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202BUSINESS
Person
IN
ETHICAL FOCUS
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AN ANTHOLOGY
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2
nd edition
EDITED BY
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Fritz Allho , Alexander Sager,
and Anand J. Vaidya
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,
Founded in 1985, Broadview Press remains
a wholly
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10publishing house. Broadview’s focus is on academic publishing;
-well
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our titles are accessible to o
university
and college
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as
as scholars and general readers. With over 600 titles in print,
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with world-wide distribution. Broadview is committed
BROADVIEW PRESS — www.broadviewpress.com
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to environmentally responsible publishing and fair business practices.
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The interior of this book is printed on 100% recycled paper.
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n Anand J. Vaidya
202
rsoand
© 2017 Fritz Allho , Alexander
PeSager,
All rights reserved. No part of this book may be reproduced, kept in an information storage and retrieval system, or transmitted in
any form or by any means, electronic or mechanical, including photocopying, recording, or otherwise, except as expressly
permitted by the applicable copyright laws or through written permission from the publisher.
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Business in ethical focus : an anthology / edited by Fritz Allho ,
o
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Alexander Sager and Anand J. Vaidya. — 2nd edition. use on -09-10
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Includes bibliographical references. P
Library and Archives Canada Cataloguing in Publication
ISBN 978-1-55481-251-6 (paperback)
1. Business ethics. I. Allho , Fritz, editor II. Vaidya, Anand, editor
III. Sager, Alexander E. (Alexander Edward), editor
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HF5387.B883 2016
174′.4
C2016-906981-8
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Broadview Press handles its own distribution
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Broadview Press acknowledges the nancial support of the Government of Canada through the Canada Book Fund for our
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CONTENTS
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UNIT 1: PRELIMINARIES
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202
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ACKNOWLEDGMENTS
NOTE ON THE SECOND EDITION
Anand J. Vaidya and Fritz Allhoff, “Introduction: Why Study Business Ethics?”
FOUNDATIONAL ISSUES
1. Anand J. Vaidya, “Ill-Founded Criticisms of Business Ethics”
2. Amartya Sen, “Does Business Ethics Make Economic Sense?”
3. Linda Klebe Treviño and Michael E. Brown, “Managing to Be Ethical: Debunking Five Business Ethics Myths”
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4. Alexander Sager, “A Brief Guide to Thinking about
, 9-1Ethics”
0
onl0yBusiness
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5. David Meeler, “Utilitarianism”
Perso
SYSTEMS OF MORAL EVALUATION
6. Heather Salazar, “Kantian Business Ethics”
7. Richard M. Glatz, “Aristotelean Virtue Ethics and the Recommendations of Morality”
8. Rita C. Manning, “Caring as an Ethical Perspective”
UNIT 2: CORPORATE SOCIAL RESPONSIBILITY
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THE CENTRAL DEBATE
t rep
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ly, 09-10Theories: Mapping the Territory”
onResponsibility
9. Elisabet Garriga and Domènec Melé, “Corporate
Social
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Anand J. Vaidya, “Introduction”
10. Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits”
11. Lynn A. Stout, “The Shareholder Value Myth”
12. George G. Brenkert, “Private Corporations and Public Welfare”
13. R. Edward Freeman, “Managing for Stakeholders”
14. Joseph Heath, “Business Ethics without Stakeholders”
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16. CASE STUDY: David Meeler and Srivatsa Seshadri,
“Actions
Louder Than Words: Rebuilding Malden
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Mills”
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15. Sumantra Ghoshal, “Bad Management Theories Are Destroying Good Management Practices”
17. CASE STUDY: Tom McNamara and Irena Descubes, “Citibank and Collateralized Debt Obligations”
18. CASE STUDY: Brad Berman, “Corporate Lobbying on GMO Labeling Legislation: Oregon Ballot Measure 92”
GLOBAL PERSPECTIVES ON CORPORATE SOCIAL RESPONSIBILITY
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19. Gillian Rice, “Islamic Ethics and the Implications for Business”
20. Gary Kok Yew Chan, “The Relevance and Value of Confucianism in Contemporary Business Ethics”
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ENTREPRENEURSHIP AND THE NOT-FOR-PROFIT SECTOR
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02
son of ‘Social2Entrepreneurship’”
erMeaning
22. J. Gregory Dees, P
“The
21. Laszlo Zsolnai, “Western Economics versus Buddhist Economics”
23. Deborah L. Rhode and Amanda K. Packel, “Ethics and Nonprofits”
24. CASE STUDY: Ardhendu Shekhar Singh, Dilip Ambarkhane, and Bhama Venkataramani, “Microlending and
the Grameen Bank”
25. CASE STUDY: Joshua M. Hall, “Students Protest University Investments: Vanderbilt’s African Land-Grab”
UNIT 3: GLOBALIZATION AND SUSTAINABILITY
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ETHICS IN INTERNATIONAL CONTEXTS
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on Morality,20and2the Common Good”
26. Manuel Velasquez, “International
PersBusiness,
Alexander Sager and Anand J. Vaidya, “Introduction”
27. Thomas Donaldson, “Values in Tension: Ethics Away from Home”
28. Ian Maitland, “The Great Non-Debate Over International Sweatshops”
29. Don Mayer and Anita Cava, “Ethics and the Gender Equality Dilemma for US Multinationals”
30. CASE STUDY: David Meeler and Srivatsa Seshadri, “Charity Begins at Home: Nepotism”
uce.
