The History of Business Ethics and Stakeholder Theory in America

Assignment Brief

ETH301 Business Ethics

Module 1 - Case

Assignment Overview

The first part of your reading in Daniel Terris’ book will include an overview of Lockheed Martin’s organization and will lay out the research plan that Terris used to obtain information necessary for his work. This will be followed by a general overview of the evolution of business ethics in America.

Case Assignment

1. Based on your readings, describe what you consider to be the responsibility of top leadership in a large organization with respect to reaching a balance between profits and stakeholder concerns. Please support your position by giving some examples from the text or from other sources where CEOs did a good or poor job of finding this balance.

2. Terris discusses the history of business ethics in America since the late 1800s with respect to anti-competitive practices, seeking unfair advantage through immoral arrangements with suppliers and public officials, failing to adhere to laws and regulations, and lack of transparency. Discuss to what extent you believe things to be better or worse in the present day for businesses in general.

3. On page 41, Terris discusses the ideas of Howard Bowen regarding the evolution of social responsibility of businesses. To what extent do you think his predictions held true since 1953?

Assignment Expectations

APA Points:

According to the Publication Manual of the American Psychological Association, there are three reasons why we need to use proper citations and references. 

They are:

“To ensure the accuracy of scientific knowledge” (p.11). – How do we know if what you are reading is really the truth?  We can look at the citation and the reference and do further research to make sure what you are reading and what you are basing your research on is correct.

“To protect the rights and welfare of research participants” (p.11). – People deserve to get credit for their work.  When you earn a degree and go on to do research, you will want credit for the work you have published.

“To protect intellectual property rights” (p.11). – When we refer to inventions, we should give credit to the person who invented the item, trademarked the item, or developed a design. This protects their work.

A reference system also allows the reader to use the in-text citation and reference page to find out how to do further research when they find a topic of interest. It can save a lot of time.

As educated students, we should know the APA Style rules and work to perfect them.

Below are three common mistakes that cost Trident Students.  Reviewing these examples should help you improve your grade and also make future assignments easier.

APA Point 1: Where does the period go?

The use of a period.  The period indicates the end of a sentence. However, if we put the period before the in-text citation, we are actually beginning the next sentence with the citation. Therefore, the period goes after the citation.

Another misuse of the period is putting it before the citation and another after the citation.  This is not correct. The period goes after the in-text citation.

Example: Intercultural Communication is quite important in how we deal with individuals from different Countries and even from different neighborhoods of our cities (Pearson, 2015b). – Notice where the period is.

APA Point 2:  Do we need to use Quotation Marks?

When using information word for word from someone else’s work, quotation marks are necessary. This example illustrates the use of quoted material at the end of the sentence, followed by a citation and reference.  The reference will also include the page numbers.

Example: When we are writing a Negative Letter, there are numerous authors who recommend starting the letters with a buffer.  Remember, “Openings for negative messages are often called Buffer Beginnings because they are designed to buffer the negative message that will follow” (Bowman, 2002, p. 1).

APA Point 3:  Arranging entries on a reference list.

Once again as we dive into our Publication Manual of the American Psychological Association, we get guidance on how to arrange our references on the reference page.  “Arrange entries in alphabetical order by the surname of the first author followed by initials of the author’s given name” (p. 181).

One may ask why.  When there are two or three references, it does not make a great amount of difference. But with numerous references, it is much easier if we arrange the references by the author’s last name.  Remember, one of the purposes of a reference page is to help readers find additional information.  If there are 10 or more references listed in random order, it is difficult to find the appropriate reference. So let’s use the alphabetical ordering.

Your paper should be double-spaced and in 12-point type size.

Your paper should have a separate cover page and a separate reference page containing the full citations corresponding to the in-text citations you choose to use in the body of your paper. So in addition to the 4- to 5-page body of your paper you will have a title page and a reference page. So overall, you will be submitting a 6- to 7-page document.

Use APA style, and proofread your paper.

Upload your paper by the end of the module.

Sample Answer

The History of Business Ethics and Stakeholder Theory in America

Introduction

Business ethics has evolved significantly in the United States over the past century, shaped by scandals, regulatory changes, and shifting expectations from society. At the centre of these discussions is the role of leadership in balancing profits with stakeholder concerns. Terris (2005) provides insight into these debates through his examination of Lockheed Martin, while also exploring the wider historical development of ethical practices in business. This essay reflects on the responsibility of top leadership in large organisations, considers whether business ethics has improved or deteriorated over time, and evaluates the relevance of Howard Bowen’s early theories of social responsibility.

Responsibilities of Leadership in Balancing Profits and Stakeholders

Top leadership in large organisations holds the responsibility of balancing shareholder value with the needs of stakeholders such as employees, customers, communities, and regulators. This balance is essential because decisions driven solely by profit can damage reputation, weaken trust, and harm long-term sustainability.

Terris (2005) emphasises that leaders at Lockheed Martin faced scrutiny not only for financial decisions but also for issues of transparency, compliance, and accountability. For example, earlier in its history, Lockheed was involved in bribery scandals that highlighted how profit-driven decision-making could undermine stakeholder trust and attract government sanctions. This demonstrates the risks of ignoring stakeholder concerns.

By contrast, more recent leaders, such as Paul O’Neill at Alcoa, demonstrated how a focus on ethical principles could align with business performance. O’Neill prioritised workplace safety, a stakeholder concern often seen as a cost. However, by embedding safety into corporate culture, he improved productivity and reduced costs, proving that ethical priorities can also strengthen profits (Gelles, 2016).

This comparison highlights the dual responsibility of leaders. They must deliver profitability for shareholders while embedding stakeholder perspectives into strategic decisions. A failure to achieve this balance can result in legal penalties and loss of public trust, whereas success can lead to stronger organisational resilience and competitive advantage.

The Evolution of Business Ethics in America

Terris (2005) traces the history of business ethics in the United States from the late nineteenth century onwards, identifying recurring problems such as anti-competitive practices, corrupt relationships with public officials, disregard for regulations, and lack of transparency. These issues reveal that unethical behaviour is not a new phenomenon.

During the early industrial period, monopolistic behaviour was common, with companies like Standard Oil using aggressive tactics to eliminate competition. This provoked the development of antitrust legislation such as the Sherman Act of 1890, designed to restore fairness in markets.

By the mid-twentieth century, corporate scandals involving insider trading, fraud, and bribery continued to undermine trust. The Lockheed bribery scandals of the 1970s, where payments were made to foreign officials, triggered the introduction of the Foreign Corrupt Practices Act in 1977. This demonstrated that unethical behaviour led directly to regulatory reform.

In the present day, the picture is mixed. On one hand, businesses face greater scrutiny from media, regulators, and activist groups. Corporate social responsibility (CSR) and environmental, social, and governance (ESG) initiatives are now standard features in large companies. Digital transparency and whistle-blower protections make it more difficult to hide misconduct. On the other hand, high-profile cases such as the Enron scandal, the 2008 financial crisis, and the Wells Fargo account fraud show that unethical practices remain widespread. Therefore, while mechanisms for accountability have improved, the pressures of competition and profit maximisation still create incentives for misconduct.

Continued...