MEANING OF ETHICS

1.
moral principles that govern a person's behaviour or the conducting of an activity.
"medical ethics also enter into the question"
synonyms moral code, morals, morality, moral stand, moral principles, moral values, rights
:
and wrongs, principles, ideals, creed, credo, ethos, rules of conduct, standards (of
behaviour), virtues, dictates of conscience
"the ethics of journalism"
2.
the branch of knowledge that deals with moral principles.
"neither metaphysics nor ethics is the home of religion"
The basic concepts and fundamental principles of decent human conduct. It includes study of
universal values such as the essential equality of all men and women, human or natural rights,
obedience to the law of land, concern for health and safety and, increasingly, also for
the natural
environment.
See
also morality.
BUSINESS ETHICS
Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that
examines ethical principles
and
moral
or ethicalproblems
that
arise
in
a business environment. It applies to all aspects ofbusiness conduct and is relevant to the
conduct of individuals and entire organizations.
DEFINITION OF 'BUSINESS ETHICS'
The study of proper business policies and practices regarding potentially controversial issues,
such as corporate governance, insider trading, bribery, discrimination, corporate social
responsibility and fiduciary responsibilities. Business ethics are often guided by law, while
other times provide a basic framework that businesses may choose to follow in order to gain
public acceptance.
INVESTOPEDIA EXPLAINS 'BUSINESS ETHICS'
Business ethics are implemented in order to ensure that a certain required level of trust exists
between consumers and various forms of market participants with businesses. For example, a
portfolio manager must give the same consideration to the portfolios of family members and
small individual investors. Such practices ensure that the public is treated fairly.
Understanding the Relationship Between Business and Ethics
The relationship between business and ethics can be compared to marriage and morality. A
good marital relationship has several essential moral ingredients: commitment of loyalty to
each other by the partners, none of the spouse ever having any extra marital affairs,
commitment to healthy upbringing of the children, taking care of parents and elders in the
family, earning decent money by unquestionable means for running the family, maintaining a
responsible relationship with the society and contributing albeit in a small way for its welfare.

Almost in similar lines, business and ethics have their connection. Any family running within
the framework of above moral guidelines gets respect from the society. Likewise, a business
run within ethical framework gets respect amidst its stakeholders.
Let us analyze the equivalents of some of the moral aspects of a marital bond that we listed
above as applicable to business ethics and grasp their purport more.
Commitment to Loyalty
Particularly if a business is run or partnership, the loyalty of business partners to each other is
extremely important. It covers mutual trust and respect too.
In a public corporation, the commitment of the management to the shareholders, or the
commitment of the business promoters to the rest of the share holders is very important.
Within the organization, the commitment and trust of higher management towards the
employees and the employee's loyalty and sincerity towards the management are to be well
established through good communication and well articulated and understood codes of ethics.
Absence of Unethical Extraneous Relationships
If top level executives at the helm of affairs in a business organization have underhand
dealings and indulge in corrupt practices to siphon off the company's money and resources to
fulfill their selfish needs, or to unduly favor their near and dear ones, the very ethical
framework of the organization will get a jolt. Such practices can greatly mar the image and
trustworthiness of the organization in the eyes of its stakeholders.
Healthy Concern for Employee Welfare
Does the organization consider and treat its employees as human assets and not like
commodities? Do the employees at different levels in the organization feel that they are
treated like respectable individuals and not as herds of slaves? Just in case the business faces
some acute hardship (like a recession) and employees are to be retrenched in large numbers,
how decently and courteously is the unpleasant task carried out?
The answers to such questions will reveal the level of ethical business standards existing in
the organization.
Ethics Behind Profits
Any organization that tends to bulldoze the business scenario by corrupt practices may make
huge profits and even become adorable to the stakeholders, but such practices will definitely
mar the image of the organization in the long run. Other than corruption, other channels of
unethical profit making will cover large scale exploitation of scarcity, stifling competition by
means of unfair business practices, creating artificial scarcity to manipulate the prices,
compromising on product quality and safety for the sake of maximizing the profits and so on.