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ot r Requirements Challenge the Internet Company”
32. CASE STUDY: Theresa Bauer, “Google in China:oCensorship
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BRIBERY AND CORRUPTION
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31. CASE STUDY: Scott Wisor, “Conflict Minerals and Supply Chain Management: The Case of the DRC”
33. P. Steidlmeier, “Gift Giving, Bribery, and Corruption: Ethical Management of Business Relationships in China”
34. A.W. Cragg, “Business, Globalization and the Logic and Ethics of Corruption”
35. CASE STUDY: Peter Jonker, “Buying Influence in China: The Case of Avon Products Incorporated”
ENVIRONMENTAL RESPONSIBILITY
36. Paul Hawken, “Natural Capitalism”
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38. Deborah C. Poff, “Reconciling the Irreconcilable:
Global
onl0The
-10Economy and the Environment”
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n “Business,
20Ethics, and Global Climate Change”
rsoBustos,
39. Denis G. Arnold and
PeKeith
37. Kristin Shrader-Frechette, “A Defense of Risk-Cost-Benefit Analysis”
40. CASE STUDY: Cyrlene Claasen and Tom McNamara, “The Deepwater Horizon Oil Spill”
UNIT 4: RIGHTS AND OBLIGATIONS OF EMPLOYEES AND EMPLOYERS
Anand J. Vaidya, “Introduction”
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EMPLOYMENT AT WILL
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42. Richard A. Epstein, “In Defense of the Contract at Will”
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43. John J. McCall, “Employee Voice
202 A Defense of Strong Participation Rights”
PersinoCorporate
41. Patricia H. Werhane and Tara J. Radin, “Employment at Will and Due Process”
44. CASE STUDY: David Meeler and Srivatsa Seshadri, “Lifestyles and Your Livelihood: Getting Fired in America”
WHISTLEBLOWING
45. Richard T. De George, “Whistleblowing”
46. Juan M. Elegido, “Does It Make Sense to Be a Loyal Employee?”
47. George G. Brenkert, “Whistle-Blowing, Moral Integrity, and Organizational Ethics”
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WORKPLACE PRIVACY
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48. CASE STUDY: Brian J. Collins, “Obligations, Responsibility, and Whistleblowing: A Case Study of Jeffrey
Wigand”
49. Joseph DesJardins and Ronald Duska, “Drug Testing in Employment”
50. Michael Cranford, “Drug Testing and the Right to Privacy: Arguing the Ethics of Workplace Drug Testing”
51. Samantha French, “Genetic Testing in the Workplace”
52. Darren Charters, “Electronic Monitoring and Privacy Issues in Business-Marketing: The Ethics of the
DoubleClick Experience”
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SAFETY IN THE WORKPLACE
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54. Anita M. Superson, “The
Relationship and the Right to Know”
ona
202
PersEmployer-Employee
53. CASE STUDY: Mike Bowern, “E-Mail and Privacy: A Novel Approach”
55. Tibor R. Machan, “Human Rights, Workers’ Rights, and the ‘Right’ to Occupational Safety”
56. Earl W. Spurgin, “Occupational Safety and Paternalism: Machan Revisited”
57. CASE STUDY: Alexander Sager, “The Rana Plaza Collapse”
UNIT 5: JUSTICE AND FAIR PRACTICE
Anand J. Vaidya, “Introduction”
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58. Edwin C. Hettinger, “What Is Wrong with Reverse
Discrimination?”
