BUSINESS AND ETHICS

Business and Ethics

Business and Ethics

Introduction

Ethics is the quest for an understanding of what is good or right for human individuals and an evaluation of the kind of action and states of affairs that can foster the “good” and the “right”. Business ethics sets these questions within the context of organizations in general and business organizations in particular. In terms of ethical theorizing, business ethics reflect the variety of normative perspectives to be found in pluralistic societies such as rights, responsibilities, duties, interests, and virtues, and much of the business ethics literature addresses the decisions and actions of individual organizational members in these terms (Donaldson, 1994).

The scandal surrounding the developer and manufacturer of solar cells Solyndra broke out in September 2011. Shortly before the company declared bankruptcy, acknowledging its inability to pay debt. According to Republicans, Solyndra received a loan because of its investor George Kaiser has sponsored the Obama campaign in 2008. However, the unique perspective of business ethics centers on questions of collective moral agency and on the issues that arise from this in terms of what it might mean to talk about “ethical” organizations. Corporations are moral agents in the sense that they act intentionally, but not all corporate action is re-describable in terms of individual actions.

Thesis

“Good” business therefore demands an organizational culture that combines a degree of ethical sensitivity with organizational systems that are effective in handling ethical issues.

The notion of responsibility is central to the concept of corporate moral agency. Two questions present themselves: “what is the nature of that responsibility?” and “to whom is the corporation responsible?” Responsibility is first of all social. Society sanctions the operations of corporations, so there is an implicit social contract that requires corporations to fulfill social expectations. Donaldson & Dunfee see contractarian theory as providing a source and a justification for organizational ethical obligations that transcend the particularities of company, of industry, and, above all, of culture. Universalistic western ethical theory is of little relevance outside its own context, they argue, whereas contractarian approaches can take into account varieties of institutional and cultural norms and practices (Donaldson, 1994).

The second question, “to who is the corporation responsible?” has given rise to a variety of arguments which revolve round the extent to which responsibility to stockholders should take precedence over responsibility to stakeholders (employees, customers, suppliers, banks, and the community). Companies have a fiduciary duty to stockholders, but this does ...