cheaper labor and thus have maximized his earning potential. He could have
simply taken the insurance money and decided not to reopen at all. Instead,
as the fire was still smoldering, Feuerstein pledged to rebuild his plant at the
same location and keep the jobs in the local community. But even more surprising, he promised to' continue paying his employees and extend their medical
coverage until they could be brought back to work. For this, Feuerstein became
famous. Featured on television and in such magazines as Fortune, Newsweek,
and Time, Mr. Feuerstein was honored by President Clinton and invited to
attend the State of the Union address as the president’s guest. He was praised
by many as a model of ethical business behavior.
Initially, all went well. Malden Mills was able to rebuild its factory and
reopen sections within a year. Employees came back to work and the com-
munity seemed to recover. Unfortunately, Malden Mills couldn’t recover fully.
Insurance covered-only three-fourths of the $400 millions cost of rebuilding and
by 2001 Malden Mills filed for bankruptcy protection. During the summer of
2004, Malden Mills emerged from bankruptcy but its board of directors was
now controlled by its creditors, led by GE Commercial Finance Division. The
new board replaced Aaron Feuerstein as CEO and Board Chairman, although
he retained the right to buy back the controlling interest if he could raise sufficient financing. In October of 2004, the board rejected Feuerstein’s offer to buy
back the company. In response to the company’s contract offer that included
cuts in health care benefits, the union representing the remaining 1,000 workers at Malden Mills voted to authorize a strike in December 2004, the first in
company history.
Are strong ethical values good for business? The only reasonable answer
is that sometimes they are and sometimes they are not. Many of the companies
examined by Collins and Porras seem to attain the ideal, high ethical standards
and long-term financial success. Others, like Philip Morris, attained long-term
success with values that would not indisputably be considered ethical. Some
unethical companies, Enron perhaps most famously, failed as a business because
of their ethical failures. Others, like Malden Mills, seem to suffer financially
because of their high ethical standards. The record is mixed. The choice is yours.
1.3 THE NATURE AND GOALS OF BUSINESS ETHICS
How, then, might we define business ethics? In a descriptive sense, "business
ethics” refers to those values, standards, and principles that operate within
business. But “business ethics” also refers to an academic discipline that not
only studies those standards, values, and principles, but also seeks to articulate and defend the ones that ought or should operate in business. In this way,
business ethics includes normative as well as descriptive elements. This text is
a contribution to that academic field of business ethics. Its aim is to describe,
examine, and evaluate ethical issue that arise within business settings.
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Unlike some business disciplines, there is no single set of answers in ethics,
no single body of information, nor is there even a single framework for thinking about ethics. Business ethics is a truly multidisciplinary field, incorporating
information from a variety of disciplines including philosophy, management,
economics, law, marketing, and public policy.
Given this diversity, there is no single way—let alone single right way—to
teach and learn business ethics. But this does not mean that there are not common
goals, concepts, principles, and frameworks of business ethics. There is
a growing body of scholarly literature in business ethics, and, in an academic
setting at least, an important element of a course in business ethics is to become
familiar with that scholarly literature. Just as there are Generally Accepted
Accounting Principles (GAAP) for accountants, there are a set of principles,
standards, concepts, and values common to business ethics. Chapter 2 will
introduce some of the most common ethical theories and principles. But beyond
this academic side, business ethics has a practical side in the sense that it aims
at judgment, behavior, and actions. We all hope that books and classes in business ethics translate into more ethical behavior among business practitioners.
Unfortunately, things are not always that simple. First, there is the daunting gap between ethical judgment and ethical behavior. From at least the time
of Plato and Aristotle, Western philosophy has acknowledged a real discontinuity between judging some act as right and following through and doing it.
It is difficult enough knowing the difference between good and bad, right and
wrong. But knowing is different from doing, and not everyone has the fortitude, strength of character, or motivation to act in ways that we know are best.
While many observers expect an ethics class to teach ethical behavior, most
ethicist