A company's right to exist is not primarily to make a lot of profit, although profit is necessary for survival. For many of those involved in a business, a business is part of their lives. Is it possible to make a profit and behave ethically at the same time? In short: is ethical entrepreneurship possible?
Why are there companies?
People need goods and services. Some specialization took place even among the first hominids. For example, the men usually hunted (or waged war), while the women gathered vegetable food and performed household chores. A person or group of persons who professionally specializes in providing a particular product or service is called a company. Primarily, therefore, is the raison d'être of companies: to manufacture or do something that others need. Business is therefore essential for our survival; because we developed ever better techniques and more effective cooperation, we succeeded in breaking out of poverty. An escalating process ensued: as more and more techniques were discovered, more time and resources could be used to develop even better techniques.
What is Profit?
Profit is what you have left when you subtract the costs from the revenues. The more profit a business makes, the more the business has leftover and, if it invests the profit in the business, the faster it can grow. It can also make the business owners richer. Profits can come from a smart, innovative business process, allowing the company to deliver something for little cost while in high demand. Profits can also be the result of parasitic business activities, leaving the company with a lot, but causing a lot of damage to the rest of the world, resulting in net capital destruction.
Examples of parasitic businesses
- With the exception of all companies in the financial sector, some insurers and non-profit banks. The financial sector itself does not produce anything, but lives on arbitrage, read: skimming the profits of others.
- The Dutch East India Company, once praised by former Prime Minister JP Balkenende, made a lot of profit by forcing slave-born natives to grow spices, which the Company sold in Europe for a lot of profit. The profit was partly secured by destroying competitors.
- Patent trolls make money by selling patents as much as possible. In doing so, they force other companies to hire expensive lawyers, hinder innovation because other companies are afraid of violating any patents and they extort companies many millions.
- Many mining companies are wreaking havoc, after which local residents are left with the lumps, because the owners let the legal entity in which the mine is located go bankrupt.
- Companies that send ghost invoices or invoices for inclusion in obscure or nonexistent registers.
- Tobacco producers, beverage manufacturers or other products that are harmful to health.
- Weapon manufacturers, especially the producers of anti-personnel landmines.
- Companies that create their own demand by causing problems, sowing fear or by talking to people about non-existent problems, so that they buy unnecessary products or services.
Societal and social responsibility
As an entrepreneur you have a duty to think not only about the profit figures but also about the consequences that your business activities have on the rest of the planet. Several centuries ago this was a very natural thought. Centuries of lobbying by crafty corporate attorneys in the US have unfortunately ultimately resulted in profit as an end in itself being a sufficient reason for a company to exist, in fact, that a manager is punishable if he does not maximize profit for a company's shareholders. Countries outside the US have unfortunately largely adopted this legislation. Managers are also still thrilled when they deliberately let their company flout environmental regulations, for example. In this case, of course, it is more effective to hold personal accountability and prosecution for these types of violations.
Hippocratic Oath for Entrepreneurs?
The contrast between the merchant and the pastor is an illusion. Ethical conduct is also important for business people. If only because a cheated customer does not return. The consequences of corporate mismanagement are also profound, as we have seen in the Gulf of Mexico, where short-term profiteering by BP executives led to the greatest environmental catastrophe in modern history. For doctors, the Hippocratic Oath has existed since classical Greek times. The doctor's oath of the small Dutch Medical Society most closely resembles the Hippocratic Oath and reads as follows:
I swear and subscribe to this oath, as long as I may dispose of my faculties and mental insight, to the end.
I will regard someone who has been my teacher of medicine as a family member and will be selfless by the side. His children will be like brothers to me, whom I will train in my turn, without asking for compensation, in medicine. I will give my teaching to them, along with my own children and to the students, who are subject to the duty of secrecy, but not to outsiders.
I will give my prescriptions to the best of my knowledge and ability, for the benefit of the patients, and I will keep them from all that is harmful and wrong. I will not help anyone who asks me for a deadly concoction, nor will I come up with any advice of my own accord. Nor will I help any woman with a poisonous suppository. Impeccable and God-fearing will be my private life as well as the exercise of my profession.
I will not perform actions that do not belong to my competence, but, if necessary, make room for those who are knowledgeable in the matter. If I go into the private realm of the patients I will do so for the sake of healing, avoiding any abuse of my position in my attitude towards women and men, especially in the sexual field.
Everything I see or hear as a care provider, including the private lives of the patients, I will keep to myself, in the conviction that such things must be kept secret.
The respect of all people for my way of life and profession may be my part forever, if I keep this oath and do not break it. In case of transgression and perjury, however, the opposite may happen to me.
Shouldn't there be such an oath for entrepreneurs and especially managers?