Army ethics paper. :: The NCO Leadership Center of Excellence

Philosophy 1100: 
Introduction
to Ethics

WRITING A GOOD ETHICS ESSAY

        The
writing
of essays in which you argue in support of a position on some moral
issue
is not something that is intrinsically difficult.  However such
essays
may be rather different from those that you have written before. 
What
I want to do in this handout, accordingly, is to describe some of the
more
important characteristics of such essays, and to offer some suggestions
which
you may find helpful.

1. A Clear, Concise, Informative
Introduction

        A
good
introduction is short and to the point.  You should indicate
exactly
what your topic is, and the view that you intend to defend.  You
should
also tell the reader how your discussion will be structured, so that he
or
she knows from the very beginning the general lines along which you
will
be arguing in support of your conclusion.  You should also
indicate,
very briefly, your main line of argument.  Finally, you should do
these
things as concisely as possible, so that you can get on with the
business
of defending the view that you are setting out on the moral issue in
question.

Illustration

       
Suppose
that you are writing about the morality of abortion.  You might
begin
your paper as follows:

“My topic is the morality of
abortion. 
I shall defend an extreme anti-abortion position by arguing, first,
that
no satisfactory rationale can be offered for any moderate position on
abortion,
and secondly, that an extreme pro-abortion position cannot be accepted
without
also accepting infanticide.”

        A
person
who reads this introductory paragraph knows exactly what view you will
be
defending, the general lines along which you will be arguing in defense
of
that view, and the overall structure of your essay.

Introduction Checklist:   Key
Questions

1.  Is my introduction concise?
2.  Does it contain a clear statement of my main thesis?
3.  Does it indicate very briefly my main line of argument?
4.  Does it explain the overall structure of my essay?

2.  The Offering of Reasons for your
View

       
After
setting out your thesis, and outlining your overall approach in the
introductory
paragraph, you need to have a section in which you offer reasons for
accepting
the view that you are advancing.  Each reason should be set out in
the
form of an explicit, step by step argument, so that the reader can see
right off both what your assumptions are, and how they are supposed to
support your
conclusion.  Moreover, if you are offering more than one
consideration in support of your thesis, it is important that different
considerations not
be mixed together in a single paragraph.  Different arguments
require
at least separate paragraphs – and preferably, separate subsections,
each
clearly labeled with an appropriate heading.  For the latter will
not
only help the reader to follow your argument: it will help you to think
more
clearly about the arguments you’re offering.

        How
many reasons should you offer in support of your thesis?  It is
best
to confine yourself to either one, or at most two, supporting
arguments. 
If you offer more arguments, there is a serious danger both that you
will
not set out any of the arguments in a sufficiently detailed way, and
that
you will not discriminate between interesting arguments in support of
your
thesis, and arguments that are at best marginal.  In short, choose
your
best one or two arguments, and develop that argument (or arguments) in
a
detailed and circumspect way.

Checklist for the Offering of Reasons:

1.  Have I set out an argument (or at
most
two arguments) to provide reasons for thinking that my thesis is true?
2.  Have I made all of my premises clear and explicit?
3.  Have I developed my argument in a full and detailed way, so
that
all of my reasoning is clear to the reader?

3.  Consideration of Objections to
your
Arguments

       
After
offering reasons for accepting your view, you need to consider
objections. 
The crucial point to note here is that objections come in two
forms. 
First, there are objections that are directed against the reasons that
you
have offered in support of your thesis, and which claim, therefore,
either
that some of your assumptions are implausible, or that some of your
reasoning
is unsatisfactory.  Secondly, there are objections that are
directed against your conclusion, and which attempt to provide reasons
for thinking that the view which you are advancing is false.

       
Objections
of the first sort are especially crucial, and your main obligation is
to
address such objections.  The reason is that if all that you do is
to
rebut objections to your thesis, and you fail to consider objections to
your
argument, then you haven’t shown that you have made out a satisfactory
positive
case in support of your thesis.

        How
do you arrive at interesting objections to your own arguments? 
The
crucial thing is to look carefully at the assumptions that you have
made,
and to ask yourself which of those are controversial, in the sense that
they
might well be questioned by an intelligent, thoughtful, and
well-informed
person.  Having located a controversial assumption, you need to
consider
why a thoughtful person might disagree with it, and then try to respond
to
that objection.

Checklist for Objections to your Arguments:

1.  Have I carefully set out the most
important
objection to each of my arguments?
2.  Have I then responded, in a careful way, to that objection (or
objections)?

4.  Consideration of Objections to
your
Thesis

       
After
you have carefully considered objections to your argument (or
arguments),
the next important task is to consider objections which, rather than
being
directed against the reasons that you have offered in support of your
view,
are directed instead against your view itself, and which attempt to
show
that your view is incorrect.  Here you need to set out any such
objection
(or objections) in a clear, careful, and dispassionate fashion, and
then
indicate why you think the objection in question is unsound.

        How
many objections to your thesis should you attempt to consider? 
Here,
as elsewhere, trying to cover too much ground can result in a weak and
superficial
discussion.  Try to find the strongest objection, and address it
in
a detailed way.

Checklist for Objections to your Thesis:

1.  Have I considered the most important
objection against the thesis that I am defending?
2.  Have I responded carefully to that objection?

5.  Exposition of Arguments

        At
the heart of a paper that examines some moral issue in a critical
fashion
is the setting out of arguments – both arguments in support of your
positions,
and arguments directed either against some of your assumptions, or
against
your position itself.  Whenever one is setting out an argument,
one
needs to do so in a careful step-by-step fashion, so that it is clear
to
the reader both what assumptions the argument involves, and what the
reasoning
is – that is, how one is supposed to get from the assumptions to the
conclusion.

        One
thing that it is very important to avoid is the setting out of more
than
one argument in a single paragraph.  For this usually results in
too
brief an exposition of the arguments in question, and often in a
muddling
together of the two arguments, thereby obscuring the structure of the
reasoning.

Checklist for your Exposition of Arguments:

1.  Are my arguments carefully and
explicitly
set out so that both all of my assumptions, and my reasoning, are
clear?
2.  Have I, at any point, set out more than one argument in a
single
paragraph?
3.  Are objections and responses set out in separate paragraphs?

6.  Logical and Perspicuous Structure

        A
crucial
factor that makes for a good essay is the presence of a logical and
perspicuous
structure.  So it’s important to ask how one can both organize
one’s
discussion in a logical fashion, and make that organization perspicuous
to
the reader.

        The
structure will be clear to the reader if you begin with an introductory
paragraph
of the sort described above, and then go on, first, to divide your
essay
up into sections (and possibly also subsections), and secondly, to use
informative
headings to mark out those sections (and subsections).  The reader
will
then be able to see at a glance how you have structured your
discussion.

       
What
makes for logical organization?  If you do the things mentioned
above,
in sections I through IV, in the order discussed, the result will be an
essay
whose overall logical organization is very strong.  That is to
say,
start by setting out your thesis, and outlining your overall approach
in
the introductory paragraph.  Follow this with a section in which
you
offer reasons for accepting the view that you are advancing.  Then
go
on to devote two sections to a consideration of objections.  In
the
first, set out, and respond to, objections that are directed against
any
controversial assumptions that you have made in arguing in support of
your
own view.  Then, in the second, consider objections that might be
directed
against your thesis itself.

       
Individual
sections also need to be organized in a logical fashion.  This is
primarily
a matter of setting out arguments in a step-by-step fashion, and of
discussing
different arguments in different subsections, as discussed above in
section
V.

Checklist for Logical and Perspicuous
Structure:

1.  Is my essay organized into sections
in
a logical fashion?
2.  Are the sections divided into appropriate subsections?
3.  Have I made the overall structure of my essay clear by using
informative
headings for sections and subsections?

7.  Dispassionate and Unemotional
Discussion

       
Another
very important feature of a good essay is that the discussion be
dispassionate,
and that one avoid formulating either the issue, or relevant arguments,
in
a biased and/or emotionally charged way.

       
Suppose,
for example, that Mary is considering whether there should be a law
against
the sale of pornography.  There are various ways in which she can
formulate
this question, some of which will strongly suggest one answer rather
than
another.  She might, for example, ask herself whether  people
should
be allowed to amass fortunes as purveyors of filthy and degrading
material
that will corrupt people, and destroy the moral fiber of society. 
If
this is the way she puts the issue, it will not be too surprising if
she
arrives at the conclusion that one certainly needs a law against
pornography. 
Suppose, on the other hand, that what she asks is whether people should
be
prevented from having access to important information about something
which
is not only natural and very beautiful, but also a means of expressing
feelings of tenderness and love.  When the question is phrased
this way, it seems
likely that she will arrive a rather different conclusion.

        Why
are emotionally charged formulations bad?  There are two
reasons. 
First, they tend to alienate the reader or listener, thereby making it
less
likely that others will devote much time to a serious consideration of
your
arguments.  But secondly, such formulations are even more
dangerous
with respect to one’s own thinking, since what they typically do is to
make
it seem that the right answer is obvious, and this in turn usually
prevents
one from grappling with the issue in a serious way, and from subjecting
one’s
own view to critical examination.

Checklist for Dispassionate and Unemotional
Discussion:

1. Have I made use of emotively charged
language?
2.  Is my discussion dispassionate and fair throughout?

8.  Overall Clarity and Conciseness

       
Many
people, confronted with an essay that is difficult to understand, but
which
is written in a style which sounds profound, tend to conclude that the
topic
must be a difficult one, and the writer’s ideas unusually deep. 
The
appropriate conclusion, however, will generally be a rather less
positive
one ­ namely, that the author either has muddy ideas, or lacks the
ability
to communicate his or her ideas to others in a satisfactory
fashion. 
Obscurity is not a sign of profundity.

        I
suspect
that this point probably needs to be labored a bit, as there are
reasons
for thinking that many people, in their secondary school education, are
encouraged
to express their ideas in a fashion which sounds profound. 
Consider,
for example, the following experiment, carried out by two English
professors
at the University of Chicago.  Joseph Williams and Rosemary Hake
took
a well-written paper, and changed the language to produce two different
versions.  Both versions involved the same ideas and concepts, but
one was written in
simplified, straightforward language, while the other was written in
verbose,
bombastic language, loaded with pedantic terms.  They then
submitted
the two papers to nine high-school teachers, and found that all nine
gave
very high marks to the verbose paper, but downgraded the
straightforward essay
as too simple and shallow.  Williams and Hake then repeated the
experiment
with a group of ninety teachers, and came up with similar
results. 
Three out of four high-school teachers (and two out of three college
teachers!)
gave higher marks to pompous writing!

