September 09, 2007

Ameer Abdul Basit explains the origins of business ethics and how to apply it into Pakistani context

THE importance of teaching business ethics as an academic discipline was first realised in United States in 1960s. The US economy was becoming dominant and local corporations were expanding geographically both at a domestic and global level. This rapid growth of corporations brought increasing environmental problems in the form of air, water, and land pollution. The profit motive of corporations excelled competition with lesser focus on consumers’ rights and product safety. In response, society raised many movements against environmental issues and protection of consumer rights.

Business schools responded to that challenge by giving space in business curriculum to such environmental and social issues caused by corporations and began to concentrate on corporate social responsibility (CSR). In the 1970s, a lot of work on this subject was produced by theologians, religious thinkers and management professors. However, philosophers brought a breakthrough to this field by introducing ethical theories, which shaped this area as a separate academic discipline, though acceptance of Business Ethics as an academic field took long time. The development of ethical theories and their applications in business situations made an interesting contribution to the field of applied ethics.

Research work carried out in this field during the last four decades has defined the boundaries of this discipline to a large extent. The contents generally covered in this area are found in most business ethics textbooks published today. This consensus has negated the claim that business ethics is a fad or an oxymoron as perceived initially.

Generally business ethics textbooks explain ethical theories and some authors also add criticism to help students in understanding limitations and shortcomings of theories. In the light of ethical theories, business ethics debates morality of market structure and its functions, environmental pollution and resource depletion, consumer protection, production and marketing ethics, consumer and workplace privacy, bribery, whistle blowing, job discrimination, employee’s rights and obligations to the firm, the firm’s rights and duties to the employees. Some textbooks also include case studies so that students can learn to apply ethical theories to diverse business situations.

According to Manuel G. Velasquez in Business Ethics: Concepts and Cases (2006) business ethics is a specialised study of right and wrong applied to business policies, institutions, and behaviors. The major ethical theories taught are 1) Utilitarianism, 2) Rights and Duties, 3) Justice and Fairness, 4) The Ethics of Care, and 5) Virtue Ethics. These theories are purely secular in nature and are based on western philosophy. An action is considered to be morally ‘right’ if it satisfies theory’s objective and morally ‘wrong’ if it does not. None of these theories have a capacity to fully resolve a particular ethical problem. For instance, in many cases, utilitarianism either ignores or violates rights of stakeholders. Due to inherent shortcomings, these ethical theories face strong criticism. Therefore, ethicists suggest integrated model by combining these theories to make better ethical decision in a given business situation.

An economy is a permanent and the most influential component of every society. It is responsible to provide goods and services to the members of the society. In our daily lives, everyone, no matter how old he is, directly or indirectly interacts with business institutions by using their products and services, by working in, or by owning them. The irresponsible and self-focused conduct of businesses can seriously threaten the interests and welfare of internal and external stakeholders and society at large. Therefore, all managers who are responsible to make decision at strategic, tactical or operational level must not ignore the ethical side of their decisions.

Realising the need of business ethics in Pakistani economic environment and emergence of this field of study in the western world, our business schools are also including this course in curriculum of undergraduate and graduate programs. Various workshops and conferences are being conducted by academicians and corporate people to address ethical challenges Pakistani businesses face today.

In Pakistan, business education mostly relies on American textbooks. All fields, like management, organisational behaviour, marketing, finance, human resources, operations, information technology, economics, and social sciences are taught from textbooks written by American and European authors. In these areas, various theories and practices are not compatible with our beliefs and values, like interest and secular ethical theories. As far as interest is concerned, Muslim scholars have written a lot on it and have proposed various methods to deal with the issue. In Pakistan, many banks are converting their interest based products to interest-free products and with that they are growing and getting better financially.

Unfortunately, the area of business ethics lacks such kind of attention. So far, very little work has been produced by Muslims in this area. Like western philosophers and academicians, Pakistani intellectuals should also develop an ethical framework, based on Islamic ethical foundations and be able to resolve ethical problems especially that have emerged as a result of capitalism, modern technologies, and globalization.

A few years ago, a Japanese management consultant told me that Japanese professors do not blindly accept everything coming from the west. Giving the example of Organisational Behaviour (OB), he said that the field of OB was introduced by Americans. When Japanese universities adopted it in their business curriculum, they tailored it according to the Japanese culture and values. We have lot to learn from this practice.

Ethics serves as basic foundation of Islam upon which the whole structure of the Shari’ah is based. Our ideology and world view is different from the non-Muslim world and we do not consider human intellect competent enough to find all solutions correctly and solely by reasoning. We need guidance from God which shows us the correct path of action.

Fortunately, we have such guidance in the form of the Quran. In light of Islamic guidance, business professors and Islamic scholars should come forward to address complex challenges of today by developing an ethical framework which can be used as a standard in making right business decisions. The framework should be able to address today’s complex business problems as mentioned in the contents of business ethics. This attempt would help in purifying the economic affairs of Pakistan and would be instrumental in economic growth and well being of our society.

ameerbasit@gmail.com