Theory Of Business Ethics Research Articles

The Unwitting Accomplice: How Organizations Enable Motivated Reasoning and Self-Serving Behavior

In this article, we demonstrate that individuals use motivated reasoning to convince themselves that their self-serving behavior is justified, which in turn affects the distribution of resources in business situations. Specifically, we explore how ambiguous contextual cues and individual beliefs can jointly form motivated reasoning. Across two experimental studies, we find that whereas individual ideologies that endorse status hierarchies (i.e., social dominance orientation) can strengthen the relationship between contextual ambiguity and motivated reasoning, individual beliefs rooted in fairness and equality (i.e., moral identity) can weaken it. Our findings contribute to person–situation theories of business ethics and provide evidence that two ubiquitous factors in business organizations—contextual ambiguity and social dominance orientation—give rise to motivated reasoning, enabling decision makers to engage in self-serving distributions of resources.

Developing business ethics theory and integrating economic analysis into business ethics teaching – a conceptualization based on externalities and diminishing marginal utility

Contrary to understandings that treat ethical considerations and economic thinking as separate if not antagonistic issues, we advocate a holistic view that links business ethics to consequentialist economic concepts and their concern about how scarce means should be used for the attainment of (given) ends. We believe that business ethics students will profit from a development of business ethics theory that facilitates an outcome-based evaluation of business strategies anchored in the economic concepts of externalities, game theory, equilibria, efficiency, transaction costs, and diminishing marginal utility. We outline how moral judgments about (socially irresponsible) business behaviors, which often lack theoretical grounding and self-critical examination, can be made both more consistent and transparent through a systematic application of these theoretical concepts. We furthermore point out that, in this evaluative exercise, business ethics analysts should make all assumptions explicit to meet their task of facilitating informed public debates and informed moral choices.

Embedding Ethics: Dialogic Partnerships and Communitarian Business Ethics

The existence of a plurality of communities, a diversity of norms, and the ultimate contingency of all decisions in modern societies complicates the task of academics and practitioners who wish to be ethical. In this paper, we envisage and articulate a dialogical, communitarian approach to embedding business ethics that requires business ethicists to more reflexively engage with practitioners in working on and representing the normative criteria that people in organisations use to deal with moral dilemmas in business. We promote the idea that business ethicists should not only cross the divide between normative ethics and empirical research, but also take a step beyond the empirical to become more active change agents. As potential exemplars of this approach in practice, we explore how self-critique and cross-disciplinary collaboration in education and teaching might be used by academics to engage current and future business ethicists, as well as managers, in dialogic partnership. In an organisational context, we also propose a three-part approach to embedding reflexive ethics in practice, through dialogic research, debate, and re-presentation of ideas. We contend that our approach has more efficacy than the traditional grand theories of ethics or more focused theories of business ethics, such as Integrated Social Contract Theory; it has the potential to provide more grounded, and therefore more practical, advice to academics, current and future business ethicists, and business practitioners.

Ética y Agencia. Una revisión crítica de la neutralidad moral de la Teoría de la Agencia

The aim of this work is to show the philosophical principles of Agency Theory in order to understand if this theory presents an argumentation on human behavior that we can described as utilitarian, and if so, how it could be critically considered from Business Ethics. As we will see, Agency Theory is based on two main conceptual frameworks: the first one is Coase’s Institutionalism as for understanding the nature of the firm and, the second one, Gary Becker’s theory of economic behavior. In this paper we will show how Agency Theory incorporates Gary Becker’s theory and, consequently, a description of human behavior that we can understand as utilitarian, not only when Becker ideas’ have an explicit reference to the philosophical utilitarianism of Bentham and Mill, but also because of an understanding of human behavior described as individualistic and based on an evaluative maximization calculus of convenience. From Business Ethics theory, such calculus must be considered amoral and, as such, implies a culture of opportunism, among other problems within the origination.

How Friedman’s View on Individual Freedom Relates to Stakeholder Theory and Social Contract Theory

Friedman’s view on corporate social responsibility (CSR) is often accused of being incoherent and of setting rather low ethical standards for managers. This paper outlines Friedman’s ethical expectations for corporate executives against the backdrop of the strong emphasis he puts on individual freedom. Doing so reveals that the ethical standards he imposes on managers can be strictly deduced from individual freedom and that these standards involve both deontological norms and the fulfillment of particular stakeholder expectations. These insights illustrate the necessity to reconsider how Friedman’s approach relates to other important normative theories of business ethics. Contrasting Friedman’s approach with stakeholder theory and integrative social contract theory—when considering the importance he assigns to individual freedom—shows how and why these approaches differ. Still, the comparison also highlights striking similarities. This paper contributes to a better understanding of Friedman’s position—which is still one of the most influential approaches in business ethics research—because it enables a differentiated look at its strengths and weaknesses.