       
What
should you be aiming at, in terms of clarity, simplicity, and
intelligibility? 
One way of estimating how successful your essay is in these respects is
by
considering how it would seem to a secondary school student who knew
nothing
about the topic.  Would he or she be able to read it without
difficulty?  Having read it, would he or she be able to say
exactly what view you were defending and how you were supporting that
view?  If you can confidently answer ‘Yes’ to both questions, then
all is well.  But if there is any
room for doubt, then you need to rewrite your essay so that your ideas
are
expressed in a simpler and more straightforward way.

Checklist for Overall Clarity and
Conciseness:

1.  To what extent is the writing clear
and
straightforward?
2.  Is the writing concise?

9.  A Non-Religious, Philosophical
Approach

       
Many people defend ethical views by appealing either to religious or
theological assumptions, or to moral principles that are religiously
based.  Such assumptions or principles are often of a highly
controversial sort, and exercises 1, 2, and 3 were intended to
illustrate how problematic an appeal either to religious and
theological premises, or to moral principles that are religiously
based, can be.

        It is
possible of course, that there are religious claims that, although
controversial, can be shown to be reasonable.  Any such defense,
however, is a major undertaking, and in an essay of this length, the
chances of success in doing that are not good.

        In
addition, however, any discussion of religious claims that is likely to
be intellectually satisfactory requires a serious background in
philosophy of religion.  The Philosophy Department has a number of
philosophers who are experts in the area of philosophy of religion, and
if you are interested in exploring religious issues, you may well want
to consider taking one of the philosophy of religion courses that the
Department offers.  This, however, is a course in ethics, and here
you need to confine yourself to non-religious, philosophical arguments:
religious assumptions, and moral claims based on a religious point of
view, are almost always going to be very controversial, and virtually
impossible to defend successfully in an essay of the length you are
writing here.  Any such claims, then, are to be
avoided.   

10.   Planning your Essay

        In
the preceding sections, I have discussed the features that make for a
good
essay that is focusing upon the critical discussion of a moral
issue. 
In this final section I want to mention briefly what I think is the
most
helpful idea for producing an essay that has these characteristics –
namely,
the formulation of an explicit plan, both for the essay as a whole, and
for
individual sections.

        To
do this, you might proceed as follows.  First, on a filing card,
or
a small sheet of paper, list the main sections into which your
discussion
will be divided, as discussed above.

       
Secondly,
for each of those sections, take a filing card, and write down both the
main
claims that you want to advance in that section, and a brief
description
of any arguments that you’ll be putting forward, or examining.

       
Thirdly,
for each of the arguments that you’ll be discussing, write down, on
another
filing card, the basic structure of that argument.

       
Finally,
re-examine everything that you have written down.  Can you see a
more
effective way of dividing the discussion up into sections?  Is
there
a better way of organizing the material within a given section? 
Can
any of your arguments be given a better step-by-step formulation?

        The
plan that you initially draw up is not, of course, set in concrete, and
as
you do more reading for your essay, or talk to other people about the
issue
that you’re considering, you’ll often see a better way of organizing
the
material, or other arguments or objections that you need to consider,
and
so on.  You can then modify your original plan.  The crucial
thing
is always to have at least a tentative plan in mind, for even when
you’re
just beginning to think about a topic, that will help you to do so in a
focused
way.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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Business Ethics

First published Thu Nov 17, 2016

A business is a productive organization—an organization whose
purpose is to create goods and services for sale, usually at a profit.
Business is also an activity. One entity (e.g., a person, an
organization) “does business” with another when it
exchanges a good or service for valuable consideration. Business
ethics can thus be understood as the study of the ethical dimensions
of productive organizations and commercial activities. This includes
ethical analyses of the production, distribution, marketing, sale, and
consumption of goods and services (see also Donaldson & Walsh
2015).

Questions in business ethics are important and relevant to everyone.
This is because almost all of us “do business”—i.e.,
engage in a commercial transaction—almost every day. Moreover,
many of us spend a major portion of our lives engaged in, or preparing
to engage in, productive activity, on our own or as part of productive
organizations. Business activity shapes the world we live in,
sometimes for good and sometimes for ill.

Business ethics is a huge field. Philosophers from Aristotle to Rawls
have defended positions on topics which can be understood as part of
business ethics. At present, there are at least five journals devoted
to the field (Business Ethics Quarterly, Business Ethics:
A European Review, Business & Society, Business & Society
Review, Journal of Business Ethics
), and work in business ethics
appears in mainstream philosophy and social science journals as
well.

This entry summarizes important research on central questions in
business ethics, including: In whose interests should firms be
managed? Who should manage them? What do firms owe their workers, and
what do workers owe their firms? What moral rules should guide
firms’ engagement with customers? Should firms try to solve
social problems? What responsibility do they have for the behavior of
their suppliers? What role should firms play in the political process?
Given the vastness of the field, of necessity certain questions in
business ethics are not addressed here.

  • 1. Varieties of business ethics
  • 2. Corporate moral agency
  • 3. The ends and means of corporate governance
    • 3.1 Ends: shareholder primacy or stakeholder balance?
    • 3.2 Means: control by shareholders or others too?
  • 4. Popular frameworks for business ethics
  • 5. Firms and consumers
    • 5.1 What should be for sale?
    • 5.2 Product safety and liability
    • 5.3 Advertising
    • 5.4 Sales and negotiation
    • 5.5 Pricing
  • 6. Firms and workers
    • 6.1 Hiring and firing
    • 6.2 Pay
    • 6.3 Meaningful work
    • 6.4 Whistleblowing
  • 7. The firm in society
    • 7.1 Corporate social responsibility
    • 7.2 Firms, governments, and political CSR
    • 7.3 International business
  • 8. The status of business ethics
  • Bibliography
  • Academic Tools
  • Other Internet Resources
  • Related Entries

1. Varieties of business ethics

Many people engaged in business activity, including accountants and
lawyers, are professionals. As such, they are bound by codes of
conduct promulgated by professional societies. Many firms also have
detailed codes of conduct, developed and enforced by teams of ethics
and compliance personnel. Business ethics can thus be understood as
the study of professional practices, i.e., as the study of the
content, development, management, and effectiveness of the codes of
conduct designed to guide the actions of people engaged in business activity. This entry
will not consider this form of business ethics. Instead, it considers
business ethics as an academic discipline.

Business ethics as an academic discipline is populated by both social
scientists and normative theorists. This is reflected in the attendees
of academic conferences in business ethics and the types of articles
that are published in business ethics journals. Social
scientists—who at this point comprise the largest group within
the field—approach the study of business ethics descriptively.
They try to answer questions like: Does corporate social performance
improve corporate financial performance, i.e., does ethics pay
(Margolis & Walsh 2003; Orlitzky, Schmidt, & Rynes 2003)? And:
Why do people engage in unethical behavior (Bazerman & Tenbrunsel
2011; Werhane et al. 2013)? I will not consider such questions here.
This entry focuses on questions in normative business ethics, most of
which are variants on the question: What is ethical and
unethical in business?

Considered only as a normative enterprise, business ethics—like
many areas of applied ethics—draws from a variety of
disciplines, including ethics, political philosophy, economics,
psychology, law, and public policy. This is because remedies
for unethical behavior in business can take various forms, from
exhortations directed at private individuals to change their behavior
to new laws, policies, and regulations. Doing business ethics well
means being familiar with results in these disciplines, or at least
being aware of gaps in one’s own knowledge.

Normative business ethicists (hereafter the qualifier
‘normative’ will be assumed) tend to make certain
assumptions about economic frameworks. One is that the means of
production can be privately owned. A second is that
markets—featuring voluntary exchanges between buyers and sellers
at mutually determined prices—should play an important role in
the allocation of resources. Those who deny these assumptions will see
some debates in business ethics (e.g., about firm ownership and
control, or about advertising) as misguided.

Some organizations “do business”—in the sense of
exchange a good or service for valuable consideration—with the
goal of seeking profit, and some do not. Merck and Wal-Mart are
examples of the first type organization; Princeton University and the
Metropolitan Museum of Art are examples of the second. Business
ethicists sometimes concern themselves with the activities of
non-profit organizations, but more commonly focus on for-profit
organizations. Indeed, most people probably understand businesses as
for-profit organizations.

2. Corporate moral agency

One way to think about business ethics is in terms of the moral
obligations of agents engaged in business activity. Who is a moral
agent? Individual persons, obviously. What about firms? This question
is typically described as a question of “corporate moral
agency” or “corporate moral responsibility”. Here
‘corporate’ does not refer to the corporation as a legal
entity, but to a collective or group of individuals. To be precise,
the question is whether firms are moral agents and morally responsible
considered as (qua) firms, not considered as aggregates of
individual members of firms.

In the business ethics literature, French is a seminal thinker on this
topic. In early work (1979, 1984), he argued that firms are morally
responsible for what they do, and hence should be seen as
“full-fledged” moral persons. He bases this conclusion on
his claim that firms have internal decision-making structures, through
which they (1) cause events to happen, and (2) act intentionally. Some
early responses to French’s work accepted the claim that firms
are moral agents, but denied that firms are moral persons. Donaldson
(1982) claims that firms cannot be persons because they lack important
human capacities, such as the ability to pursue their own happiness
(see also Werhane 1985). Other responses denied that firms are moral
agents (also). Velasquez (1983) argues that firms lack a necessary
condition of agency, viz., the ability to act (see also his 2003). In
later work, French (1995) recanted his claim that firms are moral
persons, though not his claim that they are moral agents.

