28 Oct Ethics Requirement: the case study producing toys -childs play? has to be studied and You will need to apply relevant course concepts in identifying the significant ethical issues that may be
Evaluating Business Ethics Normative Ethical Theories
Having completed this chapter you should be able to:
Explain the role of normative ethical theory for ethical decision-making in business.
Understand and apply Western modernist ethical theories, i.e. utilitarianism, ethics of duty, rights and justice, and social contract theory.
Understand and apply alternative ethical theories, i.e. virtue ethics, ethic of care, discourse ethics, and postmodernism.
Conduct a pluralist business ethics evaluation.
Key concepts
Normative ethical theory
Ethical egoism
Utilitarianism
Ethics of duty
Categorical imperative
Human rights
Justice
Social contract
Virtue ethics
Ethic of care
Discourse ethics
Postmodern ethics
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INTRODUCTION Whether we are fully aware of it or not, ethical judgements are a part of our everyday lives. We constantly come up against situations where values are in conflict and we have to make a choice about what is right or wrong. Maybe it is a question of whether to lie about something in order to protect a friend’s feelings, or driving over the speed limit when rushing to avoid being late for a date, or perhaps deciding whether to report a classmate you have seen cheating on their assignment. The point is that we all have some prior beliefs about what is right or wrong that help us to decide what to do. In most cases, the situations we are faced with in our personal lives are not very dramatic, and are pretty much within the scope of what a typical person would be able to decide. For those living in a complex social setting like a warzone, individual decision-making and ethics become more complicated and challenging, and very few will have had the advantage of being taught frameworks and concepts to help them unpick the issues. In certain professions, such as the legal or medical profession, decisions will sometimes have enormous, even life or death consequences, and legal and medical ethics are highly developed areas of academic study to help lawyers, nurses, and doctors work through the ethics of their practices (Beauchamp and Childress 2012). In a business context, too, we face complex situations, sometimes with global impact, in which even the best of us could use some help in untangling the rights and wrongs. Luckily, as we will see in this chapter, such help is readily at hand.
Consider the case of a multinational company intending to establish a subsidiary in a developing country. There are a number of ethical problems that may arise—maybe the local public authorities expect to receive bribes for granting planning permission, perhaps labour standards in the country are particularly low, or possibly workplace discrimination is much more common than back home. There is also the additional problem that a variety of people will be involved, all of whom might have different views and attitudes towards these issues. Consequently, coming to an ethical conclusion in business situations is far more complex than in most of the situations where we, as private individuals, have to make ethical decisions.
Perhaps more importantly, in a business context there is often a need for these decisions to be based on a systematic rationale and widely understandable argument, so that they can be adequately defended, justified, and explained to relevant stakeholders. Similarly, if we believe that an organization has acted unethically in responding to these issues, we need some basis from which to argue our case. After all, at what point can we say that a particular behaviour is more than just different from what we would have done, but is in some way actually wrong? This is the point where normative ethical theories come into play. By normative, we mean ethical theories that aim to prescribe the morally correct way of acting; that is, how we ought to behave. It is worth noting that the normative perspective has a counterpoint in descriptive ethical theory. While both normative and descriptive approaches seek to inform morality, normative theory can best be understood as a code of conduct that all rational beings would adhere to. Descriptive morality, on the other hand, applies to a code of conduct adopted by a particular group or society; it may be the guidelines of a religion, for instance (Gert and Gert 2017), which we discuss in more detail later in the chapter. Hence, whereas a commitment to do no harm might be considered a normative guideline that all can arrive at, the French Declaration of the Rights of Man1 and of the Citizen of 1793 outlines the emphasis on equality and liberty that remain guiding values of individual behaviour in France to this day. The lines are a little blurred here, since descriptive ethical theories need to be evaluated as to whether they are morally sound (that is, they also
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have a normative component), but for our purposes, we are most concerned with normative ethical theories which are widely applicable, not just of interest to a certain sector or group of society.
Normative ethical theories Rules, guidelines, principles, and approaches that determine right and wrong.
In this chapter we will take a look at the major ethical theories and analyse their value and potential for business ethics. To begin with, though, we first need to be clear about how exactly we shall be using ethical theory in the context of this chapter and in the rest of the book.
THE ROLE OF ETHICAL THEORY Next time you are all together, take a look around your class—do you anticipate that you will all have the same preferences and beliefs about right and wrong? Do you believe there are some universal ideals accepted by all? This will no doubt be a theme running through your study of business ethics, and here is where ethical theory can begin to be helpful (Fryer 2016). Let’s start with the idea that it is possible to discern just one way of looking at right and wrong; that is, ethical objectivism, or absolutism, versus the subjective, context- specific approach of relativism.
