BUSINESS ETHICS
(26:010:685)
Spring 2008, Room 301 Engelhard
W 2:30-5:20 PM
Danielle E. Warren
329 MEC
p: 973.353.5734
dwarren@andromeda.rutgers.edu
Wayne Eastman
331 MEC
p: 973.353.1001
weastman@andromeda.rutgers.edu
COURSE OVERVIEW
This course serves as an introduction to the multi-disciplinary academic literature on
business ethics and requires no previous exposure to business ethics or philosophy. By
the end of the course, participants will have developed their own business ethics
empirical study or normative analysis, which we expect will be on an ethical aspect of a
topic within their discipline. The course begins with foundational concepts, which are
then explored through various disciplinary applications (management, accounting,
international business, and finance). Relevant psychological and sociological influences
in decision- and policy-making are addressed throughout the course and special attention
is paid to conducting empirical research on ethics-oriented topics. Attention will also be
paid to the construction and the critical analysis of normative arguments relying upon
economics, philosophy, and history. Guest speakers provide insight into various topics.
GRADING
20% Research Question & Draft of Literature Review for Final Project (due Mar 12th)
10% Discussion Leader
10% Presentation of Final Paper (last class)
60% Final Paper (due a week after the final presentation)
READINGS
Most required readings will be posted to Blackboard or provided in class. Many sessions
include a list of further readings on the topic but such reading is not required nor is it
exhaustive. ‘Further Readings’ are meant to provide direction for those who plan to build
on a topic for their final paper.
To guide your interpretation of the readings, we suggest compiling responses for the
following questions:
Theory Papers: How does the theory relate to research in your discipline? On
what points would the scholars agree/disagree? Is the theory persuasive?
Empirical Papers: What was the main research question? Was it persuasively
answered? What was the nature of the research design? Did the authors use the
best measures? What would you recommend as a follow-up study?
TENTATIVE SCHEDULE
January 23 Introductory class: “Philosophy and Science” (Warren/Eastman)
Affinity with philosophers: Take the online survey and bring your results to the first
class: http://selectsmart.com/PHILOSOPHY/.
Robert Frank (1987), "If Homo Economicus Could Choose His Own Utility Function,
Would He Want One with a Conscience?" The American Economic Review
77(4): 593-605.
Stephen J. Gould and Richard Lewontin, “The Spandrels of San Marco and the
Panglossian Paradigm,” Proceedings of the Royal Society of London, B205: 581598.
January 30
Leading Theories in Business Ethics (Warren)
Thomas Donaldson and Thomas W. Dunfee, 1994 "Toward a Unified Conception of
Business Ethics: Integrative Social Contracts Theory" Academy of Management
Review, 19:2, pp. 252-284.
Thomas Donaldson and Lee E. Preston. 1995. "The Stakeholder Theory of the
Corporation: Concepts, Evidence, Implications," Academy of Management
Review 20(1) 65-91.
Bowie, N. 1998. A Kantian Theory of Capitalism, Business Ethics Quarterly, 37-60.
Hartman, E. 1998. “The Role of Character in Business Ethics.” Business Ethics
Quarterly,
Further Reading:
Freeman, R. E. 1984. Strategic management: A stakeholder approach. Boston: Pitman.
Bowie, N. 1999. Business Ethics: A Kantian Perspective. MA: Blackwell.
Bowie, N. “Business Ethics, Philosophy and the Next 25 years” Business Ethics
Quarterly
Hartman E. A. 1996. Organizational Ethics and the Good Life. Oxford.
Hartman E. A. 1994. The Commons and the Moral Organization, Business Ethics
Quarterly, 4, 253-269.
Solomon, R. 1992. “Corporate roles, personal virtues: An Aristotelian Approach to
Business Ethics,” Business Ethics Quarterly 3 (1992): 317-339.
Solomon, R. 1992. Ethics and excellence: Cooperation and integrity in business. Oxford.
February 6
Applying Business Ethics Theories to Social Science (Warren)
Margolis, J. D. and J. P. Walsh (2003). "Misery Loves Companies: Rethinking Social
Initiatives by Business." Administrative Science Quarterly 48(2).
Messick, D.M. 1998. “Social categories and business ethics.” Business Ethics Quarterly,
1: 149-172.
