Business ethics

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Business ethics or business ethics means the business or organization-related business ethics that is developed mainly in the United States since the 1970s. As applied ethics , it is based on general ethics , especially virtue ethics and theories of justice . The philosophical current of American pragmatism and the utilitarianism oriented towards the consequences of action form a strong background conviction. Many approaches do not have a uniform justification for the norms, but rather use the prevailing arguments eclectically .

Practice orientation

The literature on business ethics is often seen as a guide for practical life and is often appealing . The trade journal “Business Ethics” , founded in 1987, has the subtitle: “The Magazine of Corporate Responsibility” . A well-known textbook on business ethics lists eight reasons for the importance of the subject and for dealing with it:

  1. Many people feel unsettled by the increasing influence of the economy on modern life. Business ethics can help understand this and how to deal with the situation.
  2. Entrepreneurship enables the production of goods and services, creates employment, pays taxes and is the engine of economic development. Whether and how this service is provided can, however, affect significant ethical issues that go to the very foundations of society.
  3. Business ethics misconduct can cause significant damage to individuals, communities, or the environment. Through a better understanding of the reasons and consequences of such misconduct, business ethics can help improve the “ human condition ”.
  4. The demands of the various stakeholders on entrepreneurial activity are becoming more and more complex and challenging. Business ethics makes it possible to better recognize and understand these challenges and to react more effectively to expectations.
  5. Business ethics is often missing in the formal training of managers . With the right knowledge and tools, managers can better identify, diagnose, analyze and solve ethical problems and dilemmas .
  6. Due to the pressure to perform, there are always violations of ethics and laws in practice. Business ethics helps to understand the reasons and gives guidance on how to deal with them and improve behavior.
  7. Business ethics is a better way of assessing the benefits and problems of alternative approaches.
  8. Beyond the practical application in the actual subject area, business ethics imparts a better general understanding of modern society and the ability to deal better with problems in other life situations.

Corporate Social Responsibility (CSR)

The starting point for an independent role for business ethics was the assignment of social responsibility to companies. David Burch refers to an early work by Peter F. Drucker (The Concept of the Corporation, 1946), in which the latter took the view that companies, especially in mass production, have not only a technical but also a social responsibility for their employees . Richard T. De George sees the beginnings of a discussion of ethics in business during the student movement and the civil rights movement in the 1960s. The subject established itself as a scientific discipline in the 1970s, parallel to the intense discussion about John Rawls ' theory of justice .

Milton Friedman took part in the discussion about corporate social responsibility in 1970 with an article in the New York Times with the provocative headline: "Corporate social responsibility is increasing your profits." This is originally a thesis of Friedman the Munich conference of the Mont-Pèlerin-Gesellschaft 1970. Friedman advocated the thesis that moral responsibility can only lie with natural persons , that managers are solely responsible to their shareholders, and that dealing with social issues and problems is the responsibility of the state and not of company leaders . Managers are the trustees of investors who put their money to make a profit. The opposite thesis indicates that companies have their own legal personality and act independently of who is a shareholder or employee of the company. As an organization, you have a decision-making structure that is independent of people and a corporate culture that is also independent of people . In particular, speaks for the social responsibility that companies

  • have an impact on society with their actions (for example with environmental pollution)
  • Have power that they must use responsibly
  • have a direct impact on society with their services (products, employment)
  • Have relationships with a number of interdependent stakeholders.

Four-step pyramid

Archie Carroll proposed a four-tier pyramid to delineate the scope of CSR. Then one can differentiate between business, legal, ethical and philanthropic responsibility of a company.

  1. Be profitable (Be profitable) : The basic responsibility of a company is to fulfill its business purpose, to maximize profits , a good competitive position to achieve and secure its existence in the long term.
  2. Obey the law (Stick to the law) : It is the responsibility of a company that its products comply with both respect and its processes with its statutory obligations.
  3. Be ethical (handle ethically) : An important part of our corporate responsibility is to ensure that it does not violate the scope of his activities against the moral and ethical expectations of society.
  4. Be a good corporate citizen (Be philanthropic) : A company continues to take its responsibility when it voluntarily charitable purposes in the fields of culture, education and welfare support of society.

