UBC Reports
September 19, 1996

Pros and cons of ethics topics for class debate

by Stephen Forgacs
Staff writer

Should a tobacco firm aggressively market its products abroad or to specific social groups such as females and youth to compensate for otherwise declining demand? Should multinational firms apply the same ethical, safety and environmental standards in all countries in which they operate?

These are a few of the questions Bernhard Schwab, a professor in the Faculty of Commerce and Business Administration, has his students in the BCom and MBA programs debate to ensure they consider ethics as an important component of management decisions.

Decisions based on good ethics sometimes entail costs, says Schwab--costs that may make unethical behaviour attractive in some cases.

Schwab recently published an article in the Strategic Management Journal challenging a University of Michigan professor's position that being ethical is invariably good for business.

"Unfortunately life is more complex, and the view that ethical behaviour is always the most profitable one is too simple," says Schwab, who is not an ethicist but includes discussion of ethics in the context of business strategy. "If good ethics were always good for business, we would require much less in terms of laws, regulations, and enforcement than we typically observe in our societies."

Being ethical is something that you may pay a price for, both in personal life and in business, Schwab says. Not being tied to a particular code of ethics provides flexibility of choice, and that choice can become valuable. In extreme situations, it could even mean the difference between bankruptcy and survival.

"You should not condone unethical behaviour but one has to recognize that the temptation is there. This temptation often increases under competitive pressure. It is easier to be ethical when you're well off and declaring profits than when you've got water up to here and you may have a chance to save yourself."

Recognizing such temptations, many companies have developed corporate guidelines for ethical business conduct to guide managers and employees as to what behaviour is deemed appropriate.

"Clearly, there may be advantages to the company that portrays itself as striving to be ethical, in that this can build trust with various stakeholder groups. Ethics, however, should not just become a public relations exercise," Schwab says.

"Ideally, ethical conduct should also prevail when nobody sees it, or when there is no tomorrow. Ultimately, ethical behaviour has to be rooted in personal values and the belief that there is more to life and to managing a business than narrow personal or economic gain."

While ethical issues can be complex, particularly in multicultural settings, Schwab gives his students some guidelines they can use to ensure their future business transactions are ones they can live with. These include being comfortable explaining particular decisions to your family, feeling at ease in reading about your business dealings on the front page of a newspaper, and ensuring relationships with colleagues, employees and customers are such that friendship with those individuals could always be possible at a later date.