Book reviewed in this article: Principles of Biomedical Ethics. By Tom L. Beauchamp and James F. Childress.

This book provides essential reading for anyone with an academic or professional interest in business ethics today.

This study represents an improvement in the ethics scales inventory published in a 1988 Journal of Business Ethics article. The article presents the distillation and validation process whereby the original 33 item inventory was reduced to eight items. These eight items comprise the following ethical dimensions: a moral equity dimension, a relativism dimension, and a contractualism dimension. The multidimensional ethics scale demonstrates significant predictive ability.

Abstract:The term stakeholder is a powerful one. This is due, to a significant degree, to its conceptual breadth. The term means different things to different people and hence evokes praise or scorn from a wide variety of scholars and practitioners. Such breadth of interpretation, though one of stakeholder theory’s greatest strengths, is also one of its most prominent theoretical liabilities. The goal of the current paper is like that of a controlled burn that clears away some of the underbrush of (...) misinterpretation in the hope of denying easy fuel to the critical conflagration that would raze the theory. We aim to narrow its technical meaning for greater facility of use in management and organizational studies. By elaborating a number of common misinterpretations – critical and friendly – of the theory, we hope to render a stronger and more convincing theory as a starting place for future research. (shrink)

Stakeholder theory has become a central issue in the literature on business ethics / business and society. There are, however, a number of problems with stakeholder theory as currently understood. Among these are: 1) the lack of a coherent justificatory framework, 2) the problem of adjudicating between stakeholders, and 3) the problem of stakeholder identification. In this essay, I propose that a possible source of obligations to stakeholders is the principle of fairness (or fair play) as discussed in the political (...) philosophic literature of Rawls, Simmons, and Cullity among others. The principle of fairness states that, “Whenever persons or groups of persons voluntarily accept the benefits of a mutually beneficial scheme of co-operation requiring sacrifice or contribution on the parts of the participants and there exists the possibility of free-riding, there exist obligations of fairness on the part of these persons or groups to co-operate in proportion to the benefits accepted.” In this essay I discuss the gaps in the current stakeholder literature, elucidate and defend a principle of fairness that fills the gap, compare the fairness model to other similar models of business ethics, and draw some conclusions for the future of stakeholder theory. (shrink)

Edwin Hartman argues that ethical principles should not derive from abstract theory, but from the real world of experience in organizations. He explains how ethical principles derive from what workers learn in their communities (firms), and that an ethical firm is one that creates the good life for the workers who contribute to its mission. His approach is based on the Aristotelian tradition of refined common sense, from recent work on collective action problems in organizations, and from social contract theory.

Difficult moral issues in economic life, such as evaluating the impact of hostile takeovers and plant relocations or determining the obligations of business to the environment, constitute the raison d'etre of business ethics. Yet, while the ultimate resolution of such issues clearly requires detailed, normative analysis, a shortcoming of business ethics is that to date it has failed to develop an adequate normative theory.1 The failing is especially acute when it results in an inability to provide a basis for fine-grained (...) analyses of issues. Both general moral theories and stakeholder theory seem incapable of expressing the moral complexity necessary to provide practical normative guidance for many business ethics contexts. (shrink)

Abstract:In this article we first review the development of the concept of global business citizenship and show how the libertarian political philosophy of free-market capitalism must give way to a communitarian view in order for the voluntaristic, local notion of “corporate citizenship” to take root. We then distinguish the concept of global business citizenship from “corporate citizenship” by showing how the former concept requires a transition from communitarian thinking to a position of universal human rights. In addition, we link global (...) business citizenship to global business strategy and to three analytical levels of ethical norms. Finally, we trace a process whereby global businesses can implement fundamental norms and learn to accommodate to legitimate cultural differences. (shrink)

Abstract:In this article we first review the development of the concept of global business citizenship and show how the libertarian political philosophy of free-market capitalism must give way to a communitarian view in order for the voluntaristic, local notion of “corporate citizenship” to take root. We then distinguish the concept of global business citizenship from “corporate citizenship” by showing how the former concept requires a transition from communitarian thinking to a position of universal human rights. In addition, we link global (...) business citizenship to global business strategy and to three analytical levels of ethical norms. Finally, we trace a process whereby global businesses can implement fundamental norms and learn to accommodate to legitimate cultural differences. (shrink)