How Cognitive Neuroscience Informs a Subjectivist-Evolutionary Explanation of Business Ethics

Most theory in business ethics is still steeped in rationalist and moral-realist assumptions. However, some seminal neuroscientific studies point to the primacy of moral emotions and intuition in shaping moral judgment. In line with previous interpretations, I suggest that a dual-system explanation of emotional-intuitive automaticity (reflexion) and deliberative reasoning (reflection) is the most appropriate view. However, my interpretation of the evidence also contradicts Greene’s conclusion that nonconsequentialist decision making is primarily sentimentalist or affective at its core, while utilitarianism is largely rational-deliberative. Instead, I propose that current research on the human brain, in conjunction with converging experimental evidence, hints at moral subjectivism and its evolutionary basis as the most persuasive explanation of morality. These anti-realist conjectures have far-reaching implications for a wide range of topics in business ethics, as illustrated with the specific case of corporate social responsibility as a potentially tribal conception of the good.

Morality, Competition, and the Firm: The Market Failures Approach to Business Ethics by Joseph Heath

Reviewed by: Morality, Competition, and the Firm: The Market Failures Approach to Business Ethics by Joseph Heath Jason Brennan Joseph Heath, Morality, Competition, and the Firm: The Market Failures Approach to Business Ethics, Oxford University Press, 2014 Until Joseph Heath came along, philosophical business ethics was in a bad way. To the extent it’s still in a bad way, perhaps it’s because Heath has had insufficient influence. Before Heath, much of the debate in the field was between two major theories—stockholder and stakeholder theory. Both of these theories are either false, or vacuous and empty, depending on the interpretation. Heath has to some degree rescued the field by providing what is perhaps the only good general theory of business ethics, which Heath calls the Market Failures Approach. (To be clear, there is some good casuistical work in business ethics, but the Market Failures Approach is perhaps the only good general theory of business ethics.) Morality, Competition, and the Firm contains updated versions of ten of Heath’s previously published essays on the Market Failures Approach, along with three new essays. To see the value of Heath’s work, one needs to understand what came before it. Stockholder theory claims that since a corporation’s capital belongs to the stockholders, managers in a corporation have a fiduciary duty to promote stockholders’ expressed interests. Many people, both defenders and critics of the theory, misunderstood this as meaning that managers should do whatever it takes to maximize profit, so long as they don’t break the law. On this misinterpretation, stockholder theory seems false. But, more accurately, stockholder theory says that managers should pursue stockholder interests, provided they do not violate their other, pre-existing obligations, whatever those might be. Just as my lawyer does not lose her pre-existing duties when I become her client—she cannot, for instance, dump toxins in the ocean in order to keep me out of jail—so stockholder theory says that manager must pursue stockholder interests, but only after first observing whatever duties people have. The problem—the reason stockholder theory is empty—is that it offers no account of what these prior duties are. But that’s what we need a theory of business ethics to do. Stakeholder theory—perhaps the dominant theory of business ethics—is worse. Stakeholder theory claims that when making decisions, managers [End Page E-1] should take into account and properly balance the interests of all affected parties affected by their decisions, i.e., all “stakeholders”. This includes employees, suppliers, customers, local and national governments, and, well, everybody. The question, of course, is what counts as “properly balancing” all “legitimate interests,” in particular, how one ought to balance conflicts of interest both between and within stakeholder groups. Rather than trying to put meat on stakeholder theory’s bones, R. Edward Freeman and other stakeholder theorists instead assured everyone that the theory really is vacuous. In a recent book outlining the “state of the art” of stakeholder theory, Freeman and his co-authors explain that all stakeholder theory says is that we should “pay attention” to affected interests (Freeman et al. 2010, 9), and, further, even stockholder theory turns out simply to be an instance of stakeholder theory (Freeman et al. 2010, 24). (After all, it’s a theory about how to properly balance legitimate interests.) Instead, the point of stakeholder theory is to “creat[e] compelling stories” or “tell better stories” that help managers create value (Freeman et al. 2010, 216). In Freeman’s defense, at least the final theory cannot possibly admit of any counterexamples, since it does not say anything. Heath’s Market Failures Approach begins by reflecting on what markets are for. Consider that interpersonal morality is highly demanding. People are wary of businesses and capitalism in part because it seems that many of the norms of the market are lax or less demanding than those of normal interpersonal morality. As Heath puts it, this is a feature, not a bug, of capitalism. Markets are a kind of “staged competition” among firms, producers, suppliers, workers, and consumers (4). In market institutions, it’s reasonable to relax the normal interpersonal rules—including norms about fairness...

