The long philosophical tradition of ethical thought contains the subfield of business ethics. Business ethics, in turn, divides between ethics practiced by people who happen to be in business and business ethics as a coherent and well-defined academic pursuit.

People in business, like everyone else, have ethical dimensions to their lives. For example, the company W. R. Grace was portrayed in the John Travolta movie A Civil Action as a model of bad corporate behavior.Steven Zaillian (director), A Civil Action (New York: Scott Rudin, 1998), film. What not so many people know, however, is that the corporation’s founder, the man named W. R. Grace, came to America in the nineteenth century, found success, and dedicated a significant percentage of his profits to a free school for immigrants that still operates today.

Even though questions stretch deep into the past about what responsibilities companies and their leaders may have besides generating profits, the academic world began seriously concentrating on the subject only very recently. The first full-scale professional conference on academic business ethics occurred in 1974 at the University of Kansas. A textbook was derived from the meeting, and courses began appearing soon after at some schools.

By 1980 some form of a unified business ethics course was offered at many of the nation’s colleges and universities.

Academic discussion of ethical issues in business was fostered by the appearance of several specialized journals, and by the mid-1990s, the field had reached maturity. University classes were widespread, allowing new people to enter the study easily. A core set of ideas, approaches, and debates had been established as central to the subject, and professional societies and publications allowed for advanced research in and intellectual growth of the field.

The development of business ethics inside universities corresponded with increasing public awareness of problems associated with modern economic activity, especially on environmental and financial fronts. In the late 1970s, the calamity in the Love Canal neighborhood of Niagara Falls, New York, focused international attention on questions about a company’s responsibility to those living in the surrounding community and to the health of the natural world. The Love Canal’s infamy began when a chemical company dumped tons of toxic waste into the ground before moving away. Despite the company’s warnings about the land’s toxicity, residential development spread over the area. Birth defects and similar maladies eventually devastated the families. Not long afterward and on the financial front, an insider trading scandal involving the Wall Street titan Ivan Boesky made front pages, which led John Shad, former head of the Securities and Exchange Commission, to donate $20 million to his business school alma mater for the purpose of ethics education. Parallel (though usually more modest) money infusions went to university philosophy departments. As a discipline, business ethics naturally bridges the two divisions of study since the theory and tools for resolving ethical problems come from philosophy, but the problems for solving belong to the real economic world.

Today, the most glamorous issues of business ethics involve massively powerful corporations and swashbuckling financiers. Power and celebrity get people’s attention. Other, more tangible issues don’t appear in so many headlines, but they’re just as important to study since they directly reach so many of us: What kind of career is worth pursuing? Should I lie on my résumé? How important is money?

The Personal History of Ethics

Moving from academics to individual people, almost every adult does business ethics. Every time people shake their exhausted heads in the morning, eye the clock, and decide whether they’ll go to work or just pull up the covers, they’re making a decision about what values guide their economic reality. The way ethics is done, however, changes from person to person and for all of us through our lives. There’s no single history of ethics as individuals live it, but there’s a broad consensus that for many people, the development of their ethical side progresses in a way not too far off from a general scheme proposed by the psychologist Lawrence Kohlberg.

Preconventional behavior—displayed by children, but not only by them—is about people calculating to get what they want efficiently: decisions are made in accordance with raw self-interest. That’s why many children really do behave better near the end of December. It’s not that they’ve suddenly been struck by respect for others and the importance of social rules; they just figure they’ll get more and better presents.

Moving up through the conventional stages, the idea of what you’ll do separates from what you want. First, there are immediate conventions that may pull against personal desires; they include standards and pressures applied by family and friends. Next, more abstract conventions—the law and mass social customs—assert influence.

Continuing upward, the critical stages of moral development go from recognizing abstract conventions to actively and effectively comparing them. The study of business ethics belongs on this high level of individual maturity. Value systems are held up side by side, and reasons are erected for selecting one over another. This is the ethics of full adulthood; it requires good reasoning and experience in the real world.

Coextensive with the development of ideas about what we ought to do are notions about responsibility—about justifiably blaming people for what they’ve done. Responsibility at the lowest level is physical. The person who stole the book is responsible because they took it. More abstractly, responsibility attaches to notions of causing others to do a wrong (enticing someone else to steal a book) and not doing something that could have prevented a wrong (not acting to dissuade another who’s considering theft is, ultimately, a way of acting). A mature assignment of responsibility is normally taken to require that the following considerations hold:

• The person is able to understand right and wrong.
• The person acts to cause—or fails to act to prevent—a wrong.
• The person acts knowing what they’re doing.
• The person acts from their own free will.