Discussions of corporate moral agency and moral responsibility have
largely faded from the business ethics literature (as of 2016). But
they continue to receive attention in the mainstream philosophical
literature, where they are treated with a high degree of
sophistication. Here the focus is on collectives more generally, with
the business firm playing a role as an example of a collective. As in
the business ethics literature, in the mainstream philosophical
literature a key question is: What are the conditions for moral agency
and responsibility, such that collectives qua collectives,
including firms, do or do not satisfy them? A number of writers,
including Copp (2006), Hess (2014), and List & Pettit (2011),
believe that firms can be moral agents. This view has strong intuitive
appeal. We routinely say things like: “Costco treats its
employees well” or “BP polluted the Gulf of Mexico”,
and in doing so we appear to assign agency and responsibility to firms
themselves. On the other side are writers who deny that firms can be
moral agents, such as Gilbert (1989), S. Miller (2006), and
Rönnegard (2015). A claim advanced on this side is that agency
requires intention, and firms are not the kinds of things that can
have intentions (S. Miller 2006). The common way of speaking about the
agency and responsibility of firms may be metaphorical, or a shorthand
way of referring to the agency and responsibility of individuals
within firms. (For discussions of these issues, see the entries on
collective responsibility ,
collective intentionality , and
shared agency .)

While the question of whether firms themselves are moral agents is of
theoretical interest, its practical import is uncertain. Perhaps BP
itself was morally responsible for polluting the Gulf of Mexico.
Perhaps certain individuals who work at BP were. What hangs on this?
According to Hasnas (2012), very little. Firms such as BP can be
legally required to pay restitution for harms they cause even if they
are not morally responsible for them. What ascribing agency and
responsibility to firms enables us to do, according to Hasnas, is
blame and punish them. But, he argues, we should not engage in this
practice. Phillips (1995), by contrast, argues that in some cases no
individual employee in a firm is responsible for the harm a firm
causes. To the extent that it makes sense—and it often does, he
believes—to assign responsibility for the harm, it must be
assigned to the firm itself. On Phillips’s view, corporate moral
agency makes blaming behavior possible where it would otherwise not
be. Because corporate reputation can be a significant asset or
liability (Roberts & Dowling 2002), this provides an incentive for
firms to exercise due care in their operations (see also
Rönnegard 2015).

3. The ends and means of corporate governance

There is significant debate about the ends and means of corporate
governance, i.e., about who firms should be managed for, and who
should (ultimately) manage them. Much of this debate is carried on
with the large publicly-traded corporation in view.

3.1 Ends: shareholder primacy or stakeholder balance?

There are two main views about the proper ends of corporate
governance. According to one view, firms should be managed in the best
interests of shareholders. It is typically assumed that managing firms
in shareholders’ best interests requires maximizing their
wealth. This view is often called “shareholder primacy”
(Stout 2002) or—in order to contrast it more directly with its
main rival (to be discussed below) “shareholder theory”.
(Confusingly, the label ‘shareholder primacy’ is sometimes
used—e.g., by Bainbridge [2008]—to refer to the view that
shareholders should have ultimate control over the firm.) Shareholder
primacy is the dominant view about the ends of corporate governance
among financial professionals and in business schools.

A few writers argue for shareholder primacy on deontological grounds.
On this argument, shareholders own the firm, and hire managers to run
it for them on the condition that the firm is managed in their
interests. Shareholder primacy is thus based on a promise that
managers make to shareholders (Friedman 1970; Hasnas 1998). In
response, some argue that shareholders do not own the firm. They own
stock, a type of corporate security (Bainbridge 2008; Stout 2002); the
firm itself may be unowned (Strudler 2017). Others argue that managers
do not make, explicitly or implicitly, any promises to shareholders to
manage the firm in a certain way (Boatright 1994). More writers
argue for shareholder primacy on consequentialist grounds. On this
argument, managing firms in the interests of shareholders is more
efficient than managing them in any other way (Hansmann & Kraakman
2001; Jensen 2002). In support of this, some argue that, if managers
are not given a single objective that is clear and
measurable—viz., maximizing shareholder value—then they
will have an enhanced opportunity for self-dealing (Stout 2002).
Consequentialist arguments for shareholder primacy run into problems
that afflict many versions of consequentialism: in requiring all firms
to be managed in a certain way, it does not allow sufficient scope for
personal choice (Hussain 2012). Most think that people should be able
to pursue projects, including economic projects, that matter to them,
even if those projects do not maximize welfare.

The second main view about the proper ends of corporate governance is
given by stakeholder theory. This theory was first put forward by
Freeman in the 1980s (Freeman 1984; Freeman & Reed 1983), and then
refined by Freeman and various collaborators over the next 30 years
(see, e.g., Freeman et al. 2010; Jones, Wicks, & Freeman 2002).
According to stakeholder theory—or at least, early formulations
of the theory—instead of managing the firm in the best interests
of shareholders only, managers should seek to “balance”
the interests of all stakeholders, where a stakeholder is anyone who
has a “stake”, or interest (including a financial
interest), in the firm.

To its critics, stakeholder theory has seemed both insufficiently
articulated and weakly defended. With respect to articulation, one
question that has been pressed is: Who are the stakeholders (Orts
& Strudler 2002, 2009)? The groups most commonly identified are
shareholders, employees, the community, suppliers, and customers. But
other groups have stakes in the firm, including creditors, the
government, and competitors. It makes a great deal of difference where
the line is drawn, but stakeholder theorists have not provided a clear
rationale for drawing a line in one place rather than another. Another
question is: What does it mean to “balance” the interests
of all stakeholders—other than not always giving precedence to
shareholders’ interests (Orts & Strudler 2009)? With respect
to defense, critics have wondered what the rationale for managing
firms in the interests of all stakeholders is. In one place, Freeman
(1984) offers an instrumental argument for his view, claiming that
balancing stakeholders’ interests is better for the firm strategically than
maximizing shareholder wealth. (This is precisely what defenders of
shareholder primacy say about that view.) In another, he gives an
argument that appeals to Rawls’s justice as fairness (Evan &
Freeman 1988; cf. Child & Marcoux 1999).

In recent years, questions have been raised about whether stakeholder
theory is appropriately seen as a genuine competitor to shareholder
primacy, or is even appropriately called a “theory”. In one
article, Freeman and collaborators say that stakeholder theory
is simply “the body of research … in which the idea of
‘stakeholders’ plays a crucial role” (Jones et al.
2002). In another, Freeman describes stakeholder theory as “a
genre of stories about how we could live” (1994: 413). It may
be, as Norman (2013) says, that stakeholder is now best regarded as
“mindset”, i.e., a way of looking at the firm that
emphasizes its embeddedness in a network of relationships.

It is important to realize that a resolution of the debate between
shareholder and stakeholder theorists (however we conceive of the
latter) will not resolve all or even most of the ethical questions in
business. This is because this is a debate about the ends of
corporate governance; it cannot answer all of the questions about the
moral constraints that must be observed in pursuit of those
ends (Goodpaster 1991; Norman 2013). Neither shareholder primacy nor
stakeholder theory is plausibly interpreted as the view that corporate
managers should do whatever is possible to maximize
shareholder wealth and balance all stakeholders’ interests,
respectively. Rather, these views should be interpreted as views that
managers should do whatever is morally permissible to achieve
these ends. A large part of business ethics is trying to determine
what morality permits in this domain.

3.2 Means: control by shareholders or others too?

Answers to questions about the means of corporate governance often
mirror answers to question about the ends of corporate governance.
Often the best way to ensure that a firm is managed in the interests
of a certain party P is to give P control over it. Conversely,
justifications for why the firm should be managed in the interests of
P sometimes appeal P’s rights to control it.

Thus Friedman (1970) thinks that shareholders’ ownership of the
firm gives them a right to control the firm (which they can use to
ensure that the firm is run in their interests). We might see control
rights for shareholders as following analytically from the concept of
ownership. To own a thing is to have a bundle of rights with respect
to that thing. One of the standard “incidents” of
ownership is control.

As noted, in recent years the idea that the firm is something that can
be owned has been challenged (Bainbridge 2008; Strudler 2017). But
contractarian arguments for shareholder control of firms have been
constructed which do not rely on the assumption of firm ownership. All
that is assumed in these arguments is that some people own capital,
and others own labor. Capital can “hire” labor (and other
inputs of production), on terms that it draws up, or labor can
“hire” capital, on terms that it draws up, with society
setting limits on what the terms may be. It just so happens that, in
most cases, capital hires labor. These points are emphasized
especially by those who regard the firm as a “nexus of
contracts” among various parties (Easterbrook & Fischel
1996; Jensen & Meckling 1976).

Many writers find this result troubling. Even if the governance
structure in most firms is in some sense agreed to, they say that it
is unjust in other ways. Anderson (2015) characterizes standard
corporate governance regimes as oppressive and unaccountable private
dictatorships. To address this injustice, these writers call for
various forms of worker participation in managerial decision-making,
including the ability by workers to reject arbitrary directives by
managers (Hsieh 2005), worker co-determination of firms’
policies and practices (Brenkert 1992a; McCall 2001; McMahon 1994),
and exclusive control of productive enterprises by workers (Dahl
1985).

Arguments for these governance structures take various forms. One type
of argument appeals to the value of protecting workers’
interests (Brenkert 1992a; Hsieh 2005). A second type of argument
appeals to the value of autonomy, or a right to freely determine
one’s actions, including one’s actions at work (McCall
2001). A third type of argument for worker participation in managerial
decision-making is the “parallel case” argument. According
to it, if states should be governed democratically, then so should
firms, because firms are like states in the relevant respects (Dahl
1985; Walzer 1983). A fourth argument for worker participation
in firm decision-making sees it as valuable or even necessary training
for participation in political processes in the broader society (Cohen
1989).

Space considerations prevent a detailed examination of these
arguments. But criticisms generally fall into two categories. The
first insists on the normative priority of agreements, of the sort
described above. There are few legal restrictions on the types of
governance structures that firms can have. And some firms are in fact
controlled by workers (Dow 2003; Hansmann 1996). To insist that other
firms should be governed this way is to say, according to this
argument, that people should not be allowed to arrange their economic
lives as they see fit. Another criticism of worker participation
appeals to efficiency. Allowing workers to participate in managerial
decision-making may decrease the pace of decision-making, since it
requires giving many workers a chance to make their voices heard
(Hansmann 1996). It may also raise the cost of capital for firms, as
investors may demand more favorable terms if they are not given
control of the enterprise in return (McMahon 1994). Both sources of
inefficiency may put the firm at a significant disadvantage in a
competitive market. And it may not be just a matter of competitive
disadvantage. If it were, the problem could be solved by making all
firms worker-controlled. The problem may be one of diminished
productivity more generally.

