Introduction

It is in public domain that managers must possess massive understanding in finance and marketing. However, the question on why they should study ethics has been a great area of concern. There are those who believe that their sole obligation is to make profits for the organization in a legal manner. To them ethics should not compromise their sole objective of making money. On the other hand, there are those that believe that their ethics is based on making legal profits for the firms. In essence, their duty should be governed by business and the law. The other group of managers argues that character is self cultivated and not taught in schools or colleges.  All these arguments in mind, it will be paramount for us to answer several questions to understand why business people should be ethical

Why should one be ethical?

This is an absurd question since saying something should be done is another way of saying that something is ethical. In essence, what is unethical should not be done in business context. In most cases, executives tend to be driven by the motivation to behave ethically. Although there is nothing wrong in aspiring to get reward for being good, it is not wise for the business community to expect rewards for them to be good. It is imperative for the business community to note that good behavior brings about rewards but not all the time. Introduction of the ethical concept was meant to reduce chances of conflict of interests.

Doing Well by Doing Good

Corporate executives want to believe that there is a direct correlation between self interest and ethics. Nevertheless, this is not the case. They want to assume that a business can be successful if they uphold high ethical standards. It is a fact that one can often do well by doing good. For instance, an ethical company can achieve financial gains and promote its reputation. However, good behavior should not be based on tangible rewards since it may be missing in action if the incentives are no longer guaranteed. In essence, the business community must have a clear distinction between motivation and ethics.

It is worth noting that one can normally do well by doing good.  However, business ethics is concerned with how one can do good by doing well. Managers want to do something good with their lives through the business. This can only be realized only if profits are maximized.

The Duty to Make Money

The sole objective of any business entity is making as much money as possible. Maximization of the company’s profit should remain the main focus of the business people. Issues of finance, marketing and operations management should be the core business and should not waste time on ethical issues. This issue is articulated by Milton Friedman in his essay ‘’The Social Responsibility of Business Is to Increase its Profits.’’ From this essay, Friedman asserts that corporate officers have no obligation to support social causes beyond that mandated by law. Friedman argues that their sole task is profit maximization but in accordance with the provision of the law and the rules of the game.

Friedman proposes two arguments in support of this position. In the first proposition; corporate executives are not qualified to do any other thing apart from profit maximization. He argues that they lack expertise in making social policies and such issues should be left to government and social service agencies.

In addition, Friedman also asserts that these officers have no right to do anything else other than profit maximization. Corporate officers have no right to spend other people’s resources to accomplish social purpose. According to Friedman, only elected representatives of the people have the authority to spend on social matters. Sole proprietors can spend their money as they wish but fiduciaries and hired managers have no such rights. Friedman supports his position even in cases where the laws permit anti-social behavior. He bases his argument in the libertarian principle.

However, it is important to note that Friedman’s is characterized by two fallacies.  One is the idea that company officers somehow usurp authority when they act ethically at the expense of the owners.  For instance, it is wrong for an individual to charge exorbitant prices to hurricane victims. From the Friedman’s position, it is deemed right for a sole proprietor to sacrifice some of his earnings on social purpose. Professional manager running the same business is not supposed to spend the same on disaster victims. A business owner cannot escape his obligations just by hiring someone to run the business. It is worth noting that agents who act ethically at company expense do not usurp the authority of owners.

The second fallacy in regard to Friedman position is the misapplication of libertarian principles. He argues that spending owners money in social service is coercion and hence wrong. Friedman fails to consider the plight of the victims of exorbitant prices. It is also the same case by transferring the plant to other places. By so doing, choices are limited which is also coercive to the employees. Friedman position has several inadequacies especially in international businesses where there are few legal restrictions.  Nevertheless, business managers must ensure that there is positive contribution of the business both in terms of profit maximization and social obligation.

Rules of the game

From the Friedman’s point of view, the sole task of the business people is to obey the law and the ‘’rules of the game’’ which provide an ‘’open and free competition without deception or fraud.’’ This basic obligation has been disputed especially by Albert Carr in his essay “Is Business Bluffing Ethical?”

Carr argues that bluffing is legitimate in any business just as is the case in poker game. Carr argues that bluffing is essential otherwise one loses the game. Carr therefore concludes that ethical rules of everyday life do not apply to business.

Although Carr supports bluffing, he advises that business should be separated from private life to avoid psychological strain. Just like Friedman, Carr argues that bluffing is expected in many business contexts more than in poker. It is normal for negotiators not to put all their cards on the table just like are in the case of advertising. It is also important to understand that malicious deception is wrong and Carr is very much against it.

It is however important to understand that Carr’s analogy has some limitations. While the participants in a poker game are conversant with the rules of the game, the business situation is ambiguous. For instance, food processors deceptive packaging or the automobile companies’ deceptive behaviors can be detrimental. The consumers may not understand the rules of the game thus making bluffing dangerous in business context. Carr advises business people to make rational choices on the kind of business games to play. It is also important for business managers to learn how to make hard decisions.

Why study ethics?

Despite the numerous efforts to prove importance of business ethics, some managers still see no point in studying the subject.  A lot of emphasis has been placed on marketing, finance and operations at expense of ethics. Several scholars such as Confucius, Plato, Aristotle, Maimonides and Thomas Aquinas among others gave this discipline a piece of mind.  This is a clear indication that ethics is a developed field that requires great reasoning. A lot of work has been carried out to distinguish between what is right and wrong.

Some people are of the position that character is formed in early childhood and not during a class sitting. This is ill advised since it would make teaching other subjects such as finance and marketing useless since they also influence ones behavior. Ethics courses have distinct features that influence behavior. For instance, it provides language and conceptual framework within which one can talk or think about ethical issues. It also explains on the potential consequences of unethical behavior as well as reduces fallacies common in decision making.

Teaching of business ethics to managers is not a coercive exercise since only those who want to be good will learn. It is also important for the managers to understand that management and ethics are closely related. This is because the two concepts are involved in decision making with the only difference being the level of effects emanating from the decisions. While management operates in a specialized context of the firm, ethics operates in the general context of the world. Business managers should therefore be encouraged to study ethics since management is part of ethics.

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