Business Ethics, Overview

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Author: J D Rendtorff
Editor: Ruth Chadwick
Date: 2012
Encyclopedia of Applied Ethics
From: Encyclopedia of Applied Ethics(Vol. 1. 2nd ed.)
Publisher: Elsevier, Inc.
Document Type: Topic overview
Pages: 8
Content Level: (Level 5)

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Page 365

Business Ethics, Overview

J D Rendtorff, Roskilde University, Roskilde, Denmark

© 2012 Elsevier Inc. All rights reserved.

This article is a revision of the previous edition article by Jennifer Jackson, volume 1, pp 397–412, © 1998, Elsevier Inc.

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Corporate citizenship This is a way to define the obligations of a corporation toward society.

Corporate legitimacy The level of public and social acceptance of a corporation in society.

Corporate social responsibility (CSR) The accountability and level of responsibility of a corporation toward society.

Institutional theory A main-stream approach in organization theory that is often used as a basis for analyzing the role of business corporations in society.

Stakeholder Concept defining the interested parties that are affected by or affect a corporation.

Triple-bottom-line This concept refers to the idea that a corporation has not only economic obligations, but it should also care for its environmental and social impact on society.

Values-driven management Management that is related not only to economic efficiency, but also to a number of social and ethical values.

Definition of Business Ethics

Business ethics is defined as the theory and practice of the responsibility, ethics, and legitimacy of corporations in a globalized society. As stated by the French philosopher Paul Ricoeur, the aim of ethics is “the good life for and with the other person in just institutions” (Ricoeur 1990: 202). Business ethics applies this aim to corporations, organizations, and other contexts of professional life in institutions. At the institutional level, business ethics deals with the ethical theory of actions of corporations and organizations. This leads to the application of Aristotelianism, Kantianism, and Utilitarianism, and other ethical theoretical frameworks to the context of business. At the level of protection of individuals, this may include ethical principles such as protection of the four ethical principles of protection of the human person: autonomy, dignity, integrity, and vulnerability, as proposed by Rendtorff and Kemp.

A distinction can be made between meta-ethics and descriptive and normative business ethics. As normative theory, business ethics deals with ethical issues at different levels of society, individuals, organizations, and market institutions. Business ethics is closely linked to the different dimensions of corporate social responsibility (CSR), including economic, legal, ethical, and philanthropic responsibility, as suggested by Caroll. In this sense, business ethics and corporate social responsibility is not only relevant at the level of human personal choices, but it is indeed necessary to construct common values and concepts of responsibility for business organizations and institutions in order to justify the old saying that “good ethics is good business” as a reaction to the opportunistic, challenge of economic theories of individualist utility maximization.

On this basis, business ethics can be separated from moral convictions about business. While morality can be defined as the values, norms, and moral points of view that we have in ordinary life, business ethics can be defined as the deliberation about decisions and the justification of specific norms and decisions in relation to decision making in business. Values-driven or values-based management is closely linked to business ethics because it represents an effort to formulate ethical values for the mission and strategy of the business corporation. Therefore, CSR can be defined as an integrated part of business ethics and values-driven management, because it relates to the mandatory and voluntary responsibility that a corporation can assume in relation to its internal and external stakeholders and constituencies. Corporate citizenship can be conceived as the fundamental concept that at a fundamental level joins business ethics, values-driven management, and corporate social responsibility. Corporate citizenship expresses the necessary involvement of the corporation as a good citizen in society who realizes that contribution to the common good of society is an essential element of good and ethical business relations.