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ersoofnAffirmative
PStatus
59. Louis P. Pojman, “The Moral
Action”
DIVERSITY IN THE WORKPLACE
60. Sandra E. Wessinger, “Gender Matters. So Do Race and Class: Experiences of Gendered Racism on the
Wal-Mart Shop Floor”
SEXUAL HARASSMENT
61. Anita M. Superson, “A Feminist Definition of Sexual Harassment”
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62. Stephen Griffith, “Sexual Harassment and the Rights of the Accused”
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soSanitized Workplace”
64. Vicki Schultz,
Per“The
63. Myrtle P. Bell, Mary E. McLaughlin, and Jennifer M. Sequeira, “Discrimination, Harassment, and the Glass
Ceiling: Women Executives as Change Agents”
65. CASE STUDY: Darci Doll, “Sexual Harassment in the Workplace”
BLUFFING AND DECEPTION
66. Albert Z. Carr, “Is Business Bluffing Ethical?”
67. Thomas Carson, “Second Thoughts about Bluffing”
68. Fritz Allhoff, “Business Bluffing Reconsidered”
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69. CASE STUDY: Patrick Lin, “The Ethics of Bluffing: Oracle’s Takeover of PeopleSoft”
ADVERTISING
70. Tibor R. Machan, “Advertising: The Whole or Only Some of the Truth?”
71. Robert L. Arrington, “Advertising and Behavior Control”
72. Roger Crisp, “Persuasive Advertising, Autonomy, and the Creation of Desire”
73. George G. Brenkert, “Marketing to Inner-City Blacks: PowerMaster and Moral Responsibility”
74. Lynn Sharp Paine, “Children as Consumers: An Ethical Evaluation of Children’s Television Advertising”
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76. CASE STUDY: Chris Ragg, “Nestlé and Advertising: An Ethical
Analysis”
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77. CASE STUDY: Sara De Vido, “Women
Persoand Advertising”
75. Jean Kilbourne, “Jesus Is a Brand of Jeans”
78. CASE STUDY: Brennan Jacoby, “Children and Targeting: Is It Ethical?”
UNIT 6: DISTRIBUTIVE JUSTICE
Fritz Allhoff, “Introduction”
CLASSICAL THEORIES OF CONTRACTS, PROPERTY, AND CAPITALISM
79. Thomas Hobbes, Excerpts from Leviathan
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-10 and Causes of the Wealth of Nations
81. Adam Smith, Excerpts from
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Inquiry
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P“Estranged
82. Karl Marx,
80. John Locke, Excerpts from The Second Treatise of Human Government
CONTEMPORARY THEORIES OF DISTRIBUTION AND PROPERTY
83. Gerald Gaus, “The Idea and Ideal of Capitalism”
84. John Rawls, Excerpts from A Theory of Justice
85. Robert Nozick, Excerpts from Anarchy, State and Utopia
duce
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86. Kai Nielsen, “A Moral Case for Socialism”
duce.
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, d9o-10
87. G.A. Cohen, “Illusions about Private Property n
and
Freedom”
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88. CASE STUDY: KyleP
Johannsen,
“Distributive
Case of Café Feminino”
e
INTELLECTUAL PROPERTY
89. Edwin C. Hettinger, “Justifying Intellectual Property”
90. Lynn Sharp Paine, “Trade Secrets and the Justification of Intellectual Property: A Comment on Hettinger”
91. Richard T. De George, “Intellectual Property and Pharmaceutical Drugs: An Ethical Analysis”
92. CASE STUDY: John Weckert and Mike Bowern, “Intellectual Property across National Borders”
93. CASE STUDY: David Meeler and Srivatsa Seshadri, “Copy That, Red Leader: Is File-Sharing Piracy?”
PERMISSIONS ACKNOWLEDGMENTS
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ACKNOWLEDGMENTS
ot re
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onl0y-09-10
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2 for his support and for his valuable editorial guidance, Bob Martin
20Latta
rsotonthank
The editors would
Pelike
for his careful and perspicuous copy-editing, and Tara Lowes for expertly shepherding the manuscript through
production. We are also grateful to Sean McGuire and Richard Van Barriger for assistance with scanning and
formatting texts and to Nate Ezra Lau er for his work in editing the rst edition case studies, proofreading
introductory materials, and formatting the manuscript. We would like to extend our particular gratitude to Nicole
Haley who provided integral editorial assistance throughout the entire process.
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NOTE ON THEn
SECOND
ot reEDITION
o
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,
onl0y-09-10
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a been to2give
02as comprehensive as possible a survey of the breadth and depth of
Our goal in thisPanthology
ersonhas
business ethics. In selecting essays, we have aimed at providing theoretical work that is essential for understanding
business ethics as an applied area of ethical inquiry. Each section includes articles that have achieved “classic”
status in the discipline, combined with more recent works on urgent topics today. We have also sought to give
readers articles that enable them to develop a good understanding of normative moral theory and other tools for
doing ethics. This goal is to prepare the reader for the study of business ethics beyond this anthology.