Wood, D. J. 1998 “Ingroups and outgroups: What psychology doesn’t say.” Business
Ethics Quarterly, 1: 173-178.
Hartman, E. M. 1998. “Altruism, ingroups, and fairness: Comments on David Messick’s
‘Social Categories and Business Ethics’.” Business Ethics Quarterly, 179-185.
February 13 Empirical research on unethical work behavior (Warren)
Treviño, L. K., & Youngblood, S. A. (1990). Bad apples in bad barrels: A causal analysis
of ethical decision making behavior. Journal of Applied Psychology, 75, 447476.
Schweitzer, M., Ordonez, L. and Douma, B. (2004). Goal setting as a motivator of
unethical behavior. Academy of Management Journal, 47, 422-432.
Hegarty, W. H., & Sims, H. P. (1978). Some determinants of unethical decision behavior:
An experiment. Journal of Applied Psychology, 63, 451-457.
Uddin, N. & Gillett, P.R. (2002). The effects of moral reasoning and self-monitoring on
CFO intentions to report fraudulently on financial statements. Journal of
Business Ethics,
Further Reading:
Treviño, L. K., Weaver, G. R., & Reynolds, S. J. (2006). Behavioral ethics in
organizations: A review. Journal of Management, 32, 951-990.
Jones, T. M. & Ryan, L. V. (1998). The effect of organizational forces of individual
morality: Judgment, moral approbation, and behavior. Business Ethics Quarterly,
8:431-445.
Reynolds, S. J. (2006). Moral awareness and ethical predispositions: Investigating the
role of individual differences in the recognition of moral issues. Journal of
Applied Psychology, 91, 233-243.
February 20 Empirical research on unethical work behavior (Warren)
[Miguel Alzola visits]
Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden
cost of pay cuts. Journal of Applied Psychology, 75, 561-568.
Brief et al. (1996). What’s wrong with the Treadway Commission Report? Experimental
Analyses of the Effects of Personal Values and Codes of Conduct on Fraudulent
Financial Reporting. Journal of Business Ethics, 15: 183.
Miguel, A. (in press) Character and Environment: The Status of Virtues in Organizations.
Journal of Business Ethics.
Warren & Smith-Crowe (in press) Deciding what’s right: The role of external sanctions
and embarrassment in shaping moral judgments in the workplace. Research in
Organizational Behavior.
Further Reading:
Greene, J. D., Sommerville, R. B., Nystrom, L. E., Darley, J. M., & Cohen, J. D. (2001).
An fMRI investigation of emotional engagement in moral judgment. Science,
293, 2105-2108.
Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issuecontingent model. Academy of Management Review, 16, 366-395.
Nagel, T. (1974). What is it like to be a bat? The Philosophical Review, 83, 435-450.
Treviño, L. T. (1986). Ethical decision making in organizations: A person-situation
interactionist model. Academy of Management Review, 11, 601-617
February 27 The Ethical Organization (Warren)
Baucus & Baucus. 1997. Paying the piper: An empirical examination of longer-term
financial consequences of illegal corporate behavior. Academy of Management
Journal, 40: 129-151.
Hegarty, W. H., & H. P. Sims. 1979. Organizational philosophy, policies, and objectives
related to unethical decision behavior: A laboratory experiment. Journal of
Applied Psychology, 64: 331-338.
Victor, B., & J. B. Cullen. 1988. The organizational bases of ethical work climates.
Administrative Science Quarterly, 33: 101-125.
Warren, D.E. (2003). Constructive and destructive deviance in organizations. Academy
of Management Review 28, 622-632.
Weaver, G. R., L. K. Trevino, & P. L. Cochran. 1999. Corporate ethics programs as
control systems: Influences of executive commitment and environmental factors.
Academy of Management Journal, 42: 41-57.
Further Readings:
Brief, A. P., Buttram, R. T., & Dukerich, J. M. (2001). “Collective corruption in the
corporate world: Toward a process model.” In M. E. Turner (Ed.), Groups at
work: Theory and research (pp. 471-499). Mahwah, NJ: Lawrence Erlbaum.
Hess, D. 2007. A Business Ethics Perspective on the Sarbanes-Oxley Act and the
Organizational Sentencing Guidelines. Michigan Law Review, vol. 105 (8):
1781-1816.