Practical issues and cases within the field of business ethics may involve the following topics: Integrity, honesty, truthfulness and fairness in business organizations; issues of bribery and corruption, violation of trust, and conflicts of interests; fraud, manipulation, and theft; the ethics of the market (e.g., anti-trust legislation); corporate governance and investor protection; stakeholder management and fiduciary duties to stakeholders; the ethics of reporting, accounting and auditing; the ethics of finance (e.g., corporate mergers and hostile takeovers); ethical issues in relation to particular fields of business, (e.g., pharmaceutical companies or biotechnology firms); the ethics of entrepreneurship; the ethics of supplier relations including screening of suppliers for violation of ethics rules; social responsibility of business (CSR) in different fields of business; ethical issues of values and ethics in human resources and organizational culture; globalization, cultural difference and respect for human rights; socially responsible investments (SRI); work ethics, workers’ rights, and workers’ democracy; employee ethics (privacy protection, discrimination or affirmative action); ethical leadership and ethical behavior of managers; ethical relations to customer and clients, including the political consumer and protection of consumer interests; ethical protection of the environment and of ecological systems; ethical accounting, social accounting, and environmental accounting; public relations and ethics of branding (social legitimacy of corporations); the relation of the corporation to the local community (contribution to the local community); corporate philanthropy and gifts to local communities; foundations of values; values, ethics, and political theory; history of business ethics and values of social and economic systems; and, business ethics in processes of globalization and internationalization of world cultures.

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Integrative Economic Business Ethics

The methodology of business ethics is multifaceted, but many approaches can be considered such as critical philosophy combined with an interdisciplinary institutionalist approach, as proposed by Powell and DiMaggio and applied to economic and social sciences. Institutional sociology and economics provide the social science background for evaluating ethical issues in corporations and organizations. Business ethics mediates between structural and intentionalist explanations of causalities of actions in institutional theory. It uses different concepts of institutions and organizations in the managerial sciences as the background for the analysis of particular issues and cases of business ethics in corporations. At the same time, as critical philosophy, business ethics goes beyond mere institutional analysis and proposes a normative perspective of applied ethics and analysis of ethical argument as the basis for discussion of business decisions, strategies, and actions.

Business ethics is usually defined as a normative study of what norms should guide decision making and corporate social responsibility in business and economics. This applies simultaneously at the micro, meso, and macro levels of organizational behavior, corporations, business systems, and market structures and influences the political economy of different societies or states. Business ethics includes a critical evaluation of formulations of guidelines and codes of conduct for companies in national and international markets.

In this sense, business ethics also implies a critical evaluation of different concepts of managerial economics, in particular of neoclassical economics of efficiency and utility and it leads to a broader interdisciplinary, institutional, and historical perspective on the norms and values of corporations. A constant issue for discussion is the problem of whether business ethics remains an oxymoron and as such is impossible because, as Milton Friedman put it, “the social responsibility of business is to increase its profits,” or whether we should go beyond this neoclassical idea toward closer integration of business, economics, and ethics. Accordingly, most business ethics theorists go beyond a strict neoclassical position and argue that business has social and ethical responsibilities that cannot be reduced to profit concerns but rather precede profit maximization as the firm’s fundamental license to operate.

Business ethics in the tradition of Harvard Business School is based on case studies of corporations and evaluation of possible scenarios for decision making based on ethical theory. We can further observe the use of qualitative economic arguments to inform business ethics and arguments in a business ethics strategy. However, although it recognizes the explanatory potential of qualitative and quantitative social sciences, business ethics does not think that descriptive positivist economics is sufficient.

The concept of integrative business ethics is an important characteristic of the efforts of business ethics scholars to mediate between ethics and political and economic rationality. This integrative approach can be considered the application of the different ethical theories of Aristotelianism, Kantianism, and Utilitarianism as a different basis for ethical reflection on the foundations of economics as a truly value-creating science.

The Aristotelian approaches consider the corporation as a practical community aiming at the good of its members and society. Solomon argues that this approach is based on the Aristotelian concepts of practical reason (phronesis) and integrity that are applied in the understanding of ethical issues in business. As suggested by Bowie, the Kantian approach starts from the Kantian deontological theory and proposes the categorical imperative as the foundation for decision making in business. Utilitarian or pragmatic approaches are widely proposed and they are based on mainstream utilitarian (Bentham or Mill) or American pragmatism. A more recent approach is the idea of integrative social contract theory by Donaldson and Dunfee that mediates between Aristotelian, Kantian, and utilitarian approaches. We have also recently seen how the stakeholder theory by Edward Freeman has been worked out in the perspective of Rawlsian theory of justice, as suggested by Philips. In addition, there have been a number of emergent critical perspectives on mainstream business ethics coming from Marxism, feminist theory, poststructuralism (Foucault and Derrida), and phenomenology (Levinas).

