A Constructivist Approach to Business Ethics
Michael Buckley
Received: 28 May 2012 / Accepted: 5 April 2013 / Published online: 26 April 2013
� Springer Science+Business Media Dordrecht 2013
Abstract A recurrent challenge in applied ethics con-
cerns the development of principles that are both suitably
general to cover various cases and sufficiently exact to
guide behavior in particular instances. In business ethics,
two central approaches—stockholder and stakeholder—
often fail by one or the other requirement. The author
argues that the failure is precipitated by their reliance upon
‘‘universal’’ theory, which views the justification of prin-
ciples as both independent of their context of application
and universally appropriate to all contexts. The author
develops a contextual interpretation of ‘‘constructivism’’ as
an alternative approach, and argues that this alternative
meets the above challenge.
Keywords Constructivism � Contextualism �Universalism � Manager responsibility � Pharmaceuticals �Health impact fund
Business ethics operates at the crossroads of various dis-
ciplines, inviting perspectives from economists, financiers,
sociologists, organizational psychologists and philoso-
phers. Each perspective commands an area of expertise
bearing on the subject’s key questions and each employs its
own methodological approach when pursuing its answers
(Brand 2009; Garriga and Mele 2004). Given the variety of
methods found in the literature, it is surprising that ‘‘con-
structivism’’ has scarcely appeared, for it is both an
increasingly important approach in normative theory and
particularly effective at explaining how moral theory might
suitably cover a variety of cases without sacrificing exact
guidance on specific issues.1 This challenge is especially
pronounced in applied ethics, where the purpose of
applying ethical theory to practice is to inform practitioners
of appropriate action in particular cases. If moral principles
are too abstract, they are unlikely to perform their expected
action-guiding function. If they are too specific, they will
perform their expected function in too few instances. The
challenge is to translate abstract theory into a workable tool
for business practitioners (Hasnas 1998, pp. 19–20).
The relationship between normative principles and the
facts comprising particular cases has received close atten-
tion in political philosophy in recent years (Cohen 2008;
Sen 2009). Some of this work explores the issue anew by
developing a contextual approach to justice (Miller 2002).
Contextual approaches treat diverse normative issues in
terms of fine-grained, bottom–up investigations, rather than
systematically as part of—and answered in terms of—an
overarching ethical theory. The idea is that a bottom–up
analysis can better expose how principles fit their context
of application, thereby justifying concrete principles while
preserving universal reach.
Certain developments within business ethics have
moved in a similar direction. For example, the field’s
growing body of empirical work on industry-specific issues
is clearly contextual (Rossouw et al. 2012, pp. 386–391;
Brand 2009). The data collected by this work help facilitate
a fact-based, bottom–up analysis of ethical issues in busi-
ness. Attempts to systematize these industry-specific
M. Buckley (&)
Philosophy Department, Lehman College, CUNY, Carmen Hall,
360, 250 Bedford Park Boulevard West, Bronx, NY 10468, USA
e-mail: [email protected]
1 Epistemological constructivism and constructivism in education are
much more commonly explored. But the kind of constructivism found
in moral and political philosophy is much less likely to be explored.
Take for example the fact that ‘‘The Philosopher’s Index’’ returns just
four results for a search including both the terms ‘‘constructivism’’
and ‘‘business ethics.’’
123
J Bus Ethics (2013) 117:695–706
DOI 10.1007/s10551-013-1719-x
investigations into a more coherent theory are growing—
thereby overcoming what might otherwise appear a hope-
lessly ad hoc set of ethical analyses (Werhane 2008;
McVea and Freeman 2005). Should the latter effort suc-
ceed, we would possess a method that meets the above
challenge insofar as it is universal in reach yet sufficiently
flexible to generate substantive answers to diverse, con-
crete questions.
