Content provided in partnership with

Business Services Industry

The academic coverage of business ethics: does economics measure up?

American Journal of Economics and Sociology, The, July, 1995 by David J. Hoaas, Don C. Wilcox

Introduction

There is a consensus in the 1990s that schools and colleges of business need to address questions related to business ethics and the social responsibility of business. An emphasis on the general subject matter of ethics has steadily increased since the mid 1970s when the American Assembly of Collegiate Schools of Business (AACSB) urged the incorporation of the topic into the course curricula (Bishop, 1992, 291).(1)

Most Popular Articles in News: The Ten Best Laptop bags; Tata plans cheapest-ever car for Indian market; GLOBALIZATION AND THE DEVELOPMENT OF UNDERDEVELOPMENT OF THE THIRD WORLD; Corn is good for you; Corn is not only a tasty treat, but also a cereal that ...; THE 50 BEST STYLISH HANDBAGS TO CARRY; More »

The multiplicity of legal cases against managers and business organizations, that are headlined in the popular press with some degree of frequency, certainly indicates that the need exists for business ethics to be given attention in the classroom. Accounts of check-kiting schemes, defense contract fraud, collusive bidding procedures, cover-ups of health risks, unfair takeover tactics, insider trading, illegal kickbacks, conflicts of interest, and product adulteration appear as weekly items in the news.

Consequently, business ethics has now become a prime academic growth area, spawning new textbooks, research, and scholarly articles. Interest among professionals is most vividly demonstrated by the March, 1987 endowment of $20 million by the former investment banker and Securities and Exchange Commission chairman, John S. R. Shad, for a "Business Leadership and Ethics" program at the Harvard Business School (Schoenfeldt, McDonald, and Youngblood, 1991, 237-38). Over 500 business ethics courses are currently taught on American campuses. Ninety percent of the nation's business schools now provide instruction in the area of ethics. There are more than 25 textbooks in the field and three academic journals devoted to the topic. At least 16 business ethics research centers are now in operation, and endowed chairs in business ethics have been established at Georgetown, Virginia, Minnesota, and a number of other prominent business schools (Stark, 1993, 38). As Stieber and Primeaux have pointed out ". . . the insider-trading scandals on Wall Street . . . have done more to advance the concept of managerial ethics as a valid field of study than all of the curriculum committees at all of our major universities" (Stieber and Primeaux, 1991, 338). Merritt has concluded that business schools ". . . need to make their graduates more sensitive to issues of ethics and the importance of setting the proper tone in organizations" (Merritt, 1991, 631).

The literature on business ethics continues to debate the issue about what approach to follow when teaching the subject. Should it be taught as a separate business ethics course, or via an integrative approach by which ethical issues are incorporated into all the courses within the business core? In this paper the authors take the position that the integrative approach will best serve business students because of the interrelationships of the business disciplines and because of the nature of the issues in the business world that graduates will face.

Since the educational task is to ensure an examination of the diversity of ethical issues and to insure analysis of issues across disciplines, the integrative approach is seen as the most effective means of acquainting students with the diverse ethical issues they may confront in business. As noted by Bishop, "Students should be faced with ethical issues through multiple courses and be exposed to diverse ethical dilemmas," (Bishop, 1992, 294). In the business world, ethical issues typically are many faceted, cross disciplinary lines, and seldom arise in isolation (Smith, 1988, 13).

With respect to the economics literature, the study of the relationship between economics and ethics is not new. Buchanan (1985), Hamlin (1986), and Sen (1987) all provide book length treatments of this study. More recently, Hausman and McPherson (1993) have surveyed the topic from the economist's and the moral philosopher's perspectives.

However, many scholars still maintain that economics and ethics have nothing to do with one another. They argue that the study of economics is a purely technical pursuit, which can provide policy-makers with knowledge concerning the consequences of proposed policies. Then it is left to the policy-maker to make the ethical or moral choice between competing policies. The job of the policy-maker is to choose the most appropriate means toward a given end. "Ethics determines the ends, and economics determines the means. They are both crucial to policy, but they have nothing much to do with one another," (Hausman and McPherson, 1993, 672). The individuals supporting this view apparently adhere to the premise of Friedman's 1970 New York Times Magazine article "The Social Responsibility of Business is to Increase its Profits."

There are at least four reasons why economists should be interested in moral and ethical issues. First, since economists are interested in outcomes, they must be interested in the motivation of the economic agents within their models. The morality of the economic agents can influence their aims, their actions, and therefore, economic outcomes. Second, standard welfare economics is based on moral presuppositions. The acceptance of the Pareto Principle and a focusing on efficient outcomes is a moral judgment. Third, in policy making, fairness, opportunity, and freedom are all important and relevant concepts. If economists are to be useful to policy-makers, they must be able to incorporate these somewhat noneconomic ideas into their models. Finally, positive and normative economics cannot always be readily separated. People can only understand the positive theorizing behind an economic issue if they understand the normative importance of why the particular economic problem arose in the first place (Hausman and McPherson, 1993, 673-78).

Business Services Industry

The academic coverage of business ethics: does economics measure up?

American Journal of Economics and Sociology, The, July, 1995 by David J. Hoaas, Don C. Wilcox

Find Research Guides for:

Find Featured Titles for: Reference

Most Popular Articles in News

Most Popular Publications in News