A notable feature of paradox is recognition that seemingly contradictory terms are inextricably intertwined and interrelated—holding out the hope that something new can be learned from the cognitive tension contained within. Aram has characterized the central concern of the business and society field as the paradox of interdependent relations. Our study argues that this and related paradoxes can be addressed by engaging with others and trying to gain shared insight via an interactive, developmental, exploratory sensemaking process that can inform the (...) governance of stakeholder networks. We advocate multistakeholder learning dialogues (MSLDs) as a means for both scholars and practitioners to construct meanings that can guide joint efforts to cope with messy problems that help shape complex, paradoxical relationships within stakeholder networks. (shrink)

Difficult moral issues in economic life, such as evaluating the impact of hostile takeovers and plant relocations or determining the obligations of business to the environment, constitute the raison d'etre of business ethics. Yet, while the ultimate resolution of such issues clearly requires detailed, normative analysis, a shortcoming of business ethics is that to date it has failed to develop an adequate normative theory.1 The failing is especially acute when it results in an inability to provide a basis for fine-grained (...) analyses of issues. Both general moral theories and stakeholder theory seem incapable of expressing the moral complexity necessary to provide practical normative guidance for many business ethics contexts. (shrink)

Abstract:Work on stakeholder theory has proceeded on a variety of fronts; as Donaldson and Preston (1995) have noted, such work can be parsed into descriptive, instrumental, and normative research streams. In a normative vein, Phillips (1997) has made an argument for a principle of fairness as a means of identifying and adjudicating among stakeholders. In this essay, I propose that a reconstructed principle of fairness can be combined with the idea of consent as outlined in integrative social contract theory (ISCT) (...) to bring about a more normative stakeholder theory that also has ramifications for corporate governance. (shrink)

Abstract:Work on stakeholder theory has proceeded on a variety of fronts; as Donaldson and Preston (1995) have noted, such work can be parsed into descriptive, instrumental, and normative research streams. In a normative vein, Phillips (1997) has made an argument for a principle of fairness as a means of identifying and adjudicating among stakeholders. In this essay, I propose that a reconstructed principle of fairness can be combined with the idea of consent as outlined in integrative social contract theory (ISCT) (...) to bring about a more normative stakeholder theory that also has ramifications for corporate governance. (shrink)

The challenge that confronts corporate decision-makers in connection with global labor conditions is often in identifying the standardsby which they should govern themselves. In an effort to provide greater direction in the face of possible global cultural conflicts, ethicistsThomas Donaldson and Thomas Dunfee draw on social contract theory to develop a method for identifying basic human rights: Integrated Social Contract Theory (ISCT). In this paper, we apply ISCT to the challenge of global labor standards, attempting to identify labor rights that (...) could serve as guides for corporations producing or outsourcing outside of their home country. In addition to identifying areas of universal agreement, we also examine whether ISCT is, in fact, a sufficient basis for determining worker rights; we seek to define the parameters of the “sweatshop” problem; we include the application and results of our ISCT analysis as applied to labor standards: the global labor rights hypernorms; and conclude that ISCT is sufficient only for rights that are universal. We also discuss whether market-driven decisions can identify the boundaries of labor rights, or at least assure that market outcomes are compatible with maintaining labor rights, in order to respond to the shortcomings of ISCT. We conclude with some comments on directions of analysis for labor rights determination. (shrink)

Integrative social contracts theory (ISCT) uses empirical methods to develop guidelines for international business ethics. This article criticizes ISCT in terms of the way people actually think about contracts and agreements around the globe. Differences in orientations to communications context, moral reasoning, and institutional and structural conditions make the identification of authentic norms, hypernorms, and relevant communities problematic. The difficulties of the empirical methods suggest recourse to more traditional theoretical approaches for the identification of hypernorms as well as a stronger (...) test for the compatibility of authentic norms with hypernorms. (shrink)

Abstract:Social contract theory has a rich history. It originated among the ancients with recognition that social arrangements were not products of nature but convention. It developed through the centuries as theorists sought ethical criteria for distinguishing good conventions from bad. The search for such ethical criteria continues in recent attempts to apply social contract theory to organizations. In this paper, I question the concept of consent as a viable ethical criterion, and I argue for an alternate principle of impartiality as (...) a more appropriate moral norm in a social contract theory of organizations. (shrink)