For the second edition, we have sought to retain the strengths of the rst edition and to add new articles to
re ect developments in the eld from the last eight years. We have strengthened the sections from the rst edition
with recent articles and created new sections such as Global Perspectives (with articles on Islamic, Confucian, and
Buddhist business ethics) and Entrepreneurship, and the Not-for-Pro t Sector. In addition, we have added 12 new
detailed case studies with study questions that can be used to generate fruitful discussion.
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Person
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Download Complete eBook By email at etutorsource@gmail.com
UNIT 1
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PRELIMINARIES
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0 BUSINESS ETHICS?
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INTRODUCTION:
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Anand J. Vaidya and Fritz Allho
THE WHAT AND WHY OF BUSINESS ETHICS
WHAT IS BUSINESS ETHICS, AND WHY STUDY IT? One good way to get an answer to this question is by taking note of
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what business is, what ethics is, and then tying the two together.
Business as will be understood here is the sum total of the relationships and activities that surround the trading
of goods or services. In most cases, businesses seek to pro t from their activities, though it is increasingly common
for businesses such as social enterprises to operate as non-pro ts. As a category, business includes everything from
the selling of handmade products between two neighboring villages in India to large-scale multinational
corporations such as Nike and Microsoft engaged in global trade. Both the relationships between individuals
involved in any aspect of business and the relationships between groups—corporations, divisions of them, unions,
etc.—are important to understanding business as a whole.
Business ethics is important because it is involved centrally in most people’s lives. Almost all people are
consumers of commercial goods. Businesses also employ many people, giving them not only a wage, but in many
cases an identity and an opportunity to express creativity.
Ethics, in its broadest sense, is an investigation into how humans should live. Ethics is distinct from law since
laws themselves can be objects of ethical criticism. Within the con nes of a moral investigation, one can inquire as
to whether a legal statute is consistent with morality.1 For example, slavery was once considered to be both
morally permissible and legally permissible. Later many people disputed its morality even though it remained
legally permissible.
Many ethicists divide their discipline into three branches: meta-ethics, normative ethics, and applied ethics.
Meta-ethics explores conceptual and foundational questions in morality. Some of the questions are the following:
Are there moral facts? Is morality objective? How do we come to know moral truths? Are moral claims the kinds
of things that can be true or false, or are they simply expressions of emotion? What is the primary object of moral
evaluation?
Normative ethics is the study of which principles determine the moral permissibility and impermissibility of an
action, or, more simply, what constitutes right and wrong. One approach to this, deontology, holds that morality is
constituted by rights and duties, and that those features take priority over the consequences of actions. An
alternative approach, consequentialism, maintains that it is only the consequences of actions (often measured in
terms of happiness and unhappiness) that determine the moral rightness of an action. Yet other theories, such as
virtue theory, argue that actions are not the central objects of moral evaluation; rather, a person as a whole (and
perhaps their character in particular) is the object of moral evaluation.
Applied ethics is the area which investigates speci c problems and questions. Applied ethics includes such areas
as biomedical ethics, computer ethics, environmental ethics, and, of course, business ethics. In applied ethics, for
example, one may ask, “Is it just for companies to pursue pro t within the con nes of the law without considering
if their actions further the public good?” or “Is it morally permissible to bribe government o cials abroad when
this practice is widespread?” In applied ethics, one is concerned with the speci c ethical issues that arise from the
area being investigated.
Philosophers dispute the precise relationship between meta-ethics, normative ethics, and applied ethics. Some
philosophers hold that one’s meta-ethical views and position in normative ethics have important implications for
what one should claim when investigating speci c ethical issues. Nonetheless, it is often possible to reach reasoned
conclusions in applied ethics without settling contentious questions about the nature of morality or the content
and justi cation of fundamental moral principles.
Putting together this understanding of business and ethics we arrive at the following conception of business
ethics. Business ethics is the area of inquiry into issues that arise out of the relationships and activities surrounding
the production, distribution, marketing, and sale of goods and services. We can further divide business ethics into
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micro, meso, and macro issues. Micro issues concern the behavior of individual workers and employers. Some of
the questions revolve around the rights, responsibilities, and obligations that employees bear to each other and to
their employers. Likewise there are questions about what rights, responsibilities, and obligations employers bear
to employees. Does an employer have, for example, a right to information about the employee that is irrelevant to
job performance? If not, how is the concept of job relevance to be de ned? What set of rights, in general, do
employees have when they sell their labor? Does this include a safe work environment? If so, is it the employer’s
obligation to provide it? What moral considerations help us understand why this is the case?
