Thursday, August 22, 2013

The Need for Business Ethics in Commerce

Business ethics is important for maintaining a level of commercial trust between entities. According to a paper from Gabriel Abend (2013) such ethics were first formalized at the University of Yale in 1904 and the University of Chicago. The concerns and needs of ethics in the twentieth century are not all that different than that of the twenty first century. She moves onto discussing the nature and history of ethics. 

The need for business ethics is often seen as starting in the 1960’s and the corporate scandals that resulted. However, business ethics started much earlier as the complexities of business raise important concepts of public good. When ethics are not understood or enforced business decisions can have a large impact on the overall functioning of society and the very nature of people’s lives.
Her work offers a three-way understanding of ethics:

  • 1.)    The history of ethics and business practices.
  • 2.)    History of ideas about business practices.
  • 3.)   History of public/private institutions and projects that influence ethical understandings.

By viewing the history of ethics, how the concepts were formed, and how organizations influence ethics, one can better get a rounded picture of the meaning of ethics. People may look into the actions of leaders, legal precedence, legislators, journalists, preachers, educators, and group statements to have a more clear understanding. Each contributes to what is the modern applied definition of appropriate business ethics. 

At its very earliest roots ethics comes from religious and philosophical thinkers. Some sources might include religious text (Bible, Quran, Torah, etc…) as well as famous philosophers and scientists such as Aristotle, Adam Smith, Spinoza, Plato, and Aquinas. The very nature of sophistication of intellectuals from different eras added to the overall concept of ethical standards. 

Business ethics can be seen as encouraging the highest truth and ideals. It is these truths and ideals that set the standard and allow for accurate assessment of problems. Furthermore, with a level of truth it is possible to use these assessments to further develop stronger methods thwarting damaging unethical decisions. It allows for the honest man to succeed in the business world and the dishonest man to be punished by the market. 

From a lecture in 1902 Harris Weinstock proposed at the University of California in a lecture, "to the belief that success in business is more probable and more lasting if conducted upon a high ethical plane, and that true success lies in developing character rather than in heaping up gold" (University of Califomia 1904: 103-04). It is a wider range of responsibility beyond money and status that leads to higher attainment of such things. Through character one achieves other goals.

The paper did not indicate this concept but one must wonder what ethics and economics have to do with each other? Ultimately, all business and economic systems are based in the concept of trust. Such trust is impossible if people are not working on the same fundamental system of values. As the world globalizes and people begin to communicate and conduct commercial activities at an increased place the ethics of a nation will begin to adjust to a global ethics approach. The individual arguments of particular sects will fade away to the need of cross border commercial understandings. As a question we can ask ourselves, "Which nation and economic system will influence those underlying global ethics?"

Abend, G. (2013). The origins of business ethics in American universities, 1902-1936. Business Ethics Quarterly, 23 (2).

University of California. 1898. The Establishment of the College of Commerce. The University Chronicle. An Official Record 1(6) (December): 552-68.

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