On Pushing Back the Boundaries of Economics: The Case of Business Ethics

This paper attempts to go beyond the traditional boundaries of economics to examine an important area too long neglected in modern economics -- ethics. In this paper, orthodox economic methodology is turned on its head; that is, instead of employing a ceteris paribus environment, the analysis proposes a model in which the environment is a key variable of interest. Particular attention is given to environmental dynamics -- how changes in the environment can cause a change in the level of business ethics employed by the business firm. The image of causation used in the proposed model relies heavily upon important concepts from disciplines outside economics, primarily sociology and psychology. Particularly prominent is the use of Maslow's hierarchy of needs to help explain possible linkages between ethical behavior by the business firm and benefits derived from such behavior, as well as the costs of exploitative behavior to the firm. The model is intended to help us better understand the conditions under which business firms are likely to behave ethically and when not. Also, the model yields insights into effectiveness of public policy aimed at increasing business ethics when firms fail to meet society's expectations. Finally, an assessment of the model is made -- strengths, shortcomings, and future research needs are indicated.