As the subject title indicates, Substantive ethics is about the integration of law and ethics in corporate ethics programs. The author of this article gives numerous examples of why integration of law and ethics is needed.
There are numerous areas of concern, such as dishonest corporate dealings, global human rights, tort lawsuits, and questionable executive salaries (Blodgett, 2012). There is a view that laws are rules meant to be followed and not necessarily understood for its ethical value. This in turn is a major factor as to why ethical violations exist. New regulations are created often times in the corporate environment or society in response to ethical petitions for change (Blodgett, 2012). In order to have ‘ethical sustainability’ (Blodgett, 2012, p. 39), the ethical component of laws must be incorporated with new regulations (Blodgett, 2012)
The article examines the correlation of law and ethics as it focuses on managerial decision making and corporate governance. It is approached in three ways via the applied approach, change of corporate ethics codes, and restructuring the current view of law and ethics (Blodgett, 2012). The three main applied approach are the ‘separate realm view’ (Paine, 1994a. b., p. 154). This view interprets a law as a minimum or base level standard that must be followed. In contrast, the ethical principles of morals and behavior are viewed as grander and distinguished from the law (Jennings, 2006). The problem with this view is without the ethical component the law has no value or substance. The ‘correspondence view’ (Paine, 1994a. b., p. 156) states that law and ethics are one in the same with no clear distinction between the two (Paine, 1994a. b.) This can cause confusion as to where law ends and ethics begins. The ‘coinciding view ‘interestingly enough (Dunfee, 1996) is rightly placed within the intermediate between the separate view and corresponding view having a closely related strengthening each other.
The author gives further reasons and examples of why law alone is not adequate to govern or prevent ethical breaches as well as laws. Corporate compliance programs merely only focus on the duty to obey, prevent, and punishment for failure to comply. However, law alone is not sufficient as evidenced by continued corrupt corporate behavior (Blodgett, 2012). Ethical statements need to be incorporated in compliance statements and programs (Blodgett, 2012).
Corporate ethics codes can become enhanced by the restructuring of compliance statements. Values which are expressed via a company’s ethics codes should be the guiding force for managerial decision making (Peppas, 2002). With ethics codes being of such great importance in guiding a corporation’s behavior and goals, there was an analysis of varied research done on corporate ethics codes in 2005 (Schwartz, 2005). ‘Universal values’ was discovered by this research (Schwartz, 2005, p. 36) and helped substantiate the Aspen Declaration, which states that there are ‘six universal values’ in existence (Schwartz, 2005, p. 36). Universal values can be located in the majority of corporate ethics codes. Many compliance statements were also found to incorporate these values. The problem now arises when corporations design and implement compliance programs to control corrupt behavior the law element is emphasized alone without incorporating the ethical reasoning and values found within a corporations ethics code (Blodgett, 2012). In addition, there was no uniformity found within all the corporations researched as it relates to which approach to law and ethics were used in within corporate ethics codes (Blodgett, 2012).
The author states that solution as it relates to law and ethics is for corporations to move from legal compliance based programs which only focus on the law to integrity based programs which focus on law and ethics. The author believes this approach will have a greater influence on corporate behavior (Blodgett, 2012). Re-structuring the view of law and ethics begins by understanding that the law is not just rules meat to comply with, but realizing the ethical reasoning as well (Hartman, 2000).
Based on the fact that our society is a capitalist structured economy (Hoffman, 2012), there is a natural conflict of interest as it relates to how our society is set up. The goal or motivation for corporations is profit maximization, personal enrichment, and the gain of resources (Hoffman, 2012); as resources relates to finances, real estates, and political power. Capitalism is all about money and power. All corporations care about is the bottom line at the end of a fiscal period. It is a juxtaposition, do corporations chose to do what is moral and ethical or do what is profitable? If there is a legal loophole within the system, many corporations will use any business leverage regardless of the ethical dilemma in my view. Some famous corporate scandals are MF Global, Fannie Mae, and Lehman brothers. The very nature of possessing a competitive mindset is the ultimate result of competing for limited resources within this particular systemic structure or economy. I pose this question to my readers. Who do you think will be the most successful between a corporation prided on making managerial decisions above and beyond the minimum known as the law or a company that obeys the law and utilizes any legal loophole in a capitalist economy?
Society has to move from a capitalist based economy guided by law alone. A corporation’s success should not be solely based on the bottom line, financial growth, acquiring political power, and real estate. The exact type of economy that works best for corporations guided by substantive ethics is unknown to this writer. There will always and continue to be corrupt corporate behavior within a capitalist based economy given the very nature of capitalism. It breeds corruption, when guided by law unaided, hence the ethical dilemma.