essay on morality and ethics in corporate world

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Morality And Ethics In Corporate World (Essay Sample)

Table of Contents

Introduction

The world is like a huge, open playfield. It is so broad that there is quite literally, very few sets of rules that can control every sector sensibly and in equal measure. Morals and ethics are vital requirements in the business world as every individual faces ethical and moral issues daily. Different people respond to these matters differently as each of them has different sets of morals. The corporate world hires different individuals to offer various skills or expertise for instance investors or employees. The business community has policies and regulations which are typically included in the contracts, and such rules see to ensure that the quality of moral and ethical responsibilities is upheld.

In the corporate world, the rules tend to shift quite often, based on the individual interests of the parties involved. What is surprising though, is the fact that the rules usually change without any respect as to whether they change for the better, or worse. It usually calls for the establishment and observation of a set of both written and unwritten ethical codes to crack it and to ensure normalcy is upheld therein. The corporate world, therefore, acknowledges discipline as a vital asset in the society as it boosts the trust, value, and dignity of every individual and thus ensures that all the activities they engage in are essential and ethical. Ethics and morality in the corporate world, therefore, acts as a guide to all individuals boost their credibility which ensures they render accurate and efficient services in business. The effectiveness of these morals and ethics ensure that no interests conflict in the corporate world and this results in increased productivity.

The principle of ethics and morality

The principle of ethics and morality in the corporate world is highly applicable to a company. A company constitutes an organizational setup whereby different members of staff take part in different activities which all sum up to increased productivity and profitability of the entity. Managers are in a better position to influence its application as the leaders have all the authority to apply any styles towards the employees to ensure no hazards as a result of poor skill management. To a great extent, management is in itself a special skill and a delicate balancing act too. When training to join the business world, the trainees are taught moral values, and the training officers always lead by example as every individual should remain responsible for their actions each time they offer any service in the corporate world.

Credibility and Management

If the management is effective, the organization’s credibility increases and thus creates a good image of the firm and also ensures that the business is loyal to its target clients and markets. According to Carroll & Buchholtz (2014), the corporate world vastly recognizes the value of professional and personal morals and ethics as they play a primary role which is promoting the significance of morality when interacting with other stakeholders. To sustain a productive corporate world, the business leadership should be efficient and aggressive which in turn leads the stakeholders towards an upward trend, which indicates an improvement in the investments and assets of the company. Morality and ethics within the corporate world, therefore, act an objective campaign which bolsters a company’s marketing interest and values.

Impacts of Ethical Leadership

Ethical leadership ensures that the company grows by increasing its revenue status which in turn raise credibility within the corporate world. Effective leadership, therefore, results in positive changes in a business structure and ensures productivity. Ciulla (2014) argues that firms should also respect the rules and regulations as presented by the international or national agencies which act as the regulatory bodies with the aim of creating a harmonious corporate environment that protects the public. Ethics is mutual, not a one-way thing. The respect and responsibility is mutual and there is no such thing as lesser or greater entities when it comes to it.

The considerations of an ethical corporate world are currently adapting to the diversity that is applied to the consumers and employees. In the business community the integrity of every human being is respected, and thus human rights are waived to the stakeholders during the transactions and other activities within the institution. Compliance with the gender, race, ethnicity, educational background, sexual orientation, and age is one of the rules that must be followed within the corporate world to protect individuals from any harassment or discrimination. It is the business world’s primary goal to respect every individual’s rights with efforts to implement and sustain ethical values and morality.

The corporate world believes that it is a firm that influences the productivity and interest through engagement in humanitarian operations to both local and international target markets. To a greater extent, the whole thing simply narrows down to one. This is, the identification of various ways, however small, through which more and more money can be made. According to the moral absolutism approach, ethical principles and values exist and should be applicable in all circumstances and places (Churchland, 2011). The approach argues that the moral quality of every action and behavior depend on the act itself and thus irrespective of the circumstance if an act is right then it remains right and likewise if something is wrong then it is always considered wrong.

The corporate world is currently embracing the significance of ethics and morality, and most major company’s executives are concerned whether their corporations operate on ethical grounds. It is evident from the media that unethical and scandalous behaviors are quite prevalent and has allowed most managers realize the importance of ethics and morality in their corporations. Some of the immoral issues that the executive should focus to solve are excessive pay for packages, investigations from the government and corruption. It is evident that the current world is too complex and interlinked and thus unethical behaviors cannot be tolerated. In this complex quagmire, some voice of reason, as upheld within the tenets of ethics and morality, is essential.

Morality and ethics make up different sides of the same body. As a result, they are inseparable.  In the corporate world, without a strict observation of ethics, there is a lot that would go wrong. If a corporation embraces good ethical approaches, the business cultures will establish a definite stand, and this would boost not only profitability but also ensure consumer satisfaction. Ethical companies are considered efficient, and morality is the key thing towards creating and sustaining a corporate culture. Ethics help a company vilify the expectations which are a vital aspect of management. Managers are urged to instill ethical behaviors by maintaining moral quality and confronting those that engage in immoral activities in the corporate world.

• Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
• Churchland, Patricia Smith (2011). Braintrust: What Neuroscience Tells Us About Morality? Princeton University Press. pp. 7–9. ISBN 978-0-691-13703-2.
• Ciulla, J. B. (Ed.). (2014). Ethics, the heart of leadership. ABC-CLIO

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What Are Business Ethics & Why Are They Important?

• 27 Jul 2023

From artificial intelligence to facial recognition technology, organizations face an increasing number of ethical dilemmas. While innovation can aid business growth, it can also create opportunities for potential abuse.

“The long-term impacts of a new technology—both positive and negative—may not become apparent until years after it’s introduced,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability . “For example, the impact of social media on children and teenagers didn’t become evident until we watched it play out over time.”

If you’re a current or prospective leader concerned about navigating difficult situations, here's an overview of business ethics, why they're important, and how to ensure ethical behavior in your organization.

Access your free e-book today.

What Are Business Ethics?

Business ethics are principles that guide decision-making . As a leader, you’ll face many challenges in the workplace because of different interpretations of what's ethical. Situations often require navigating the “gray area,” where it’s unclear what’s right and wrong.

When making decisions, your experiences, opinions, and perspectives can influence what you believe to be ethical, making it vital to:

• Be transparent.
• Invite feedback.
• Consider impacts on employees, stakeholders, and society.
• Reflect on past experiences to learn what you could have done better.

“The way to think about ethics, in my view, is: What are the externalities that your business creates, both positive and negative?” says Harvard Business School Professor Vikram Gandhi in Leadership, Ethics, and Corporate Accountability . “And, therefore, how do you actually increase the positive element of externalities? And how do you decrease the negative?”

Related: Why Managers Should Involve Their Team in the Decision-Making Process

Ethical Responsibilities to Society

Promoting ethical conduct can benefit both your company and society long term.

“I'm a strong believer that a long-term focus is what creates long-term value,” Gandhi says in Leadership, Ethics, and Corporate Accountability . “So you should get shareholders in your company that have that same perspective.”

Prioritizing the triple bottom line is an effective way for your business to fulfill its environmental responsibilities and create long-term value. It focuses on three factors:

• Profit: The financial return your company generates for shareholders
• People: How your company affects customers, employees, and stakeholders
• Planet: Your company’s impact on the planet and environment

Check out the video below to learn more about the triple bottom line, and subscribe to our YouTube channel for more explainer content!

Ethical and corporate social responsibility (CSR) considerations can go a long way toward creating value, especially since an increasing number of customers, employees, and investors expect organizations to prioritize CSR. According to the Conscious Consumer Spending Index , 67 percent of customers prefer buying from socially responsible companies.

To prevent costly employee turnover and satisfy customers, strive to fulfill your ethical responsibilities to society.

Ethical Responsibilities to Customers

As a leader, you must ensure you don’t mislead your customers. Doing so can backfire, negatively impacting your organization’s credibility and profits.

Actions to avoid include:

• Greenwashing : Taking advantage of customers’ CSR preferences by claiming your business practices are sustainable when they aren't.
• False advertising : Making unverified or untrue claims in advertisements or promotional material.
• Making false promises : Lying to make a sale.

These unethical practices can result in multi-million dollar lawsuits, as well as highly dissatisfied customers.

Ethical Responsibilities to Employees

You also have ethical responsibilities to your employees—from the beginning to the end of their employment.

One area of business ethics that receives a lot of attention is employee termination. According to Leadership, Ethics, and Corporate Accountability , letting an employee go requires an individualized approach that ensures fairness.

Not only can wrongful termination cost your company upwards of $100,000 in legal expenses , it can also negatively impact other employees’ morale and how they perceive your leadership.

Ethical business practices have additional benefits, such as attracting and retaining talented employees willing to take a pay cut to work for a socially responsible company. Approximately 40 percent of millennials say they would switch jobs to work for a company that emphasizes sustainability.

Ultimately, it's critical to do your best to treat employees fairly.

“Fairness is not only an ethical response to power asymmetries in the work environment,” Hsieh says in the course. “Fairness—and having a successful organizational culture–can benefit the organization economically and legally.”

Why Are Business Ethics Important?

Failure to understand and apply business ethics can result in moral disengagement .

“Moral disengagement refers to ways in which we convince ourselves that what we’re doing is not wrong,” Hsieh says in Leadership, Ethics, and Corporate Accountability . “It can upset the balance of judgment—causing us to prioritize our personal commitments over shared beliefs, rules, and principles—or it can skew our logic to make unethical behaviors appear less harmful or not wrong.”

Moral disengagement can also lead to questionable decisions, such as insider trading .

“In the U.S., insider trading is defined in common, federal, and state laws regulating the opportunity for insiders to benefit from material, non-public information, or MNPI,” Hsieh explains.

This type of unethical behavior can carry severe legal consequences and negatively impact your company's bottom line.

“If you create a certain amount of harm to a society, your customers, or employees over a period of time, that’s going to have a negative impact on your economic value,” Gandhi says in the course.

This is reflected in over half of the top 10 largest bankruptcies between 1980 and 2013 that resulted from unethical behavior. As a business leader, strive to make ethical decisions and fulfill your responsibilities to stakeholders.

How to Implement Business Ethics

To become a more ethical leader, it's crucial to have a balanced, long-term focus.

“It's very important to balance the fact that, even if you're focused on the long term, you have to perform in the short term as well and have a very clear, articulated strategy around that,” Gandhi says in Leadership, Ethics, and Corporate Accountability .

Making ethical decisions requires reflective leadership.

“Reflecting on complex, gray-area decisions is a key part of what it means to be human, as well as an effective leader,” Hsieh says. “You have agency. You must choose how to act. And with that agency comes responsibility.”

Related: Why Are Ethics Important in Engineering?

Hsieh advises asking the following questions:

• Are you using the “greater good” to justify unethical behavior?
• Are you downplaying your actions to feel better?

“Asking these and similar questions at regular intervals can help you notice when you or others may be approaching the line between making a tough but ethical call and justifying problematic actions,” Hsieh says.

Become a More Ethical Leader

Learning from past successes and mistakes can enable you to improve your ethical decision-making.

“As a leader, when trying to determine what to do, it can be helpful to start by simply asking in any given situation, ‘What can we do?’ and ‘What would be wrong to do?’” Hsieh says.

Many times, the answers come from experience.

Gain insights from others’ ethical decisions, too. One way to do so is by taking an online course, such as Leadership, Ethics, and Corporate Accountability , which includes case studies that immerse you in real-world business situations, as well as a reflective leadership model to inform your decision-making.

Ready to become a better leader? Enroll in Leadership, Ethics, and Corporate Accountability —one of our online leadership and management courses —and download our free e-book on how to be a more effective leader.

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Building an Ethical Company

• Isaac H. Smith
• Maryam Kouchaki

Just as people can develop skills and abilities over time, they can learn to be more or less ethical. Yet many organizations limit ethics training to the onboarding process. If they do address it thereafter, it may be only by establishing codes of conduct or whistleblower hotlines. Such steps may curb specific infractions, but they don’t necessarily help employees develop as ethical people.

Drawing on evidence from hundreds of research studies, the authors offer a framework for helping workers build moral character. Managers can provide experiential training in ethical dilemmas. They can foster psychological safety when minor lapses occur, conduct pre- and postmortems for initiatives with ethical components, and create a culture of service by encouraging volunteer work and mentoring in ethics.

Create an organization that helps employees behave more honorably.

Idea in Brief

The opportunity.

Just as people entering the workforce can develop job-related skills and abilities over time, they can learn to be more ethical as well.

Why It’s Often Missed

Many organizations relegate ethics training to the onboarding process, perhaps also issuing codes of conduct and establishing whistleblower hotlines. Such steps may curb specific unethical acts but don’t necessarily help workers grow as moral people.

How to Capitalize on It

Managers can provide experiential training in ethical dilemmas, foster psychological safety when (minor) lapses occur, conduct pre- and postmortems for initiatives with ethical components, and create a culture of service by encouraging volunteer work and mentoring in ethics.

People don’t enter the workforce with a fixed moral character. Just as employees can nurture (or neglect) their skills and abilities over time, they can learn to be more or less ethical. Yet rather than take a long-term view of employees’ moral development, many organizations treat ethics training as a onetime event, often limiting it to the onboarding process. If they do address ethics thereafter, it may be only by espousing codes of conduct or establishing whistleblower hotlines. Such steps may curb specific unethical actions, but they don’t necessarily help employees develop as moral people.

• Isaac H. Smith is an associate professor of organizational behavior and human resources at BYU Marriott School of Business. His research explores the morality and ethics of organizations and the people in them.
• Maryam Kouchaki is a professor of management and organizations at the Kellogg School of Management. Her research explores ethics, morality, and the complexity and challenges of managing ethnic and gender diversity for organizations.

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Essay on Morality and Ethics in Corporate World (Sample)

Essay on Morality and Ethics in Corporate World

In the corporate world, there is a large group of people who are hired to perform their skills and responsibilities as employees and investors. There are rules and policies that are indicated from the contract that has been drafted and applied by the corporate world in order to ensure that the quality of ethical responsibilities is followed.

Discipline is important in the corporate world because it values the trust and the dignity of every employee to ensure that their services and product campaign are essential to value the cooperation of the target markets. In this case, it enhances the  credibility  of each employee to essential render their service efficiently and accurately to prevent any conflicting interests that might challenge the productivity of the corporate world.

The principle of morality in the corporate world is valued by the influence of a firm leadership application; it is valued by managers and a head of a company. The reason behind is that leaders have the authority to apply their styles towards their employees to prevent any risks or hazards caused by ineffective skill management to a certain function or operation. During training, moral values are always insinuated by the training officers of the company because every employee should be responsible with their actions when rendering their service to the operating institution.

As a result, the influence of an effective management procedure enhances the credibility of the institution to improve its values and trust with their target markets to establish an efficient way of promoting their professionalism. In the corporate world, the value of personal and professional ethics plays an important role to promote the essentials of morality towards other stakeholders.

A productive corporate world is sustained by an effective and aggressive leader by leading change to the stakeholders to move in an upward trend, indicating an improvement with the assets and investments of the company. It is a strategic campaign to bolster the fundamentals of the company’s marketing values and interest. The result of having an effective leadership moves the company forward by means of generating an increased revenue status that improves credibility in the corporate world.

This means that having an effective leadership generates a positive change within the corporate structure of the company. Respecting the house rules as well as the provisions provided by either national or international regulating agencies engages in a harmonious corporate structure to protect and safeguard that interest of the public.

The ethical consideration of the corporate world is adapting to diversity applicable towards employees and consumers. In the corporate world, basic human rights are always waived to all stakeholders because it values the integrity of every human being while transacting and rendering the services of the institution. This involves respecting the race, the gender, sexual orientation, ethnicity, social class, educational attainment, and age.

In this case, the corporate world values the integrity of every individual by means of preventing actions against racism, hate speech, and discrimination of any actions made by its employees or a company. Respecting the rights of anyone is a major goal of the corporate world to sustain and implement its morality and ethical values. At the end of the day, a company influences the interest as well as productivity by means of engaging in a humane way of operating the company to both local and international markets (Churchland, 2011).

Churchland, Patricia Smith (2011). Braintrust: What Neuroscience Tells Us About Morality. Princeton University Press. pp. 7–9. ISBN 978-0-691-13703-2.

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Corporate Business World: Ethics and Morality

Filed Under: Essays Tagged With: immanuel kant

Ethics and morals are a requirement in the corporate business world. Each day employees are faced with moral and ethical issues; and because they have their own individual set of morals, they behave differently. Many have formed a good understanding of the basics of ethics, leadership, morality and social responsibility; but most do not really understand the true meaning of values, ethics and morality. The roots of ethics in America teach us “Ten Universal Values,” namely, honesty, integrity, promise-keeping, fidelity, fairness, caring, respect for others, responsible citizenship, pursuit of excellence, and accountability. However, recent history teaches us 12 ethical principles that include two additional values, namely leadership, and reputation and morals to the list that I will discuss in this essay. I will also discuss the differences between ethical and moral issues. In business, ethics and character count. Therefore, I will also discuss some organizations that have been destroyed or damaged due to their unethical and immoral behavior in business.

Let’s begin with Merriam Webster’s Dictionary definition of ethics. According to this dictionary, ethics is defined as: an area of study that deals with ideas about what is good and bad behavior; a branch of philosophy dealing with what is morally right or wrong (Merriam-Webster).

According to our text, ethics is defined in two ways. First, it states that ethics are the principles of conduct that governs an individual or group. An example would be the rules by which an individual lives his or her personal life (Text pg 8).

The Essay on Global Ethics and Business: A Philosophical Approach

Virtue Ethics Introduction        When analyzing business decisions and practices, people tend to employ a particular moral framework. Often, some people do not know whether they are employing an ethical framework. To understand the nature of some decisions and practices, there is a need to consider ethical frameworks such as utilitarianism, justice, ethics of virtue and deontology (Becker 2000). ...

A great example would be when a child makes the decision to break the rules of a game, he is creating conflict between himself and his playmates. Then again, the child who chooses to play by the rules ultimately enjoys friendship and closeness with his playmates, which is a benefit to himself. Our text defines ethics from the dictionary as “the study of morality.” Ethics may deal with morality, but it is not the same as morality (Text pg­ 8).

Our text states that ethics is a kind of investigation [that] includes both the activity of investigating as well as the results of that investigation. Whereas, morality is the subject matter that ethics investigates (Text pg 8).

This brings us to the dictionary definition of morality which defines it as: beliefs about what is right behavior and what is wrong behavior, or the degree to which something is right and good; the moral goodness or badness of something (Merriam-Webster).

Two good examples are correcting a financial error in your favor when you know that it would never be discovered and a co-worker stealing food out of the freezer. These are crimes, the moral issue is do you report them or not? There are guidelines and standards in which employees are expected to follow if an employee decides to stay employed.

Ethical principles serve as a guide to making decisions and they also serve to establish the criteria by which your decisions will be judged by others. In the business world, it is critical how people judge your character because it is the basis of trust and credibility. Your reputation is what people perceive of your actions. Are they honorable and ethical? Whereas your character is defined by your actions and if they are they honorable and ethical according to the following 12 ethical principles:

1. Honesty – Be honest in all communications and actions.

2. Integrity – Maintain personal integrity.

3. Promise-keeping – Keep promises and fulfill commitments.

4. Loyalty – Be loyal within the framework of other ethical principles.

5. Fairness – Strive to be fair and just in all dealings.

6. Caring – Demonstrate compassion and a genuine concern for the well-being of others.

The Essay on Ethical Leadership Reputation Matrix

1. “There is no I in Team.” One for all and all for one best describes utilitarianism 2. “There is no I in team, but there is an M and a E (me).” To seek the greatest amount of pleasure for self and the majority of the group best describes Hedonism. 3. “I will do my best to do my duty…” To strive for excellence in everything you and others do and say best describes  Deontology. Multiple Choice 4. ...

7. Respect for others – Treat everyone with respect.

8. Law Abiding – Obey the law.

9. Commitment to excellence – Pursue excellence all the time in all things.

10. Leadership – Exemplify honor and ethics.

11. Reputation and Morale – Build and protect and build the company’s good reputation and the moral of its employees.

12. Accountability – Be accountable.

Both character and reputation should be a concern for successful executives because both can be destroyed by their actions that are perceived to be unethical (http://josephsoninstitute. Ethics are an integral learned part of the success or failure of a business. Several large organizations such as Enron and WorldCom have been destroyed and some organizations such as AIG, Fannie Mae, and Freddie Mac have been seriously damaged due to unethical practices of their top executives. Most notable is the Ponzi scheme by Bernie Madoff and other executives of Enron Corporation who convinced thousands of investors to fork over their savings by falsely promising consistent profits in return and falsely inflated the company’s revenues, through their accounting practices that made them become the seventh largest company in the world. When the scheme was uncovered, the company fell unraveled and, consequently, filed for Chapter 11 bankruptcy in December, 2001. Seven years later, Madoff was caught and charged with 11 counts of fraud, money laundering, perjury, and theft after conning his investors out of $65 billion and went undetected for many years. He was sentenced to 150 years in prison (S. Yang 2014).

More locally, my daughter previously worked for the Finance Department of the Marion Housing Authority and was terminated by Executive Director, Frederick Hunt, for not participating in practicing that ethically and morally wrong. After a three-year investigation, Hunt was arrested and preliminarily charged with two counts of forgery, one count of corrupt business influence and four counts of theft for misusing more than $20,000 in Marion Housing Authority funds. According to the Grant County Prosecutor, checks were written to a sub-contractor, Hunt forged the payee’s name and deposited the funds into his own personal account; charged over $12,000 on a company credit card and made several in his hometown of North Carolina (C. Franks 2014).

The Term Paper on Business Ethics Test Questions With Answers

Chap 10: 16. Which of the following is true of gatekeepers? a. They are not bound to ethical duties. b. Investors and boards are examples of gatekeepers. c. They serve as intermediaries between market participants. d. They are not responsible for ensuring conformance to fairness in the marketplace. Answer: c 17. Which of the following rely on gatekeepers for fair and effective functioning of ...

According to our textbook, traditionally the view of an individual’s responsibility for corporate acts have claimed that when an organized group of members (i.e. corporation) act together, then their act should be attributed to the corporate group and not the individuals of whom the group is made; and they must be held responsible for the act. Meaning that each and every person who knowingly and freely cooperates to produce a corporate act is morally responsible for that act. The law, however, attributes the acts of a corporation’s managers to the corporation as a whole and not to the managers as individuals. (Text pg. 62)

While a majority of companies choose to make law-abiding decisions, there are still some companies that will try to “beat the system.” This is where the Sarbanes-Oxley Act of 2002 comes in. This Act discourages the “crooks” of the corporate world from being noncompliant with security violations due to the Act’s criminal and civil penalty provisions; and it encourages independent auditing by certified external auditors. This Act requires elevated levels of corporate disclosure in the areas of executive salaries, financial reports, and insider trading. Although the Sarbanes-Oxley Act is considered a burden by some companies, it gives the investing world a greater level of confidence in their investment activities by complying with its provisions.

In conclusion, ethics is the branch of philosophy that theoretically, rationally, and logically determines right from wrong, moral from immoral, and good from bad conducts and behaviors. Simply put by some as “walking the talk.” With regard to basic values, morals guide people toward permissible behavior; they are judgments, standards and rules of good conduct in society. Hopefully, one day all executives and managers will come to realize the old saying that “honesty is the best policy.”

The Essay on Ethics and Social Responsibility 2

Ethics Paper MGT/498 January 22, 2013 Matt Keogh Ethics Paper Ethics is described as the consensually accepted standards of behavior for an occupation, a trade, or profession (Wheelan & Hunger, 2010). This includes the study of 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, ...

12 Ethical Principles for Business Executives by Michael Josephson. (2010, December 17).

Retrieved January 6, 2015, from http://josephsoninstitute.org/business/blog/2010/12/12-ethical-principles-for-business-executives/ Ethic. (n.d.).

Retrieved January 6, 2015, from

http://www.merriam-webster.com/dictionary/ethic Franks, C. (2014, July 14).

Former Housing Head Arrested. Chronicle-Tribune. Retrieved January 8, 2015. Morality. (n.d.).

Retrieved January 6, 2015, from http://www.merriam-webster.com/dictionary/morality Understanding ethics and morality in business – Smart Business Magazine. (n.d.).

Retrieved January 6, 2015, from http://www.sbnonline.com/article/understanding-ethics-and-morality-in-business-there-are-distinct-differences-between-ethics-and-morality/ Velasquez, M. (2012).

Business ethics Concepts and cases (7th Ed.).

Upper Saddle River, NJ: Prentice Hall. Yang, S. (2014, July 1).

5 Years Ago Bernie Madoff Was Sentenced to 150 Years In Prison – Here’s How His Scheme Worked. Retrieved January 6, 2015, from http://www.businessinsider.com/how-bernie-madoffs-ponzi-scheme-worked-2014-7

BA 3200 ESSAYexist.

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Harvard Business School professor Lynn S. Paine's new book, Value Shift , argues that companies can't consider themselves amoral or apart from society anymore—that the relationship between companies and society at large necessitates bringing a moral dimension to decision making. In this interview with HBS Working Knowledge's Carla Tishler, Paine explains why this shift has occurred, and why now.

Tishler: Your research on corporate values and ethics dates back to the 1980s, including much work done for Harvard Business School cases. Clearly, business ethics issues have been around a long time. Do you see a marked difference in the types and degrees of ethical breaches occurring in the past, compared to more recently?

Paine: Business ethics, of course, is as old as business itself, but formal academic study of the subject is, as your question suggests, comparatively new. When I began working in this area, the field was just beginning to emerge. At the time, corporations were being taken to task for a host of moral failings—neglecting consumer and employee safety, ignoring civil rights, polluting the environment, violating election laws, misleading investors.

The 1970s, much like the period we are in today, had witnessed a dramatic loss of confidence in business and American institutions more generally. In 1968, 70 percent of the public thought business tried to strike a fair balance between profits and the public interest. By 1977, the proportion was something like 15 percent. The overseas payments scandal was another contributor to the malaise. More than 400 major U.S. companies had admitted to making illegal campaign contributions and bribing public officials to win business overseas.

