One might rightly ask "Why should managers be ethical?" What are the new challenges in business ethics and economics? The short answer would be that society expects managers to be ethical and that managers should be responsive to the expectations of society and stakeholders if they wish to maintain their legitimacy as agents in society. From a moral philosophy perspective, managers should be ethical because it is the right thing to do. We should go beyond these simple, but appropriate, answers, however, and point out some other reasons why ethical behavior and practice is warranted: Shared values build trust. Consistency leads to predictability in planning. Predictability is essential for crisis management. Confidence in such rewards builds loyalty. Companies are as good as their people. Consumers care about values. Shareholders also care about values. Ethical leadership forestalls oppressive regulation. Effective partnerships depend on common values. Ethics is a form of insurance. An examination of these reasons suggests two broad categories of justification: Society and stakeholders expect managers to do what is right, fair and just. It is in organisations' and managers' best interests to be ethical. From the experience of Europe, and especially big changes in Eastern Europe, I would like to also provide some frameworks of ethical decision making which seek to identify the various steps involved in arriving at ethical decisions: An individual must, first, perceive an ethical problem. An individual seeks to identify various alternative actions that might solve the problem and what their consequences would be. Two kinds of evaluations take place: one looks to the inherent rightness or wrongness of each alternative (deontological considerations) and one considers the probability and desirability of the consequences of each alternative, as well as the importance to the relevant stakeholders (teleological considerations). These two evaluations are merged to form a single ethical judgment. Such ethical judgments impact on a person's behaviour through the intervening variable of his or her intentions which may, however, differ (due to other preferred consequences) from what he or she judged to be ethical. The resulting behaviour may vary from the individual's prior intentions and ethical judgments, depending on the extent to which the individual actually exerts control in the enactment of an intention in a particular situation. Personal characteristics, as well as organisational, industrial, professional and cultural environments, directly influence steps 1-3 above. Although my article addresses several problems of theory, it ends on a constructive note. Identifying the obstacles to reconciling the described perspectives can be an important step towards finding and developing a coherent normative theory for business ( for related arguments, see Swanson (1995, 1999)).