Ethical absolutism. On one side of the spectrum would be a position of ethical absolutism, which claims that there are eternal, universally applicable moral principles. According to this view, right and wrong are objective qualities that can be rationally determined, irrespective of the circumstances.
Ethical relativism. The other extreme would be a position of relativism, which claims that morality is context-dependent and subjective. Stemming in part from anthropological studies of culture, relativists tend to believe that there are no universal right and wrongs that can be rationally determined—it simply depends on the traditions, convictions, or practices of those making the decision. In business ethics studies, the notion of relativism occurs frequently in international business issues, where it is argued that a moral judgement about behaviour in another culture cannot be made from outside because morality is culturally determined. Ethical relativism is different from descriptive relativism: while the latter merely suggests that different groups have different ethics, the former proposes that both sets of beliefs can be equally right. Ethical relativism, as we use it here, is still a normative theory (Gowans 2018).
THINK THEORY
Think about the concepts of absolutism and relativism in the context of bribery. How would each theory conceptualize the problem of bribery and what course of action might they suggest for someone faced with a corrupt official?
Visit the online resources for a suggested response.
Most traditional Western modernist ethical theories tend to be absolutist in nature. They seek to set out universal rules or principles that can be applied to any situation to provide the answer as to what is
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right or wrong. Contemporary ethical theories provide us with some alternative perspectives on ethical theory. They often tend towards a more relativistic position. However, in the course of this chapter we want to show that, for the practical purposes of making effective decisions in business, both of these positions have limitations.
Our position is one of ethical pluralism. This is something of an alternative approach to absolutism and relativism. A pluralist approach accepts that we ought to recognize that incompatible values can be equally legitimate and tolerate them as such (Liu 2018). According to Elinor Mason (2018), pluralism thus differs from (a straightforward understanding of) relativism and absolutism in that it neither puts all ethical perspectives on an equal footing, nor favours one approach over others. Irene Liu (2018) notes that ‘a worry for pluralism is that it is overly tolerant. Some ways of life, practices, institutions, or traditions really are deeply misguided, and in their cases, tolerance is inappropriate.’ The potential of radical conflict between logical theoretical perspectives is an inevitable part of pluralism and has to be addressed. We take inspiration from Nobel Prize-winning economist and philosopher Amartya Sen (2000), who acknowledges the profound complexity of the changing world and the value therein of a pluralist approach rather than seeking a universal general theory. He argues that pluralism allows an important openness and sensitivity to new realities.
Ethical theories, as we shall show, can help to clarify different moral presuppositions of the various parties involved in a decision— one person may tend to think in terms of one theory, while another might think in terms of a different theory. In making good business decisions, we need to understand this range of perspectives in order to establish a robust and defensible decision on the solution to ethical problems (Fryer 2016). The primary value of ethical theories lies in the fact that they help to rationalize, explain, and understand the hunches or gut feelings we all have about what is right or wrong. Furthermore, they make it possible to engage in a rational discourse between individuals whose moral values are different from each other.
Though our core focus in this chapter is on European and North American approaches, we acknowledge that there is a growing debate and literature on African, Asian, and Latin-American perspectives on business ethics. Confucian ethics (Kennedy, Kim, and Strudler 2016), for example, has received a growing amount of attention in recent years, and so, as we mentioned in Chapter 1, has the African Ubuntu ethics (Naude 2017). There are many more ethical theories which help to balance the theories presented here.
As we indicated in Chapter 1, there is of course a wealth of ethical thinking in business. One of the arenas we have not yet discussed in any detail is the role that religion can play in offering an ethical framework, which we noted above is both descriptive and normative ethical theory. Religion is not a key element of our book or approach, but for some it is an important influence in deciding on ethical practice, so we briefly introduce this perspective here.
Before we proceed with some tricky ethical theory, let’s pause to hear from Dr Nolywé Delannon, who is living business ethics through her important work giving voice to the marginalized in society in Practitioner Spotlight 3. As you learn about theory, it is worth keeping in mind how very practical trying to ‘make a difference’ is, and how the theory can help you to structure your ideas and be more effective in achieving change. We will come across other such ethically inspired entrepreneurs in Ethics in Action 7.1: When saving the world is your day job.
PRACTITIONER SPOTLIGHT 3 Inspiring ethics leaders of tomorrow
Photo credit: Sébastien St-Jean/Agence QMI
Business and management schools are often critiqued for promoting short-term thinking over a longer-term and more sustainable orientation. But exactly how do we embed business ethics within business and management scholarship? We spoke to Nolywé Delannon, Ph.D., Assistant Professor at Université Laval in Québec, Canada to learn more about how her teaching and research is driving more equitable and inclusive societies.
