Ethics and Governance

Introduction

Business ethics also known as corporate ethics have been debated for many years on whether firms should be ethical focused or money making focused. Albach (2005) argues that by teaching ethics to businesses would mean weakening of business administration and profit making. This essay sets out the argument on whether it is important for firms to be ethical or focused on making profit. There are different schools of thoughts with regards to business ethics - some believed in the theory of ‘separation thesis’, where business and morality can be separated, while others reject the separation thesis believing that ethics must come hand in hand with business (Freeman 1994). In addition, individualism talks about personal or firm survival while altruism disregards themselves for the benefits of others (Vaughan 2012).

In separation thesis, the communication of business and the communication of ethics can be separated into sentences like “this is a business decision” - indicating no moral content, and “this is a moral decision” - indicating no business content (Freeman 1994). In other words, ethics should not have anything to do with business and vice versa. If business focused on ethics, then it would be no different from being a non-profit organisation. Similarly, if business focused solely on profit, the process of making profit might be arrived on the expense of employee’s and society's welfare. Furthermore, corporate governance plays an important part in firms as it consists of shareholders, stakeholders and company’s management. How a firm should functions and how its goals and directions are decided depend much on corporate governance.

Profit-based

Business is about making profit (Byrne 2011) and maximising profit. Businesses are not charity organisations to begin with and thus, a firm main objective is to make profit. Profit-generating firms tend to be in capitalist mode which aim is for economic growth. It allows business to function in hierarchy...