This paper relates Donaldson and Dunfee’s Integrative Social Contracts Theory to the problem of gender discrimination. We make the assumption that multinational managers might seek some guidance from ISCT to resolve ethical issues of gender discrimination in countries indifferent or hostile to gender equaIity. The role of Donaldson and Dunfee’s “hypernorms” seems especially cruciaI, and we find that, under their writings thus far, no “hypernorms” exist to make unethical the most blatant acts of sex discrimination in a host country whose (...) local norms tolerate such discrimination. The genesis of “hypernorms” as “global moral minimums” is recounted, and specific application of ISCT to a familiar ethics case (“A Foreign Assignment”) is provided. (shrink)

Downsizing has become a significant public issue that has not yet been significantly studied by business ethicists. It is proposed that reasonable social and psychological contracts bound the moral free space of managers contemplating downsizing; the degree of constraint is also dependent on the organization's resource munificence. A framework for considering the extent of managerial moral free space and implications thereof for managerial practice are offered.

Downsizing has become a significant public issue that has not yet been significantly studied by business ethicists. It is proposed that reasonable social and psychological contracts bound the moral free space of managers contemplating downsizing; the degree of constraint is also dependent on the organization's resource munificence. A framework for considering the extent of managerial moral free space and implications thereof for managerial practice are offered.

This paper carries forward the conceptual clarification of normative theories of business ethics ably begun by Hasnas in the January 1998 issue of BEQ. This paper proposes a normatively neutral framework for discussing and assessing such normative theories. Every normative theory needs to address these seven issues: it needs to specify a moral principle that identifies (1) recommended values and (2) the grounds for accepting those values. It also must specify (3) a decision principle that business people who accept the (...) theory can use. It must determine (4) who the normative theory applies to and (5) whose interests need to be considered. It must also outline (6) in what contexts it applies, and (7) what legal and regulatory structures it assumes. Once clarified, this paper applies the framework to the normative versions of stockholder theory, stakeholder theory, and ISCT. It is concluded that ISCT is the most promising normative theory currently under discussion, but that there are some major issues that ISCT has not dealt with yet. (shrink)

Contractualism conceives of firm-stakeholder relations as cooperative schemes for mutual benefit. In essence, contractualism holds that these schemes, as well as the normative principles that guide and constrain them, are ultimately ratified by the consent and endorsement of those subject to them. This paper explores the empirical validity of a contractualist perspective on firm-stakeholder relations. It first develops a typology of firm-stakeholder contracting problems. It subsequently confronts this typology with empirical data collected in an interview study of concrete stakeholder management (...) practices, involving in-depth research interviews with forty-four managers working in the Dutch financial services industry. The findings of this theory-building study suggest that there are limits to the applicability of the contract model in the context of stakeholder management, and that disregarding either the model or its limitations may lead to highly ineffective firm-stakeholder relations. (shrink)

Abstract:Donaldson and Dunfee (1999) suggest in a brief discussion that a manager may in some cases rely on his or her own values in making organizational decisions. Our paper examines the role of diversity in values in an organizational context. Our central contention is that value diversity among managers, employees, and other stakeholders on dimensions such as prudence-boldness, clarity-flexibility, and rigor-mercy is highly useful for an organization. We introduce nontechnical models of individual and board decision-making in which value diversity cuts (...) across group interests that would otherwise control the decision. In these models, decision-makers who are influenced by values such as prudence or boldness as well as by their group interests are more likely to avoid suboptimal decisions, because their weaker but not their more intense group interests are likely to be overridden by their cross-cutting value inclinations. (shrink)

Internal due process systems are the formal mechanisms thatmany organizations use to address and resolve ethics conflicts.Problematical due process systems such asinvestigation-punishment and grievance-arbitration systemsnarrowly constrain the political and moral space needed formeaningful ethics voice, praxis, and community. The relativelyuncommon employee board and mediator-counselor types of systemscan help solve such problems. The employee board andmediator-counselor systems permit questioning not only of guiltwith respect to policy violations but also the appropriateness ofthe policies as well as potential biases in an organization'sembedded tradition-system (...) that may be contributing to unethicalbehavior. Theoretical implications for organization ethics,praxis, community, and integrative social contracts theories areexplored. Several case examples are discussed. (shrink)

