🌳

Evolution of Business Ethics

5 Distinct Stages

1. Before 1960

2. The 1960’s

3. The 1970’s

4. The 1980’s

5. The 1990’s

And we have the 21st century

Before 1960
The concept of “living wage”(1) was used during this period.

Until 1960’s, ethical issues were discussed in churches and other religious and
philosophical institutions.

Ex - Religious leaders raised questions about fair wages, labor practices and the
morality of capitalism.

Evolution of Business Ethics 1

 The 1960’s : The Rise of Social Issues in Business
An anti- business attitude (Against toward business and especially big business)
was created towards military- industrial complex which controlled the economic and
political sides of the society.

In 1960’s the inner cities died and ecological problems arose.

The growth of consumerism (2)-During this period has led to many organizations
improving their services to the customers

In 1962, Consumers’ Bill of Rights were introduced by President John F. Kennedy

which includes

1. The right to safety,

2. The right to be informed,

3. The right to choose,

4. The right to be heard.

Evolution of Business Ethics 2

 Figure 1:

Picture of the Bill of Rights, showing a brief summary of each of the first tenth
amendments. Taken from (http://www.lorraineprofeta.us/BillOfRights.jpg)

Other remarkable movements during the period

Criticizing General Motors Corporation by Ralph Nader in 1965.

1967 Wholesome Meat Act - approved to prevent polluted or misbranded meat

and meat products from being sold as food and to ensure that meat and meat
products are butchered and processed under sanitary conditions.

1968 Radiation Control for Health and Safety Act.

Evolution of Business Ethics 3

 1970’s : Business Ethics as an Emerging Field
Business ethics began to develop as a field of study.

Beginning of teaching and writing about corporate social responsibilities.

Businesses gave more attention towards their public image and started to realize
the need for addressing ethical issues more directly.

Centers dealing with issues of business ethics were also established during this
period.

By the end of 1970’s, a number of major ethical issues had emerged.

Ex -

Bribery (3),

misleading advertising,

Price collusion (4),

Product safety,

Environment.

Business ethics became a common expression.

The 1980’s : Consolidation/Linking

Acknowledgement of business ethics as a field of study.

High growth of institutions, organizations and members which promoted this field of
study.

The Defense Industry Initiative on Business Ethics and conduct was developed to
guide corporate support for ethical conduct.

Public’s interest was more on self regulation rather than on government regulations
which lead towards lifting trade barriers.

Due to lifting regulations, rules of businesses changed phenomenally.

Evolution of Business Ethics 4

 1990’s : Institutionalization of Business Ethics
Lifting of regulations and promoting free trade lead to health related social issues
such as teenage smoking. (Due to restricting cigarette advertising)

The federal Sentencing Guidelines for organizations was approved by Congress in

November 1991. This guideline introduced law incentives (encouragement) to
reward organizations for taking action to prevent misconduct. ( misbehavior.)

By taking preventive actions, a company could avoid penalties.

The 21st century : A New Focus on Business Ethics

Although business ethics appeared to become more institutionalized in the 1990’s,
many accounting scandals (5) made it evident that questionable accounting
practices had became a part of the culture of many companies.

In 2002, the Sarbanes - Oxley Act was passed with the intention of addressing the
loss of confidence in financial reporting and corporate ethics.

The new law made securities fraud (6) a criminal offense and charged penalties for
corporate fraud.(6)

In 2004, amendments (7) were made to the Federal Sentencing Guidelines for
organizations, which lead towards placing the responsibility on the company’s
leadership.

Accordingly, directors of an organization are held responsible for discovering risk

related with ethical conduct.(8)

Extras

1. living wage- “Income sufficient for education, recreation, health and retirement”

2. Consumerism- “The protection or promotion of the interests of consumers.”

Evolution of Business Ethics 5

 3. Bribery - blackmail

4. Price Collusion - “Collusive pricing or price collusion is a scenario when several
companies agree to set the price of the good or service unanimously. Their
objective could be to earn more profit or gain more market share.”

5. Scandals - An action or event that shocks people and makes them feel disapproval

6. Fraud - Cheating

7. Amendments - Modifications

8. Conduct - Behavior

Evolution of Business Ethics 6