THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, August 4, 1996 TAG: 9608030520
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
TYPE: Interview
LENGTH: 79 lines
Edward Freeman says he wakes up every day knowing he won't have a shortage of raw material.
A Georgia native with a doctorate in philosophy, Freeman wrestles with ways to address ethical issues in the business world.
Since 1987, he has been teaching ethics at the University of Virginia's Darden Graduate School of Business Administration in Charlottesville. He also heads the school's Olsson Center for Applied Ethics.
Freeman developed an interest in ethics and business while teaching management courses at the University of Pennsylvania's Wharton School. But business wasn't uppermost in his mind when he took a post-doctoral research post at Wharton.
``I went there because my future wife was going to school there,'' Freeman said. ``I went to business school because of love.''
Today, Freeman devotes much of his time to studying the roles that ``stakeholders'' - employees, customers, suppliers, communities and shareholders - have in business.
In addition to his research, he has been editing a series of 13 books on business and ethics for Oxford University Press. Last week Freeman spoke about ethics in the business world with staff writer Tom Shean.
Q How did you develop your interest in applying ethics to business?
A It seemed to me that you couldn't understand what managers did unless you understood the ethical nature of their jobs. They are engaged in activities that harm and benefit others. Ethics in business doesn't just involve things like an Exxon oil spill or insider-trading scandals on Wall Street. It has to get at how we treat each other every day in business.
Q There has been more discussion in recent years about the roles that employees, communities and customers have in business. What attracted you to the topic of ``stakeholders?''
A At its core, capitalism is a cooperative venture. The basis of capitalism is an ability to put together a deal that benefits all these groups. It doesn't have to be antagonistic.
Q The managements of some American corporations have displayed greater concern about ethical behavior. How widespread is this?
A It's happening all over the world. As we speak, there is an international conference on ethics going on in Tokyo. Another conference will be held in China next week.
Q What prompted the increased attention to ethics?
A A couple of things. One is a better understanding of markets. We've had this view that markets are unethical or amoral, but Adam Smith, author of The Wealth of Nations, said markets work because people tell the truth and keep their promises. People don't come to the marketplace as one-dimensional, self-interested maximizers. They come as complex human beings.
Q How effective have laws been at fostering ethical behavior in the business world?
A I'm pretty skeptical about legislation. Often, the problem is that well-meaning legislators enact laws that have dumb consequences. I think the Foreign Corrupt Practices Act of 1977 was a well-meaning attempt to prevent payoffs, but it had the effect of barring American companies from a lot of business opportunities overseas. It required the reporting of every kind of payment, even one that was more of a tip than a bribe.
Q How should bribes be treated?
A We have this view that a bribe is a bribe is a bribe, but paying off a government minister to get a contract may be very different from making a small payment to a customs official to expedite an order of machine parts.
Q What kind of reception have you gotten from business managers when you talk to them about ethics?
A Many of the business people I've worked with want to understand what effects their actions have. I've found a remarkable willingness among business people to discuss ethics.
Q What reaction does the discussion of ethics get at the Darden business school?
A I'm in a unique position because Darden takes ethics pretty seriously. It's a place that says ethics is part of business.
Q Is there a message that you try to convey to business managers and students?
A My hobbyhorse is to say that you can't separate the two. You can't put business on one side of the ledger and ethics on the other. The challenge is to bring the two together. by CNB