What’s the Matter with Business Ethics PDF

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Attention to business ethics provides numerous other benefits, as well these benefits are listed late....

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With the recent boom in business ethics comes a curious irony: the more entrenched the discipline becomes in business schools, the more bewildering—and even off-putting—it appears to actual managers.

The more entrenched the discipline becomes in business schools, the more bewildering it appears to managers.

Signs of the boom are everywhere. Over 500 business-ethics courses are currently taught on American campuses; fully 90% of the nation’s business schools now provide some kind of training in the area. There are more than 25 textbooks in the field and 3 academic journals dedicated to the topic. At least 16 business-ethics research centers are now in operation, and endowed chairs in business ethics have been established at Georgetown, Virginia, Minnesota, and a number of other prominent business schools.

And yet, I suspect that the field of business ethics is largely irrelevant for most managers. It’s not that they are hostile to the idea of business ethics. Recent surveys suggest that over three-quarters of America’s major corporations are actively trying to build ethics into their organizations. Managers would welcome concrete assistance with primarily two kinds of ethical challenges: first, identifying ethical courses of action in difficult gray-area situations (the kind that Harvard Business School Lecturer Joseph L. Badaracco, Jr. has

described as “not issues of right versus wrong,” but “conflicts of right versus right”); and, second, navigating those situations where the right course is clear, but real-world competitive and institutional pressures lead even well-intentioned managers astray.

The problem is that the discipline of business ethics has yet to provide much concrete help to managers in either of these areas, and even business ethicists sense it. One can’t help but notice how often articles in the field lament a lack of direction or poor fit with the real ethical problems of real managers. “Business Ethics: Where Are We Going?” asks one title. “Is There No Such Thing as Business Ethics?” wonders another. My personal favorite puts it wryly, “Business Ethics: Like Nailing Jello to a Wall.”

What is the matter with business ethics? And more important, what can be done to make it right? The texts reviewed here shed light on both questions. They point to the gulf that exists between academic business ethics and professional management and suggest that business ethicists themselves may be largely responsible for this gap.

Far too many business ethicists have occupied a rarified moral high ground, removed from the real concerns and real-world problems of the vast majority of managers. They have been too preoccupied with absolutist notions of what it means for managers to be ethical, with

overly general criticisms of capitalism as an economic system, with dense and abstract theorizing, and with prescriptions that apply only remotely to managerial practice. Such trends are all the more disappointing in contrast to the success that ethicists in other professions—medicine, law, and government—have had in providing real and welcome assistance to their practitioners.

Does this mean that managers can safely dismiss the enterprise of business ethics? No. In the past year or two, a number of prominent business ethicists have been taking stock of their field from within. Much like managers trying to reengineer their companies’ business processes, they have called for fundamental changes in the way the enterprise of business ethics is conducted. And they are offering some promising new approaches of value to both academic business ethicists and professional managers.

What follows, then, is a guide to business ethics for perplexed managers: why it seems so irrelevant to their problems and how it can be made more useful in the future.

Why Should Managers Be Ethical? To understand the gap between business ethics and the concerns of most managers, it pays to recall how managers and management

academics thought about business ethics before it became a formal discipline. Indeed, much of the research and writing in contemporary business ethics can be understood as a disgruntled reaction to the way ethical issues usually were addressed at business schools—in particular, to the traditional answers to the fundamental question: Why should managers be ethical?

Starting well before World War II and culminating in the 1960s and 1970s, the dominant approach to the moral dimension of business was a perspective that came to be known as corporate social responsibility . Largely reacting to neoclassical economics, which holds that the sole responsibility of business is to maximize its immediate bottom line subject to only the most minimal constraints of the law, advocates of corporate social responsibility argued that ethical management requires more than merely following the dictates of the law or signals of the market, the two institutions that otherwise guide business behavior. Rather, ethical management is a process of anticipating both the law and the market—and for sound business reasons.