Given the field's origins in these events, people sometimes forget that business ethics at its core is about excellence and high attainment rather than misdeeds and malfeasance. But we do pay attention to misconduct, and I have seen many types over the years—from the garden-variety deceptions and betrayals that sap morale and waste human energy to the serious forms of wrongdoing that destroy health, wealth, and life itself.

The issues span the ethical spectrum: falsified books and records, misleading communications, defective and dangerous products shipped without warnings or information, abusive behavior and unsafe conditions in the workplace, unwarranted favoritism and conflicts of interest, myriad examples of bribery and extortion, unfair and predatory competition, theft and misappropriation of information, civic and environmental irresponsibility.

Unfortunately, we have no reliable gauge of how the levels and types of misconduct have changed over time. One reason for this, as I note in the book, is that expectations for corporate behavior are constantly evolving. Conduct that would have been ethically acceptable in one era becomes unacceptable as expectations rise.

People sometimes forget that business ethics at its core is about excellence and high attainment rather than misdeeds and malfeasance. — Lynn S. Paine

Moreover, new issues are constantly coming to the fore as a result of changes in technology, society, and politics. For instance, data privacy was not a major issue until the late 1980s and 1990s when companies began to exploit newly available information technologies. Recent advances in biotechnology have raised ethical issues that have never before presented themselves. And globalization has given rise to cross-cultural dilemmas that just weren't a major part of the scene in the 1970s.

Q: You note in your book that many companies are making a "turn to values,"—focusing on ethics, values, and examining company culture—but for varied reasons including risk management, organizational functioning, market positioning, and civic positioning. In your view, do you expect to see more companies follow one of these four routes more than the others? Does there always have to be a corporate justification? Will we see any trends?

A: As I describe in the book, the paths to values are many and varied. Some managers arrive by way of a crisis or scandal, and others by way of personal conviction or a logical process of reasoning and analysis. And a few are motivated simply by the vision of a better and more humane way of conducting business.

Overall, though, my experience has been that probably half, and maybe even two-thirds, categorize ethics mainly as a risk management issue. These managers tend to see corporate values as a tool for preventing misconduct with its incident legal, financial, and reputational risks. Ethics gets their attention because they want to avoid the high-profile missteps and billion-dollar losses experienced by a Salomon Brothers, Bridgestone/Firestone, or Enron.

In the future, I think more managers will recognize that risk management is only part of the story and that the benefits of positive values go well beyond problem avoidance. — Lynn S. Paine

In recent years, however, I have seen more attention being paid to the positive side of ethics. More managers are waking up to the ways in which positive values contribute to a company's effective day-to-day functioning, as well as its reputation and long-term sustainability. In the book, I trace these connections in some detail and show how they play out in practice—sometimes in surprising ways.

In the future, I think more managers will recognize that risk management is only part of the story and that the benefits of positive values go well beyond problem avoidance. I have seen this progression in some companies that initially turn to values as a damage control measure when confronted with a scandal in their organization or industry. Then, over time, they come to take a broader view as they see the positive effects on work life, product quality, relationships with their constituencies, or their standing in the community.

Q: Having a positive value system in place can help contain costs by heading off trouble. But can improved values also add to the bottom line?

A: I've alluded to some of the ways positive values can add to the bottom line. And research points to others that I discuss in the book—better access to talent, enhanced employee commitment, better information sharing, greater creativity, enhanced reputation, and so on.

But I caution managers against focusing only on the financial case for values. No matter how much evidence we amass for this case, the fact remains that moral indifference and even blatantly unethical behavior can also be financially rewarding in many circumstances. We should not forget that slavery had its financial benefits for slave owners. And, in virtually every case of misconduct that I've studied, the perpetrators justified their actions by reference to the anticipated financial gains.

What's important to recognize, as I argue in the book, is that today's companies are being held to a higher standard. Financial results are a must, but in addition, leading companies are expected to achieve those results by acting in an ethically acceptable manner. This represents a dramatic departure from centuries of tradition holding that corporations are by nature amoral and thus incapable of assuming responsibility, adhering to ethical standards, or exercising moral judgment. But abundant evidence shows that companies today are expected to do all these things.

In every region I've studied, I've found business leaders who are trying to develop companies that meld high ethical standards with outstanding financial results. — Lynn S. Paine

This shift in our understanding of the corporate personality has profound implications for management. Among other things, it means that managers must develop more robust ethical reasoning skills and increasingly subject their decisions to ethical as well as financial analysis. In a world in which companies are expected to behave as moral actors that conform their activities to certain ethical requirements, financial tests of acceptability alone are insufficient.

In the book, I spell out the implications of this shift in some detail and show how companies can become what I term "center-driven"—oriented toward strategies that make both ethical and financial sense. In the schema I lay out, companies can choose to be "dues payers" that practice an ethic of compliance, "sustaining members" that practice an ethic of mutuality, or "sponsoring members" that practice an ethic of contribution. But, as a practical matter, they can no longer choose ethical indifference as orthodox corporate theory has long maintained.

Q: What about the global picture? Are there other countries setting good examples for American firms to follow? Are there some places where the turn to values will be particularly difficult?

A: One of the most rewarding aspects of my research in recent years has been learning about well-regarded companies in all parts of the world. In every region I've studied, I've found business leaders who are trying to develop companies that meld high ethical standards with outstanding financial results. Generally, these are companies that seek to do an excellent job serving their core constituencies, including investors, customers, employees, and the public.

This is an inherently challenging task in any country, but it is more difficult in some environments than others, particularly those plagued by high levels of corruption. The effects of corruption are insidious and they go well beyond requests for bribes and favors. Obviously, the economic implications can be significant when your competitors can get away with paying off officials—either public or corporate—to win major contracts or secure exemptions from health, safety, or other requirements.

On the other hand, a background of corruption can sometimes make it easier for a good company to stand out. The story of Nigeria's Guaranty Trust Bank, which I recount in the book, provides a nice example. Given that studies have consistently found Nigeria to be among the world's most corrupt countries, it would not appear, at least initially, to be a very promising venue for a values-based company. But, for this very reason, GTB's founders felt it was imperative to try. They set out to build a bank that would be known for its workplace innovations, outstanding customer service, superior financial results, and exemplary corporate citizenship.

In general, though, it is easier to meld ethical commitment and economic success in environments where information is free-flowing and people have real choices about where to work, invest, and consume. Of course, people can only make sound choices if they are educated and have ongoing access to relevant information. So an educated populace and a free press are also important. In addition, a well-understood ethical framework and an effective legal system are crucial. In other words, it is very hard to talk about corporate ethics without paying attention to the broader social and institutional context in which a company is operating.

Q: What other projects are you working on?

A: As I note in the preface, Value Shift raises many more questions than it answers. So there are several directions I am considering for my next project. But, for now, the general idea is to go more deeply into the cross-cultural issues you just asked about.

For the past few years I have been developing a course on cross-cultural management for the second-year MBA program. While this project has persuaded me that leading companies around the world are gravitating toward a set of what might be termed "generally accepted ethical principles," it has also persuaded me that cultural differences present some formidable challenges for companies and their managers.

In my next project, I hope to shed some light on this murky area and also to help fill a gap in our curriculum. Historically, cultural issues have not had a central place in management education, but given the world today—and the role of business in it—familiarity with these issues has become essential preparation for business leadership.

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Business Ethics

Exchange is fundamental to business. ‘Business’ can mean an activity of exchange. One entity (e.g., a person, a firm) “does business” with another when it exchanges a good or service for valuable consideration, i.e., a benefit such as money. ‘Business’ can also mean an entity that offers goods and services for exchange, i.e., that sells things. Target is a business. Business ethics can thus be understood as the study of the ethical dimensions of the exchange of goods and services, and of the entities that offer goods and services for exchange. This includes related activities such as the production, distribution, marketing, sale, and consumption of goods and services (cf. Donaldson & Walsh 2015; Marcoux 2006b).

Questions in business ethics are important and relevant to everyone. Almost all of us “do business”, or engage in a commercial transaction, almost every day. Many of us spend a major portion of our lives engaged in, or preparing to engage in, exchange activities, on our own or as part of organizations. Business activity shapes the world we live in, sometimes for good and sometimes for ill.

Business ethics in its current incarnation is a relatively new field, growing out of research by moral philosophers in the 1970’s and 1980’s. But scholars have been thinking about the ethical dimensions of commerce at least since the Code of Hammurabi (c. 1750 BC).

This entry summarizes research on central questions in business ethics, including: What sorts of things can be sold? How can they be sold? In whose interests should firms be managed? Who should manage them? What do firms owe their workers, and what do workers owe their firms? Should firms try to solve social problems? Is it permissible for them to try to influence political outcomes? Given the vastness of the field, of necessity certain questions are not addressed.

1. Varieties of business ethics

2. corporate moral agency, 3.1 ends: shareholder primacy or stakeholder balance, 3.2 means: control by shareholders or others too, 4. important frameworks for business ethics, 5.1 the limits of markets, 5.2 product safety and liability, 5.3 advertising, 5.5 pricing, 6.1 hiring and firing, 6.2 compensation, 6.3 meaningful work, 6.4 whistleblowing, 7.1 corporate social responsibility, 7.2 corporate political activity, 7.3 international business, 8. the status of business ethics, other internet resources, related entries.

Many people engaged in business activity, including accountants and lawyers, are professionals. As such, they are bound by codes of conduct promulgated by professional societies. Many firms also have detailed codes of conduct, developed and enforced by teams of ethics and compliance personnel. Business ethics can thus be understood as the study of professional practices, i.e., as the study of the content, development, enforcement, and effectiveness of the codes of conduct designed to guide the actions of people engaged in business activity. This entry will not consider this form of business ethics. Instead, it considers business ethics as an academic discipline.

The academic field of business ethics is shared by social scientists and normative theorists. But they address different questions. Social scientists try to answer descriptive questions like: Does corporate social performance improve corporate financial performance, i.e., does ethics pay (Vogel 2005; Zhao & Murrell 2021)? Why do people engage in unethical behavior (Bazerman & Tenbrunsel 2011; Werhane et al. 2013). How can we make them stop (Warren, Gaspar, & Laufer 2014)? I will not consider such questions here. This entry focuses on questions in normative business ethics, most of which are variants on the question: What is ethical and unethical in business?

Normative business ethicists (hereafter the qualifier ‘normative’ will be assumed) tend to accept the basic elements of capitalism. That is, they assume that the means of production can be privately owned and that markets—featuring voluntary exchanges between buyers and sellers at mutually agreeable prices—should play an important role in the allocation of resources. Those who reject capitalism will see some debates in business ethics (e.g., about firm ownership and control) as misguided.

Some entities “do business” with the goal of making a profit, and some do not. Pfizer and Target are examples of the former; Rutgers University and the Metropolitan Museum of Art are examples of the latter. An organization identified as a ‘business’ is typically understood to be one that seeks profit, and for-profit organizations are the ones that business ethicists focus on. But many of the ethical issues described below arise also for non-profit organizations and individual economic agents.

One way to think about business ethics is in terms of the moral obligations of agents engaged in business activity. Who can be a moral agent? Individual persons, obviously. What about firms? This is treated as the issue of “corporate moral agency” or “corporate moral responsibility”. Here ‘corporate’ does not refer to the corporation as a legal entity, but to a collective or group of individuals. To be precise, the question is whether firms are moral agents and morally responsible considered as ( qua ) firms, not considered as aggregates of individual members of firms.

We often think and speak as if corporations are morally responsible. We say things like “Costco treats its employees well” or “BP harmed the environment in the Gulf of Mexico”, and in doing so we appear to assign agency and responsibility to firms themselves (Dempsey 2003). We may wish to praise Costco and blame BP for their behavior. But this may be just a metaphorical way of speaking, or a shorthand way of referring to certain individuals who work in these firms (Velasquez 1983, 2003). Corporations are different in many ways from paradigm moral agents, viz., people. They don’t have minds, for one thing, or bodies, for another. The question is whether corporations are similar enough to people to warrant ascriptions of moral agency and responsibility.

In the business ethics literature, French is a seminal thinker on this topic. In early work (1979, 1984), he argued that firms are morally responsible for what they do, and indeed should be seen as “full-fledged” moral persons. He bases this conclusion on his claim that firms have internal decision-making structures, through which they cause events to happen, and act intentionally. Some early responses to French’s work accepted the claim that firms are moral agents, but denied that they are moral persons. Donaldson (1982) claims that firms cannot be persons because they lack important human capacities, such as the ability to pursue their own happiness (see also Werhane 1985). Other responses went further and denied that firms are moral agents. Velasquez (1983, 2003) argues that, while corporations can act, they cannot be held responsible for their actions, because those actions are brought about by the actions of their members. In later work, French (1995) recanted his claim that firms are moral persons, though not his claim that they are moral agents.

Debate about corporate moral agency and moral responsibility rages on in important new work (Orts & Smith 2017; Sepinwall 2016). One issue that has received sustained attention is choice. Appealing to discursive dilemmas, List & Pettit (2011) argue that the decisions of corporations can be independent of the decisions of their members (see also Copp 2006). This makes the corporation an autonomous agent, and since it can choose in the light of values, a morally responsible one. Another issue is intention. A minimal condition of moral agency is the ability to form intentions. Some deny that corporations can form them (S. Miller 2006; Rönnegard 2015). If we regard an intention as a mental state, akin to a belief or desire, or a belief/desire complex, they may be right. But not if we regard an intention in functionalist terms (Copp 2006; Hess 2014), as a plan (Bratman 1993), or in terms of reasons-responsiveness (Silver forthcoming). A third issue is emotion. Sepinwall (2017) argues that being capable of emotion is a necessary condition of moral responsibility, and since corporations aren’t capable of emotion, they aren’t morally responsible. Again, much depends on what it means to be capable of emotion. If this capability can be given a functionalist reading, as Björnsson & Hess (2017) claim, perhaps corporations are capable of emotion (see also Gilbert 2000). Pursuit of these issues lands one in the robust and sophisticated literature on collective responsibility and intentionality, where firms feature as a type of collective. (See the entries on collective responsibility , collective intentionality , and shared agency .)

Another question asked about corporate moral agency is: Does it matter? Perhaps BP itself was morally responsible for polluting the Gulf of Mexico. Perhaps certain individuals at BP were. What hangs on this? Some say: a lot. In some cases there may be no individual who is morally responsible for the firm’s behavior (List & Pettit 2011; Phillips 1995), and we need someone to blame, and perhaps punish. Blame may be the fitting response, and blame (and punishment) incentivizes the firm to change its behavior. Hasnas (2012) says very little hangs on this question. Even if firms are not morally responsible for the harms they cause, we can still require them to pay restitution, condemn their culture, and subject them to regulation. Moreover, Hasnas says, we should not blame and punish firms, for our blame and punishment inevitably lands on the innocent.

3. The ends and means of corporate governance

There is significant debate about the ends and means of corporate governance, i.e., about who firms should be managed for, and who should (ultimately) manage them. Much of this debate is carried on with the large publicly-traded corporation in view.

There are two main views about the proper ends of corporate governance. According to one view, firms should be managed in the best interests of shareholders. It is typically assumed that managing firms in shareholders’ best interests requires maximizing their wealth (cf. Hart & Zingales 2017; Robson 2019). This view is called “shareholder primacy” (Stout 2012) or—in order to contrast it more directly with its main rival (to be discussed below) “shareholder theory”. Shareholder primacy is the dominant view about the ends of corporate governance in business schools and in the business world.

A few writers argue for shareholder primacy on deontological grounds, i.e., by appealing to rights and duties. On this argument, shareholders own the firm, and hire managers to run it for them on the condition that the firm is managed in their interests. Shareholder primacy is thus based on a promise that managers make to shareholders (Friedman 1970; Hasnas 1998). In response, some argue that shareholders do not own the firm. They own stock, a type of corporate security (Bainbridge 2008; Stout 2012); the firm itself may be unowned (Strudler 2017). Others argue that managers do not make, explicitly or implicitly, any promises to shareholders to manage the firm in a certain way (Boatright 1994). More writers argue for shareholder primacy on consequentialist grounds. On this argument, managing firms in the interests of shareholders is more efficient than managing them in any other way (Hansmann & Kraakman 2001; Jensen 2002). In support of this, some argue that, if managers are not given a single objective that is clear and measurable—viz., maximizing shareholder value—then they will have greater opportunity for self-dealing (Stout 2012). The consequentialist argument for shareholder primacy run into problems that afflict many versions of consequentialism: in requiring all firms to aim at a certain objective, it does not allow sufficient scope for personal choice (Hussain 2012). Most think that people should be able to pursue projects, including economic projects, that matter to them, even if those projects do not maximize shareholder value.

The second main view about the proper ends of corporate governance is given by stakeholder theory. This theory was first put forward by Freeman in the 1980s (Freeman 1984; Freeman & Reed 1983), and has been refined by Freeman and collaborators over the years (see, e.g., Freeman 1994; Freeman et al. 2010; Freeman, Harrison, & Zyglidopoulos 2018; Jones, Wicks, & Freeman 2002; Phillips, Freeman, & Wicks 2003). According to stakeholder theory—or at least, early formulations of it—instead of managing the firm in the best interests of shareholders only, managers should seek to “balance” the interests of all stakeholders, where a stakeholder is anyone who has a “stake”, or interest (including a financial interest), in the firm. Blair and Stout’s (1999) “team production” theory of corporate governance offers similar guidance.

To be clear, in a firm in which shareholders’ interests are prioritized, other stakeholders will benefit too. Employees will receive wages, customers will receive goods and services, and so on. The debate between shareholder and stakeholder theorists is about what to do with the residual revenues, i.e., what’s left over after firms meet their contractual obligations to employees, customers, and others. Shareholder theorists think they should be used to maximize shareholder wealth. Stakeholder theorists think they should be used to benefit all stakeholders.

To its critics, stakeholder theory has seemed both incompletely articulated and weakly defended. With respect to articulation, one question that has been pressed is: Who are the stakeholders (Orts & Strudler 2002, 2009)? The groups most commonly identified are shareholders, employees, the community, suppliers, and customers. But other groups have stakes in the firm, including creditors, the government, and competitors. It makes a great deal of difference where the line is drawn, but stakeholder theorists have not provided a clear rationale for drawing it in one place rather than another. Another question is: What does it mean to “balance” the interests of all stakeholders, other than not always giving precedence to shareholders’ interests (Orts & Strudler 2009)? With respect to defense, critics have wondered what the rationale is for managing firms in the interests of all stakeholders. In one place, Freeman (1984) offers an instrumental argument, claiming that balancing stakeholders’ interests is better for the firm strategically than maximizing shareholder wealth (see also Blair & Stout 1999; Freeman, Harrison, & Zyglidopoulos 2018). (Defenders of shareholder primacy say the same thing about their view.) In another, he gives an argument that appeals to Rawls’s justice as fairness (Evan & Freeman 1988; cf. Child & Marcoux 1999).

In recent years, questions have been raised about whether stakeholder theory is appropriately seen as a genuine competitor to shareholder primacy, or is even appropriately called a “theory”. In one article, Freeman and collaborators say that stakeholder theory is simply “the body of research … in which the idea of ‘stakeholders’ plays a crucial role” (Jones et al. 2002). In another, Freeman describes stakeholder theory as “a genre of stories about how we could live” (1994: 413). It may be, as Norman (2013) says, that stakeholder is now best regarded as “mindset”, i.e., a way of looking at the firm that emphasizes its embeddedness in a network of relationships. In this case, there may be no dispute between shareholder and stakeholder theorists.

Resolving the debate between shareholder and stakeholder theorists (assuming they are competitors) will not resolve all or even most of the ethical questions in business. This is because it is a debate about the ends of corporate governance. It cannot answer questions about the moral constraints that must be observed in pursuit of those ends (Goodpaster 1991; Norman 2013), including duties of beneficence (Mejia 2020). Neither shareholder theory nor stakeholder theory is plausibly interpreted as the view that corporate managers should do whatever is possible to maximize shareholder wealth and balance all stakeholders’ interests, respectively. Rather, these views should be interpreted as views that managers should do whatever is consistent with the requirements of morality to achieve these ends. A large part of business ethics is trying to determine what these requirements are.

Answers to questions about the means of corporate governance often mirror answers to question about the ends of corporate governance. Often the best way to ensure that a firm is managed in the interests of a certain party P is to give P control. Conversely, justifications for why the firm should be managed in the interests of P sometimes appeal P’s rights to control it.

Friedman (1970), for example, thinks that shareholders’ ownership of the firm gives them a right to control the firm (which they can use to ensure that the firm is run in their interests). We might see control rights for shareholders as following analytically from the concept of ownership. To own a thing is to have a bundle of rights with respect to that thing. One of the standard “incidents” of ownership is control. (See the entry on property and ownership .)

As noted, in recent years the idea that the firm is something that can be owned has been challenged (Bainbridge 2008; Stout 2012; Strudler 2017). If this is right, then the ownership argument collapses. But similar contractarian arguments for shareholder control of firms have been constructed which do not rely on the assumption of firm ownership. All that is assumed in these arguments is that some people own capital, and others own labor. Capital can “hire” labor (and other inputs of production) or labor can “hire” capital. It just so happens that, in most cases, capital hires labor. We know this because in most cases capital-providers are the ultimate decision-makers in the firm. In a publicly-traded corporation, they elect the board. These points are emphasized especially by those who regard the firm as a “nexus of contracts” among various parties (Easterbrook & Fischel 1996; Jensen & Meckling 1976).

Many writers find this result troubling. Even if the governance structure in most firms is in some sense agreed to, they say that it is unjust in other ways. Anderson (2017) characterizes standard corporate governance regimes as oppressive and unaccountable private dictatorships. To address this injustice, these writers call for various forms of worker participation in managerial decision-making, including the ability by workers to reject arbitrary directives by managers (Hsieh 2005), worker co-determination of firms’ policies and practices (Ferreras 2017; McMahon 1994), and exclusive control of productive enterprises by workers (Dahl 1985).

Arguments for these governance structures take various forms. One appeals to the value of protecting workers’ interests (González-Ricoy 2014; Hsieh 2005). Another appeals to the value of autonomy, or a right to freely determine one’s actions, including one’s actions at work (Malleson 2014; McCall 2001). A third argument for worker control is the “parallel case” argument. According to it, if states should be governed democratically, then so should firms, because firms are like states in the relevant respects (Dahl 1985; Landemore & Ferreras 2016; cf. Mayer 2000). A fourth argument sees worker participation in firm decision-making as valuable training for citizens in a democratic society (Pateman 1970).

Space considerations prevent detailed examinations of these arguments (for critical reviews see Frega, Herzog, & Neuhäuser 2019; Hsieh 2008). But criticisms generally fall into two categories. The first insists on the normative priority of agreements, of the sort described above. There are few legal restrictions on the types of governance structures that firms can have. And some firms are in fact controlled by workers (Dow 2003; Hansmann 1996). To insist that other firms should be governed this way is to say, according to this argument, that people should not be allowed to arrange their economic lives as they see fit. Another criticism of worker participation appeals to efficiency. Allowing workers to participate in managerial decision-making may decrease the pace of decision-making, since it requires giving many workers a chance to make their voices heard (Hansmann 1996). It may also raise the cost of capital for firms, as investors may demand more favorable terms if they are not given control of the enterprise in return (McMahon 1994). Both sources of inefficiency may put the firm at a significant disadvantage in a competitive market. It may not just be a matter of competitive disadvantage. If it were, the problem could be solved by making all firms worker-controlled. The problem may be one of diminished productivity more generally.

Business ethicists seek to understand the ethical contours of business activity. One way of advancing this project is by choosing a normative framework and teasing out its implications for business issues. In principle, it is possible to do this for any normative framework. Below are four that have received significant attention.

One influential approach to business ethics draws on virtue ethics. Moore (2017) develops and applies MacIntyre’s (1984) virtue ethics to business. For MacIntyre, there are goods internal to practices, and certain virtues are necessary to achieve those goods. Building on MacIntyre, Moore develops the idea that business is a practice (or contains practices), and thus has certain goods internal to it (or them), the attainment of which requires the cultivation of business virtues. Aristotelian approaches to virtue in business are found in Alzola (2012) and de Bruin (2015). Scholars have also been inspired by the Aristotelian idea that the good life is achieved in a community (Sison & Fontrodona 2012), and have considered how business communities must be structured to help their members flourish (Hartman 2015; Solomon 1993).

Another important approach to the study of business ethics comes from deontology, especially Kant’s version (Arnold & Bowie 2003; Bowie 2017; Scharding 2015; Hughes 2020). Kant’s claim that humanity should be treated always as an end, and never as a means only, has proved especially fruitful for analyzing the human interactions at the core of commercial transactions. In competitive markets, people may be tempted to deceive, cheat, use, exploit, or manipulate others to gain an edge. Kantian moral theory singles out these actions out as violations of human dignity (Hughes 2019; Smith & Dubbink 2011).

Ethical theory, including virtue theory and deontology, is useful for thinking about how individuals should relate to each other. But business ethics also comprehends the laws and regulations that structure markets and firms. Here political theory seems more relevant. A number of business ethicists have sought to identify the implications of Rawls’s (1971) justice as fairness for business. This is not an easy task, since while Rawls makes some suggestive remarks about markets and firms, he does not articulate specific conclusions or develop detailed arguments for them. But scholars have argued that justice as fairness: (1) is incompatible with significant inequalities of power and authority within firms (S. Arnold 2012); (2) requires people to have an opportunity to perform meaningful work (Moriarty 2009; cf. Hasan 2015); and requires alternative forms of (3) corporate governance (Berkey 2021; Blanc & Al-Amoudi 2013; Norman 2015; cf. Singer 2015) and (4) corporate ownership (M. O’Neill & Williamson 2012).

