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right to life, the right to freedom from injury, and the right to privacy.
Such standards are adequate patterns of behaviour because they are
supported by consistent and well founded reasons.
Secondly, as a practical approach, normative ethics refers to the
study and development of one’s ethical standards. As mentioned
above, feelings, laws, and social norms can deviate from what is
ethical. So it is necessary to constantly examine one’s standards to
ensure that they are reasonable and well-founded. Ethics also means,
then, the continuous effort of studying our own moral beliefs and our
moral conduct, and striving to ensure that we, and the institutions we
help to shape, live up to standards that are reasonable and solidly-
based.
As a general theory, ethics is not concerned with any particular
category of people, its questions being asked from the standpoint of
mankind. ‘What one should do in order to fulfil his or her desires,
goals, and ideals, in such a way that would make possible the most
flourishing life of an individual, no unnecessary harm being done to
any other people, but letting everyone else to seek freely his or her
personal achievements, and even making a contribution to a better
society?’ – this is the core of all ethical investigations. The applied or
practical ethics ask the same question, but from the standpoint of a
particular category of people. What a doctor or a nurse should do in
their professional activities – namely healthcare? What a lawyer
should do when acting as a judge, as a councelor or as a prosecutor?
Our specific question is: What business people should do in doing
business? Which are the moral responsibilities and duties of a busi-
nessman? As a common-sense problem, this question has been asked
since the ancient times, but only recently it had become the central
issue of an academic field of research: business ethics. Why did this
happen? Which are the social and economic changes that have made
common-sense opinions and beliefs on what business people should
do in their real life to be judged as outdated and inadequate, requiring
a theoretical approach of the reasonable ethical standards which
should govern business in the contemporary world?
WHY BUSINESS ETHICS SHOULD BE A NECESSARY ENDEAVOUR
teach and study ethics has come from students and corporate
executives. [...] The hardest nut to crack has been the faculty.” 8
Donaldson refers to the resistance which faculties oppose to the
development of the systematic study of business ethics, resistance
justified by the lack of funds for research in this field. In America, the
reward system inside each discipline is tied in some way, at all
schools, to publication of research. Only a few journals are stronger in
ethics than in other subjects, and ethics is not as tangible a subject as,
say marketing or decision science, making it harder to assess the
depth of research in ethics. Additionally, few professors actually
concentrate on ethics as a discipline, because it does not promise a
bright academic career. In other words, the deans hesitate to increase
the importance of business ethics as long as this discipline does not
find a generous and stable funding.
One of the readers of BusinessWeek, Michael Forde, Toronto,
Canada, asks an innocent, but very deep question: “Why do ethics
have to be cost-justified? In our early upbringing, we were all, I sup-
pose, instructed and shown exemplary behavior indicating why ethics
were essential to good character and humanity. When our kids chal-
lenge us on our ethical posture, should that discussion focus on the
rate of return, cost-benefit, or net present value of simply doing the
right thing? Have conscience and morality been laid off, outsourced,
or taken the buyout package? I for one refuse to accept money/profit
as the highest arbiter of all values. We adults cannot reject moral
behavior for its own sake, [while demanding] that from our children.”9
As for the students, some of them would be interested in ethics,
but very few take courses in this discipline; most of them choose to
study those ‘core’ objects and ‘hard skills’ which the recruiters seek,
because they are professionally more qualified and productive. Ron
Cenfetelli, another Canadian reader of BusinessWeek, has a point in
saying that “Business education has moved from an education model
to a student-as-customer model. Just as in a restaurant, if your cus-
tomers don’t like spinach and they don’t want to buy it, you don’t
force it on their plate. Students respond to such attempts at broader
education by lowering the scores [they give their schools] on annual
ranking surveys. It’s as if children could dock their parents’ salary for
making them eat their vegetables. In the case of B-schools, lower
survey rankings mean less tuition revenue, corporate support, and so
22 Business and Morality
forth.”10 As you can see, even in its home country, business ethics is
not yet accepted and respected by everyone.
But what about Romania? It might be thought that, willing to
imitate the Western models, we are now beginning to study and teach
business ethics, even though our economic system is not yet
compatible with the free market economy in the developed capitalist
countries – and here we can see the revival of an old Romanian story:
the adoption of modern, up-to-date Western patterns, uselessly and,
sometimes, ridiculously applied on an Eastern, old fashioned and
underdeveloped social reality. In Titu Maiorescu’s salient words,
“shape with no content” or “form without matter”.