Laufer, W. S., & D. C. Robertson. 1997. Corporate ethics initiatives as social control.
Journal of Business Ethics, 16: 1029-1048.
Laufer, W. S. 2002. Corporate prosecution, cooperation, and the trading of favors. Iowa
Law Review, 87: 643-667.
Schwartz, M. S. 2002. A code of ethics for corporate code of ethics. Journal of
Business Ethics, 41: 27-43.
Trevino, L. K., G. R. Weaver, D. G. Gibson, & B. L. Toffler. 1999. Managing ethics and
legal compliance: What works and what hurts. California Management Review,
41: 131-151.
Warren, D. E. 2006. Ethics initiatives: The problem of ethical subgroups. In E. B.
Mannix, M. Neale, & A. Tenbrunsel (Eds.), Research on Managing Groups and
Teams: Ethics (pp. 83-100). London: Elsevier Science Press.
Warren, D. E. 2007. “Corporate scandals and spoiled identities: How
organizations shift stigma to employees.” Business Ethics Quarterly.
Weaver, G. R., L. K. Trevino, & P. L. Cochran. 1999. Integrated and decoupled corporate
social performance: Management commitments, external pressures, and corporate
ethics practices. Academy of Management Journal, 42: 539-552.
Weaver, G. R., L. K. Trevino, & P. L. Cochran. 1999. Corporate ethics practices in the
mid-1990's: An empirical study of the Fortune 1000. Journal of Business Ethics,
18: 283-294.
March 6
ISCT and the Ethics of Corporate Philanthropy
[Tom Dunfee visits]
Donaldson, T. & Dunfee, T. W. 1999. Ties that Bind. Harvard Business School Press.
Dunfee, T.W. 2006. “A Critical Perspective of Integrative Social Contracts Theory:
Recurring Criticisms and Next Generation Research Topics.” Journal of
Business Ethics, 68: 303-328.
Dunfee, T. W. (in press). Ethics of Corporate Philanthropy.
March 12
Auditing & Reporting (Financial & Social)
[Marietta Peytcheva visits]
Hess, D. 2001. “Regulating Corporate Social Performance: A New Look at Corporate
Social Accounting, Auditing, and Reporting.” Business Ethics Quarterly, vol. 11
(2): 307-330.
Peytcheva, Marietta. Accountability and dysfunctional behavior in auditing:
Responsibility for previous work, time pressure and the suppression of audit
evidence.
Moore, D. A. Tetlock, P. E. Tanlu, L. Bazerman, M. H. (2006). “Conflicts of Interest and
the Case of Auditor Independence: Moral Seduction and Strategic Issue Cycling,”
Academy of Management Review, 31(1), 10-29.
Nelson, M. (2006). “Ameliorating conflicts of Interest in Auditing: Effects of recent
reforms on Auditors and their clients,” The Academy of Management Review
31, 30-42.
Further Reading:
Hess, D. 2007. “Social Reporting and New Governance Regulation: The Prospects of
Achieving Stakeholder Accountability through Transparency.” Business Ethics
Quarterly.
Hess, D. & Dunfee, T.W. (2007). “The Kasky-Nike Threat to Corporate Social
Reporting: Implementing a Standard of Optimal Truthful Disclosure as a
Solution.” Business Ethics Quarterly, vol. 17(1): 5-32.
Dunfee, T. W. 2003. Social Investing: Mainstream or Backwater? Journal of Business
Ethics.
Gendron, Y., Suddaby, R. and Lam, H. (2006). “An examination of the ethical
commitment of professional accountants to auditor independence,” Journal of
Business Ethics 64, 169-193.
March 19 – No Class – Spring Break
March 26 The Gap between Facts and Values (Eastman)
Thomas Donaldson (1994). When Integration Fails: the Logic of Prescription and
Description in Business Ethics. Business Ethics Quarterly 4: 157-169.
David Hume (1888 ed.), A Treatise of Human Nature:. 466-470
http://books.google.com/books?id=5zGpC6mL-MUC&pg=PA455-IA2&vq=Hume#PPA466,M1
John R. Searle (1964). How to Derive ‘Ought’ from ‘Is’. Philosophical Review 73: 4358.
