Balancing Ethical and Legal Considerations

Balancing Ethical and Legal Considerations in Business

Business ethics and the law have both stood out recently as two separate entities that help businesses operate under the specific cultural, moral, and financial framework. In fact, most businesses feature websites where they tout their commitment to normative ethical concepts while making sure that their customers understand that their patronage and appreciation is still key. This is a product of a renewed interest in business ethics and the legal landscape in the 1980's and 1990's, as much of academia became concerned with how businesses can operate both from a financially profitable aspect as well as a socially profitable one as well (Carasco and Singh, 2008). Emerging from this interest came the concept that businesses would be judged on not only their business performance, but also their efforts within the community and their promises to adhere to the legal framework of the country or countries they did business in. Ethics and the law can be viewed as two separate concepts for businesses, yet they both go hand in making sure that the business is viewed and judged in a way that casts it in a positive light. Another key understanding that many businesses have recently come to is the fact that, while it is not an outwardly attractive relationship, customers and profits come to those businesses that can convey themselves as community and environmentally conscious.

The idea that businesses have no other obligations other than making a profit was first made popular by economist Milton Friedman (Husted, 2008). This idea, while not entirely popular in the public realm, has been the backbone of business and commerce for hundreds of years. This is how many businesses still operate, but in a world where social connectivity has never been greater, and as businesses grow and emerge as key players within a globalized world economy, it is ever important to be perceived by peers and customers alike as being both profit and socially conscious. Certainly share and stakeholders have more basic, profit-motivated concerns than customers may, but all businesses must consider the benefits and costs of making sure they come out on top, ethically speaking. These motivations raise another question, about whether or not legal rule is morally acceptable (Anderson, 2008). Certainly the distinction between the law and morality exists, yet this distinction is far better defined in some places than in others, and remains as a separate consideration from profit-making.

Within their profit-making structure, businesses also have to adhere to the legal systems of the places they are operating. While this may seem a rather simple conclusion, it is important to recognize that not all countries' legal frameworks and sets of regulations are created equally in the eyes of business (Carasco and Singh, 2008). This is to say that for most businesses, there are both pros and cons to operating in certain places in the world. For example, a Canadian healthcare firm may have far more red tape to cut through relative to regulatory actions and regulations when coming out with a new drug treatment than say the same firm in a place like Russia (Svensson, Wood, Singh, and Callaghan, 2009). Both the ethical and legal considerations and frameworks are entirely different for the same business in the same industry in different countries. In this respect, the laws of business and the ethics of business are often formed at similar times in the business history of a nation or culture, and these considerations, while often synchronized on an individual basis, are not always so when compared to other nations and cultures around the world. In this way it is often morally or fiscally advantageous for certain businesses to be based or headquartered in one country and doing business or work in another (Carasco and Singh, 2008). Ethically, it may be shaky ground, but if this sort of behavior is healthy for the businesses' bottom line, it is often not a consideration, just as Freidman was eager to espouse.

The relationship between these two concepts, business law and business ethics, is therefore rather sticky, depending on the place of operation and the businesses' commitment to being socially and environmentally responsible (DuPlessis, Enman, Gunz, O'Byrne, 2011). This means that while the common ethics in a country are most often aligned with the laws, it may not always be the case that a business has to choose between "right" and "wrong" either ethically or legally. Certainly a business that is scrutinized publicly on a daily basis has to be much more careful to operate in a normatively ethical way, but this is not true for every business. When businesses decide to accept profits over ethics, it is often not a question of legality but a question of customer and outside perception. The ethical considerations are often outweighed by the potential for profits and pressure for creating an atmosphere of upward mobility both within and without a business (Svensson, Wood, Singh, and Callaghan, 2009). This can be seen at every level of management and employment at many firms, as people tend to become more ethically lax and cutthroat while moving up in the chain of command. Legally of course, there are no repercussions of stretching the truth or tattling on a co-worker to usurp a position or job title. While this behavior is frowned upon, there is little legislated to discourage it.

On the outside however, businesses are reluctant to be viewed as unethical, since this often cuts into the profit margin of a business in these environmentally-conscious times. Due to these concerns, most businesses have adopted internal corporate ethics policies, independent from the legal structure of their business (DuPlessis, Enman, Gunz, O'Byrne, 2011). This means that the corporate structure is not only governed by laws and regulations as well as normative ethical considerations, but a codified set of ethics that helps to regulate and govern the internal functions of the business and keep the outside image and internal moral of said business intact. This is an important part of most successful corporate structures and businesses and helps to encourage a positive working environment while, at the same time, leading the business to be viewed as more "friendly" and socially aware and conscious, which does help the businesses' bottom line, regardless of the internal cost of developing, implementing, and regulating such an ethics structure.

Business regulators are seldom concerned with ethics as much as they are with legal regulations and actions. This has always been so, and since there exists few agencies to regulate or even measure ethical considerations and actions in the business world, the law has remained as a lowest common denominator of sorts for businesses worldwide. Some people and businesses feel that more regulation and ethical framework is a positive thing for the economy and the business world since it forces businesses to be more transparent and honest in their disclosures (DuPlessis, Enman, Gunz, O'Byrne, 2011). Others, like Friedman himself, posit that from the realist and business-minded perspective, more regulation hinders economic development. But the questions surrounding ideas of over or under regulation and what amount of business law is best are often shrouded in political and business aspirations far removed from the floors of any corporation or structure. Certainly each country and specialized economy is different, and the vast complexity that is found in the world of ethics, regulation, and business is cause for closer, more specific examination of certain countries or ethical systems.