This paper contributes to the latter effort by explaining
how one might apply a constructivist approach to busi-
ness ethics. I argue that a contextual interpretation of
constructivism enables business ethicists to analyze a
wide array of familiar moral issues in a manner that
generates concrete, context-sensitive moral principles,
thereby meeting the above challenge. Section ‘‘Universal
Analyses of Ethical Issues in Business’’ of this paper
looks at one such familiar issue, namely: what standard
should managers use to gauge morally responsible busi-
ness behavior? An appropriate moral standard should be
both suitably general to cover various cases and ade-
quately substantive to inform appropriate action in a
particular case. However, two central approaches to this
question—stakeholder and stockholder approaches—fail
by one or the other requirement. I argue that the failure
is precipitated by their reliance upon what is sometimes
called a ‘‘universal’’ approach (Miller 2002). This con-
trasts with ‘‘contextual’’ approaches, a version of which I
outline in ‘‘Constructivism: A Contextual Approach to
Normative Theory’’ section where I identify four features
of constructivism and argue that these features facilitate a
reversal away from a universal to a contextual approach
for business ethics.
The four features of constructivism outlined in ‘‘Con-
structivism: A Contextual Approach to Normative Theory’’
section are formal and orientate different kinds of norma-
tive investigations—moral, political, and applied. If they
are to be useful to business ethics, they must be specified in
a language more conducive to the discipline. Sections ‘‘A
Variety of Formal Problems Associated with Resource
Allocation,’’ ‘‘The Teleological Structure of Business
Practices,’’ ‘‘The Scope of Public Interest Concerns
Reflected in Business Practices,’’ and ‘‘Competing Values
Implicit in the Concept of Efficiency’’ provide this crucial
step, thus extending the outline of ‘‘Constructivism: A
Contextual Approach to Normative Theory’’ section in a
direction suitable for practitioners of business ethics.
The final section of this paper provides an example of a
constructivist analysis. It investigates the question: what
principle best informs a pharmaceutical manager’s
responsibility to the global poor? The question is particu-
larly pressing given the degree to which the poor’s health
needs go unattended (UNDP 2003, pp. 97–103). However,
it is not easily dealt with from within a universal approach.
Constructivism offers a perspective that promises a
detailed analysis on which a concrete principle can be
firmly established. This brief example, together with the
other sections, serves as an outline for how one might apply
constructivism to business ethics.
Universal Analyses of Ethical Issues in Business
This section introduces the distinction between universal
and contextual approaches to ethics by reviewing a familiar
question in business ethics, namely, what principles should
managers use to gauge morally responsible business
behavior? A universal approach answers this question by
relying on principles that are both justified independently
of their context of application and applied invariantly
across all contexts (Miller 2002). This view conceives
moral theory as aiming at fundamental principles of right.
Insofar as the principles are fundamental, they are justified
independent of circumstantial fact, although circumstances
may be taken into account when applying them.
One problem with this influential strain of thinking in
business ethics is that it often leads to indeterminate out-
comes (Heath 2006, p. 535). Abstract principles typically
support contrary assessments of particular cases and, as a
result, fail to deliver an indefeasible metric for guiding
action. A second problem concerns the appropriateness of a
principle to a particular case. In the absence of reference to
the circumstances of a case when defending principles,
their application to a particular instance may appear arbi-
trary and in need of further justification. To illustrate both
problems consider stockholder and stakeholder approaches
to the question: What standard should managers use to
gauge morally responsible business behavior? A stock-
holder approach recommends ‘‘profits’’ as the standard
measure of right action, arguing that profits serve as a
proxy for how well a company satisfies consumer demand
and, by extension, overall utility (Friedman 1970; Econo-
mist 2005). This approach is sufficiently determinate to
provide an exact and easily quantifiable standard of prac-
tical action. Its notable and familiar defect is that it serves
as a poor guide to moral action, since profits are sometimes
realized through morally inappropriate behavior (Hasnas
1998, p. 23).
