American Business Ethics and Stakeholder Theory


Corporations must act ethically because it is impossible for them to dodge scrutiny from different stockholders (Terris 47). Corporate ethics should be treated as a continuous process aimed at supporting the best business outcomes. It should focus on every aspect of an organization in order to deal with various problems in different business areas. For instance, businesses might decide to deal with or fix certain unethical practices. This strategy only “presents a short-term solution to a problem that can have numerous impacts in the long-term” (Terris 47). The thesis for this essay is that business corporations must “develop an approach that is sufficiently dynamic, supple, and self-critical to engage ethics issues in their most fundamental, and therefore most threatening, dimension” (Terris 48). This essay offers useful arguments to support the above thesis.

Arguments for Effective Corporate Ethics: Historical Perspective

Scholars in the ethics field focus on five unique perspectives for effective business performance. To begin with, corporate leaders should be able to identify and implement powerful ethical approaches that can deliver positive results. As well, it is appropriate for companies “to execute their businesses in accordance with the existing industry standards” (Terris 47). The experience of the targeted employees should also be considered in order to get the best outcomes. The other focus should be on the implications of different business functions on the wider community. It will also be appropriate to consider the targeted profits. These five perspectives should be considered whenever implementing an ethics program.

The above broad strands of thought present the true scope of business ethics. These thoughts have the potential to promote numerous judgments. However, these shades of emphasis have compelled many companies to reshape their behaviors and ethical practices (Terris 47). The ethics programs designed by corporations should consider the needs and views of different players. For instance, corporate leaders should act diligently in order to steer the best ethical practices. They should ensure their firms have skilled workers who are aware of the changing expectations of different stakeholders (Carroll and Shabana 86). Business firms should also focus on the regulations, laws, and requirements provided by different agencies. As well, companies must focus on the best activities that can support the changing needs of the targeted communities.

Before the 1960s, corporate ethics “focused mainly on normative-micro relationships of society and business” (Booth and Rowlinson 12). Business organizations followed specific norms and principles existing during the time. However, the past few decades have led to new ideas in descriptive components of corporate ethics. Such components currently focus on both the internal and external aspects of business practices. Such aspects are also “viewed from both the micro and macro levels” (Booth and Rowlinson 13). Casson and Lee argue that the aggregate decisions made by different organizations will affect all stakeholders (16). This fact explains why “the decisions and practices undertaken by an organization will have significant impacts on communities, shareholders, and employees on a macro level” (Casson and Lee 19). For example, the misbehaviors of companies such as Enron affected many shareholders. New efforts had to be embraced in order to dictate the behaviors and practices of different corporations.

New interests and theories have emerged in the recent past to support the need for agile and dynamic ethical programs. Behind this wave is the stakeholder theory. Stakeholder theory “is based on the fact that corporations have their stakeholders” (Booth and Rowlinson 17). That being the case, the activities embraced by such corporations will definitely affect the welfare of different stakeholders such as communities, customers, and investors. Ciulla observes that stakeholders have specific interests and expectations that must be taken into consideration (341). Stakeholder theory therefore creates a level-playing ground whereby corporate activities are examined from a moral perspective.

Stakeholder theory is considered “superior to normative models because it defines the stage for effective measurement of organizations’ performance by differentiating between social issues and stakeholder concerns” (Booth and Rowlinson 19). Velentzas and Broni also argue that the theory is plausible because it provides a framework for embracing the power of ethics in organizational planning (814). This argument explains why ethics should be a powerful aspect of management strategy. Stakeholder theory also explains why “companies engaging in ethical management will find it easier to outperform every competitor in the targeted industry” (Booth and Rowlinson 12).

This argument for stakeholder theory shows how ethical practices can make it possible for corporations to achieve their conventional business objectives. This achievement is also “characterized by improved share value and market share” (Booth and Rowlinson 21). Corporations must consider the above five perspectives whenever implementing their ethical programs. They will ensure their employees and leaders are willing to promote the best ethical practices. The corporations will also focus on the changing needs of different stakeholders and communities. The use of this theory can address most of the issues identified by organizational leaders in various markets (Velentzas and Broni 798). This approach expands the possibilities of firms without necessarily confronting their visions.

The Future of Business Ethics

Studies and evidences support the effectiveness of good ethics. The use of inclusive ethical programs will result in good businesses. Organizational managers should consider the above five perspectives in order to become responsible. They should be ready to promote the best business practices such as conduct and compliance. Individuals in a given organization should work together in order to produce powerful ethics programs. Such programs should focus on the needs of every stakeholder (Velentzas and Broni 804). The approach will focus on the changing needs of these stakeholders and other agencies. New models should also be included in order to address the issues affecting businesses both internationally and locally.

Studies show clearly that future business organizations will be expected to remain ethical, transparent, and responsible. Business ethics programs should support every situation. The concept of dynamism will also ensure ethics is applied in every area of business (Ciulla 339). Stakeholder should be involved in the process in order to promote the best outcomes.


Business ethics is a continuous process that should improve the responsiveness and commitment of organizations. New studies are needed in order to outline the role of organizational and individual behaviors towards supporting the best ethics programs. Ciulla also encourages businesses to acquire new ideas in order to develop self-critical and inclusive ethics programs (340). Such initiatives will encourage more corporations to embrace powerful ethical values such as transparency and integrity. This argument therefore explains why “business organizations should have powerful and inclusive approaches to engage ethics issues” (Carroll and Shabana 89). Individuals should embrace the best characters in order to improve the ethical positions of their organizations.

Works Cited

Booth, Charles and Michael Rowlinson. “Management and Organizational History: Prospects.” Management and Organizational History 1.1 (2006): 5-30. Print.

Carroll, Archie and Kareem Shabana. “The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice.” International Journal of Management Review 1.1 (2010): 85-105. Print.

Casson, Mark and John Lee. “The Origin and Development of Markets: A Business History Perspective.” Business History Review 85.1 (2011): 9-37. Print.

Ciulla, Joanne. “Is Business Ethics Getting Better: A Historical Perspective.” Business Ethics Quarterly 21.2 (2011): 335-343. Print.

Terris, Daniel. Ethics at Work: Creating Virtue at an American Corporation. Waltham, MA: Brandeis University Press, 2005. Print.

Velentzas, John and Georgia Broni. “Ethical dimensions in the conduct of business: business ethics, corporate social responsibility and the law: the “ethics in business” as a sense of business ethics.” ICOAE 1.1 (2010): 795-819. Print.

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