Showing papers in "Business Ethics Quarterly in 2009"

Private Political Authority and Public Responsibility: Transnational Politics, Transnational Firms, and Human Rights

Abstract: Transnational corporations have become actors with significant political power and authority which should entail responsibility and liability, specifically direct liability for complicity in human rights violations. Holding TNCs liable for human rights violations is complicated by the discontinuity between the fragmented legal/political structure of the TNC and its integrated strategic reality and the international state system which privileges sovereignty and non-intervention over the protection of individual rights. However, the post-Westphalian transition—the emergence of multiple authorities, increasing ambiguity of borders and jurisdiction and blurring of the line between the public and private spheres—should facilitate imposing direct responsibility on transnational firms. Mechanisms for imposing direct responsibility on TNCs are considered including voluntary agreements and international law. However, I conclude that a hybrid public-private regime which relies on non-hierarchical compliance mechanisms is likely to be both more effective and consistent with the structure of the emerging transnational order.

Introduction to the Special Issue: Globalization as a Challenge for Business Responsibilities

Abstract: This article assesses some of the implications of globalization for the scholarly debate on business ethics, CSR and related concepts. The argument is based, among other things, on the declining capacity of nation state institutions to regulate socially desirable corporate behavior as well as the growing corporate exposure to heterogeneous social, cul- tural and political values in societies globally. It is argued that these changes are shifting the corporate role towards a sphere of societal governance hitherto dominated by traditional political actors. This leads to a discussion of the ambivalent results of such a process for a responsible corporate role in a globalized world. While assessing the current reception these changes have received in the management literature, the contributions of the four articles in this Special Issue are framed and evaluated. The argument closes by highlighting avenues of future research on this new challenge.

Moral Commitments and the Societal Role of Business: An Ordonomic Approach to Corporate Citizenship

Abstract: This article introduces an “ordonomic” approach to corporate citizenship. We believe that ordonomics offers a conceptual framework for analyzing both the social structure and the semantics of moral commitments. We claim that such an analysis can provide theoretical guidance for the changing role of business in society, especially in regard to the expectation and trend that businesses take a political role and act as corporate citizens. The systematic raison d'etre of corporate citizenship is that business firms can and—judged by the criterion of prudent self-interest—“should” take on an active role in rule-finding discourses and rule-setting processes with the intent of realizing a win-win outcome of the economic game. We identify—and illustrate—four ways that corporate citizens can employ moral commitments as a factor of production to enhance their processes of economic value creation.

Making Sense of Whistle-Blowing's Antecedents: Learning from Research on Identity and Ethics Programs

Abstract: Despite a significant increase in whistle-blowing practices in work organizations, we know little about what differentiates whistle-blowers from those who observe a wrongdoing but chose not to report it. In this review article, we first highlight the arenas in which research on whistle-blowing has produced inconsistent results and those in which the findings have been consistent. Second, we propose that the adoption of an identity approach will help clarify the inconsistent findings and extend prior work on individual-level motives behind whistle-blowing. Third, we argue that the integration of the whistle-blowing research with that on ethics programs will aid in systematically expanding our understanding of the situational antecedents of whistle-blowing. We conclude our review by discussing new theoretical and methodological arenas of research in the domain of whistle-blowing.

Organizational Justice and Behavioral Ethics: Promises and Prospects

Abstract: Scholars studying organizational justice have been slow to incorporate insights from behavioral ethics research, despite the fields’ conceptual affinities. We maintain that this stems from differences in the paradigmatic approaches taken by scholars in each area. First, justice research historically has assumed that individuals are motivated by a desire for instrumental control of worthwhile outcomes or by a concern with social status, while behavioral ethics has paid more attention to the role of internalized moral convictions and duties. Second, organizational justice researchers have investigated one set of individual differences, behavioral researchers have examined another. Third, justice scholars focus on social identities while behavioral ethics scholars also investigate moral identities. As an impetus to future inquiry, our review attends to contemporary organizational justice research that takes into account concepts derived from behavioral ethics. In so doing we hope to highlight an avenue for integrative scholarship that will further our understanding of organizational justice.

