This essay provides an overview of business ethics. I describe important issues, identify some of the normative considerations animating them, and offer a roadmap of references for those wishing to learn more. I focus on issues in normative business ethics, but discuss briefly the growing body of work in descriptive business ethics. I conclude with a comment on the changing nature of the field.

I argue that lying in business negotiations is pro tanto wrong and no less wrong than lying in other contexts. First, I assert that lying in general is pro tanto wrong. Then, I examine and refute five arguments to the effect that lying in a business context is less wrong than lying in other contexts. The common thought behind these arguments—based on consent, self-defence, the “greater good,” fiduciary duty, and practicality—is that the particular circumstances which are characteristic of business negotiations (...) are such that the wrongness of lying is either mitigated or eliminated completely. I argue that all these “special exemption” arguments fail. I conclude that, in the absence of a credible argument to the contrary, the same moral constraints must apply to lying in business negotiations as apply to lying in other contexts. Furthermore, I show that for the negotiator, there are real practical benefits from not lying. (shrink)

A standard framework for business ethics views the inquiry as an application of major ethical theories to specific issues in business. As these theories are largely presented as being principled, the exercise therefore becomes one of applying general principles to business situations. Many adopting this standard approach have thus resisted the implementation of the most prominent development in ethical theory in recent history: that of particularism. In this article, I argue that particularist thinking has much to offer to business ethics (...) and that standard resistance to particularist business ethics is based largely on misunderstandings. I do so by illustrating how the harbinger of particularism, W. D. Ross, countenances the practical wisdom of particularist ethics while being 1) invulnerable to standard objections to particularist business ethics and 2) compatible with the generalism of the standard approach. The Rossian business ethic is therefore one that the standard approach should be eager to include. (shrink)

Competitive negotiators frequently use tactics which others view as "unethical", in that these tactics either violate standards of truth telling or violate the perceived rules of negotiation. This paper sought to determine how business students viewed a number of marginally ethical negotiating tactics, and to determine the underlying factor structure of these tactics. The factor analysis of these tactics revealed five clear factors which were highly similar across the two samples, and which parallel (to a moderate degree) categories of tactics (...) proposed by earlier theory. Data from one sample also permitted comparisons of the appropriateness of certain tactics across gender, nationality, ethnic origin and perception of one's negotiating style. (shrink)

This study investigated attitudes toward the use of deception in negotiation, with particular attention to the distinction between deception regarding the informational elements of the interaction (e.g., lying about or misrepresenting needs or preferences) and deception about emotional elements (e.g., misrepresenting one's emotional state). We examined how individuals judge the relative ethical appropriateness of these alternative forms of deception, and how these judgments relate to negotiator performance and long-run reputation. Individuals viewed emotionally misleading tactics as more ethically appropriate to use (...) in negotiation than informational deception. Approval of deception predicted negotiator performance in a negotiation simulation and also general reputation as a negotiator, but the nature of these relationships depended on the kind of deception involved. (shrink)

The moral status of business bluffing is a controversial issue. On the one hand, bluffing would seem to be relevantly similar to lying and deception. Because of this, business bluffing can be taken to be an activity that is at least prima facie morally condemnable. On the other hand, it has often been claimed that in business bluffing is part of the game and that therefore there is nothing morally questionable in business bluffing. In a recent issue of this journal, (...) Fritz Allhoff puts forward a novel defence of business bluffing. In this article, I will examine Allhoff’s arguments for the moral acceptability of business bluffing and argue that they are implausible. (shrink)

On the one hand, bluffing in business seems to bear a strong resemblance to lying, and therefore might be thought to be prima facie impermissible. On the other, many people have the intuition that bluffing is an appropriate and morally permissible negotiating tactic. Given this tension, what is the moral standing of bluffing in business? In this paper, I will consider influential accounts of both Albert Carr and Thomas Carson, and I will present my criticisms thereof. Drawing off of these (...) accounts, I will then develop my own argument as to why bluffing in business is morally permissible, which will be that bluffing is a practice that should be endorsed by all rational negotiators. (shrink)

