Business in Ethical Focus An Anthology [2 ed.] 9781554812516

Citation preview

Download Complete eBook By email at [email protected]

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected]

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202BUSINESS Person

IN ETHICAL FOCUS

ce. u d o r p ot re n AN ANTHOLOGY o d , y onl0-09-10 e s u l a 202 Person

2

nd edition

EDITED BY

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person Fritz Allho , Alexander Sager, and Anand J. Vaidya

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected]

Download Complete eBook By email at [email protected]

ce. u d o r p ot re n o d , Founded in 1985, Broadview Press remains a wholly onl0yindependent 10publishing house. Broadview’s focus is on academic publishing; -well e 9 s 0 u l a 2 our titles are accessible to o university and college students as as scholars and general readers. With over 600 titles in print, n 0 2 publisher in the humanities, Perasleading international Broadview has become with world-wide distribution. Broadview is committed BROADVIEW PRESS — www.broadviewpress.com Peterborough, Ontario, Canada

to environmentally responsible publishing and fair business practices.

ce. u d o r p ot re n o d , The interior of this book is printed on 100% recycled paper. y onl0-09-10 e s u l a 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.

e. c u d o r t rep o n Business in ethical focus : an anthology / edited by Fritz Allho , o d ly, Alexander Sager and Anand J. Vaidya. — 2nd edition. use on -09-10 l a 20 n 0 o 2 s r e 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

ce. u d o r p HF5387.B883  2016           174′.4           C2016-906981-8 ot re n o d , ly 09-10 onAmerica e s Broadview Press handles its own distribution in North2 u l 0a 20Canada PO Box 1243, Peterborough, Ontario K9J 7H5, Person 555 Riverwalk Parkway, Tonawanda, NY 14150, USA Tel: (705) 743-8990; Fax: (705) 743-8353 email: [email protected]

Distribution is handled by Eurospan Group in the UK, Europe, Central Asia, Middle East, Africa, India, Southeast Asia, Central America, South America, and the Caribbean. Distribution is handled by Footprint Books in Australia and New Zealand.

uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

Broadview Press acknowledges the nancial support of the Government of Canada through the Canada Book Fund for our publishing activities. Copy edited by Robert M. Martin Book design by Michel Vrana PRINTED IN CANADA

Download Complete eBook By email at [email protected]

Download Complete eBook By email at [email protected]

CONTENTS

e. c u d o r t rep o n o d onl0y,-09-10 e s u l UNIT 1: PRELIMINARIES a 202 Person

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”

e. c u d o r t rep o n o d 4. Alexander Sager, “A Brief Guide to Thinking about , 9-1Ethics” 0 onl0yBusiness e s 0 u l a 2 n 0 2 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

e. c u d o r THE CENTRAL DEBATE t rep o n o d ly, 09-10Theories: Mapping the Territory” onResponsibility 9. Elisabet Garriga and Domènec Melé, “Corporate Social e s u l a 20n 0 o 2 s r e PResponsibility of Business Is to Increase Its Profits” 10. Milton Friedman, “The Social Anand J. Vaidya, “Introduction”

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”

e. c u d o r p t reSpeak o n 16. CASE STUDY: David Meeler and Srivatsa Seshadri, “Actions Louder Than Words: Rebuilding Malden o d , y l n 0 o 1 Mills” l use2020-09a n o s r Pe: Tom McNamara and Irena Descubes, “Citibank and Collateralized Debt Obligations” 17. CASE STUDY 15. Sumantra Ghoshal, “Bad Management Theories Are Destroying Good Management Practices”

18. CASE STUDY: Brad Berman, “Corporate Lobbying on GMO Labeling Legislation: Oregon Ballot Measure 92” GLOBAL PERSPECTIVES ON CORPORATE SOCIAL RESPONSIBILITY

Download Complete eBook By email at [email protected] 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”

ce. u d o r p ot re n o d , y ENTREPRENEURSHIP AND THE NOT-FOR-PROFIT SECTOR onl0-09-10 e s u l a 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

ce. u d o r p ot re n o d , y ETHICS IN INTERNATIONAL CONTEXTS onl0-09-10 e s u l a 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. d o r p e ot r Requirements Challenge the Internet Company” 32. CASE STUDY: Theresa Bauer, “Google in China:oCensorship n d , y onl0-09-10 e s u l BRIBERY AND CORRUPTION a 202 Person 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”

ce. u d o r p ot re n o d , y 38. Deborah C. Poff, “Reconciling the Irreconcilable: Global onl0The -10Economy and the Environment” e 9 s 0 u l a 2 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”

Download Complete eBook By email at [email protected] EMPLOYMENT AT WILL

ce. u d o r p ot re n 42. Richard A. Epstein, “In Defense of the Contract at Will” o d , onl0y-09-10 e s u l na Governance: 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”