Reconsidering Instrumental Corporate Social Responsibility through the Mafia Metaphor

Abstract: The purpose of this paper is to critically evaluate the instrumental perspective on Corporate Social Responsibility (CSR) in practice and theory by relying on sociological analyses of a well known organization: the Italian Mafia. Legal businesses might share features of the Mafia, such as the propensity to exploit a governance vacuum in society, a strong organizational identity that demarcates the inside from the outside, and an extreme profit motive. Instrumental CSR practices have the power to accelerate a firm's transition to Mafia status through its own pathologies. The boundaries of such instrumentalism are explored and lessons for future CSR research derived, with specific emphasis on a firm's social and normative embeddedness, taking into account the inherent challenge of regulating corporate behaviour in the global economy.

Does Global Business Have a Responsibility to Promote Just Institutions

Abstract: Drawing upon John Rawls's framework in The Law of Peoples, this paper argues that MNEs have a responsibility to promote well-ordered social and political institutions in host countries that lack them. This responsibility is grounded in a negative duty not to cause harm. In addition to addressing the objection that promoting well-ordered institutions represents unjustified interference by MNEs, the paper provides guidance for managers of MNEs operating in host countries that lack just institutions. The paper argues for understanding corporate responsibility in relation to the specific institutional environment in which MNEs operate.

From Implicit to Explicit Corporate Social Responsibility: Institutional Change as a Fight for Myths

Abstract: The focus of this paper is institutional change and the changing role of business in Germany. Back in the 1980s, the German institutional framework was characterized by implicit mandatory and obligatory regulations that set a clear context for responsible corporate behavior. Today, this framework has eroded and given way to a situation in which corporations explicitly and voluntarily take responsibility for social issues. This shift from implicit to explicit corporate social responsibility is an indication of a major institutional change epitomized by the deconstruction of ‘old’ and the reconstruction of ‘new’ institutions. In the course of this change, corporations, state actors, and civil society organizations compete for their ideas and interests in what we call a fight for myths. The paper traces this fight for myths and the changing understanding of corporate responsibility in Germany.

The Uses and Abuses of Agency Theory

Abstract: The use of agency theory remains highly controversial among business ethicists. While some regard it as an essential tool for analyzing and understanding the recent spate of corporate ethics scandals, others argue that these scandals might not even have occurred had it not been for the widespread teaching of agency theory in business schools. This paper presents a qualified defense of agency theory against these charges, first by identifying the theoretical commitments that are essential to the theory (in order to distinguish between agency theory itself and certain incorrect interpretations that have been widely promulgated), and second, by specifying more clearly the different ways that agency theory can be used to analyze relations within the firm. The recommendation that follows from this analysis is that agency theory be used as a critical-diagnostic tool, to identify the points at which both firms and markets will be vulnerable to breakdown in the absence of moral constraint.

Business Ethics and the Brain

Abstract: Neuroethics, the study of the cognitive and neural mechanisms underlying ethical decision-making, is a growing field of study. In this review, we identify and discuss four themes emerging from neuroethics research. First, ethical decision-making appears to be distinct from other types of decision-making processes. Second, ethical decision-making entails more than just conscious reasoning. Third, emotion plays a critical role in ethical decision-making, at least under certain circumstances. Lastly, normative approaches to morality have distinct, underlying neural mechanisms. On the basis of these themes, we draw implications for research in business ethics and the practice of ethics training.

Reasoned Moral Agreement: Applying Discourse Ethics within Organizations

Abstract: Whether at the executive or the line-management levels, businesspeople face moral decisions that cannot be easily resolved with reference to a shared ethos, whether because of diversity of ethea in the organization or its environment, or because the organization's ethos is inadequate for the problem at hand. These decisions are made more common by the changing norms of a pluralistic business environment, and require collective moral deliberation to be adequately resolved. Discourse ethics ideally characterizes the form of valid collective moral deliberation. I argue that accommodation for the limitations of actual discourse makes discourse ethics, conceived in terms of the rules of practical discourse, practical for realizing improvements in the openness and validity of moral decision-making over states in which these rules are flagrantly violated. These rules have normative implications at the organizational level for the integrity approach to corporate ethics programs, and at the individual level for ethical leadership.

Private Security Companies and Institutional Legitimacy: Corporate and Stakeholder Responsibility

Abstract: The private provision of security services has attracted a great deal of recent attention, both professional and popular. Much of that attention suggests the questioned moral legitimacy of the private vs. public provision of security. Linking the literature on moral legitimacy and responsibility from new institutional and stakeholder theories, we examine the relationship between moral legitimacy and responsible behavior by both private security companies (PSCs) and their stakeholders. We ask what the moral-legitimacy-enhancing responsibilities of both might be, and contribute to both literatures and their managerial implications by detailing the content of those responsibilities, emphasizing the reciprocal nature of moral obligations. We suggest that the moral legitimacy of the industry depends upon responsible behavior by both PSCs and their stakeholders.