The meso level focuses on how businesses ought to be structured if they are to justly ful ll their role in society.
The central debate has been over whether the sole responsibility of business is to maximize pro t for shareholders
or whether businesses also have signi cant moral responsibilities to stakeholders that go beyond pro t
maximization. This debate enquires into the immediate physical and social environment in which businesses are
embedded, and to the future physical and social environment they will create. As a consequence, there are a host
of ethical questions about the permissibility of polluting in the physical environment, and promoting socially
important causes in the social environment.
A nal set of questions for business ethics concerns macro level questions of political economy and distributive
justice. Businesses operate in economic, legal, and social environments that both facilitate and constrain their
actions and impact. Questions of corporate social responsibility and obligations to individual employees depend in
part on our conclusions about a just society. What are the advantages and drawbacks of capitalism as an economic
system? What constitutes a fair distribution of wealth? How do we understand democracy and to what extent
should economic actors be subject to democratic control? In many cases, our conclusions about the macro, meso,
and micro levels will inform each other, giving a more thorough ethical understanding of key issues faced by
businesses, employees, and the public.
Finally we are left with the following question: Why study business ethics? The simple answer is that, if you are
like most people, you will at some point enter some sector of the business world. And, if you are like most
people, you will discover very quickly that there are signi cant questions about right and wrong that arise in this
walk of life. The issues that this volume discusses can at least provide you with the following: an understanding of
the issues one faces in the business world; some theoretical and practical tools one can use for analyzing ethical
issues; and a framework for helping one construct an overall moral point of view. It is the hope of the editors of
this book that everyone who takes to a serious study of this volume will come away with an appreciation for the
role of morality within the world of business.
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NOTE
1 We follow many philosophers in using “ethics” and “morality” synonymously in this introduction since within
the discipline there is not an agreed upon distinction between the two terms.
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FOUNDATIONAL ISSUES
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Anand J. Vaidya
IN THE WAKE OF CORPORATE SCANDALS SUCH AS Enron and WorldCom at the turn of the millennium, corporate
executives and business schools were compelled to re ect on how to incorporate ethics into their organizations
and curricula (Association to Advance Collegiate Schools of Business 2004). Nonetheless, one still nds a tendency
amongst people to look at business ethics as not that relevant to doing good business. Insofar as the importance of
business ethics is acknowledged, it is treated as a laundry list of codes that one must obey in order to avoid
penalties, and that to a certain degree can be broken if one is careful. Cynical comments about business ethics as a
contradiction in terms are common. Often people have in the back of their mind a conception of corporations
ruthlessly seeking pro t without regard to legal niceties or human cost.
The underlying assumption of this line of thought is that the concept of ethical conduct cannot be appropriately
conjoined to the concept of business, that the concept of business transaction and negotiation is in tension with the
concept of ethical conduct. At root the idea may be as simple as the claim that ethics is about a concern for the
other at a possible cost to oneself, while business transactions are motivated by self-interest. Business, they say,
involves wheeling and dealing, getting the better of your opponent; and, so they continue, business leaves ethics at
the door. Ideas like this are found in business literature starting as far back as the 1950s. Albert Z. Carr’s “Is
Business Blu ng Ethical?” (1958) argues that business is a lot like playing poker, and so one should adopt the
ethics of poker, which is at odds with ethical codes prescribed by Christianity and other traditional religions.
Others point out that even when businesses adopt a “socially responsible” persona they do so out of the pro t
motive. Being socially responsible is pro table; if it weren’t companies could not a ord it. In order to survive in
the marketplace one needs to make a pro t; if being socially responsible requires sacri cing pro ts, then one
could expect that their competitors will eventually force them out of the marketplace. The logic of competition
puts socially responsible companies at a disadvantage. Competitors who decided not to be socially responsible
would be able to displace socially responsible ones.
In order to clear the ground for the study of business ethics and to open the door to the fruits that may come
from studying it, and from actually employing an ethical perspective in business, an end needs to be put to the
idea that “business ethics” is an oxymoron, a somehow confused idea. In this essay I hope to exonerate business
ethics of a couple of di erent criticisms that go together with the claim that it is an oxymoron. In section one, I
will present the most common complaints about business ethics, and o er rebuttals. In section two, I will o er a
diagnosis of the source of the view that business and ethics are incompatible, and show that it rests on a false
understanding of what it takes for business to ourish.
