Business Ethics Then vs. Now

by Craig VanSandt, Associate Professor of Management, David W. Wilson Chair in Business Ethics

As an academic, my first impulse is to go into a lengthy discourse on what the goal of “business ethics” is and what constitutes “progress.” But I will spare you that painful exercise, and just say it is doing fewer “bad” things and doing the “right” thing more often.

As a card-carrying “the-glass-ishalf-empty-and-it’s-got-a-big-leak” pessimist, my knee-jerk response would typically be to point out all the things that business people do that harm their workers, customers and environment.

Tim Wu, a law professor at Columbia University, and a contributing opinion writer for The New York Times writes, “… during the 20th century…the central dogma of American business strategy [has been]: maximization of size and scale, ideally to the point of monopoly.” And Alfie Kohn, author of “No Contest: The Case Against Competition,” states that a focus on winning leads to cheating. Combining those two ideas, we are forced to conclude that business ethics often takes a back seat to financial dominance.

We have seen this process play out all too often during the late 20th and early 21st centuries — Enron, Bernie Madoff, WorldCom, Adelphia, GE and so many more — are easily identifiable business scandals. But now we see the likes of Larry Fink, CEO of BlackRock, and the Business Roundtable calling for heightened corporate social responsibility (CSR).

I see a lot of progress being made over the past 40 years. As with any change in social acceptability, ideas are a leading indicator. A great example of this is the recent 50th anniversary of Milton Friedman’s famous essay, “The Social Responsibility of Business is to Increase Its Profits,” which argued that the only legitimate duty that business executives had was to pursue profits (he did add that the pursuit needed to “stay within the rules of the game”). Business ethics professors have long derided Friedman’s mantra, and the popular press is now calling it into question and emphasizing the need for more CSR. Although the holy grail

More CEOs recognize the need to broaden their scope of who benefits from the operations of their corporations.

of correlating enhanced CSR with higher profits has still not been established in academic literature, we definitely see increased demand for better behavior. More CEOs recognize the need to broaden their scope of who benefits from the operations of their corporations.

I believe we stand on the precipice of a new focus on corporate social responsibility. Many have been calling for adjustments to “winner-take-all” capitalism. The triple whammy crisis of the novel coronavirus pandemic, Black Lives Matter movement and potential economic meltdowns provide fertile soil for more inclusive and fair business practices. We can do our part by preparing students to practice business ethically. BIZ