlaps with culture because it represents the moral dimension of how we
should behave in the world. There are several codes of behavior we pick up along the
way either through religious beliefs (10 commandments or other religious scriptures) or
social values (courage, integrity, etc.). What we value comes into question when
confronting an ethical dilemma. Confronted with moral choice brings the cultural as
context of interpretation and the ethical consideration together. It is the place in which
the decision responds to the specific context and its method of evaluation. For example,
if we have to make a decision either to break a promise or be honest or to keep a
promise and be dishonest evaluating this dilemma would be treated differently from the
following ethical theories:

Deontological Theory - family of ethical theories encompassing moral rules
- nonconsequentialist approach when the consequences of an action are not taken into
account (for the decision) the rule is the rule regardless of the consequences/
consequentialist approach considers the outcome of the decision as part of the decision
making process

Utilitarianism - teleological approach "the greatest happiness for the greatest number"
- What decision would bring the greatest happiness for the greatest number?

NORM - moral rule set to apply to everyone
- Finds the rule that would be acceptable to all stakeholders involved if they were faced
with the same ethical dilemma
- Based on Kantian moral philosophy analyzing the human experience to find the
common denominator - put yourself in someone else's place

(Contact: Gale Prawda
26, rue de l'Avenir
92170 Vanves, France
email: galeprawda@wanadoo.frhttp://www.philodialogue.com/12.html)

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The Importance of Ethics in Business and Management:

Good ethics lead us to believe in not doing things that are not right and not saying if
they are not true. Ethics is a system of moral principles governing the appropriate
conduct of a person or a group. It is a way of being human and having a feeling of
compassion, sympathy or regard for others the way we have for ourselves. Good ethics
is important to all occupations or social or economic class. Thus, maintaining good
ethics is being consistent with the principles of correct moral conduct constantly.

Business ethics is similar to our normal every day ethics. Good ethics leads to good
business. It is a fundamental requirement of any profession. It is integral to the success
of the business as well. Good ethics makes us aware of what we are doing including the
consequences of our actions. An organization strives continually to be in pursuit of its
goals while benefiting the employees in building up their high competencies. In this
pursuit, the adherence to high ethical standards of the employees can be very much
contributory to the impressive achievements of business goals being turned out as
planned and intended.

Ethics refers to human conduct as to make judgments between what is right and what is
wrong. It could be that there are several factors that may encourage one to adopt
unethical behavior, but the right person is he who, despite facing ethical dilemmas,
assesses the situations and makes differentiation between what is morally good and
bad in order to follow the rules and code of professional conduct. Good ethics causes to
gain confidence of superiors while promoting integrity, which means to continue doing
right things even when we are not being watched.

Business also has responsibilities, such as, designing proper jobs. After the jobs are
created and the employees are appointed, fair reward and promotion systems are
necessary for an organization to implement. Employees develop positive feelings, the
feeling of pleasure when a need or desired is fulfilled. If an organization does not
recognize the talent and hard work of the employees, the consequences may lead the

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employees toward unethical behavior. Employees must be treated fairly. If they are
treated respectfully and in an appropriate way, they are in favor of management else
they may get back to adopt unethical behavior.

Moreover, it is the responsibility of management to intervene if managers take improper
decisions in terms of hiring and firing the employees because the managers of business
may sometimes lose their ethics when they take certain decisions that affect the
employees’ career and growth. If the decisions of managers are unethical, both
employees and the organization suffer the consequences. It must be seen whether
employee morale is enhanced. The policy guidelines related to compensations is a
factor affecting employee morale. The difference between the aspects that what
compensation the employees expect to get and what is being offered to them is in
general prevailing and so it is a reason of dissatisfaction. What in such situation a
management needs to do is it should come out with the schemes that can enhance the
morale with reasonable compensations.

Furthermore, business managers or supervisors need to develop perceptual abilities
that on the basis of accurate perceptions, an unbiased outlook may be maintained.
Every employee should be treated fairly by inculcating the sense of positive feelings
about the organization. Professionalism should be preferred to favoritism as the practice
of giving special treatment or unfair advantages to a person or group creates lots of
problems that result in hurting the feelings, causing emotional pain or suffering of
another person or group.

The importance of ethics in professional life can be evidenced by a number of instances
showing failure of businesses and several scandals. It may be rightly said that the
situations would not have been so worsened had there been observance of ethical
standards. Therefore, maintaining ethical standards is must for the prosperity of an
organization as well as the development of one’s personality. Good ethics will lead us to
maintain our honest image. It will enable us to refrain from such activities that may
discredit to our profession. Thus, adhesion to good ethics is to let our conscience be our

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guide at all times. Albert Schweitzer says, “Ethics is the activity of man directed to
secure the inner perfection of his own personality.”

(By: K.A.Fareed (Fareed Siddiqui)
Pursuing PhD-Management;
MPhil – Financial Management; MBA – Finance
MPhil – English; MA – English


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