Is Business Ethics Too Important to be Left in the Hands of Business: A Democratic Alternative?

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[We’re pleased to welcome author Carl Rhodes of the University of Technology, Sydney. Rhodes recently published an article in Organization Studies entitled “Democratic Business Ethics: Volkswagen’s Emissions Scandal and the Disruption of Corporate Sovereignty,” which is currently free to read for a limited time. Below, Rhodes reflects on the inspiration for conducting this research:]

Cover image for latest issue of Organization Studies

When people think of business ethics they normally imagine what businesses can or should do to be judged as ethical.  Whether the focus is on breaches of ethical norms by corporations, or models for the achievement of ethical business, the common approach is that it is organizations themselves who are the ethical agents.

This assumption is limited because it fails to account for how corporate responsibility does not necessarily arrive through the voluntary actions of corporations themselves. In response, in my own research I have been exploring a more democratic and socially focussed understanding of how business ethics is practiced.  The results were recently published in my article in Organization Studies called ‘Democratic Business Ethics: Volkswagen’s Emissions Scandal and the Disruption of Corporate Sovereignty’

The 2015 Volkswagen emission scandal illustrates what I call democratic business ethics; an ethics where citizens and the institutions of civil society hold corporations to account for their actions, and in so doing disrupt the self-interested abuse of corporate power.  At the time the scandal broke, Volkswagen was the world’s largest auto manufacturer, and a company widely heralded for its environmentalism and its corporate social responsibly activities.  Despite impeccable ethical credentials, the scandal revealed a corporation whose success had been boosted by sophisticated cheating on fuel emission tests.

The paper shows how Volkswagen was brought to justice for its actions not because of its own proclaimed ethics or moral hubris, but because of the interaction of individuals and institutions from outside of business, in this case NGOs, scientists, law makers, government agencies, the media, and the general public.  This was a demonstration how business ethics manifested in the interruption of a flagrant case of corporate fraud, deceit and criminality.

The paper develops the idea of democratic business ethics by focussing on how civil society in particular can and should ensure that corporations are made morally responsible for what they do. This is an ethics made practical through forms of dissent and contestation that redirect power away from centres of organized wealth and capital, returning it to its democratically rightful place with the people.

The conclusion is that business ethics is far too important to be left in the hands of business, and needs to be exercised in the democratic sphere so that corporations are serving society rather than the other way around.

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