Adam Smith in 1776 in The Wealth of Nations made a withering comment on company management that would echo through the ages: “Being managers of other people’s money than their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private co-partner frequently watch over their own … Negligence and profusion, therefore, must always prevail more or less in the management of the affairs of a joint-stock company” (Smith 1976, 264–265).Īs technological change advanced with the industrial revolution, there occurred a wider diffusion of ownership of many large companies as no individual, family or group of managers could provide sufficient capital to sustain growth. Shakespeare immortalised the potential venality of business in The Merchant of Venice, “All that glisters is not gold.” Frentrop (2003) graphically records how greed, speculation, deceit and frequent bankruptcy punctuated the fortunes of the earliest of the great trading companies, beginning with the Dutch East India Company. Most major world religions cast a sceptical eye on business, including Christianity, Islam and Confucianism. In the ancient Greek civilisation Aristotle could readily distinguish between the basic trade required for an economy to function, and trade for profit which could descend into unproductive usury (Solomon 1992, 321). Since the origin of commerce, the ethical basis of business has been in question. However challenging the prospects, there are growing indications of large corporations taking their social and environmental responsibilities more seriously, and of these issues becoming more critical in the business agenda. A substantial increase in the range, significance and impact of corporate social and environmental initiatives in recent years suggests the growing materiality of a more ethically-informed approach.
The manifest failures of corporate governance and business ethics in the global financial crisis has increased the urgency of the search for a better ethical framework and governance for business. The accountability and responsibility of business enterprise is constantly subject to question. The balance of pursuing market opportunities while maintaining accountability and ethical integrity has proved a defining challenge for business enterprise since the arrival of the joint- stock company in the early years of industrialism.
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