A fourth approach to business ethics is called the “market failures approach” (MFA). It originates with McMahon (1981), but it has been developed in most detail by Heath (2014) (for discussion see Moriarty 2020 and Singer 2018). According to Heath, the justification of the market is that it produces efficient—in the sense of Pareto-optimal— outcomes. But this only happens when the conditions of perfect competition obtain, such as perfect information, no market power, and no barriers to entry or exit. (When they don’t, markets fail—hence the market failures approach.) On the MFA, these conditions are the source of ethical rules for market actors. The MFA says that market actors, including sellers and buyers, should not create or take advantage of market imperfections. So, for example, firms should not deceive consumers (creating information asymmetries) or lobby governments to levy tariffs on foreign competitors (erecting barriers to entry).

Selecting a normative framework and applying it to a range of issues is an important way of doing business ethics. But it is not the only way. Indeed, the more common approach is to identify a business activity and then analyze it using “mid-level” principles or ideals common to many moral and political theories. Below I consider ethical issues that arise at the nexus of firms’ engagement with three important groups: consumers, employees, and society.

5. Firms and consumers

The main way that firms interact with consumers is by selling, or attempting to sell, products and services to them. Many ethical issues attend this interaction.

Many have argued that some things should not be for sale (Anderson 1993; MacDonald & Gavura 2016; Sandel 2012; Satz 2010). Among the things commonly said to be inappropriate for sale are sexual services, surrogacy services, and human organs. Some writers object to markets in these items for consequentialist reasons. They argue that markets in commodities like sex and kidneys will lead to the exploitation of vulnerable people (Satz 2010). Others object to the attitudes or values expressed in such markets. They claim that markets in surrogacy services express the attitude that women are mere vessels for the incubation of children (Anderson 1993); markets in kidneys suggest that human life can be bought and sold (Sandel 2012); and so on. (For a discussion of what it might mean for a market to “express” a value, see Jonker [2019].)

Other writers criticize these arguments, and in general, the attempt to “wall-off” certain goods and services from markets. Brennan and Jaworksi (2016) object to expressive or “semiotic” arguments against markets in contested commodities (cf. Brown & Maguire 2019). Whether selling a particular thing for money expresses disrespect, they note, is culturally contingent. They and others (e.g., Taylor 2005) also argue that the bad effects of markets in contested commodities can be eliminated or at least ameliorated through appropriate regulation, and that anyway, the good effects of such markets (e.g., a decrease in the number of people who die because they are waiting for a kidney) outweigh the bad.

Some things that firms may wish to sell, and that people may wish to buy, pose a significant risk of harm, to the user and others. When is a product too unsafe to be sold? This question is often answered by government agencies. In the U.S., a number of government agencies, including the Consumer Product Safety Commission (CPSC), the National Highway Traffic Safety Administration (NHTSA), and the Food and Drug Administration (FDA), are responsible for assessing the safety of products for the consumer market. In some cases these standards are mandatory (e.g., medicines and medical devices); in other cases they are voluntary (e.g., trampolines and tents). The state identifies minimum standards and individual businesses can choose to adopt more stringent ones.

Questions about product safety are a matter of significant debate among economists, legal scholars, and public policy experts. Business ethicists have paid scant attention to these questions (but see Brenkert 1981). Existing treatments often combine discussions of safety with discussions of liability—the question of who should pay for harms that products cause—and tend to be found in business ethics textbooks. One of the most careful treatments is Velasquez’s (2012). He distinguishes three (compatible) views: (1) the “contract view”, according to which the manufacturer’s duty is only to accurately disclose all risks associated with the product; (2) the “due care view”, according to which the manufacturer should exercise due care to prevent buyers from being injured by the product; and (3) the “social costs view”, according to which the manufacturer should pay for any injuries the product causes, even if the manufacturer has accurately disclosed all risks associated with the product and has exercised due care to prevent injury (see also Boatright & Smith 2017). In the U.S. and elsewhere, the law has moved in the direction of the social costs view, where it is known as “strict liability”.

There is much room for philosophical exploration of these issues. One area that merits attention is the definitions of key terms, such as “safety” and “risk”. Drop side cribs pose risks to consumers; so do trampolines. On what basis should the former be prohibited but the latter not be (Hasnas 2010)? The answer must take into account the value of these products, how obvious the risks they pose are, and the availability of substitutes. With respect to liability, we may wonder whether it is fair to hold manufacturers responsible for harms their products cause, when the manufacturers are not morally at fault for those harms. On the other hand, it may be unfair to force consumers to bear the full costs of their injuries, when they too are not morally at fault. The question may be one for society as a whole: what is the most efficient or just way to distribute these costs?

Most advertising contains both an informational component and a persuasive component. Advertisements tell us something about a product, and try to persuade us to buy it. Both of these components can be subject to ethical evaluation.

Emphasizing its informational component, some writers stress the positive value of advertising. Markets function efficiently only when certain conditions are met. One of these conditions is perfect information. Minimally, consumers have to understand the features of the products for sale. While this condition will never be fully met, advertising can help to ensure that it is met to a greater degree (Heath 2014). Another value that can be promoted through advertising is autonomy. People have certain needs and desires—e.g., to eat healthy food, to drive a safe car—which their choices as consumers help them to satisfy. Their choices are more likely to satisfy their needs and desires if they have information about what is for sale, which advertising can provide (Goldman 1984).

These good effects depend, of course, on advertisements producing true beliefs, or at least not producing false beliefs, in consumers. Writers treat this as the issue of deception in advertising. The issue is not whether deceptive advertising is wrong (most would agree it is), but what counts as deceptive advertising, and what makes it wrong.

In the 1980s, Beech-Nut advertised as “100% apple juice” a drink that contained no juice of any kind. Beech-Nut was fined $2 million and two of its executives went to prison. As of this writing (in 2021), Red Bull is marketing its energy drinks with the slogan “Red Bull Gives You Wings,” but in fact Red Bull doesn’t give you wings. There is no problem with Red Bull’s marketing. What’s the difference? We might say that Red Bull’s slogan is not warranted as true (Carson 2010). It is an example of “puffery,” or over-the-top, exaggerated praise which no reasonable person takes seriously (Attas 1999). By contrast, Beech-Nut’s statement appeared to be a claim meant to be taken at face value, but in fact is false. As these examples illustrate, advertisements are deceptive not because of the truth-value of their claims, but what these claims cause reasonable consumers to believe. Questions can be raised, of course, about what it means to be reasonable (Scalet 2003); the answer may depend on who the consumers are.

Intention is usually taken to be irrelevant to deception in advertising. That is, an advertisement may be deemed deceptive even if the advertiser doesn’t intend to deceive anyone. Some philosophers would say that these advertisements are better described as misleading . (For discussion, see the entry on the definition of lying and deception .) Regulators of advertising blur this distinction, or perhaps they don’t care about it. Their goal is to protect consumers from acting on materially false beliefs, which may be caused either by deception or by blamelessly being misled.

Many reasons have been offered for why deceptive advertising is wrong. One is the Kantian claim that deceiving others is disrespectful to them, a use of them as a mere means. Deceptive advertising may also lead to harm, to consumers (who purchase suboptimal products, given their desires) and competitors (who lose out on sales). A final criticism of deceptive advertising is that it erodes trust in society (Attas 1999). When people do not trust each other, they will either not engage in economic transactions, or engage in them only with costly legal protections.

The persuasive component of advertising is also a fruitful subject of ethical inquiry. Galbraith (1958), an early critic, thinks that advertising, in general, does not inform people how to acquire what they want, but instead gives them new wants. He calls this the “dependence effect”: our desires depend on what is produced, not vice versa . Moreover, since we are inundated with advertising for consumer goods, we want too many of those goods and not enough public goods. Hayek (1961) rejects this claim, arguing that few if any of our desires are independent of our environment, and that anyway, desires produced in us through advertising are no less significant than desires produced in us in other ways.

Galbraith is concerned about the persuasive effects of advertisements. In contrast, recent writers focus on the techniques that advertisers use to persuade. Some of these are alleged to cross the line into manipulation (Aylsworth, 2020; Brenkert 2008; Sher 2011). It is difficult to define manipulation precisely, though attempts have been made (for extensive discussion, see the entry on the ethics of manipulation ). For our purposes, manipulative advertising can be understood as advertising that attempts to persuade consumers, often (but not necessarily) using non-rational means, to make irrational or suboptimal choices, given their own needs and desires.

Associative advertising is often identified as a type of manipulative advertising. In associative advertising, the advertiser tries to associate a product with a positive belief, feeling, attitude, ideal, or activity which usually has little to do with the product itself. Thus many television commercials for trucks in the U.S. associate trucks with manliness. Commercials for body fragrances associate those products with sex between beautiful people. The suggestion is that if you are a certain sort of person (e.g., a manly one), then you will have a certain sort of product (e.g., a truck). In an important article, Crisp (1987) argues that this sort of advertising attempts to create desires in people by circumventing their faculties of conscious choice, and in so doing subverts their autonomy (cf. Arrington 1982; Phillips 1994). Lippke (1989) argues that it makes people desire the wrong things, encouraging us to try to satisfy our non-market desires (e.g., to be more manly) through market means (e.g., buying a truck) (cf. Aylsworth 2020). How seriously we should take these criticisms may depend on how effective associative and other forms of persuasive advertising are. To the extent that advertisers are unsuccessful at “going around” our faculty of conscious choice, we may be less worried and more amused by their attempts to do so (Bishop 2000; Goldman 1984).

Our judgments on this issue should be context-sensitive. While most people may be able to see through advertisers’ attempts to persuade them, some may not be (at least some of the time). Paine (Paine et al. 1984) argues that advertising is justified because it helps consumers make wise decisions in the marketplace. But children, she argues, lack the capacity for making wise consumer choices (see also E.S. Moore 2004). Thus advertising directed at children constitutes a form of objectionable exploitation. Other populations who may be similarly vulnerable are the senile, the ignorant, and the bereaved. Ethics may require not a total ban on marketing to them but special care in how they are marketed to (Brenkert 2008; cf. Palmer & Hedberg 2013).

Sales are central to business. Perhaps surprisingly, business ethicists have said relatively little about sales.

An emerging set of issues concerns refusals to sell. Normally businesses want to sell their goods and services to everyone. But not always. In 2012, Jack Phillips of Masterpiece Cakeshop declined to sell a wedding cake to a same-sex couple because he opposed same-sex marriage on religious grounds. In response, the couple filed a complaint with the Colorado Civil Rights Commission. Should Phillips have sold the wedding cake to the couple? We might say that a commercial transaction is a kind of association, and people—including business owners like Phillips—should be free to associate, or not, with whomever they choose. Or we might say, as Phillips did, that his actions were protected by freedom of religion, since they were an expression of his identity, which includes his religious commitments. Alternatively, we might claim that Phillips was discriminating against the couple, and his actions were wrong for the same reasons discrimination typically is, viz., it denies people opportunities and undermines their dignity (Corvino, Anderson, & Girgis 2017).

Questions can also be raised about the techniques advertisers use to sell. These questions are similar to the ones asked about advertising. Salespeople are, in a sense, the final advertisers of products to consumers. An early contribution to the ethics of sales is found in Holley (1986), who develops a set of obligations for salespeople derived from the point of market activity, which he says is to efficiently meet people’s needs and wants (cf. Heath 2014). In what is probably the most sophisticated treatment of the subject, Carson (2010) says salespeople have at least the following four pro tanto duties: (1) provide customers with safety warnings and precautions; (2) refrain from lying and deception; (3) fully answer customers’ questions about items; and (4) refrain from steering customers toward purchases that are unsuitable for them, given their stated needs and desires. Carson justifies (1)—(4) by appealing to the golden rule: treat others as you want to be treated. He identifies two other duties that salespeople might have (he is agnostic): (5) do not sell customers products that you (the salesperson) think are unsuitable for them, given their needs and desires, without telling customers why you think this; and (6) do not sell customers poor quality or defective products, without telling them why you think this. For the most part, (1)—(4) ask the salesperson not to harm the customer; (5) and (6) ask the salesperson to help the customer, in particular, help her not to make foolish mistakes. The broader issue is one of disclosure (Holley 1998). How much information we think salespeople are required to share with customers may depend on what kind of relationship we think they should have, e.g., to what extent it is adversarial.

For many products bought and sold in markets, sellers offer an item at a certain price, and buyers take or leave that price. But in some cases there is negotiation over price (and other aspects of the transaction). We see this in the sale of “big ticket” items such as cars and houses, and in salaries for jobs. While there are many ethical issues that arise in negotiation, one issue that has received special attention is “bluffing”, or deliberately misstating one’s bargaining position. The locus classicus for this discussion is Carr (1968). According to him, bluffing in negotiations is permissible because business has its own distinctive set of moral rules and bluffing is permissible according to those rules. Carson (2010) agrees that bluffing is permissible in business, though in a more limited range of cases. Carson’s argument appeals to self-defense. If you have good reason to believe that your adversary in a negotiation is misstating her bargaining position, then you are permitted to misstate yours. A requirement to tell the truth in these circumstances would put you at a significant disadvantage relative to your adversary, which you are not required to suffer. An implication of Carson’s view is that you are not permitted to misstate your bargaining position if you do not have good reason to believe that your adversary is misstating hers.

In simplified models of the market, individual buyers and sellers are “price-takers”, not “price-makers”. That is, the prices of goods and services are set by the aggregate forces of supply and demand; no individual buys or sells a good for anything other than the market price. In reality, things are different. Sellers of goods have some flexibility about how to price goods.

Most business ethicists would accept that, in most cases, the prices at which products should be sold is a matter for private individuals to decide. This view has been defended on grounds of property rights. Some claim that if I have a right to a thing, then I am free to transfer that thing to you on whatever terms that I propose and you accept (Boatright 2010). It has also been defended on grounds of welfare. Prices set by voluntary exchanges reveal valuable information about the relative demand for and supply of goods, allowing resources to flow to their most productive uses (Hayek 1945). Despite this, most business ethicists also recognize some limits on prices.

One issue that has received increasing attention is price discrimination. This is discrimination based on willingness to pay, or the practice of charging more to people who are willing to pay more. This might at first seem unfair or even exploitative, but in fact it is commonplace and usually unremarkable (Elegido 2011; Marcoux 2006a). Examples of price discrimination include senior and student discounts, bulk discounts, versioning, and the sort of bargaining one finds in car dealerships and flea markets. We might see price discrimination as an implication of freedom in pricing, and according to a familiar result in economics, price discrimination increases social welfare, provided that it enables producers to increase output (Varian 1985). But some instances of price discrimination have come in for criticism. Online retailers collect and purchase enormous amounts of information about consumers, and there is evidence that they are using this to personalize prices, or tailor prices to what they think are consumers’ reservation prices, i.e., the highest amounts they are willing to pay. Some believe that this practice is unfair (Steinberg 2020), though they problem may simply be that consumers don’t know what retailers are up to.

Another issue of pricing ethics is price gouging. Price gouging can be understood as a sharp increase in the price of a necessary good in the wake of an emergency which renders that good scarce (Hughes 2020; Zwolinski 2008). As the novel coronavirus spread around the world in early 2020, retailers began to charge extremely high prices for cleaning products and medical supplies. Many jurisdictions have laws against price gouging, and it is widely regarded as unethical (Snyder 2009). The reason is that it is a paradigm case of exploitation: A extracts an excessive benefit out of B in circumstances in which B cannot reasonably refuse A ’s offer (Valdman 2009). But some theorists defend price gouging. While granting that sales of items in circumstances like these are exploitative, they note that they are mutually beneficial. Both the seller and buyer prefer to engage in the transaction rather than not engage in it. Moreover, when items are sold at inflated prices, this both limits hoarding and attracts more sellers into the market. Permitting price gouging may thus be the fastest way of eliminating it (Zwolinski 2008). (For further discussion, see the entry on exploitation .)

Most contemporary scholars believe that sellers have wide, though not unlimited, discretion in how much they charge for goods and services. But there is an older tradition in business ethics, found in Aquinas and other medieval scholars, according to which there is one price that sellers should charge: the “just price”. There is debate about what exactly medieval scholars meant by “just price”. According to a historically common interpretation, the just price is determined by the seller’s cost of production, i.e., the price that compensates the seller for the value of her labor and expenses. More recent interpretations understand the medieval just price at something closer to the market price, which may be more or less than the cost of production (Koehn & Wilbratte 2012).

6. Firms and workers

Business ethicists have written much about the relationship between employers and employees. Below we consider four issues at the employer/employee interface: (1) hiring and firing, (2) pay, (3) meaningful work, and (4) whistleblowing. Another important topic at this interface is privacy. For space reasons it will not be discussed, but see the entries on privacy and privacy and information technology .

Ethical issues in hiring and firing tend to focus on the question: What criteria should employers use, or not use, in employment decisions? The question of what criteria employers should not use is addressed in discussions of discrimination.

While there is some debate about whether discrimination in employment should be legally prohibited (see Epstein 1992), almost everyone agrees that it is morally wrong (Hellman 2008; Lippert-Rasmussen 2014). Discussion has focused on two questions. First, when does the use of a certain criterion in an employment decision count as discriminatory? It would seem wrong if Walmart were to exclude white applicants for a job in their marketing department, but not wrong if the Hovey Players (a theater troupe) were to exclude white applicants for the role of Walter Younger in A Raisin in the Sun . We might say that whether a hiring practice is discriminatory depends on whether the criterion used is job-relevant. But the concept of job-relevance is contested, as the case of “reaction qualifications” reveals. Suppose that white diners prefer to be served by white waiters rather than black waiters. In this case race seems job-relevant, but it seems wrong for employers to take race into account (Mason 2017). Another question that has received considerable attention is: What makes discrimination wrong? Some argue that discrimination is wrong because of its effects on those who are discriminated against (Lippert-Rasmussen 2014); others think that it is wrong because of what it expresses to them (Hellman 2008). (For extensive discussion, see the entry on discrimination .)

Some writers believe that employers’ obligations are not satisfied simply by avoiding using certain criteria in hiring decisions. According to them, employers have a duty to hire the most qualified applicant. Some justify this duty by appealing to considerations of desert (D. Miller 1999; Mulligan 2018); others justify it by appealing to equal opportunity (Mason 2006). We might object to this view by appealing to property rights. A job offer typically implies a promise to pay the job-taker a sum of your money for performing certain tasks. While we might think that excluding some ways you can dispose of your property (e.g., rules against discrimination in hiring) can be justified, we might think that excluding all ways but one (viz., a requirement to hire the most qualified applicant) is unjustified. In support of this, we might think that a small business owner does nothing wrong when she hires her daughter for a part-time job as opposed to a more qualified stranger.

The question of when employees may be fired is a staple of business ethics texts and was the subject of considerable debate in the business ethics literature in the 1980’s and 1990’s. There are two main views: those who think that employment should be “at will”, so that an employer can terminate an employee for any reason (Epstein 1984; Maitland 1989), and those who think that employers should be able to terminate employees only for “just cause” (e.g., poor performance or excessive absenteeism) (McCall & Werhane 2010). In fact, few writers hold the “pure” version of the “at will” view. Most would say, and the law agrees, that it is wrong for an employer to terminate an employee for certain reasons, e.g., a discovery that he is Muslim or his refusal to commit a crime for the employer. Thus the debate is between those who think that employers should be able to terminate employees for any reason with some exceptions , and those who think that employers should be able to terminate employees only for certain reasons. In the U.S., most employees are at will, while in Europe, most employees are covered, after a probationary period, by something analogous to just cause. Arguments for just cause appeal to the effects that termination has on individual employees, especially those who have worked for an employer for many years (McCall & Werhane 2010). Arguments for at will employment appeal to freedom or macroeconomic effects. It is claimed, in the former case, that just cause is an unwarranted restriction on employers’ and employees’ freedom of contract (Epstein 1984), and in the latter case, that it raises the unemployment rate (Maitland 1989). The more difficult it is for an employer to fire an employee, the more reluctant she will be to hire one in the first place.

Businesses generate revenue, and some of this revenue is distributed to employees in the form of compensation, or pay. Since the demand for pay typically exceeds the supply, the question of how pay should be distributed is naturally analyzed as a problem of justice.

Two theories of justice in pay have attracted attention. One may be called the “agreement view”. According to it, a just wage is whatever wage the employer and the employee agree to without force or fraud (Boatright 2010). This view is sometimes justified in terms of property rights. Employees own their labor, and employers own their capital, and they are free, within broad limits, to dispose of it as they please. In addition, we might think that wages should be should determined by voluntary agreement for the same reason prices generally should be, viz., it allocates resources to their most productive uses, as determined by people’s wants (Heath 2018; Hayek 1945). A “wage”, after all, is just a special name for the price of labor.

A second view of wages may be called the “contribution view”. According to it, the just wage for a worker is the wage that reflects her contribution to the firm. This view comes in two versions. On the absolute version, workers should receive an amount of pay that equals the value of their contributions to the firm (D. Miller 1999). On the comparative version, workers should receive an amount of pay that reflects the relative value of their contributions to the firm, given what others in the firm contribute and are paid (Sternberg 2000). The contribution view strikes some as normatively basic, a view for which no further argument can be given (D. Miller 1999). An analogy may be drawn with punishment. Just as it seems intuitively right for the severity of a criminal’s punishment to reflect the seriousness of her crime, so it may seem intuitively right for the value of a persons’s pay to reflect the value of her work (Moriarty 2016). In this way, pay might be understood as a reward for work.

Some argue that compensation should be evaluated not only as a problem of justice but as an incentive. The question here is what pay encourages employees to do, and how it encourages them to do it. Poorly structured compensation packages for traders in the financial services industry are thought to have contributed to the financial crisis of 2007-2009 (Kolb 2012). Traders were incentivized to take excessively risky bets, and when those bets went bad, their firms could not cover the losses, putting the firms and ultimately the whole financial system in peril. Bad incentives may also help to explain the recent account fraud scandal at Wells Fargo.

The pay of any employee can be evaluated from a moral point of view. But business ethicists have paid particular attention to the pay of certain employees, viz., CEOs and workers in factories in developing countries, often called “sweatshops.”

There has been significant debate about whether CEOs are paid too much (Boatright, 2010; Moriarty 2005), with scholars falling into two camps. Those in the “managerial power” camp believe that CEOs wield power over boards of directors, and use this power to extract above-market rents from their firms (Bebchuk & Fried 2004). Those in the “efficient contracting” camp believe that pay negotiations between CEOs and boards are usually carried out at arm’s-length, and that CEOs’ large compensation packages reflect their rare and valuable skills. (For a recent survey of relevant empirical issues, see Edmans, Gabaix, & Jenter 2017).

There has also been a robust debate about whether workers in sweatshops are paid too little. Some say ‘no’ (Powell & Zwolinski 2012; Zwolinski 2007). They say that sweatshops wages, while low by standards in developed countries, are not low by the standards of the countries in which the sweatshops are located. This explains why people choose to work in a sweatshop; it is the best offer they have. Efforts to increase artificially the wages of sweatshop workers, according to these writers, is misguided on two counts. First, it is an interference with the autonomous choices of employers and workers. Second, it is likely to make workers worse off, since employers will respond by either moving operations to a new location or employing fewer workers in that location (cf. Kates 2015). These writers sometimes appeal to a principle of “nonworseness,” according to which a consensual, mutually beneficial interaction (of the sort sweatshop owners and workers engage in) cannot be worse than its absence. Other writers challenge these claims. While granting that workers choose to work in sweatshops, they deny that their choices are truly voluntary (Arnold & Bowie 2003; Kates 2015). Given their low wages, this suggests that sweatshop workers are wrongfully exploited (Faraci 2019). Moreover, some argue, firms can and should do more for sweatshop workers, on grounds on fairness or beneficence (Snyder 2010). These writers invoke a principle of “interaction,” according to which people involved in a certain relationship (of the sort sweatshop owners and workers are engaged in) must live up to certain standards of conduct (which exploitation is alleged to fall below). In response to the claim that firms put themselves at a competitive disadvantage if they do, writers have pointed to actual cases where firms have been able to secure better treatment for sweatshop workers without suffering serious financial penalties (Hartman, Arnold, & Wokutch 2003). (For further discussion, see the entry on exploitation .)

Smith (1776 [1976]) famously observed that a detailed division of labor greatly increases the productivity of manufacturing processes. To use his example: if one worker performs all of the tasks required to make a pin himself—18, we are told—he can make just a few pins per day. However, if the worker specializes in one or two of these tasks, and combines his efforts with other workers who specialize in one or two of the other tasks, then together they can make thousands of pins per day. But according to Smith, there is human cost to the detailed division of labor. Performing one or two simple tasks all day makes a worker “as stupid and ignorant as it is possible for a human creature to become” (Smith 1776 [1976]: V.1.178).

To avoid this result, some call for work to be made more “meaningful”. In this sense, a call for meaningful work is not a call for work to be more “important”, i.e., to contribute to the production of a good or service that is objectively valuable, or that workers believe is valuable (cf. Michaelson 2021; Veltman 2016). Instead, it is a call for labor processes to be arranged so that work is interesting, requires skill, and gives workers substantial decision-making power (Arneson 1987; Roessler 2012; Schwartz 1982).

Smith’s insight that labor processes are more efficient when they are divided into meaningless segments leads some writers to believe that, in a competitive economy, firms will not provide as much meaningful work as workers want (Werhane 1985). In response, it has been argued that there is a market for labor, and if workers want meaningful work, then employers have an incentive to provide it (Maitland 1989; Nozick 1974). According to this argument, insofar as we see “too little” meaningful work on offer, this is because workers prefer not to have it—or more precisely, because workers are willing to trade meaningfulness for other benefits, such as higher wages.

The above argument treats meaningful work as a matter of preference, as a job amenity that employers can decline to offer or that workers can trade away (cf. Yeoman 2014). Others resist this understanding. According to Schwartz (1982), employers are required to offer employees meaningful work, and employees are required to perform it, out of respect for autonomy (see also Bowie 2017). The idea is that the autonomous person makes choices for herself; she does not mindlessly follow others’ directions. A difficulty for this argument is that respect for autonomy does not seem to require that we make all choices for ourselves. A person might, it seems, autonomously choose to allow important decisions to be made for her in certain spheres of her life, e.g., by a coach, a family member, a medical professional, or a military commander.

