|
|
|
BUSINESS ETHICS PRIMER
Page 1 of 3
DEFINING BUSINESS ETHICS
Understanding the landscape of business ethics can be problematic.
The field is vast, often encompassing such concerns as corporate governance,
reputation management, accurate accounting and audits, fair labor practices
and environmental stewardship to name but a few. In fact, the field addresses
the entire scope of responsibilities - or obligations - that a company
has to each of its stakeholders: those who have a vested interest - or
stake - in the decisions and actions of a company, like clients, employees,
shareholders, suppliers and the community. Depending upon the company
in question, one may even be able to identify additional stakeholders.
The field of business ethics is further complicated by the fact that many terms exist to refer to corporate offices and programs intended to communicate, monitor, and enforce a company's values and standards. In theory, one can make some rough distinctions among the various domains related to business ethics, e.g., corporate responsibility, social responsibility, corporate compliance, etc. In practice, however, such distinctions blur because corporate offices of compliance established in the 1970s may now function similarly to an office of corporate and social responsibility.
For the purpose of clarity, definitions will be provided for each of the terms that can be understood as related to the goal of improving the conduct of business, namely, business ethics, corporate compliance, corporate responsibility and corporate and social responsibility. Please note that these definitions are not being offered as official definitions, but only to impart how they are commonly used in the business ethics industry.
Business Ethics
Business ethics is a form of applied ethics. It aims at inculcating a
sense within a company's employee population of how to conduct business
responsibly. Because the term "ethics" can pose problems in an international
context, i.e., the term does not translate well and it can be difficult
to find a common understanding of the term, some organizations choose
to recast the concept of business ethics through such other terms as integrity,
business practices or responsible business conduct.
For more information on business ethics, please visit
the Bibliography and Links
pages in the Resources section of this site.
Corporate Compliance
U.S. business scandals that occurred in the 1980s
- particularly related to government contracts - gave rise to corporate
compliance, which is most often narrowly focused on complying with national
and local laws and regulations. Corporate compliance offices and programs
have been criticized for falling short of respecting the spirit of the
law in favor of the letter of the law. It should, however, be noted that
corporate offices of compliance may now function in much broader contexts.
For more information on corporate compliance, please
visit the Bibliography and Links
pages in the Resources section of this site.
Corporate Responsibility
Corporate responsibility refers to fulfilling the responsibilities or
obligations that a company has toward its stakeholders. When examining
a particular corporate practice, like profit versus environmental protection,
corporate responsibility can help distinguish between a stakeholder expectation
and a corporate obligation, i.e., is the company obligated to provide
absolute environmental protection at all cost or is it obligated to maximize
profits for its investors at the cost of damaging the environment?
For more information on corporate responsibility, please
visit the Bibliography and Links
pages in the Resources section of this site.
Corporate and Social Responsibility
Corporate and social responsibility can be understood in terms of corporate
responsibility, but with greater stress laid upon the obligations a company
has to the community, particularly with respect to charitable activities
and environmental stewardship. Corporate and social responsibility is
sometimes described as being a tacit contract between business and a community,
whereby the community permits the business to operate within its jurisdiction
to obtain jobs for residents and revenue through taxation. Additionally,
the community expects the business to preserve the environment and to
make the community a better place to live and to work through charitable
activities.
Business for Social Responsibility
speaks of corporate social responsibility in the following terms: "Socially
responsible business practices strengthen corporate accountability, respecting
ethical values and in the interests of all stakeholders. Responsible business
practices respect and preserve the natural environment. Helping to improve
the quality and opportunities of life, they empower people and invest
in communities where a business operates."
Currently, companies in Europe seem to be adopting offices of corporate
and social responsibility more often than in other part of the world.
It should be noted that some business ethics organizations - the Institute
included - believe that corporate responsibility encompassess all
responsibilities that a compnay has to all of its stakeholders,
which includes social and environmental responsibilities.
For more information on corporate and
social responsibility, please visit the Bibliography
and Links pages in the Resources section of this
site. You may also wish to read the article entitled "Business Ethics
versus Corporate Social Responsibility: Competing or Complimentary Approaches?"
by Juliet Altham, which appeared in the International Business Ethics
Review (Volume 4, Issue 1).
|
|
|