The stakeholder approach provides a more appropriate
moral metric insofar as it takes seriously the effects of
managerial decisions on various stakeholders (Freeman
1984; Donaldson 1999). However, it is insufficiently exact
to overcome the problem of indeterminacy, since managers
will balance various interests differently, thus generating
rival and perhaps incommensurable moral obligations (Orts
and Strudler 2009, p. 611). As a result, the stockholder
approach purchases determinacy at the expense of ethical
696 M. Buckley
123
clarity, while the stakeholder approaches purchase ethical
clarity at the expense of exactness.
From where do these problems arise? They primarily
result from the application of universal moral theory. Take
for instance the normative characterization of a stakeholder
approach, which addresses the moral basis on which
managerial decisions ought to consider the interests of
various stakeholders (Donaldson and Preston 1995). The
moral basis on which this approach is defended varies
(Phillips et al. 2003; Gibson 2000). Sometimes it is
grounded on a utilitarian logic. Sometimes it is grounded
on a deontological basis, which in turn varies between
Kantian and right-based theories. A Kantian basis empha-
sizes the idea of human freedom and dignity, and operates
in accordance with one of Kant’s three categorical imper-
atives, such as the imperative to treat people not merely as
means but also as ends (Gibson 2000). Relatedly, right-
based approaches emphasize each stakeholder’s entitle-
ment to some bundle of goods (Carroll and Buchholtz
2011, pp. 229–230; Donaldson and Preston 1995). On this
view, managerial obligations derive from stakeholder
entitlements to such goods as safety, due process, privacy,
etc.
There are other moral bases on which to defend a
stakeholder approach, but they too will suffer from inde-
terminacy if they, like the above instances, attach their
operative moral concepts and principles to stakeholders.
For when concepts and principles attach to stakeholders,
conflicts among stakeholders cannot be resolved by refer-
ence to some further principle. One is forced to balance
conflicting interest without reference to an independent
scale and, as a result, two different people facing an
identical moral problem may derive two contradictory yet
obligatory courses of action. This is a significant problem,
for it exposes the way in which a stakeholder approach fails
to provide the tools for checking our moral intuitions. In
the end, managers must rely on intuitive judgments,
thereby obviating the need for an applied moral theory.
It is possible to overcome the indeterminacy problem if
one makes the following argument: Corporations ought to
serve the interests of various stakeholders, but the means
by which managers can best realize this aim is by running a
profitable firm (Boatright 2006). On this view, profits serve
as the measure against which managers can balance their
duties to stakeholders. Interestingly, this argument shares a
moral logic similar to that of the stockholder approach.
Stockholder approaches defend the pursuit of profits on the
grounds that profits act as signals to managers in much the
same way as prices act as signals to suppliers and con-
sumers in a market economy (Hasnas 1998). Each set of
signals facilitate the allocation of resources to their most
valued use, thereby improving overall utility (Sowell 2000,
pp. 7–20).
This is a weak argument, since profits by no means track
improved social utility. One need only consider the harms
created by very profitable tobacco or alcohol industries to
see why. For this reason, some have preferred to focus on a
rights-based justification for a stockholder approach (Has-
nas 1998). According to this line of reasoning, for-profit
companies are characterized as neutral arbiters of com-
peting consumer choices and, therefore, protective of
individual liberty (Friedman 1982). The ‘‘right’’ to free-
dom—both the freedom of consumers to choose and the
freedom of producers to deploy their products as they see
fit—offers a justification to this approach.
This too is a weak argument, since profitable firms do
not necessarily ensure greater consumer choice. Monopo-
lies may both inhibit consumer choice and generate sub-
stantial profits (US v. Microsoft Corp. 1998). Moreover, as
Mill recognized at the dawn of capitalism, commercial
enterprises are only neutral arbiters of commercial inter-
ests; they are not neutral arbiters of all values and thus not
protective of non-commercial values, such as cultural,
acetic, and environmental values (Mill [1859] 1977,
p. 275). These considerations suggest that both the utili-
tarian and deontic bases on which business ethicists defend
stockholder approaches fail to explain how profits serve as
a plausible moral metric in particular cases. While the
pursuit of profit may improve overall utility and protect
individual liberty in certain cases, their application breaks
down in many other contexts. In these contexts, the
application of the metric appears arbitrary and in need of
further justification, or implausible altogether.
