A Constructivist Approach to Business Ethics

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<ul><li><p>A Constructivist Approach to Business Ethics</p><p>Michael Buckley</p><p>Received: 28 May 2012 / Accepted: 5 April 2013 / Published online: 26 April 2013</p><p> Springer Science+Business Media Dordrecht 2013</p><p>Abstract A recurrent challenge in applied ethics con-</p><p>cerns the development of principles that are both suitably</p><p>general to cover various cases and sufficiently exact to</p><p>guide behavior in particular instances. In business ethics,</p><p>two central approachesstockholder and stakeholder</p><p>often fail by one or the other requirement. The author</p><p>argues that the failure is precipitated by their reliance upon</p><p>universal theory, which views the justification of prin-</p><p>ciples as both independent of their context of application</p><p>and universally appropriate to all contexts. The author</p><p>develops a contextual interpretation of constructivism as</p><p>an alternative approach, and argues that this alternative</p><p>meets the above challenge.</p><p>Keywords Constructivism Contextualism Universalism Manager responsibility Pharmaceuticals Health impact fund</p><p>Business ethics operates at the crossroads of various dis-</p><p>ciplines, inviting perspectives from economists, financiers,</p><p>sociologists, organizational psychologists and philoso-</p><p>phers. Each perspective commands an area of expertise</p><p>bearing on the subjects key questions and each employs its</p><p>own methodological approach when pursuing its answers</p><p>(Brand 2009; Garriga and Mele 2004). Given the variety of</p><p>methods found in the literature, it is surprising that con-</p><p>structivism has scarcely appeared, for it is both an</p><p>increasingly important approach in normative theory and</p><p>particularly effective at explaining how moral theory might</p><p>suitably cover a variety of cases without sacrificing exact</p><p>guidance on specific issues.1 This challenge is especially</p><p>pronounced in applied ethics, where the purpose of</p><p>applying ethical theory to practice is to inform practitioners</p><p>of appropriate action in particular cases. If moral principles</p><p>are too abstract, they are unlikely to perform their expected</p><p>action-guiding function. If they are too specific, they will</p><p>perform their expected function in too few instances. The</p><p>challenge is to translate abstract theory into a workable tool</p><p>for business practitioners (Hasnas 1998, pp. 1920).</p><p>The relationship between normative principles and the</p><p>facts comprising particular cases has received close atten-</p><p>tion in political philosophy in recent years (Cohen 2008;</p><p>Sen 2009). Some of this work explores the issue anew by</p><p>developing a contextual approach to justice (Miller 2002).</p><p>Contextual approaches treat diverse normative issues in</p><p>terms of fine-grained, bottomup investigations, rather than</p><p>systematically as part ofand answered in terms ofan</p><p>overarching ethical theory. The idea is that a bottomup</p><p>analysis can better expose how principles fit their context</p><p>of application, thereby justifying concrete principles while</p><p>preserving universal reach.</p><p>Certain developments within business ethics have</p><p>moved in a similar direction. For example, the fields</p><p>growing body of empirical work on industry-specific issues</p><p>is clearly contextual (Rossouw et al. 2012, pp. 386391;</p><p>Brand 2009). The data collected by this work help facilitate</p><p>a fact-based, bottomup analysis of ethical issues in busi-</p><p>ness. Attempts to systematize these industry-specific</p><p>M. Buckley (&amp;)Philosophy Department, Lehman College, CUNY, Carmen Hall,</p><p>360, 250 Bedford Park Boulevard West, Bronx, NY 10468, USA</p><p>e-mail: michael.buckley@lehman.cuny.edu</p><p>1 Epistemological constructivism and constructivism in education are</p><p>much more commonly explored. But the kind of constructivism found</p><p>in moral and political philosophy is much less likely to be explored.</p><p>Take for example the fact that The Philosophers Index returns just</p><p>four results for a search including both the terms constructivism</p><p>and business ethics.</p><p>123</p><p>J Bus Ethics (2013) 117:695706</p><p>DOI 10.1007/s10551-013-1719-x</p></li><li><p>investigations into a more coherent theory are growing</p><p>thereby overcoming what might otherwise appear a hope-</p><p>lessly ad hoc set of ethical analyses (Werhane 2008;</p><p>McVea and Freeman 2005). Should the latter effort suc-</p><p>ceed, we would possess a method that meets the above</p><p>challenge insofar as it is universal in reach yet sufficiently</p><p>flexible to generate substantive answers to diverse, con-</p><p>crete questions.</p><p>This paper contributes to the latter effort by explaining</p><p>how one might apply a constructivist approach to busi-</p><p>ness ethics. I argue that a contextual interpretation of</p><p>constructivism enables business ethicists to analyze a</p><p>wide array of familiar moral issues in a manner that</p><p>generates concrete, context-sensitive moral principles,</p><p>thereby meeting the above challenge. Section Universal</p><p>Analyses of Ethical Issues in Business of this paper</p><p>looks at one such familiar issue, namely: what standard</p><p>should managers use to gauge morally responsible busi-</p><p>ness behavior? An appropriate moral standard should be</p><p>both suitably general to cover various cases and ade-</p><p>quately substantive to inform appropriate action in a</p><p>particular case. However, two central approaches to this</p><p>questionstakeholder and stockholder approachesfail</p><p>by one or the other requirement. I argue that the failure</p><p>is precipitated by their reliance upon what is sometimes</p><p>called a universal approach (Miller 2002). This con-</p><p>trasts with contextual approaches, a version of which I</p><p>outline in Constructivism: A Contextual Approach to</p><p>Normative Theory section where I identify four features</p><p>of constructivism and argue that these features facilitate a</p><p>reversal away from a universal to a contextual approach</p><p>for business ethics.