Ethics is the study of whatever is right and good for humans, while business ethics are some business actions in light of some aspect of human value that requires the evaluation of business practice. Business practice goes beyond facts to include the “ought to” of a situation (Donaldson and Werhane 1979). Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company. If a company’s purpose is to maximize shareholder returns, then sacrificing profits to other concerns is a violation of its fiduciary responsibility. Corporate entities are legally considered as persons in the United States and in most nations. The “corporate persons” are legally entitled to the rights and liabilities due to citizens as persons.
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.
Very often it is held that business is not bound by any ethics other than abiding by the law. Milton Friedman is the pioneer of the view. He held that corporations have the obligation to make a profit within the framework of the legal system, nothing more. Friedman made it explicit that the duty of the business leaders is “to make as much money as possible while conforming to the basic rules of the society, both those embodied in the law and those embodied in ethical custom.” Ethics for Friedman is nothing more than abiding by “customs” and “laws.” The reduction of ethics to abidance to laws and customs, however, have drawn serious criticisms (Dienhart 2000; Enderle 1999; Friedman 1970; NSPE 2019).
Leave a Reply