Stakeholder management

A further development for the field of business ethics resulted from the approach of stakeholder management originally conceived as a concept for the strategic management of companies by R. Edward Freeman, who pointed out that the management of a company can only be successful if it is also successful Influences of the various stakeholders from his environment are adequately taken into account. As stakeholders, he referred to groups or individuals who influence the achievement of the goals of an organization or are (can) influenced by them. Freeman justified the demands of the stakeholders with the categorical imperative , according to which nobody should be treated as a means, but always as an end. It follows that the purpose of a company is not just the profit principle. Rather, it serves as a "vehicle for coordinating stakeholder interests" that gain advantages through the existence of the company. The stakeholder approach is in contrast to the shareholder value concept, according to which the corporate purpose is primarily geared towards the interests of the shareholders through profit maximization. “A company interested in the well-being of its stakeholders, on the other hand, is characterized by the fair weighing and consideration of the interests of all stakeholders and thus integrates the financial, political, ecological and moral factors of economic activity.” This changed purpose gives rise to the demand for the establishment of management -Instruments to enter into dialogue with stakeholders.

If the term “stake” is used, the term stakeholder encompasses the parties who have invested in a company. Only providers of equity and debt capital and employees who have contributed their human capital to the company are recorded here. The scope of the term becomes a little wider if one includes all those who are directly connected to the company by contract. Suppliers and customers also come into focus here. The government, municipalities, associations, trade unions and others are only included with the extended provision that everyone who has a justified claim on the company is considered a stakeholder. In particular, the people who are influenced by external effects from the company's activities come into focus . Citizens' initiatives, media, churches, environmental and animal rights activists, for example, lie in the border area. With the broad term stakeholder, the extremely difficult undertaking is to reconcile the different interests and normative ideas of individual stakeholders. From a normative point of view, the stakeholder concept does not provide any guidance for solving dilemmas. Managers therefore have the task of pragmatic weighting of their decisions, whereby the risk of opportunism and ethical relativism is not insignificant.

A well-known way of classifying stakeholders comes from Mitchell / Agle / Wood, who classify the stakeholder groups according to their power, urgency and legitimacy of their claims. You name the following types:

  1. Dormant Stakeholders: Have power, but no legitimate claims
  2. Discretionary Stakeholder: Have legitimate claims, but no power and do not assert them
  3. Demanding stakeholders: They have neither power nor legitimacy, but make demands on the company
  4. Dominant Stakeholders: Have both power and legitimacy, but do not assert their claims
  5. Dangerous stakeholders: Although they have no legitimacy, they make demands and also have power
  6. Dependent Stakeholder: Have legitimacy and also make claims, but have no power
  7. Definitive stakeholders: have legitimacy, also make claims and also have power

Depending on the affiliation of the stakeholders to one of the classes mentioned, companies can tailor their approach specifically. The implementation of stakeholder management comprises several steps:

  • Identification of the stakeholders
  • Identification of the interests and demands of the stakeholders
  • Analysis of the importance for the company
  • Definition of a strategy for dealing with claims (defensive attitude, observation, involvement or collaboration)
  • Developing policies and measures for dealing with stakeholders

A balanced scorecard , for example, is a suitable instrument for implementation , in which the various perspectives on individual topics and conflicts (stakeholders, companies, processes, finances) can be recorded and coordinated.

Corporate Citizenship

The term corporate citizenship comes from practice and has increasingly become the subject of academic literature since the 1990s. An important impetus was the signing of the joint declaration "Global Corporate Citizenship - The Leadership Challenge for CEOs and Boards" by 40 multinational companies (MNEs) at the World Economic Forum 2002, including ABB , Deutsche Bank , Philips and Renault .

The still relatively new term is used with different content:

  • Narrowly, it refers to the philanthropic activities of a company according to the Carroll pyramid (see also above ).
  • It is also used synonymously with corporate social responsibility .
  • In a broad understanding, companies are understood as institutional economic citizens who also play an active role in shaping politics.

According to the broad term, companies have the task of protecting and enforcing civil rights in addition to the state, and to enable these rights to be safeguarded. In the social field, this means commitment to the unemployed and homeless, support for educational institutions or improvement of the infrastructure at community level. This is especially true when multinationals operate in underdeveloped countries. Especially in countries where the political infrastructure is insufficiently developed, companies are also asked to enforce civil rights, be it the fight against child labor, the improvement of medical care, the fight against discrimination or much more. At the political level, too, civil rights can be promoted through good corporate citizenship, such as freedom of the press, minimum wages or advocacy for constitutional administrative and legal proceedings or the fight against corruption.

Institutionalization

Wieland cites legal, but above all historical and cultural reasons for the differences between the approach in the USA and the European practice of business ethics. In Germany, for example, there are very detailed regulations in labor law or through provisions in collective agreements that are not matched by any corresponding provisions in the USA. In particular, there is a lack of rules on participation and the presence of employees and trade unions on supervisory boards. In the USA, an individualistic worldview dominates, with a uniform value structure being restricted by immigration and increasing pluralism. Business ethics management helps companies within their organization to establish a common orientation for their employees.