Organizational Change, Normative Control Deinstitutionalization, and Corruption

Abstract: Despite widespread attention to corruption and organizational change in the literature, to our knowledge, no research has attempted to understand the linkages between these two powerful organizational phenomena. Accordingly, we draw on major theories in ethics, sociology, and management to develop a theoretical framework for understanding how organizational change can sometimes generate corruption. We extend anomie theory and ethical climate theory to articulate the deinstitutionalization of the normative control system and argue that, through this deinstitutionalization, organizations have the potential to become incubators for corruption. We qualify this process by proposing conditions more ripe for anomie and under which this deinstitutionalization is more likely to occur, propounding moderating relationships that influence organizational reconfiguration. Examples of turbulence in the contemporary business environment that can trigger change highlight our discussion. We conclude with managerial implications, offering means by which the deleterious effects of corruption may be arrested or controlled.

What’s the Matter with Price Gouging?

Abstract: When prices for basic commodities increase following a disaster, these price increases are often condemned as 'price gouging.’ In this paper, I discuss what moral wrongs, if any, are most reasonably ascribed to accusations of price gouging. This discussion keeps in mind both practical and moral defenses of price increase following disasters. I first examine existing anti-gouging legislation for commonalities in their definitions of gouging and then present arguments in favor of the permissibility of gouging, focusing on the economic benefits of price increases following disasters. I argue that gouging takes the form of a specific failure of respect for persons by undercutting equitable access to essential goods. While I discuss anti-gouging legislation throughout this paper, my aim is to give an account of the moral wrongs associated with gouging rather than guidance for developing morally defensible anti-gouging legislation.

Moral Imagination, Collective Action, and the Achievement of Moral Outcomes

Abstract: Drawing upon the collective action model of institutional change, I reconceptualize moral imagination as both a social process and a cognitive one. I argue that moral outcomes are not produced by individual actors alone; rather, they emerge from collective action processes that are influenced by political conditions and involve behaviors that include issue framing and resource mobilization. I also contend that individual moral imagination involves the integration of moral sensitivity with consideration of collective action dynamics. I illustrate my arguments with a case study of the Chad-Cameroon oil project. The paper suggests new directions in teaching and research on moral imagination.

How Much Compensation Can CEOs Permissibly Accept

Abstract: Debates about the ethics of executive compensation are dominated by familiar themes. Many writers consider whether the amount of pay CEOs receive is too large—relative to firm performance, foreign CEO pay, or employee pay. Many others consider whether the process by which CEOs are paid is compromised by weak or self-serving boards of directors. This paper examines the issue from a new perspective. I focus on the duties executives themselves have with respect to their own compensation. I argue that CEOs’ fiduciary duties place a moral limit on how much compensation they can accept, and hence seek in negotiation, from their firms. Accepting excessive compensation leaves the beneficiaries of their duties (e.g., shareholders) worse off, and thus is inconsistent with observing those duties.

Dialogue on Price Gouging

Abstract: This commentary develops my position on the ethics of price gouging in response to Jeremy Snyder's article, “What's the Matter with Price Gouging.” First, it explains how the “nonworseness claim” supports the moral permissibility of price gouging, even if it does not show that price gougers are morally virtuous agents. Second, it argues that questions about price gouging and distributive justice must be answered in light of the relevant possible institutional alternatives, and that Snyder's proposed alternatives to price gouging fare worse on the dimension of justice than a system in which goods are allocated by a system of market prices.

Efficiency, Equity, and Price Gouging: A Response to Zwolinski

Abstract: In this response, I reiterate my argument that price gouging undercuts the goal of equity in access to essential goods whereas Zwolinski emphasizes the importance of the efficient provision of essential goods above all other goals. I agree that the efficient provision of essential goods is important as I argue for the goal of equitable access to sufficient of the goods essential to living a minimally flourishing human life. However, efficiency is a means to this goal rather than the end itself. Finally, I offer additional arguments against the non-worseness claim.

Price gouging, non-worseness, and distributive justice

Abstract: This paper develops my position on the ethics of price gouging in response to Jeremy Snyder's article, "What's the Matter with Price Gouging." First, it explains how the "nonworseness claim" supports the moral permissibility of price gouging, even if it does not show that price gougers are morally virtuous agents. Second, it argues that questions about price gouging and distributive justice must be answered in light of the relevant possible institutional alternatives, and that Snyder's proposed alternatives to price gouging fare worse on the dimension of justice than a system in which goods are allocated by a system of market prices.