Wayne Eastman & James R. Bailey (1998). Mediating the Fact-Value Antinomy:
Patterns in Managerial and Legal Rhetoric. Organization Science 9: 232-244.
John Mikhail (2007). Universal Moral Grammar: Theory, Evidence, and the Future.
Trends in Cognitive Science 11: 143-152.
Further Reading:
Linda Trevino & Gary R. Weaver (1994). Business Ethics: One Field or Two?
Business Ethics Quarterly 4: 113-128.
Wayne Eastman, (1996), How Coasean Bargaining Entails a Prisoners' Dilemma. Notre
Dame Law Review 72: 89-105.
Wayne Eastman (2000). Critical Legal Studies. Bouckaert, Boudewijn and De Geest,
Gerrit (eds.), Encyclopedia of Law and Economics, Volume I. The History and
Methodology of Law and Economics , Cheltenham, Edward Elgar, 2000L 754- 789.
http://encyclo.findlaw.com/0660book.pdf
Mark G. Kelman (1984). Trashing. Stanford Law Review 36: 293-342.
Duncan Kennedy (1998). law-and-economics from the perspective of critical
legal studies. The New Palgrave Dictionary of Economics and the Law 465 (P.
Newman, ed.): Macmillan. http://duncankennedy.net/bibliography/chrono.html
Duncan Kennedy & Frank Michelman, Are Property and Contract Efficient? Hofstra
Law Review 8, 1980: 711-770
http://duncankennedy.net/bibliography/chrono.html
April 2
Ethics and Economics (Eastman)
Wayne Eastman (2007). “Resolved: Markets Are Moral”--NYU Debate Notes.
Robert Frank (2000). Why Cost-Benefit Analysis Is So Controversial. Journal of Legal
Studies 29: 913-930. [Lexis-Nexis]
Michael C. Jensen (1994). Self-Interest, Altruism, Incentives, and Agency Theory.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=5566
Nien-he Hsieh (2000). Moral desert: Fairness and legitimate expectations in the market.
Journal of Political Philosophy 8: 91-114.
Jeremy Bentham, Defense of Usury. http://www.econlib.org/LIBRARY/Bentham/bnthUs.html
Further Reading:
N. Scott Arnold (1987). Why profits are deserved. Ethics, 97: 387-402.
Thomas Donaldson (2001). The ethical wealth of nations. Journal of Business Ethics,
31: 25-36.
Amartya Sen 1987, On Ethics and Economics, (Ch. 1) Oxford (Blackwell, 1987).
Amartya Sen (1993). "Markets and Freedoms: Achievements and Limitations of the
Market Mechanism in Promoting Individual Freedoms." Oxford Economic Papers
45(4): 519-541 [JSTOR]
April 9 What Is the Point of Competing Values? (Eastman)
Wayne Eastman (2008). The Analysis of Value Competition: A Proposal for a Science
of Ethics.
Wayne Eastman (2007). The Secret of Democracy: How a Troubled System of
Government Became the World's Destiny, chapter 1, Solving the Challenges of
Populism and Elitism.
Wayne Eastman (2008). A Model of Politics with Values and Varying Participation
Costs.
John Stuart Mill (1857). On Liberty. (introduction) http://www.constitution.org/jsm/liberty.htm
Jonathan Haidt and Jesse Graham (2007). Planet of the Durkheimians:
Where Community, Authority, and Sacredness are Foundations of Morality
http://faculty.virginia.edu/haidtlab/articles/haidt.graham.planet-of-the-durkheimians.doc.
Further Reading:
Bryan Caplan (2007). The Myth of the Rational Voter. Princeton University Press.
http://press.princeton.edu/chapters/i8384.html
John T. Jost (2006). The End of the End of Ideology. American Psychologist 61:651670.
Jeffrey Friedman (2006). Is Democratic Competence Possible? Public Competence In
Normative And Positive Theory: Neglected Implications Of “The Nature Of
Belief Systems In Mass Publics.” Critical Review 18, 1-3: i-xliiii
Nolan McCarty, Keith T. Poole, and Howard Rosenthal (2006). Polarized America: The
Dance of Ideology and Unequal Riches. MIT Press
Cass Sunstein (2002). The Law of Group Polarization. Journal of Political Philosophy
10: 175-195.