Over the last few decades in the 20th century, the legal framework for companies in the USA has changed. An important beginning was the legal equality of minorities through the Civil Rights Act of 1964 and Executive Order 11246 under Lyndon B. Johnson , which contributed significantly to the enforcement of non-discrimination laws. The United States Environmental Act, with the establishment of the Environmental Protection Agency (EPA) in 1970, marked the rethinking of environmental policy. The policy in the area of ​​corruption was consistent with the Foreign Corrupt Practices Act of 1977, which led to the USA strengthening its position internationally campaign for anti-corruption legislation to mitigate possible competitive disadvantages for American companies.

The legal background is of particular importance for the implementation of business ethics if American case law is taken into account. In the event of violations of the law, not only the persons involved, but also companies can be penalized, some of which can reach delicate proportions of several hundred million US dollars. On the other hand, if companies can prove that they have set up an effective system of business ethics management to prevent such violations, the pending penalties can be reduced by up to 90% in specific cases. The basis for this is the Sentencing Reform Act of 1984, a provision for the national standardization of the determination of sentences, which was given Chapter eight in 1991, which deals with a (more stringent) determination of sentences for companies (Chapter eight: Sentencing of Organizations). Mitigating factors "apply:

  • the existence of standards and procedures designed to reduce unlawful behavior by employees;
  • the appointment of a responsible employee to oversee the program;
  • the communication of these procedures and standards through publications and employee seminars;
  • the establishment of a reporting system in order to be able to check compliance with the standards
  • and finally proof of having carried out this program on a permanent basis. "

To ensure these requirements, it has become common practice that companies should have the following institutional facilities:

  • Code of Conduct, Code of Ethics
  • Ethics Committee of the Board of Directors (Committee in the Management Board and / or on the Supervisory Board)
  • Ethics Officer / Business Conduct Officer (there is even a professional association for this)
  • Audit programs for which it specialized certification companies are
  • Ethic hotline

Another important motive for establishing business ethics management is the award of public contracts. In the USA, companies that have come under public criticism for their behavior or have violated relevant rules are often not considered when awarding public contracts. A well-known example is the US Department of Defense. The Defense Logistics Agency itself has temporarily blocked General Electric's aircraft engine division as a supplier. As a consequence, a number of companies have come together to form the Defense Industry Initiative on Business Ethics and Conduct (DII) in order to develop and implement joint ethical guidelines.

Due to the great importance of the topic, all university business schools hold lectures and seminars on business ethics, some of which are mandatory. In addition, there are a large number of free Centers for Ethics, some of which are supported or supported by church institutions that conduct teaching, research and advice in the subject of business ethics.

literature

  • Norman E. Bowie (Ed.): The Blackwell guide to business ethics, Wiley-Blackwell, 2002, ISBN 978-0-631221234
  • Christopher Cowton, Roger Crisp (Eds.): Business ethics: perspectives on the practice of theory, Oxford University Press, 1998, ISBN 978-0-198290315
  • Collin Fisher, Alan Lovell: Business Ethics and Values: Individual, Corporate and International Perspectives, Pearson Education, 3rd ed. 2008, ISBN 978-0-273716167
  • Robert Frederick: A companion to business ethics, Wiley-Blackwell, 2002, ISBN 978-1-405101028
  • Campbell Jones, Martin Parker, René ten Bos: For business ethics, Routledge, 2005, ISBN 978-0-415311359
  • László Zsolnai (Ed.): The European difference: business ethics in the Community of European Management Schools, Springer 1998, ISBN 978-0-792382621