I don’t see the matter this way. One of the most powerful causes
of the slow steps we have taken on the path to a functional, efficient
and competitive free market economy is the widespread and deeply
rooted corruption in our society. Supposing – only for the sake of
argument – that business ethics was no more than an academic
fashion in the Western world, the transition of Romania to
capitalism requires, among other things, a continuous and strenuous
educational effort, meant to explain the negative consequences of an
unethical behaviour in business, and to convince the people that, in
the long run, we cannot become a prosperous and democratic society
if we do not impose on ourselves and on our partners strict and
demanding ethical standards. On the other hand, the progress of our
economy requires an intense and constant partnership between the
Romanian companies and solid foreign investors, so that we must be
aware of their ethical codes and observe the Western standards of
morality in business.
But even in the most advanced countries there are still a lot of
people who do not take business ethics very seriously, considering it
as an artificial and futile inquiry, almost completely irrelevant to the
business people and their practical problems.
Maybe those who are sceptical about business ethics have a point
and perhaps in some respects this new discipline really is an academic
fashion. “Whether as a reaction to the 1980s yuppie culture, or a
reflection of the ‘caring, sharing’ 1990s,” says Elaine Sternberg,
“business ethics has become fashionable.” But quickly she adds:
“Unlike hoola hoops or Rubik cubes, however, business ethics is not
just a passing fad.”11 Every fashion has its history, and each history
has its roots and its meaning. Business ethics was born in the USA,
What for Business Ethics? 23
called upon to cure all the ills of society: not just to make safer
products or improve employment conditions, but to save endangered
species and alter fundamental social attitudes. (Of course, this is a
controversial issue only in the West; until now it never crossed our
fresh-made millionaires’ minds to support art, invention, healthcare or
education – at best, some of them are spending their easy money on
sponsoring football clubs, golf courses or boxing fights, while others
pretend to be great hunters of wild animals.)
Questions of business ethics have also been prompted indirectly
by the action of government, through their effect on the economy.
Whereas the boom years of the 1980s raised questions about business
profligacy, and the role and legitimacy of takeovers, the subsequent
recession has forced business to make hard choices about cutbacks
and layoffs and paying their suppliers. With their very survival at
stake in the face of global competition, businesses have had to
seriously consider patterns of conduct which have proved notably suc-
cessful overseas.
Awareness of business ethics questions has also been raised by
the growing media attention paid to business. As business has increas-
ingly come to be front page news, so has business misconduct. At
least in this respect, we can be proud of standing in line with the West
– Romania had in the last decade its big media scandals but, unlike
the West, we are still waiting for our big legal trials.
The actions of stakeholders groups have also made business ethics
more important. Increasingly, the best employees in the developed
countries are attracted not just by pay and perks, but by job satis-
faction, potential for growth, and the ethical character of their
employers. With the number of candidates from the traditionally
favoured groups expected to decline, a firm’s ethical stance may
therefore be a key determinant of its ability to attract and retain
preferred staff. And whereas past consumer movements concentrated
on the qualities of the product, the new trend is to ‘vigilante consum-
erism’, in which consumption choices take into account the character
of the producting firm. So the firm that wants to attract increasingly
critical customers must have a care for business ethics.
Shareholders are also attending to the ethics of companies they
own. In ‘ethical investment’ movement, investment decisions are
based on companies’ attitudes and behaviour, rather than on solely
financial criteria. And in both the US and the UK, institutional
26 Business and Morality
must be looked for, found, defined, and refined. Pursuing its inquiry,
business ethics still has to meet several challenges, all meant to argue
its futility and its lack of relevance, on different grounds.
of cafeterias that barred people who were black. The same could be
said about bribery in our society: a large number of people give and
take bribe naturally, and nobody is really scandalized, even though
almost everyone knows that bribery is a wrong national habit. There
is another way in which the scandalous wrongdoing may, with
repetition and the passage of time, come to look like commonplace
and unscandalous. Perhaps some forms of drug dealing are cases in
point. To sum up, scandalous behaviour need not include wrongdoing
and wrongdoing need not scandalize. Or, in other words, scandal is an
uncertain indicator of what is unethical.
Focusing on shocking scandals, mass media is detrimental to the
credibility of business ethics in at least two respects: First, the public
is presented almost exclusively with unethical behaviours in business,
and this one-sided view strenghtens the common stereotype that busi-
ness is not compatible with being ethical. That is why so many people
think that ‘business ethics’ is an oxymoron. Secondly, the spectacular
scandals which make the headlines suggest the point that business
ethics deals only with the issues of the big businesses and big cor-
porations. The truth is that not all business leaders are corrupted and
not all of the small businesses are exonerated from ethical dilemmas.