For example, when managers voluntarily undertake socially responsible actions beyond the bare legal minimum required (in environmental protection, say, or antidiscrimination policy), they tend to forestall punitive social regulation. As corporate scholar E. Merrick Dodd, Jr.

stated in a 1932 Harvard Law Review article, the purpose of ethical management is “to catch any new spirit” and embody it in voluntary standards “without waiting for legal compulsion.” Or as Berkeley professor Edwin Epstein more recently and succinctly put it, “being ethical heads off the law.”

A Manager’s Guide to Business Ethics “The Cost of a Corporate Conscience,” W. Michael Hoffman (Business and Society Review Spring 1989). “Do Good ...

The social responsibility approach not only took an expansive view of the law but also urged managers to take an expansive view of the market. In the short term, ethical behavior may prove costly to a company’s bottom line. But according to the advocates of corporate social responsibility, ultimately the market will reward such behavior. “In general, socially responsible deliberation will not lead management to decisions different from those indicated by long-range profit considerations,” the management scholar Wilbur Katz wrote in 1950. Or in the by-now famous words of former SEC Chairman John Shad: “Ethics pays.”

Most managers were able to assimilate this response to the question “Why be ethical?” fairly easily under the heading enlightened

self-interest . Indeed, by now the tenets of corporate social

responsibility have become conventional wisdom in managerial circles. Organizations like the Business Roundtable publish studies with titles like “Corporate Ethics: A Prime Business Asset.” And top corporate executives regularly use the logic of enlightened self-interest, reflected in the statement by former Dow Chairman Robert W. Lundeen: “We found that if we were not running our business in the public interest, the public [would] get back at us with restrictive regulations and laws.”

It was one thing, however, for social responsibility advocates to provide a broad and appealing answer to the question: Why should managers be ethical? It was quite another to answer the obvious follow-up: How can managers determine the ethical course in any particular situation and stick to it in the face of competing pressures?

To address this question, social responsibility advocates set out in the 1970s to create a brand-new managerial discipline: business ethics . One idea was to bring experts in moral philosophy into the business schools. Training in moral philosophy would give business ethicists the analytical frameworks and conceptual tools necessary for making fine-grained ethical distinctions and discerning the appropriate course in difficult ethical situations. Once “retooled” in management, the moral philosophers could apply their sophisticated frameworks to the day-to-day moral problems that managers face.

However, things have not worked out quite the way traditional advocates of corporate social responsibility had hoped. Largely because of their background in moral philosophy, a discipline that tends to place a high value on precisely those kinds of experiences and activities where self-interest does not rule, many business ethicists found the precepts of corporate social responsibility profoundly dissatisfying. As a result, they have spent a great deal of scholarly time and energy tearing down the social responsibility position in order to erect their own. Indeed, far from taking a step closer to the real-world moral problems of management, several prominent business ethicists have chosen to reopen the fundamental question: Why should managers be ethical?

The Myopia of Moral Philosophy Business ethicists have two basic problems with the enlightened self-interest answer to the question of why managers should be ethical. First, they disagree that ethical behavior is always in a company’s best interest, however enlightened. “There are no vanilla solutions,” writes Bentley College ethicist W. Michael Hoffman in his article, “The Cost of a Corporate Conscience.” “To behave ethically can cost dearly.” In other words, ethics and interests can and do conflict.

Second, they object that even when “doing good” is in the company’s best interest, acts motivated by such self-interest really can’t be ethical. Moral philosophy tends to value altruism, the idea that an individual should do good because it is right or will benefit others, not because the individual will benefit from it. For many business ethicists, motivation can be either altruistic or self-interested, but not both. A participant in a symposium called “Do Good Ethics Ensure Good Profits?” (recently sponsored by Business and Society Review ) put it as follows: “To be ethical as a business because it may increase your profits is to do so for entirely the wrong reason. The ethical business must be ethical because it wants to be ethical.” In other words, business ethics means acting within business for nonbusiness reasons....