How should we distinguish between ethical and unethical ways of pursuing profit in a market? The market failures approach (MFA) to business ethics purports to provide an answer to this question. I argue that it fails to do so. The source of this failure is the MFA’s reliance on Pareto efficiency as a core ethical principle. Many ethically “preferred” tactics for seeking profit cannot be justified by appeal to Pareto efficiency. One important reason for this is that Pareto efficiency, as (...) understood by the theory of welfare economics upon which the MFA relies, assumes a static conception of efficiency. This is a problem because many ethically “preferred” tactics can only be justified by appeal to dynamic efficiency considerations. I argue that, instead of Pareto efficiency, we should look to the value of wealth creation to understand the ethical constraints on how market actors may pursue profit. (shrink)

Businesses frequently exclude spiritual values, viewing such values as impositions that belong in business as much as a priest belongs at a bachelor party. Yet spirituality should not be viewed as impositions from without, but as inclusions from within. Spiritual values should be included in a company to the extent that these values are shared by the principals of a firm. Excluding spiritual values found in a “convergent consensus” runs contrary to freedom and liberty that Milton Friedman, among others, champions. (...) Furthermore, the exclusion of such values from a business threatens to alienate business persons from their moral integrity. By cultivating what I will call “the spiritual imagination,” businesses can facilitate fidelity between the convergent values of its principals, and the actions, policies, and culture of a company. (shrink)

Bluffing, a common and consequential form of competitive behavior, has been comparably ignored in the management literature, even though misleading one's rivals is suggested to be an advantageous skill in a multifaceted and highly competitive environment. To address this deficiency and advance scholarship on competitive dynamics, our study investigates the moral reasoning behind competitive bluffing and, using a simulated market-entry game, examines the performance effects of bluffing. Findings suggest that decision makers' views on the ethicality of bluffing competitors differ from (...) their beliefs on the ethicality of misleading other organizational stakeholders. Analysis also indicates that decision makers who view competitor bluffing as more ethical (less unethical) are more willing to engage in competitive bluffing. Finally, while bluffing is often thought to be an effective business practice, results show that in the context of repeated interaction, bluffing is not conducive to high levels of performance and, in fact, can have undesirable consequences. (shrink)

Despite a strong plea for integrating sustainability goals into traditional corporate bonus schemes, a comprehensive implementation of these systems has been lacking until recently. This article explores four illustrative cases from the Netherlands, where several multinationals started to pioneer with sustainable bonuses in the past few years. The article examines the setups and the different elements of bonus programmes used, in terms of performance criteria (focusing in particular on external vs. internal benchmarking), their link to specific stakeholders, type and size (...) of bonuses, target levels and transparency. While sustainable bonuses signal corporate awareness of responsibility vis-à-vis society and stakeholders, credibility varies considerably depending on these elements. Our case evidence sheds some light on the extent to which sustainable bonuses may be a credible sign of corporate responsibility or rather just another perverse mechanism meant to keep up bonus levels (window dressing). A definite assessment is hampered by the emergent state and lack of full transparency—while ‘justified’ by companies for competitive reasons, this raises questions. Insights are offered to appraise current and future systems and provide directions for further research. (shrink)

This essay offers a philosophical defense of deception about reservation prices in business negotiation. Its discussion is prompted by arguments that Charles N.C. Sherwood makes in a recent issue of Business Ethics Quarterly and develops ideas I put forward in an earlier issue of Business Ethics Quarterly. The essay argues that although reservation price deception cannot be justified by appeal to the consent of negotiating parties, it can be justified by appeal to a separate but related notion, assumption of risk, (...) as long as the assumption of risk occurs in a suitably fair context. (shrink)

Business myth is generally treated in business ethics literature as a mental obstacle that must be removed in order to prepare the ground for rational thinking on the ethical aspect of business conduct. This approach, which focuses on the content of myth, does not explicate the nature and function of myth. Based on the study of myth in the fields of humanities and social sciences, this paper develops a theoretical framework and analytical tool-the revolving-door model-for researching myth in business. The (...) proposed framework (I) offers new perspectives on myth: the consumer's, the producer's, the mythologist's, and the ethicist's; (2) explicates various distortion mechanisms ofthe myth; and (3) enables a redefinition of the relation of business myth to business ethics. The applicability of this framework is demonstrated by means of a real case which sets the stage for examining a set of common myths. (shrink)

