What business ethics to choose when closing down a business or moving it oversees, and what to do with the workers?

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kipling2448 | (Level 3) Educator Emeritus

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The oft-quoted notion that "the business of business is business," attributed in a modified form to Calvin Coolidge, means that businesses exist to make money and, in so doing, provide jobs for employees and dividends for investors. First and foremost, though, is that businesses exist to make money. Beyond laws and regulations intended to maintain a level playing field and to protect consumers from fraudulent claims and defective products, the role of ethics is often left to the individual business owner. In the end that individual(s) must live with the moral consequences of his or her actions. 

A decision on whether to close a business, or to move it overseas, the latter usually a product of calculations of relative costs of doing business (i.e., labor costs, costs associated with regulatory compliance, etc.) may or may not involve ethical dilemmas. A decision to close a business may simply be the product of the owner's decision to retire and not having a child to whom to turn over the operations of the company. That is not an ethical matter, even to the extent that employees may lose their jobs. In a free-market, capitalist system, employees serve at the whim of their employers, although unionization and laws intended to protect employees from prejudicial behavior are certainly part of the larger picture. A business owner cannot, however, be compelled to keep his or her business open solely for the benefit of employees. 

In contrast to decisions about whether to keep a business open, a decision as to whether to move the company overseas, or at least to contract out business operations to foreign entities, can indeed involve ethical considerations. Companies relocate to foreign destinations because the costs of manufacturing may be demonstrably lower in those foreign destinations than in the country of origin, like the United States. In a highly-competitive business environment, a decision to relocate overseas may be the only option if a company hopes to remain viable. It is certainly unfortunate for the affected employees, but that is the nature of international commerce and of globalization. A company that relocates overseas without being driven to do so by the pressure of competition, however, may be crossing moral boundaries solely for the sake of increasing profits. That is, indeed, an ethical dilemma, especially if the destination involves a foreign country with pitiably lower wages and lax, or even nonexistent environmental regulation. Moving one's operations to a country with little or no regulation of environmental matters and with no protections for employees from harsh and unsafe work conditions is unethical. Uneven wage structures, however, does not necessarily entail unethical business practices, as less-developed economies simply have lower wage scales and the introduction of manufacturing jobs can be beneficial to the work force in such locations. The question of ethics comes into play when those workers are denied the freedom to organize into unions and are subjected to unsafe work conditions and unreasonably long hours.

In short, questions of ethics can involve multifaceted situations that may or may not be clear-cut to outside observers. Unethical behavior is evident when employee rights and environmental degradation are ignored; it is not evident when businesses are closed because the owner can no longer function or simply wants to retire and there is no buyer for the company.

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