A potential problem for this response brings us back to Smith, and to “formative” arguments for meaningful work. The problem, according to some writers, is that if most of a person’s day is given over to meaningless tasks, then her capacity for autonomous choice, and perhaps her other intellectual faculties, may deteriorate. A call for meaningful work may be understood as a call for workplaces to be arranged so that this deterioration does not occur (Arneson 2009; Arnold 2012; Yeoman 2014). In addition to Smith, Marx (1844 [2000]) was concerned about the effects of work on human flourishing.

Formative arguments face at least two difficulties, one empirical and one normative. The empirical difficulty is establishing the connection between meaningless work and autonomous choice (or another intellectual faculty). More evidence is needed. The normative difficulty is that formative arguments make certain assumptions about the nature of the good and the state’s role in promoting it. They assume that it is better for people to have fully developed faculties of autonomous choice (etc.) and that the state should help to develop them. These assumptions might be challenged, e.g., by liberal neutralists (Roessler 2012; Veltman 2016). Yeoman (2014) seeks to surmount this challenge—and make meaningful work safe for liberal political theory—by conceptualizing meaningful work as a fundamental human need, not a mere preference.

Suppose you discover, as Tyler Shultz did at Theranos in 2015, that your firm is deceiving regulators and investors about the efficacy of its products. To stop this, one thing you might do is “blow the whistle” by disclosing this information to a third party. While scholars give different definitions of whistleblowing (see, e.g., Brenkert 2010; Davis 2003; DeGeorge 2009; Delmas 2015), the following elements are usually present: (1) insider status, (2) non-public information, (3) illegal or immoral activity, (4) avoidance of the usual chain of command in the firm, (5) intention to solve the problem. In the above example, Shultz was a whistleblower because he was (1) a Theranos employee (2) who disclosed non-public information (3) about illegal activity in the firm (4) to a state regulator (5) in an effort to stop that activity.

Debate about whistleblowing tends to focus on the question of when whistleblowing is justified—in the sense of when it is permissible, or when it is required. This debate assumes that whistleblowing requires justification, or is wrong, other things equal. Many business ethicists make this assumption on the grounds that employees have a pro tanto duty of loyalty to their firms (Elegido 2013). Against this, some argue that the relationship between the firm and the employee is purely transactional—an exchange of money for labor (Duska 2000)—and so is not normatively robust enough to ground a duty of loyalty. (For a discussion of this issue, see the entry on loyalty .)

One prominent justification of whistleblowing is due to DeGeorge (2009). According to him, it is permissible for an employee to blow the whistle when his doing so will prevent harm to society. (In a similar account, Brenkert [2010] says that the duty to blow the whistle derives from a duty to prevent wrongdoing.) The duty to prevent harm can have more weight, if the harm is great enough, than the duty of loyalty. To determine whether whistleblowing is not simply permissible but required, DeGeorge says, we must take into account the likely success of the whistleblowing and its effects on the whistleblower himself. Humans are tribal creatures, and whistleblowers are often treated badly by their colleagues. (Shultz and his family were hounded by Theranos’s powerful and well-connected lawyers, at a cost to them of hundreds of thousands of dollars.) So if whistleblowing is unlikely to succeed, then it need not be attempted. The lack of a moral requirement to blow the whistle in these cases can be seen as a specific instance of the rule that individuals need not make huge personal sacrifices to promote others’ interests, even when those interests are important.

Another account of whistleblowing is given by Davis (2003). Like Brenkert (and unlike DeGeorge), Davis focuses on the wrongdoing that the firm engages in (not the harm it causes). According to Davis, however, the point of whistleblowing is not so much to prevent the wrongdoing but to avoid one’s own complicity in it. He says that an employee is required to blow the whistle on her firm when she believes that it is engaged in seriously wrongful behavior, and her work for the firm “will contribute … to the wrong if … [she] [does] not publicly reveal what [she knows]” (2003: 550). Davis’s account limits whistleblowers to people who are currently firm insiders. Many find this counterintuitive, since it implies that people often described as whistleblowers, like Jeffrey Wigand (Brown & Williamson) and Edward Snowden (NSA), are not actually whistleblowers.

7. The firm in society

Business activity and business entities have an enormous impact on society. One way that businesses impact society, of course, is by producing goods and services and by providing jobs. But businesses can also impact society by trying to solve social problems and by using their resources to influence governments’ laws and regulations.

“Corporate social responsibility”, or CSR, is typically understood as actions by businesses that are (i) not legally required, and (ii) intended to benefit parties other than the corporation (where benefits to the corporation are understood in terms of return on equity, return on assets, or some other measure of financial performance). The parties who benefit may be more or less closely associated with the firm itself; they may be the firm’s own employees or people in distant lands.

A famous example of CSR involves the pharmaceutical company Merck. In the late 1970s, Merck was developing a drug to treat parasites in livestock, and it was discovered that a version of the drug might be used treat Onchocerciasis, or river blindness, a disease that causes debilitating itching, pain, and eventually blindness in people. The problem was that the drug would cost hundreds of millions of dollars to develop, and would generate little or no revenue for Merck, since the people usually afflicted with river blindness were too poor to afford it. Ultimately Merck decided to develop the drug. As expected, it was effective in treating river blindness, but Merck made no money from it. As of this writing in 2021, Merck, now in concert with several nongovernmental organizations, continues to manufacture and distribute the drug throughout the developing world for free.

The scholarly literature on CSR is dominated by social scientists. Their question is typically whether, when, and how socially responsible actions benefit firms financially. The conventional wisdom is that there is a slight positive correlation between corporate social performance and corporate financial performance, but it is unclear which way the causality goes (Vogel 2005; Zhao & Murrell 2021). That is, it is not clear whether prosocial behavior by firms causes them to be rewarded financially (e.g., by consumers who value their behavior), or whether financial success allows firms to engage in more prosocial behaviors (e.g., by freeing up resources that would otherwise be spent on core business functions).

Many writers connect the debate about CSR with the debate about the ends of corporate governance. Thus Friedman (1970) objects to CSR, saying that managers should be maximizing shareholder wealth instead. (Friedman also thinks that CSR is a usurpation of the democratic process and often wasteful, since managers aren’t experts in solving social problems.) Stakeholder theory (Freeman et al. 2010) is thought to be more accommodating of prosocial activity by firms, since it permits firms to do things other than increase shareholder wealth.

We do not need, however, to see the debate about CSR a debate about the proper ends of corporate governance. We can see it as a debate about the nature and scope of firms’ moral duties, i.e., what obligations (e.g., of rescue or beneficence) they must discharge, whatever their goals are (Hsieh 2004; Mejia 2020).

Many writers give broadly consequentialist reasons for CSR. The arguments tend to go as follows: (1) there are serious problems in the world, such as poverty, conflict, environmental degradation, and so on; (2) any agent with the resources and knowledge necessary to ameliorate these problems has a moral responsibility to do so, assuming the costs they incur on themselves are not excessively high; (3) firms have the resources and knowledge necessary to ameliorate these problems without incurring excessively high costs; therefore, (4) firms should ameliorate these problems (Dunfee 2006a).

The view that someone should do something about the world’s problems seems true to many people. Not only is there an opportunity to increase social welfare by alleviating suffering, suffering people may also have a right to assistance. The controversial issue is who should do something to help, and how much they should do. Thus defenders of the above argument focus most of their attention on establishing that firms have these duties, against those who say that these duties are properly assigned to states or individuals. O. O’Neill (2001) and Wettstein (2009) argue that firms are “agents of justice”, much like states and individuals, and have duties to aid the needy (see also Young 2011). Strudler (2017) legitimates altruistic behavior by firms by undermining the claim that shareholders own them, and so are owed their surplus wealth. Hsieh (2004) says that, even if we concede that firms do not have social obligations, individuals have them, and the best way for many individuals to discharge them is through the activities of firms (see also McMahon 2013; Mejia 2020).

Debates about CSR are not just debates about whether specific social ills should be addressed by specific corporations. They are also debates about what sort of society we want to live in. While acknowledging that firms benefit society through CSR, Brenkert (1992) thinks it is a mistake for people to encourage firms to engage in CSR as a practice. When we do so, he says, we cede a portion of the public sphere to private actors. Instead of deciding together how we want to ameliorate social ills affecting our fellow community members, we leave it up to private organizations to decide what to do. Instead of sharpening our skills of democracy through deliberation and collective decision-making, and reaffirming social bonds through mutual aid, we allow our skills and bonds to atrophy through disuse.

Many businesses are active participants in the political arena. They support candidates for election, defend positions in public debate, lobby government officials, and more. What should be said about these activities?

Social scientists have produced a substantial literature on corporate political activity (CPA) (for a review, see Lawton, McGuire, & Rajwani 2013). This research focuses on such questions as: What forms does CPA take? What are the antecedents of CPA? What are its consequences? CPA raises many normative questions as well.

We might begin by asking why corporations should be allowed to engage in political activity at all. In a democratic society, freedom of expression is both a right and a value (Stark 2010). People have a right to participate in the political process by supporting candidates for public office, defending positions in public debate, and so on. It is generally a good thing when they exercise this right, since they can introduce new facts and arguments into public discourse. People can engage in political activity individually, but in a large society, they may find it useful to do so in groups. The firm might be seen as one of these groups. Indeed, we might think it is especially important that firms engage in (at least some forms of) political activity. Society has an interest in knowing how proposed economic policies will affect firms; firms themselves are a good source of information.

But political activity by corporations has come in for criticism. One concern focuses on what corporations’ goals are. Some worry that firms engage in CPA in order to advance their own interests at the expense of their competitors’ or the public’s. This activity is sometimes described, and condemned, as “rent-seeking” (Jaworski 2014; Tullock 1989). Questions have been raised about the nature and value of rent-seeking. According to a common definition, rent-seeking is socially wasteful economic activity intended to secure benefits from the state rather than the market. But there is disagreement about what counts as waste. Lobbying for subsidies, or tariffs on foreign competitors, are classic cases of rent-seeking. But subsidies for (e.g.) corn might help to secure a nation’s food supply, and tariffs on (e.g.) foreign steel manufacturers might help a nation to protect itself in a time of war (Boatright 2009; Hindmoor 1999). One person’s private rent-seeking is another’s public benefit.

A second concern about CPA is that it can undermine the ideal of equality at the heart of democracy (Christiano 2010). Some corporations have a lot of money, and this can be translated into a lot of power. In 2010, the state of Indiana passed a law—the Religious Freedom Restoration Act (RFRA)—that appeared to give employers the freedom to discriminate against LGBTQ people on religious grounds. In response, Salesforce and Angie’s List cancelled plans to expand in the state, and threatened to leave it altogether. Indiana quickly convened a special session of its legislature and announced that the new law did not in fact give employers this freedom. By contrast, if the average Indianan told the legislature that they might leave the state because of the RFRA, the legislature would not have cared. This objection to CPA is also an objection to political activity by powerful groups like the National Rifle Association (NRA) or the American Civil Liberties Union (ACLU) and individuals like Charles Koch or Tom Steyer.

A third objection to CPA is more narrowly targeted. According to it, corporations are not the right type of entities to engage in political activity (Hussain & Moriarty 2018). The key issue is representation. Organizations like the NRA and ACLU are legitimate participants in the political arena because they represent their members in political debate, and people join or leave them based on political considerations. By contrast, business organizations have no recognized role to play in the political system, and people join or leave them for economic reasons, not political ones. On this criticism, corporate political activity should be conceptualized not as a collective effort by all of the corporation’s members to speak their minds about a shared concern, but as an effort by a small group of powerful owners or executives to use the corporation’s resources to advance their own personal ends.

Traditionally CPA goes “through” the formal political process, e.g., contributing to political campaigns or lobbying government officials. But increasingly firms are engaging in what appears to be political activity that goes “around” or “outside” of this process, especially in circumstances in which the state is weak, corrupt, or incompetent. They do this through the provision of public goods and infrastructure (Ruggie 2004) and the creation of systems of private regulation or “soft law” (Vogel 2010). For example, when the Rana Plaza collapsed in Bangladesh in 2013, killing more than 1100 garment industry workers, new building codes and systems of enforcement were put into place. But they were put into place by the multinational corporations that are supplied by factories in Bangladesh, not by the government of Bangladesh. This kind of activity is sometimes called “political CSR,” since it is a kind of CSR that produces a political outcome (Scherer & Palazzo 2011). We might call it CPA “on steroids”. Instead of influencing political outcomes, corporations bring them about almost single-handedly. This is a threat to democratic self-rule. Some writers have explored whether it can be ameliorated through multi-stakeholder initiatives (MSIs), or governance systems that bring together firms, non-governmental organizations, and members of local communities to deliberate and decide on policy matters. Prominent examples include the Forest Stewardship Council (FSC), the Roundtable on Sustainable Palm Oil (RSPO), and the Extractive Industries Transparency Initiative (EITI) (Scherer & Palazzo 2011). Critics have charged that MSIs, while effective in producing dialog among stakeholders, are ineffective at holding firms to account (Hussain & Moriarty 2018; Moog, Spicer, & Böhm 2015).

There is another kind of corporate political activity. This is political activity whose target is corporations, known as “ethical consumerism” (for a review see Schwartz 2017). Consumers typically make choices based on quality and price. Ethical consumers (also) appeal to moral considerations. They may purchase, or choose not to purchase, goods from retailers who make their products in certain countries or who support certain political causes. These can be described as political activities because consumers are using their economic power to achieve political ends. It is difficult for consumer actions against, or in support of, firms to succeed, since they require coordinating the actions of many individuals. But consuming ethically may be important for personal integrity. You might say that you cannot in good conscience shop at a retailer who is working, in another arena, against your deeply-held values. One concern about ethical consumerism is that it may be a form of vigilantism (Hussain 2012; cf. Barry & MacDonald 2018), or mob justice. Another is that it is yet another way that people can self-segregate by moral and political orientation as opposed to finding common ground.

Many businesses operate across national boundaries. These are typically called “multinational” or “transnational” firms (MNCs or TNCs). Operating internationally heightens the salience of a number of the ethical issues discussed above, such as CSR, but it also raises new issues, such as relativism and divestment. Two issues often discussed in connection with international business are not treated in this section. One is wages and working conditions in sweatshops. This literature is briefly discussed in section 6.2 . The second issue is corruption, which is not discussed in this entry, for space reasons. But see the entry on corruption .

A number of business ethicists have developed ethical codes for MNCs, including DeGeorge (1993) and Donaldson (1989). International agencies have also created codes of ethics for business. Perhaps the most famous of these is the United Nations Global Compact, membership in which requires organizations to adhere to a variety of rules in the areas of human rights, labor, environment, and anti-corruption. In his important work for that body, Ruggie (2004, 2013) developed a “protect, respect, and remedy” framework for MNCs and human rights, which assigns the state the primary duty to protect human rights and remedy abuses of them, and firms the duty to respect human rights (cf. Wettstein 2009). A striking fact about much of this research is that, while it is focused on international business, and sometimes promulgated by international agencies, the conclusions reached do not apply specifically to firms doing business across national boundaries. The duty to, e.g., respect human rights applies to firms doing business within national boundaries too. It is simply that the international context is the one in which this duty seems most important to discharge, and in which firms are some of the few agents who can do so.

There are issues, however, that arise specifically for firms doing business internationally. Every introductory ethics student learns that different cultures have different moral codes. This is typically an invitation to think about whether or not morality is relative to culture. For the businessperson, it presents a more immediate challenge: How should cultural differences in moral codes be managed? In particular, when operating in a “host” country, should the businessperson adopt host country standards, or should she apply her “home” country standards?

Donaldson is a leading voice on this question, in work done independently (1989, 1996) and with Dunfee (1999). Donaldson and Dunfee argue that there are certain “moral minima” that must be met in all contexts. These are given to us by “hypernorms”, or universal moral values and rules, which are themselves justified by a “convergence of religious, philosophical, and cultural” belief systems (1999: 57). Within the boundaries set by hypernorms, Donaldson and Dunfee say, firms have “free space” to select moral standards. They do not have the liberty to select any standards they want; rather, their choices must be guided by the host country’s traditions and its current level of economic development. Donaldson and Dunfee call their approach “integrative social contracts theory” (ISCT), since they seek to merge norms derived from hypothetical contracts with norms that people have actually agreed to in particular societies.

ISCT has attracted a great deal of attention and many critics. Much of this criticism has focused on hypernorms, the criteria for which are alleged to be ad hoc (Scherer 2015), ambiguous (Brenkert 2009), and incomplete (Mayer & Cava 1995). Dunfee (2006b) collects and analyzes a decade worth of critical commentary on ISCT. For a more recent elaboration and defense of the approach, see Scholz, de los Reyes, and Smith (2019).

A complication for the debate about whether to apply home country standards in host countries is that multinational corporations engage in business across national boundaries in different ways. Some MNCs directly employ workers in multiple countries, while others contract with suppliers. Nike, for example, does not directly employ workers to make shoes. Rather, Nike designs shoes, and hires firms in other countries to make them. Our views about whether an MNC should apply home country standards in a host country may depend on whether the MNC is applying them to its own workers or to those of other firms.

The same goes for responsibility. MNCs, especially in consumer-facing industries, are often held responsible for poor working conditions in their suppliers’ factories. Nike was subject to sharp criticism for the labor practices of its suppliers in the 1990s (Hartman et al. 2003). Initially Nike pushed back, saying that those weren’t their factories, and so wasn’t their problem. Under mounting pressure, it changed course and promulgated a set of labor standards that it required all of its suppliers to meet, and now spends significant resources ensuring that they meet them (Hsieh, Toffel, & Hull 2019; Wokutch 2001). This is increasingly the approach Western multinationals take. Here again the response to the Rana Plaza tragedy is illustrative. What lengths companies should go to ensure the safety of workers in their supply chains is a question meriting further study (see Young 2011).

A businessperson may find that a host country’s standards are not just different than her home country’s standards, but morally intolerable. She may decide that the right course of action is not to do business in the country at all, and if she is invested in the country, to divest from it. The issue of divestment received substantial attention in the 1980s as MNCs were deciding whether or not to divest from South Africa under its Apartheid regime. It may attract renewed attention in the coming years as firms and other organizations contemplate divesting from the fossil fuel industry. Common reasons to divest from a morally problematic society or industry are to avoid complicity in immoral practices, and to put pressure on the society or industry to change its practices. Critics of divestment worry about the effects of divestment on innocent third parties (Donaldson 1989) and about the efficacy of divestment in forcing social change (Hudson 2005). Some believe that it is better for firms to stay engaged with the society or industry and try to bring about change from within—a policy of “constructive engagement”.

It is not hard to see why philosophers might be interested in business. Business activity raises a host of interesting philosophical issues: of agency, responsibility, truth, manipulation, exploitation, justice, beneficence, and more. After a surge of activity 40 years ago, however, philosophers seem to be gradually retreating from the field.

One explanation appeals to demand. Many of the philosophers who developed the field were hired into business schools, but after they retired, they were not replaced with other philosophers. Business schools have hired psychologists to understand why people engage in unethical behavior and strategists to explore whether ethics pays. These scholars fit better into the business school environment, which is dominated by social scientists. What social scientists do to advance our understanding of descriptive ethics is important, to be sure, but it is no substitute for normative reflection on what is ethical or unethical in business.

Another explanation for the retreat of philosophers from business ethics appeals to supply. There are hardly any philosophy Ph.D. programs that have faculty specializing in business ethics and, as a result, few new Ph.D.’s are produced in this area. Those who work in the area are typically “converts” from mainstream ethical theory and political philosophy. Some good news on this front is the recent increase in the number of normative theorists working on issues at the intersection of philosophy, politics, and economics (PPE). Many of the topics these scholars address—the value and limits of markets, the nature of the employment relationship, and the role of government in regulating commerce—are issues business ethicists care about. But PPE-style philosophers hardly cover the whole field of business ethics. There remain many urgent issues to address.

I hope this entry helps to inform philosophers and others about the richness and value of business ethics, and in doing so, generate greater interest in the field.

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How to cite this entry . Preview the PDF version of this entry at the Friends of the SEP Society . Look up topics and thinkers related to this entry at the Internet Philosophy Ontology Project (InPhO). Enhanced bibliography for this entry at PhilPapers , with links to its database.

• Marcoux, Alexei, “Business Ethics”, The Stanford Encyclopedia of Philosophy (Fall 2016 Edition), Edward N. Zalta (ed.), URL = < https://plato.stanford.edu/archives/fall2016/entries/ethics-business/ >. [This was the previous entry on business ethics in the Stanford Encyclopedia of Philosophy — see the version history .]
• A History of Business Ethics , by Richard T. De George (University of Kansas), an important early contributor to the field.
• Society for Business Ethics , the main professional society for business ethicists, especially of the normative variety.

agency: shared | corruption | discrimination | economics [normative] and economic justice | ethics: virtue | exploitation | feminist philosophy, topics: perspectives on class and work | information technology: and privacy | intentionality: collective | justice: distributive | justice: global | Kant, Immanuel: moral philosophy | loyalty | lying and deception: definition of | manipulation, ethics of | markets | moral relativism | perfectionism, in moral and political philosophy | privacy | property and ownership | Rawls, John | responsibility: collective | rights | rights: human

Acknowledgments

For helpful suggestions on this entry (and the previous version), I thank Dorothea Baur, George Brenkert, Jason Brennan, Matt Caulfield, David Dick, Anca Gheaus, Keith Hankins, Edwin Hartman, Laura Hartman, Lisa Herzog, David Jacobs, Woon Hyuk Jay Jang, Peter Jaworski, Xavier Landes, Chris MacDonald, Emilio Marti, Dominic Martin, Pierre-Yves Néron, Eric Orts, Katinka Quintelier, Sareh Pouryousefi, Amy Sepinwall, Kenneth Silver, Abraham Singer, Alejo José G. Sison, Cindy Stark, Chris Surprenant, Kevin Vallier, and Hasko von Kriegstein.

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Home > Books > Globalization

The Moral Dilemmas of Global Business

Submitted: 26 October 2017 Reviewed: 03 February 2018 Published: 05 November 2018

DOI: 10.5772/intechopen.74833

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Since the 1970s, the rise of global capitalism posed new ethical dilemmas for Western multinational corporations (MNCs), when it became apparent that they could profit from lower labor, environmental and human rights standards in developing countries. Academic reflection on the matter led to the development of the international business ethics field, which seeks to answer a key question: how should a company behave when the standards followed in the host country are lower than those followed in the home country? This chapter will fulfill three goals. Firstly, it will present the new moral dilemmas that economic globalization and technological change are posing to multinational corporations. Secondly, it will introduce a number of answers developed by practitioners in civil society, government and business. Finally, it will review a number of theoretical answers developed by normative researchers by adapting traditional moral theories such as utilitarianism, kantian deontology and virtue ethics. The chapter will conclude that traditional moral theories have mostly failed at providing guidance for a number of new cross-cultural moral dilemmas in the global economy.

• globalization
• business ethics
• cross-cultural

Author Information

Federico ast *.

• IAE Business School, Pilar, Buenos Aires, Argentina

*Address all correspondence to: [email protected]

1. Introduction

“The Gordian knot of international business ethics is formed around the vexing question, how should a company behave when the standards followed in the host country are lower than those followed in the home country?” [ 1 ].

Since the 1970s, globalization, deregulation and technological change triggered a rapid expansion of multinational corporations (MNCs) to every corner of the planet. By the year 2000, some 63,000 multinational companies with more than 690,000 foreign affiliates accounted for 25% of world production [ 2 ]. These “new Leviathans” became increasingly powerful and nation states lost their capacity to regulate them [ 3 , 4 ]. Corporations took advantage of regulatory arbitrage, relocating to low tax jurisdictions and lax regulations on labor and environment. Multinationals structured global value chains by relocating purchase, sales, support and product development activities to locations where they could be done better, faster or cheaper [ 5 ].

In domestic business environments, national laws and traditions establish a shared ethical framework on what businesses can and cannot do. A French company operating in France knows that it must comply with well-established labor, environmental and governance rules backed by reliable enforcement mechanisms. However, in its overseas operations, the company often faces substandard regulatory frameworks and weak enforcement mechanisms, which present the opportunity of obtaining benefits through practices that would be unacceptable at home. Many dilemmas arise about the moral legitimacy of capturing such benefits.

In this chapter, I review the challenges that economic globalization and technological change are posing to multinational corporations (MNCs).

First, I will present the new set of moral dilemmas that arise in labor standards, marketing practices, environment, corruption and human rights, as companies operate across diverse cultural and legal frameworks. Second, I will review the answers that governments, corporations and civil society actors have developed to assist managers in international decision making. Third, I will review how business ethicists have adapted moral frameworks such as libertarianism, utilitarianism, deontology and virtue ethics to address the specific challenges of global business.

2. The moral dilemmas of globalization

2.1. labor standards.

In the 1960s and 1970s, companies in developed economies began to relocate production facilities and contracting in emerging countries to cut labor costs [ 6 ]. Offshoring raised the number moral dilemmas in the issue of sweatshops [ 7 , 8 , 9 , 10 ]. Some argue that sweatshops violate duties of justice because the company offers lower pay and working conditions to employees in the host country for the same kind of work. Others believe that sweatshops ought to be encouraged because they are a necessary first step for economic development in emerging countries [ 11 ].

Child labor is an especially critical issue in such debates. Managers from a Western multinational would not even think about hiring children in their home country since it would be both illegal and offensive to the moral sense of the community. In some emerging economies, however, child labor is common and even essential for the subsistence of the child. Does this make hiring children morally acceptable?

Other dilemmas involve differences in worker safety standards. The SS United States was one of the most luxurious cruise ships of the 1950s. In the 1990s, the company decided to have it refurbished which required removing asbestos from the vessel. Conducting the task under US strict worker safety norms had a cost of $100 million. The company decided to outsource the job in Turkey, where the cost was only $2 million. Since finally the Turkish authorities would not allow it for fear that workers would get cancer, the ship was towed to the Russian port of Sevastopol, where asbestos were removed for even less, thanks to even lower standards in worker safety.

