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This paper aims to investigate the systemic causes of the failure of business ethics (BE) and suggest some possible remedies. The discipline and the movement of BE has at least three decades of history. BE has developed concepts and theories, and provided empirical evidences. However, BE as a movement and as a practice has failed to deliver the expected results.

The paper uses results from management ethics, moral psychology and corporate governance to analyze the underlying causes of corporate unethical behavior.

The failure of BE is deeply rooted in today’s corporation-ruled business world. BE has failed to realize systemic features of modern business and therefore missed its target. The social, ethical and environmental problems caused by corporations may require a different kind of treatment based on law, politics and social institutions.

The paper uses models outside ethics to help business organizations to become more ethical in their functioning.

The paper applies two core theoretical frameworks of budgetary change-incrementalism and punctuated equilibrium theory-to a new database of Hungarian final accounts data for the period 1991 through 2013. Based on our analysis trends in Hungarian budgeting are in line with available comparative evidence suggesting that yearly changes of budget outlays in policy domains are best characterized by a punctuated equilibrium model. The most significant variable in predicting whether an observation would fall into the equilibrium or punctuated group was the share of the given policy domain of total outlays. However, alternative explanatory variables, such as the electoral cycle, the fiscal cycle and the business cycle had no effect on the results.