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September / October 2004

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Can Business and Ethics Coexist?

Illustration by Valerie Williams

Can Business and Ethics Coexist?
UMaine Business School faculty weigh in

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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 better."

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 says.

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 money."

by George Manlove
September-October, 2004

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