Business Law and Regulation: Helping or Hindering Canadian Businesses?

The questions of whether or not Canada has too much business law and whether it would be better off with less regulation are certainly controversial and their answers depend on the quantifying of many terms within the question. What does it mean for a country or a business to be "better off," and how much is "too much" regulation? These two questions are framed from the angle or assumption that there may indeed be too much law and regulation and that Canadian businesses and the economy itself may, in fact benefit from a less structured, less regulated legal system. These common assumptions must be more closely examined in order to unlock not only the meanings, but the social, ethical, and business implications of answering them. On certain stages, these questions are political and ethical powder kegs, touched off at the slightest mentioning of governmental restrictions, required transparency, and higher taxes. In Canada, these questions are far less provocative as they are within the U.S. legal structure, but they are equally as important in helping to decide and define the fate of the Canadian business world.

The implications for business and the regulatory structures within a country like Canada relative to the political leanings and beliefs found within the business world are profound (Husted, 2009). From the conservative perspective, businesses are hindered by more government, and the fewer regulations and governmental considerations a business has, the more latitude it is afforded to make a profit. This is assuming that profit and "what is good" for a business, an economy, and consumers, are all aligned. In this world view, the Canadian system of business regulation is ripe for the pruning of its lower branches, where the most liberal, socially, and environmentally-friendly legislation has been enacted that has cut into the bottom line of businesses nationwide (DuPlessis, Enman, Gunz, O'Byrne, 2011). Often, the conservative perspective would like to give personal legal rights to businesses with less consideration put upon the responsibilities that arise from such a legal status. This is to say that businesses, like people, should be afforded rights as well as responsibilities as the cost of the rights granted and enjoyed.

From the other side of the tracks, from a more liberal perspective, business ethics and regulations are different hands on the same body. This is to say that this group of people believes that the more businesses are regulated and ethically fixed; the better off an economy is (DuPlessis, Enman, Gunz, O'Byrne, 2011). This attitude also does not hold profits above any other human or environmental consideration. Certainly both this and the conservative attitudes' examples are stereotypical and must be taken with a grain of salt, but these two dueling perspectives, be they political, economic, or business-minded in nature, have always been at odds with one another in all economies and legal structures.

It is therefore necessary to look at the Canadian business structure and supporting legal system not from one or another perspective on either side, but from a sort of middle ground that allows for a balancing of the business and regulatory models. This balance should be struck with the idea in mind that profits are not always central to human interests, and that businesses are acting as business entities, not as persons with personal rights and responsibilities (Anderson, 2008). The Canadian model of business government is one that is relatively left-leaning as far as other nations are concerned. When compared to the U.S. system, the Canadian set of business laws and regulations is relatively hindering for many businesses. This comes in part from the higher taxes imposed by the Canadian government as a measure of a businesses' social and environmental considerations (DuPlessis, Enman, Gunz, O'Byrne, 2011). But these higher fiscal and social taxes have their benefits as well, as many Canadians can attest to.

Loosening the legal framework that Canadian businesses operate within could do much to help spur new growth in sectors that are already heavily regulated. But what cost are these regulations exacting on commerce? Do profits come before other human considerations like safety? This question is one that is often present in the decisions made by legislators as well as businesses themselves at certain defining moments of action (Husted, 2008). Loser regulations could also mean lower taxes, which could be argued, would also spur more employment growth since businesses would be making better profits and not have to worry so much about their regulatory fiscal responsibilities. However, if Friedman is to be taken seriously, and if businesses are concerned first and foremost with profits, then reducing taxes and fees on Canadian businesses would theoretically only act to embolden and fatten the bottom lines of the businesses involved. This means that they would simply absorb their lower costs as profit and move ahead, unaffected and unchanged as an entity concerned solely with money making.

A more measured, moderated approach could be taken, where regulations are loosened on businesses in ways that help to both free up more commerce as well as retain the ethical and human considerations that businesses face on a daily basis. In a global environment that has been very negatively affected by the global economic recession, the fact that Canadian businesses have enjoyed much shelter from this fiscal storm, being spared the much more severe fates that U.S. cohorts have had to endure, is testament to the fact that a greater amount of regulatory and legal apparatuses have actually helped to ease the economic blow of such a recession (DuPlessis, Enman, Gunz, O'Byrne, 2011). This means that because Canadian business law requires much more transparency in sectors like banking, finance, and investing, there has been far less fallout from the recession and from the lack of questionable ethical decisions and actions. This may be a product of such a heavily-regulated system where businesses have less incentive and ability to act in an unethical, illegal manner, or it may be a product of cultural differences (Anderson, 2008). Arguing for the former is quite clearly something that left-leaning politicians and businesspeople would find beneficial to their cause, but there is some merit to that argument in particular.