Business Ethics

“Business” has two meanings. A “business” is an entity that offers a good or service for sale, typically with the goal of making a profit. Wal-Mart and Toyota are businesses. “Business” can also mean the activity of exchange. An individual does business with Toyota when she exchanges some of her money for one of its cars. So “business ethics” includes the study of the ethics of the entities that offer (and often produce) goods and services for sale, as well as the ethics of exchange and activities connected with exchange (e.g., advertising). Philosophers have long been interested in these subjects. Aristotle worried about the effects of commerce on character, while Aquinas wrote on profit and prices. Smith and Marx thought deeply about the organization of the process of production. Business ethics in its current incarnation traces its roots to the 1970s and 1980s, when a group of moral philosophers applied ethical theories to business activity. A number of business ethics journals were created around this time, and business ethics became a familiar course in philosophy departments. Common topics of inquiry were and continue to be the purpose of the firm, corporate governance, corporate moral agency, rights and duties at work, fairness in pay and pricing, the limits of markets, marketing ethics, supply chain ethics, and corporate political activity. Not long after philosophers reinvigorated the field, social scientists entered it (and in fact had been working on related issues the whole time). They have increasingly pulled the field, and its academic courses, into business schools. This article concentrates on the philosophical or normative side of business ethics, but it also says something about the descriptive or social scientific side when they overlap.