4. Popular frameworks for business ethics

Business ethicists seek to understand the ethical
contours of, and devise principles of right action for, business
activity. One way of advancing this project is by choosing a normative
framework and teasing out its implications for a range of issues in
business.

One influential approach to business ethics draws on virtue ethics
(see, e.g., Alzola 2012; Sison & Fontrodona 2012). Moore, in a
number of articles (Beadle & Moore 2006; G. Moore 2005), develops
and applies MacIntyre’s (1984) virtue ethics to business. For
MacIntyre, there are certain goods internal to practices, and certain
virtues are necessary to achieve those goods. Building on MacIntyre,
Moore develops the idea that business is a practice, and thus has
certain goods internal to it, the attainment of which requires the
cultivation of business virtues. Scholars have also been inspired by
the Aristotelian idea that the good life is achieved in a community.
They have considered how business communities must be structured to
help their members flourish (Hartman 2015; Solomon 1993).

Another important approach to the study of business ethics comes from
Kantian moral theory (D.G. Arnold & Bowie 2003; Bowie 1999).
Kant’s claim that humanity should be treated always as an end,
and never as a means only, has proved especially fruitful for
analyzing the human interactions at the core of commercial
transactions. In a competitive market, people may be tempted to
deceive, cheat, or manipulate others to gain an edge. Kantian moral
theory singles out these actions out as violations of human dignity
(Smith & Dubbink 2011).

Ethical theory, including virtue theory and Kantian deontology, is useful for thinking about how individuals should relate
to each other in the context of business (cf. Rorty 2006). But
business ethics also comprehends the laws and regulations that
structure markets and organizations. And here political theory seems
more relevant (see and cf. Moriarty 2005b; Phillips & Margolis
1999). A number of business ethicists have sought to identify the
implications of Rawls’s (1971) justice as fairness—the
dominant theory of justice in the English-speaking world—for
business. This is not an easy task, since while Rawls
makes some suggestive remarks about markets and organizations, he does
not articulate specific conclusions or develop detailed arguments for
them. But scholars have argued that justice as fairness: (1) is
incompatible with significant inequalities of power and authority
within businesses (S. Arnold 2012); (2) requires people to have an
opportunity to perform meaningful work (Moriarty 2009; cf. Hasan
2015); and requires alternative forms of (3) corporate governance
(Norman 2015; cf. Singer 2015) and (4) corporate ownership (M.
O’Neill & Williamson 2012).

A fourth approach to business ethics is called the “market
failures approach” (MFA). A version of this view can be found in
McMahon (1981), but it has been developed in most detail and is now
most closely associated with Heath (2014). According to Heath, the
reason we have a market-based economy, as opposed to a command
economy, is because markets are more efficient. But markets fail, due
to imperfect information, externalities, transaction costs, and more.
The state corrects for many market failures through regulation. We set
limits on pollution and require truth in advertising, among other
things. But we would not want, and we cannot write, regulations to
address every market failure. This is where business ethics comes in,
according to the MFA. Businesspeople have a moral obligation not to
exploit the market failures that the law allows them to exploit. Put
another way, the moral obligations of businesspeople are identified by
the ideal regulatory regime—the one we would have if regulations
were costless and written and administered by a godlike figure.

Selecting a normative framework and applying it to a range of issues
is an important way of doing business ethics. But it is not the only
way. Indeed, the more common approach is to identify a business
activity and then analyze it using intuitions and principles common to
many moral and political theories. Below I consider ethical issues
that arise at the nexus of firms’ engagement with three
important groups: consumers, employees, and society.

5. Firms and consumers

The main way that firms interact with consumers is by selling, or
attempting to sell, products and services to them. Many ethical issues
attend this interaction.

5.1 What should be for sale?

A number of writers have argued that some things should not be for
sale (Anderson 1993; MacDonald & Gavura 2016; Sandel 2012; Satz
2010). Among the things commonly said to be inappropriate for sale are
sexual services, surrogacy services, and human organs. Some writers
object to markets in these items for consequentialist reasons. They
argue that markets in commodities like sex and kidneys will lead to
the exploitation of vulnerable people (Satz 2010). Others object to
the attitudes or values expressed in such markets. They claim that
markets in surrogacy services express the attitude that women are mere
vessels for the incubation of children (Anderson 1993); markets in
kidneys suggest that human life can be bought and sold (Sandel 2012);
and so on.

Other writers have criticized these arguments, and in general, the
attempt to “wall-off” certain goods and services from
markets. Brennan and Jaworksi (2016) object to
“expressive” arguments against markets in contested
commodities. Whether selling a particular thing for money expresses
disrespect, they note, is culturally contingent. They and others also
argue that the bad effects of markets in contested commodities can be
eliminated or at least ameliorated through appropriate regulation, and
that anyway, the good effects of such markets (e.g., a decrease in the
number of people who die because they are waiting for a kidney)
outweigh the bad (see also Taylor 2005).

5.2 Product safety and liability

Some things that firms may wish to sell, and that people may wish to
buy, pose a significant risk of harm, to the user and others. When is
a product too unsafe to be sold? This question is often answered by
government agencies. In the U.S., a number of government agencies,
including the Consumer Product Safety Commission (CPSC), the National
Highway Traffic Safety Administration (NHTSA), and the Food and Drug
Administration (FDA), are responsible for assessing the safety of
products for the consumer market. In some cases these standards are
mandatory (e.g., medicines and medical devices); in other cases they
are voluntary (e.g., trampolines and tents). The state identifies
minimum standards and individual businesses can choose to adopt higher
ones.

Questions about product safety are a matter of significant debate
among economists, legal scholars, and public policy experts. Legal
scholars have also devoted considerable attention to tort law, the
area of law that deals with cases of (non-contractual, non-criminal)
harm. But business ethicists have paid scant attention to these
questions. Existing treatments often combine discussions of safety
with discussions of liability—the question of who should pay for
harms that products cause—and tend to be found in business
ethics textbooks. One of the most detailed treatments is
Velasquez’s (2012). He distinguishes three (compatible) views:
(1) the “contract view”, according to which the
manufacturer’s duty is to accurately disclose all risks
associated with the product; (2) the “due care view”,
according to which the manufacturer should exercise due care to
prevent buyers from being injured by the product; and (3) the
“social costs view”, according to which the manufacturer
should pay for any injuries the product causes, even if the
manufacturer has exercised due care to prevent injury and has
accurately disclosed all risks associated with the product (see also
Boatright 2009a).

There is much room for exploration of these issues. One area that
merits attention is the definitions of key terms, such as “safety” and
“risk”. Drop side cribs pose risks to consumers; so do
chainsaws. On what basis should the former be prohibited but the
latter not be (Hasnas 2010)? On the question of liability, an
important issue is whether it is fair to hold manufacturers
responsible for harms that their products cause, when the
manufacturers are not morally at fault for those harms (Piker
1998).

5.3 Advertising

Most advertising contains both an informational component and a
persuasive component. Advertisements tell us something about a
product, and try to persuade us to buy it. Both of these components can be
subject to ethical evaluation.

Emphasizing its informational component, some writers stress the
positive value of advertising. Markets function efficiently only when
certain conditions are met. One of these conditions is perfect
information: minimally, consumers have to understand the features of the products for sale. While this condition will never be fully met in reality,
advertising can help to ensure that it is met to a greater
degree (Heath 2014). Another value that can be promoted through
advertising is autonomy. People have certain needs and
desires—e.g., to eat healthy food, to drive a safe
car—which their choices as consumers help them to satisfy. Their
choices are more likely to satisfy their needs and desires if they
have information about what is for sale, which advertising can provide
(Goldman 1984).

These good effects depend, of course, on advertisements producing true
beliefs, or at least not producing false beliefs, in consumers.
Writers treat this as the issue of “deception” in
advertising. The issue here is not whether deceptive advertising is
wrong—most believe it is (cf. Child 1994)—but what counts
as deceptive advertising, and what makes it wrong.

In the 1980s, Beech-Nut advertised as “100% apple juice” a
drink that contained no juice of any kind. Its advertisements were
deceptive, and therefore wrong, because they appeared to make a true
claim, but in fact made a false claim. But many advertisements that do
not seem deceptive make false or unverifiable claims. Consider Calvin
Klein’s slogan, “between love and madness lies
obsession” or Gillette’s slogan, “the best a man can
get”. It is common to say of these types of claims that they are
not warranted as true, and so cannot deceive (Carson 2010). Yet these claims may in fact deceive some people. A person
may believe Gillette’s claim that its products are the best a
man can get, and purchase them on that basis. Regulators address this
complication by employing a “reasonable person” standard
(Attas 1999). Advertisements are deemed deceptive when a reasonable
person, not any person at all, is deceived. This makes deception in
advertising a matter of results in consumers, not intentions in
advertisers.

Many reasons have been offered for why deceptive advertising is wrong.
One is the Kantian claim that deceiving others is disrespectful to
them, a use of them as a mere means. Deceptive advertising
may also lead to harm, to consumers (who purchase suboptimal products,
given their desires) and competitors (who lose out on sales). A final
criticism of deceptive advertising is that it erodes trust in society
(Attas 1999). When people do not trust each other, they will either
not engage in economic transactions, or engage in them only with
costly legal protections.

The persuasive component of advertising is also a fruitful subject of
ethical inquiry. Galbraith (1958), an early critic, thinks that
advertising, in general, does not inform people how to acquire what
they want, but instead gives them new wants. He calls this the
“dependence effect”: our desires depend on what is
produced, not vice versa. Moreover, since we are inundated
with advertising for consumer goods, we want too many of those goods
and not enough public goods. Hayek (1961) rejects this claim, arguing
that few if any of our desires are independent of our environment, and
that anyway, desires produced in us through advertising are no less
significant than desires produced in us in other ways.