Managed Hearts and Wallets: Ethical Issues in Emotional Influence By and Within Organizations

Abstract: Increasing research attention to the ways that firms seek to influence the emotions of employees, consumers, and other stakeholders has not been accompanied by systematic attention to the ethical dimensions of emotion management. In this article we review and discuss research that informs the morality of influencing and regulating the emotions of others. What are the moral limits of the use of emotion as a management tool for shaping workplace behavior and influencing the thoughts and actions of consumers? Do the ethics of emotional labor and emotional appeals (e.g., in consumer advertising) depart from moral rules that apply in “non-emotional” contexts? To explore these questions we examine research on the means by which individuals’ emotions are shaped and on the organizationally relevant consequences of individual emotional experience. We then discuss a number of potential ethical issues that are implicit or explicit in the organizationally sanctioned use of emotion management, incorporating existing literature in management and business ethics that has addressed the moral obligations of organizations in this context, and highlighting areas where there is yet work to be done. We conclude by discussing the implications of our analysis.

Principles of Managerial Moral Responsibility

Abstract: The purpose of this paper is to formulate and defend a set of moral principles applicable to management. Our motivation is twofold: 1) to increase the coherence and utility of Integrative Social Contracts Theory (ISCT); and 2) to initiate an alternative stream of business ethics research. To those ends, we specify what counts as adequate guidance in navigating the ethical terrain of business. In doing so, a key element of ISCT, Substantive Hypernorms, is found to be flawed beyond repair. So we propose and defend a remedy: prima facie moral principles. After delineating the appropriate criteria and format for such principles, we formulate, explain, and defend five of them. We conclude with a brief comment on future research possibilities.

From Hired Hands to Co-Owners: Compensation, Team Production, and the Role of the CEO

Abstract: In the 1990s, the role of the chief executive offi cer (CEO) of major United States corporations underwent a profound transformation in which CEOs went from be- ing bureaucrats or technocrats to shareholder partisans who acted more like proprietors or entrepreneurs. This transformation occurred in response to changes in the competitive environment of U.S. corporations and also to the agency theory argument that high levels of compensation by means of stock options helped to overcome the agency problem inherent in the separation of ownership and control. Some critics charge that this new CEO role is objectionable for a variety of reasons, which may also be applicable to the current fi nancial crisis in which CEO misconduct may have played a part. These objections are based largely on a team production model of corporate governance, which is held by these critics to be superior to the standard agent-principal model. This article examines the objections offered by critics of the changed role of the CEO and argues that their negative assessment of this development and their use of the team production model to support their conclusions are not warranted. CEOs have changed from hired hands to co-owners, and this change may have contributed in some measure to the current fi nancial crisis. However, in determining the morally preferable role of the CEO, care must be taken not to discard what is sound in the changed role.

Evolutionary Psychology and Business Ethics Research

Abstract: In this article, we describe evolutionary psychology and its potential contribution to business ethics research. After summarizing evolutionary theory and natural selection, we specifically address the use of evolutionary concepts in psychology in order to offer alternative explanations of behavior relevant to business ethics, such as social exchange, cooperation, altruism, and reciprocity. Our position is that individuals, groups, and organizations all are affected by similar natural, evolutionary processes, such that evolutionary psychology is applicable at multiple levels of analysis (e.g., individual and group). We introduce a variety of experiments and instruments employed by evolutionary psychologists to illustrate how ethics-relevant cultural norms and practices evolve and are regulated, and to raise the prospect that these experiments and instruments can be useful in future business ethics research.

"The Changing Role of Business in a Global Society: New Challenges and Responsibilities"

Abstract: This special issue assesses some of the implications of globalization for the scholarly debate on business ethics, CSR and related concepts

Finance: Servant or Deceiver? Financialization at the Crossroads, by Paul H. Dembinski Basingstoke: Palgrave Macmillan, 2009. Hardcover, 176 pp. ISBN-13: 978-0230220379.

