Is ‘business ethics’ a contradiction in terms?

Hey there, time traveller!
This article was published 01/10/2011 (5162 days ago), so information in it may no longer be current.

This is my first editorial column for the Brandon Sun in what I hope will be a lively and engaging invitation to think about and discuss the purpose of ethics in business, whether we are business or professional leaders or just plain ordinary folks (not that these are mutually exclusive categories).

Thirty years ago, while I was still completing my PhD, my husband and I founded a journal called The Journal of Business Ethics. We thought it would be a successful journal in the usual terms — a little academic journal that some academics read and to which they contributed through research publishing.

It is now the lead business ethics journal in the world and the one most frequently cited — ranked with the Harvard Business Review as one of the top journals dealing with ethical issues in business for educators and business people around the world.

Our success was clearly in part because we hit the market with a journal that responded to an increased demand for attention on ethics and public accountability from both the private sector and public sector precipitated by increased scandals at the time.

In 1983, I taught two large sections of a business ethics course at the University of Alberta in my first full-time academic job.

In both large classes, someone said for the first time the tedious joke that I have heard for the rest of my career — “Business ethics? Isn’t that like honest politicians? An oxymoron or contradiction in terms.”

The comment was and is depressing. It begins from a place of jaded cynicism, both about the nature of businesses and business people but also through analogy to the public sector.

Unfortunately, the last 25 years have not given us less reason to be cynical. We ushered in the 21st century with greed, fraud, illegal and unethical practices of unprecedented scope from companies like Enron to the largest Ponzi scheme ever promulgated on investors by Bernie Madoff, to the tune of $60 billion.

In a classic article by Nobel prize-winning economist Milton Friedman, he posed a question concerning what the rightful purpose of business should be. His answer to the question was basically that the purpose of a business was to maximize profit for the principals or stockholders who invest in a company and to obey the law.

Further, Friedman argued that it is not the purpose of business to engage in corporate, socially responsible activity and to do so was unadulterated socialism. He also stated that business should not be advantaged in philanthropic activity through tax benefits and incentives.

The range of issues that both Friedman’s article raises as well as the issues raised by unethical and illegal business practices is both broad and complex.

What are the legitimate purposes of businesses? When businesses go ethically wrong, who is responsible? Who do we hold accountable — the senior management, the corporation or both? Should businesses be committed to social corporate responsibility and philanthropy or is that a misguided extension of the legitimate mandate of business to pursue profit? Is business ethics good for business and if it is, is that a legitimate reason for businesses and business people to act ethically? What if business ethics works against a better bottom line? Does that legitimize acting unethically?

In future columns, we will talk about many of these issues. I will also try to put these large issues into the context of our own community and local economy.

I look forward to your comments.

» Deborah C. Poff, Ph.D., is president and vice-chancellor of Brandon University. She is also editor of the Journal of Business Ethics, and editor-in-chief of the Journal of Academic Ethics. Her column appears monthly.