2.2. Environmental standards

Technological progress triggered exponential growth in human ability to alter the environment. While this has countless benefits, it also raises a number of dilemmas about the use of natural resources in societies with poor environmental regulations [ 12 ].

Texaco was accused of making irreversible damage to the Ecuador rainforest because of the use of low standards in the 1970s and 1980s. A similar case happened in southern Argentina’s shale gas field of Vaca Muerta. Protests have arisen against the activities of oil companies YPF and Chevron for using allegedly low environmental standards in fracking [ 13 ].

In the late 1990s, the Finnish company Botnia planned the construction of a pulp mill in the city of Fray Bentos (Uruguay), on the shores of the Uruguay River near the border with Argentina. The project was heavily resisted by environmental advocacy groups. Botnia was accused of making extra profits by following lower environmental standards than in the home country.

Another frequent international environmental dilemma is related to toxic waste. It is estimated that a considerable part of China’s arable land is polluted with lead, zinc and other heavy metals exported from developed economies. Old computers that are discarded in the United States usually end up in China, where the cost of disposal is 90% lower [ 14 ]. Some emerging economies have sought to attract foreign direct investment by lowering environmental standards, in a phenomenon known as “race to the bottom” and the creation of countries that work as “pollution havens”.

2.3. Human rights

Corporations sometimes face dilemmas linked to operations in countries with governments accused of violating human rights.

A high-profile case was IBM scandal of doing business with the Nazis. In the 1930s and 1940s, IBM provided Hollerith punch cards to the Third Reich, which were used in the operational management of extermination camps [ 15 ].

In the 1970s, Polaroid stopped selling equipment to the government in apartheid South Africa when it learned that cameras were used to make IDs for the surveillance of dissidents. In 1993, Levi Strauss and Co. canceled contracts in China due to the systematic violation of human rights perpetrated by the government.

More recently, Google accepted the Chinese government’s request to censor keywords like Tiananmen Square and Dalai Lama in its search engine. The CEO Eric Schmidt stated: “I think it is arrogant to enter a country where we are starting our operations and tell the country how to govern itself” [ 16 ].

2.4. Cultural diversity

Principles of international law hold that corporations ought to respect the customs and culture of the communities where they operate [ 17 ]. Traditional values can be lost to the homogenizing trends introduced by globally integrated production processes and product promotion. Some amount of change is inevitable and certain local practices may not deserve protection if they violate important minimum global norms. However, when should a norm be respected because of cultural diversity considerations and when should it be ignored because it violates a global minimum?

A paradigmatic case occurs with gender equality. It is frequent that anti-discrimination standards clash with traditional customs or religious practice. Western corporations, which typically promote gender equality at home, often find themselves operating in societies intolerant against women. In Saudi Arabia, for example, gender separation is almost total and women are forbidden by law to practice many professions.

While companies usually justify discriminatory practices out of respect for local traditions, these arguments can be problematic: “As in Saudi Arabia today, South Africa maintained a system where a broad segment of society was discriminated against in all walks of life and under the authority of men without any fear of being considered responsible for their actions. The only difference was that the victims in South Africa were black; In Saudi Arabia, are women” [ 18 ].

In some cases, softer ways of discrimination exist. While Mexico does not have formal restrictions against women in the labor market, a widespread macho culture often operates as a glass ceiling [ 19 ]. Corporations face an unwritten rule that holds that women should not be in charge of a male team. Using the gender equality standard of the home country (not considering gender as relevant for defining team leadership) could be costly for the company, as employees may not perceive a female boss as a legitimate authority. However, respecting local traditions and denying promotion to a talented executive solely because of gender considerations would seem a violation of the principle of equal opportunity.

Sometimes, cultural diversity dilemmas manifest themselves in marketing decisions. Developed countries usually have strict regulations against dangerous substances such as tobacco. As change in customer preferences and health laws generated a decline in cigarette consumption in developed economies, tobacco companies shifted their attention and marketing dollars to emerging markets with different regulatory standards.

For example, US tobacco executives had to decide how to market tobacco in Egypt, where the minimum legal age to buy cigarettes is 14. Should the company use the home standard (abstain from marketing tobacco to people under 18) or the host standard? Is the 14-year-old threshold from Egypt below some global minimum or the result of cultural preferences about the age at which people should be responsible for choosing whether to smoke or not?

2.5. Corruption

Corruption is a concept that agglomerates practices ranging from multi-million dollar payments to high government officials to a few dollars bribe to a low-level bureaucrat. It is estimated that over $1 trillion are paid in bribes annually, which squanders public resources and deprives millions of food, education and other government services to which they are entitled.

Bribery in foreign operations was not always considered morally wrong. Some even saw it as a normal operating expense when doing business in emerging economies. German corporate law, while severely punishing bribery at home, considered foreign bribes as tax deductible expenses [ 20 ]. Attitudes toward bribery changed in the late 1970s after the US Congress passed the Foreign Corrupt Practices Act which outlawed paying bribes abroad for American companies.

It is beyond doubt that bribing foreign officials to win a contract is immoral. However, less clarity exists in other situations. For example, is it acceptable to bribe a low-level bureaucrat to speed up a procedure he is supposed to do anyway? Small payments are tolerated in some countries and even rationalized by the need to supplement the meager salaries earned by public officials [ 21 , 22 ]. It is not always clear, however, what should count as a “small payment”. In April 2012, it was reported that Walmart paid more than $24 million to Mexican officials to speed up permits to open new branches. Payments were made to expedite a process that officials should have executed anyway. Is $24 million a “small payment” for a company the size of Walmart? [ 23 ].

In some cases, cultural differences exist in the appropriate relationship between a company and its stakeholders. Following China’s integration in the global economy, scholars became interested by the ethical status of guanxi, informal networks of favor exchange between companies and public officials. Since it is not a specific payment for a particular service, guanxi does not fit into the conventional definition of bribery. Advocates of guanxi argue that the definition of bribery is based on a Western concept of impartiality that is not necessarily shared by all cultures. Critics contend that guanxi is similar to Western mafia practices of “today you scratch my back and tomorrow I will scratch yours”. It is unclear whether these exchanges of favors constitute a form of corruption or whether it is a legitimate way of doing business in the Chinese market [ 24 , 25 ].

3. The response from governments, civil society and corporations

As ethical dilemmas in international business became more widespread and complex, governments, civil society associations and corporations began to develop policies and agreements as a response.

3.1. Governments

The response of governments to the new scenario of international business was an attempt to manage the globalization process by creating transnational norms for corporations.

In 1977, the Foreign Corrupt Practices Act was an early example of national regulation with international reach, since it affected the activities of American companies abroad. Enacted in the aftermath of the Enron and Worldcom frauds, the 2002 Sarbanes-Oxley Act established a set of ethical standards to be followed by every firm doing business in the USA. Because of the sheer size of the US economy, American regulators are in position of influencing corporate behavior around the world. Smaller societies, however, are vulnerable. Tight labor or environmental regulations may lead to capital flight to countries with lower standards.

Over the years, there has been growing awareness of the difficulties for nation states to solve a problem that is essentially global. This is why governments have sought regional and global agreements such as the Declaration on International Investment and Multinational Enterprises [ 26 ] and the Declaration of Fundamental Principles and Rights at Work [ 27 ].

In 1999, UN Secretary General Kofi Annan launched the Global Compact, establishing a set of principles on human rights, labor, environment and corruption taken from commitments made by governments at different UN pacts, such as the Universal Declaration (1948), the Rio Declaration on Environment and Development (1992), the International Labor Organization’s Fundamental Principles and Rights at Work (1998) and the UN Convention Against Corruption (2003) [ 28 ].

In general, these initiatives only achieved limited results because no body exists with transnational political authority and enforcement capability. The difficulty of finding common intercultural values and the pressures of special interests to keep global economy free of regulation also affected the efficacy of government initiatives to influence corporate behavior [ 29 ].

On September 2015, a number of countries adopted the sustainable development goals (SDGs), a set of 17 global goals which cover a broad range of social issues like poverty, hunger, health, education, climate change, gender equality and social justice to be achieved by 2030. The SDGs are likely to become an important source of guidelines for the behavior of multinational corporations in years to come [ 30 ].

3.2. Civil society

Global civil society actors have had some success in enforcing sanctions on companies engaging in unethical behavior, mostly through activism against abusive practices. Soft law influences corporate behavior, not through legal sanctions, but through awareness campaigns and boycotts [ 31 ].

Nike faced international scandal when it was reported that its clothing was manufactured through a network of abusive contractors in Southeast Asia. After a 9-year boycott by the Rainforest Action Network (RAN), in 1998 Mitsubishi agreed to replace wood-based paper with an eco-friendly one [ 32 ].

In addition to boycotts triggered by specific situations, the global civil society has developed more formal attempts to create socially responsible standards. The fair trade movement created a fair trade certificate that guarantees that a product was not produced under abusive conditions and that a fair price was paid for raw materials.

Fair trade started in 1986 in the Max Havelaar Foundation in the Netherlands. After a beginning in the coffee industry, it expanded to honey, bananas, tea and orange juice. It gained important traction in 2000 when Starbucks announced the introduction of a blend of fair trade coffee [ 33 ].

The Global Reporting Initiative (GRI) was created in 1997 by a project of the Coalition for Environmentally Responsible Economies and the United Nations Environment Program. This non-profit organization developed the most widely used standard for controlling corporate sustainability practices. The GRI framework aims to increase the consistency and comprehensiveness of sustainability reports, requiring companies to present abundant information in terms of corporate strategy, operational profile and management systems, as well as data on 50 performance indicators related to its economic activity and environmental impact.

In 2000, some 50 organizations used GRI principles to report their sustainability performance. The number grew progressively to the present day, in which it is estimated that more than 4000 companies from more than 60 countries use them. Firms participating in the United Nations Global Compact are required to submit reports following GRI guidelines. In return, they have the right to use the Global Compact seal on their products, which establishes them as socially responsible companies to consumers and other stakeholders.

3.3. Corporations

While philanthropy and charity were always present in the business world, the idea that corporations have a moral obligation toward stakeholders beyond shareholders is quite recent. Corporate leaders began paying attention to corporate citizenship in the late 1990s, following waves of anti-globalization protests.

The main response of corporations to the moral challenges of globalization has been the development of global codes of ethics. The majority of individual company codes and industry-wide standards emerged after the mid-1970s. In the US, many came as a response to foreign bribery scandals while others reacted to broadly calls for greater social responsibility.

Codes of conduct help clarify internal policies and procedures, promote a common company identity among a diverse international workforce and communicate standards to external stakeholders. Voluntary codes can help encourage appropriate conduct and reduce pressures for mandatory government action.

Enderle developed a taxonomy of four typical philosophies that guide policy when domestic and foreign standards differ [ 34 ].

The Foreign Type adapts the practices of the subsidiaries to the laws and customs of the host country under the notion of “when in Rome, do as the Romans”. The Imperial Type keeps home standards virtually unchanged. In the Interconnected Type, the company does not consider itself as being of a particular nationality but of a certain region, such as the European Union. In its foreign operations, it uses the region’s standards. Finally, Global Type companies do not believe that belonging to a country is relevant for the practice of international business. These companies consider the fact that the parent company is, say, in the USA does not generate any obligation to abide to US standards. An American company could use European standards on environmental issues and other rules for labor issues.

In addition to individual codes of ethics, corporations also developed voluntary agreements on standards for international business. In 1978, a group of US companies adhered to the Sullivan Principles for their operations in South Africa. They agreed not to respect the discriminatory labor laws of apartheid and to put pressure on the South African government for their abolition. The Sullivan Principles were a model for other voluntary codes such as the Caux Round Table, created in 1986 by former executives of multinational corporations in the USA, Europe and Japan.

In 1994, this organization proposed an international code of ethics based on principles of search for the common good and human dignity. It offers behavioral guidelines for consumers, employees, investors, suppliers, competitors and local communities ( Figure 1 ) [ 35 ].

Answers from practitioners to the moral dilemmas of global business. Source: Own Elaboration.

4. The response from moral theory

Even though philosophers of all time have reflected about the morality of economic activity, business ethics as an academic field only started in the 1960s. As corporations gained global influence, awareness increased about the risks posed by their activities on the environment, consumers and workers. Bowie argues that the field was born in November 1974, when the first business ethics conference was held at the University of Kansas [ 36 ]. In that context, business schools developed their first programs in ethics and social responsibility, generally focused on the study of interactions between laws and business.

In the early 1970s, philosophical ethics entered business schools and concepts such as utilitarianism, deontology and virtue ethics started to be applied to corporate behavior. The pioneers, in general, faced a cold reception in the academy. Colleagues in philosophy departments did not perceive business as a philosophically interesting activity. Colleagues in business schools were skeptical about what a moral philosopher could bring to the moral common sense of executives.

The relevance of business ethics was helped by the publication of John Rawls’ A Theory of Justice in 1971 [ 37 ]. The book introduced distributive justice concerns into mainstream philosophical debate which included moral reflections on the role of multinational corporations [ 38 , 39 ].

Management scholars started to address these issues in the 1980s with the seminal book Strategic Management: A Stakeholder Approach (1984) where Edward Freeman introduced stakeholder theory. This theory emphasized the moral and socio-political dimensions of decision making, in particular the consideration of the rights and interests of the different stakeholders of an organization, and not only the shareholders [ 40 ]. This movement was connected to the rise of corporate social responsibility among practitioners.

The deepening of globalization and the international expansion of corporations generated moral dilemmas of increasing complexity. The common sense of executives became insufficient to make complex decisions about gender discrimination in foreign cultures or about drug testing in developing countries.

The first book to offer a systematic treatment of such issues was The Ethics of International Business [ 41 ] which uses a social contract device to elucidate the rules that a socially responsible multinational should follow. In Competing with Integrity in International Business, De George presents 10 moral principles that every company must meet anywhere in the world, including respect for human rights, local cultures and cooperation with government [ 42 ].

International business ethics research was deeply influenced by stakeholder theory [ 43 ]. This requires answering a series of questions about who the stakeholders are, what interests should be considered, and the nature of the balance to be reached. All this was conceptualized through the Pyramid of Corporate Social Responsibility [ 44 , 45 , 46 ].

According to this model, a multinational has four types of global responsibilities toward their stakeholders.

First, to generate economic performance. Companies are expected to produce goods and services on a global scale and to sell them globally for a profit.

Second, they have the responsibility of following the law in countries where they operate.

Third, when the law is not appropriate to guide the ethical behavior, the corporation has an obligation to do what is right. Ethical responsibilities include practices and activities that are expected or prohibited in a society, but are not codified in the law: rules, standards and expectations of what employees, customers, shareholders and the global community regard as fair, equitable and consistent with the protection of stakeholders’ moral rights.

Fourth, corporations have a philanthropic responsibility that reflects a society’s expectation about the involvement of companies in activities that are not required by the law nor generally expected by ethics.

International business ethics investigates the third level of the Corporate Social Responsibility Pyramid: ethical responsibilities that are desirable or prohibited, but are not necessarily codified in law. Theoretical developments for answering this question were based on the adaptation of traditional ethical theories such as libertarianism, utilitarianism, Kantian deontology and virtue ethics to the new challenges posed by globalization ( Figure 2 ).

The CSR pyramid illustrates the different levels of corporate responsibility. Source: Carroll (1991).

4.1. Libertarianism

The libertarian perspective only accepts the economic and legal levels of the CSR Pyramid and only considers the shareholder as a valid stakeholder. While it has not been defended as a single theoretical framework in the field of business ethics, the view may be summarized by a famous Milton Friedman’s argument in an article published in the New York Times Magazine [ 47 ].

According to Friedman, in a democratic society, the majority of citizens determine the laws that govern corporate behavior. Executives are agents of the shareholders and the only common interest that shareholders have is to make money. As an agent, any commitment to anything else than providing returns for shareholders within the rules of the game means that the manager is spending money that is not his, whether that is of the customer (through price increases), the employees (by means of lower wages) or the shareholder (through lower profits). In Friedman’s argument, this would constitute a form of taxation without representation because managers are not democratically elected.

From this follows the famous Friedman’s libertarian definition on the obligation of business: “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” [ 48 ].

The Texaco oil company faced a famous scandal after being accused of several oil spills in Ecuador over decades starting in the 1970s. Critics argued that Texaco ignored oil industry standards by dumping untreated waste directly into rivers and streams. The company replied with a libertarian argument: it had always operated in full compliance with Ecuador law and with the approval of Ecuador government. The problem, from a libertarian perspective, is that when Texaco started its operations in the 1970s, the country was under military rule. After democracy returned, it still was a highly corrupt country and it was unclear that the “rules of the game” really reflected the people’s will.

Generally speaking, the libertarian argument assumes that the “rules of the game” are created by democratic governments where the majority of citizens determine the laws that govern corporate behavior. However, many dilemmas in international business ethics arise from the fact that companies operate in non-democratic countries where laws are not the result of popular consent and where enforcement systems are weak.

Holding the government of Ecuador, the sole responsible for the consequences of Texaco’s operations merely because Texaco operated lawfully is to set an extraordinarily low standard for the conduct of multinational corporations. It would imply that corporations should not be regarded as morally responsible for any behavior so long as the government in power legally sanctioned the conduct.

4.2. Utilitarianism

Initially developed by Jeremy Bentham and John Stuart Mill and with over 200 years of history, utilitarianism is a durable ethical theory that is also an important foundation for economics and social policy [ 49 , 50 ]. It was adapted to international business ethics by Gerard Elfstrom [ 51 ]. In its simplest form, utilitarianism holds that ethically correct decisions need to comply with the Utility Principle, which prescribes maximizing benefits and minimizing damages to all stakeholders.

Identify all the relevant alternative actions,

List all the stakeholders who will be affected by the alternative courses of action,

Assess how the stakeholders will be affected by the alternative actions, computing the balance of benefit to harm for each stakeholder affected by each act,

Choose the act which maximizes utility (which results in the greatest total balance of benefit to harm).

Pastin and Hooker [ 53 ] use a utilitarian argument against the Foreign Corrupt Practices Act. Maitland [ 54 ] presents utilitarian considerations on behalf of sweatshop manufacturing since it tends to benefit citizens of developing societies.

Card and Krueger [ 55 ] build on utilitarian thinking when they argue that corporations could raise sweatshop wages to the subsistence level without sacrificing profitability. According to the Utility Principle, this would be the right decision as it tends to improve the situation of workers without harming shareholders. Arguments against the Child Labor Deterrence Act, which sought to prohibit the importation of products made from child labor into the United States, were also made on utilitarian grounds. According to the argument, the law would harm stakeholders such as the owners of the Bangladesh clothing industry (because they would lose the American market) and the children employed in the factories (because they would lose their only source of income) [ 56 ].

While we lack space here to review its different varieties, generally speaking, utilitarian perspectives have typically faced three main complications: difficulties for stakeholder identification, difficulties in defining the expected result of different courses of action and lack of consideration for individual rights that might conflict with the Utility Principle.

First, it is not always easy to determine who are the stakeholders affected by a decision, which makes it difficult to measure the balance between benefits and damages. In the case of the Child Labor Deterrence Act, are children the only stakeholder who will be affected if the clothing industries close in Bangladesh? Should the children’s families count as a stakeholder too, since they rely on the working children for economic support? Whether one considers or not the family as a stakeholder has an impact in the utilitarian calculation of benefits and harm, and as a consequence, may end justifying a completely different decision.

Second, the morally correct decision depends on the expected result of different courses of action. However, the outcome of each alternative is usually hard to predict. Depending on the empirical assumptions and the probability the decision maker attributes to each scenario, the Utility Principle might suggest diametrically opposed decisions. How are factory owners expected to react to the Child Labor Deterrence Act? Will they close the factories and leave thousands of children out of work? Or will factory owners hire adults (which cost a bit more) and absorb a small reduction in profits? If more adults have income, will their children go to school and improve their future opportunities through education? Making a moral decision requires answering a number of highly speculative questions about expected outcomes.

Third, when comparing the benefits and costs of a decision, utilitarianism may not properly consider individual rights. This is usually a problem in clinical testing dilemmas. Let us imagine a pharma company that is developing a drug for curing a deadly disease in children. Having the tests done in a country with lower standards could greatly accelerate the release of the drug, potentially saving the life of millions. The cost would probably be a handful of preventable deaths in an emerging country. Some could argue, from an utilitarian point of view, that the benefits of conducting the tests far outweigh their cost. Hence, it would be morally permissible. Critics, however, argue that this utilitarian calculation is unfair toward the subjects in the emerging country. Generally speaking, an important problem of utilitarian thinking is that promoting the greatest good for the greatest number can affect fundamental rights of minorities [ 57 ].

4.3. Kantian deontology

Bowie [ 58 ] pioneered the introduction of Kantian thinking in business ethics. Building on this work, Evan and Freeman developed a Kantian model for stakeholder management. Bowie [ 59 ] made the first comprehensive and systematic effort to apply Kantian ethics in business, in combination with contemporary theories of organization and strategic management.

Kantian morality is based on the premise that humans are autonomous beings that have an intrinsic dignity and universal rights. Kant proposes the categorical imperative as a test for assessing whether the principles upon which an action is based are morally acceptable. Kant offers different formulations of the categorical imperative [ 60 ].

The formulation “work only according to a maxim such that you can want at the same time that it becomes universal law” can be applied to bribery. If bribery (secret payments to gain an advantage over others) became a universal behavioral law, then the practice of making secret payments to gain advantages would make no sense. Since they fail the categorical imperative test, bribes are immoral.

The formulation “work as if, through your maxims, you were always a legislative member in a universal kingdom of ends”, translated to business, may mean that organizational structures should treat all people with equal dignity and respect. From this formulation arise obligations such as the consideration of all the interest groups affected by the decisions, the establishment of relations of justice and in cases where it is necessary to benefit one group over another that the decision is not taken with an Utilitarian parameter such as the number of members of each group.

Kantian deontology advises managers to identify the rights of the different groups affected by a decision and to choose a course of action that does not violate any. Because of its non-consequentialist nature, Kantian ethics avoids the problem of the aggregation of benefits and damages that affects utilitarian models.

Pharmaceutical companies must sometimes decide to test new therapeutic methods in societies with weak health regulations. From a utilitarian perspective, the risk of a few deaths in a developing country could be justified if it leads to accelerating the launch of a new therapy with the potential to save millions. From Kantian morality, however, this option would be illegitimate because it does not respect the dignity of the individuals who will be subjected to the tests [ 61 ]. Kantian arguments were frequently used to defend the right of employees not to be discriminated against, of consumers not to be deceived and of communities to enjoy a healthy environment.

However, Kantian ethics has also faced a number of criticisms. Different people can come up with different answers regarding the universalization of action maxims. Depending on the assumptions, many alternative formulations of rights could be made between different stakeholders [ 62 ]. Some argue that Kantian ethics is too speculative, demanding and unrealistic to apply in organizational contexts. Solomon believes that Kantian concepts are inadequate to address the specific context of business and the particular roles people play in companies: “people do not do ethics that way” [ 63 ].

4.4. Virtue ethics

Virtue ethics is a venerable tradition that can be traced back to Plato and Aristotle in the West and to Confucius in the East. Recently, this stream of thought aroused a renewed interest, mostly due to the work of MacIntyre [ 64 ]. In the early 1990s, Solomon [ 65 , 66 ] introduced Aristotelian ethics in the organizational field.

Virtue ethics starts with the idea that the basis for moral judgments is not the isolated individual but the community. A corporation is, above all, a community where managers fulfill roles with specific obligations. In many cases, there are no general rules on how to behave. Dilemmas cannot be solved with the instrumental reason, as if it were the resolution of a technical problem through the application of a universal law to a particular case. It is necessary to resort to practical reason, good judgment, or as Aristotle called it, phronesis.

The manager’s ability to make the ethically correct decision depends on his or her character. There are different virtues of character relevant to business, including honesty, courage, generosity, tolerance, integrity and prudence. Virtues are not static character traits that a manager possesses or does not possess. They are enduring traits that are cultivated through experience in the resolution of ethical dilemmas. In every situation where the executive is confronted with an ethically complex decision, virtue ethics suggests identifying what virtue is at stake and then asking what a virtuous person would do.

As the manager acquires this habit of thinking, his character will develop and his habits of ethical decision making will become more successful. To the extent that more members of the corporation go through this process and acquire the virtues of good character, the organization as a whole will tend to the common good [ 67 ].

Virtue ethics’ approach seems well adapted to the concrete ethical situations that managers can find in organizations. The theory is able to solve cases where rules seem difficult to apply or when two or more rules suggest courses of action inconsistent with each other. Instead of generating a discussion about which rule has priority over the others (a debate for which executives, because of their training and interests, are often poorly prepared) virtue ethics diverts attention from the principles to the agent. The key question is not what principle or rule is applicable, but what virtue is at stake and what would a virtuous person do.

Virtue ethics has faced two kinds of criticism. First the situationist critique questions the moral psychology assumptions underlying the model of virtuous man. Virtue ethics assumes that actions are a result of character, and that the development of good character results in better moral decision making. Doris [ 68 ], however, notes that character traits are less durable than what this model implies. Evidence indicates that small changes in the environment significantly affect decision making and that decisions depend little on the character of the person and much of the situation in which they are made. If this were true, then it would be false that the development of virtues tends to improve ethical decision making, a basic assumption of virtue ethics.

Second, while the focus on the agent may solve a number of problems of rule-based approaches such as utilitarianism and Kantian ethics, the downside is that it is only applicable to individual managers. Corporations, however, also need moral guidance for the development of global codes of ethics. Utilitarian and Kantian approaches, despite their difficulties, are capable of offering criteria of good corporate behavior on which to build globally applicable rules. Virtue ethics, on the contrary, is unable to provide answers to dilemmas at the level of the corporation in relation to business in society. Solomon argues: “a problem with virtue ethics is that it tends to be provincial and ethnocentric. It thereby requires the language of rights and some sense of utility as a corrective”.