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a WORKPLACE PRIVACY 202 Person

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”

ce. u d o r p ot re n SAFETY IN THE WORKPLACE o d , onl0y-09-10 e s u l 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”

ce. u d o r p ot re n o d , 58. Edwin C. Hettinger, “What Is Wrong with Reverse Discrimination?” onl0y-09-10 e s u l a 202 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”

Download Complete eBook By email at [email protected] 62. Stephen Griffith, “Sexual Harassment and the Rights of the Accused”

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 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”

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 Perso

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”

uce. d o r p e not r o 76. CASE STUDY: Chris Ragg, “Nestlé and Advertising: An Ethical Analysis” d , y l e o0n20-09-10 s u l a n 2 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

uce. d o r p e not r o d , y l on into -10 and Causes of the Wealth of Nations 81. Adam Smith, Excerpts from An Inquiry the9Nature e s 0 u l 0 a 2 20 Person 80. John Locke, Excerpts from The Second Treatise of Human Government

82. Karl Marx, “Estranged Labor”

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

Download Complete eBook By email at [email protected]

ce. u d o r p ot re n o d , 87. G.A. Cohen, “Illusions about Private Property n and Freedom” o l0y-09-10 e s u l a 02 The Case of Café Feminino” 88. CASE STUDY: KyleP Johannsen, erson“Distributive2Justice: 86. Kai Nielsen, “A Moral Case for Socialism”

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

Download Complete eBook By email at [email protected]

ce. u d o r p ACKNOWLEDGMENTS ot re n o d , onl0y-09-10 e s u l a Stephen 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.

ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected]

Download Complete eBook By email at [email protected]

ce. u d o r p NOTE ON THEn SECOND ot reEDITION o d , onl0y-09-10 e s u l 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.

ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected]

Download Complete eBook By email at [email protected] UNIT 1

ce. u d o r p PRELIMINARIES ot re n o d , 0 BUSINESS ETHICS? onl0y-0WHY INTRODUCTION: e 9-1STUDY s u l a 2 n 0 o                2 Pers Anand J. Vaidya and Fritz Allho

THE WHAT AND WHY OF BUSINESS ETHICS

One good way to get an answer to this question is by taking note of 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 WHAT IS BUSINESS ETHICS, AND WHY STUDY IT?

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 Perso

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected] 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.

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 Perso

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

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.

Download Complete eBook By email at [email protected]

e. c u d 1 o r t rep o n o d nly, 0 FOUNDATIONAL ISSUES

—

—

o 0-09-1 OF BUSINESS ETHICS eCRITICISMS s ILL-FOUNDED u l a n 202 Perso                Anand J. Vaidya 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. IN THE WAKE OF CORPORATE SCANDALS SUCH AS

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

1. COMMON COMPLAINTS ABOUT BUSINESS ETHICS

The four most common complaints about business ethics are that it is

e. c u d o r t rep o n o d onl0y,-09-10 e s u l a 202 Person

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.

Download Complete eBook By email at [email protected] 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.

ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , y onl0-09-10 e s u l a 202 Person

uce. d o r p e ot r n o d , y onl0-09-10 e s u l a 202 Person

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.

ce. u d o r p ot re n 1. Economists disagree over rst principles. o d , y onl0rst-0principles, 2. If theorists within a eld of inquiry disagree over -10 then determinate answers cannot be reached. e 9 s u l a 2 3. If determinate answerse be reached in2a0 eld of inquiry, then that eld of inquiry is without value. rson P cannot 4. Therefore, economics is 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

Download Complete eBook By email at [email protected] 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

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

ce. u d o r p ot re n o d , onl0y-09-10 e s u l a 202 Person

Download Complete eBook By email at [email protected] 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.

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 Perso

2. THE BAKER AND THE BUTCHER REVISITED

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 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.

uce. d o r p e not r o d , y l e o0n20-09-10 s u l a n 2 Perso

uce. d o r p e not r o d , y l on 0-09-10 e s u l a 202 Person

duce

Download Complete eBook By email at [email protected]

ce. u d o r p ot rein Business Schools: Report of the Ethics n o d Association to Advance Collegiate Schools of Business, “Ethics Education , nlyof-0Directors.” oBoard -10 2004. e 9 s Education Task Force to AACSB International’s u l 0 a 2 20 http://www.aacsb.edu/publications/researchreports/archives/ethics-education.pdf Person BIBLIOGRAPHY

Albert Z. Carr, “Is Business Blu ng Ethical?” Harvard Business Review (January/February 1968). See below, 526– 34. 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 below, 1–17. Clarence C. Walton, “The State of Business Ethics,” Enriching Business Ethics (New York: Plenum Press, 1990).