Business Ethics in Biblical Perspective

A Comprehensive Introduction

Michael E. Cafferky

• Publisher: IVP Academic
• Year: 2015
• ISBN:
  9780830898664
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

It is legal for CEOs to make 300 times the amount of the average worker. But is this fair and just? Is it ethical for a customer to purchase a digital camera for the sole purpose of using it on a ski trip and then return the item to the store afterwards? Should companies who purchase advertising space on websites that offer pirated videos for download be held accountable for breaking intellectual property laws? The world of business is fraught with ethical challenges. Some of these are relatively straightforward, but others are complicated and require careful reflection. While there are numerous theories to help people navigate these dilemmas, the goal of this book is to provide a comprehensive biblical perspective on contemporary issues in areas such as consumer behavior, management, accounting and marketing. In Business Ethics in Biblical Perspective, Michael E. Cafferky explores the biblical resources for moral guidance and ethical consideration. He identifies twelve key themes in the narrative of Scripture: cosmic conflict, creation, holiness, covenant relationships, shalom, sabbath, justice, righteousness, truth, wisdom, loving kindness and redemption. By looking at ethical approaches and issues through this multifaceted biblical perspective, Cafferky helps readers appreciate the complex nature of ethical decision making, particularly in the context of business and finance. Designed from the start with the classroom in mind, each chapter of Business Ethics in Biblical Perspective provides example scenarios, questions for intrapersonal and interpersonal ethical reflection, review questions, ethical vignettes for discussion and an exploration of the chapter material in light of the biblical themes. Additional IVP Instructor Resources are also available.

Part One

The Fundamentals

Ethics is about moral action in a social context, not just moral thinking or correct doctrine considered in private. Accordingly, there is nothing more practical than business ethics when you think that the biggest question that is asked in business ethics is What should I do in this situation? At times the answer to the question is clear and easy to give. The tension is that at other times the answer to the question is somewhat more difficult and, at least in the world of business, often more complex.

The biblical perspective presented here provides a plausible structure to consider contemporary ethical ideas and challenges. Followers of God believe that the principles of ethics applying to business come from God. But when these principles are examined rationally, they are plausible explanations for how best to conduct oneself in the marketplace. The biblical themes presented here portray the means by which a person, in community, can be successful in this endeavor.

In chapter one we consider the question, Why is ethics in business important? We introduce the basic terms and concepts. Chapter two presents the underlying nature of the ethical, social and legal environment of business in terms of fundamental tensions that must be managed when taking action. As we will see, these fundamental tensions are universal and unending. Chapters three and four present the intellectual engine of the book: twelve interrelated, interwoven and interdependent biblical themes that are used as lenses to think through contemporary business ethics issues (cosmic conflict, creation, holiness, covenant, shalom, sabbath, justice, righteousness, truth, wisdom, loving kindness and redemption). As we will see, many of these themes are action-oriented. Designed for all areas of life’s experience, they take us past mere thinking and guide us into the real world of behaviors in a social context. It is vital that the reader understand the essential elements of each theme as these will be used later in the book to evaluate contemporary ethical theories and contemporary ethical problems in business.

1

Why Ethics in Business Is Important

Scripture Passage

So you shall keep His statutes and His commandments which I am giving you today, that it may go well with you and with your children after you, and that you may live long on the land which the LORD your God is giving you for all time. (Deut 4:40)1

Chapter Overview

In this chapter we consider whether or not it is beneficial for an organization, whether for-profit or nonprofit, to allow ethics to be influential in the life and work of the organization. In particular, we will

• introduce the benefits and costs of ethical and unethical actions in business
• examine what contributes to ethical problems occurring in business
• explore the definitions and distinctions of key concepts: morals, ethics, law
• introduce four levels of application of moral principles in organizations: individual, organ­izational, industrial and economic system

Main Topics

Is Honesty Always the Best Policy?

Why More Interest in Business Ethics Now?

Benefits of Ethical Business Activities

Costs of Unethical Business Activities

Why Study Business Ethics?

