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Ethical Imperative

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Essay title: Ethical Imperative


Today's businesses are entrenched in a great conflict. The interests of the stockholders and the interests of the populace at large seem to be in constant turmoil. On one hand, stockholders desire profit for themselves, and on the other, the general population does not care to be exploited by those whose sole motive is profit. This is a conflict because those who buy a business's products tend to be in the general public, and they have the ability to make or break a company's profit margin, but many stockholders are less interested in serving any sort of public good than making money. However, in order to maintain economic stasis in the world, and to maintain market share and customers, business needs to evolve to become more socially responsible in both the environment and in labor practices.

Current business theory holds that business has operated and is operating in five different generations. This theory is that as the world becomes more aware of business practices, there is more of a need for business to operate in an ethical or responsible manner. With each progressive generation of business issues, the company becomes more socially aware and responsible. Growing from economist Milton Friedman's idea that the only obligation a company has is to its shareholders to the belief that the corporation has an obligation to help improve the world, the generation theory in business has gone the furthest in explaining the role of the public in business (Mendes 1).

First-generation businesses believe, like Friedman, that their only obligation is to themselves and their shareholders. The best examples of first-generation businesses existed in the American Gilded Age (1875 – 1900). In these corporations, the labor was treated as expendable and was prevented from asserting their human status by unionizing. Strikes for better conditions, wages, and hours were often ended with violence, almost always instigated by the wealthy business owners (Zinn 239). Fortunately, businesses of the first generation have essentially ceased to exist with the rise of public interest in the dealings of companies, especially after several different scandals in the 1970s (Mendes 1).

Codes of conduct for ethical behavior are the written policies of second-generation businesses. These codes pertain to the employee's interaction as a representative of the company at large. Primarily, they relate to bribing or accepting bribes from government officials, which could cast an unfavorable smear on the company's image. The other main function is to deter corporate espionage, either for or against the company, by giving no incentive and, indeed, offering strict prohibition and retribution. The vast majority of today's companies are of the second generation. This is because extensive research has demonstrated time and again the enhanced profitability of these businesses, proving that ethics and profit can and do go hand in hand. This profitability is also a key contributor to the death of first-generation businesses, as both consumers and stockholders enjoy a company with a good reputation and ethical employees (Mendes 1).

Third-generation businesses include in their codes of conduct the rights of all those who are tied to the company, including employees and customers. This means that products are reliable and safe, and that employees receive fair wages and safe working conditions. There is a growing number of third-generation businesses in the industrial world. The reasons for implementing third-generation policies are increased employee motivation and productivity, customer satisfaction and improved relations within the corporate world. All of these factors lead to an increase in profit. Indeed, many businesses of the third-generation have begun to include foreign workers in their codes of conduct, providing them with safer and less hostile work areas. This last innovation was, again, due to public outcry over the conditions of those working in the Third World (Mendes 1, 2).

There is a fear, real or imagined, that the so-called ‘ethical consumerism' of third-generation businesses will push jobs and capital away from the host countries of corporations to a country of lower standards than the host country. As of now, there are not enough third-generation businesses to prove or disprove this argument with any degree of certainty. To put it another way, the profitability of these companies cannot be evaluated. However, there are two examples of companies operating at or above the third-generation that are very successful: Levi-Strauss, and Sara Lee (Mendes 2)

Businesses of the fourth-generation take a further degree of social responsibility in acknowledging the potential impact of company dealings on the community in which it resides and the environment around

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