Melé [ 69 ] believes that some basic rational principles from Personalist ethics could be used as guidelines for virtuous behavior. Melé proposes two principles: the Personalist Principle, including respect and love for people, which prescribes respect of workers and consumers, and forbids exploitation, manipulation and deceptive behavior in commercial transactions; the Common Good Principle, which captures the social dimension of human beings, requires that managers and employees do whatever is necessary to contribute to situational needs and goals of an organization.

While Melé’s proposal is valuable in trying to introduce some principles into virtue ethics, it is still at an early stage of research. At this point, the principles are too general and abstract. It remains unclear that Melé’s proposal could correct the excessively situationalist character of virtue ethics, which makes it unable to provide rules for moral guidance in decision making ( Figure 3 ).

Different answers from traditional ethical theory to dilemmas in international business. Source: Own elaboration.

5. Conclusion

Economic globalization and technological change are posing new ethical challenges to multinational corporations. As companies operate across diverse cultural and legal frameworks, moral dilemmas arise in labor standards, marketing practices, environment, corruption and human rights. In this chapter, I have reviewed the response of governments, corporations and civil society associations to the new moral dilemmas of globalization. Then, I have introduced the answers developed within the academic field of international business ethics.

Velasquez [ 70 ] applied all traditional ethical theories to a dilemma faced by a North American multinational doing business in Jamaica during the 1970s. He found that none of the existing theories provided an adequate answer. Theories were too abstract, presented inconsistent choices or made suggestions that were counterintuitive to moral common sense.

Other, more recent, frameworks have arisen during the 1990s, such as Integrative Social Contracts Theory, a contractarian approach to business ethics. Up to this point, however, no theory can provide a fully satisfactory solution for the dilemmas managers have to face. Much progress is to be done in developing better tools for managerial moral decision making in global business.

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© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3.0 License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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The Importance of Good Morals and Ethics in Business

While it's true that every company's goal is to make a profit, being a good member of society that you are, it should go without saying that the company should always adhere to its own set of morals and ethics. This article will discuss the importance of good morals and ethics in business.

Having morals and ethics is not only important for the business, but it's important for the people who work there as well. The importance of good morals and ethics is one of the most contentious topics in the business world today. It's never been more important for businesses to put principles and values before profits.

What does morals, ethics, and values mean?

Morals are defined as principles concerning the distinction between right and wrong or good and bad behavior. Ethics can be described as standards of behavior that guide us in making moral judgments. Values, on the other hand, are considered more broad than morals. They may include religious beliefs or deeply held personal convictions that influence how we act in business and our personal life.

What does it mean to put value above all else? In business, this means putting the needs of your customers, employees, and clients before anything else. It means treating people with kindness and respect regardless of their social class or educational background.

Importance of Good Morals and Ethics in Business

Why ethics should be important to businesses — even if it doesn't seem like a glamorous or exciting topic — and how small changes in behavior can lead to huge differences in outcomes.

1.  Ethics is about the business and its stakeholders:

Ethics is not morality, the latter being a comfortable sentiment toward which we may be willing to act. It is a matter of self-interest. Morality, on the other hand, means simply to wish your neighbor well and so feels good about him. The former is what you ought to do, the latter what you should do.

Many people think of business as being in opposition to ethics. They forget that businesses are often one of society's largest stakeholders — they need to care for just as much as any other citizen. It takes a fully engaged organization to produce a fully engaged worker.

It requires an organization that is dedicated to the purpose of its existence. Most organizations are not organizations in this sense. Most people tend to think of their organization as something apart from them. They see themselves as employees, members, or customers.

Businesses cannot afford not to be ethical — they need to be concerned with how their actions affect the lives of others and what they can do to improve their reputation. The more they invest in ethics, the more money they can save on problems caused by unethical practices, such as poor quality and unaffordable insurance, lawsuits and higher levels of employee turnover. If a company behaves badly, it can cause significant damage to its reputation — and that's bad news for everyone involved!

2.  A company's reputation matters:

Business ethics is the reputation of a company, not just in the present, but also in the future. The more a business invests in ethics, the more profitable it will be and thus be able to invest even more. It's useful to think about a business as an extension of its employees. If people want to do business with your company, they're going to want to know that it has good ethics.

Therefore, one of the first questions asked at job interviews is often What was your biggest failure and how did you handle it?. It's not just important to treat your employees well, it's also necessary to do so to keep them happy and satisfied. If a company is seen as unethical, this can damage its reputation even if customers are pleasantly surprised by its service.

3.  Ethics trumps money:

Despite what conservative talking heads may say (or think), a business cannot be equated with a person. It's not a living entity and it cannot act on its own. A business considers the actions of its employees when making decisions and is subject to both the law and the public's perception about how those actions affect its stakeholders — both of which are extremely important factors in determining how well it does.

With that in mind, consider some of the following examples: During an economic recession, a business might consider laying off employees as a way to reduce costs. If this action has a positive impact on profits, then it's probably a good idea — right? Well, yes and no. It depends on how this action will be perceived by stakeholders and what their needs are.

It may be beneficial for the company to lay off workers if they can manage to find new jobs easily (meaning they won't have problems paying bills), but it could make employees angry if they are not rehired later when the economy has improved (because this means they lost out on benefits or other opportunities).

4.  Business ethics drives employee behavior:

A great business is built on a foundation of ethics, integrity and honesty. It must be so from the first day forward. A business has no conscience — but people must.

Being ethical is not a test of manhood or an endurance run — it's just a means to get what you want while making the lives around you better at the same time. Many rules can be followed to make this happen, including the following:

Don't lie or mislead others: If your employees don't know whether they can trust other employees, then your company won't know how to trust its employees either. Nobody wants to be confused, disappointed or in a situation where they might need to be dishonest so they might all benefit from honesty.

Treat your employees well, and reward them for doing a good job: If you don't pay them enough — or if you don't have any benefits — then it becomes more difficult to trust their opinions because they know their opinions won't count for much. Conversely, if you pay them well and provide them with benefits, then it's easier for your employees to look at the company as an extension of themselves.

5.  Learning:

A man that studied revenge keeps his own wounds green. Businesses need to adapt to changing times, which means that their practices also need to change. Because of this, companies must work on improving themselves and maintaining good relationships with their employees, other businesses and the public at large.

The ruthless pursuit of profit is destroying our society. Profit comes from creating value. If a company fails to create or find value, then it must fail. If a company wants to keep its employees happy, it needs to make sure that their pleas for help will be heard and taken into account so that they can feel like part of the team rather than exploited.

For employees to see their earnings as fair, they need to know that the company is trying hard to ensure that their needs are met — not only because this will make them feel good, but because they want to get the job done in the first place!

6.  Business ethics benefits the bottom line:

An ethical business does so many things to improve its performance, it has a positive effect on its bottom line. And that's why ethics improves the bottom line.

As explained above, ethics is more than just a moral issue. If a company does the right thing for others, it also makes money in the process. Businesses spend money hiring employees and paying them well, providing benefits and giving them opportunities to grow within the company.

Employees are happy because they get what they want and there are no problems with benefits or job security — so they like working for your company! All of this together means that good ethics can lead to profits!

7.  Business ethics is profitable:

The winners in life think constantly in terms of I can, I will and I am. Losers, on the other hand, concentrate their waking thoughts on what they should have or would have done, or what they can't do. In many ways, ethics is about mutual gain. When businesses treat their employees well and find creative ways to help them out (thanks to competition for talent).

It means that both parties win in the end. Not only does this improve employee morale and create an environment where risks will be taken if they're beneficial to the company, but it also means that companies can compete in a better-informed environment.

8.  Businesses are better off with a strict code of ethics:

You can always judge your quality by the enemies you make. Friendships and partnerships require good faith, and it is the same when working with other businesses or stakeholders. The more that you can agree upon in terms of ethical behavior, the better your relationships will be in the long run.

Whether it's deciding upon ways to treat employees or sharing information about future actions, it helps to have a clear idea of what is acceptable behavior from both sides.

9.  Business ethics is not just "someone else's responsibility":

It's a good idea to set ethical standards for yourself and your company, but it is equally as important to remind your employees of this every once in a while. Being ethical doesn't just mean that your employees should do the right thing — it also means that they should remember to do the right thing! If most of the employees on your team have forgotten what an ethical decision is (for example, treating employees unfairly), then you might not be doing as much as you could be.

10.  Business ethics can have a huge run:

The word 'ethics' means, literally, the study of what is good and bad. Now, people think that is a very obvious study. Of course it's a study of what is good and bad; but you know what? The question is not just whether it's good or bad, it's how good and how bad.

Ethical behavior can go up against immoral or unethical practices so often that in many instances (such as the example above), ethical acts win out over unethical ones thanks to their consistency. As such, if you want your company to be successful in the long run, then you'll want to be ethical.

You need only look at the business ethics scandals to see that companies that fail to act ethically, in the long run, tend to be less successful than those who do — and not just from a financial perspective!

11.  Ethical behavior is its reward:

What a man believes may be ascertained, not from his creed, but from the assumptions on which he habitually acts.

Being ethical is not always easy. It can get you into trouble with customers, other businesses or even your employees sometimes. However, there is a certain satisfaction that you can only get from doing the right thing.

As explained above, ethics is not just right or wrong — there are times when it's better to do good by harming others (such as in self-defense), and other times when it's better to do wrong by helping someone else out a jam.

What matters most is whether or not you can deal with the potential repercussions of your behavior and still sleep at night without feeling guilty. If you can look at yourself in the mirror and feel proud of your actions (or lack thereof), then you're on the right track when it comes to business ethics.

12.  Ethical behavior is profitable in the long run:

A principle is a simple, clear, affirmative statement of what one believes. It is not to be confused with a goal, an aim, or an ideal. The difference is this: A goal is what one wants to achieve; an aim is what one aims at; an ideal is what one imagines or pictures. But a principle is a standard.

Good Morals and Ethics to Dos

Every company is going to encounter some type of ethical dilemma at one point or another. It’s inevitable and it can be difficult to deal with, but there are a few things that businesses can do to handle this kind of situation properly.

1.  Educate yourself and your team on ethical issues

First and foremost, it’s important to educate yourself. You can’t have an ethical problem and not know that it exists or what you should do about it. By educating yourself, you’ll be able to recognize when something unethical is going on. You can also talk to your team about these things so you can get a second opinion from them as well.

2.  Calculate the cost of unethical behavior

The best thing you can do to prevent unethical behavior is to calculate the cost. Once you know the cost, you can be sure that it would be a lot less expensive to do business ethically than it would be on the other side. The key is that no matter what happens, you’ll know exactly how much extra money you have to spend if an unethical situation occurs. This can keep you from making any hasty decisions and it will also help to ensure that the millions you’re spending on your business are spent wisely.

3.  Create an ethics policy

Most companies have some sort of ethics or code of conduct. You need to be sure that it aligns with your company values, but in general, having a written policy is important when it comes to the ethical dilemma. If you have an ethical dilemma, you’ll want to refer to your policies. At the end of the day, your policies will be what help guide you and put into action the things that you’ve learned from this article.

4.  Know how to report an ethical issue

If there is unethical behavior that could harm a company in any way, there is something that needs to be reported. After the report has been made, you need to know how to act. You’ll want to be sure that you’re following proper procedures while still making it a point that you are protecting the interests of your company at all times.

5.  Give training and education on ethics

Even if people do report unethical practices, ensure that they understand what happened and why it was wrong. Make sure that everyone understands why something is unethical and give them some tips on how to prevent it from happening in the first place. This will make it cheaper for your company in the long run, which is always a good thing!

Every company should have an ethics policy so they can deal with situations like these when they occur. This will make it easier for you to handle them and it will also show your employees that you are serious about doing business ethically. You’ll find it a lot easier to deal with unethical behavior if everyone is on the same page.

Final Thoughts

In the end, it’s all about staying true to your values and doing what you believe is right. Even if it costs you a little money or makes you look bad to someone else, make sure that it’s what you believe in and that the profit from it more than makes up for losing points with someone else. Ethics is all about doing what you feel is right in the long run.

By making sure that you are focusing on your vision and not just short-term gains and profits, you’ll be able to see which decisions ethical and which ones are aren’t. If you don’t, there is a chance that you could end up doing things that are unethical and not even know it. This can be harmful to your company in the long run.

Do you feel like you are struggling with putting "strategy" and "business growth concepts" in place that make a difference? Doing it all is overwhelming! Let’s have a honest discussion about your business and see if the Power of 10 can help you. Click  “HERE”  to have a great conversation with our team today.

Written and Published By The Strategic Advisor Board Team C. 2017-2021 Strategic Advisor Board / M&C All Rights Reserved www.strategicadvisorboard.com  /  [email protected]

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What Is Business Ethics?

Understanding business ethics, why is business ethics important, types of business ethics.

• Implementing Good Business Ethics
• Monitoring and Reporting

The Bottom Line

What is business ethics definition, principles, and importance.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Business ethics is the moral principles, policies, and values that govern the way companies and individuals engage in business activity. It goes beyond legal requirements to establish a code of conduct that drives employee behavior at all levels and helps build trust between a business and its customers.

Key Takeaways

• Business ethics refers to implementing appropriate business policies and practices with regard to arguably controversial subjects.
• Some issues that come up in a discussion of ethics include corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
• The law usually sets the tone for business ethics, providing a basic guideline that businesses can choose to follow to gain public approval.

Investopedia / Katie Kerpel

Business ethics ensure that a certain basic 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 as they do to wealthier clients. These kinds of practices ensure the public receives fair treatment.

The concept of business ethics began in the 1960s as corporations became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes, and corporate responsibility. The increased focus on "social issues" was a hallmark of the decade.

Since that time, the concept of business ethics has evolved. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally vs. maintaining a competitive advantage over other businesses. Firms display business ethics in several ways.

Business ethics ensure a certain level of trust between consumers and corporations, guaranteeing the public fair and equal treatment.

Principles of Business Ethics

It's essential to understand the underlying principles that drive desired ethical behavior and how a lack of these moral principles contributes to the downfall of many otherwise intelligent, talented people and the businesses they represent.

There are generally 12 business ethics principles:

• Leadership : The conscious effort to adopt, integrate, and emulate the other 11 principles to guide decisions and behavior in all aspects of professional and personal life.
• Accountability : Holding yourself and others responsible for their actions. Commitment to following ethical practices and ensuring others follow ethics guidelines.
• Integrity : Incorporates other principles—honesty, trustworthiness, and reliability. Someone with integrity consistently does the right thing and strives to hold themselves to a higher standard.
• Respect for others : To foster ethical behavior and environments in the workplace, respecting others is a critical component. Everyone deserves dignity, privacy, equality, opportunity, compassion, and empathy.
• Honesty : Truth in all matters is key to fostering an ethical climate. Partial truths, omissions, and under or overstating don't help a business improve its performance. Bad news should be communicated and received in the same manner as good news so that solutions can be developed.
• Respect for laws : Ethical leadership should include enforcing all local, state, and federal laws. If there is a legal grey area, leaders should err on the side of legality rather than exploiting a gap.
• Responsibility : Promote ownership within an organization, allow employees to be responsible for their work, and be accountable for yours.
• Transparency : Stakeholders are people with an interest in a business, such as shareholders, employees, the community a firm operates in, and the family members of the employees. Without divulging trade secrets, companies should ensure information about their financials, price changes, hiring and firing practices, wages and salaries, and promotions are available to those interested in the business's success.
• Compassion : Employees, the community surrounding a business, business partners, and customers should all be treated with concern for their well-being.
• Fairness : Everyone should have the same opportunities and be treated the same. If a practice or behavior would make you feel uncomfortable or place personal or corporate benefit in front of equality, common courtesy, and respect, it is likely not fair.
• Loyalty : Leadership should demonstrate confidentially and commitment to their employees and the company. Inspiring loyalty in employees and management ensures that they are committed to best practices.
• Environmental concern : In a world where resources are limited, ecosystems have been damaged by past practices, and the climate is changing, it is of utmost importance to be aware of and concerned about the environmental impacts a business has. All employees should be encouraged to discover and report solutions for practices that can add to damages already done.

There are several reasons business ethics are essential for success in modern business. Most importantly, defined ethics programs establish a code of conduct that drives employee behavior—from executives to middle management to the newest and youngest employees. When all employees make ethical decisions, the company establishes a reputation for ethical behavior. Its reputation grows, and it begins to experience the benefits a moral establishment reaps:

• Brand recognition and growth
• Increased ability to negotiate
• Increased trust in products and services
• Customer retention and growth
• Attracts talent
• Attracts investors

When combined, all these factors affect a business' revenues. Those that fail set ethical standards and enforce them are doomed to eventually find themselves alongside Enron, Arthur Andersen, Wells Fargo, Lehman Brothers, Bernie Madoff, and many others.

There are several theories regarding business ethics, and many different types can be found, but what makes a business stand out are its corporate social responsibility practices, transparency and trustworthiness, fairness, and technological practices.

Corporate Social Responsibility

Corporate social responsibility (CSR) is the concept of meeting the needs of stakeholders while accounting for the impact meeting those needs has on employees, the environment, society, and the community in which the business operates. Of course, finances and profits are important, but they should be secondary to the welfare of society, customers, and employees—because studies have concluded that corporate governance and ethical practices increase financial performance.

Businesses should hold themselves accountable and responsible for their environmental, philanthropic, ethical, and economic impacts.

Transparency and Trustworthiness

It's essential for companies to ensure they are reporting their financial performance in a way that is transparent. This not only applies to required financial reports but all reports in general. For example, many corporations publish annual reports to their shareholders.

Most of these reports outline not only the submitted reports to regulators, but how and why decisions were made, if goals were met, and factors that influenced performance. CEOs write summaries of the company's annual performance and give their outlooks.

Press releases are another way companies can be transparent. Events important to investors and customers should be published, regardless of whether it is good or bad news.

Technological Practices and Ethics

The growing use of technology of all forms in business operations inherently comes with a need for a business to ensure the technology and information it gathers is being used ethically. Additionally, it should ensure that the technology is secured to the utmost of its ability, especially as many businesses store customer information and collect data that those with nefarious intentions can use.

A workplace should be inclusive, diverse, and fair for all employees regardless of race, religion, beliefs, age, or identity. A fair work environment is where everyone can grow, be promoted, and become successful in their own way.

How to Implement Good Business Ethics

Fostering an environment of ethical behavior and decision-making takes time and effort—it always starts at the top. Most companies need to create a code of conduct/ethics, guiding principles, reporting procedures, and training programs to enforce ethical behavior.

Once conduct is defined and programs implemented, continuous communication with employees becomes vital. Leaders should constantly encourage employees to report concern behavior—additionally, there should be assurances that if whistle-blowers will not face adversarial actions.

A pipeline for anonymous reporting can help businesses identify questionable practices and reassure employees that they will not face any consequences for reporting an issue.

Monitoring and Reporting Unethical Behavior

When preventing unethical behavior and repairing its adverse side effects, companies often look to managers and employees to report any incidences they observe or experience. However, barriers within the company culture (such as fear of retaliation for reporting misconduct) can prevent this from happening.

Published by the Ethics & Compliance Initiative (ECI), the Global Business Ethics Survey of 2021 surveyed over 14,000 employees in 10 countries about different types of misconduct they observed in the workplace. 49% of the employees surveyed said they had observed misconduct and 22% said they had observed behavior they would categorize as abusive. 86% of employees said they reported the misconduct they observed. When questioned if they had experienced retaliation for reporting, 79% said they had been retaliated against.

Indeed, fear of retaliation is one of the primary reasons employees cite for not reporting unethical behavior in the workplace. ECI says companies should work toward improving their corporate culture by reinforcing the idea that reporting suspected misconduct is beneficial to the company. Additionally, they should acknowledge and reward the employee's courage in making the report.

Business ethics concerns ethical dilemmas or controversial issues faced by a company. Often, business ethics involve a system of practices and procedures that help build trust with the consumer. On one level, some business ethics are embedded in the law, such as minimum wages, insider trading restrictions, and environmental regulations. On another, business ethics can be influenced by management behavior, with wide-ranging effects across the company.

What Are Business Ethics and Example?

Business ethics guide executives, managers, and employees in their daily actions and decision-making. For example, consider a company that has decided to dump chemical waste that it cannot afford to dispose of properly on a vacant lot it has purchased in the local community. This action has legal, environmental, and social repercussions that can damage a company beyond repair.

What Are the 12 Ethical Principles?

Business ethics is an evolving topic. Generally, there are about 12 ethical principles: honesty, fairness, leadership, integrity, compassion, respect, responsibility, loyalty, law-abiding, transparency, and environmental concerns.

Business ethics concerns employees, customers, society, the environment, shareholders, and stakeholders. Therefore, every business should develop ethical models and practices that guide employees in their actions and ensure they prioritize the interests and welfare of those the company serves.

Doing so not only increases revenues and profits, it creates a positive work environment and builds trust with consumers and business partners.

New York University Stern Center for Sustainable Business. " ESG and Financial Performance: Uncovering the Relationship By Aggregating Evidence From 1,000 Plus Studies Published Between 2015 – 2020 ."

Ethics & Compliance Initiative (ECI). " The State of Ethics & Compliance in the Workplace ," Pages 16-22.

Ethics & Compliance Initiative (ECI). " 2021 Global Business Ethics Survey Report The State of Ethics & Compliance in the Workplace: A Look at Global Trends ."

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Ethics in the Modern World Essay

Regarding the increased topicality of such issues as tolerance, democracy, and multiculturalism in the modern world, ethics becomes one of the crucial aspects that should be considered in decision making. One should realize the fact that individual lives in society, and all his/her actions might impact surrounding people and precondition the appearance of different processes. In this regard, moral becomes one of the landmarks a person should consider when solving a particular problem (Hoffman, Frederick, & Schwartz, 2014). Especially important this statement becomes for leaders who are engaged in strategic planning as their decisions affect a particular unit with all its workers and might either improve its functioning or precondition its collapse. Under these conditions, biased attitudes and perspectives among people responsible for planning might have a pernicious impact on future development and precondition the appearance of ethical dilemmas or other problematic situations.

Therefore, enhanced self-awareness could be considered one of the possible ways to improve decision-making and minimize errors. Realizing the most common biases, stereotypes, and the way they affect people, a leader, will be able to avoid ethical barriers and make appropriate decisions. However, if desired self-awareness is not attained, results could be crucial. For instance, using biased perspectives when looking for an efficient solution to a problem, a leader will not be able to choose the most appropriate approach because of the lack of tolerance, mistrust, etc. (Donaldson, Werhane, & Zandt, 2007). Second, the lack of self-awareness might also result in the deterioration of relations within a collective as its leader adheres to biased practices and uses stereotypes when delegating duties (Halbert & Ingulli, 2014). In such a way, his/her efficiency decreases significantly. Moreover, he/she destroys a team and contributes to the appearance of numerous conflicts based on ethical and cultural issues. Finally, poor understanding of the modern environment preconditioned by stereotyped thinking might result in the significant decrease of the leaders authority and deprive him/her of an opportunity to control the situation.

Therefore, the inability to overcome stereotypes also affects long and short-term strategic plans and outcomes. For instance, a leader responsible for strategic development might feel particular emotions, both positive and negative ones, towards a company or an actor. If these feelings serve as the basis for the decision-making or financial agreement, results will be unpredictable or even poor. Strategic thinking demands a comprehensive investigation of a situation, all factors that impact its development, and barriers that could deteriorate results (Jennings, 2011). That is why a leader should be able to ignore his/her emotions and use a lean approach to guarantee positive outcomes. Moreover, the current business environment requires innovative and revolutionary techniques to attain success and become a leading actor in a certain sphere. A person who uses common biases in his/her decision-making will not be able to elaborate a method that meets all demands of the modern world. For this reason, only balanced and well-thought-out decisions should be made.

Nevertheless, as we have already stated, leaders’ decisions impact not only him/her; a company or a team might also experience their consequences. In this regard, a broad range of ethical factors should be considered when making a particular decision. First, a leader should determine who will be affected by one or another act. It could also be described as the utilitarian approach, which considers all parties interests (Dagnino & Cinici, 2016). Moreover, one should also think if his/her particular decision might cause harm to involved people. Solutions that presuppose the deterioration of individuals positions could hardly be considered ethical and should be ignored by a leader. Finally, peoples rights become another important factor that affects decision-making. It is unacceptable to act in a way that violates peoples fundamental freedoms and rights. These factors become fundamental for a leader who wants to avoid ethical conflicts and align improved cooperation between parties.

Finally, moral issues become crucial for giant corporations because of their multi-national structure. The increased diversity of employees cultures and beliefs results in the creation of a specific working environment. Under these conditions, ethics becomes central for the improved cooperation between all staff members and companies further evolution. Therefore, the only way to adjust appropriate ethical standards is to outline a crucial necessity to respect all cultures and beliefs that are presented at the moment (Crane & Matten, 2016). It is impossible to elaborate a unified approach that will consider all employees peculiarities because of the multi-cultural nature of global concerns. Instead, it is crucial to create a framework that will cultivate these cultures enhanced cooperation, mutual respect, and tolerance.

Altogether, ethics becomes a fundamental issue in the modern world. Drastic alterations in peoples mentalities shifted priorities towards tolerance and multiculturalism. For this reason, biased thinking becomes inappropriate for the current business environment. A leader should cultivate self-awareness to eliminate barriers that prevent him/her from further rise. Only under these conditions he/she will be able to minimize errors and enhance the decision-making process. Furthermore, ethics becomes crucial for multi-cultural corporations as it creates a tolerant framework that helps all workers to cooperate efficiently. That is why ethical factors are central for the modern world and should be considered when making a particular decision.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization . New York, NY: Oxford University Press.

Dagnino, G., & Cinici, M. (Eds.). (2016). Research methods for strategic management . New York, NY: Routledge.

Donaldson, T., Werhane, P., & Zandt, J. (2007). Ethical issues in business: A philosophical approach. Upper Saddle River, NJ: Prentice-Hall.