Although I have focused my criticisms on the stake-
holder and stockholder approaches, my main target is a
universal approach to applied ethics. When business ethi-
cists draw on universal theory and only consider contextual
circumstances in the application of theory, the above
problems materialize. In light of this, business ethicists
may find it worthwhile to explore a more contextual
approach, one whereby contextual circumstances play a
role in the defense of substantive principles. In the next
section, I outline one such contextual approach.
Constructivism: A Contextual Approach to Normative
Theory
The metaphor of construction has been used in various ways
to name different theoretical approaches across a range of
disciplines, including mathematics, education, legal theory,
and social epistemology (Guba et al. 1994). In political
theory, it has been used to describe two very different
approaches. One approach familiar to International Rela-
tions Theory (but also applied in business ethics) focuses on
A Constructivist Approach 697
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how social processes of collective meaning help form
identities and interests, which in turn define situations as
calling for certain actions (Wendt 1992; Werhane 1999). A
second approach familiar to political philosophy concerns
the justification and objectivity of political principles and
judgments (Rawls 1999b). Each emphasizes the role of
human thought in constructing political norms. But the first
can be construed as relativistic given its emphasis on ‘‘the
world of experience as it is lived’’ (Schwandt 1994, p. 125).
By contrast, the second holds that constructed principles can
be justified as objectively valid irrespective of the cultural
processes within which they were constructed.
One familiar way of framing the objective validity of
political principles is through a procedural device. On this
view, political principles are justified as objectively valid
when they result from deliberations guided by appropriate
standards of practical reason. Rawls famously defends his
two principles of justice through such a device, arguing
that the principles chosen within the ‘‘original position’’ are
just in virtue of the procedure’s constraints on deliberations
(Rawls 1999a).
A second way of defending the objective validity of
constructed principles is to argue that principles are justified
as objectively valid when they function as the solution to
social problems (Rawls 1993; Korsgaard 2003; Street 2010).
In his later works, Rawls adopts this second approach by
developing a freestanding conception of justice around
which an overlapping consensus can emerge as the solution
to the problem of social unity given the fact of reasonable
pluralism (Rawls 1993, p. 391, 27n; Rawls 2001, p. 82n). I
will briefly explain an interpretation of this approach, and
then show how one might apply it to business ethics.
The general idea behind this interpretation is that social
problems tend to arise and persist when particular situa-
tions lack normative guidance. Constructivism analyzes the
underlying structure of the problem and constructs a prin-
cipled solution. The justification of a normative principle is
based on how well it functions as a solution to the problem.
Since different problems materialize for different reasons
related to a variety of circumstances, the objective validity
of any justified principle is not ‘‘real’’ in a metaphysical
sense. Rather, constructivism underwrites a mode of
objectivity whereby ‘‘rightness’’ (or ‘‘justice’’) names a
relational property—objectively valid principles solve
moral problems that might arise in the absence of nor-
mative guidance.
Since constructivism views various problems as calling
for distinct investigations in light of their unique contextual
facts, it implies a piecemeal approach to ethics; one that
investigates discrete issues one-at-a-time. Rawls expresses
this idea in his later works when he notes: ‘‘it is the distinct
structure of the social framework, and the purpose and role
of its various parts and how they fit together, that explain
why there are different principles for different kinds of
subjects’’ (Rawls 1999c, p. 533). David Miller, following
Rawls, puts the thought as follows: ‘‘in context C it is
always right to distribute the relevant goods and bads
according to principle P’’ (Miller 2002, p. 12). Provided we
can identify the unique factual features of context C, we
can then rationally explain the appropriateness of principle
P without reference to a more fundamental principle. This
facilitates a reversal away from a universal approach to a
contextual approach, since it begins with the contextual
circumstances of various subjects and then works its way
up to the more abstract principles. Moreover, the reversal
maintains universal reach insofar as ethicists can apply the
approach to different subjects.