Social Responsibility
Engaging in the business to make profits by producing products that have harmful effects on
consumers, by creating pollution and consequently causing potential health hazards to the
society etc will be considered as poor business ethics from the point of view of accountability
to the society.
Any organization making huge profits by cheating the exchequer by circumventing the tax
laws will also be against ethics of social responsibility of the business. An organization
paying taxes and duties promptly and justly as per laws is in fact contributing revenue to the
Government and this revenue ultimately comes to the society by means of welfare measures
and infrastructural development. An ethically sound organization may also contribute a
portion of its profits by engaging in philanthropic activities for the welfare of the society.
It is quite likely that profits may appear to have an inverse relationship with business ethics.
But ethically sound business can run smoothly like a well oiled machinery and is most likely
to run longer and stronger when compared to immensely profitable competitors who lack
ethical standards.
The relationship between business and ethics is intrinsically entwined. A
successful company is one which can effectively recognize and cultivate
the relationship which exists between the two.
Businesses that exhibit and promote strong corporate codes of ethics are more prosperous in
the long run because they show a commitment to an expectation of sound moral behavior.
This demonstrates a dedication to society, customers, employees and the business itself. It
also enhances a company's reputation if they become commonly known as an ethical
company, and this brings more value to the organisation.
The highly competitive environment in today's global economy puts pressures on company
leaders to remain profitable and to show a good return to stakeholders. Often this pressure
can result in unethical decisions being made in order to deliver positive results. When this
occurs it usually results in a pattern that gets passed down through the organisation.
As leaders show unethical behavior, and perhaps even justify such behavior while knowing it
to be wrong, this eventually becomes a part of organizational culture. People follow by
example, and the lack of moral judgment will spread.
It's easy to blame "the system", yet many fail to realize "the system" is comprised of decision
making individuals. The relationship between business and ethics is inherently linked, but
there
are
some
who
fail
to
make
this
connection.
To say "business is business" is not justified, as responsible (ethical) decision making is an
important component of doing good business.
Today's society is an instant gratification one, and people expect immediate results. This is
perhaps part of the reason why some companies exhibit bad business practices. Not the only
reason, but perhaps a common one. Obviously one's individual moral compass impacts

choices made in a business, and when the cultural environment nurtures sound moral
philosophies and does not tolerate bad business practices, the immoral acts will decline.
Granted the unethical companies may initially make significant gains financially and deliver
the profits, but at what cost? When companies make unethical decisions, it can result in
defective or rushed products, unsubstantiated firing of employees, and false presentations of
products to consumers.
Is this good for the company? The fact is the only thing it creates is an illusion. Yes, these
factors will all cut costs and give the appearance of profit, but it's inevitable that poor choices
will negatively impact the business and be more costly in the long run.
While the immediate bottom lines show a healthy profit through immoral acts, the reputations
of these companies ultimately suffer. Over the course of time this can really hurt a business
and its profits. All too often we hear about CEOs who have either stolen funds, or ruined a
company's reputation, due to corrupt practices.
In the long run, managers and leaders who promote an atmosphere with low ethical standards
bring harm the business. While it may not necessarily shut the business down, it will impact
the opportunity to increase revenues to its fullest potential.
Good business practices starts with management setting standards of what's expected, and
they should lead by example. The establishment of higher levels of ethical behavior within a
business benefits the company in many ways. It displays strong values have been set for a
commitment to company philosophy and mission.
There is no good reason why a company cannot make ethically sound decisions, and still turn
a profit. Cheating and/or lying do not bring value to a business, and it also affects employee
morale. Employees and reputation are two very valuable assets, and by promoting a morally
sound environment for both employees and customers; this can only enhance those assets.
Consumer trust and confidence in a business can only serve to benefit the company.
Economic rules dictate that the larger a network, the more value is added to that network. If
customers can accurately rely on the fair treatment, expertise and knowledge of a company,
this will further expand their reputation as honest and as a result attract more customers. This
ultimately economically benefits the company as well, and their network will grow. This
being the case, it would be in a company's best interest to promote universal ethically good
behavior in the workplace.
A positive reputation leads to higher profits and provides better service for the public. Ethics
and business go hand in hand, and cannot effectively be separated. Ultimately implementing a
strong ethical policy is a win-win situation for all. In today's competitive environment why
wouldn't a company want to do all they can do to promote success on all levels?

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 historianhow 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 called "ethics in business." In this broader sense the
history ofbusiness 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.1 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 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 argues 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 politicaleconomy.

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. 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. 8 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
Ethic10 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 those 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, 11 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.12 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.
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 fieldalthough 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 practicesmuch 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 threatsomething 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 illinformed, or who, in fact, adopted polemical attacks against or positions in defense of
business. Many observers dismissed business ethics 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 accepted.

As a field, business ethics covered the ethical foundations of business, of private property,
and of various economic systems. 3) Although the field was concerned with managers and
workers as moral persons with responsibilities as well as rights, most attention was focused
on the corporationits 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 blurred.

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?

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 shouldn't 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
debatethe 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 arguedoften 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 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 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 shift.

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 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 wellknownCredo 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 externalitiessuch as the discharge of toxic
effluents from factory smokestacks.

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--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 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.
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 accordingly.
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.