Business Ethics

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Business Ethics and Wealth Creation:
Conceptual Clarifications and Research Questions

Introduction

Three considerations led me to the choice and investigation of this topic of business ethics and wealth creation. In his fascinating and powerful historical account “why some [nations] are so rich and some so poor,” David Landes (1999) scrutinizes the winners and losers in the process of wealth creation over the last 50 years. On the winners’ side, in addition to “the thirty wonderful years from 1945 to 1975” of France and the “economic miracle” in Germany, he highlights the East Asian success stories of Japan, the four “Little Tigers“ (South Korea, Taiwan, Singapore, and Hong Kong), and the regional followers such as Malaysia, Thailand, and Indonesia, referring, among others, to the World Bank’s study The East Asian Miracle (1993), and adding China in his “Epilogue 1999” (Landes 1999: 524-531). The losers are the Middle East, Latin America, the countries of the Communist-Socialist bloc, and sub-Saharan Africa. While this “gap in wealth and health that separates rich and poor” (1999: xx), obviously, has been caused by multiple factors, the fact itself is enormous and provides paramount importance to the question of how we may understand the creation of wealth.

A second consideration responds to the worldwide discussions about “corporate social responsibility” or CSR that have gained considerable momentum in the last ten years. Corporations are expected to care about their environmental impact, to behave as corporate citizens, to defend freedom on the internet, to support cultural and sports events in their communities, to help the victims of natural disasters such as tsunami and Katrina, to provide health care at reduced prices or for free to the needy who can’t afford it, etc. Against the backdrop of this wealth of expectations, it is striking that, quite often, the financial and economic responsibilities of business organizations seem to be ignored, and, more specifically, no attention is being paid to the questions how companies can and should create wealth.

Finally, surveying the management literature, a third consideration comes to mind. It seems fair to say that a large part of this literature assumes the companies’ objective of “maximizing shareholder value” with no critical examination in economic terms. Moreover, the broader objective of “adding value” is often used as a black box that can be filled with any type of so-called “value.” The notion of wealth creation is not seriously scrutinized even by prominent writers like J. Collins (1994, 2001) and J. Porras (1994).

Against this backdrop of global importance and widespread neglect, in the following sections, I first explore and clarify the notion and significance of wealth creation. Then I discuss how business ethics can and should be related to wealth creation. I conclude with outlining several research perspectives. What is the Creation of Wealth?

Wealth can be defined in several ways. As Robert Heilbroner states (1987, 880), “wealth is a fundamental concept in economics indeed, perhaps the conceptual starting point for the discipline. Despite its centrality, however, the concept of wealth has never been a matter of general consensus.” As for the term itself, it figures prominently in Adam Smith’s work, An Inquiry Into the Nature and Causes of the Wealth of Nations (1776), but is conspicuously absent from Gunnar Myrdal’s Asian Drama: An Inquiry Into the Poverty of Nations (1968) and is complemented with its opposite in David Landes’s book title, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (1998). It is noteworthy to see how Smith’s “wealth” is translated into other languages: as Wohlstand prosperity (not as: Reichtum riches, Wohlfahrt welfare, Vermögen wealth) in German, richesse riches in French, riqueza riches in Spanish and fù rich in Chinese.

In order to discuss the concept of wealth, we first may concentrate on...
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