Please can you tell us a bit about how your current job role connects with business ethics? As a professor of International Management in a business school, I aim to fuel conversations on business ethics with students who would not have necessarily attended a class dedicated to the topic. Also, as a researcher and a citizen, I choose the phenomena and challenges I want to research based on my commitment towards issues of business ethics and CSR. For example, until recently I was sitting on the board of a non-partisan political organization for four years— including two as president—and defended young workers’ rights and intergenerational equity in Canadian public policy. Ethics and CSR have always guided my public interventions. And as I continue to get invited to address a variety of audiences on issues related to equality and inclusion, I strongly rely on my expertise in CSR to discuss and challenge business–government–civil society relations.
What practical skills are needed to do your job? In a way, I see myself as an entrepreneur; a knowledge entrepreneur. This means that I have to be creative and persistent, to be a multi-tasker, while remaining clear on my limitations in order to know when to search for resources. In fact, being an engaged scholar means navigating different worlds and striving to be both rigorous and relevant; to act as a translator. More challenging, it also means being continuously exposed to criticism from perspectives that are hardly reconcilable. In such a context, my most practical skills are certainly my optimism and my ability to believe so hard in what I do that I keep my eyes on the horizon even when I stumble and fall.
What has been your career path to date? My pathway towards sustainability was far from linear. Being born and raised in French Guiana, a territory 95% covered by the Amazon forest and long protected by traditional knowledge and practices, certainly infused me with the belief in the strong interconnectedness between the environment, society, and the economy. But I was trained in political science and international relations, and I only came to fully realize and formalize my engagement towards sustainability while undertaking graduate studies. I then briefly worked in a consulting company specialized in the facilitation of business–local community relations in major infrastructure projects in Canada. This professional experience was a true revelation for me and I decided to undertake a Ph.D. in Management with a specialization
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in CSR, more specifically looking into how business interacts with marginalized stakeholders around sustainability issues.
What are the key benefits and challenges of your role from an ethical perspective? One of the key benefits of being a scholar is being able to take advantage of academic freedom. I can publicly discuss issues that I consider important without having to worry about sanctions from my institution. This is a rare privilege and I believe it comes with tremendous responsibility to speak up on important and sometimes difficult societal issues. As regards challenges, I would say that relevance is one that haunts me. How can I make sure that my work, both research- and teaching-wise, actually has some impact, at a very local scale? This is one of the reasons why I have chosen to dedicate significant time to contributing to public debate and policy. Recently appointed by the Québec government to a working group on the collaborative economy, I rely on my expertise in CSR to conduct wide consultations with businesses, non-profits, and civil society organizations to inform public policy.
If you could change one big world issue, what would it be? As we are seeing increasing divides within contemporary societies at a global scale, I consider mis- and under-representation of the marginalized as a big world issue that should be addressed with no delay. By the term ‘marginalized’, I refer to individuals, collectives, as well as territories that are either absent, minored, or silenced. We can naturally think of migrants and refugees that are the target of growing populist movements across Europe and North America. But we can also think of Indigenous people, racialized people, and precarious workers—groups among which women tend to be over-represented—whose voices are seldom heard first-hand. I believe that we, as academics and practitioners of business ethics, should constantly challenge ourselves to become more inclusive in both our discourse and practice.
SOURCES https://www.ulaval.ca https://www4.fsa.ulaval.ca/enseignants/nolywe-delannon https://postmedia.us.janrainsso.com/static/server.html? origin=https%3A%2F%2Fmontrealgazette.com%2Fbusiness%2Fnew- committee-to-study-airbnb-uber-and-others-in-review-of- sharing-economy
Visit the online resources for more Practitioner Spotlight interviews.
NORMATIVE ETHICAL THEORIES AND RELIGION Religious teaching about ethics and normative ethical theory from philosophy both tend to have the same aim when applied to business, namely how to decide what is the right thing to do when faced with moral problems in commerce. Both are therefore focused on ensuring that business is responsible, avoids doing harm, and contributes to societal benefits. However, there are two main differences between the approaches:
Source of rules and principles. Religions typically invoke a deity or an organized system of belief (e.g. the teachings in the Qu’ran or the Talmud) as the source of determining right and wrong. Faith is considered the critical requisite for acting ethically. Philosophical theories, on the other hand, are based on the belief that human reason
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should drive ethics. Thus according to philosophical perspectives, rationality is the critical requisite for acting ethically.