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1. COMMON COMPLAINTS ABOUT BUSINESS ETHICS
The four most common complaints about business ethics are that it is
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Useless because individuals upon reaching a certain age are incapable of changing the way in which they
determine whether an action is morally permissible (i.e., good or bad).
Unfeasible because the demands of market competition do not permit a sincere commitment to ethical
considerations.
Indeterminate because ethicists disagree over normative theories (e.g., consequentialism, deontology, virtue
ethics) and principles (e.g., maximize happiness, distribute goods to the worst o , respect rights to private
property, privacy, etc.) rendering decisive answers impossible, which consequently takes the value out of
business ethics.
Beside the point because ethical inquiry is not what is needed; rather individuals behaving ethically is what is
needed.
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Each of these complaints serves as a reason for avoiding business ethics discussions in the corporate world. And
each of these can easily be shown to be unfounded.
The claim that business ethics is useless because by the time people enter the business world, roughly in their
mid 20s to late 20s, their moral character has been, for the most part, formed for bad or good, rests on bad
psychology, as well as bad reasoning.
First, consider the psychological assumption that a person’s moral character is static rather than revisable. It may
be true that it is harder for people to change how they morally evaluate a situation at an older age than at a
younger age, because certain moral habits or evaluative behaviors are more ingrained. And, it is probably true that
most of us enter the work force at an age at which we have lots of opinions about what is morally right and
wrong. However, it is false to say that it is impossible for one to change their moral viewpoint. More importantly,
the attitude expressed by the “useless” argument is exactly the attitude that bars one from learning as a result of
participation in community discussion about what is right and wrong. The fact is that we can change our moral
point of view, and that listening and discussing things with others can have this result. Thus business ethics is
important.
Second, critics of business ethics have argued that the nature of business, especially in a capitalist economy,
makes ethical behavior impossible over the long run. On this account, business is committed to the logic of
competition and pro t maximization in the market place. In a capitalist economy, businesses that allow ethical
considerations to impede focusing on the bottom line will not survive. Business leaders may want to act ethically,
but those who allow corporate social responsibility or a commitment to sustainability as something more than a
façade to attract consumers will nd themselves replaced by boards looking after the interests of shareholders. One
problem with this line of reasoning is that corporate social responsibility seems to have a neutral or slightly
positive e ect on the bottom line (Economist Intelligence Unit 2008). The claim that people in businesses must act
unethically if they want to compete is probably false.
While some complain that business ethics is useless or impossible, a third complaint is that the real problem is
that business ethics is indeterminate, and therefore valueless. The position they o er is not without initial
plausibility. Anyone who has taken a freshman level course in ethics is aware that there are di erent schools of
thought in ethics such as consequentialism, deontology, and virtue ethics. Each of these major schools of thought
has its own criterion as to what constitutes right action or right living.
One brand of consequentialism, actutilitarianism, says that the right action is that action from the set of
available actions that maximizes aggregate happiness. One brand of deontology, Kantianism, says that the right
action is that action whose maxim can be universalized without contradiction. Depending on which ethical school
I subscribe to, I may give di erent answers as to the morality of any action I may have to take in the business
world. So the critic of business ethics can argue: “What I wanted in the rst place was to decide what to do based
on what was morally permissible, but it is not possible for me to determine what is morally permissible until I
know which school of moral thought is correct, and the ethicists have not settled that. Consequently, discussions of
ethics in business will be indeterminate.” And what is ultimately indeterminate, the critic of business ethics will
argue, is without value. In order to understand this argument and locate the weakness in it, consider it in the
following formal presentation.
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1. Business ethicists disagree over rst principles.
2. If theorists in a eld disagree over rst principles, then determinate answers cannot be reached.
3. If determinate answers cannot be reached in a eld of inquiry, then that eld of inquiry is without value.
4. Therefore, business ethics is without value.
Interestingly enough, we can formulate this argument with respect to any realm of inquiry where scholars of the
discipline disagree over rst principles and/or methodology. Consider the following argument about economics.
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1. Economists disagree over rst principles.
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2. If theorists within a eld of inquiry disagree
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3. If determinate answerse
be reached in2a0 eld of inquiry, then that eld of inquiry is without value.
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4. Therefore, economics
without value.
By looking at the mirror argument with respect to economics we can see the aw in the critic’s position. Before
analyzing the premises we can note that while many in the business world feel comfortable o ering the argument
about business ethics, they would not feel as comfortable o ering the corresponding argument for economics.