The following address considers the relevance of business ethics education to our students. Is our concept of ethics one of practiceand application? And, if so, are we accountable to our students, our institutions and ourselves, for the practical impact that we haveor, conversely, that we do not have? Aren’t we responsible in part if one of our students ventures forth and does not act in an ethicalmanner? Though a positive response to this query may not be popular, what is the (...) alternative? If we are not responsible for the impact(or lack thereof) that we have on our students, then what is our purpose? The discussion further explores the nature of this impact andthe process by which we can amplify the results. (shrink)

Mounting evidence suggests that socioeconomic status is a determinant of health. As nations around the globe increasingly rely on market-based economies, the corporate sector has come to have a powerful influence on the socioeconomic gradient in most nations and hence upon the health status of their populations. At the same time, it has become more difficult for any one nation to influence corporate activities, given the increasing ease with which corporations relocate their operations from country to country, As a result (...) of all of these factors, nations wishing to assure the health of their populations will need to both involve the corporate sector and cooperate with other nations.In this article, we review the business ethics literature and consider what justification it might provide for requiring multinational corporations to attend to concerns about population health. (shrink)

This chapter contains sections titled: Background: mapping the field of business ethics The evolution of social contract approaches to business ethics Integrative social contracts theory (ISCT) Remaining issues and promising research directions for contractarian business ethics.

A questionnaire on business ethics was administered to business professionals and to upper-class business ethics students. On eight of the seventeen situations involving ethical dilemmas in business, students were significantly more willing to engage in questionable behavior than were their professional counterparts. Apparently, many students were willing to do whatever was necessary to further their own interests, with little or no regard for fundamental moral principles. Many students and professionals functioned within Lawrence Kohlberg's stage four of moral reasoning, the law (...) and order stage. Individualism and egoism remain strong patterns in the moral reasoning of many professionals, but they influence moral reasoning patterns among students to a much greater degree. (shrink)

Contractualism conceives of firm-stakeholder relations as cooperative schemes for mutual benefit. In essence, contractualism holds that these schemes, as well as the normative principles that guide and constrain them, are ultimately ratified by the consent and endorsement of those subject to them. This paper explores the empirical validity of a contractualist perspective on firm-stakeholder relations. It first develops a typology of firm-stakeholder contracting problems. It subsequently confronts this typology with empirical data collected in an interview study of concrete stakeholder management (...) practices, involving in-depth research interviews with forty-four managers working in the Dutch financial services industry. The findings of this theory-building study suggest that there are limits to the applicability of the contract model in the context of stakeholder management, and that disregarding either the model or its limitations may lead to highly ineffective firm-stakeholder relations. (shrink)

The purpose of this study was to assess the perceptions of business students and of business practitioners regarding ethics in business. A survey consisting of a series of brief ethical situations was completed by 537 senior business majors and 158 experienced business people. They responded to the situations, first, as they believed the typical business person would respond and, second, as they believed the ethical response would be.The results indicate that both students and business people perceived a significant gap between (...) the ethical response to the given situations and the typical business person's response. Students were significantly more accepting than business people of questionable ethical responses, and they also had a more negative view of the ethics of business people than did the experienced business people. (shrink)

Applying social contract theory to business ethics is a relatively new idea, and perhaps nobody has pursued this direction better than Thomas Donaldson and Thomas W. Dunfee. Their "Integrative Social Contracts Theory" manages to combine culturally sensitive decision making capacities with trans-cultural norms by setting up a layered system of social contracts. Lurking behind their work is a concern with the problems of relativism. They hope to alleviate these problems by introducing three concepts important to the ISCT: "authentic norms," which (...) clarify culturally specific norms, "priority rules," which determine the rules of engagement when authentic norms clash, and "hypernorms," which measure the value of authentic norms against a thin set of universally upheld values. This paper traces the genealogy of these hypernorms and challenges their value for the ISCT. It argues that well-conceived priority rules can do everything hypernorms can, and can do so more simply. (shrink)

This article reviews Thomas Donaldson and Thomas Dunfee's new book Ties That Bind. The article argues that the book is a helpful elaboration of Donaldson and Dunfee's Integrative Social Contracts Approach, particularly with regard to their specification of hypernorms. The article also presents Donaldson and Dunfee's argument with regard to how the hypernorm of necessary social efficiency applies to bribery and raises questions about the extent to which human moral behavior might be hardwired.