Given both a problem-based approach to justification
and a variety of distinct contextual situations within which
various problems arise, it follows that there exists a plu-
rality of equally fundamental principles that are neither
derived from, nor represent the substantive applications of,
an overarching principle of justice (Miller 2002, p. 10).
This again contrasts with universal approaches, which
apply a single or lexically ordered set of principles to
various subjects as in the above examined accounts of the
stakeholder and stockholder approaches. Moreover, it
captures the way in which human thought constructs nor-
mative principles. Very simply, humans construct norma-
tive principles to solve problems we collectively face.
In addition to constructing principles, the characteriza-
tion of a problem is constructed insofar as it requires
human interpretation. It is, therefore, possible for people to
disagree on the appropriateness of a principle because they
disagree on the nature of a social ‘‘problem.’’ There are at
least two reasons why people might disagree on the nature
of a social problem. First, people might disagree on the
facts constituting the problem. Second, people might agree
on the facts but interpret their moral relevance differently.
Some hard cases reflect both reasons, as in the case of the
United State’s fifth Amendment ‘‘taking clause.’’ This
clause allows the government to take private property
provided the taking is (a) justly compensated and (b) in the
public interest. For those cases citing economic develop-
ment as the justification for a state’s exercising of its
eminent domain powers, the key question is whether the
transfer of property from one private party to another
serves the interest of all. People might arrive at different
judgments because they disagree on the facts. For example,
they may disagree on the likelihood that economic benefits
will spread throughout the community. In principle,
empirical data should reconcile such factual disagree-
ments—if not at the current moment, then at least at some
point in the future. But it is also possible for people to
agree on the facts yet disagree on whether the transfer of
property from one private party to another ever serves the
698 M. Buckley
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public interest. For example, some might interpret the facts
as implying: ‘‘Nothing is to prevent the State from
replacing any Motel 6 with a Ritz-Carlton, any home with a
shopping mall, or any farm with a factory’’ [O’Conner
(2005), dissenting]. On this interpretation, an economically
beneficial state-enforced transfer threatens the public
interest by weakening an individual’s private property
claim against the state.
Whenever circumstances are such that different yet
equally compelling moral diagnoses of a particular prob-
lem can be articulated, the principle proposed to govern
one diagnosis cannot indefeasibly govern competing
diagnoses, and, therefore, cannot serve as an objectively
valid principle for that case. This exposes the constructivist
approach to the same indeterminacy charge leveled against
the stakeholder approach, and might thus be construed as a
grave weakness. However, unlike stakeholder approaches,
the manner in which indeterminacy arises exposes the
source of moral disagreement as residing in an interpreta-
tion of the social problem rather than the application of a
principle. Since many social problems do in fact reflect
robust fact patterns of potential harms, the failure to rec-
ognize those facts as requiring a normative response
exposes a person’s attitude toward the problem as unrea-
sonable. To see this, consider the effects of global warming
on the Himalayan glaciers. These glaciers are the source of
fresh water for over 1 billion people (Watkins et al. 2006,
p. 165), and act as seasonal water towers locking fresh
water in the winter and releasing it gradually throughout
the warming months. ‘‘[C] hanges in snow and glacier
melt, as well as rising snowlines in the Himalayas, will
affect seasonal variation in runoff, causing water shortages
during the dry summer months. One-quarter of China’s
population and hundreds of millions in India will be
affected’’ (Bates 2008, p. 129). In order to correct for the
quickening pace of glacier melt and compensate for
increasingly dry summer months, China, India, and other
countries must invest in new water storage facilities now.