Those that nd themselves comfortable with the former argument, but not the latter put themselves in the
following logical dilemma: accept the conclusion to both arguments, reject both arguments, or nd the disanalogy
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between the two cases. In this case, we should reject both arguments as unsound because premises (2) and (3) are
false.
First, regarding (2), it should be noted that the critic’s use of “indeterminate” betrays an ambiguity. It does not
follow from the claim that there are disputes over rst principles within a discipline that all areas within the
discipline are indeterminate. Economists, for example, may disagree in fundamental ways about human
rationality, the tendency of markets to settle into equilibria, or government intervention, but nonetheless converge
on speci c issues. For example, almost all economists agree that international trade is bene cial on a whole,
though speci c segments of society may su er when confronted with international competition. In some cases,
there may not be major disputes about which tools from economics are useful for resolving an issue: for example,
in public policy, few people deny that a cost-bene t-risk analysis is relevant for many decisions, even if they
disagree about how this analysis is best conducted or about its weight compared to other considerations such as
public support or civil rights.
This holds in the case of ethics as well. Though ethicists may disagree about ethical theory, their judgments may
converge in many cases. For example, utilitarians, who base ethics on the promotion of happiness, will often call
for the respect of rights and obligations. The reason is that societies in which most people’s rights and obligations
are honored tend to be happier. Indeed, a good deal of applied ethics occurs without explicit discussion of moral
theory, since most ethical theorists agree that we should avoid harms and promote wellbeing, that we need to
justify coercion, that under most circumstances discrimination and deception are wrong, and much else.
Regarding (3), it is hard to maintain that the indeterminacy within a discipline over rst principles and
methodology renders the discipline valueless. The main reason for this is the fact that debates about principles and
methodologies are themselves valuable insofar as they can lead to clari cation, resolution, and innovation.
Unlike the critic above who thinks that the indeterminacy of ethics renders it valueless, the frustrated critic of
business ethics has recourse to a fourth complaint: business ethics is beside the point because we already know how
people should act. The problem is getting them to act in that way. The members of Enron knew what they were
doing was wrong when they committed fraudulent accounting practices to in ate their share price and engaged in
insider trading, and they created a culture in which certain goals led to breaking the rules. What was needed was
not more insight into what is wrong, but rather putting into play mechanisms that lead to people behaving
morally.
While it is true that in general we would all bene t from everyone behaving morally, it is just false that we
already, in general, know how to behave. Ethics is an on-going project; as technology advances and business takes
on a new face, new ethical questions arise; and the answers to an ethical dilemma presented by new technology
and business practice are not always answered by just looking at what we said in the past in the most relevantly
similar cases.
But even if it were true that for the most part we know what the morally correct thing to do is in a given
situation, it still would not be true that business ethics is beside the point. The underlying assumption required to
make that inference is that studying business ethics has no e ect on our motivations.
However, studying business ethics is not necessarily motivationally ine cacious. What is important is how we
unpack the idea of “studying.” If studying business ethics just amounts to memorizing a bunch of codes and passing
an exam, it is fair to say that studying it is likely to only provide one with knowledge of what codes and principles
to obey. While this project might be worthy in itself, it does not come close to motivating one to be ethical. But
there is another way of understanding the idea of “studying” business ethics. Being part of a business community
where one can openly discuss how business should be conducted, and where one’s contributions are taken
seriously and re ected upon by others can often open one’s mind to the possibility of change in light of the
criticism of others.
Those who nd that the pressure of the real world corporate environment pushes them away from the moral
principles they believed in prior to entering the corporate world may discover that these principles are reactivated
when they read case histories and debate what to do in particular and common situations. One of the best ways to
learn about the consequences of cruelty is to read and discuss the great novels that portray it. Likewise, reading
case histories representing common ethically relevant business situations, and discussing them, can reinforce values
and bring clarity.
Secondly, ethics in general requires healthy debate and exchange of ideas. When a person o ers an ethical
position on a topic, and another disagrees, both parties have a prima facie obligation to o er reasons and
justi cations for their positions. Unlike disputes about what is the best avor of ice cream, where opponents may
disagree with one another with no other reason than that they like the particular avor that they do, the nature of
moral discussion requires that reasons be o ered. Moral discussions are often about the possibility of harm to
others, and most people in most cultures see the actions which have potential to harm others as requiring reasons
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and justi cations. Consequently, and as a result of moral engagement, individuals can come to be motivated to act
one way rather than another by acquiring new desires and beliefs through moral debate. It is often times noted
that people feel most comfortable with an action they are about to take when they feel con dent in the reasons
they have for taking that action. Moral discussions can provide reasons, and con dence in those reasons.