Halbert, T., & Ingulli, E. (2014). Law and ethics in the business environment (Cengage Learning legal studies in business) . Cincinnati, OH: South-Western College Pub

Hoffman, M., Frederick, R., & Schwartz, M. (Eds.). (2014). Business ethics: Readings and cases in corporate morality . Hoboken, NJ: Wiley-Blackwell.

Jennings, M. (2011). Business ethics: Case studies and selected readings (South-Western legal studies in business academic) . Cincinnati, OH: South-Western College.

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Corporate Business World: Ethics and Morality Essay

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Ethical motives and ethical motives are a demand in the corporate concern universe. Each twenty-four hours employees are faced with moral and ethical issues ; and because they have their ain single set of ethical motives. they behave otherwise. Many have formed a good apprehension of the rudimentss of moralss. leading. morality and societal duty ; but most do non truly understand the true significance of values. moralss and morality. The roots of moralss in America teach us “Ten Universal Values. ” viz. . honestness. unity. promise-keeping. fidelity. equity. lovingness. regard for others. responsible citizenship. chase of excellence. and answerability. However. recent history Teachs us 12 ethical rules that include two extra values. viz. leading. and repute and ethical motives to the list that I will discourse in this essay. I will besides discourse the differences between ethical and moral issues. In concern. moralss and character count. Therefore. I will besides discourse some organisations that have been destroyed or damaged due to their unethical and immoral behaviour in concern.

Let’s Begin with Merriam Webster’s Dictionary definition of moralss. Harmonizing to this dictionary. moralss is defined as: an country of survey that trades with thoughts about what is good and bad behaviour ; a subdivision of doctrine covering with what is morally right or incorrect ( Merriam-Webster ) . Harmonizing to our text. moralss is defined in two ways. First. it states that moralss are the rules of behavior that governs an single or group. An illustration would be the regulations by which an person lives his or her personal life ( Text pg 8 ) . A great illustration would be when a kid makes the determination to interrupt the regulations of a game. he is making struggle between himself and his playfellows. Then once more. the kid who chooses to play by the regulations finally enjoys friendly relationship and intimacy with his playfellows. which is a benefit to himself. Our text defines moralss from the dictionary as “the survey of morality. ” Ethical motives may cover with morality. but it is non the same as morality ( Text pg­ 8 ) .

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Our text states that moralss is a sort of probe [ that ] includes both the activity of investigation every bit good as the consequences of that probe. Whereas. morality is the capable affair that moralss investigates ( Text pg 8 ) . This brings us to the dictionary definition of morality which defines it as: beliefs about what is right behaviour and what is incorrect behaviour. or the grade to which something is right and good ; the moral goodness or badness of something ( Merriam-Webster ) . Two good illustrations are rectifying a fiscal mistake in your favour when you know that it would ne’er be discovered and a colleague stealing nutrient out of the deep-freeze. These are offenses. the moral issue is do you describe them or non? There are guidelines and criterions in which employees are expected to follow if an employee decides to remain employed.

Ethical rules serve as a usher to doing determinations and they besides serve to set up the standards by which your determinations will be judged by others. In the concern universe. it is critical how people judge your character because it is the footing of trust and credibleness. Your repute is what people perceive of your actions. Are they honest and ethical? Whereas your character is defined by your actions and if they are they honest and ethical harmonizing to the following 12 ethical rules:

1. Honesty – Be honest in all communications and actions. 2. Integrity – Maintain personal unity. 3. Promise-keeping – Keep promises and fulfill committednesss. 4. Loyalty – Be loyal within the model of other ethical rules. 5. Fairness – Strive to be just and merely in all traffics. 6. Caring – Demonstrate compassion and a echt concern for the wellbeing of others. 7. Respect for others – Treat everyone with regard. 8. Law Biding – Obey the jurisprudence. 9. Committedness to excellence – Pursue excellence all the clip in all things. 10. Leadership – Exemplify award and moralss. 11. Repute and Morale – Build and protect and construct the company’s good repute and the moral of its employees. 12. Accountability – Be accountable.

Both character and repute should be a concern for successful executives because both can be destroyed by their actions that are perceived to be unethical ( hypertext transfer protocol: //josephsoninstitute. Ethical motives are an built-in erudite portion of the success or failure of a concern. Several big organisations such as Enron and WorldCom have been destroyed and some organisations such as AIG. Fannie Mae. and Freddie Mac have been earnestly damaged due to unethical patterns of their top executives. Most noteworthy is the Ponzi strategy by Bernie Madoff and other executives of Enron Corporation who convinced 1000s of investors to fork over their nest eggs by falsely assuring consistent net incomes in return and falsely inflated the company’s grosss. through their accounting patterns that made them go the 7th largest company in the universe. When the strategy was uncovered. the company fell unraveled and. accordingly. filed for Chapter 11 bankruptcy in December. 2001. Seven old ages subsequently. Madoff was caught and charged with 11 counts of fraud. money laundering. bearing false witness. and larceny after victimizing his investors out of $ 65 billion and went undetected for many old ages. He was sentenced to 150 old ages in prison ( S. Yang 2014 ) .

More locally. my girl antecedently worked for the Finance Department of the Marion Housing Authority and was terminated by Executive Director. Frederick Hunt. for non take parting in practising that ethically and morally incorrect. After a three-year probe. Hunt was arrested and preliminarily charged with two counts of counterfeit. one count of corrupt concern influence and four counts of larceny for misapplying more than $ 20. 000 in Marion Housing Authority financess. Harmonizing to the Grant County Prosecutor. cheques were written to a sub-contractor. Hunt forged the payee’s name and deposited the financess into his ain personal history ; charged over $ 12. 000 on a company recognition card and made several in his hometown of North Carolina ( C. Franks 2014 ) .

Harmonizing to our text edition. traditionally the position of an individual’s duty for corporate Acts of the Apostless have claimed that when an organized group of members ( i. e. corporation ) act together. so their act should be attributed to the corporate group and non the persons of whom the group is made ; and they must be held responsible for the act. Meaning that each and every individual who wittingly and freely cooperates to bring forth a corporate act is morally responsible for that act. The jurisprudence. nevertheless. attributes the Acts of the Apostless of a corporation’s directors to the corporation as a whole and non to the directors as persons. ( Text pg. 62 )

While a bulk of companies choose to do observant determinations. there are still some companies that will seek to “beat the system. ” This is where the Sarbanes-Oxley Act of 2002 comes in. This Act discourages the “crooks” of the corporate universe from being defiant with security misdemeanors due to the Act’s felon and civil punishment commissariats ; and it encourages independent auditing by certified external hearers. This Act requires elevated degrees of corporate revelation in the countries of executive wages. fiscal studies. and insider trading. Although the Sarbanes-Oxley Act is considered a load by some companies. it gives the investment universe a greater degree of assurance in their investing activities by following with its commissariats.

In decision. moralss is the subdivision of doctrine that theoretically. rationally. and logically determines right from incorrect. moral from immoral. and good from bad behaviors and behaviours. Simply put by some as “walking the talk. ” With respect to basic values. ethical motives guide people toward allowable behaviour ; they are judgements. criterions and regulations of good behavior in society. Hopefully. one twenty-four hours all executives and directors will come to recognize the old expression that “honesty is the best policy. ”

12 Ethical Principles for Business Executives by Michael Josephson. ( 2010. December 17 ) . Retrieved January 6. 2015. from hypertext transfer protocol: //josephsoninstitute. org/business/blog/2010/12/12-ethical-principles-for-business-executives/ Ethic. ( n. d. ) . Retrieved January 6. 2015. from hypertext transfer protocol: //www. merriam-webster. com/dictionary/ethic Franks. C. ( 2014. July 14 ) . Former Housing Head Arrested. Chronicle-Tribune. Retrieved January 8. 2015. Morality. ( n. d. ) . Retrieved January 6. 2015. from hypertext transfer protocol: //www. merriam-webster. com/dictionary/morality Understanding moralss and morality in concern – Smart Business Magazine. ( n. d. ) . Retrieved January 6. 2015. from hypertext transfer protocol: //www. sbnonline. com/article/understanding-ethics-and-morality-in-business-there-are-distinct-differences-between-ethics-and-morality/ Velasquez. M. ( 2012 ) . Business moralss Concepts and instances ( 7th Ed. ) . Upper Saddle River. New jersey: Prentice Hall. Yang. S. ( 2014. July 1 ) . 5 Old ages Ago Bernie Madoff Was Sentenced to 150 Old ages In Prison – Here’s How His Scheme Worked. Retrieved January 6. 2015. from hypertext transfer protocol: //www. businessinsider. com/how-bernie-madoffs-ponzi-scheme-worked-2014-7

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Cultural Diversity and Universal Ethics in a Global World

Introduction.

• Published: 07 August 2013
• Volume 116 , pages 681–687, ( 2013 )

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• Domènec Melé 1 &
• Carlos Sánchez-Runde 1  

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Cultural diversity and globalization bring about a tension between universal ethics and local values and norms. Simultaneously, the current globalization and the existence of an increasingly interconnected world seem to require a common ground to promote dialog, peace, and a more humane world. This article is the introduction to a special issue of the Journal of Business Ethics regarding these problems. We highlight five topics, which intertwine the eight papers of this issue. The first is whether moral diversity in different cultures is a plausible argument for moral relativism. The second focuses on the possibility of finding shared values and virtues worldwide. The third topic deals with convectional universalistic ethical theories in a global world and the problems they present. Fourth, we consider the traditional natural moral law approach in the context of a global world. The last topic is about human rights, as a practical proposal for introducing universal standards in business.

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Differences in race, sex, language, ethnicity, values systems, religion, and local practices are important aspects of the business environment in both domestic and international business. Cultural diversity not only matters to business management, but also to policy makers and international organizations. It is, of course, relevant for business ethics, too. Organizing corporations so that people from different cultures live and work together peacefully is a challenge for management that we cannot ignore.

The last few decades have witnessed the development of cross-cultural management, which focuses on cultural differences and their effect on organizational and managerial decision-making. Cross-cultural management is not only a question of techniques. It involves human and ethical considerations, as does every other aspect of management (Melé 2012 ). Beyond cultural diversity, management is about people and so it entails ethical dimension.

Cultural diversity entails an ethical challenge, for different reasons. One is that there are differences on moral perceptions and moral judgments among cultures, and consequently a tension appears between moral universalism (universal ethical principles or standards) and moral cultural relativism (local or cultural ethical norms as the exclusive source for ethical standards) (Donaldson 1996 ; Jhingran 2001 ; Frederick 2002 ; Vendemiati 2008 ; among others). Some may defend that the old chestnut, “when in Rome do as Romans do,” still has currency. This saying does not offer ethical difficulties if you apply it with regard to certain customs, but it is problematic if you apply it to ethical matters—then it leads to moral relativism. At the other extreme we find those who defend acting in accordance with one’s home cultural values and norms, which often merits the accusation of “cultural imperialism.” Others, to avoid both cultural relativism and imperialism, prefer to say “when in Rome do as the best Romans do.” This improves the former by introducing a sense of discernment, but no-one can be sure that even the best Romans always acted in accordance with high standards of morality. We should remember, for instance, that for a long time slavery was acceptable even for the best Romans, and in certain countries or places corruption was so extensive that it would have been very difficult to find a virtuous person abstaining from corrupting practices. Apart from this, acritically accepting other people’s behavior, or the values of the majority, as one’s moral standard means ignoring personal conscience and thus the first personal moral obligation of sincerely seeking the virtuous and right thing to do in each situation.

In spite of these and other objections, some ethicists are in favor of moral relativism, while others insist on the shortcomings of this position and defend moral universalism (Krausz 1989 ). A third group holds a balanced position between universalism, expressed through a set of basic ethical values or principles, and particular cultural norms (Donaldson 1996 ; Gowans 2012 ) or are looking for empirical or philosophical bases to promote global ethics (e.g., Küng 1998 and ITC 2009 , respectively).

The debate on ethical relativism and universal ethics, which is still open, has important consequences for both business ethics and cross-cultural management. Some opt for accepting ethical relativism, while others offer strong arguments against this. In addition, some events, such as corporate scandals and corruption, violation of certain basic human rights and environmental issues question ethical relativism at least in some matters.

Apart from this debate, there is a pragmatic reason to seek and promote universalism and common values: the current globalization and the existence of an increasingly interconnected world. According to Bok, “the need to pursue the inquiry about which basic values can be shared across cultural boundaries is urgent, if societies are to have some common ground for cross-cultural dialog and for debate about how best to cope with military, environmental, and other hazards that, themselves, do not stop at such boundaries.” ( 2002 , p. 13).

The Parliament of the World’s Religions ( 1993 ), seeking consensus on common ethical values, stated that there will be no better global order without a global ethic, which cannot be created or enforced by laws, prescriptions, or conventions alone. On its part, the International Theological Commission (ITC) praised those who work in seeking common ethical values, assessing that “only the recognition and promotion of these ethical values can contribute to the construction of a more human world.” But, at the same time, stresses the necessity of achieving a sound foundation by affirming: “these efforts cannot succeed unless good intentions rest on a solid foundational agreement regarding the goods and values that represent the most profound aspirations of man, both as an individual and as member of a community.” (ITC 2009 , n. 2).

These and other related topics were discussed in the 17th IESE International Symposium on “Ethics, Business and Society,” in Barcelona, Spain, on May 14–15, 2012 under the theme “Universal Ethics, Cultural Diversity and Globalization.” This issue of the Journal of Business Ethics publishes a collection of papers presented at this Symposium. Our aim is to introduce the articles selected within a framework on cultural diversity and universal ethics intertwining the contributions included in this issue. We structure this presentation by focusing on five relevant aspects treated in the Symposium. Firstly, we ask whether or not moral diversity of different cultures is a good argument for moral relativism. Secondly, we consider the existence of shared values and virtues worldwide, and some managerial inferences. Thirdly, we wonder if universalistic ethical theories are appropriate in a global world facing development problems. Fourthly, we deal with the traditional proposal of natural moral law in the context of a global world. In the fifth part, we focus on human rights, as a practical proposal for introducing universal standards in business.

Is Moral Diversity a Good Argument for Moral Relativism?

Moral diversity among cultures is not a novelty. Among the ancient Greek philosophers, moral diversity was widely acknowledged (Gowans 2012 ), as it was with Medieval thinkers, like Thomas Aquinas (das Neves and Melé 2013 ). Modern cultural anthropologists have also empirically shown that moral diversity is a matter of fact (e.g., Benedict 1934 ). A fundamental question is whether the existence of moral diversity is a good argument to support moral relativism. While the former is peacefully accepted by almost all, many reject ‘moral relativism, or more precisely “normative moral relativism.” Moral relativists defend the position that there are neither objective ethics nor universal ethics; the only source of truth for morality is each cultural context. According to Gowans ( 2012 ), moral relativists state that “the truth or falsity of moral judgments, or their justification, is not absolute or universal, but is relative to the traditions, convictions, or practices of a group of persons.” He terms this philosophical position “Metaethical Moral Relativism.” This author explains this approach through the statement “Polygamy is morally wrong,” which may be true relative to one society, but false relative to another. Similar examples could include cutting off a hand when someone is caught stealing, the mutilation of female genitals, or in a business context, tolerating bribery and harming the environment. Obviously, one can claim that these actions are assumed as right in reference to norms shared in certain societies that endorse them, but this does itself not probe by itself the truth of a moral judgment, especially when colliding with solid trans-cultural ethical referents, such as respect of human dignity or the Golden Rule. A moral judgment may be passed in one society, but not in another, this being a matter for sociological verification. But this is not the same as justifying and legitimating a given moral judgment as good or right.

Two papers here deal with moral relativism, although this is not their central topic. From different perspectives, both agree that moral diversity is not a good argument for moral relativism. The first paper is authored by Carlos J. Sanchez-Runde, Luciara Nardon, and Richard M. Steers, all with expertise in cross-cultural management. They describe and discuss the cultural roots of ethical conflicts in the global business environment. They emphasize the importance of understanding moral diversity along with ethical conflicts in multiple levels within the same organization or industry, and the meaning of universal values and the relationship between values and practices. These authors state that values are universal but their universalism can only be accessed incrementally. They bring a text on the effects of the atomic bombing of Hiroshima from the literature Nobel laureate Kenzaburo Oé to illustrate the point that the richness of the concept of human dignity is beyond words, that no human language will ever fully make it justice, and that one can improve its understanding through time and space. They argue that people and cultures evolve over time and space, and so do their ethical beliefs and values. At times, these values run somewhat in tandem across cultures to give the impression of a universal form of access—understanding and application—to those values. This can be seen very clearly in many commonly espoused beliefs (respect your neighbors, protect the defenseless…) that can be found in various religions. At other times, however, this convergence seems to disappear. Their conclusion is that from a descriptive viewpoint, ethical values are not universal over time and space but they do become universal through time and space. We then make progress in accessing ethical values.

The second paper, by Daryl Koehn, devotes a part of its discussion to clarifying some mistaken notions that lead to cultural ethical relativism. One is that moral relativists often begin by pointing to the wide variety of human experience, and no one contests the existence of such variety. This happens because of focusing too much on the details and failing to search for overarching ethic good and/or virtues underpinning diverse human practices. Another objection against some moral relativists is that they consider cultures as static and monolithic, when actually they are not. Some members of a culture may be more practically wise than others, and each culture contains resources and concepts for interpreting a universal virtue such as justice in a variety of ways in light of new conditions and circumstances. Over time –she affirms–, “these intra-cultural manifestations may converge as agents refine their judgments in light of experience interpreted by reason and in light of arguments advanced by especially thoughtful members of the community.” A third argument given by Koehn is that moral relativists wrongly assume that issues can only be successfully addressed in one way within another culture. This assumption leads them to conclude wrongly that this other culture operates with an ethical compass different from our own. This has a significant application in business when some affirm that it is morally acceptable to pay bribes when doing transactions in Asia. Many Scandinavian companies, for instance, do business in Asia without paying bribes.

Common Values Worldwide and Universal Virtues

While moral diversity is a matter of fact, as noted, some add that disagreements across different societies are much more significant than whatever agreements there may be—this is called “Descriptive Moral Relativism” (Gowans 2012 ). Authors in disagreement with this proposition point that there is a universal minimal morality, whatever other moral differences there may be (e.g., Bowie 1990 ; Walzer 1994 ; Bok 2002 ). According to this latter scholar, “certain basic values necessary for collective survival have had to be formulated in every society. A minimalist set of such values can be recognized across societal and other boundaries.” (Bok 2002 , p. 12).

Several empirical research works show that beyond specific moral judgments there can be found basic values or principles underlying those judgments, and these common values and principles appear in the major religions and wisdom traditions worldwide. Thus, Lewis ( 1987 ) and Moses ( 2001 ) identified a number of foundational principles shared by all religions, the Golden Rule (Wattles 1996 ) among others (Terry 2011 ; Tullberg 2011 ). Other findings recognize the more or less latent presence of common values in when surveying the world’s major religious traditions (Kidder 1994 ; Dalla Costa 1998 ; Küng 1996 ; 1998 ). Hengda ( 2010 ), for instance, traced within Chinese traditional ethics (Confucius, Mencius, MoTzu…) the universal values of humanity and reciprocity included in the Declaration toward a Global Ethics of Humanity. This Declaration was formulated by the Second Parliament of the World’s Religions, which 6,500 delegates from all over the world attended in Chicago in 1993.

If we look at the great diversity of character traits presented as virtues throughout history and societies, Dahlsgaard et al. ( 2005 ) found a set of core virtues across religions and cultures (Confucianism, Buddhism, Hinduism, Athenian, Judeo-Christian, Islamic, among others). Their findings show that there is convergence across time, place and intellectual tradition about certain core virtues: wisdom, justice, courage, temperance, humanity, and transcendence. These core virtues are “ubiquitous, if not universal” (Peterson and Seligman 2004 , p. 33), and they are not too far from the four traditional “cardinal virtues” proposed firstly by Plato (Finance 1991 , p. 485) and then on by many other authors: prudence (practical wisdom), justice, fortitude (courage), and temperance (moderation or self-control).

Two papers of this issue focus on universal virtues. Daryl Koehn, apart from the above-mentioned discussion on moral relativism, also shows how Aristotle’s virtue ethic strongly resembles that of Confucius. This similarity derives from what they each take to be objective facts about human nature and developmental aspects of virtue. This similarity suggests that a universal virtue ethic may already exist in the form of a powerful shared strand of moral thinking. Morales and Cabello focus on the traditional cardinal virtues, which they consider universal and essential moral competencies for managerial decision-making. They discuss the influence of these virtues on moral sensitivity, moral judgment, moral motivation, and moral character. Prudence will influence moral sensitivity, moral judgment, and moral motivation. Justice will influence the component of the ethical decision-making process mainly related with human will: moral motivation and moral character. Temperance will help to create moral motivation to develop ethical behavior. Finally, fortitude will reinforce the moral character to engage the ethical behavior.

Moral Universalism

In opposition to moral relativism, moral universalism —also called moral objectivism —holds that there are objective right or wrong actions, independently of the social or personal values or opinions. There are well-known approaches in business ethics which fall within the domain of moral universalism, such as Kantian deontology, Natural Rights Theory, Utilitarianism, and several forms of Contractualism. Moral universalism can be, or not, moral absolutism. This latter, as in Kantian Ethics (Bowie 1999 ), defends the position that the morality of some actions is independent of context or consequences. Non-absolutist moral universalism, such as Consequentialism and its more popular form, Utilitarianism (Snoeyenbos and Humber 2002 ), or Integrative Social Contracts Theory (Donaldson and Dunfee 1999 ) consider both universal norms and local norms to evaluate the morality of an action.

Universalist theories like these mentioned provide sound ethical standards or criteria for conducting business, but they also present some problems. Some of them are based on different aprioristic rational principles (the Categorical Imperative in Kant, the Utilitarian principle in Utilitarianism, and so on). Thus, various ethical theories compete. In addition, Neo-Aristotelians criticize agent-neutral theories for not considering individual character in making moral judgments.

Moral universalism is indirectly considered in the article by Prabhir Vishnu Poruthiyil, included in this issue, from a critical position. He argues that business ethicists—many of whom propose universal theories—state obligations for multinationals which could contribute to the well-being of individuals in developing countries. In addition, some of them have offered strategies to achieve this goal. However, their results are limited. Despite the good intentions, business ethics theories aiming at fulfilling social goals can be rendered ineffectual when economic goals are prioritized. He then postulates a “developmental ethics” approach calling on multinational companies to change their primary focus from profit generation to social justice. He argues that this approach, opposed to mere economism, offers more nuanced approaches than those now available in business ethics literature.

Universal Ethics through the Natural Moral Law

A different perspective on universal ethics come from the natural moral law tradition (Murphy 2011 ), with roots in several authors of ancient Greece and Rome including Cicero, and medieval thought, particularly Thomas Aquinas’. Natural law is mentioned in the Bible ( 1966 ), as rationally accessible for unbelievers. St. Paul writes: “When Gentiles, who do not have the law, do by nature things required by the law, they are a law for themselves, even though they do not have the law. They show that the requirements of the law are written on their hearts, their consciences also bearing witness, and their thoughts sometimes accusing them and at other times even defending them.” ( Rom 2: 14-15).

Cicero suggested the existence of a Reason ( mens , in Latin) that rules the whole world, which he describes as a fully superior and divine, not mediated, “nature law” ( lex naturae ) that is universal, absolutely primal, invariable and eternal, which humans should try to know and apply in their lives (Corso de Estrada 2008 ). Cicero is aligned with the Stoic moral philosophy view of the natural law when he synthesized that “living according to nature consists in living according to the dictates of right reason, which is quite clearly thought of as the common or universal law” (Horsley 1978 , p. 40).

Similarly, although with some differences to Cicero, Aquinas accepted human beings are endowed with certain capacity (practical reason) that allows us to distinguish good from evil—what is truly good for human flourishing from what is not—at least in some minimalistic aspects. Thus, humans can know natural law, which “is nothing else than the rational creature’s participation of the eternal law.” (Aquinas 1981 , I-II 91, 2) Aquinas focused on the rational nature of the human being and consequently his natural law theory is directly founded on the basic elements of humanity. It is a universal ethics which also accounts for diversity. In addition, Cicero held that natural law obliges us to contribute to the general good of the larger society (Barham 1841 -42, Introduction). Aquinas also included moral responsibilities toward the common good of the society (Finnis 1998 , pp. 234ff).

After a period of certain decadence and criticism (George 1999 ), natural law theory has experienced a revival since the middle of the last century (Maritain 1971 , 2001 ; Finnis 1980 ; Rhonheimer 2000 ; Murphy 2001 , among others), and some recently suggest a new look at natural law (ITC 2009 ), including Pope Benedict XVI ( 2008 ) in his speech to the General Assembly of the United Nations. He related the UN Universal Declaration of Human Rights of 1948 to natural law by affirming that “the rights recognized and expounded in the Declaration apply to everyone by virtue of the common origin of the person, who remains the high-point of God’s creative design for the world and for history. They are based on the natural law inscribed on human hearts and present in different cultures and civilizations.” (our Italics).

In this issue, two papers refer to natural law, one focused on Cicero and another on Aquinas. Cicero’s natural law and his ideas on virtuous behavior are taken into consideration by Michael Aßländer in his contribution. He focuses on Cicero by arguing that this Roman Stoic philosopher presented important concepts and approaches from which we can learn for business ethics. After summarizing the specific Ciceronian understanding of natural law and virtuous behavior, he analyzes honorableness and beneficialness, two key distinct qualities according to Cicero. This Roman thinker had the conviction that honorableness depends on respecting universal ethical principles. Wise people, following their true nature, fulfill their natural duties toward fellow-citizens and do no harm others. For Cicero, Aßländer affirms, what is honorable is always useful, because the honorable person strives for the common good, and therefore serves the community and benefits all. He argues that, from a Ciceronian perspective, what is honorable may not necessarily be profitable; honorable behavior and profitable behavior may conflict. Aßländer argues that reputation must be seen as an independent issue which might influence financial opportunities but, first of all, derives from the fulfillment of duties that go beyond purely economic considerations. Reputation derives solely from honorable behavior and the orientation toward the common good. Consequently, corporate reputation will only be achieved if it is based primarily on “honorableness,” and that reputation will be lost if financial interests override the honest intentions of a company.

