Does business ethics begin where the law ends?
John C.Maxwell believes that there are three reasons why people make unethical choices in business situations : 1) we do what is most convenient, 2) we do what we must do to win, 3) we rationalise our choices with relativism.
Those reasons headed by the fear of losing business and consequently losing profit can lead individuals and companies tomake decisions, that, while not illegal, raise concerns about fairness, equity, justice and honesty. Examples do not lack : the despoiling of rivers with industrial pollutants, the exploitation of sweatshop workers, the payment of bribes to governments...
But despite the frequency of occurrence of such examples and recent financial scandals, one should not think that business ethics is anoxymoron. Realization by firms of the importance of ethics in business is visible in many respects. Business ethics has then to be understood as the study of business situations, activities and decisions where issues of right and wrong are addressed. This concept is complex as there is no definite answers to an ethical issue. But if ethics were simple, we could have simple laws. Law is indeed alsoabout right and wrong and offers more definite answers to specific issues. However, law does not cover all situations, and where law has to be observed, there is of course the question of interpretation of that law. For those reasons, it is said that business ethics begins where the law ends. Our aim is to analyse the reality of this affirmation.
We will see in a first part that business ethicsbegins where the law ends because they are two distinct concepts and that business ethics deals with issues that law does not cover ; and in a second part that business ethics and law are however closely connected and can not be understood in a separate way.
1_ Business ethics and law are two separated concepts and business ethics deals with issues that law does not cover :
The firstobservation that can be made is that ethics, apprehended under the name of moral, and law are inherently distinct. Nowadays, the distinction is clearly affirmed, and that, through different approaches.
First, sources of law and ethics are not the same. Rules of moral come from the divine revelation, the individual conscience or the social ethics whereas rules of law come from an institution which isauthorized to enact them. Then, their content are different. Morality belongs to a vaster domain insomuch as it deals not only with the relationship between men but also with the relation between the man and himself, or even between men and the divinity. Their purpose also differ. Moral rules aim to reach the perfection of the mankind whereas rules of law aim to organise the society. Finally, thesanctions are not the same. The law sanctions through the public power whereas sanctions of moral rules are internal to men. Men can not be forced by external forces to execute moral rules.
Historically, this distinction has been progressive. During the 19th century, most of jurists advocated the indifference of the law towards morality, but others managed to demonstrate the close relationshipbetween the two concepts in the 30's. In the 60's, moral has been rejected again. Moral was then considered as an intrusion in society in the private sphere, whereas law was considered as neutral. This movement has influenced the evolution of our legislation : decriminalization of abortion, adultery, homosexuality, liberalization of divorce...
We can however observe, since the 80's, a return ofmoral under the concept of ethics. In a general way, one can notice the appearance of professional moral rules. Those one go beyond the law imposing some ethical demands which are not covered by the law. The increasing importance of good faith in business law is an example of this return of moral. Ethics has also entered in relation with law in the domain of bioethics.
In a nutshell, ethics...
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