What is the ‘Greater Good’ in Business?

People never will stop repeating this cliché because, deep down, we know that it's not always easy to be ethical—in business or anywhere else in life! Sometimes it's hard to know what the right thing to do is. Because modern life is complex and fast-moving, we sometimes are honestly perplexed about what ethics require in a particular quandary.

Business Ethics and Community

In more general terms, businesses must care about ethics because businesses are part of a human community. Communities are held together by virtues and sound mores. As Aristotle puts it, a person without ethics is more of a wild beast than a human being. We all want to be treated with respect and care. We want to feel we can trust each other. Indeed, it is hard to envision how we could perform routine tasks, much less do business, without a modicum of trust and loyalty. Since we care about virtue, we hold our businesspeople, doctors, lawyers, tradespeople, and others responsible for their behavior. Criminal prosecutions of white-collar workers are increasingly common, a sure sign that, as members of society, we do not believe that business ethics is a silly contradiction in terms.

Social Contract

Businesses have a social contract with government. No business has an absolute right to exist. Governments allow businesses to incorporate and grant corporations certain incentives (e.g., limited liability of corporate officers) only because they believe and trust the corporations will provide genuine goods and services back to the community. The government is under no obligation to license arms dealers who traffic in stolen or forbidden weapons or other rogue enterprises. If a business incorporates, it is effectively pledging to strive to produce goods and services that will truly enrich the life of the community. Since ethics is the practice of knowing what actions are enriching and then doing these actions, anyone in business is tacitly bound by business ethics.

Free-Market Ethics

Businesspeople are implicitly bound by business ethics for a second reason. The market is in many cases not a very effective enforcer of ethics because the public may not know about a problem until many years have passed. By then, substantial damage may have been done. The company that caused the harm may have gone out of business. Think, for example, of the case of toxic waste pollution. Employees working on the inside of a firm are in a better position to know what the firm is doing. This insider knowledge creates a special fiduciary obligation binding employees. They are, in effect, the public's trustees. Like a trustee, they are morally required to consider and to act to promote the best interest of the larger community.

Comparison to other Professionals

Of course, none of this is to deny that some businesspeople lie, cheat and act in other unscrupulous ways. But there are greedy doctors and ministers, too, and no one contends that medical or ministerial ethics are mere oxymoron. Doctors treat sick patients who are not functioning at their best. Ministers counsel bereaved and sometimes desperate people. As vulnerable clients, we rely upon professionals to treat us well. The same logic applies to businesses. As customers, we rely upon drug companies to test their products adequately and to disclose any adverse side effects. Restaurant patrons trust the owners and managers to properly prepare meat so that it is safe to eat. We may not ask the hostess whether the restaurant is managed ethically before we consent to be seated, but we certainly have an unspoken expectation that those running it are looking after our interest as well as their own.

The Public View

Let’s look at the general public’s view of business ethics. The public may not differentiate between business practices that are clearly unethical (i.e., selling a VW with a ‘defeat device’) and those that are simply unpopular (i.e., layoffs to save a manufacturing plant in a community). Closing a factory or instituting cutbacks may have a negative impact on some lives but is done in the interests of the greater good.

In the end there are good and bad businesses. Business ethics is not an oxymoron any more than political ethics is an oxymoron. Oh wait, I am wrong about the latter as we have painfully learned over the years reinforced by the current election cycle.

Blog posted by Steven Mintz on June 9, 2016. Dr. Mintz is a professor in the Orfalea College of Business at Cal Poly San Luis Obispo. He also blogs at www.ethicssage.com.