Galbraith is concerned about the persuasive effects of
advertisements. In contrast, recent writers focus on persuasive
techniques that advertisers use. Some of these are alleged to
cross the line into manipulation. It is difficult to define manipulation precisely, though many attempts have been made (see, e.g.,
Coons & Weber 2012). For our purposes, manipulative advertising
can be understood as advertising that attempts to persuade consumers,
often (but not necessarily) using non-rational means, to make
irrational or suboptimal choices, given their own needs and desires
(see and cf. Beauchamp, Hare, & Biederman 1984; Brenkert
2008).

Associative advertising is often held up as an example of manipulative
advertising. In associative advertising, the advertiser tries to
associate a product with a positive belief, feeling, attitude, or
activity which usually has little to do with the product itself. Thus many
television commercials for trucks in the U.S. associate trucks with
manliness. Commercials for body fragrances associate those products
with sex between beautiful people. The suggestion is that if you are a
certain sort of person (e.g., a manly one), then you will have a
certain sort of product (e.g., a truck). Crisp (1987) argues that this
sort of advertising attempts to create desires in people by
circumventing their faculty of conscious choice, and in so doing
subverts their autonomy (cf. Arrington 1982; Phillips 1994). Lippke
(1989) argues that it makes people desire the wrong things,
encouraging us to try to satisfy our non-market desires (e.g., to be
more manly) through market means (e.g., buying a truck). How
seriously we take these criticisms may depend on how effective we
think associative and other forms of persuasive advertising are. To
the extent that we think that advertisers are unsuccessful at
“going around” our faculty of conscious choice, we may be
less worried and more amused by their attempts to do so (Bishop 2000;
Goldman 1984).

Our judgments on this issue may be context-sensitive. While most
people may be able to see through advertisers’ attempts to
persuade them, some may not be (at least some of the time). Paine (Paine
et al. 1984) argues that advertising is justified because it helps
consumers make wise decisions in the marketplace. But children, she
argues, do not have the capacity for making wise consumer choices (see
also E.S. Moore 2004). Thus advertising directed at children—as
opposed to advertising of products for children directed at
adults—constitutes a form of objectionable exploitation. Other
populations who may be similarly vulnerable are the senile, the
ignorant, and the bereaved. Ethics may require not a total ban on
marketing to them but special care in how they are marketed to
(Brenkert 2008).

5.4 Sales and negotiation

Sales are central to business. Perhaps surprisingly, business
ethicists have said little directly about sales. But
much of what is said about advertising also applies to sales.
Salespeople are, in a sense, the final advertisers of products to
consumers. They provide benefits to consumers in much the same way as
advertisers and have the same ability to deceive or manipulate
consumers.

Carson (2010) works out a detailed theory of ethics for salespeople.
According to him, salespeople have at least the following four pro
tanto
duties: (1) provide customers with safety warnings and
precautions; (2) refrain from lying
and deception; (3) fully answer customers’ questions about
items; and (4) do not steer customers toward purchases that are
unsuitable for them, given their stated needs and desires. Carson
justifies (1)—(4) by appealing to the golden rule: treat others
as you want to be treated. He identifies two other duties that
salespeople might have (he is agnostic): (5) do not sell
customers products that you (the salesperson) think are unsuitable for
them, given their needs and desires, without telling customers why you
think this; and (6) do not sell customers poor quality or defective
products, without telling them why you think this. For the most part,
(1)—(4) ask the salesperson not to harm the customer; (5) and
(6) ask the salesperson to help the customer, in particular, help her
not to make foolish mistakes. Whether salespeople should
help customers in this way may depend on how adversarial their
relationship should be.

The broader issue here is one of disclosure. Holley (1998) argues that
salespeople are required to disclose to customers what a
“reasonable person would want to know” about a product
before they purchase it. Ebejer and Morden (1988) claim that salespeople
should disclose all information that is “relevant” to a
buyer’s purchase. But there is no consensus on what information
is relevant to a purchasing decision, or what reasonable people want
to know.

For many products bought and sold in markets, sellers offer an item at
a certain price, and buyers take or leave that price. But in some
cases there is negotiation over price (and other aspects of the
transaction). We see this in the sale of “big ticket”
items such as cars and houses, and in salaries for jobs. While there
are many ethical issues that arise in negotiation, one issue that has
received special attention is “bluffing”, or deliberately
misstating one’s bargaining position. The locus
classicus
for this debate is Carr (1968). According to him,
bluffing in negotiations is permissible because business has its own
special set of rules and bluffing is permissible according to these
rules. In Carr’s view, everyone who enters the business arena
accepts bluffing as permissible, just like everyone who enters a
boxing ring accepts punching people as permissible. Carson (2010)
agrees that bluffing is permissible in business, though in a more
limited range of cases than Carr. Carson’s defense of bluffing
appeals to self-defense. If you have good reason to believe that your
adversary in a negotiation is misstating her bargaining position,
then you are permitted to misstate yours. A requirement to tell the
truth in these circumstances would put you at a significant
disadvantage relative to your adversary, which you are not required to
suffer. An implication of Carson’s view is that you are not
permitted to misstate your bargaining position if you do not have good
reason to believe that your adversary is misstating hers.

5.5 Pricing

In simplified models of the market, individual buyers and sellers are
“price-takers”, not “price-makers”. That is,
the prices of goods and services are set by the aggregate forces of supply and
demand; no individual is able to buy or sell a good for anything other
than the market price. In reality, things are different. Sellers of
goods have some flexibility about how to price goods.

Most business ethicists would accept that, in most cases, the prices
at which products should be sold is a matter for private individuals
to decide. This view has been defended on grounds of property rights.
Some claim that if I have a right to X, then I am free to
transfer it to you on whatever terms that I propose and you accept
(Boatright 2010). It has also been defended on grounds of welfare.
Prices set by the voluntary exchanges of individuals reveal valuable
information about the relative demand for and supply of goods,
allowing resources to flow to their most productive uses (Hayek 1945).
Despite this, most business ethicists recognize some limits on
prices.

One issue that has received attention recently is price
discrimination. By this I do not mean discrimination in pricing on the
basis of a person’s membership in traditionally protected
classes such as race and sex. (This is widely regarded as wrong.)
“Price discrimination” refers to discrimination in pricing
on the basis of people’s willingness to pay: charging more to
people who are willing to pay more and charging less to people who are
willing to pay less. Economists tend to think that price discrimination is
valuable insofar as it enables firms to increase output. But the moral
status of it is less clear. When it was revealed that Staples and other
online retailers were charging consumers in different zip codes
different prices for the same products at the same time, consumers
were outraged. But some writers argue that this practice is no worse
than movie theaters giving discounts to children (Elegido 2011;
Marcoux 2006). The problem may be that Staples and others engaged in
this practice without disclosing it. In doing so, they were taking
advantage of consumers’ ignorance.

Another issue of pricing ethics is price gouging. Price gouging can be
understood as a sharp increase in the price of a necessary good in the
wake of an emergency which renders that good scarce. In the immediate
aftermath of Hurricane Katrina in New Orleans in 2005, for example,
many retailers charged very high prices for water and gasoline. Many
jurisdictions have laws against price gouging, and it is widely
regarded as unethical (Snyder 2009). The reason is that it is a
classic case of exploitation: A extracts an excessive fee out
of B in circumstances in which B cannot reasonably
refuse A’s offer (Valdman 2009). But some theorists
defend price gouging. While granting that sales of items in
circumstances like these are exploitative, they note that they are
mutually beneficial. Both the seller and buyer prefer to engage in the
transaction rather than not engage in it. Moreover, when items are
sold at inflated prices, this attracts more sellers into the market.
Permitting price gouging may thus be the fastest way of eliminating it
(Zwolinski 2008). (For further discussion, see the
entry on exploitation .)

Most contemporary scholars believe that sellers have wide, though not
unlimited, discretion in how much they charge for goods and services.
But there is an older tradition in business ethics, found in Aquinas
and other medieval scholars, according to which there is one price
that sellers should charge: the “just price”. There is
debate about what exactly medieval scholars meant by “just
price” (see Reiff 2013). According to a historically common
interpretation, the just price is determined by the seller’s
cost of production, i.e., the price that compensates the seller for
the value of her labor and expenses. More recent interpretations
understand the medieval just price at something closer to the market
price, which may be more or less than the cost of production (Koehn
& Wilbratte 2012). In a contemporary treatment, Reiff resurrects
and rehabilitates the concept of just price, distinguishing it from
the market price, and specifying it as the “average total social
cost of the good at issue” (2013: 109). A view like
Reiff’s must contend with the arguments sketched
above—based on rights and welfare—for allowing prices to
be determined by the voluntary choices of buyers and sellers.

6. Firms and workers

Business ethicists have written much about the relationship between
employers and employees. Most of this writing has inquired into the
obligations that employers owe to employees. This may be because
employers usually have more power than employees, and so have greater
discretion in how they treat employees, than employees have in how
they treat employers. Below I identify four issues at the
employer/employee interface: (1) hiring and firing, (2) pay, (3)
meaningful work, and (4) whistleblowing. Another important topic in
this area is privacy. For space reasons this topic will not be
discussed, but see the entries on
privacy and
privacy and information technology .

6.1 Hiring and firing

Ethical issues in hiring and firing tend to focus on the question:
What criteria should employers use, or not use, in employment
decisions? The question of what criteria employers should not use is
addressed in discussions of discrimination.

While there is some debate about whether discrimination in employment
should be legally prohibited (see Epstein 1992), almost everyone
agrees that it is morally wrong (Hellman 2008; Lippert-Rasmussen
2014). Discussion has focused on two questions. First, when does the
use of a certain criterion in an employment decision count as
discriminatory? It seems wrong for Wal-Mart to exclude white
applicants for a job in their marketing department, but not wrong for
the Hovey Players (a theater troupe) to exclude white applicants for a
production of A Raisin in the Sun. We might say that whether
a hiring practice is discriminatory depends on whether the criterion
used is job-relevant. But this may not go far enough, as the case of
“reaction qualifications” reveals. Suppose that white diners prefer to be
served by white waiters rather than black waiters. In this case race seems job-relevant, but it also seems wrong for employers to take race into account (Mason 2017). Another
question that has received considerable attention is: What makes
discrimination wrong? Some argue that discrimination is wrong because
of its effects on those who are discriminated against
(Lippert-Rasmussen 2014); others think that it is wrong because of
what it expresses to them (Hellman 2008). (For further discussion, see
the entry on
discrimination .)