Locating Responsibility – An Extended Transaction Cost Approach

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Professional ethics and governance: understanding appraiser independence

As no clear definition of appraiser independence exists in the literature to date, this paper proposes one, while also aiming to identify the key factors that influence this concept, contributing to the development of an independence framework. Drawing on behavioural corporate governance and business ethics theories, we focus on the relationship between fund managers and appraisers in the Portuguese real estate investment fund industry to assess how different agents perceive appraiser independence. Conflicts of interest, appraisers' economic dependence on the client and appraisers' experience are found to be the factors that most impact the perception of independence. Enforcement mechanisms (to guarantee effective corporate governance) are also considered important for ensuring independence. We also conclude that appraiser independence is perceived in the same way by different agents (appraisers vs non-appraisers).

CSR Initiatives as Market Signals: A Review and Research Agenda

The purpose of this paper is to provide a basis for a systematic development of signaling theory on CSR initiatives. The paper (i) proposes signaling theory as a framework supportive of a strategic CSR approach; (ii) maps extant research on signaling through CSR initiatives; (iii) offers a comprehensive assessment of the most diffused CSR initiatives and discusses their eligibility as signaling devices; and (iv) outlines a research agenda to further develop and test signaling theory in business ethics. Specifically, the study reconsiders some key assumptions, identifies key gaps in empirical validation, and proposes directions to extend multiple signal, signaling pattern, and target cases.

Strategizing Value Co-Creation with Poor Farmers in a Mexican Agribusiness

While recent research has established businesses can benefit from engaging with the Base of the Pyramid (BOP) population, we know little about the processes through which managers strategize these opportunities and turn them into action. To address this gap, we report a detailed action research study in which we collaborated with the managers of a Mexican agribusiness to expand the firm’s market through value co-creation with the poorest farmers. To inform the strategizing process, we combined dynamic capability theory with options thinking and a framework for identifying the needs of the BOP population. As a result, we offer a detailed account of how the management team collaborated downstream with distributors and farmers and upstream with suppliers to grow a new franchise business that would increase the well-being of the poorest farmers and create additional business opportunities. Based on these empirical results and extant theory, we offer an integrated process model for how managers may strategize and implement BOP opportunities. In conclusion, we discuss our research in relation to the theory and practice of business ethics.

Bounded Ethicality and The Principle That “Ought” Implies “Can”

ABSTRACT:In this article we investigate a philosophical problem for normative business ethics theory suggested by a phenomenon that contemporary psychologists call “bounded ethicality,” which can be identified with the putative fact that well-intentioned people, constrained by psychological limitations, make ethical choices inconsistent with their own ethical beliefs and commitments. When one combines the idea that bounded ethicality is pervasive with the idea that a person morally ought to do something only if she can, it raises a doubt about the practical relevance of the moral principles that business ethics theory prescribes. We call this doubt the Radical Behavioral Challenge. It consists in the idea that people cannot generally conform to the normative ethical principles that business ethics theorists prescribe, and that these principles are therefore practically irrelevant. We answer the Radical Behavioral Challenge and explore normative implications of our answer.

Teaching Business Ethics and Stakeholder Theory

Teaching Business Ethics and Stakeholder Theory

An evolutionary logic towards the convergence of international business ethics

The fundamental problem in developing a theory of international business ethics, without imposing ethnocentric assumptions, lies in the inherent conflict between the need for universal ethics and the reality of diverse national cultures. Integrative social contracts theory holds an intermediate position between ethical universalist and relativist positions — recognizing universal hypernorms on the one hand and moral free space on the other. We argue that all businesses share a common objective of sustaining long-run economic value for their stakeholders. We develop this argument using an evolutionary logic into a hypernorm along three propositions: First, the firm influences, and is influenced by, members of the society (social context proposition). Second, managers maximize profit subject to joint constraints of technical feasibility and ethical norms (managerial decision proposition). Third, ethical norms evolve from interactions among the stakeholders without a central authority. Natural selection favors norms that maximize long run economic value for the society (natural selection proposition). We show that the hypernorm can spawn widely agreed authentic ethical norms. However, moral bounded rationality when interpreting the hypernorm generates different authentic norms in the moral free space. The evolutionary logic is testable along the dimensions of variation, inheritance and selection of ethical norms.