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Accordingly, business ethics integrates the rationalities of different philosophical theories with the perspectives of social sciences, law, economics, and politics in order to promote environmental, social, and economic sustainability and the good life of humanity. Here the efforts to support the idea of the triple bottom line of the three Ps of people, planet, profit, as suggested by Elkington, is an important element of business ethics. Integrative business ethics as showed by Lynn Sharp Paine is not only about external limitations on business activity, but it also implies internal guidance for economic value creation. It implies not only a deontology of correct business rules but also an argument for the value shift toward a morality of just institutions of free economic markets.

We can perceive the emergence of a close link between ethics and economics as new strategy for corporate social responsibility and moral management. However, there still remains a tension between ethics and economics, as stated by Amartya Sen. Therefore, we need external political and legal constraints on economic markets. Ethics is the foundation of economic action. At the same time, we should admit that there is an ethical dimension within economic notions of utility and efficiency, which should be taken into account when dealing with the ethics of economic markets. Therefore, there may be an economic dimension to ethics, and ethics and economics are in a dialectical relation where they mutually shape one another.

In light of economic anthropology, this implies a critical examination of the concept of ‘homo economicus’ of egoistic utility-maximizing individuals in traditional economic theory. According to most business ethicists, economic anthropology should instead be considered in the perspective of ethical liberalism where individuals interact in complex networks of reciprocity in a social community. Accordingly, economic action is based on the Aristotelian vision of the “good life in community with and for the other person in just institutions,” according to Ricoeur. This vision is evaluated in the Kantian perspective of universal rules of the categorical imperative. Utilitarian welfare analysis is only possible in the perspective of this framework of Aristotelianism, taking into account the deontological rules of the categorical imperative of Kantian business ethics.

The Values of Business Corporations

When we deal with case studies in business ethics, we can say that it is the philosophical concept of judgment that is the framework of specific case studies. The methodology of judgment may be based on Aristotelian practical judgment, hermeneutics, Rawlsian reflective equilibrium, or Kantian reflective judgment. It is the task of such a determinate and reflective judgment in case analysis to make the bridge between micro- and macroeconomic rationality for convenient application of ethical theories and principles to concrete situations of choice and decision making in business organizations. This is the foundation for the concept of the rationality in business ethics that we can call moral management or ethical leadership in the perspective of cosmopolitan business ethics giving business ethics and international and global application. Therefore business ethics is not only about internal market behavior, but also about finding external principles of political governance to regulate economic markets. Accordingly, we can say that a view of justice as expressed in the concept of corporate citizenship, for example, John Rawls’ concept of justice, is necessary as the ultimate horizon of business ethics.

On the basis of the theories of business ethics and the principles of its concrete application, we can observe application of business ethics and corporate social responsibility reflections with regard to internationalization in global society. In particular, there has been a demand for ethics in leadership and governance. Such moral management in corporations can be considered to be important in order to formulate universal norms for different cultures and to cope with economic and social changes and developments in international markets as a consequence of increased globalization. In the age of global capitalism, companies have increased power and responsibility to contribute to social values and sustainable development. Emergence of global publics and media awareness present a challenge to companies to deal responsibly with issues of human rights and the environment. From the institutional and ethical perspective, the result of these social expectations of corporations has been the emergence of norms of a global civil society with its own laws and norms. Development of codes of conduct and policies of moral management represent the contribution of corporations to the establishment of these norms of civil society to reinforce the social foundations of economic interactions.

To conceive the function of morality in management or ethical leadership, we can also observe applications of the concept of value to business management and discussions of its role in business ethics, as has been analyzed by Driscoll and Hoffman. An ethical vision of values and moral management is necessary. This discussion of values, organizations, and management can be related to the problem of how to define the meaning, function, and goal of values in organizations. There are many different values in organizational life and it is the role of business ethics to clarify the relation between these different values in the institutional perspective. As the basis for individual action, institutions and organizations reflect values in their culture and decision-making structure. The values of economizing, power aggrandizing, and ecologizing put forward by Frederick have, in this context and on a naturalist basis, been proposed as the original values of the corporation.

