Business Ethics: Decision Making for Personal Integrity & Social Responsibility 5th Edition by Laura

 
 
Making the Case for Business Ethics
The “Separation thesis” described a common which holds that ethical standards are separate from the standards that apply in business activities.  This view holds that business has its own rules that govern how the game is played and, therefore, business is exempt from ordinary ethical judgments.
This separation thesis is represented prominently in Milton Freidman’s famous essay, “The Social Responsibility of Business is to Increase its profits.”  This very common perspective can be seen in many cases discussed throughout this text, and should be contrasted with the “stakeholder theory” described in Chapter 5.
Relationship between economic and moral values: How should we conceive of the relationship between business and market activity, on the one hand, and ethical concerns, on the other?  This is not a new question, but one that can be found since the very dawn of modern capitalism.
The relationship between Adam Smith’s two books, The Wealth of Nations and The Theory of Moral Sentiments, can be seen as representing this question.
The issue of the relationship of economic and moral values is addressed in the study of business ethics.
As recently as the mid-1990s, articles in such major publications as The Wall Street Journal, the Harvard Business Review, and U.S. News and World Report questioned the legitimacy and value of teaching classes in business ethics.
Leaders realize that they can no longer afford this approach in contemporary business.  The direct costs of unethical business practice are more visible today than perhaps they have ever been before.
The first decade of the new millennium was riddled with highly-publicized corporate scandals, the effects of which did not escape people of any social or income class.  Moreover, we saw the economy begin a downward spiral into one of the largest financial crises of the last 80 years.
These lending and trading efforts encouraged bad debt to appreciate beyond levels that the market could bear. The inevitable correction caused real estate values in most markets to decline sharply, domestic credit markets to freeze, and the federal government to intervene with a rescue package.
Economic turmoil incites misconduct; there is a significant bump in observed workplace misconduct during times of economic challenges. Some money-saving strategies deployed by struggling companies, such as compensation/benefit reductions and hiring freezes, have been found to increase misconduct by more than 35 percent.
*Chapter Objective 1 Addressed Below*
To understand the origins of the shift from whether ethics or values should play a role in business decisions to the almost frantic search for how most effectively (and quickly!) to do it, consider the range of people who were harmed by the Wells Fargo scheme: Customers, employees, investors, competitors, and the communities in which these people live.
Expansion of ethically responsible business decision-making: Ethically responsible business decision-making must move beyond a narrow concern with stockholders, and consider the impact that decisions will have on a wide range of stakeholders. In a general sense, a business stakeholder will be anyone affected, for better or worse, by decisions made within the firm.
*Reference: “Reality Check - Why Be Ethical? Because the Law Requires It”* (describes some legal requirements that have been created since the Enron fiasco)
Reasons to be concerned with ethical issues: Beyond specific legal obligations, contemporary business managers have many other reasons to be concerned with ethical issues.
Unethical behavior not only creates legal risks for a business, it creates financial and marketing risks as well. 
Managing these risks requires managers and executives to remain vigilant about their company’s ethics.
A firm’s ethical reputation can provide a competitive advantage, or disadvantage, in the marketplace and with customers, suppliers, and employees. 
Managing ethically can also pay significant dividends in organizational structure and efficiency. 
Trust, loyalty, commitment, creativity, and initiative are just some of the organizational benefits that are more likely to flourish within ethically stable and credible organizations
*Reference:  “Reality Check - Why Be Good?”*
Reasons to be concerned with ethical issues for business students: The need to study ethics should be as clear as the need to study the other sub-fields of business education.  Without this background, students simply will be unprepared for a career in contemporary business.
But, even for students not anticipating a career in business management or business administration, familiarity with business ethics is just as crucial.