In this paper I examine the claim that businesspersons have what might be called "ethical immunity" with respect to the duty not to deceive. According to this ethical immunity claim, businesspersons are exempt from the ordinary ethical prohibition against deception; and widespread business deception is therefore ethically permissible. I focus on two arguments for the claim. One of the arguments, which has been presented by Albert Carr, relies upon an analogy between business on the one hand, and games in which (...) deception is permitted, on the other. The second argument is based upon the notion that exceptions to ethical duties may sometimes be justified on prudential grounds. In response to the arguments, I try to show that neither one provides strong support for the ethical immunity claim. (shrink)

Spoofing—placing orders on financial exchanges intending to withdraw them prior to execution—is widely legally prohibited. I argue instead on two main grounds that spoofing should be permitted and legalised. The first is that spoofing as a form of bluffing remains within the market practice of making legally binding offers—as opposed to lying or betraying trust—and primarily concerns the spoofer’s personal information. As a form of bluffing spoofing helps prevent financial speculators, in particular high-frequency algorithmic traders, from easily profiting by other (...) market actors reliably revealing their underlying preferences through their market activity. The second is that at the systemic level permitting spoofing would benefit non-speculative actors who place orders to hedge economic risk and whose activities provide the raison d’être for financial exchanges, differentiating them from simple forums for gambling. I also address potential concerns that legalised spoofing would drive speculators out of financial markets entirely and, therefore, undermine market liquidity. This work contributes to the wider debate in business ethics regarding bluffing by illustrating the acceptability of bluffs which do not betray counterparty trust or reliance on testimony by remaining within the framework of market practices. (shrink)

The growth in international trade in recent years necessitates a better understanding of customs and expectations in cross-cultural negotiations. While several researchers have sought to examine and detail the similarities and differences between select countries, their data have generally been obtained under neutral or unspecified negotiating conditions. However, issue importance, opponent (prowess, ethical reputation), and context (location, confederate awareness, urgency) can play a significant role in the use of negotiating tactics. This paper describes a study comparing the perceptions of one (...) hundred and forty-two current and future business professionals from two emerging trade partners, Brazil and the United States, regarding the appropriateness and likely use of five categories of negotiation tactics under seven challenging or unfavorable negotiating conditions commonly faced by negotiators. The results indicate an overall conditional effect for both attitudes (perceived appropriateness) and intentions (likelihood of use). In addition, while no significant difference in perceived appropriateness was found due to country, there were differences in likely use due to country for six conditions-behaviors. (shrink)

Although the managerial practice of cheating spans complex and heterogeneous situations, most business ethics scholars consider that the very idea of cheating is indefensible on moral grounds, and quickly dismiss it as wrongdoing. This paper proposes to fine-tune this conventional moral assessment by arguing that some forms of cheating can be justified—or at least excused. To do so, it starts with a value-free definition of cheating that covers a wide diversity of situations: “breaking the rules while deliberately leading or allowing (...) others to think they have been respected.” While using this definition at the metaethical level, the paper contends that the moral assessment of cheating depends on the obligation to comply with the rules. There are rules which do not entail moral obligations, and there are special circumstances where other more important obligations override the obligation to comply with the rules. Furthermore, the paper argues that respecting the penalty rules also influences the moral assessment of cheating on the rules. The key interest of this endeavor lies in contributing to building a more solid theoretical framework for the study of cheating in management, which may replace our common prejudices and basic intuitions on this matter. (shrink)

