Business Ethics

Introduction to Business Ethics

Some people think that running a business is all about making a profit. If you want to help others, work for a charity, but if you’re running a business, you have to make money.

Others argue that businesses have a profound impact on the environment, on the lives of their workers, on society and the world as a whole. As such, they have important responsiblities, and stockholders are just one small group among all of the stakeholders of a company.

Some people think that running a business is all about making a profit. If you want to help others, work for a charity, but if you’re running a business, you have to make money.

Others argue that businesses have a profound impact on the environment, on the lives of their workers, on society and the world as a whole. As such, they have important responsiblities, and shareholders are just one small group among all of the stakeholders of a company.

A cynical view is that companies adopt ‘ethical practices’ just to attract more customers, but that businesses would only survive and thrive if they were essentially selfish. Some argue the opposite – that a company can value its workers, genuinely care about the environment and still make money.

Dame Anita Roddick, the founder of The Body Shop, said:

Being good is good business.

In this topic, we will be exploring how business ethics have evolved over the past 150 years and become a central focus. We will be looking into corporate social responsibility, whistle blowing, globalisation and how different ethical theories apply to the world of business.

Business ethics is not completely new to the 19th-21st centuries. In fact, there are mentions of how to be fair in business in almost all religious texts. Usury is the practice of lending money at unreasonably high rates of interest, and this was spoken about as a sin in Jewish scripture, Buddhist writings, the Indian Vedas, the Qur’an and the New Testament.

States have found it important to regulate business for hundreds of years, as there have always been dishonest shopkeepers, greedy tax collectors or people giving immoral loans. One example of this is regulating weights and measures.

Task: Watch the video.

The development of business ethics in the UK was kick started by the Industrial Revolution. Millions of people were employed in unhygienic and unsafe conditions. They were not paid satisfactorily and worked incredibly long hours.

Task: Watch the video.

During this time, people did not have employment rights. There were no organisations to protect the wellbeing of the workers. However, efforts were made to improve things, especially in the area of child labour. Brave groups of people and individuals lobbied parliament to put some protection in place to avoid exploitation of workers.

The Earl of Shaftesbury, Anthony Ashley-Cooper, pushed the Ten Hours Act through parliament, as well as other Factories Acts. He also introduced the Mines and Collieries Act 1842 in Parliament to outlaw the employment of women and children underground in coal mines. Also, Ashley was a strong supporter of prohibiting the employment of boys as chimney sweeps. Many climbing boys were illegitimate who had been sold by their parents. They suffered from scorched and lacerated skin, their eyes and throats filled with soot, with the danger of suffocation and their occupational disease—cancer of the scrotum. In 1840, a Bill was introduced into the Commons outlawing the employment of boys as chimney sweeps, and strongly supported by Ashley.

1970 saw the Equal Pay Act, ensuring equal pay for men and women doing equivalent work. Until 1971, there was almost no protection for workers against unfair dismissal, including pregnancy. Additionally, before the Second World War, one major chain of shops employed no ‘coloured’ people, no men with beards and no one with red hair.

In 1889, the dockers at the Port of London went on strike, now known as The Great Dock Strike. Up until the strike, dockers would gather at the fates of the dock companies. The foreman would select those who would be given work, just for that day. The rest would be sent away, unpaid and hungry.

Task: Watch the video.

The general manager at Millwall Docks, in evidence to Parliament, said:

The poor fellows are miserably clad, scarcely with a boot on their foot, in a most miserable state… These are men who come to work in our docks who come on without having a bit of food in their stomachs, perhaps since the previous day; they have worked for an hour and have earned 5d (two pence); their hunger will not allow them to continue; they take the 5d. in order that they may get food, perhaps the first food they have had for twenty-four hours.

The workers marched through London, with fish heads hung around their necks, to highlight their poverty. Parliament became involved and issues of morality in employment were discussed widely, including by the Anglican Bishop of London, Frederick Temple and the Roman Catholic Archbishop of Westminster, Cardinal Henry Manning.

In 1891, Pope Leo XI published a letter Rerum Novarum, known as ‘The Workers’ Charter’. This condemned the capitalism and materialist communism and set our conditions of dignity for all workers. Frederick Temple’s son, Archbishop William Temple, also wrote on the topic (Christianity and Social Order, 1942), which influenced all political parties and was very influential on the post war restructure of industry.

However, some people claim that the sole responsibility of business is to make profits for its shareholders. Critics argue that whilst the shareholders are people, so to are the customers and workers, who should have rights too.

All businesses engage in contracts. That may be with a customer, in which the business provides a service or a product and the customer pays the business for the service or product. Both parties have rights in this agreement, the customer to receive good quality service or goods, and the business to receive fair payment for what they have provided. This could be extended further in many cases, for example in the building trade. Numerous business are reliant on others, suppliers, tradespeople, architects etc and each enter into a contract which creates a chain. Therefore, businesses are reliant on external organisations and do not operate in a vacuum, independently.

Businesses affect numerous people, even beyond the customers, employees and shareholders, into the wider community. We can see how the ending or failing of a business can affect the whole community in the mining industry.

Task: Read here.

Task: Create a timeline of how rights for workers have evolved since the Industrial Revolution. Click here for some information to get you started.

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