Can Business and Ethics Coexist?
UMaine Business School faculty weigh in
Phil Frederick at Bangor Floral often
pays more for his plants than his competitors. He'll shell out as much
as $1.50 more for an azalea ordered from a Florida nursery than from a
government-subsidized Canadian company or an Ecuadorian grower who
heavily uses pesticides and chemical fertilizers to produce bumper crops
of lush, green plants.
"If I have a choice — (even if) it does cost me more to carry the green
plants that I do — I'd much rather buy locally," he says. "I feel
To remain competitive, Frederick says he doesn't pass the extra cost on
to customers and he doesn't spend much time thinking about how that
compromises profits. "One thing I've learned over the years is that
there's always a cost to doing the right thing. I think for some people,
it's a conscious choice. For others, money is all that matters," he
With a national backdrop of a winner-take-all business environment and
stunning instances of corporate corruption, decisions like Frederick's
are refreshing examples of a new business ethic engaging greater social
responsibility. In recent years, investigations, indictments and trials
involving mismanagement within some of our most trusted corporate
institutions have shaken Americans' faith in the very companies feeding
retirement portfolios and investment accounts. Frederick and business
leaders like him are part of a growing business culture trying to
counterbalance a helter-skelter free market environment that invites
ethical shortcuts in the race to maximize quarterly earnings. Their
decisions consider consequences beyond the bottom line.
In his book The Cheating Culture: Why More Americans Are Doing Wrong to
Get Ahead, David Callahan, co-founder of the New York-based Demos think
tank, cites two common excuses for unethical business behavior:
"everyone else is doing it" and cheating is a way to survive.
But how does the need to get ahead equate to allegations that Enron
executives in California cynically manipulated the energy market to
generate profit from chaos, then falsified audit reports?
What's happened to old-fashioned ethics in business?
"I don't think you're going to get an easy answer," says University of
Maine Assistant Professor of Management Stephanie Welcomer. "It's like
asking: Where have our values gone? The question is not when are we
going to trust business. It's when are we going to trust each other?"
she says. "We've really created this animal."
Ethical behavior isn't as simple as deciding whether to break the law or
deceive stockholders, says Roger King, UMaine associate professor of
philosophy who teaches business ethics. It's hard to hold to firm ethics
without firm personal values.
"Part of my goal is to give students a set of conceptual tools (with
which) to reflect on motivations and values, and to see the complexity
of a lot of situations," he says. "Many times there's a tendency to
oversimplify. That's why they need the tools for analyzing ethics."
Fundamentally, ethics are determined by societal values, adds Ken
Nichols, associate professor of public administration, who also teaches
ethics in his courses. "The biggest ethical decisions are between right
and right, not right and wrong. There are contrasting outcomes and
values. That's what we want to introduce to our students."
But some decisions are right and wrong.
"Everyone looks at Enron, Global Crossing, Tyco, Adelphia and WorldCom
and says ‘unethical behavior,'" notes Daniel Innis, dean of the UMaine
College of Business, Health and Public Policy.
"A lot of people are saying those activities are a sign we need better
ethics education at our business schools. I disagree. Those executives
knew what they were doing was wrong. They knew the difference, but they
chose to do it anyway."
John Mahon, UMaine's John M. Murphy Chair of International Business
Policy and Strategy, says too many people ask the wrong question when it
comes to balancing business ethics and profitability. "Can I make money
and still do the right thing?" he asks. "That's a seductive trap."
Mahon prefers to ask, "What's an ethical rate of return? What's a
reasonable profit? No one asks that question," he says. "I believe you
can succeed in business and be absolutely ethical. I suggest you don't
have to make a choice between doing the right thing and making a ton of
by George Manlove
for more stories from this issue of UMaine Today Magazine.