The Value of Business Ethics
In a world that is becoming increasingly corrupt, with questionable behavior tainting virtually all levels of society, the definition of Business Ethics can become somewhat blurred and often differs quite drastically depending on who you may be speaking to. Some even claim that ethics are irrelevant to the field of business, taking the stance that the main responsibility of a company CEO is to make money, and if one needs to use some “creative accounting” to do so, then so be it. This approach was promoted by Milton Friedman (1912-2006), a well respected multiple award-winning American economist and statistician associated with the Chicago School of Economics, who was reported as saying that corporations are amoral, cannot have social responsibilities and that CEOs have a single duty, that of maximizing the profits of the company they have been entrusted to run.
Broadly speaking, sound ethics in business would ensure that no harm is done – to investors, employees, the environment and local communities – and many of these aspects are incorporated into social responsibility programs that are often used as a marketing tool to promote the company, as well as its services and products, to consumers and investors. Very often what is passed off as ethical behavior is simply complying with legal requirements to ensure that company does not fall foul of the law. But sticking to the law does not necessarily constitute ethical behavior, hence the need for social responsibility programs in the first place – rewarding companies for going beyond what is legally required to promote the welfare of all involved.
Business ethics remains a much debated topic, mainly because it promotes the doing of good over the doing of harm, but what is “good” and what is “bad” is, in itself, a topic for debate. Unfortunately, often unethical behavior only comes to light when disaster strikes. There have been many such disasters over the years, where investors have lost substantial amounts of money, even their life savings, through companies pushing the boundaries of creative accounting to the limits. So while some skeptics may feel that the term “Business Ethics” is an oxymoron, clearly there are many short- and long-term benefits to running a business in an ethical manner, which is likely to benefit all stakeholders rather than just the few fat-cats pulling the strings.
