Modern Business Ethics

If society as a whole has responsibilities for the ultimate well-being of all its members in terms of the distribution of wealth and of access to the earth's resources and the value which can be added to them, when one focuses on the theological and ethical considerations which apply to the actual creation of wealth in society, then attention inevitably turns to the business sector as that part of society which is most involved in this process. For the shape and the conditions of contemporary business have developed in such a way that the challenge of moral values is being addressed now not just to individuals as they go about their business, but to business companies and corporations, and, indeed, to the whole activity and role of business in modern society.

The development of large public corporations, with the important distinction between the ownership and the management of such enterprises, resulted in increasing power on the part of such companies and their managers over the lives of many millions of people, whether as customers and consumers, employees and labour forces, marketing areas at national, overseas and increasingly multinational levels, suppliers at home or overseas, including the Third World, and whole communities and countries with their local and national governments. One way of summing up the agenda of modern business ethics is to see it as the study and analysis of the power possessed by business throughout society, and of the ways in which businesses acquire and exercise their power, whether for good or for ill.

In fact, one of the major incentives for the development since the 1960s of a new approach to business ethics was the incidence of a massive and continuing misuse of business power in various parts of the globe, exemplified in bribery and corruption scandals; systematic racial and sexual discrimination; dangers to workers, consumers and the public at large; disregard for environmental and ecological considerations; and a growing awareness of the plight of undeveloped nations in the southern hemisphere, including the growing burden of international debt and many of the conditions attached to financial grants and aid. In all these circumstances it is not surprising that society began to formulate new ethical and social expectations of business, which can be summed up in requiring business to respect the legitimate interests of those other sectors of society who came to be identified as its 'stakeholders', that is, all those constituencies which had a stake in how business operated, including its owners, managers and workforce and their dependents, its customers or clients, its suppliers, cooperators and competitors, and the local and national communities of people in which it found itself and operated, and of which business was considered to be an integral part.

In such ways the social agenda for business changed and diversified, and with the growing awareness of the power of business and the consequent responsibilities of the growing managerial class in society, the focus of ethical concern turned to the behaviour not of business men and women but of businesses themselves, in terms of their corporate, and not just individual, responsibility, and of their broad social, and not just financial, accountability.

One way in which ethical attention can be focused on the power of business is by considering the different human relationships which are to be encountered in business activities, and to identify and explore the ethical implications of those relationships as they find expression within four areas of activity which are common to all business organisations:

1 The inner workings of the company itself.

2 Its relationships with customers and clients.

3 Relationships with other companies, whether as collaborators, suppliers or competitors.

4 The company's relations with society as a whole.

It is thus possible from an ethical point of view to identify the desirable qualities which should characterize human relationships in general and then to apply those qualities as appropriate in each of the business areas identified and consider how their presence or absence makes for good or bad business in ethical terms.

Thus, within the company's interior organization and activity and the structures and relationships which desirably should govern the inner workings of a company, attitudes which can be identified include the recognizing and respecting of the human personal dignity of all involved in the enterprise, and the implications which this has for such issues and questions as employment and dismissal, wages and working conditions, discrimination in employment and promotion, mutual confidentiality and mutual loyalty. It is also within this circle of relationships internal to the company that attention can be focused on its shareholders, not only in regard to the general business activities of the managers who are their agents, as already noted above, but also in regard to possible acquisitions and mergers and their effect on workforces, dependants and local communities. In this inner circle of the business organization's activities much concern is rightly directed today at the whole area of corporate governance and the ways in which managers ought to render an account of their stewardship to owners, as well as the ways in which owners discharge their own responsibilities, not all of which can simply be delegated to others. If one of the reasons for the economic success of modern business has been the distinction between ownership and professional management, it appears that one of the manifestations of newfound ethical sensitivity in business is the recognition that such a distinction must not constitute an ethics gap or perpetuate the mistaken idea that owners have no ethical responsibilities for the behaviour of their agents.

The process of wealth creation relies critically on sales of goods and services, and so particular ethical concern needs to be directed at a company's relationships with its customers as exemplifying, above all, concern for the dignity and autonomy of individuals, as well as their capacity for cooperating with others to their mutual advantage. Particular issues which thus fall to be considered here include questions of product safety, reliability and durability; the ethics of certain marketing and advertising techniques, especially when directed at impressionable or vulnerable groups or societies; and the ongoing debate about whether advertising exists to satisfy actual needs or is designed to create new needs, and to what extent this latter is humanly desirable. In this area considerable concern is directed today at the marketing and sale of credit, whether to individuals or to less developed nations, and at the moral, and not just the legal, responsibilities of both debtors and creditors, whether the latter are the High Street banks or the World Bank and the International Monetary Fund.

Business relations with suppliers raise questions of respect for those who are in a subordinate position in a relationship of inequality or dependency, with particular concern centred on speedy payments to vulnerable suppliers, and on pricing and other conditions imposed on Third World producers. Competition, too, calls for mutual respect and raises ethical issues relating to contracts, bribing for business to secure unfair advantage, and monopolistic and price-fixing arrangements, as well as the seeking of unfair selective government protection.

Finally, the ethics of business power exercised for good or ill can consider the ways in which companies relate to the various communities on which they depend and which they claim to serve. Here inevitable attention is paid today to the physical environment, but there should be no less concern for the social and political environments and the ways in which corporations relate to local communities, as well as to local and national governments and legislation. How a corporation practises what has been called 'good citizenship' in terms of public philanthropy has become a fashionable question in some countries today, but how far that should extend beyond the immediate and long-term business interests of the company, and in particular whether such business philanthropy is an acceptable alternative to social justice on the part of government, are questions which require careful elucidation. Likewise, consideration needs to be given to the desired cooperation between a local community and a particular company or industry involved in opening, or closing, plants within that community, including the immediate and knockon costs and the likely effects on the economic and social ecosystems within a particular community.

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