April 16 When in Rome...? (Eastman)
Friedrich Nietzsche, Beyond Good and Evil (Section V)
http://www.mala.bc.ca/~johnstoi/Nietzsche/beyondgoodandevil5.htm.
Thomas Donaldson, “Moral Minimums for Multinationals,” Ethics and
International Affairs 3 (1989): 163-182.
Manuel Velasquez, “International Business, Morality, and the Common
Good,” Business Ethics Quarterly 2 (1992): 27-40.
Andrew Spicer, Thomas Dunfee, & Wendy J. Bailey (2004). Does National Context
Matter in Ethical Decision Making? An Empirical Test of Integrative Social
Contract Theory. Academy of Management Journal 47: 610-620.
Further Reading
Thomas Dunfee (2005). Do Firms with Unique Competencies for Rescuing Victims
of Human Catastrophes Have Special Obligations? Business Ethics
Quarterly 16: 185-210.
Thomas Dunfee & David Hess (2000). The legitimacy of direct corporate humanitarian
investment. Business Ethics Quarterly, 10: 95-109.
Samuel P. Huntington (1996). The West: Unique, Not Universal. Foreign Affairs 75:
28-46.
Amartya Sen (2003). Democracy and its Global Roots. The New Republic 229(14): 2835.
David S. Landes (1990). Why Are We So Rich and They So Poor? American Economic
Review 80: 1-13
April 23 Ethics and Corporate Governance (Eastman)
Nien-he Hsieh (2005). Rawlsian Justice and Workplace Republicanism. Social Theory
and Practice 31: 115-142.
Wayne Eastman and Michael Santoro (2002). Voting for Your Boss. University of
Pennsylvania Review of Law and Social Change.
James B. Wade, Charles A. O’Reilly & Timothy G. Pollock (2006). Overpaid CEOs and
Underpaid Managers: Fairness and Executive Compensation. Organization
Science, 17: 527-544.
Jared Harris & Philip Bromiley (2007). Incentives to Cheat: The Influence of Executive
Compensation and Firm Performance on Financial Misrepresentation.
Organization Science, 18: 350-367
Michael C. Jensen (2005). Agency Costs of Overvalued Equity. Financial Management
34: 5-19.
Further Reading
Rawls, John (1985). Justice as Fairness: Political not Metaphysical. Philosophy and
Public Affairs, 14: 223-251
Wayne Eastman & Michael Santoro (2003). The Importance of Value Diversity in
Corporate Life. Business Ethics Quarterly 13: 433-52.
Jeffrey Moriarity (2005). Do CEOs Get Paid Too Much? Business Ethics Quarterly 15:
257-281.
Wayne Eastman (1998). Working for Position: Women, Men, and Managerial Work
Hours. Industrial Relations 37: 51-66.
William W. Bratton, Jr. (1992). Commentary: The Economic Structure of the PostContractual Corporation. Northwestern University Law Review 67: 180-217.
April 30 Ethics, Standards, Rules, and Law (Eastman)
Duncan Kennedy (1976) Form and Substance in Private Law Adjudication. Harvard
Law Review 89: 1685-1778.
Antonin Scalia (1989). The Rule of Law as a Law of Rules. University of Chicago Law
Review 56: 1175-1185.
Michael L. Michael (2006). Business Ethics: The Law of Rules. Business Ethics
Quarterly 16: 475-504.
Student author (2003). Note: The Good, the Bad, and Their Corporate Codes of Ethics:
Enron, Sarbanes-Oxley, and the Problems with Legislating Good Behavior.
Harvard Law Review 116: 2123-2148.
Further reading
Richard Posner (2004). Legal Pragmatism. Metaphilosophy 35: 147-159.
Cass Sunstein (2000). Constitutional Agreements without Constitutional Theories. Ratio
Juris 13: 117-130.
Paula A. Franzese & Daniel J. O'Hern (2005). Restoring the Public Trust: An Agenda
For Ethics Reform of State Government and a Proposed Model for New Jersey.
Rutgers Law Review 57: 1175-1244.
Qi Chen, Thomas Hemmer & Yun Zhang (2007). On the Relation between Conservatism
in Accounting Standards and Incentives for Earnings Management. Journal of
Accounting Research 45: 541-565.
May 7 – FINAL PRESENTATIONS (Warren & Eastman)
May 14 – Final Papers Due