Throughout the centuries, there have been various approaches to business ethics. These include the Aristotelian approach, the Market failures approach, the Shareholder primacy approach, and the Corporate moral agency approach. These approaches were not all developed at the same time, however, and each has its own merits.
Corporate moral agency
Several arguments have been formulated to support the idea that corporations are moral agents. Some of the most common are the following:
There are three main ways that companies can be considered as moral agents. The first is that they can act as a collective body, whose mission is to achieve a particular goal. The second is that they can act as a collective with power and wealth.
The third is that they can perform a moral duty. A company can be held responsible for their actions, assuming that they follow the correct procedures. This is a controversial idea, but there are arguments on both sides.
According to the Guiding Principles, corporations should act to avoid rights infringements and mitigate harms caused by their activities. It is important to note that the principle is not a legal requirement.
Aristotelian approaches
Developing an Aristotelian approach to business ethics opens up a new vista for scholars in the field. This type of research relies on a synthesis of classical concepts, while making the ethical case for contemporary business practices. Moreover, it focuses on the role of law in ethical decision-making. It is an intriguing subject to investigate, especially in light of recent developments in the business world.
The Aristotelian concept of community is particularly relevant to a modern corporation. In this context, a community is an entity consisting of a group of people that work together to achieve a common goal. In addition, the idea of a community relates to a close relationship with the divine. A good community also provides a context for resolving conflict, a function that is not always available in our day and age.
Market failures approach
‘Market failures’ refers to the inefficient allocation of resources in a free market. These failures can be caused by monopolies, negative externalities, and insufficient information. These types of market failures can occur in an explicit market, or in an implicit market.
Market failures can also be caused by rent seeking by special interest groups. They can be addressed by government regulations, or by voluntary collective action. Private markets can also be used to address some of these problems.
The “market failures approach” is a contemporary business ethics theory developed by Joseph Heath. It provides a framework for thinking about business ethics in a market economy. He argues that there is an implicit morality in the market system. He believes that managers have a duty to make the best use of the system, and avoid taking advantage of the imperfections of the market.
Shareholder primacy
Historically, shareholder primacy has been a staple of business ethics. It has a legal foundation and is widely embraced by companies, managers, and law makers.
Using the term “shareholder” in a broad sense, however, may be misleading. A corporation is a multi-party entity and has many different stakeholders, including owners, shareholders, employees, and the community. It is important to recognize all of these parties when making corporate decisions.
In terms of shareholder primacy, it is important to identify the most important stakeholders and make sure that you are fulfilling your fiduciary duty to your shareholders. If you neglect to do this, it could lead to negative earnings. Similarly, focusing too much on short-term goals can have a detrimental impact on the company’s sustainability.
For example, one of the best ways to measure the performance of a corporation is to examine the shareholder wealth created by the firm. This can inform students’ conduct in the business world.
Social responsibility
During the late 1960s and early 1970s, the concept of business ethics and social responsibility became more prevalent. Corporate consciences and increasing public pressure fueled the movement. Government and legislative legislation also played a role. Companies responded to the pressures by starting programs to become more socially responsible. Some industries had already adopted codes of ethics. Others, such as the chemical industry, took it further and adopted Responsible Care codes.
A number of academic philosophers in the field of business ethics were involved. Some of these scholars were religious thinkers. They continued writing about ethics and business.
The 1960s also saw the development of social issues courses in business schools. The textbooks tended to focus on empirical studies, rather than on ethical theory. However, a number of theories were introduced, such as Kantian and Aristotelian approaches, which examined the moral character of actors.