Some writers believe that employers’ obligations are not
satisfied simply when they avoid using certain criteria in
hiring decisions. According to them, employers have a duty to hire the
most qualified applicant. Some justify this duty by appealing to
considerations of desert (D. Miller 1999); others justify it by
appealing to equal opportunity (Mason 2006). The standard challenge to
this view appeals to property rights (Kershnar 2004). A
job offer typically implies a promise to pay the job-taker a sum of
your money for performing certain tasks. While we might think that
excluding some ways you can dispose of your property (e.g., rules
against discrimination in hiring) can be justified, we might think
that excluding all ways but one (viz., a requirement to hire the most
qualified applicant) is unjustified. In support of this, we might
think that a small business owner does nothing wrong when she hires
her daughter for a part-time job as opposed to a more qualified
stranger.

Many of the same ethical issues that attend hiring also attend firing.
There has been a robust discussion of the ethics of firing in the
business ethics literature. There are two main camps: those who think
that employment should be “at will”, so that an employer
can terminate an employee for any reason (Epstein 1984; Maitland
1989), and those who think that employers should be able to terminate
employees only for “just cause” (e.g., poor performance or
a business downturn) (McCall & Werhane 2010). In fact, few writers
hold the “pure” version of the “at will” view.
Most would say that it is wrong for an employer to terminate an
employee for some reasons, e.g., a discovery that he is Muslim or his
refusal to commit a crime for the employer. Thus the debate is between
those who think that employers should be able to terminate employees
for any reason with some exceptions, and those who think that
employers should be able to terminate employees only for certain reasons. In the U.S.,
most employees are at will, while in Europe, most employees are
covered, after a probationary period, by something analogous to just
cause. Arguments for just cause appeal to the effects that termination
has on individual employees, especially those who have worked for an
employer for many years (McCall & Werhane 2010). Arguments for at
will employment appeal to freedom or macroeconomic effects. It is
claimed, in the former case, that just cause is an unwarranted
restriction on employers’ and employees’ freedom (Epstein
1984), and in the latter case, that it raises the unemployment rate
(Maitland 1989).

6.2 Pay

Business organizations generate revenue, and some of this revenue is
distributed to their employees in the form of pay. Since the demand
for pay typically exceeds the supply, the question of how pay
should be distributed is naturally analyzed as a problem of
justice.

Two general theories of justice in pay have attracted attention. One
may be called the “agreement view”. According to this
view, the just wage is whatever wage the employer and the employee
agree to without force or fraud (Boatright 2010; Machan & Chesher
2002). This view is sometimes justified in terms of property rights.
Employees own their labor, and employers own their capital, and they
are free, within broad limits, to dispose of it as they please
(Boatright 2010). A second view of wages may be called the
“contribution view”. According to it, the just wage for a
worker is the wage that reflects her contribution to the firm. This
view comes in two versions. On the absolute version, workers should
receive an amount of pay that equals the value of their contributions
to the firm (D. Miller 1999). On the comparative version, workers
should receive an amount of pay that reflects the relative value of
their contributions to the firm, given what others in the firm
contribute and are paid (Sternberg 2000). The contribution view
strikes some as normatively basic, a view for which no further
argument can be given (D. Miller 1999). An analogy may be drawn with
punishment: just as it seems intuitively right for the severity of a
criminal’s punishment to reflect the seriousness of her crime,
so it may seem intuitively right for the value of a worker’s pay
to reflect the value of her work.

The pay of any employee in a firm can be evaluated from a moral point
of view, using the two theories sketched above. But business ethicists
have paid particular attention to the pay of certain groups of
employees, viz., CEOs and sweatshop workers.

There has been a robust debate about whether CEOs are paid too much
(Moriarty 2005a), with scholars falling roughly into two camps. Those
in the “managerial power” camp believe that CEOs wield
power over boards of directors, and use this power to extract
above-market rents from their firms (Bebchuk & Fried 2004). Those
in the “efficient contracting” camp believe that pay
negotiations between CEOs and boards are usually carried out at
arm’s-length, and that CEOs’ large compensation packages
reflect their rare and valuable skills (cf. Reiff 2013).

There has also been a robust debate about whether workers in
sweatshops are paid too little. Some say ‘no’ (Powell
& Zwolinski 2012; Zwolinski 2007). They say that sweatshops wages,
while low by our standards, are not low by the standards of the
countries in which the sweatshops are located. This explains why
people choose to work in a sweatshop: it is the best offer they have.
Efforts to increase artificially the wages of sweatshop workers,
according to these writers, is misguided on two counts. First, it is
an interference with the autonomous choices of employers and workers.
Second, it is likely to make workers worse off, since employers will
respond by either moving operations to a new location or employing
fewer workers in that location. Other writers challenge these claims.
While granting that workers choose to work in sweatshops, they deny
that their choices are voluntary (D.G. Arnold & Bowie 2003). Given
their very low wages, this suggests that sweatshop workers are
exploited. Moreover, some argue, appealing to a Kantian duty of
beneficence, that firms can and should do more for sweatshop workers
(Snyder 2010). In response to the claim that firms put themselves at a
competitive disadvantage if they do, writers have pointed to actual
cases where firms have been able to secure better treatment for
sweatshop workers without suffering serious financial penalties
(Hartman, Arnold, & Wokutch 2003).

6.3 Meaningful work

Smith (1776 [1976]) famously observed that a detailed division of
labor greatly increases the productivity of manufacturing processes.
To use his example: if one worker performs all of the tasks required
to make a pin himself, he can make just a few pins per day. However,
if the worker specializes in one or two of these tasks, and combines
his efforts with other workers who specialize in one or two of the
other tasks, then together they can make thousands of pins per day.
But there is human cost, according to Smith, to the detailed division
of labor. Performing one or two simple tasks all day is likely to make
a worker “as stupid and ignorant as it is possible for a human
creature to become” (Smith 1776 [1976]: V.1.178).

Calls for “meaningful work” are a response to this
problem. As this implies, a call for meaningful work is not a call for
work to be more “important”, i.e., to contribute to the
production of a good or service that is objectively valuable, or that
workers believe is valuable. Instead, it is a call for labor processes
to be arranged so that work is interesting, requires skill, and gives
workers substantial decision-making power (Arneson 1987; Michaelson et
al. 2014).

Smith’s insight that labor processes are more efficient when
they are divided into meaningless segments leads some writers to
believe that, in a competitive economy, firms will not provide as much
meaningful work as workers want (Werhane 1985). In response, it has
been argued that there is a market for labor, and if workers wanted
meaningful work, then employers would have an incentive to provide it
(Maitland 1989; Nozick 1974). According to this argument, insofar as
we see “too little” meaningful work on offer, this is
because workers prefer not to have it—or more precisely, because
workers are willing to trade more meaningfulness for other benefits,
such as higher wages. This argument assumes, of course, that workers
have the financial ability to trade wages for meaningfulness.

The above argument treats meaningful work as a matter of preference:
as a job amenity that employers can decline to offer or that workers
can trade away. Others resist this understanding. According to
Schwartz (1982), employers are required to offer employees meaningful
work, and employees are required to perform it, out of respect for
autonomy. The thought is: the autonomous persons makes choices for herself; she does not mindlessly follow others’ directions. A difficulty for this argument is that respect for autonomy
does not seem to require that we make all choices for
ourselves. A person might, it seems, autonomously choose to allow
important decisions to be made for her in certain spheres of her life,
e.g., by a coach, a family member, or a military commander.

A potential problem for this response brings us back to Smith, and to
“formative” arguments for meaningful work. The problem,
according to some writers, is that if most of a person’s day is
given over to meaningless tasks, then her capacity for autonomous
choice, and perhaps her other intellectual faculties, may deteriorate. A
call for meaningful work may thus be understood as a call for
workplaces to be arranged so that this deterioration does not occur
(Arneson 2009; S. Arnold 2012). In addition to Smith, Marx (1844
[2000]) was clearly concerned about the effects of work on human
flourishing. Formative arguments face two difficulties. One is
establishing the connection between meaningless work and autonomous
choice (or another intellectual faculty). Second, and perhaps more
importantly, formative arguments make certain assumptions about the
nature of the good and the public’s role in promoting it. They
assume that it is better for people to have fully developed faculties
of autonomous choice (etc.) and that the public should help to develop
them. Both assumptions may be challenged. Neutralists in
political philosophy think that the state should not promote the good,
at least when there is reasonable disagreement about what is good
(see, e.g., Rawls 1993).

6.4 Whistleblowing

Suppose you discover that your firm is paying bribes to government
officials to win contracts. To stop this, one thing you might do is
“blow the whistle” by disclosing this information to a
journalist. While different theorists give different definitions of
whistleblowing (see, e.g., Brenkert 2010; Davis 2003; DeGeorge 2009),
the following elements are usually present: (1) insider status, (2)
non-public information, (3) illegal or immoral activity, (4) avoidance
of the usual chain of command in the firm, (5) intention to solve the
problem. In the above example, you would be a whistleblower because
you are (1) an employee (2) who discloses non-public information (3)
about illegal activity in a firm (4) to people outside of it (5) in an
effort to stop that activity.

Debate about whistleblowing tends to focus on the question of when
whistleblowing is justified—in the sense of when it is
permissible, or when it is required. This debate assumes that
whistleblowing requires justification, or is wrong, other things
equal. Many business ethicists make this assumption on the grounds
that employees have a pro tanto duty of loyalty to their
firms (see, e.g., Boatright 2009a). Against this, some argue that the
relationship between the firm and the employee is purely
transactional—an exchange of money for labor (Duska
2000)—and so is not normatively robust enough to ground a duty of
loyalty. (For a discussion of this issue, see the entry
on
loyalty .)

One prominent justification of whistleblowing is due to DeGeorge
(2009). According to him, it is permissible for an employee to blow
the whistle when his doing so will prevent harm to society. (In a
similar account, Brenkert [2010] says that the duty to blow the
whistle derives from a duty to prevent wrongdoing.) The duty to
prevent harm has more weight than the duty of loyalty. To determine whether
whistleblowing is not simply permissible but required, DeGeorge says,
we must take into account the likely success of the whistleblowing and
its effects on the whistleblower himself. Humans are tribal creatures,
and whistleblowers are often treated badly by their colleagues. So if
whistleblowing is unlikely to succeed, then it need not be attempted.
The lack of a moral requirement to blow the whistle in these cases can
be seen as a specific instance of the rule that individuals need not
make huge personal sacrifices to promote others’ interests, even
when those interests are important.