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This debate on values in organizations implies discussions of the relation between economic, legal, social, and ethical values. The question is how these values should be realized in moral management and business ethics. We need a reflective view of morality that attempts to overcome the danger of management ideology and we need to conceive of ethics as the integrating force of business life. Moral management is about the good life in organizations based on universal norms of responsibility seeking to find the right balance between individuals and organizations and indeed between corporations, society, and political democracy as a republican society. The Swiss scholar Peter Ulrich calls this Republican Business Ethics.

The concept of the good citizen corporation has been important in the debates in European and U.S. business ethics. The different approaches to business ethics and values-driven management, including integrated contract theory, may be viewed as steps toward a comprehensive concept of business ethics as the basis for good corporate citizenship in modern complex societies. This social responsibility and responsiveness is at the forefront of the firm’s license to operate. Responding to the expectations of different stakeholders, good citizen corporations are involved in public reasoning and deliberative public communication. The different theories of business ethics coming from Aristotelian, Kantian, or Utilitarian sources provide us with the values that define the core of moral management of responsible corporations in democratic societies.

Application in the Fields of Business Ethics

In particular, with the challenge of sustainable development of the world community facing environmental problems and climate crisis there has been a focus in business ethics on values of green business and on the triple-bottom-line. Corporate social responsibility, business ethics, and social and ethical accounting are among the practices of corporations based on policies of leadership that include different stakeholders and demand stakeholder salience. This framework is also applied in relation to the firm’s internal and external constituencies. Internal stakeholders and other constituencies include owners, investors, management, and employees. Among external stakeholders and constituencies, we can include relations with other businesses, consumers, marketing and public relations, and relations with the local community. Moreover, in the perspective of sustainable development and concern for a triple-bottom-line of economic, social, and environmental responsibility, the relations of the firm to the environment viewed as a stakeholder are included in the business ethics of the firm.

The idea of justice as fairness is an appropriate framework for inclusion of stakeholders in corporate decision making. Basic ethical principles of autonomy, dignity, integrity, and vulnerability are important expressions of the concept of justice as fairness. These basic ethical principles can be directed toward protection of human persons in organizational structures. Therefore, it is considered important to move from corporate social responsibility (CSR1) to corporate social responsiveness (CSR2). Corporate social responsiveness lays emphasis on the company’s practical contribution to social management rather than on its capacity to talk about it. Corporate social responsiveness is not only about government initiative to make incentives for social responsibility, but also proposals for corporations to make concrete contributions to social betterment. Business ethics is not only about ideal theory but must be realized in concrete practice and make a difference for good management strategy.

Analyzing relations to internal constituencies of the corporation, we can perceive how ethical values are mixed with the original natural values of economizing, power aggrandizing, and ecologizing. In addition to the perspective of the ethical principles, relations to internal constituencies were investigated in light of the tension between economic rationality and ethical rationality. The relation to internal stakeholders can also be viewed in relation to the theory of the firm in business economics. Moreover, issues of corporate governance between shareholders and stakeholders, ownership, and the ethics of finance, socially responsible investments and the ethics of the workplace can be analyzed in the perspective of corporate social responsibility, sustainability, justice as fairness, and ethical principles for protection of the human person. In particular, the need for respect of the dignity and integrity of the human person in the workplace, for example, by promoting workplace democracy and participatory rights, is an important issue in the discussion of business ethics.

Concerning the business ethics of external constituencies, we can emphasize the importance of social responsiveness and the application of ethical principles to the ethics of not only consumers and customers, but indeed more generally to the ethics of public relations with governments and the local community and to the building of norms and trust relations to civil society. Indeed, the efforts of developing new proposals for accounting ethics and triple-bottom-line reporting are important for establishing such relations. Accounting ethics is an instrument to improve transparency and trust, but it is also an instrument to create knowledge and reflective self-perception of the firm. Such multilevel measurement of the firm’s performance can also be developed in the strategies of the firm’s moral management, implying repeated dialogue with the firm’s different stakeholders. There are many important international initiatives to improve accounting ethics, but much remains to be done in order to develop general international standards.

