(Un)ethical Behavior in Business: A Reward-Punishment Probability Framework

Abstract

The recent inquiry of business ethics can be traced to the early 1960s, following the recovery of capitalism after World War II. Ethical issues related to business in the realm of fair wages, labor practices, consumers’ rights, and morality of capitalism were mainly focused at that time. Consumerism movement in America during the 1960s ushered a new dialogue in business ethics. It asked the business to look at the consumer and the society and be ethical in their conducts. Environment also became an issue. Various laws were passed in America to protect the rights of the consumers and to protect the environment. Business became more concerned about its image in the society and corporate social responsibility was emphasized. About this time, business ethics gained recognition in the academia and professors entered the arena, applying ethical theory and philosophical analysis to structure the discipline of business ethics. By the end of 1970s, issues like bribery, deceptive advertising, price collusion, product safety, environmental damage were debated both in business and in the academia. Limited efforts were also made to describe how ethical decision making worked and what factors influenced such decision making. In the 1980s, business ethics was acknowledged as a field of study in many business schools and Business Ethics was taught as a course in different business programs. Prominent companies established separate departments to handle the ethical conduct of business and corporate social responsibility issues. Self-regulation rather than regulation by the government was emphasized.