Another account of whistleblowing is given by Davis (2003). Like
Brenkert (and unlike DeGeorge), Davis focuses on the wrongdoing that
the firm engages in (not the harm it causes). According to Davis,
however, the point of whistleblowing is not so much to prevent the
wrongdoing but to avoid one’s own complicity in it. He says that
an employee is required to blow the whistle on her firm when she
believes that it is engaged in seriously wrongful behavior, and her
work for the firm “will contribute … to the wrong if
… [she] [does] not publicly reveal what [she knows]”
(2003: 550). An unusual feature of Davis’s account is that it
limits whistleblowers to people who are currently firm insiders. You
cannot “blow the whistle” on a firm after you have left
it.

Whistleblowing picks out a real and important phenomenon. But it does
not seem morally distinctive, in the sense that the values and duties
involved in it are familiar. Loyalty to an individual (or group) may
require that we give preference to her (or their) interests, to an
extent. And yet, in general, we should avoid complicity in immoral
behavior, and should also make an effort to prevent harm and
wrongdoing, especially when our efforts are likely to succeed and are
not personally very costly. On the accounts given above,
whistleblowing is simply the attempt to act in accordance with these
values, and discharge these duties, in the context of the
workplace.

7. The firm in society

Businesses as a whole command enormous resources, and as a result can
have an enormous impact on society. One way that businesses impact
society, of course, is by producing goods and services and by
providing jobs. But businesses can also impact society by trying to
solve social problems and by using their resources to influence
states’ laws and regulations.

7.1 Corporate social responsibility

“Corporate social responsibility”, or CSR, is typically
understood as actions by businesses that are (i) not legally required,
and (ii) intended to benefit parties other than the corporation (where
benefits to the corporation are understood in terms of return on
equity, return on assets, or some other measure of financial
performance). The parties who benefit may be more or less closely
associated with the firm itself; they may be the firm’s own employees or people in distant lands.

A famous example of CSR involves the pharmaceutical company Merck. In
the late 1970s, Merck was developing a drug to treat parasites in
livestock, and it was discovered that a version of the drug might be
used treat River Blindness, a disease that causes debilitating itching, pain, and
eventually blindness. The problem
was that the drug would cost millions of dollars to develop, and would
generate little or no revenue for Merck, since the people afflicted
with River Blindness—millions of sub-Saharan Africans—were too poor to afford it. In the end, Merck
decided to develop the drug. As expected, it was effective in treating
River Blindness, but Merck made no money from it. As of this writing
in 2016, Merck, now in concert with several nongovernmental
organizations, continues to manufacture and distribute the drug for
free throughout the developing world.

Corporate social responsibility, or CSR, is not the only term that
business ethicists use to describe actions like Merck’s. They
might also be described as an example of “corporate
citizenship” or “corporate sustainability” (Crane,
Matten, & Moon 2008; cf. Néron & Norman 2008). It is
doubtful that anything important hangs on one’s choice of
labels.

The scholarly literature on CSR is dominated by social scientists.
Their question is typically whether, when, and how socially
responsible actions benefit firms financially. The conventional wisdom
seems to be that there is a slight positive correlation between
corporate social performance and corporate financial performance, but
it is unclear which way the causality goes (Margolis & Walsh 2003;
Orlitzky et al. 2003; Vogel 2005). That is, it is not clear whether
prosocial behavior by firms causes them to be rewarded financially
(e.g., by consumers who value their behavior), or whether financial
success causes firms to engage in more prosocial behaviors (e.g., by
freeing up resources that would otherwise be spent on core business
functions). Since our concern is with normative questions, we will
focus on moral reasons for and against CSR.

Some writers connect the debate about CSR with the debate about the
ends of corporate governance. Thus Friedman (1970) objects to CSR,
saying that managers should be maximizing shareholder wealth instead.
Stakeholder theory is thought to be more accommodating of prosocial
activity by firms, since it permits firms to do things other than
increase shareholder wealth. But we do not need to see the debate about
CSR as arguments about the proper ends of corporate governance. We can
see it as a debate about the means to those ends, with some arguing,
and others denying, that certain acts of prosocial behavior are
required no matter what ends a firm pursues.

Many writers give broadly consequentialist reasons for CSR. The
arguments tend to go as follows: (1) there are serious problems in the
world, such as poverty, conflict, environmental degradation, and so
on; (2) any agent with the resources and knowledge necessary to
ameliorate these problems has a moral responsibility to do so,
assuming the costs they incur on themselves are not great; (3) firms have the
resources and knowledge necessary to ameliorate these problems without incurring
great costs; therefore, (4) firms should ameliorate these problems.
The view that someone should do something about the
world’s problems seems clearly true to many people. Not only is
there an opportunity to increase social welfare by alleviating
suffering, suffering people may also have a right to assistance. The
controversial issue is who should do something to help, and how much
they should do. Thus defenders of the above argument focus most of
their attention on establishing that firms have these duties,
against those who say that these duties are properly assigned to
states or individuals. O. O’Neill (2001) and Wettstein (2009)
argue that firms are “agents of justice”, much like states
and individuals, and have duties to aid the needy. Strudler
(2017) legitimates altruistic behavior by firms by undermining
the claim that shareholders own them, and so are owed their surplus
wealth. Hsieh (2004) says that, even if we concede that firms do not
have social obligations, individuals have them, and the best way for
many individuals to discharge them is through the activities of their
firms (see also McMahon 2013).

Debates about CSR are not just debates about whether specific social
ills should be addressed by specific corporations. They are also debates about
what sort of society we want to live in. While acknowledging that
firms benefit society through CSR, Brenkert (1992b) thinks it is a
mistake for people to encourage firms to engage in CSR as a practice.
When we do so, he says, we cede a portion of the public sphere to
private actors. Instead of deciding together how we want to ameliorate
social ills affecting our fellow community members, we leave it up to
private organizations to decide what to do. Instead of sharpening our
skills of democracy through deliberation, and reaffirming social bonds
through mutual aid, we allow our skills and bonds to atrophy through
disuse.

7.2 Firms, governments, and political CSR

Many businesses are active participants in the political arena. They
support candidates for election, defend positions on issues in public
debate, lobby government officials, and more (see Stark 2010). What
does business ethics say about these activities?

Social scientists have produced a substantial literature on corporate
political activity (CPA) (for a review, see Hillman, Keim, &
Schuler 2004). This research focuses on such questions as: What forms
does CPA take? What are the antecedents of CPA? What are its
consequences? CPA raises many normative questions as well.

One question is whether firms are the right type of entities to engage
in political activity. In large states, citizens often find it useful
to join associations of like-minded others, the purpose of which is to
represent their views in political decision-making. But while
organizations like the Republican Party and the Sierra Club are
suitable participants in the political arena, it is not clear that
organizations like Merck or Wal-Mart are. This is because they have no
recognized role in the political process, and citizens do not join or
leave them based on political considerations (Hussain & Moriarty
forthcoming; Tucker 2010). Some have criticized the U.S. Supreme
Court’s majority decision in Citizens
United
—which affirmed and enhanced firms’ rights to
participate in political discourse—on this basis. Alternatively,
we might see firms as legitimate speakers on behalf of certain points
of view (Stark 2010).

Scholars have also raised questions about the goals of CPA. One thing
a firm might do when it engages in CPA is provide valuable information
to government officials. Society has an interest in knowing how
proposed economic policies will affect firms; firms themselves are a
good source of information on these questions. But some worry that
firms more often engage in CPA in order to advance their own interests
at the expense of their competitors’. This activity is sometimes
described, and condemned, as “rent-seeking” (Tullock
1989). Questions have been raised about the nature and permissibility
of rent-seeking. According to standard definitions, rent-seeking is
socially wasteful economic activity intended to secure benefits from
the state rather than from the market. But there is disagreement about
what counts as waste. Lobbying for agricultural subsidies is often
described as a rent-seeking activity, but it can be important to
secure a nation’s food supply (Boatright 2009b; Hindmoor 1999).
A related issue is whether firms are permitted to engage in
rent-seeking behavior. The structure of the problem appears to be that
of a prisoner’s dilemma: individual firms often do better if
they engage in rent-seeking, but the economy as a whole does worse if
all firms engage in it (DeBow 1992–1993).

The forms of CPA identified above—participating in public
discourse and lobbying government officials—go
“through” the formal political process. But firms are
increasingly engaging in what appears to be political activity that
goes “around” or “outside” of this process,
especially in circumstances in which the state is weak, corrupt, or
incompetent. In the world today, firms are providing public goods such
as healthcare and education (Ruggie 2004), protecting people’s
citizenship rights (Matten & Crane 2005), and helping to create
and enforce systems of private regulation or “soft law”
(Vogel 2010). For example, when the Rana Plaza collapsed in Bangladesh
in 2013, killing more than 1000 garment industry workers, new building
codes and systems of enforcement were put into place. But they were
put into place by the multinational corporations that are supplied by
factories in Bangladesh, not by the government of Bangladesh. Writers
characterize these activities as political because they are the kinds
of actions that states normally perform, or should perform (Matten
& Crane 2005; Scherer & Palazzo 2007, 2011). These new forms
of CPA—called “political CSR”—have raised
questions about the legitimacy of firms’ actions in
democratically governed states.

Scherer and Palazzo (2007, 2011) are major contributors to this
debate. In their view, if firms behave like states, then they
must be governed like states (see also Matten & Crane 2005). The
form of governance that Scherer and Palazzo have in mind is
Habermasian in character, involving deliberative dialog among all
stakeholders who are affected by a firm’s actions. They give as
examples of this type of governance arrangement multi-stakeholder
initiatives (MSIs) that bring together firms, non-governmental
organizations, and members of local communities to deliberate and
decide on policy matters, such as the Forest Stewardship Council
(FSC), the Roundtable on Sustainable Palm Oil (RSPO), and the
Extractive Industries Transparency Initiative (EITI). Against this,
critics have charged that multi-stakeholder initiatives, while
effective in producing dialog among stakeholders, are ineffective at
holding firms to account (Moog, Spicer, & Böhm 2015). There
is little doubt that firms can benefit society through political CSR.
The building codes put into place by Western multinationals may well
save the lives of many Bangladeshi garment workers. Unless new forms
of corporate governance can be devised, however, these benefits may
come at a cost to democratic self-rule.