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Environmental issues related to the question of sustainable development are indeed very important applications of stakeholder management and ethical principles. Within the framework of responsibility and sustainability, the ethical principles of protection of dignity, integrity, and vulnerability emerge as central values for environmental business ethics. From the point of view of environmental ethics, corporate social responsibility means how organizations relate ethically to animals and nature. Environmental ethics has an institutional dimension insofar as it deals with the relation between organizations and nature, searching for means to integrate bioethics, environmental ethics, and business ethics. In this context, we can propose basic ethical principles for interpreting the concept of sustainable development in the perspective of triple bottom line management. Environmental ethics of organizations should not be conceived only in light of utility and enlightened self-interest, but rather include principle-based accounts of the intrinsic value of nature and animals. To efficiently meet the quest for environmental ethics, development of compliance programs for environmental protection is an important way to increase corporate responsibility for protection of the environment. The symbolic nature of criminal law can help increase the efficiency of such a requirement of compliance with high environmental standards.

International Political and Legal Developments

Different legal strategies have been developed in the United States, Europe, and in the international community that document this normative framework for the role of corporations in society. They express the difference between the different approaches to moral management and corporate social responsibility in different countries. In the United States, the legal system has been used extensively to create a strong legal framework for promotion of ethics and compliance programs. In 1991, the United States Federal Sentencing Guidelines for Organizations (FSGOs) were enacted by Congress. FSGOs represent a strong combination of carrot and stick measures to motivate and enforce corporations in establishing compliance and ethics programs. The FSGOs were decisive in creating more focus on corporate ethics and organizational integrity. This development was continued with the recent Sarbanes-Oxley legislation on corporate governance, transparency, and accountability after the Enron and World Com scandals. Furthermore, there have been discussions of the need for increased legislation after the scandals following the financial crisis in 2008. The U.S. focus on legislation has increased corporate awareness and focus on employees’ ethical behavior. Such compliance and ethics programs are a new development of corporate law considering regulation as dialogue and self-regulation rather than strict enforcement of state power. Moreover, FSGOs may be considered a reinforcement of the legal subjectivity of corporations. Different legal strategies have been developed in the United States, Europe and in the international community. They illustrate that we can observe the development of a normative framework of business ethics and corporate social responsibility as the foundation for understanding the role of corporations in society.

European initiatives with regard to moral management and corporate social responsibility have been promoted from the 2001 document “Promoting a European Framework for Corporate Social Responsibility: Green Paper.” This document was followed by a communication about corporate social responsibility from the European commission and the establishment of the European Stakeholder Forum. The ideas of voluntary self-regulation and stakeholder dialogue are central to the legislative approach of the European Commission. The legislative framework of the European approach is much weaker than the guidelines that have been implemented in the United States. The emergent European paradigm of corporate social responsibility focuses on developing a new morality of ethical virtue rather than direct legal enforcement. As such, the European Union’s approach attempts to reflect the traditions of corporate social responsibility and engagement in local community, which is central to the business tradition of European societies. There is an effort to develop a culture of virtue where ethics is an integrated part of business economics and management. To avoid criticism as an instrumental tool, we can say that basic ethical principles are integrated into corporate social responsibility as in element of postconventional virtue morality in European social economies, as defined by the French scholar Gilles Lipovetsky.

This process of creating norms and legal rules of corporate social responsibility in the United States and Europe is part of an effort to establish global and international norms and guidelines of business ethics. To succeed it is important that these norms be extended to be valid throughout the global market. Liberalization of international economics and business requires greater ethical responsibility among corporate actors in international relations. We can perceive the institutionalization of international regimes of business ethics based on universal rules and human rights as a moral minimum while leaving space for differences in substantial norms of local cultures as long as these norms do not conflict with universal standards. As a normative basis for international business conduct, corporate citizenship contributes to establishing such international regimes of good norms for moral management and multinational business practice. We are moving toward the creation of a cosmopolitan view of business ethics considering the firm as a world citizen in a cosmopolitan society. Many international organizations and corporations have contributed to the establishment of such an international regime of business ethics, such as the OECD, the World Economic Forum, and the UN Global Compact principles, the work of the UN Commission on Human Rights on corporate social responsibility and human rights. In particular, the Caux Round Table principles (founded on a universal concept of human dignity) can be cited as an important effort to promote self-imposed norms of high integrity for powerful multinational corporations as international guidelines for business ethics that are mediating and bridging East and West.