Consequences of morality and immorality. In religious teaching, there is an important element of spiritual consequence for the decision-maker. These consequences might include salvation, enlightenment, reincarnation, or damnation.
Of course, different religions often have very different things to say about how to go about achieving the goals of ethical business. One example of religious observance for followers of Judaism, for example, is specific periods of abstinence from economic activity. In Jerusalem, this has given rise to a long-running ‘Sabbath war’ between secular and orthodox residents over whether shops, cinemas, and bars should remain open on the Jewish day of rest (Dunn and Jensen 2018). Islam also provides certain rules about appropriate business practices which has given rise to a distinct system of banking consistent with the principles of Sharia Law that forbid the charging of interest, part of a wider approach to Islamic finance (Hussain, Shahmoradi, and Turk 2016) that we shall discuss in Chapter 6.
In many parts of the world, the influence of religious principles is less direct, but they continue to shape business conduct, even if most economic actors are not devout followers. One such example that has its roots in the Protestant denomination of Christianity is the Protestant Work Ethic, as developed by German Sociologist Max Weber (1905). His position is that ‘egalitarian principles, a disdain of leisure activities, and the belief in the importance of hard work were responsible for economic successes seen in the USA and Europe during the turn of the twentieth century’ (Zabel et al. 2017: 301). These days the link to Christianity is almost entirely gone, with conceptualizations of the Work Ethic in other religions and none. For instance, Selcuk Uygur has extended this perspective to develop ideas around an Islamic work ethic, which he finds gives moral energy to small business owners in Turkey who are committed Muslims (Uygur et al. 2017).
Clearly, religion is an important part of life for some individuals. Nevertheless, we would not want to overemphasize differences in religious principles when it comes to business. Interfaith groups have long promoted their common cause of improving ethical practices in business. The Interfaith Centre for Corporate Responsibility, for example, seeks to use the collective influence of values-based investors to improve corporate attention to social and environmental issues, regardless of denomination.2 Similarly, the long-standing Interfaith Declaration, an accord between Christian, Jewish, and Muslim leaders, established an influential set of business principles based on commonalities across the religions. It emphasizes their shared commitment to justice, mutual respect, stewardship, and honesty.3 Ultimately, although religious principles continue to be influential on the institutional fabric of economic life, as a descriptive ethical theory their direct sustained effect on business culture and practice is significant in only certain regions of the world. Substantial processes of secularization—i.e. movement towards a non-religious form of organizing—have taken place in workplaces across the globe. As such, normative ethical theories, based on philosophical principles, remain at the cornerstone of business ethics for much of contemporary business.
WESTERN MODERNIST ETHICAL THEORIES
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In Western societies, the ethical theories traditionally regarded as appropriate for application to business contexts are based on philosophical thinking beginning with the Enlightenment in the 18th century. This age is often also referred to as ‘modernity’, as it modernized a lot of traditional thinking dominated by religious approaches throughout the Middle Ages. We refer to these theories, therefore, as ‘Western modernist’. They generally offer a certain rule or principle that one can apply to any given situation—hence, they are absolutist in intention. These theories are normative because they start with an assumption about the nature of the world, and more specific assumptions about the nature of human beings. Consequently, the degree to which we can accept the theory and the outcome of its application to particular business situations depends chiefly on the degree to which we share their underlying assumptions. As they have a rather well-defined rule of decision, the main advantage of these theories is the fact that they normally provide us with a fairly unequivocal solution to ethical problems.
There is a distinct point of division in this group: consequentialist and principle-based theories, which we summarize in Table 3.1 and go on to discuss in more detail below. We have, on the one hand, theories that base moral judgement on the outcomes of a certain action—they are goal orientated. If these outcomes are desirable, then the action in question is morally right; if the outcomes of the action are not desirable, the action is morally wrong. The moral judgement in these theories is thus based on the intended outcomes, the aims, or the goals of a certain action. Consequentialist ethics is often also referred to by the term teleological, based on the Greek word for ‘goal’. We focus on consequentialist theories of ethical egoism and utilitarianism.
On the other hand, we have those theories that base moral judgements on the derivation of principles and the procedure by which they are arrived at. These principle-based theories4 prioritize what is right, rather than what is desirable. These philosophical theories, also called deontological (based on the Greek word for ‘duty’), look at the desirability of principles, and based on these principles, deduce a ‘duty’ to act accordingly in a given situation, regardless of the desirability of the consequences. We focus on the principle-based theories of ethics of duties, and rights and justice.