Human Rights as Universal Standards for Business

One important step in applying universal ethics is through human rights, and more specifically the international declarations of human rights, beginning with the Universal Declaration of Human Rights (UDHR) (1948), and followed by other UN human rights covenants and ILO Conventions, including the International Covenant on Economic, Social, and Cultural Rights adopted by the United Nations General Assembly in 1966, along with an optional protocol added in 2008, which presents an exhaustive list of rights in the labor context, and the UN Global Compact with its ten ethical principles for business.

Article 1 of the UDHR begins with the well-known statement that “All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act toward one another in a spirit of brotherhood.” This is a significant ethical statement addressed to humankind. However, the proposal presents two important issues to be debated, one theoretical and the other practical. The theoretical regards the foundation of human rights. As the Declaration of the Parliament of the World’s Religions ( 1993 ) pointed out, rights without morality cannot long endure. Without a solid foundation, any claim supported by strong lobbies can eventually be presented as a human right. The practical problem refers to the implementation of human rights and the role that business should play in this matter. At this point, it is worth noting the recent idea that protecting and promoting human rights is not only a task of states but also of civil society and business. We can point to, John Ruggie’s recent reports (Ruggie 2008 , 2011 , 2013 ) which former UN Secretary-General Kofi Annan commissioned in 2005. The last of those reports, significantly entitled: “Protect, Respect, and Remedy: A Framework for Business and Human Rights” (Ruggie 2011 ) is particularly relevant for our purposes, as so are the “Guiding Principles on Business and Human Rights” to implement the Framework.

Two papers included in this special issue focus on Ruggie’s reports and the Guiding Principles. One is authored by Matthew Murphy and Jordi Vives. Drawing from several celebrated scholars, they hold that the equal treatment of all people as humans— conditio humana —is the constitutive, defining characteristic of universal human rights. Even accepting that ethical values may differ among cultures, seemingly divergent values converge at key points, such as respect for human dignity, respect for basic rights and good citizenship. In addition, human rights are the most important and fundamental category of moral rights that protect those freedoms which are most essential for a dignified and self-determined human life. Their main aim is, however, not to discuss this, but some problems related to Ruggie’s Framework. They apply concepts from the field of ‘organizational justice’ to the arena of business and human rights for the purpose of operationalizing this Framework. They argue that there could be a gap between perceptions of justice held by stakeholders versus businesses and/or the State. Through theoretical considerations and by analyzing a case study—the Goldcorp’s Marlin Mine in Guatemala—they show the potential for complicity of businesses in human rights abuses and expose a fundamental weakness in a UN Framework, that draws too sharp a distinction between duties of States and responsibilities of businesses.

The other paper, by Björn Fasterling and Geert Demuijnck analyses UN Guiding Principles on Business and Human Rights. The authors identify tensions for corporations between respecting human rights as “perfect moral duty” admitting no exceptions and “human rights due diligence” to which companies should morally commit. They argue that the due diligence approach falls short of the requirements implied by the respect of human rights as perfect moral duty, inasmuch as the Guiding Principles leave room for an instrumental or strategic implementation of due diligence. This can then result in a depreciation of the fundamental norms the UN seeks to promote. They suggest that to make further progress in international and extraterritorial human rights law we also need a more forceful discussion on the moral foundations of human rights duties for corporations.

To conclude, we hope that this special issue may make a contribution to the current debate on cultural diversity and universal ethics, particularly in a global world, further discussion and research. Apart from academic research, ethics in culturally diverse and global environments may require the opening of closed attitudes too strongly secluded in technical and economics viewpoints, for they display certain disregard for what we have in common as humans. Benedict XVI once wrote that “as society becomes ever more globalized, it makes us neighbors but does not make us brothers.” ( 2009 , n. 16). Indeed, global and local processes, along with tensions of interconnectedness and separation do impact on the content and structure of human relationships. In our view, these relationships only become truly human by advancing in the current rebuilding of our common human family.

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Israel’s Deadly Airstrike on the World Central Kitchen

The story behind the pioneering aid group and how it mistakenly came under attack..

From “The New York Times,” I’m Michael Barbaro. This is “The Daily.”

The Israeli airstrike that killed seven aid workers delivering food in Gaza has touched off outrage and condemnations from across the world. Today, Kim Severson on the pioneering relief crew at the center of the story, and Adam Rasgon on what we’re learning about the deadly attack on the group’s workers. It’s Thursday, April 4.

Kim, can you tell us about the World Central Kitchen?

World Central Kitchen started as a little idea in Chef José Andrés’ head. He was in Haiti with some other folks, trying to do earthquake relief in 2010. And his idea at that point was to teach Haitians to cook and to use solar stoves and ways for people to feed themselves, because the infrastructure was gone.

And he was cooking with some Haitians in one of the camps, and they were showing him how to cook beans the Haitian way. You sort of smash them and make them a little creamy. And it occurred to him that there was something so comforting for those folks to eat food that was from their culture that tasted good to them. You know, if you’re having a really hard time, what makes you feel good is comfort food, right? And warm comfort food.

So that moment in the camp really was the seed of this idea. It planted this notion in José Andrés’ mind, and that notion eventually became World Central Kitchen.

And for those who don’t know, Kim, who exactly is Chef José Andrés?

José Andrés is a Spanish chef who cooked under some of the Spanish molecular gastronomy greats, came to America, really made his bones in Washington, DC, with some avant-garde food, but also started to expand and cook tapas, cook Mexican food. He’s got about 40 restaurants now.

Yeah. And he’s got a great Spanish restaurant in New York. He’s got restaurants in DC, restaurants in Miami.

Come with me to the kitchen. Don’t be shy.

He’s also become a big TV personality.

Chef, are you going to put the lobster in the pot with the potatoes?

We’re going to leave the potatoes in.

Leave the potatoes in!

He’s one of the most charismatic people I’ve ever been around in the food world.

He’s very much the touchstone of what people want their celebrity chefs to be.

So how does he go from being all those things you just described, to being on the ground, making local comfort food for Haitians? And how does this all go from an idea that that would be a good idea, to this much bigger, full-fledged humanitarian organization?

So he started to realize that giving people food in disaster zones was a thing that was really powerful. He helped feed people after Hurricane Sandy, and he realized that he could get local chefs who all wanted to help and somehow harness that power. But the idea really became set when he went to Houston in 2017 to help after Hurricane Harvey.

And that’s when he saw that getting local chefs to tap into their resources, borrowing kitchens, using ingredients that chefs might have had on hand or are spoiling in the fridge because the power is out and all these restaurants needed something to do with all this food before it rotted — harnessing all that and putting it together and giving people well-cooked, delicious — at least as delicious as it can be in a disaster zone — that’s when World Central Kitchen as we know it today sort of emerged as a fully formed concept.

The first pictures now coming in from Puerto Rico after taking a direct hit — Hurricane Maria slamming into the island. And as you heard, one official saying the island is destroyed.

Shortly after that, he flew to Puerto Rico, where Hurricane Maria had pretty much left the entire island without water and in darkness.

He flew in on one of the first commercial jets that went back in. He got a couple of his chef buddies whose kitchens were closed, and they just decided to start cooking. They were basically just serving pots of stew, chicken stew, in front of the restaurants.

The lines got longer. And of course, chefs are a really specific kind of creature. They really like to help their community. They’re really about feeding people.

So all the people who were chefs or cooks on the ground in Puerto Rico who could wanted to help. And you had all these chefs in the States who wanted to fly down and help if they could, too. So you had this constant flow of chefs coming in and out. That’s when I went down and followed him around for about a week.

And what did you see?

Well, one of the most striking things was his ability to get food to remote places in ways the Salvation Army couldn’t and other government agencies that were on the ground couldn’t. You know, the Federal Emergency Management Agency, FEMA, doesn’t deliver food. It contracts with people to deliver food.

So you have all these steps of bureaucracy you have to go through to get those contracts. And then, FEMA says you have to have a bottle of water and this and that in those boxes. There’s a lot of structure to be able to meet the rules and regulations of FEMA.

So José doesn’t really care about rules and regulations very much. So he just got his troops together and figured out where people needed food. He had this big paper map he’d carry around and lay out. And he had a Sharpie, and he’d circle villages where he’d heard people needed food or where a bridge was out.

And then he would dispatch people to get the food there. Now, how are you going to do that? He was staying in a hotel where some National Guard and military police were staying to go patrol areas to make sure they were safe. He would tuck his big aluminum pans of food into the back of those guys’ cars, and say, Could you stop and drop these off at this church?

During that time in Puerto Rico, he funded a lot of it off of his own credit cards or with cash. And then he’s on the phone with people like the president of Goya or his golf buddies who are well-connected, saying, hey, we need some money. Can you send some money for this? Can you send some money for that?

So he just developed this network, almost overnight. I mean, he is very much a general in the field. He wears this Orvis fishing vest, has cigars in one pocket, money in the other. And he just sets out to feed people.

And there were deliveries that were as simple as he and a couple of folks taking plastic bags with food and wading through a flooded parking lot to an apartment building where an older person had been stuck for a few days and couldn’t get out, to driving up to a community that had been cut off. There was a church that was trying to distribute food.

We drive through this little mountain road and get to this church. We start unloading the food, and the congregation is inside the church. José comes in, and the pastor thanks him so much. And the 20 people or so who are there gather around José, and they begin praying.

And he puts his head down. He’s a Catholic. He’s a man who prays. He puts his head down. He’s in the middle of these folks, and he starts to pray with them. And then, pulls out his map, circles another spot, and the group is off to the next place.

And when Russia invades Ukraine, he immediately decided it was time for World Central Kitchen to step into a war zone. You know, so many people needed to eat. So many Ukrainians were crossing the border into Poland.

There are refugees in several countries surrounding Ukraine. So a lot of the work that they did was feeding the refugees. They set up big operations around train stations, places where refugees were coming, and then they were able to get into cities.

One of their operations did get hit with some armaments early on. Nobody was hurt badly. But I think that was the first time that they realized this was an actually more dangerous situation than perhaps going in after there’s been an earthquake.

But the other thing that really made a difference here is, José Andrés and World Central Kitchen would broadcast on social media, live from the kitchens. In the beginning, he’d be holding up his phone and saying, we put out 3 million meals for the people of Puerto Rico, chefs for Puerto Rico. It was very infectious.

And now, one of the standard operating procedures for people who are in the World Central Kitchens is to hold up the phone like that — you can see the kitchen, busy in the back — and talk about how many meals they’ve served. They have these kind of wild meal counts, which one presumes are pretty accurate. But they’re like, we served 320,000 meals this morning to the people of Lviv.

I mean, that scale seems important to note. This is not the kind of work that feeds a few people and a few towns. When you’re talking about 300,000 meals in a morning, you’re talking about something that begins, it would seem, to rival the scope and the reach of the groups that we tend to think of as the most important in the disaster-relief world.

Absolutely. And the meals — there are lots and lots and lots of meals. But also, World Central Kitchen hires local cooks. They’ll hire food truck operators, who obviously have no work, and pay them to go out and deliver the meals. They’ll pay local cooks to come in and cook. That’s what they do with a lot of their donations, which is very different than other aid organizations. And this then helps the local economy. He’s trying to buy as much local food as he can. That keeps the economy going in the time of a disaster. So that’s a piece of his operation that is a little different than traditional aid operations.

So walk us up to October 7, when Hamas attacked Israel. What does Chef José Andrés and the World Kitchen do?

Well, he had had such impact in Ukraine. And I think the organization itself thought that they had the infrastructure to now take food into another war zone. Gaza, of course, was nothing like Ukraine. But World Central Kitchen shows up. They’re nimble. They start to connect with local chefs.

Right now, they have about 60 kitchens in the areas around Gaza, and they’ve hired about 400 Palestinians to help do that. But getting the food into Gaza became the difficulty.

How do you actually get the food into the Gaza Strip? Large amounts of food that require trucks? You’ve got to realize, getting food into Gaza right now requires going through Israeli checkpoints.

And that slows the operation down. You might get eight trucks a day in, and that is such a small amount of food. And this has been incredibly difficult for any aid operations.

So World Central Kitchen, playing on the experience that they had in a war zone and working with government entities and trying to coordinate permissions — they took that experience from Ukraine and were trying to apply it in the Gaza Strip. Now, they had worked for a long time with Israeli officials. They wanted to make sure that they could get their food in.

And they decided that the best way to do it would be to take food off of ships, get it in a warehouse, and then get that food into Gaza. It took a long time to pull those permissions through, but they were able to get the permissions they needed and set this system up, so they could move the food fairly quickly into North Gaza.

And once they get those permissions, how big a player do they become in Gaza?

World Central Kitchen became a kind of a fulcrum point for getting food aid in to Gaza in a way that a larger and more established humanitarian aid operations couldn’t, in part because they were small and nimble in their way. So the amount of food they were moving maybe wasn’t as large as some of the more established humanitarian aid organizations, but they had so much goodwill. They had so much logistical knowledge.

They were working with local Palestinians who knew the food systems and who understood how to get things in and out. So they were able to find a way to use a humanitarian corridor to have permissions from the Israeli government, to be able to move this food back and forth. And that’s always been the secret to World Central Kitchen — is incredibly nimble. So —

Just like in Puerto Rico, they seemed to win over just about everybody and do the seemingly impossible.

Right. And World Central Kitchen says they delivered 43 million meals to Gazans since the start of the war. And I don’t think there was any other group that could have pulled this off.

Hey, this is Zomi and Chef Olivier. We’re at the Deir al-Balah kitchen. And we’ve got the mise en place. Tell us a little bit about it, Chef.

And then, this caravan, this fairly efficient caravan of armored vehicles, labeled with World Central Kitchen logo on the roof, on the sides — the idea was they head on — this humanitarian quarter, they head on this road. The seven people who went all in vests — three of whom are security people from Great Britain — you have another World Central Kitchen employee who has handled operations in Asia, in Central America. She’s quite a veteran of the World Central Kitchen operation.

And you have a young man who someone told me was like the Michael Jordan of humanitarian aid, who hooked up with World Central Kitchen in Poland. He was a hospitality student and had just become an indispensable make-it-happen guy. And you have a Palestinian guy who’s 25, a driver.

So this is the team. They have all the clearances. They have the well-marked vehicles. It seemed like a very simple, surgical kind of operation. And of course, now, as we know, it was anything but that.

After the break, my colleague Adam Rasgon on what happened to the World Central Kitchen workers in that caravan. We’ll be right back.

So Adam, what ends up happening to this convoy that our colleague Kim Severson just described from World Central Kitchen?

So what we know is that members of the World Central Kitchen had been at a warehouse in Deir al-Balah in the Central Gaza Strip. They had just unloaded about 100 tons of food aid that had been brought via a maritime route to the coast of the Gaza Strip. When they departed the warehouse, they were in three cars.

Two of the cars were armored cars, and one was a soft-skinned car, according to the organization. When the cars reached the coastal road, known as Al Rashid Street, they started to make their way south.

And what do we know about how much the World Central Kitchen would have told the Israeli military about their plans to be on this road?

Yeah. So the World Central Kitchen said that its movements were coordinated. And in military speak or in technical speak, people often refer to this as deconfliction. So basically, this process is something that not only the World Central Kitchen but the UN, telecommunications companies going out to repair damaged telecommunications infrastructure, others would use, where they basically provide the Israeli military with information about the people who are traveling — their ID numbers, their names, the license plate numbers of the cars they’ll be traveling in.

They’ll sort of explain where their destination is. And the general process is that the Israelis will then come back to them and say, you’re approved to travel from this time, and you can take this specific route.

And do we know if that happened? If the IDF said, you’re approved, use this route on this night?

So we heard from the World Central Kitchen that they did receive this approval. And the military hasn’t come out and said that it wasn’t approved. So I think it’s fair to assume that their movements were coordinated and de-conflicted.

OK. So what happens as this seemingly pre-approved and coordinated convoy trip is making this leg of the journey?

They started to make their way south towards Rafah. And the three cars suddenly came under fire. The Israeli army unleashes powerful and devastating strikes on the three cars in the convoy, most likely from a drone. The strikes rip through the cars, killing everyone inside.

Shortly thereafter, ambulances from the Palestine Red Crescent are dispatched to the location. They retrieve the dead bodies.

They bring those bodies to a hospital. And at the hospital, the bodies are laid out, and journalists start to report to the world that indeed, five members of the World Central Kitchen staff have been killed. And the Palestine Red Crescent teams were continuing to search for other bodies and eventually brought back two more bodies to the hospital for a total of seven people killed in these airstrikes.

And when the sun comes up, what does it end up looking like — the scene of these struck trucks from this convoy?

So early in the morning when the sun comes up, a number of Palestinian journalists headed out to the coastal road and started taking pictures and videos. And I received a series of videos from one of the reporters that I was in touch with, essentially showing three cars, all heavily damaged. One had a World Central Kitchen logo on top of it, with a gaping hole in the middle of the roof.

A second car was completely charred. You could barely recognize the structure of the car. The inside of it had been completely charred, and the front smashed.

And do we know if the strike on this convoy was the only strike happening in this area? In other words, is it possible that this convoy was caught in some kind of a crossfire or in the middle of a firefight, or does it appear that this was quite narrow, and was the Israeli army targeting these specific vehicles, whether or not they realized who was in it?

We don’t have any other indication that there was another strike on that road around that time.

What that suggests, of course, is that this convoy was targeted. Now, whether Israeli officials knew who was in it, whether they were aid workers, seems like a yet-unresolved question. But it does feel very clear that the trucks in this convoy were deliberately struck.

Yes. I do think the trucks in this convoy were deliberately struck.

What is the reaction to these airstrikes on this convoy and to the death of these aid workers?

Well, one of the first reactions is from the World Central kitchen’s founder, José Andrés.

Chef José Andrés, who founded World Central Kitchen, calling them angels.

He said he was heartbroken and grieving.

And adding the Israeli government needs to stop this indiscriminate killing.

And then, he accused Israel of using food as a weapon.

What I know is that we were targeted deliberately, nonstop, until everybody was dead in this convoy.

And he just seemed devastated and quite angry.

And so what is the reaction from not just World Central Kitchen, but from the rest of the world to this airstrike?

There’s, frankly, fury and outrage.

The White House says it is outraged by an Israeli airstrike that killed seven aid workers in Gaza, including one American.

President Biden, who has been becoming increasingly critical of Israel’s approach to this war — he came out and said that he was outraged and heartbroken.

Certainly sharper in tone than we have heard in the past. He says Israel has not done enough to protect aid workers trying to deliver desperately needed help to civilians. Incidents like yesterday’s simply should not happen. Israel also has not —

And we’re seeing similar outrage from foreign governments. The British Foreign Secretary David Cameron —

The dreadful events of the last two days are a moment when we should mourn the loss of these brave humanitarian workers.

— said that the airstrikes were completely unacceptable. And he called on Israel to explain how this happened and to make changes to ensure that aid workers could be safe.

So amid all this, what does Israel have to say about the attack — about how it happened, about why it happened?

The response from Israel this time was much different, compared to other controversial airstrikes on the Gaza Strip. Often, when we’re reporting on these issues, we’ll hear from the army that they’re investigating a given incident. It will take days, if not weeks, to receive updates on where that investigation stands.

There are instances where Israel does take responsibility for harming civilians, but it’s often rare. This time, the Prime Minister —

[NON-ENGLISH SPEECH]

— Benjamin Netanyahu comes out with a video message —

— saying that Israel had unintentionally harmed innocent civilians. And that was the first indication or public indication that Israel was going to take responsibility for what had happened.

The IDF works together closely with the World Central Kitchen and greatly appreciates the important work that they do.

We later heard from the military’s chief of staff. Herzi Halevi issued a video statement in English.

I want to be very clear the strike was not carried out with the intention of harming aid workers. It was a mistake that followed a misidentification.

And he said this mistake had come after a misidentification. He said it was in the middle of a war, in a very complex condition. But —

This incident was a grave mistake. We are sorry for the unintentional harm to the members of WCK.

He was clear that this shouldn’t have happened.

I want to talk about that statement, because it seems to suggest — that word, “misidentification”— that the Israeli army believed that somebody else was in this convoy, that it wasn’t a bunch of aid workers.

That’s possible, although it’s extremely vague and cryptic language that genuinely is difficult to understand. And it’s a question that us in the Jerusalem Bureau have been asking ourselves.

I’m curious if the Israeli government has said anything in all of its statements so far about whether it noticed these markings on these three cars in the convoy. Because that, I think, for so many people, stands out as making misidentification hard to understand. It seems like perhaps a random pickup truck could be misidentified as perhaps a vehicle being used by a Hamas militant. But a group of World Central Kitchen trucks with their name all over it, driving down a known aid corridor — that becomes harder to understand as misidentification.

Yeah, it’s an important question. And at this moment, we don’t know exactly what the Israeli reconnaissance drones could see, and whether or not they were able to see, in the darkness of the night, the markings of the World Central Kitchen on the cars. But what is clear is that when the cars were found in the morning, right there was the big emblazoned logo of the World Central Kitchen.

Mm-hmm. I’m curious how you think about the speed with which Israel came out and said it was in the wrong here. Because as you said, that’s not how Israel typically reacts to many of these situations. And that makes me think that it might have something to do with the nature of the aid group that was the target of these airstrikes — the World Central Kitchen — and its story.

I think it does have to do with this particular group. This is a group that’s led by a celebrity chef, very high-profile, who is gone around the world to conflict zones, disaster areas, to provide food aid. And I also think it has to do with the people who were killed, most of who were Western foreign aid workers. Frankly, I don’t think we would be having this conversation if a group of Palestinian aid workers had been killed.

Nor, perhaps, would we be having the reaction that we have had so far from the Israeli government.

I would agree with that.

Adam, at the end of the day, what is going to be the fallout from all of this for the people of Gaza? How do we think that this attack on World Central Kitchen is going to impact how food, medicine, aid is distributed there?

So the World Central Kitchen has said that it’s suspending its operations across Gaza. Because it essentially seems that they don’t feel they can safely operate there right now. And several ships that carried aid for the organization, which were sort of just on the coast — those ships ended up turning back to Cyprus, carrying more than 200 tons of aid.

So aid that was supposed to reach the people of Gaza is now leaving Gaza because of this attack.

Yes. And it’s also had a chilling effect. Another aid group, named INARA, has also suspended its operations in Gaza. And it seems that there is concern among humanitarians that other aid groups could follow.

So in a place where people are already suffering from severe hunger, poor sanitation, the spread of dangerous disease, this is only going to make the humanitarian situation, which is already dire, even worse.

Well, Adam, thank you very much. We appreciate it.

Thanks so much for having me.

We’ll be right back.

Here’s what else you need to know today. The magnitude-7.4 earthquake that struck Taiwan on Wednesday has killed nine people, injured more than 1,000, and touched off several landslides. It was Taiwan’s strongest quake in the past 25 years. But in a blessing for the island’s biggest cities, its epicenter was off the island’s east coast, relatively far from population centers like Taipei.

And the first patient to receive a kidney transplant from a genetically modified pig has fared so well that he was discharged from a Massachusetts hospital on Wednesday just two weeks after surgery. Two previous transplants from genetically modified pigs both failed. Doctors say the success of the latest surgery represents a major moment in medicine that, if replicated, could usher in a new era of organ transplantation.

Today’s episode was produced by Lynsea Garrison, Olivia Natt, and Carlos Prieto, with help from Asthaa Chaturvedi. It was edited by Marc Georges, with help from Paige Cowett, contains original music by Marion Lozano and Dan Powell, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

That’s it for “The Daily.” I’m Michael Barbaro. See you tomorrow.

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• April 4, 2024   •   32:37 Israel’s Deadly Airstrike on the World Central Kitchen
• April 3, 2024   •   27:42 The Accidental Tax Cutter in Chief
• April 2, 2024   •   29:32 Kids Are Missing School at an Alarming Rate
• April 1, 2024   •   36:14 Ronna McDaniel, TV News and the Trump Problem
• March 29, 2024   •   48:42 Hamas Took Her, and Still Has Her Husband
• March 28, 2024   •   33:40 The Newest Tech Start-Up Billionaire? Donald Trump.
• March 27, 2024   •   28:06 Democrats’ Plan to Save the Republican House Speaker
• March 26, 2024   •   29:13 The United States vs. the iPhone
• March 25, 2024   •   25:59 A Terrorist Attack in Russia
• March 24, 2024   •   21:39 The Sunday Read: ‘My Goldendoodle Spent a Week at Some Luxury Dog ‘Hotels.’ I Tagged Along.’
• March 22, 2024   •   35:30 Chuck Schumer on His Campaign to Oust Israel’s Leader

Hosted by Michael Barbaro

Featuring Kim Severson and Adam Rasgon

Produced by Lynsea Garrison ,  Olivia Natt ,  Carlos Prieto and Asthaa Chaturvedi

Edited by Marc Georges and Paige Cowett

Original music by Dan Powell and Marion Lozano

Engineered by Chris Wood

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

The Israeli airstrike that killed seven workers delivering food in Gaza has touched off global outrage and condemnation.

Kim Severson, who covers food culture for The Times, discusses the World Central Kitchen, the aid group at the center of the story; and Adam Rasgon, who reports from Israel, explains what we know about the tragedy so far.

On today’s episode

Kim Severson , a food correspondent for The New York Times.

Adam Rasgon , an Israel correspondent for The New York Times.

Background reading

The relief convoy was hit just after workers had delivered tons of food .

José Andrés, the Spanish chef who founded World Central Kitchen, and his corps of cooks have become leaders in disaster aid .

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

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Kim Severson is an Atlanta-based reporter who covers the nation’s food culture and contributes to NYT Cooking . More about Kim Severson

Adam Rasgon reports from Israel for The Times's Jerusalem bureau. More about Adam Rasgon

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