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Corporate Morality: Integrity, Trust, and Legitimacy

What is the foundation of the morality of the corporation? This issue concerns the ethical and legal foundations of the idea of corporate social responsibility considered within the framework of an institutional concept of corporate identity and personhood. In this context, there have been many points of view on the moral identity of corporations. In particular, the collectivist and constructivist concept of corporate identity have been proposed as a useful foundation of the organizational integrity of the good citizen corporation (or the corporation as a world citizen). At the institutional level, organizational integrity can be considered a result of efforts to establish successful strategies of moral management. This is also the basis for trust and accountability of corporations, making it possible to formulate an institutional and communicative concept of social legitimacy for corporations.

Accordingly, the idea of corporate social responsibility is evolving on the basis of recent developments of business ethics in the international community. We can analyze the conception of corporate social responsibility in the current economy on the basis of an institutional theory of organizations in society. The problem is what conception of the firm and corporate intentionality is implied in recent developments of corporate social responsibility. One idea has been to propose a dialectical concept of corporate intentionality finding a way to overcome the oppositions between the collectivist and the nominalist view on corporate social responsibility, as suggested by Peter French. This position can be considered an institutional concept of corporate social responsibility, which constitutes the theoretical foundation of the concept of corporate citizenship. This view on corporate social responsibility stems from a criticism of a concept of responsibility in which it is not possible to ascribe any institutional ethical responsibility to corporations. This concept of institutional responsibility can be considered an expression of the legal concept of due diligence present through the organization’s compliance and ethics programs where the organization expresses its good intention and standards of integrity.

Accordingly, we can put forward the notion of organizational integrity on the basis of the ideas of business ethics and corporate social responsibility. This can be conceptualized as the foundation of good corporate citizenship. The notion of integrity implies the idea of a virtuous and responsible organization. There is a close connection between individual and organizational integrity. Integrity strategies should be distinguished from compliance strategies because they deal with values and ethics rather than rules and regulations. In organizations there should be formulated strategies for implementation of organizational values program according to specific values, histories, and contexts of specific firms. Moreover, integrity expresses organizational commitment to justice and fairness with regard to different stakeholders. Indeed, there is also a close link between leadership, ethical judgment, triple-bottom-line management, and evolving organizational integrity. Establishment of organizational integrity and managerial judgment contributes to formulating a framework for handling organizational dilemmas in daily leadership practices. Organizational integrity in judgment aims at the ideals of openness, honesty, wholeness, and thoughtfulness.

We may say that values-driven management programs are useful tools to promote a culture of integrity, accountability, and trust within organizations. It is argued that genuine trust relations should be considered to be important results of moral management and ethics in organizational culture. Because of globalization and greater public awareness, a stronger link has been established between accountability, trust, and social expectations of corporations. The need to build trustworthy business practices includes management of problems of corporate governance, accountability, and transparency concurrent with a deep crisis of public trust and the social acceptance of corporations. Therefore, it is necessary to discuss the significance of trust in order to restore the corporate image, develop good corporate governance, and achieve social acceptance of business in a democratic society. I believe that trust should not only be considered an instrument of economic action, but also an important social glue and informal lubricant of business organizations.

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To consider business practices as based on ethical values moves trust to the center of corporate social responsibility as the background for corporations’ accountability and integrity, because generalized mistrust and opportunistic behavior are the limits of fair business practice and cannot be considered the basis for the internal unity and external legitimacy of business corporations. On this basis, it is possible to defend an ethical definition of trust considering that what is trustworthy is based on the firm’s accountability and responsibility. To trust someone implies means holding that person or organization accountable over time, believing that its actions will follow principles of integrity and honesty. Moreover, trust is developed out of mutual expectations and promises for reciprocity and collaboration in the future. Thus, there is a close connection between integrity and the accountability of transparent business institutions.

