What comes to mind when you hear the phrase “business ethics?” Many people associate ethics with following your conscience or the law. However, business ethics is a lot more complicated. Business ethics is not simply following the law or choosing to follow along with the status quo of other companies. Instead, business ethics are principles and values that guide how a company does business. Like organizational behavior, there is no exact time and place in which business ethics were created. However, there are historical events that have helped to develop each aspect of the term. Let’s explore some of these events and how they contributed to business ethics as we know them today.

Aristotle’s The Nicomachean Ethics (translated by W. D. Ross) begins with the statement that “every art and every inquiry, and similarly every action and pursuit, is thought to aim at some good.”

Richard T. De George describes the history of business ethics to have blended together from different strands. He believes each strand represents a different yet equally important perspective on business ethics. Depending on what perspective historians have on the topic, will shift their version of history.^[1] For the purpose of this section, let’s examine a few of the strands he has identified to ensure we get more of a “whole picture” perspective.

The first strand De George discusses is the one that can be dated back the furthest. “Ethics in business” as he refers to it, includes the history of moral standards used in business practices since the dawn of time. Instead of having a code of ethics like many companies do today, people centuries ago would still use ethical guidelines like the Ten Commandments or Aristotle’s economic relations philosophies.  Even after the fall of Rome, clear discussions of business ethics did not exist, however, there were many conversations about justly and honestly buying and selling good and services. Religious organizations used morals and biblical teachings to support ethical behavior, however, it was not until the mid 1900s that the term “ethics” or “ethics in business” was coined.

The next, and more recent strand De George investigates is the academic field of business ethics. During Vietnam, Americans became hypercritical of ongoing government and business operations. Big businesses were booming and the chemical industry was growing rapidly. These swift changes in growth drew a lot of attention and protest. People were concerned for equal employment opportunities and upset about the environmental damage caused by large corporations and the chemical industry. To help counter the protests, some corporations began to focus on a new term, social responsibility. Social responsibility was a term used by companies to help correct the error in their ways. If they were being accused of hiring discrimination, companies could then tell the public that they had a social responsibility to hire a diverse group of individuals. A company was accused of too much pollution? They can use social responsibility to change their impact on the environment and promote cutting back on harmful pollutants. Social responsibility differed from one industry to another since there were no set standards or descriptors in place to clearly define it. In the 1960s, social responsibility entered into the world of academia and is still a popular class in many business schools today. However, it wasn’t until the 1970s that business ethics as an academic field of study was born.

In the 1970s, scholars, theologians, and philosophers were all investigating the world of business. With the onset of so many new perspectives and ideas, the term business ethics was born. In November 1974, the first ever business ethics conference was held at the University of Kansas. The ideas and case studies discussed at the conference could be found in new business courses in the years to follow. Professors of philosophy and business alike were working together to fully examine and understand this new field. So what was the difference between social responsibility and business ethics? Business ethics were developed with a clearer set of boundaries and expectations. In addition, business ethics created more controversy within the business world than social responsibility did. Business ethics took a more critical approach to how companies operated and many argued that ethical decisions were outside of a company’s control. As we continue through this module, you will learn how companies actually can enforce business ethics and why it is so important and impactful to the success of their company.