“We need more cases on positive ethical outcomes” – says Thomas
Donaldson. “The attention to failure has [...] put the emphasis on
legality and compliance. And so we’ve missed opportunities to focus
on more positive or creative cultures that show good ethics.”17 The
same point is made, even more clearly, by Sternberg, who claims that
media scandals “do not constitute the whole or even the main part of
business ethics. Contrary to popular belief, ethical issues can arise in
respect of any and all business activities. As a result, the need to
consider business ethics is not an optional extra, but a central, ines-
capable fact of business life. Ethical concerns permeate every aspect
of business activity, because ethical concerns permeate all human
activity.”18
It is not business ethics’ concern to prove that not all business people
are thieves and crooks; this is a matter of social experience. Business
ethics must demonstrate that moral behaviour is a necessary condition
36 Business and Morality
of good business or, in other words, that someone cannot become and
keep on being a successful business leader if he or she is not con-
cerned with the morality of his or her conduct in business – briefly,
that good ethics is good business. If it would be able to support with
reasons this principle, and to demonstrate all of its logical and
practical consequences, business ethics could exert a more or less
significant influence on the real economic life. But this point raises
some important and difficult questions, like these: Is it possible such a
demonstration? And, if possible, would it bare a beneficial or a bad
influence on real business?
One of the challenges to business ethics comes from the philoso-
phers who think that ethical problems cannot be really resolved by
means of rational arguments. They base their claim on a point of view
advanced in the early twentieth century by a group of thinkers who
argued that philosophy should be based solely on the analysis of
statements of fact. If a statement could not be verified – that is,
proved either true or false by methods of scientific analysis – these
philosophers rejected it on the grounds that it was not meaningful.
Statements that did not pass muster under the scientific criteria could
be used to evoke strong emotions, persuade others to follow one’s
example, or express one’s own private point of view; but without the
rigors of empirical proof, no statement was to be accorded worth. In
this view, all the ethical judgments and principles seem to be
deprived of rationality. Ethics is not and cannot be a scientific form
of knowledge; it only tries to persuade, appealing to emotions,
feelings, interests and social habits. Like any other moral statement,
‘good ethics is good business’ cannot be proved true, just as its
opposite, ‘wrong conduct is good business’ cannot be proved false.
The ethical arguments do not prove anything. They seem to be
acceptable only for those people who take for granted the moral
principles. But if someone, who is not inclined to believe that good
ethics is good business, questions the principle, asking: ‘Why should I
accept this statement?’, one cannot give him empirical proofs.
Known as ‘positivism’, and sometimes referred as logical posi-
tivism because it uses logical techniques of formal analysis, this point
of view initially attracted a great deal of support because it seemed to
be scientific. But further reflection showed that this was not the case.
For one thing, such a limiting attitude towards what counts as worthy
eliminates most scientific theories and laws because they cannot stand
What for Business Ethics? 37
But even though business ethics was no more than a persuasive dis-
course, this would not prevent it from bearing a real social influence
on business. On the contrary. In the social life, rhetorical persuasion is
often more efficient than the scientific arguments. Therefore, even if
we had serious doubts about the cognitive worth of ethical statements
and arguments, this would not clear away the question if business
ethics exerts a beneficial or a negative influence on real business.
As above mentioned, there are people who believe that business
has nothing to do with ethics. But not all of them have the same point
in mind. The conservatives emphasize the word ‘business’: in their
view, any moral claim on business means bad business. The free
What for Business Ethics? 39
The challenge from the right on business ethics comes from those
who argue that the only duty of business is to make profit. In a totally
free marketplace, where people are allowed to seek their own self-
interest, the forces of competition will produce the quantity and
variety of material goods essential to civil society. This was basically
the point of view of the eighteenth-century philosopher and economist
Adam Smith (1723-1790). In one of the most famous quotations from
his book An Inquiry into the Nature and Causes of the Wealth of
Nations, Smith claims that “it is not from the benevolence of the
butcher, the brewer or the baker that we expect our dinner, but from
their regard for their own self-interest”. In a free market the forces of
supply and demand act as a sort of “invisible hand” – again, to use
Smith’s salient phrase – that restrains individual greed and stimulates
productivity. The term ‘invisible hand’, though used only once by
Smith in his book, has come to be a kind of mantra for the unres-
trained economy, a laissez-faire approach to the marketplace.