Third, all of us at one time were new to the corporate environment and the pressures that arise in it, and most
of us looked for guidance, not just from our colleagues and our bosses, but also from a source beyond them. One
reason we searched for this was that we weren’t always sure that our bosses and colleagues were doing the
morally right thing, or, for that matter, that they were even concerned with the morally right thing to do. Clearly,
business ethics can provide guidance here. The study of ethics can provide us with a rm grasp of principles that
can be applied in new situations to help us determine for ourselves what the morally right action is. The ability to
reason about ethics can provide us with that sense of independence in thought that allows us to judge for ourselves
whether our actions are morally right, and to criticize others.
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2. THE BAKER AND THE BUTCHER REVISITED
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It is not from the benevolence
butcher,2
the brewer, or the baker that we expect our dinner, but from
rsoof the
Peinterest.
their regard to their own
We address ourselves, not to their humanity but to their self-love …
Let’s go back to the beginning. Where does the idea that business and ethics do not t together come from? One
promising place to look would be at the role of self-interest in economics. There is a famous passage quoted from
Adam Smith’s 1778 Wealth of Nations:
The standard story based on this passage is that the sellers want our money, we want their products, and the
exchange bene ts us all. As a result, there doesn’t seem to be any need for ethics in the exchange matrix. Rational
individuals pursuing their own self-interest are all it takes for day-to-day business dealings. Any imposition of
ethical principles would be redundant.
While it is true that Smith paid tribute to self-interest in the passage above, it is a misreading of the passage,
pointed out by Amartya Sen, to take it that it excludes ethics from the matrix of exchange. By locating the speci c
sense in which self-interest is being celebrated by Smith, Sen claims we can bring out the sense in which ethics is
an essential component of a system of exchange. What Smith was saying is that our motivation for exchange is selfinterest. We are motivated to come to the marketplace to exchange our goods, not out of love for the other, but
out of the necessity of self-preservation. The butcher sells his meat, the brewer his beer, and the baker his bread
out of the obvious desire to procure money in order to purchase the goods they desire. Smith is not saying that
business can function without ethical principles to guide the exchange. By making a distinction between the
motivation for exchange and the features necessary for the ourishing of business we can see the appropriate roles of
self-interest and how business ethics makes sense.
Ethical principles and codes of conduct are what allow for a system of exchange to ourish over long periods of
time. In order to see the necessity of ethical principles and codes of conduct in the marketplace it will be
instructive to look at a point made by Socrates in Book 1 of The Republic.
In discussion with Thrasymachus, Socrates points out that if a group has a common goal and every member of
the group acts unjustly, then the attainment of the common goal will be frustrated. His point is made in an
attempt to praise justice against Thrasymachus’ diatribe. Thrasymachus has praised the life of injustice and
thievery because he understands justice to be a weakness, and injustice to be the power to take advantage of
others with impunity. Socrates has pointed out that even though it is correct that thieves take advantage of others,
and at times with impunity, it is not true that they live wholly unjust lives. In fact, Socrates points out, in their
dealings with other thieves they obey rules, and have a code of conduct, that allows for their thievery in groups to
prosper. Even in modern times Socrates’ point is common knowledge. The ma a has their own code of conduct,
and individuals within their circle obey a code of conduct out of fear of punishment. If you are convinced that “the
ethics of the ma a” is not an oxymoron, then you should equally be convinced that “business ethics” is not an
oxymoron.
Socrates’ point connects well with the distinction between the motivation for exchange and those features of a
system necessary for its ourishing. Codes of conduct, rules, and guidelines—ethical principles—are all required in
order for business to ourish over time. Without ethical principles and rules the common goal of business—the
exchange of goods for the bene t of all—would be frustrated, and less successful.
So, business and ethics do go together; and business ethics is not useless, valueless because indeterminate, or beside
the point. Rather, ethics and business are connected in a way that is essential for the very ourishing of business.
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BIBLIOGRAPHY
duce.
pro
e
r
t
o
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Economist Intelligence Unit, “Corporate Citizenship: Pro ting from a Sustainable Business.” (London: Economist
Intelligence Unit, Ltd., 2008).
Plato, “Book 1,” Republic, translated by G.M.A. Grube and revised by C.D.C. Reeve (Indianapolis, Indiana: Hackett
Publishing Company, 1992).
Amartya Sen, “Does Business Ethics Make Economic Sense?” Business Ethics Quarterly 3.1 (January 1993). See
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Clarence C. Walton, “The State of Business Ethics,” Enriching Business Ethics (New York: Plenum Press, 1990).