Table 3.1 Normative theories in business ethics: part one
Ethical egoism
Utilitarianism Ethics of duties
Rights and justice
Leading contributors
Thomas Hobbes Ayn Rand
Jeremy Bentham John Stuart Mill
Immanuel Kant
John Locke Jean-Jacques Rousseau John Rawls
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Ethical egoism
Utilitarianism Ethics of duties
Rights and justice
Key works Leviathan (TH) The Virtue of Selfishness (AR)
An Introduction to the Principles of Morals and Legislation (JB) Utilitarianism, on liberty, considerations on representative Government (JSM)
Foundations of the Metaphysics of Morals (IK)
Two Treatises of Government (JL) The Social Contract (JJR) A Theory of Justice (JR)
Focus Individual desires or interests
Outcomes and collective welfare
Duties Rights and the nature of justice
Guiding tenets
Maximization of desires/self- interest
Act/rule utilitarianism
Respect for autonomy and rational reason (in the form of the Categorical Imperative)
Universalizable rules for the nature of justice. Respect for human beings
Concept of human beings
Humans are objectively obliged to serve their self- interest alone
Humans are motivated by avoidance of pain and gain of pleasure
Humans are rational moral actors with free will
Humans are beings that are distinguished by dignity
Type Consequentialist Consequentialist Principle- based
Principle-based
In the following, we will have a closer look at both families of philosophical theories and analyse their potential for solving various business decisions. In explaining these theories, we will use them to reflect on a particular business problem, as presented in Ethical Dilemma 3. We suggest you read this before continuing with the chapter.
CONSEQUENTIALIST THEORIES
Here we shall look at two main consequentialist theories: Ethical egoism Utilitarianism
These theories address right and wrong by emphasizing the achievement of good goals. However, we shall see that they address those outcomes in different ways—ethical egoism by focusing on the outcomes and self-interest for the individual decision-maker, utilitarianism by focusing on the wider social outcomes within a community.
Ethics of self-interest: ethical egoism
Egoism is one of the oldest philosophical ideas. It was already well known and discussed by ancient Greek philosophers such as
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Epicurus, but it has a troubled history. There is real controversy around whether egoism has a place among ethical theories (Arnold, Beauchamp, and Bowie 2014; Gert and Gert 2017). Whereas the other Western modernist theories we address here are pretty standard in business ethics textbooks, ethical egoism quite often does not get mentioned at all, and is dismissed implicitly as offering no ethical insights of value (see, for example, Boatright 2014; Fryer 2015, and unsurprisingly, Bowie 2017 in his Kantian take on business ethics). The controversy lies in the focus in egoism on self-interest, such that the only obligation for a person, or by extension a business, is self- promotion.
Psychological egoism focuses on self-interest as a type of motivation that is the explanation of human conduct. Here we are more concerned with ethical egoism. In an early narrow perspective on this, Greek philosopher Epicurus (341–270 BC) was an example of a hedonist, being of the view that pleasure is the ultimate good and should be pursued for its own sake (Shaw and Barry 2016). This, however, is just one version of egoism.
The most commonly acknowledged protagonist of ethical egoism is probably political philosopher Thomas Hobbes (1588–1679). He had a rather pessimistic view of human nature, such that without strong preventative measures, he believed that in a state of nature (society without any systems, controls, or government), anarchy and chaos would result (Arnold, Beauchamp, and Bowie 2014: 15). In one of his key texts, Leviathan, he called this ‘the war of all against all’ (Plamenatz 1967: 24). This may seem fanciful, but it is worth remembering that he was deeply influenced by the violence of the English Civil War in the 1640s, during which it must indeed have seemed that everyone was against everyone else. Ultimately, Hobbes argued that it was best for everyone—every individual’s self-interest —to be governed by some impartial rules. We will come back to this later, but for now, Hobbes’ contribution to understanding ethical egoism is that no person has a moral obligation to others beyond things which serve their own interest.
A more recent but no less controversial protagonist of ethical egoism is Ayn Rand (1905–82). Diametrically opposed to altruism, she believed ferociously in individualism as being at the heart of every human being (Machan 1999). According to Ayn Rand, who grew up during the Russian Revolution before emigrating to America, objectivism is key to ethics and we are each responsible for our own happiness, self-development, and self-perfection. Rand (1964) promoted the idea of a virtue of selfishness (she was also influenced by Aristotle, who we will come to later).
Moving closer to the field of business, other writers, such as the economists Adam Smith (1723–90) and Milton Friedman (1912– 2006), have somewhat retrospectively been associated with egoism via their defences of capitalism and the free market (Arnold, Beauchamp, and Bowie 2014), though this again is disputed. Friedman promoted the idea that the responsibility of the business leader is to fulfil fiduciary duties to shareholders (‘the business of business is business’ (Friedman 1970)). Smith, who was also a philosopher, belie
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