The ideas of responsibility, integrity, accountability, and trust can be promoted as constituting elements in a theory of the legitimacy of corporations in modern society, as proposed by Suchman. Legitimacy in global society is an important element in the requirements for the good citizen corporation. The quest for legitimacy is not only about economic efficiency of transaction costs, but business ethics of theories such as Aristotelianism, Kantianism, and Utilitarianism, involving middle-level ethical principles such as the four ethical principles of autonomy, dignity, integrity, and vulnerability, attempt to formulate the basis for social and political legitimacy of corporations in democratic societies. The good citizen corporation uses these political ideas as the basis for a theory of rationality of corporations in economic markets in complex societies.

We can analyze the impact of different views of the firm and economic life in different theories of management and economics in the twentieth and twenty-first centuries. The views of legitimacy in some of the most influential theories of economics and management can be used to promote an institutionalist and stakeholder-oriented view of corporate legitimacy, which is based on the idea of the good citizen corporation. In the perspective of ethical theories, the idea of stakeholder dialogue is viewed as the normative basis of the concept of good corporate citizenship. These ideas makes us escape the Weberian iron cage of instrumental rationality opening for market regimes based on integrative business ethics with a broader social basis. Legitimacy is founded on the social community and a human-life world based on views of justice as fairness, protection of rights, and the promotion of the common good for society. Thus, according to this alternative view of the legitimacy of business in society, responsibility, integrity, and accountability emerge out of the idea of respect for good business ethics as the “license to operate” for the firm in society. We can call this view of good business “republican business ethics” which means that the firm should act as a good citizen being responsible for its duties toward society and be a good servant of society. This republican attitude, where the firm is oriented toward the common good, does not only concern the duties toward the nation-state, but indeed also toward the international community. Therefore social responsibility and ethical business become global business ethics and we can say that the firm has cosmopolitan responsibility to act as a world citizen that is concerned about global world problems concerning social, environmental and economic issues.

Further Reading

Bidault F, Gomez PY, and and Marion G, (eds.) (1997) Trust, Firm and Society. London: Macmillan.

Boatright JR (2003) Ethics and the Conduct of Business, 3rd edn. New Jersey: Prentice Hall.

Bowie NE (1999) Business Ethics. A Kantian Perspective. Cambridge MA: Basil Blackwell Publishers.

Carroll AB (1979) A Three Dimensional Model of Corporate Social Performance. Academy of Management Review 4: 497–505.

Crane A and Matten D (2004) Business Ethics. A European Perspective. Oxford: Oxford University Press.

De George R (1999) International business ethics. In: Frederick RE (ed.) A Companion to Business Ethics. Blackwell Companions to Philosophy, pp. 233–243. Oxford: Blackwell Publishing.

Dienhart JW (2000) Business, Institutions and Ethics. A Text with Cases and Readings. Oxford: Oxford University Press.

Donaldson T and Dunfee TW (1999) Ties that Bind. A Social Contracts Approach to Business Ethics. Boston: Harvard Business School Press.

Driscoll D-M and Hoffman WM (2000) Ethics Matters. How to Implement Values-Driven Management. Waltham MA: Centre for Business Ethics, Bentley College.

Elkington J (1999) Cannibals with Forks. The Triple Bottom Line of 21st Century Business. Oxford: Capstone.

Enderle G (1999) International Business Ethics, Challenges and Approaches. Notre Dame IN: University of Notre Dame Press.

European Commission (2001) Directorate-General for Employment and Social Affairs, Industrial Relations and Industrial Change, Unit EMPL/D.1 (2001). Promoting a European Framework for Corporate Social Responsibility, Green Paper, July, 2001, Luxembourg: Office for Official Publication of the European Communities.

Frederick WC (1994) From CSR1 to CSR2: The maturing of business and society thought. Business and Society 33: 150–164.

Frederick WC (1995) Values, Nature and Culture in the American Corporation. New York: Oxford University Press.

Freeman ER (1984) Strategic Management, A Stakeholder Approach. Boston: Pitman Publishing Inc.

French P (1984) Collective and Corporate Responsibility. New York: Columbia University Press.

