Discussion: Why Would Ethics Enter Business?

Why Would Ethics Enter Business?

As you know, we are considering four different organizational models. Two of these models are ethical (broadly speaking), and two are not.

Given that we need no special explanation for why someone would seek the two business cultures that are not ethical (money!), it is very important for us to discuss why someone would seek the other two.

This goes to the very heart of business ethics, because so many people think that "business" and "ethics" are contradictory. In their imagination, all businesses are inevitably stuck on either model 1 or model 2. I think that assumption is just plain wrong. There are several reasons why an executive may be interested in leading an ethical business:

1) Fear of legal action

Businesses that always do the bare minimum in terms of following the law are the same businesses who face legal action by employees (wrongful termination suits), class action suits on behalf of customers, and more

2) Reputational considerations

Many people are concerned with their reputation - they want people to respect them for the good they have done in the world. Or maybe they want to leave a positive legacy - they want people to remember them well. On the other side of that, people might fear a bad reputation, or bad publicity for their business

3) Religious considerations

The vast majority of people in the world are religious in one way or another. You might believe, for example, that running a business that harms people will give you bad karma. Or if you believe in God, you might think that running a business that does good in the world is an expression of God's love for the world. Or you might just worry that God will punish you if your business is greedy and exploitative!

4) Desire for business success in the long-term

One of the most important lessons I hope you take from this course is that treating your stakeholders well is a recipe for long-term success. And on the other hand, being constantly concerned about your bottom line more than anything else might bring you short-term profits but probably not long-term success. The world needs more business leaders and entrepreneurs who care about their businesses doing well in the long-term

5) Feeling of Purpose

Many people, for whatever reason, want to feel like they are doing something positive in the world. It just makes them feel good! So when they are leading (or work for) a business that is harming people in pursuit of profits, they become uncomfortable with their activity. More and more, people are looking for jobs with purpose! You might want to be the CEO of one of these companies, and/or you may be motivated to work for one

6) And more realistically: some combination of 1) through 5) 

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