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Therefore, Adam Smith’s image of the ‘‘invisible

hand,’’ by which all benefit from the self-interest of

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entrepreneurs make the business market incompati-

ble with moral interference, or Bernard Mandeville’s

credo that the self-related behavior of stakeholders is

the condition sine qua non of economic prosperity

and the driving force of the civilization process, shall

be critically reflected. While private property and

the accumulation of wealth foster economic pros-

perity and general welfare, they should not go

unconstrained. A striving for profit that is driven by

avarice and greed violates the notion of justice and is

inconsistent with a humanistic and universal concept

of righteousness.

In this article, we assert that any ethical reinvigo-

ration of the business world can only be accomplished

when the business realm imposes upon itself some

effective measures of self-regulation that go beyond

the increasing number of laws and rules passed by

governing bodies and requirements mandated by the

regulatory authorities. We also suggest that ethical

custom is not enough. Since business has individual-

istic foundations and is real in its individual agents

only, a sense of personal morality needs to be devel-

oped that takes into account deontological principles1

of ethical conduct. While we acknowledge that the

room for pursuing non-commercial forms of social

responsibility is limited in economic enterprise, we

argue that this room, however limited, has to be en-

tirely filled by personal ethical responsibility. Ethical

responsibility in the business world is not all-encom-

passing, but whatever it offers for ethical behavior to

take place, should be exploited to its fullest.

Framing the challenge

If humans have a choice to act, being ethical, to state

the obvious, is about how human beings ‘‘ought’’ to

act; and consequently, business ethics is about how

business agents ‘‘ought’’ to act. For both, the acting

takes place in a social and political human environ-

ment in which mutual constraint, based on custom

and law, guides human interrelations.

Quite naturally, the successful outcome of applied

business policies and strategies depends on achieving

targets and goals. That the business world is profit-

oriented and thus focused on results and outcomes is

a fact – and rightly so. However, when the spotlight

is on the result, there can be an increased potential

that an inappropriate course of action is taken, as can

be observed relating to earnings targets. On the one

hand, earnings targets should motivate management

to conduct business affairs so that earnings goals can

be achieved. On the other hand, reaching earnings

targets at all costs can result in behavior where the

use of any means anticipated to help in achieving this

goal is considered to be justified. Indeed, a review of

Securities and Exchange Commission (SEC)

enforcement releases for accounting irregularities

shows that often earnings are overstated or expenses

understated in order to meet analysts’ or Wall

Street’s targets for revenue or net income.2 Since

Enron, the public has become ever more aware of

instances where corporate executives used dishonest

means in order to meet earnings or growth objec-

tives. One can question whether the focus of

investors as well as management on the end-result

may have justified, at least in the minds of the

corporate executives involved, the ‘‘need’’ to use

whatever means available to meet profitability goals

and hence acquire the rewards so ‘‘earned.’’ Ratio-

nalization of this type considers the outcome,

without an adequate consideration of the means to

achieving the outcome.

Utilitarian ethics, also designated as teleological3 or

consequentialist ethics, focuses on what is considered a

good outcome of an action related to the acting

individual’s (or group of individuals) notion of good

and bad. A thing is done for some personal and/or

collective benefit, and not necessarily because it is

the right thing to do. The standards of right and

wrong, of virtue and vice, are often measured and

decided based on what is in one’s best interest,

without sufficient consideration of the rights and

interests of others. The basic tenet of utilitarianism

defines the ‘‘good’’ (individual or collective happi-

ness) independent of the ‘‘right’’, and introduces

then the right as that thing that maximizes the good.4

Often, and not just in business, self-indulgence, self-

promotion, in short, material selfishness can be

found at the root of human behavior. When the

spotlight is on the result, egotism – be it in its

individual or collective form – is not far away.5

Applying Bentham’s principle of the ‘‘greatest

18 Edwin R. Micewski and Carmelita Troy



happiness of the greatest number of people’’ (1996,

p. IViii) to the level of the business enterprise, the

general result regarding the collective happiness of all

stakeholders,6 would lie both in profit and in effi-

cient business conduct.

According to utilitarian ethics states that the

outcome determines the ethical appropriateness of

any activity. Agency theory (Eisenhardt, 1989; Stroh

et al., 1996) addresses how influence agents (i.e.,

managers or executives) towards those outcome-

based activities that result in what the principal/

owner desires. ‘‘The job of agency theory is to help

devise techniques for describing the conflict inherent

in the principal-agent relationship and controlling

the situations so that the agent, acting from self-

interest, does as little harm as possible to the prin-

cipal’s interest (DeGeorge, 1992). This is often

accomplished by paying the agent based upon the

degree to which he or she achieves the outcomes

desired by the principals. However, it is when the

outcome, such as profit-making, becomes the sole

focus of business behavior that a utilitarian approach

can become problematic and impair the rights of


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