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Friedman M (1970) The social responsibility of business is to increase its profits. New York Times Magazine, September 3, 1970. Reprinted in Scott B. Rae and Kenman, L Wong, Beyond Integrity. A Judeo-Christian Approach to Business Ethics. Grand Rapids Michigan: Zondervan Publishing House, 1996, pp. 241–246.

Laufer WS (1996) Integrity, diligence, and the limits of good corporate citizenship. American Business Law Journal 34: 157–181.

Lipovetsky G (1991) Les noces de l’e´thique et du business. Le De´bat 67: 145–167.

Lu¨ tz MA and Lux K (1979) The Challenge of Humanistic Economics. Menlo Park, CA: Benjamin-Cummings Publishing.

Mittchell RK, Agle BR, and Wood DS (1997) Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review 22: 853–886.

Paine LS (1994) Managing for organizational Integrity. Harvard Business Review 72(2): 106–117.

Paine LS (1997) Cases in Leadership, Ethics and Organizational Integrity. A Strategic Perspective. Chicago: Irwin.

Paine LS (2003) Valueshift. Why Companies Must Merge Social and Financial Imperative to Achieve Superior Performance. New York: McGraw-Hill.

Philips R (2003) Stakeholder Theory and Organizational Ethics. San Francisco: Berrett-Koehler, Inc.

Powell WW and DiMaggio PJ (1991) The New Institutionalism in Organizational Analysis. Chicago: The University of Chicago Press.

Rafalko RJ (1994) Remaking the corporation: The 1991 US sentencing guidelines. Journal of Business Ethics 13: 625–636.

Rawls J (1971) A Theory of Justice. Cambridge MA: Harvard University Press.

Rendtorff JD and Kemp P (2000) Basic Ethical Principles in European Bioethics and Biolaw, Vol. I–II. Copenhagen: Center for Ethics and Law.

Rendtorff JD (2009) Responsibility, Ethics and Legitimacy of Corporations. Copenhagen: Copenhagen Business School Press.

Ricœur P (1990) Soi-meˆme comme un autre. Paris: Le Seuil.

Sen A (1987) On Ethics and Economics. Cambridge MA: Blackwell Publishers.

Solomon RC (1992) Ethics and Excellence, Cooperation and Integrity in Business. New York: Oxford University Press.

Suchman MC (1995) Managing legitimacy: Strategic and institutional approaches. Academy of Management Review 20(3): 571–610.

Ulrich P (2008) Integrative Economic Ethics, Foundations of a Civilized Market Economy. Cambridge: Cambridge University Press.

Willmott H (1998) Towards a New Ethics? The contributions of poststructuralism and posthumanism. In: Parker M (ed.) Ethics in Organizations. London: Sage Publications.

Relevant Websites – CSR Europe. – European Business Ethics Network (EBEN). – International Society of Business,

Economics and Ethics. – Society for Business Ethics. – UN Global Compact.

Biographical Sketch

Jacob Dahl Rendtorff is Professor of Ethics, at Roskilde University, Denmark and is Head of studies and Head of research at his department. He was educated in universities in Denmark, Germany, and France and he has been visiting professor in Utrecht, Freiburg, Rome, Boston, Santa Clara, Stanford, and Louvain. Dr. Rendtorff has been director and co-director on several research projects; in particular, he was rapporteur to the European Union as a member of a BIO-MED II Project. He has written more than 50 articles, authored seven books, been editor or co-editor on more than ten other books in Danish, English, French and German. His work covers issues of existentialism and hermeneutics, French philosophy, ethics, bioethics, and business ethics as well as philosophy of law. In particular, Basic Ethical Principles in European Bioethics and Biolaw, Copenhagen and Barcelona (2000) (written with Peter Kemp) and Responsibility, Ethics and Legitimacy of Corporations (2009). Dr. Rendtorff is currently member of the board of the Danish Philosophical Forum and he is vice president of the Danish Association for philosophy in the French language. He is also a member of the international group on reflection about ethics, Eco-ethica, founded by Professor Tomonobu Imamichi.

Source Citation

Source Citation   

Gale Document Number: GALE|CX3610600057