This paper examines the philosophical basis for the argument that there is a connection between ethical behavior and profitability. Both sides of this argument – that good ethics is good business and that bad ethics is bad business – are explored. The possibility of a moral floor above which ethical behavior is not rewarded is considered, and an economic experiment testing such a proposition is discussed. Johnson & Johnson suffers a potentially devastating blow when some cyanide-laced Tylenol capsules cause several (...) deaths. Johnson & Johnson voluntarily pulls Tylenol off the shelf, to universal acclaim. When Tylenol is returned to the marketplace, its share of the over-the-counter painkiller market becomes greater than it was before the tragedy. Arthur Andersen, the venerable accounting firm, is caught in the web surrounding the downfall of Enron, Inc. As Enron’s various sins are discovered, it is found that Arthur Andersen auditors had signed off on flawed audits and had shredded documents to cover themselves. Andersen is prosecuted for, and convicted of, obstructing justice (although the conviction is later overturned). Today the firm barely exists and has no resemblance to the Big Five accounting giant of 1999. These stories seem to indicate that ethical (or unethical) behavior leads to positive (or negative) financial results. But the philosophical arguments underpinning such statements are seldom subjected to proper analysis. They are perhaps wishful thinking, or perhaps based on examples such as the above without considering other examples that may reinforce a contrary position. This paper will explore the philosophical arguments and empirical evidence regarding these statements and state some research questions for exploration in this area. In particular we will propose the possibility that a moral floor exists above which firms that engage in ethical activities will not reap rewards, but below which firms that engage in unethical activities will be punished by actors in the economic marketplace. We will discuss an economic experiment to determine if such actors indeed form a moral floor. (shrink)

The phenomenon of globalization of markets has been accompanied by calls for a globalization of ethical norms. One principle often referred to in such calls is the so-called Golden Rule. The rule, often stated as Do unto others as you would have others do unto you, has long been used and referenced in the business literature. But those who use it often do so without full realization of the rule itself and what it stands for. This paper examines the history, (...) meaning, and problems of the rule and attempts to show, through a case analysis, how these problems surface when using the rule in a business context. In so doing it attempts to clarify exactly what the rule means and how it can fit into a universal code of morality. (shrink)

In this paper we examine many of the arguments contained in Milton Friedman’s classic essay, in the form of critiques linked with learning objectives forclassroom discussions.

This study investigates possible links between small-business managers’ perceptions of stakeholder salience and their views of the ethicality of business decisions. Results indicate few if any links between the two concepts exist. They provide evidence that small-business managers make decisions in line with internal viewpoints rather than external pressures.

This study investigates possible links between small-business managers’ perceptions of stakeholder salience and their views of the ethicality of business decisions. Results indicate few if any links between the two concepts exist. They provide evidence that small-business managers make decisions in line with internal viewpoints rather than external pressures.

Student cheating and reporting of that cheating represents one form of organizational wrong-doing and subsequent whistle-blowing, in the context of an academic organization. Previous research has been hampered by a lack of information concerning the validity of survey responses estimating the incidence of organizational wrongdoing and whistle-blowing. An innovative method, the Randomized Response Technique (RRT), was used here to assess the validity of reported incidences of wrongdoing and whistle-blowing. Surprisingly, our findings show that estimates of these incidences did not vary (...) significantly when RRT questionnaire results were compared to those obtained from standard surveys. In fact, a large number of business undergraduates admitted cheating while only a small percentage reported peers'' cheating when they observed it. These results should be sobering for managers and their implications are considered in some detail. (shrink)