Abstract: I the midst of the current fi nancial crisis comes a book that warns of the dangers lurking in our complex, lightly regulated, and globe-spanning fi nancial system. But this is no ordinary book that blames the economic meltdown on the usual suspects: the housing bubble, subprime mortgages, exotic derivatives, low interest rates, inadequate government regulation, high leverage by investment banks or even “infectious greed.” According to this well-timed book, the fault does not lie in a malfunction of an otherwise sound fi nancial system; rather, the system itself is fundamentally fl awed as a means for serving its basic purpose of enhancing human life. Finance, which should be a servant in our search for security, well-being, and meaning, has instead become an end in itself that has deceived us about how to live a rich, full live. Finance: Servant or Deceiver? which has the additional subtitle Financialization at the Crossroads, is a report from the Geneva-based Observatoire de la Finance, written by the director Paul H. Dembinski, who is also a professor at the University of Fribourg. The Observatoire de la Finance publishes the bi-lingual journal Finance and the Common Good/Commun Bien. The focus of this book or report is on the phenomenon of fi nancialization, in which fi nance as a mode of thought has pervaded our lives and outlook. Financial thinking, Dembinski claims, “has gradually permeated and transformed behavior patterns, mechanisms and structures, and extended its control over society to the point where it is now one of its main organizing principles, or indeed the dominant one” (6). Although fi nancialization, in his view, has produced the current fi nancial crisis, the consequences of this phenomenon are more profound and serious and would have a deleterious effect even if our fi nancial system had continued to function smoothly. Financialization, according to this book, impacts not only our fi nancial well-being but the very core of our existence. If fi nancialization has also caused our current fi nancial crisis, then Dembinski’s case has even greater resonance.

Managing for Stakeholders: Survival, Reputation, Success, by R. Edward Freeman, Jeffrey S. Harrison, and Andrew C. Wicks. New Haven, Conn.: Yale University Press, 2007. Hardcover, 200 pp., $26. ISBN: 978-0300125283

Abstract: 1. The Hippocratic Oath was traditionally taken by physicians to guide the ethical practice of medicine. Hippocrates, the father of Western medicine, is said to be the creator of the oath. In modern medical education in the United States and Canada, the oath has been updated from its original format and modifi ed to fi t contemporary mores. According to one survey of 150 U.S. and Canadian medical schools, only 14 percent of modern oaths prohibit euthanasia, 11 percent invoke a deity, 8 percent foreswear abortion, and only 3 percent forbid sexual contact with patients. See R. D. Orr, N. Pang, E. D. Pellegrino, and M. Siegler, “Use of the Hippocratic Oath: A Review of Twentieth Century Practice and a Content Analysis of Oaths Administered in Medical Schools in the U.S. and Canada in 1993,” The Journal of Clinical Ethics 8(4) (1997): 377–88.

Conscience and Corporate Culture, by Kenneth Goodpaster. Oxford: Blackwell, 2007

Abstract: H should we respond to ethical failures in business? Well, it depends on the cause of these failures. If there is something wrong with business itself— something morally suspect at its core—then perhaps we ought to rethink the very enterprise. Kenneth Goodpaster defends a more measured conclusion in his excellent book Conscience and Corporate Culture. It is his perceptive diagnosis of ethical failures that allows him to keep his intellectual wits about him. We do not need “to adopt draconian measures” or to reject “free markets” (2) in response to the Enrons and Arthur Andersons of the business world. Business itself is not the source of wrongdoing. Rather, he contends, the cause is a much more general phenomenon that reaches across all sectors and societies. Ethical failures in business lend themselves to the same basic explanation as that of NASA’s failures in the Challenger and Columbia disasters and of the behavior of the September 11 attackers (1). Nor is this ethical problem one that we can address by simply getting people to stop being greedy. “Ethical autopsies” that give pride of place to concerns of will, desire, and selfi shness ignore the important role of “mindsets” in immorality (33). The real cause of immorality, Goodpaster thinks, is that we lose sight of how to think and feel about the place of our projects in the social world, not that we have the proper moral perspective yet choose to advance our own self-interest. So, to avoid immorality, we must do more than restrain our hedonistic tendencies. We need to exercise “knowledge and discernment” and the “habits of the heart” (2, italics removed). Otherwise, we are bound to engage in fixation, rationalization, and emotional detachment. This was the story with Enron, NASA, and Al Qaeda: “Take an organization that is fixated on certain goals whatever the cost; combine it with the group’s rationalization of its behavior in the name of those goals, and repeat this behavior again and again until the protesting consciences of the participants become detached, anesthetized” (3). Fixation, rationalization, and emotional detachment are symptoms of what Goodpaster brilliantly characterizes as “teleopathy,” a goal-induced sickness or mental state that