Exploring Ethical Implications of Personal Relationship in Dyadic Business Exchanges

This paper explores the ethical implications of the existence of personal relationships in business exchanges. Firstly, this paper introduces personal relationship in business exchanges. Secondly, three normative theories of business ethics that are related to the issue of personal relationship are presented. Finally, this paper explores the ethical implications on personal relationships according to the three theories. The main recommendation of this paper is that an analysis of personal relationships using ethical theories is needed to formulate laws and regulate such relationships and ultimately eliminate their negative consequences on organisations’ profitability.

Towards a Minimalist Theory of Intra-Firm Management Professionalism

The social welfare implications of the managerial role may be fruitfully problematized using a simple distinction – extra-firm social welfare (i.e. socially beneficial corporate impact outside the firm’s organizational structure), versus intra-firm social welfare (i.e. socially beneficial corporate impact within the firm’s organizational structure). Focusing on the intra-firm dimension, I argue that managers occupy professional roles, and that management professionalism involves following efficiency imperatives, despite prevalent market failures arising from intra-firm information asymmetries. This approach is grounded upon a novel minimalist theory of the professions and their role in society. Beyond market governance mechanisms, professional governance involves non-market mechanisms such as ethics codes and social norms. Intra-firm management professionalism thus involves promoting social welfare within the firm, by drawing on norms that also have extra-firm and general public interest relevance. Dominant paradigms of business ethics already consider promoting social welfare to be a professional obligation, viz. a special obligation applicable to the managerial role, as opposed to a general obligation applicable to all individuals and corporations at large. An intra-firm theory of management professionalism thus facilitates a dynamic engagement with on-going debates about a unified intra-firm/extra-firm theory of business ethics.

Consumer recycling: An ethical decision‐making process

ABSTRACTAlthough recycling is often experienced as a moral dilemma, studies that systematically approach this issue from an ethical perspective are scarce. Moreover, previous studies have explored recycling by mainly using single ethical constructs, such as moral norms, values or obligations, rarely approaching it as an ethical decision‐making process. Our study takes a more holistic approach and integrates the recycling literature with business ethics theory in order to develop a conceptual model of ethical decision making involved in recycling. The model is based on Jones' issue‐contingent model and its key concept, that is, moral intensity, which we extend by adding altruism as an important personality trait that influences pro‐social behaviour. The data were collected from a sample of 367 adult consumers, representative of the Slovenian population by gender and age. The hypotheses were tested using structural equation modelling. The results of our study confirmed the relationships between three key facets of ethical decision making: moral recognition, moral judgment and moral intention. Higher levels of moral recognition were found to lead to more positive moral judgments, which in turn positively influenced the formation of intentions to recycle. Moreover, moral intensity was found to be a significant predictor of moral recognition and moral judgment, while altruism was found to be a significant predictor of moral recognition. These findings hold important implications for public policy makers and social marketers who have to consider not only the consumer characteristics but also the issue characteristics in seeking to understand and influence consumer recycling. Copyright © 2013 John Wiley & Sons, Ltd.

The Origins of Business Ethics in American Universities, 1902–1936

The history of the field of business ethics in the U.S. remains understudied and misunderstood. In this article I begin to remedy this oversight about the past, and I suggest how it can be beneficial in the present. Using both published and unpublished primary sources, I argue that the business ethics field emerged in the early twentieth century, against the backdrop of the establishment of business schools in major universities. I bring to light four important developments: business ethics lectures at the University of California and Yale University, Leon Marshall’s curriculum at the College of Commerce of the University of Chicago, and the William A. Vawter Foundation on Business Ethics at Northwestern University. Then, I consider the payoffs of my historical account for business ethics theory, pedagogy, and practice. Specifically, I present four implications of my account under these headings: business ethics as a public problem; the place of ethics in business schools; historicizing business ethics; and historical self-knowledge.

The Origins of Business Ethics in American Universities, 1902–1936

ABSTRACT:The history of the field of business ethics in the U.S. remains understudied and misunderstood. In this article I begin to remedy this oversight about the past, and I suggest how it can be beneficial in the present. Using both published and unpublished primary sources, I argue that the business ethics field emerged in the early twentieth century, against the backdrop of the establishment of business schools in major universities. I bring to light four important developments: business ethics lectures at the University of California and Yale University, Leon Marshall’s curriculum at the College of Commerce of the University of Chicago, and the William A. Vawter Foundation on Business Ethics at Northwestern University. Then, I consider the payoffs of my historical account for business ethics theory, pedagogy, and practice. Specifically, I present four implications of my account under these headings: business ethics as a public problem; the place of ethics in business schools; historicizing business ethics; and historical self-knowledge.

An ethical framework in information systems decision making using normative theories of business ethics

As business environments become more complex and reliant on information systems, the decisions made by managers affect a growing number of stakeholders. This paper proposes a framework based on the...