Critics of business activity on the left of the political spectrum
often see business as inherently immoral. One of the most severe
antagonists, and certainly the most influential, was Karl Marx (1818-
1883). He based his analysis of the state of industrialized Europe on
what he experienced of the practices of industrialized countries in the
nineteenth century, and by any standards the plight of workers was
desperate. Long hours, little pay, scant or nonexistent benefits, and a
complete lack of job security characterized the situation of workers of
mid-nineteenth-century Europe. Marx set about to discover the causes
of this misery and to suggest a cure.
40 Business and Morality
and driving down prices. Eventually the market will produce a kind of
equilibrium where enough producers produce enough products to
satisfy consumer demands at a reasonable price.
It is hard to argue against a free market these days, given the fact
that much of the world is rushing to embrace the idea. The planned
centralized economies of Eastern Europe and the former Soviet Union
could not match the economies of the West in levels of productivity
and quality, and they all but collapsed under the weight of bureau-
cratic inefficiency and waste. Friedman seems to be vindicated in
another way, too: he argues that individual freedom and economic
freedom go hand in hand. One cannot have a truly free society unless
the marketplace is free as well. Friedman, however, is nothing if not
consistent. He extends his model of economic freedom broadly,
including the issuing of licenses to practice a profession (everything
from selling real estate to the practice of medicine). Should the
government require special licenses and proof of competence before
allowing people to enter a profession? Not at all, Friedman says. The
market will drive out inferior quality and reward excellence. No need
for the heavy hand of government to do these things. Friedman also
argues that business has no social responsibility, and that to use the
profits of a company for social goods is to make a decision for the
shareholders that they should make for themselves. Businesses serve
society best, Friedman argues, when they keep to their true mission,
wich is to make a profit. If by ‘business ethics’ we mean the social
responsibilities of business, Friedman councels business to stick to
business and leave social concerns to others. The government’s proper
task is to be mediator and enforcer of laws and contracts. Its role, he
says, is “to provide a means whereby we can modify the rules, medi-
ate differences among us on the meaning of the rules, and to enforce
compliance with the rules on the part of those few who would other-
wise not play the game.”21
Few people agree completely with Friedman: we want physicians
licensed in order to provide at least some assurance of competence,
we expect government to set standards of purity for our food and
drugs, and we have found through bitter experience that some activi-
ties of business, such as insider trading and stock manipulation, need
to be curtailed by law and threat of punishment. But notice that we all
agree that there must be a framework of rules of conduct if we are to
have anything resembling civil society. Notice, too, that the best way
What for Business Ethics? 45
have tried to argue that, besides his moral duty to keep the law, every
honest, serious, respectable, and, in the long run, successful business-
man must take some moral responsibilities and obligations, whose
standard is more or less higher than the minimal demands of the legal
system. What kind of responsibilities and obligations? It is not hard to
find the most important of them. Some of them are directed towards
particular classes of persons, sometimes called ‘stakeholders’, and
some attach to certain capacities or roles. C. B. Handy distinguishes
six different sorts of stakeholder, whose interests ought to be con-
sidered by those taking decisions: financiers, employees, suppliers,
customers, the environment, and society as a whole. He argues that
these six classes constitute a hexagon, within which a decision-maker
has to balance different, and sometimes conflicting, obligations. 25
Further distinction may be drawn. Shareholders are in a different
position from other creditors. Obligations to society comprise obli-
gations to the local community, to the nation and perhaps to the
international community and the whole of mankind. Many firms also
recognize some obligation to to their industry or trade. There are
certain obligations, as well as certain non-obligations, to competitors.
It is tempting to describe these as duties. Certainly, we could tax
a businessman to explain why he had failed to consider his share-
holders, employees, locality, country or the environment, and if the
questions were brushed off with a ‘Why should I? It is none of my
business’, his reply would sound hollow. But the word ‘duty’ denotes
a stringency of obligation that often does not obtain. The duties of
avoiding violence and of honesty are stringent, but many obligations
are prima facie only, and may be overridden by others. A business has
to survive, and that may require sacking not just an incompetent, but
even a hard-working, employee. Faced with the apparently insatiable
demands of morality, a businessman may feel inclined to follow
Machiavelli and relegate morality to a private world, as not being
practicable in the serious conduct of affairs. That is a mistake. We can
guard against that mistake by talking not of peremptory duties, but
grounds of obligation. I do not always have to keep redundant or
incompetent employees in work: but I have some obligation towards
them. If the survival of the firm depends on it, I must take the hard
decision: but I am not usually in that extremity, and may be able to
postpone the sacking, giving warnings in the case of incompetence,
and long notice in the case of redundancy. It is not a matter of hard-
What for Business Ethics? 49
REFERENCES