</p><p>The four features of constructivism outlined in Con-</p><p>structivism: A Contextual Approach to Normative Theory</p><p>section are formal and orientate different kinds of norma-</p><p>tive investigationsmoral, political, and applied. If they</p><p>are to be useful to business ethics, they must be specified in</p><p>a language more conducive to the discipline. Sections A</p><p>Variety of Formal Problems Associated with Resource</p><p>Allocation, The Teleological Structure of Business</p><p>Practices, The Scope of Public Interest Concerns</p><p>Reflected in Business Practices, and Competing Values</p><p>Implicit in the Concept of Efficiency provide this crucial</p><p>step, thus extending the outline of Constructivism: A</p><p>Contextual Approach to Normative Theory section in a</p><p>direction suitable for practitioners of business ethics.</p><p>The final section of this paper provides an example of a</p><p>constructivist analysis. It investigates the question: what</p><p>principle best informs a pharmaceutical managers</p><p>responsibility to the global poor? The question is particu-</p><p>larly pressing given the degree to which the poors health</p><p>needs go unattended (UNDP 2003, pp. 97103). However,</p><p>it is not easily dealt with from within a universal approach.</p><p>Constructivism offers a perspective that promises a</p><p>detailed analysis on which a concrete principle can be</p><p>firmly established. This brief example, together with the</p><p>other sections, serves as an outline for how one might apply</p><p>constructivism to business ethics.</p><p>Universal Analyses of Ethical Issues in Business</p><p>This section introduces the distinction between universal</p><p>and contextual approaches to ethics by reviewing a familiar</p><p>question in business ethics, namely, what principles should</p><p>managers use to gauge morally responsible business</p><p>behavior? A universal approach answers this question by</p><p>relying on principles that are both justified independently</p><p>of their context of application and applied invariantly</p><p>across all contexts (Miller 2002). This view conceives</p><p>moral theory as aiming at fundamental principles of right.</p><p>Insofar as the principles are fundamental, they are justified</p><p>independent of circumstantial fact, although circumstances</p><p>may be taken into account when applying them.</p><p>One problem with this influential strain of thinking in</p><p>business ethics is that it often leads to indeterminate out-</p><p>comes (Heath 2006, p. 535). Abstract principles typically</p><p>support contrary assessments of particular cases and, as a</p><p>result, fail to deliver an indefeasible metric for guiding</p><p>action. A second problem concerns the appropriateness of a</p><p>principle to a particular case. In the absence of reference to</p><p>the circumstances of a case when defending principles,</p><p>their application to a particular instance may appear arbi-</p><p>trary and in need of further justification. To illustrate both</p><p>problems consider stockholder and stakeholder approaches</p><p>to the question: What standard should managers use to</p><p>gauge morally responsible business behavior? A stock-</p><p>holder approach recommends profits as the standard</p><p>measure of right action, arguing that profits serve as a</p><p>proxy for how well a company satisfies consumer demand</p><p>and, by extension, overall utility (Friedman 1970; Econo-</p><p>mist 2005). This approach is sufficiently determinate to</p><p>provide an exact and easily quantifiable standard of prac-</p><p>tical action. Its notable and familiar defect is that it serves</p><p>as a poor guide to moral action, since profits are sometimes</p><p>realized through morally inappropriate behavior (Hasnas</p><p>1998, p. 23).</p><p>The stakeholder approach provides a more appropriate</p><p>moral metric insofar as it takes seriously the effects of</p><p>managerial decisions on various stakeholders (Freeman</p><p>1984; Donaldson 1999). However, it is insufficiently exact</p><p>to overcome the problem of indeterminacy, since managers</p><p>will balance various interests differently, thus generating</p><p>rival and perhaps incommensurable moral obligations (Orts</p><p>and Strudler 2009, p. 611). As a result, the stockholder</p><p>approach purchases determinacy at the expense of ethical</p><p>696 M. Buckley</p><p>123</p></li><li><p>clarity, while the stakeholder approaches purchase ethical</p><p>clarity at the expense of exactness.