Business ethics

Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.[1] These ethics originate from individuals, organizational statements or from the legal system. These norms, values, ethical, and unethical practices are what is used to guide business. They help those businesses maintain a better connection with their stakeholders.[2]

Business ethics refers to contemporary organizational standards, principles, sets of values and norms that govern the actions and behavior of an individual in the business organization. Business ethics have two dimensions, normative business ethics or descriptive business ethics. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns.

Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, most major corporations today promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters.

Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."[3] Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions. Ethics implicitly regulates areas and details of behavior that lie beyond governmental control. The emergence of large corporations with limited relationships and sensitivity to the communities in which they operate accelerated the development of formal ethics regimes.[4]

History

Business ethics reflect the norms of each historical period. As time passes, norms evolve, causing accepted behaviors to become objectionable. Business ethics and the resulting behavior evolved as well. Business was involved in slavery,[6][7][8] colonialism,[9][10] and the cold war.[11]

The term 'business ethics' came into common use in the United States in the early 1970s. By the mid-1980s at least 500 courses in business ethics reached 40,000 students, using some twenty textbooks and at least ten casebooks supported by professional societies, centers and journals of business ethics. The Society for Business Ethics was founded in 1980. European business schools adopted business ethics after 1987 commencing with the European Business Ethics Network.[12][13][14] In 1982 the first single-authored books in the field appeared.[15][16]

Firms began highlighting their ethical stature in the late 1980s and early 1990s, possibly in an attempt to distance themselves from the business scandals of the day, such as the savings and loan crisis. The concept of business ethics caught the attention of academics, media and business firms by the end of the Cold War.[13][17][18] However, criticism of business practices was attacked for infringing the freedom of entrepreneurs and critics were accused of supporting communists.[19][20] This scuttled the discourse of business ethics both in media and academia.[21] The Defense Industry Initiative on Business Ethics and Conduct(DII) was created to support corporate ethical conduct. This era began the belief and support of self-regulation and free trade, which lifted tariffs and barriers and allowed businesses to merge and divest in an increasing global atmosphere.

Religious and philosophical origins

One of the earliest written treatments of business ethics is found in the Tirukkuṛaḷ, a Tamil book dated variously from 300 BCE to 7th century CE and attributed to Thiruvalluvar. Many verses discuss business ethics, in particular verse 113, adapting to a changing environment in verses 474, 426, and 140, learning the intricacies of different tasks in verses 462 and 677.[22][23][24]

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