What is the honorable business?

Business can be quite commonly perceived as suspicious and profiting as inherently not good for society. In order for one to succeed at business, one must commit an immoral act at some point. But is this claim always true? Are there other ways that businesses can conduct themselves to change this perception? Can a business be honorable?

James R. Otteson, professor of business ethics at the Notre Dame Deloitte Center for Ethical Leadership at the University of Notre Dame, certainly thinks so.

The assumption is that businesses must compensate for unethical practices by giving back their profits to society. In a webinar hosted by the AUC School of Business John D. Gerhart Center about the honorable business, Otteson cited studies which revealed that people see profit as “necessarily in conflict with the social good.”

After earning his PhD in philosophy and starting his teaching career, Otteson discovered to his surprise that many of his business students were embarrassed about studying business degrees, and often lied about studying something else.

He revealed that a lot of people tend to think that a business must have done something wrong to achieve its success, and therefore, needs to atone for it by giving back.

Otteson argues that a business should have values in and of itself and that the concept of a business being a force for good for society should be taught in business schools. Instead of engaging in charity after the business’s success, the business activity itself should have a moral purpose.

He says: “If we are going to continue to teach business and have business schools, then I think it’s incumbent on us to give an answer to this question: Why business? What’s the moral purpose of business?”

Otteson interestingly proposes a framework adapted from Aristotle’s philosophy of purposes and end goals. Aristotle believed that the way to find purpose in our lives today is to explore what ultimate end we want for ourselves. To do this, we have to imagine that we are already at the end of our lives and look back on our lives. At this point, we should ask ourselves what life would we have liked to have led for us to say we lived a good life that was worthy and lived to its fullest?

To achieve this end goal, Aristotle said to reverse engineer what you imagined and think about what you need to do to live a moral life and feel happy and achieved by the end of it. This should be incorporated into our everyday life.

Otteson’s adapted framework of Aristotle’s philosophy for business includes five key characteristics: 1) desiring a just and humane society; 2) institutions that build a just and humane society; 3) a properly functioning market economy; 4) honorable businesses which create the properly functioning market economy.

The fifth is the constituents of an honorable business, which Otteson describes as the “industries, firms, and individuals creating genuine value,” with value here meaning making their own and other people’s lives genuinely better. The businessperson improves their own life by improving the lives of others.

An honorable business also treats all parties equally and respects their autonomy and consent, while honoring promises even when there will be no consequences if they are broken.

But why be an honorable business anyway? Some might ask. Otteson says to consider what is called the “great enrichment”. This is a term that has been used to describe our current period of material wealth. Today, the world boasts unprecedented levels of wealth that has never been seen before in human history.

Otteson believes one of the reasons this happened was due to a shift in moral attitudes. Where there was extraction, imperialism and colonization before, now there is voluntary exchange and partnership. The former depletes certain parties to the enrichment of other parties. The latter enriches all parties and contributes to overall prosperity and net benefit.

“It is win-win for both parties to the exchange. In fact, it’s win-win-win. It’s not only benefiting me and you if we’re both parties to the transaction. It’s also benefitting society in several ways,” he said.

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