</p><p>From where do these problems arise? They primarily</p><p>result from the application of universal moral theory. Take</p><p>for instance the normative characterization of a stakeholder</p><p>approach, which addresses the moral basis on which</p><p>managerial decisions ought to consider the interests of</p><p>various stakeholders (Donaldson and Preston 1995). The</p><p>moral basis on which this approach is defended varies</p><p>(Phillips et al. 2003; Gibson 2000). Sometimes it is</p><p>grounded on a utilitarian logic. Sometimes it is grounded</p><p>on a deontological basis, which in turn varies between</p><p>Kantian and right-based theories. A Kantian basis empha-</p><p>sizes the idea of human freedom and dignity, and operates</p><p>in accordance with one of Kants three categorical imper-</p><p>atives, such as the imperative to treat people not merely as</p><p>means but also as ends (Gibson 2000). Relatedly, right-</p><p>based approaches emphasize each stakeholders entitle-</p><p>ment to some bundle of goods (Carroll and Buchholtz</p><p>2011, pp. 229230; Donaldson and Preston 1995). On this</p><p>view, managerial obligations derive from stakeholder</p><p>entitlements to such goods as safety, due process, privacy,</p><p>etc.</p><p>There are other moral bases on which to defend a</p><p>stakeholder approach, but they too will suffer from inde-</p><p>terminacy if they, like the above instances, attach their</p><p>operative moral concepts and principles to stakeholders.</p><p>For when concepts and principles attach to stakeholders,</p><p>conflicts among stakeholders cannot be resolved by refer-</p><p>ence to some further principle. One is forced to balance</p><p>conflicting interest without reference to an independent</p><p>scale and, as a result, two different people facing an</p><p>identical moral problem may derive two contradictory yet</p><p>obligatory courses of action. This is a significant problem,</p><p>for it exposes the way in which a stakeholder approach fails</p><p>to provide the tools for checking our moral intuitions. In</p><p>the end, managers must rely on intuitive judgments,</p><p>thereby obviating the need for an applied moral theory.</p><p>It is possible to overcome the indeterminacy problem if</p><p>one makes the following argument: Corporations ought to</p><p>serve the interests of various stakeholders, but the means</p><p>by which managers can best realize this aim is by running a</p><p>profitable firm (Boatright 2006). On this view, profits serve</p><p>as the measure against which managers can balance their</p><p>duties to stakeholders. Interestingly, this argument shares a</p><p>moral logic similar to that of the stockholder approach.</p><p>Stockholder approaches defend the pursuit of profits on the</p><p>grounds that profits act as signals to managers in much the</p><p>same way as prices act as signals to suppliers and con-</p><p>sumers in a market economy (Hasnas 1998). Each set of</p><p>signals facilitate the allocation of resources to their most</p><p>valued use, thereby improving overall utility (Sowell 2000,</p><p>pp. 720).</p><p>This is a weak argument, since profits by no means track</p><p>improved social utility. One need only consider the harms</p><p>created by very profitable tobacco or alcohol industries to</p><p>see why. For this reason, some have preferred to focus on a</p><p>rights-based justification for a stockholder approach (Has-</p><p>nas 1998). According to this line of reasoning, for-profit</p><p>companies are characterized as neutral arbiters of com-</p><p>peting consumer choices and, therefore, protective of</p><p>individual liberty (Friedman 1982). The right to free-</p><p>domboth the freedom of consumers to choose and the</p><p>freedom of producers to deploy their products as they see</p><p>fitoffers a justification to this approach.</p><p>This too is a weak argument, since profitable firms do</p><p>not necessarily ensure greater consumer choice. Monopo-</p><p>lies may both inhibit consumer choice and generate sub-</p><p>stantial profits (US v. Microsoft Corp. 1998). Moreover, as</p><p>Mill recognized at the dawn of capitalism, commercial</p><p>enterprises are only neutral arbiters of commercial inter-</p><p>ests; they are not neutral arbiters of all values and thus not</p><p>protective of non-commercial values, such as cultural,</p><p>acetic, and environmental values (Mill [1859] 1977,</p><p>p. 275). These considerations suggest that both the utili-</p><p>tarian and deontic bases on which business ethicists defend</p><p>stockholder approaches fail to explain how profits serve as</p><p>a plausible moral metric in particular cases. While the</p><p>pursuit of profit may improve overall utility and protect</p><p>individual liberty in certain cases, their application breaks</p><p>down in many other contexts. In these contexts, the</p><p>application of the metric appears arbitrary and in need of</p><p>further justification, or implausible altogether.</p><p>Although I have focused my criticisms on the stake-</p><p>holder and stockholder approaches, my main target is a</p><p>universal approach to applied ethics. When business ethi-</p><p>cists draw on universal theory and only consider contextual</p><p>circumstances in the application of theory, the above</p><p>problems materialize. In light of this, business ethicists</p><p>may find it worthwhile to explore a more contextual</p><p>approach, one whereby contextual circumstances play a</p><p>role in the defense of substantive principles. In the next</p><p>section, I outline one such contextual approach.</p><p>Constructivism: A Contextual Approach to Normative</p><p>Theory</p><p>The metaphor of construction has been used in various ways</p><p>to name different theoretical approaches across a range of</p><p>disciplines, including mathematics, education, legal theory,</p><p>and social epistemology (Guba et al. 1994...</p></li></ul>

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