Business and Professional Ethics
Business and professional ethics studies the moral norms governing commercial activity and the conduct of professions, including the responsibilities of firms, managers, and practitioners to clients, employees, and society.
Definition
The branch of applied ethics concerned with moral principles in commerce and in the practice of professions.
Scope
This area covers the purpose and responsibilities of business corporations, the obligations professionals owe by virtue of their role and expertise, and the moral evaluation of markets and exchange. It includes corporate social responsibility, stakeholder versus shareholder theory, conflicts of interest, whistleblowing, codes of professional conduct, and the limits of what may be bought and sold. As a reference subject it describes competing frameworks and debates rather than advising firms or professionals what to do.
Sub-topics
Core questions
- What, if anything, do business corporations owe beyond returns to their owners?
- Whose interests should managers serve—shareholders, or a wider set of stakeholders?
- What special obligations arise from professional roles and expertise?
- Are there goods that should not be allocated by markets?
Key theories
- Stakeholder theory
- R. Edward Freeman's view that firms should be managed in the interests of all parties affected by them—employees, customers, suppliers, and communities, not only shareholders.
- Shareholder (stockholder) theory
- Milton Friedman's position that the primary social responsibility of business is to increase profits within the rules of the game, leaving broader social aims to other institutions.
History
Business ethics emerged as an academic field in the 1970s and 1980s, spurred by corporate scandals and by Friedman's influential 1970 essay defending the profit-maximizing view. Freeman's 1984 articulation of stakeholder theory provided the principal alternative, and integrative social-contract approaches followed in the 1990s.
Debates
- Shareholder versus stakeholder primacy
- A central dispute over whether managers' fiduciary duties run only to shareholders or to a broader set of stakeholders, with implications for corporate purpose and social responsibility.
Key figures
- R. Edward Freeman
- Milton Friedman
- Thomas Donaldson
- Norman Bowie
Related topics
Seminal works
- freeman1984
- friedman1970
- donaldson1999
Frequently asked questions
- Is business ethics just public relations?
- No. As an academic field it analyses the moral foundations of commercial and professional conduct using ethical theory, distinct from a firm's reputation management, though the two are sometimes confused in practice.
- How do business ethics and professional ethics differ?
- Business ethics focuses on commercial organizations and markets, while professional ethics concerns the role-based duties of practitioners such as physicians, lawyers, engineers, and accountants; the two overlap in many workplace settings.