Individuals often lie for psychological rewards (e.g., preserving self image and/or protecting others), absent economic rewards. We conducted a laboratory experiment, using a modified dictator game, to identify conditions that entice individuals to lie solely for psychological rewards. We argue that such lies can provide a ready means for individuals to manage others’ impression of them. We investigated the effect of social distance (the perceived familiarity, intimacy, or psychological proximity between two parties) and knowledge of circumstances (whether parties have common (...) or asymmetric information) on the frequency of lying. We found that lying occurs more frequently when social distance is near and that the effect is exacerbated when information is asymmetric. Our theoretical development suggests that, under these conditions, individuals’ need to manage others’ impression is magnified. We discuss the implications of our findings. (shrink)

In a recent paper that appeared in this journal Fritz Allhoff addresses the morality of bluffing in negotiations1. He focuses on cases in which people misstate their reservation price in negotiations, e.g., suppose that I am selling a house and tell a prospective buyer that $300,000 is absolutely the lowest price that I will accept, when I know that I would be willing to accept as little as $270,000 for the house rather than continue to try to sell it. Allhoff (...) criticizes my (qualified) defense of bluffing in my paper Second Thoughts on Bluffing,2 and offers what he takes to be a more plausible defense of bluffing. Allhoffs criticisms rest on several serious misinterpretations of my views. He ascribes to me several arguments that I dont make. He also attributes to me an unqualified defense of bluffing that I explicitly reject. I briefly document this in Section 1. In Sections 2 and 3 I explain and criticize Allhoffs positive views about bluffing and the morality of bluffing. (shrink)

There has been widespread emphasis on the importance of trust amongst parties to the employment relationship, associated with a call for increased "integrative bargaining". Trust is bound up with ethical action, but there has been some debate about the ethics of deception in bargaining. Because it is possible for cooperative bargainers to be exploited, some writers contend that deceptive behavior is ethical and established practice. There are several problems about that view. It is questionable how clear and uniform such a (...) practice has been. An appearance of deceptive bluffing can often be explained as exchange of genuine concessions. Recent trends have seen increased devolution of bargaining from professionals to non-professionals, which dilutes any shared understandings there have been in the past, while practices that do exist may not be freely or voluntarily accepted and the existence of such practices is not enough to compensate for inequalities of power and skill. It is questionable to what extent bluffing and deception are necessary for self-defense. There other techniques available by which parties can guard themselves against exploitation. (shrink)

Price discrimination is widespread in the American economy and sometimes can be defended as achieving socially preferable economic outcomes. However, the separation of markets required for price discrimination is often difficult to sustain. Sometimes those whom the seller wishes to charge higher prices are identified by imprecise markers. (Thus, as one example, airlines have traditionally attempted to identify business travelers willing to pay higher fares as those travelers unwilling to stay at their destination over a Saturday night.) Imprecise targeting complicates (...) efforts to prevent strategies of circumvention and sellers sometimes resort to claiming that buyers are morally bound to observe rules which sellers cannot otherwise enforce. This paper examines whether buyers can be morally bound by sellers to put themselves into discriminated-against classes.This paper takes the position that if, as often seems to be the case, there is a social consensus that consumers would not be morallyobliged to sort themselves into categories precisely designed to achieve the goals of price discrimination, then there is, a fortiori,a social consensus that consumers are not morally obliged to sort themselves into categories which are only crudely designed toachieve the goals of price discrimination, and which may in fact be counterproductive. (shrink)

This study explores the direct and interactive effects of individual differences in interpersonal trust and negotiation style on ethical decision-making processes across commonly faced negotiation situations. Individual differences influence basic ideas about legitimate negotiating behaviors, affect behavioral intentions directly, and interact with the favorability of negotiating situations, resulting in direct, indirect, and interactive effects on ethical decision-making processes. Using a sample of 298 participants in executive education workshops, the study analyzes the relationship between interpersonal trust, competitiveness, moral judgment, and behavioral (...) intentions in different negotiating conditions through a series of structural equation models and regression analyses. Our results suggest that individual difference variables exert a significant influence not only on how managers assess the morality of ethically ambiguous negotiation practices but also directly on their behavioral intentions, and that this effect changed across specific negotiation situations. We discuss these results in terms of their usefulness in explaining ethical decision-making processes in negotiations. (shrink)