BUSINESS ETHICS

LAW AND REGULATION

Zahurul Alam

CONTENTS

Law and Ethics in Business

Law, Ethics and Business
Business: A Money Making Machine
Counter-Arguments
Retroactivity and Blindness of Law
Laws are Unable to Ensure Corporations Responsibilities
Accused is Innocent Until Proven Guilty
Liberal Democratic Laws and Crime
Ethics in Business Can Protect Interest
Corporations-Not Legal Devices
Corporations to Serve People

3. LAW AND ETHICS IN BUSINESS

Are law and ethics the same?

4. LAW AND ETHICS IN BUSINESS

THE ANSWER IS NO
There is close relationship between the two
both in business and in other fields. However,
the difference between those is that:
Ethics is what you should do
Law is what you are obligated to do.
Ethical issues in business can sometimes have
legal ramifications, including criminal penalties,
civil disputes and contract disputes.

5. LAW, ETHICS AND BUSINESS

Milton Friedman pioneered the view that:
Business is not bound by any ethics other
than abiding by law
Business has the obligation to make profit
within the framework of the legal system
(Obligation and not Right, because
corporations are accountable to its
shareholdersthis may be the only
explanation)

6. BUSINESS: A MONEY
MAKING MACHINE
Further, Friedman held that:
The duty (not right!) of the business is to
make as much money as possible while
conforming to the basic rules of the
society: i) those embodied in the law, and
ii) those embodied in ethical custom.
Ethics, according to MF is nothing more
than abiding by customs and laws

8. COUNTER ARGUMENTS
Legal procedures are technocratic,
bureaucratic, rigid and obligatory
Ethical act is conscientious, voluntary
choice beyond normativity

9. RETROACTIVITY AND
BLINDNESS OF LAW
Law is retroactive
Crime proceeds law (in formulation and
implementation)
The crime must have happened, before
law against that crime to be passed
Laws are blind to the crimes undefined in
it

10. LAWS ARE UNABLE TO ENSURE

CORPORATIONS ACCOUNTABILITY
Laws, without established business ethics, are not in a
position to make business fully accountable to
stakeholders
However, business needs to be accountable to the
society, community and in fact all stakeholders, as that
relies on social resources; business needs to procure
raw materials, use human resources for activities to be
performed and sell products to consumers
Business cannot operate in isolation. So it has to
comply with certain norms and values: perform ethical
business.

11. ACCUSED IS INNOCENT

UNTIL PROVEN GUILTY
As per law, conduct is not criminal unless
forbidden by law which gives advance
warning that such conduct is criminal
Law presumes the occurred innocent until
proven guilty
State must establish the guilt of the
accused beyond reasonable doubt

12. LIBERAL DEMOCRATIC LAWS

AND CRIME
Until the government prosecutor proves
the firm guilty, the accused is innocent
This protects individuals, however it is not
a useful mechanism to make firms
morally accountable

13. ETHICS IN BUSINESS CAN

PROTECT INTEREST
Ethical business, which is built on social
norms, lands law, culture, custom,
international law, buyers interest and the
interest of all stakeholders is in a position to
protect the interest of the people.
Business should be socially responsible
The issue of corporate social responsibility
is thus an important cornerstone of ethical
business.

14. CORPORATIONS-NOT LEGAL

DEVICES
Berle, A. A., & Means, G. C. (1932) suggested that
"Corporations have ceased to be merely legal devices
through which the private business transactions of
individuals may be carried on.
The corporation has, in fact, become both a method of
property tenure and a means of organizing economic
life. Grown to tremendous proportions, there may be
said to have evolved a 'corporate system
They [management] have placed the community in a
position to demand that the modern corporation serve
not only the owners [] but all society.

15. CORPORATIONS TO SERVE

THE PEOPLE
Hansmann, H., & Kraakman, R.(2000) in The End
History of Corporate Law. Georgetown Law
Journal(89), 439468: "All thoughtful people
believe that corporate enterprise should be
organized and operated to serve the interests of
society as a whole, and that the interests of
shareholders deserve no greater weight in this
social calculus than do the interests of any other
members of society."

LITERATURE
Richard De George, Business Ethics
Manuel G. Velasquez, Business Ethics: Concepts and Cases
Moon, Chris Et al.(2001) Business Ethics. London: The
Economist:119132 Bevan, D. (2008). Philosophy: A
Grounded Theory Approach and the Emergence of
Convenient and Inconvenient Ethics.
Drucker, P. (1981). " What is business ethics?" The Public
Interest Spring(63): 1836
Good Governance Program. (2004). Business Ethics: A
manual for managing a responsible business enterprise in
emerging market economies. (pp.93128) Washington DC:
Good Governance Program, US Department of Commerce
Watson T.J (2003). 'Ethical Choice in Managerial Work: The
Scope for Managerial Choices in an Ethically Irrational World',
Human Relations, 56(2): 16785

THANK YOU!