A still more subtle way that firms can engage in political activity is
through the exercise of their property rights (Christiano 2010). A
firm might move out of a state in response to the passage of a law it
does not favor, or it may threaten to move out of a state if such a
law is passed. This may cause the state’s citizens to revise or
edit their political decisions. As with certain cases of political
CSR, we may applaud the results of this kind of political activity.
Many applauded when the state of Indiana revised its law permitting
discrimination against members of the LGBT community (on grounds of
religious liberty) in response to claims by powerful firms, such as
Salesforce.com and Angie’s List, that they would scale back
their economic activity in the state. But it is unclear whether such
behavior by firms should be encouraged. We may wish to draw a
distinction between private individuals influencing political
decision-making by exercising their property rights and firms doing
the same thing.

7.3 International business

Many businesses operate across societal, including national,
boundaries. These are typically called “multinational” or
“transnational” firms (MNCs or TNCs). Operating
internationally heightens the salience of a number of the ethical
issues discussed above, such as CSR, but it also raises new issues,
such as relativism and divestment. (Two issues often discussed in
connection with international business are not treated in this
section. One is wages and working conditions in overseas factories,
often called sweatshops. This literature is briefly discussed in
section 6.2 .
The second issue is corruption. For discussion of this issue, see the
entry on
corruption .)

Whether and to what extent firms have a duty to perform socially
responsible actions is a question that can and has been asked about
firms in a domestic context. But this question has seemed especially
pressing in international contexts, and many of the most famous
examples of CSR—including the case of Merck and River Blindness
discussed in
section 7.1 —take
place in the developing world. There are two reasons for this. One is
that social problems, including poverty and environmental degradation,
are often worse in the developing world than in the developed world.
The second is that firms are relatively more powerful actors in the
developing world than in the developed world.

A number of business ethicists have developed ethical codes for MNCs,
including DeGeorge (1993) and Donaldson (1989). International agencies
have also created codes of ethics for business. Perhaps the most
famous of these is the United Nations Global Compact, membership in
which requires organizations to adhere to a variety of rules in the
areas of human rights, labor, environment, and anti-corruption. In his
important work for that body, Ruggie (2004, 2013) developed a
“protect, respect, and remedy” framework for MNCs and
human rights, which assigns the state the primary duty to protect
human rights and remedy abuses of them, and firms the duty to respect
human rights (cf. Wettstein 2009). A striking fact about much of this research is that, while it is focused on
international business, and sometimes promulgated by international
agencies, the conclusions reached do not apply specifically to firms
doing business across national boundaries. The duty to, e.g., respect
human rights applies to firms doing business
within national boundaries too. It is simply that the
international context is the one in which this duty seems most
important to discharge, and in which firms are one of the few agents
who can do so.

There are issues, however, that arise specifically for firms doing
business internationally. Every introductory ethics student learns
that different cultures have different moral codes. This is typically
an invitation to think about whether or not morality is relative to
culture. For the businessperson, it presents a more immediate
challenge: How should cultural differences in moral codes be managed?
In particular, when operating in a “host” country, should
the businessperson adopt host country standards, or should she apply
her “home” country standards?

Donaldson is a leading voice on this question, in work done
independently (1989, 1996) and with Dunfee (1999). Donaldson and
Dunfee argue that there are certain “moral minima” that
must be met in all contexts. These are given to us by
“hypernorms”, or universal moral values and rules, which
are themselves justified by a “convergence of religious,
philosophical, and cultural” belief systems (1999: 57). Within the boundaries set by hypernorms, Donaldson and Dunfee say, firms have “free
space” to select moral standards. They do not have the liberty
to select any standards they want; rather, their choices must be
guided by the host country’s traditions and its current level of
economic development.

Donaldson and Dunfee’s approach has attracted a great deal of
attention, and many critics. Much of this criticism has focused on the
nature of hypernorms. Some writers argue that Donaldson and
Dunfee’s criteria for hypernorms are ad hoc (Scherer
2015); others claim that some of the norms that they claim are hypernorms
(e.g., a prohibition on gender discrimination) do not meet their stated
criteria (Mayer & Cava 1995). Other writers focus on the
application of Donaldson and Dunfee’s theory, arguing that it
does not give managers the specific guidance it claims to (Soule
2002).

A complication for the debate about whether to apply home country
standards in host countries is that multinational corporations engage
in business across national boundaries in different ways. Some MNCs
directly employ workers in multiple countries, while others
contract with suppliers in multiple countries. Nike, for example, does
not directly employ workers to make shoes. Rather, Nike designs shoes,
and hires firms in other countries to make them. Our views about
whether an MNC should apply home country standards in a host country
may depend on whether the MNC is applying them to its own workers or to
those of other firms. The same goes for accountability. MNCs,
especially in consumer-facing industries, are often held responsible
for poor working conditions in their suppliers’ factories. Nike
was subject to sharp criticism for the labor practices of its
suppliers in the 1990s (Hartman et al. 2003). Our views about the
extent of the MNC’s responsibility may depend on whether the
problematic practices exist in the MNC’s own factories or in
those of its suppliers.

A businessperson may find that a host country’s standards are
not just different than her home country’s standards, but
morally intolerable. She may decide that the right course of action is
to not do business in the country at all, and if she is invested in
the country, to divest from it. The issue of divestment received
substantial attention in the 1980s and 1990s as MNCs were deciding
whether or not to divest from South Africa under its Apartheid regime.
It may attract renewed attention in the coming years as firms and
other organizations contemplate divestment from the fossil fuel
industry. Common reasons to divest from a morally problematic society
or industry are to avoid complicity in immoral practices, and to put
pressure on the society or industry to change its practices. Critics
of divestment worry about the effects of divestment on innocent third
parties (Donaldson 1989) and about the efficacy of divestment in
forcing social change (Teoh, Welch, & Wazzan 1999). Some believe
that it is better for firms to stay engaged with the society or
industry and try to bring about change from within.

8. The status of business ethics

The field of business ethics, in its current form, grew out of
research that moral and political philosophers did in the 1970s and
1980s. It is not hard to see why moral and political philosophers
might be interested in business. Business activity raises a host of
interesting philosophical issues: of agency, truth, manipulation,
exploitation, justice, and more. After a surge of activity 30 years
ago, however, philosophers seem to be retreating from the field. There
are hardly any philosophy Ph.D. programs that have faculty
specializing in business ethics and, as a result, few new
Ph.D.’s are produced in this area. Those who work in the area
are typically “converts” from mainstream ethical theory
and political philosophy. This is a missed opportunity. Many
businesspeople care about business ethics: they see themselves as good
people who want to do the right thing at work. And many accrediting
agencies, such as the Association to Advance Collegiate Schools of
Business (AACSB), require business schools to teach ethics. As
philosophers have retreated from the field, business schools have
turned to management scholars to fill the void. Given their training
in the social sciences, management scholars treat ethics largely as a
descriptive enterprise, i.e., as the study of the causes and effects
of allegedly ethical or prosocial behavior. This is an important
enterprise, to be sure, but it is no substitute for normative
reflection on what is ethical in business. I hope this entry
helps to inform philosophers about the richness and value of business
ethics, and in doing so, excite greater interest in the field.

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    Models, Milgram and the Problem of Obedience
    , New York: Cambridge
    University Press.
  • Wettstein, F., 2009, Multinational Corporations and Global
    Justice: Human Rights Obligations of a Quasi-Governmental
    Institution
    , Stanford, CA: Stanford Business Books.
  • Zwolinski, M., 2007, “Sweatshops, Choice, and
    Exploitation”, Business Ethics Quarterly, 17(4):
    689–727.
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    347–378.

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Other Internet Resources

  • Marcoux, Alexei, “Business Ethics”,
    The Stanford Encyclopedia of Philosophy (Fall 2016 Edition), Edward N. Zalta (ed.),
    URL =
    < https://plato.stanford.edu/archives/fall2016/entries/ethics-business/ >.
    [This was the previous entry on business ethics in the Stanford
    Encyclopedia of Philosophy
    — see the
    version history .]
  • A History of Business Ethics ,
    by Richard T. De George (University of Kansas), an important contributor
    to the field.
  • Society for Business Ethics ,
    the main professional society for business ethicists, especially of
    the “normative” variety.
  • Zicklin Center for Business Ethics Research ,
    at The Wharton School (University of Pennsylvania). It hosts conferences, produces reports,
    and publishes popular articles on business ethics.
  • The Business Ethics Blog ,
    by Chris MacDonald, Ted Rogers School of Management.
    This website contains links and commentary on current issues in
    business ethics.

Related Entries

agency: shared |
corruption |
discrimination |
economics and economic justice |
ethics: virtue |
exploitation |
feminist philosophy, topics: perspectives on class and work |
information technology: and privacy |
intentionality: collective |
justice: distributive |
justice: global |
Kant, Immanuel: moral philosophy |
loyalty |
lying and deception: definition of |
markets |
moral relativism |
perfectionism, in moral and political philosophy |
privacy |
Rawls, John |
responsibility: collective |
rights |
rights: human

Acknowledgments

For help determining what areas of business ethics to cover in this
entry, I thank Dorothea Baur, George Brenkert, Jason Brennan, David
Dick, Edwin Hartman, Laura Hartman, Woon Hyuk Jay Jang, Chris
MacDonald, Emilio Marti, Dominic Martin, Eric Orts, Sareh Pouryousefi,
Abraham Singer, Alejo José G. Sison, and Chris Surprenant. Thanks also
to David Jacobs and (especially) an anonymous reviewer for the
Stanford Encyclopedia for detailed and thoughtful comments on a draft
of the entry. Thanks finally to Northeastern University for providing a hospitable environment in which to work on this entry.

Copyright © 2016 by

Jeffrey Moriarty
< jmoriarty @bentley .edu >

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