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Why There Is Business Ethics



Once upon a time [about 2500 years ago] in a land far away [Greece, to be exact] philosophers began to consider pure virtue as the moral descriptor in determining ethical behavior. Socrates urged teachers, pupils, and ordinary people to turn inward and reflect on the human experience. Knowledge of self was the prerequisite course in preparation for living a virtuous life. Basically, the bad guys would not be bad if they had an awareness of their wrongdoings and knew that they were wrong. This self awareness would be the fertile ground on which wisdom and knowledge could be grown. Studying such ethical norms as a philosophical feature of the actions of people naturally grew into the norms for societies and groups within society. Business ethics was born.

An interesting perspective on ethics is that it is the root word means “character” and even though it has evolved out of millennia of philosophical thought the nature of virtuous business ethics is a bit of a stretch. People have come to know ethics as the measure of moral right or wrong based on religious beliefs, traditions and norms of societal behavior. Under law, a corporation is a person with a distinct legal separateness from the people who run the company or its employees. This grew out of a need for financial separation, but it goes much further. Just as corporate assets are distinctly different from its stockholders or owners, civil liabilities are also separated. People have moral values, but if the corporation is a person can it be a moral person? What is the basis of that morality if it is not from the owners and employees?

Recent news about garment factory collapse in Bangladesh earlier in 2013 reported that the incident killed more than 400 workers. There were cries of ethical misconduct that such a situation could even exist, but this is a replay of disasters from a century ago in the United States in the coal mining areas of West Virginia and Pennsylvania. One such incident killed 361 workers only to be followed by another one taking 239 lives a few weeks later. Always investigated for cause and effect, the class differences between worker and employer always raised ethical questions. The rise of unions came about as a necessary banding together to stimulate change in working conditions and correct perceived ethical problems of companies.

Probably the most recent case of an incident that actually resulted in the demise of a company came in 1984 when a toxic chemical release from a Union Carbide factory in Bhopal, India killed over 3700 individuals and left an estimated 40,000 local people permanently disabled by the accident. Formerly a component company of the Dow Jones Industrial Average, the company never recovered from this disaster as it slid from prominence. Public outcry and financial reversals signaled the end of an era of greatness for the company until in 2001 the remaining business units became a subsidiary of Dow Chemical Company. The old Union Carbide was no more. This incident of corporate punishment for questionable ethical behavior touched more lives than those directly in the path of a toxic cloud. One VP was quoted as saying that the hardest job he ever had to do in his career was to layoff the person who had originally hired him as a new college graduate decades earlier. None of these people were directly responsible for the disaster nor could they have altered the course of history.

How important is corporate ethics? Without some norm of behavior accepted by society, business will fail and take their products and employees into failure with them. Likewise, questionable personal ethics can bring down a mighty company. There is a lot of food for thought here.

Image credit: thegreekphotoholic / 123RF Stock Photo



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