Business Ethics over Time
Ethics in business has changed over time. Read this section to learn more.
A Matter of Time
What effect does time have on business ethics,
and how is this effect achieved? If we accept that business today has
two purposes - profitability and responsibility - we might assume that
business ethics is in a much better position now than in the past to
affect conduct across industries. However, much of the transformation of
business over time has been the result of direct government
intervention; one recent example is the Dodd–Frank Wall Street Reform
and Consumer Protection Act that followed the financial crisis of 2008.
Yet, despite such regulation and increased management vigilance in the
form of ethics training, compliance reporting, whistleblower programs,
and audits, it is tempting to conclude that business ethics is in worse
shape than ever. The Information Age and the Internet may even have
facilitated unethical behavior by making it easier to move large sums of
money around undetected, by enabling the spread of misinformation on a
global scale, and by exposing the public to the theft and misuse of vast
stores of personal data gathered by companies as diverse as Equifax and
Facebook.
However, since the mercantile era, there has been a
gradual increase in awareness of the ethical dimension of business. As
we saw in the preceding chapter, businesses and the U.S. government have
debated and litigated the role of corporate social responsibility
throughout the twentieth century, first validating the rule of
shareholder primacy in Dodge v. Ford Motor Company (1919) and then
moving away from a strict interpretation of it in Shlensky v. Wrigley
(1968). In Dodge v. Ford Motor Company (1919), the Michigan Supreme
Court famously ruled that Ford had to operate in the interests of its
shareholders as opposed to its employees and managers, which meant
prioritizing profit and return on investment. This court decision was
made even though Henry Ford had said, "My ambition is to employ still
more men, to spread the benefits of this industrial system to the
greatest possible number, to help them build up their lives and their
homes. To do this we are putting the greatest share of our profits back
in the business".
By mid-century and the case of Shlensky v.
Wrigley (1968), the courts had given boards of directors and management
more latitude in determining how to balance the interests of
stakeholders.
This position was confirmed in the more recent case
of Burwell v. Hobby Lobby (2014), which held that corporate law does
not require for-profit corporations to pursue profit at the expense of
everything else.
Governmental regulation and legal
interpretations have not been the only avenues of change over the past
century. The growing influence of consumers has been another driving
force in recent attempts by businesses to self-regulate and voluntarily
comply with global ethical standards that ensure basic human rights and
working conditions. The United Nations (UN) Global Compact is one of
these standards. Its mission is to mobilize companies and stakeholders
to create a world in which businesses align their strategies and
operations with a set of core principles covering human rights, labor,
the environment, and anticorruption practices. The Global Compact is a
"voluntary initiative based on CEO commitments to implement universal
sustainability principles and to undertake partnerships in support of UN
goals".
Of course, as a voluntary initiative, the initiative does not bind corporations and countries to the principles outlined in it.
Read
the Ten Principles of the United Nations Global Compact urging
corporations to develop a "principled approach to doing business". The
principles cover human rights, labor, the environment, and corruption.
Whenever
we look at the ways in which our perception of ethical business
practice changes over time, we should note that such change is not
necessarily good or bad but rather a function of human nature and of the
ways in which our views are influenced by our environment, our culture,
and the passage of time. Many of the examples discussed thus far
illustrate a gradual increase in social awareness due to the actions of
individual leaders and the historical era in which they found
themselves. This does not mean that culture is irrelevant, but that
human nature exists and ethical inclination is part of that nature.
Historical conditions may allow this nature to be expressed more or less
fully. We might measure ethical standards according to the degree they
allow human compassion to direct business practice or, at least, make it
easier for compassion to hold sway. We might then consider ethics not
just a nicety but a constitutive part of business, because it is an
inherent human trait. This is a perspective Kant and Rawls might have
agreed with. Ethical thinking over time should be measured, deliberate,
and open to examination.