Web links

Individual evidence

  1. ↑ See the extensive comparative study by Bettina Palazzo: Interkulturelle Unternehmensethik. German and American models in comparison, Gabler, Wiesbaden 2000
  2. ↑ Online journal "Business Ethics"
  3. ↑ Andrew Crane, Dirk Matten : business ethics . 2nd Edition. OUP, 2007, p. 10–11 (The first edition of the book won the “Textbook Award” from the Association of University Lecturers for Business Administration (VBH) in 2005 and the “Textbook Award” from the Institute of German Economy in 2006).
  4. ↑ David Birch: Corporate Social Responsibility ( Memento of the original of July 24, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. : Some Key Theoretical Issues and Concepts for New Ways of Doing Business, Journal of New Business Ideas and Trends 2003 1 (1), pp 1-19, 4 @1@ 2Template: Webachiv / IABot / jed.cecc.com.au
  5. ^ Richard T. De George: Business ethics from an American point of view, in: Hans Lenk, Matthias Maring (ed.): Economy and Ethics, Reclam, Stuttgart 1992, 301-316, 304
  6. ↑ Milton Friedman: The Social Responsibility of Business is to Increase Its Profits., The New York Times Magazine September 13, 1970
  7. ↑ Published in German in: Blick durch die Wirtschaft , dated December 2, 1976 under the title: What does social responsibility actually mean here? See: Andres Suchanek: Profit maximization as corporate social responsibility ?, in: Ingo Pies, Martin Leschke (ed .): Milton Friedmans economic liberalism, Mohr Siebeck, Tübingen 2004, 105-124
  8. ↑ Andrew Crane, Dirk Matten: business ethics, OUP, 2nd revised edition 2007, 44-48
  9. ^ Archie B. Carroll: The Pyramid of Corporate Social Responsibility. Toward the Moral Management of Organizational Stakeholders, Business Horizons, July / August 1991, 39-48
  10. ^ R. Edward Freeman: Strategic management: a stakeholder approach, Pitman, Boston / Mass. 1984, 52; Similar in: Archie B. Carroll, Ann K. Buchholtz: Business and Society: Ethics and Stakeholder Management, Cengage Learning, 7th edition Mason / OH 2008, 84
  11. ^ William M. Evans and R. Edward Freeman: A Stakeholder Theory of the Modern Corporation: Kantian Capitalism, in: Tom L. Beauchamp and Norman E. Bowie (Eds.): Ethical Theory and Business, Prentice-Hall, Englewood-Cliffs 1988, 97-106, 97
  12. ^ William M. Evans and R. Edward Freeman: A Stakeholder Theory of the Modern Corporation: Kantian Capitalism, in: Tom L. Beauchamp and Norman E. Bowie (Eds.): Ethical Theory and Business, Prentice-Hall, Englewood-Cliffs 1988, 97-106, 103-104
  13. ↑ Bettina Palazzo: Intercultural Business Ethics. German and American models in comparison, Gabler, Wiesbaden 2000, 59
  14. ^ Elisabeth Göbel: Unternehmensethik, Lucius & Lucius, Stuttgart 2006, 113-115
  15. ↑ Bettina Palazzo: Intercultural Business Ethics. German and American models in comparison, Gabler, Wiesbaden 2000, 65
  16. ↑ Ulrich Steimle: Resource dependency and sustainability orientation of companies, Metrololis, Marburg 2008, 182 FN 670
  17. ↑ Ronald K. Mitchell / Bradley R. Agle / Donna J. Wood: Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts, in: Academy of Management Review, 22nd year, no.4 , 1997, pp. 853-896, here 874
  18. ↑ Ronald R. Sims: Ethics and corporate social responsibility: why giants fall, Greenwood Publishing, Westport / CT 2003, 40
  19. ↑ Stuart Cooper: Corporate social performance: a stakeholder approach, Ashgate, Aldershot 2004, 22
  20. ↑ Andrew Crane, Dirk Matten: business ethics, OUP, 2nd revised edition 2007, 70-75
  21. ↑ Jörgen Centerman, among others: Corporate Global Citizenship. (pdf) The Leadership Challenge for CEOs and Boards. (No longer available online.) In: weforum.org. World Economic Forum, 2002, archived from the original on February 22, 2014 ; Retrieved on February 12, 2014 (English, original document). Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.weforum.org
  22. ^ Josef Wieland: Forms of the institutionalization of morals in American companies. The American business ethics movement: Why and how they do it, Haupt, Bern 1993
  23. ↑ Bettina Palazzo: Intercultural Business Ethics. German and American models in comparison, Gabler, Wiesbaden 2000, 161-174, with corresponding documents
  24. ↑ Thomas F. McMahon: A brief history of American business ethics, in: Robert E. Frerick (Ed.): A Companion to Business Ethics, Blackwell, 3rd ed. Malden / MA 2006, 342-352
  25. ^ Josef Wieland: Forms of the institutionalization of morals in American companies. The American Business Ethics Movement: Why and how they do it, Haupt, Bern 1993, 21
  26. ↑ ref> Bettina Palazzo: Intercultural business ethics. German and American models in comparison, Gabler, Wiesbaden 2000, 201, with the reference to: E. Perty Jr .: The Federal Sentencing Guidelines for Organizations, Center for Business Ethics News, 1 (1992), p. 4
  27. ^ Josef Wieland: Forms of the institutionalization of morals in American companies. The American Business Ethics Movement: Why and how they do it, Haupt, Bern 1993, 23
  28. ^ New York Times, June 3, 1992, D1