Why Ethical Problems Occur in Business

Basic Concepts

Four Levels of Application

Down to the Nitty-Gritty

Key Terms

amoral, communal, dirty tricks, ethics, generally accepted moral principles (GAMP), gray areas, immoral, law, morality, proscribed, prescribed, unethical

Opening Scenario

Exercise and changing your diet to low-fat foods is one way to shed some weight. But some high-fat treats such as doughnuts are difficult to give up completely when you are on a diet. That is when Robert Ligon hit on a powerful target marketing concept: sell low-fat doughnuts to people trying to lose weight. This is just what he did.2

The typical doughnut is a sweet-tasting delivery system for a whopping 530 calories lathered in up to 18 grams of fat. As much as 25 percent of the traditional doughnut is fat. That’s one reason why it tastes so good. Ligon’s low-fat carob-covered version boasted 135 calories and 3 grams of fat. Delivering just one fourth of the calories and 17 percent of the fat, four of Ligon’s doughnuts were the equivalent of one traditional doughnut. And Ligon’s doughnuts tasted great!

Ligon sold not only low-fat doughnuts but also low-fat cinnamon rolls and low-fat cookies through weight-loss retail centers. Ligon’s customers liked his product. A few customers were at first disappointed and then outright concerned when they gained weight instead of losing it. Then someone complained to the US Food and Drug Administration (FDA) that Ligon’s doughnuts tasted too good to be of the low-fat variety. One customer noticed that when Ligon’s doughnut was placed on a piece of paper it left a grease ring.

In 1997 the FDA began a formal investigation. This is when Ligon’s three-year entrepreneurial bakery venture began to crumble. Through their investigation FDA food scientists determined that Ligon’s doughnuts carried the same amount of fat and calories as do typical doughnuts. The FDA threshold for claiming that a product is low fat is 3 grams. The investigation revealed that Robert Ligon had been purchasing doughnuts from Cloverhill Bakery in Chicago, contracting with a packaging company to repackage Cloverhill’s doughnuts and then selling the repackaged doughnuts under Ligon’s brand.

As a result of their investigation the government raided Robert Ligon’s doughnut packaging facilities in Kentucky and Illinois; they seized 1,560 dozen doughnuts as well as cinnamon rolls and packaging labels. Ligon was indicted for mail fraud for shipping falsely labeled goods. He pled guilty to one count but probably sold thousands of mislabeled doughnuts, cinnamon rolls and cookies. For his part Ligon claimed that he did not break the law and that he had never heard even one complaint about his doughnuts. He commented that he had been singled out. In January 2004, Ligon began serving a fifteen-month sentence in federal prison.

Ligon was not the first to introduce the low-fat doughnut to the market. Entenmann’s bakery tried selling a doughnut with 25 percent less fat, but the product was not successful. Entenmann’s attempt was entirely legal and ethical. Not so with Vernon Patterson, the CEO of Genesis II Foods, Inc. who for a time also sold low-fat doughnuts. Patterson served a one-year prison term for mail fraud, misbranding food and unlawful monetary transactions. His crime: selling three varieties of regular doughnuts falsely labeled as low-fat.

Fortunately, the majority of people who start new ventures do not base their strategic commitments on faulty ethical principles. Whether or not they are Christians, many of the business activities are based on solid ethical foundation. If for no other reason, their organizations’ survival depends on ethical practices.

Is Honesty Always the Best Policy?

Is honesty always the best policy in business? We can say with Benjamin Franklin, yes. But honesty does not automatically mean that you will earn a profit.3 Looking only from a purely economic point of view over only the short run, being honest can make you money such as when a customer returns because he or she trusts you. Honesty is at the foundation of trust, which is necessary for success in both the short run and the long run. However, when a firm is under pressure to achieve a strong quarterly profit report or when the managers of the firm have an information advantage over a supplier or over a customer, the expected short-run financial benefit of being dishonest can exceed the expected costs. This is especially true if the managers believe there is a good chance they won’t get caught.4

At other times being honest does not appear to have any direct and immediate measurable financial impact, either positive or negative.5 Still, at other times honesty can increase your operating expenses, which means that short-term profit would go down if you cannot find other ways to cut costs or pass along the increase in cost to customers.

Honesty is the best policy.

But is it always good for profits?

Unethical actions can promote making a short-run profit if customers have no other substitute available and absolutely must have what you sell, if you can avoid detection or if you use physical intimidation of extortion.6 Likewise, in the short run being dishonest can increase expenses incurred from defending a lawsuit in court. Or, it can mean lost revenue when a customer goes away. At other times being dishonest may have no immediate measurable financial impact one way or the other.

We can see from this brief review ...