In the absence of investment today, people will suffer
terribly tomorrow. These facts support an obligation to
invest today in order to solve tomorrow’s problem. But
they also illustrate the way in which normative problems
cannot be articulated without referencing the facts. This is
important, for while the characterization of a moral prob-
lem is constructed, the construct must refer to fact patterns
that are themselves verifiable. A carefully delineated
interpretation drawing on such fact patterns can gain wide
consensus.
The above interpretation of constructivism facilitates a
reversal away from a universal approach to a contextual
approach to normative issues. This follows from its con-
ception of justification as the solution to social problems
that might arise in the absence of normative guidance. If
the various contextual circumstances creating different
problems are to find their unique normative solution, nor-
mative inquiry must take a piecemeal approach. As a result,
we can say that a contextual conception of constructivism
reflects the following four features: (1) the delineation of
fact patterns in terms of a real or potential social problems,
(2) a piecemeal approach that addresses different social
problems in terms of their public interest impact, (3) the
justification of principles in terms of their serving as a
solution to a public interest problem, and (4) the recogni-
tion of the plurality of equally fundamental normative
principles.
These four features are abstract and cover various nor-
mative investigations. In order to be useful to an applied
discipline such as business ethics they should be specified
in a language more familiar to those working in the dis-
cipline. In the next four sections I provide this crucial step
by recasting the above features as follows: (1) the delin-
eation of formal social problems associated with resource
allocation, (2) a piecemeal approach to business ethics
guided by the various aims pursued by different business
practices, (3) the justification of principles in terms of their
solving public interest problems, and (4) the recognition of
competing values implicit in the concept of ‘‘efficiency.’’
These four features enable a series of fine-grained analyses
into various ethical issues in business, thereby facilitating a
contextual or bottom–up approach to business ethics.
A Variety of Formal Problems Associated
with Resource Allocation
Some of our firmest and least controversial claims about
business ethics derive from unique allocation problems
with clearly definable structures. These allocation problems
include, but are not limited to, externalities, market fail-
ures, moral hazards, the tragedy of the commons, rent
seeking, and the various degrees of supply and demand
elasticity relative to various goods, along with, but again
not limited to, a host of related issues concerning free rider
problems, monopoly power, prisoner dilemma scenarios,
adverse selection and the provision of public goods.
This list reflects structural challenges implicit in market-
based systems of resource allocation. These challenges
result from difficulties concerning the following: inducing
the proper incentive matrix on the part of consumers and
producers, capturing the correct cost of production in
pricing, achieving informational balances among con-
tracting parties, and establishing greater predictability in
demand and supply shifts. Insofar as these problems are
structural, they represent formal circumstances within
which a wide variety of problems may obtain. For example,
monopoly power might be exercised through the
A Constructivist Approach 699
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elimination of competition, but it can also be exercised
through informational imbalances between purveyor and
consumer (Le Grand et al. 1992, pp. 45–46). Despite dif-
ferent instances, the general form of the problem associated
with monopoly power remains constant, namely, monop-
olies extract extra wealth from a market system without
returning extra benefit in the form of improved services,
better products, or innovation (Sowell 2000, pp. 89–95;
Mankiw 2009, pp. 322–326).
In addition to the variety of cases obtained within a
given allocation problem, the various allocation problems
are themselves formally distinct from one another.2 For
example, the tragedy of the commons reflects a formally
distinct structure from that of externalities, since the former
refers to an incentive matrix that encourages the overcon-
sumption of resources, while the latter refers to a burden
transferred from the cooperative efforts of one group to an
innocent third party (Hardin 1968, pp. 1243–1248; Kaul
et al. 1999, pp. 5, 6). The formal structure of each problem
is distinct, which implies that an analysis of a particular
case reflecting one or the other problem is distinct. Indeed,
one of the strongest arguments against the utilitarian jus-
tification of stockholder theory is that profits cannot plau-
sibly serve as a proxy for how well a company satisfies
consumer demand—and thus overall utility—since profits
often fail to reflect the externalized costs placed on con-
sumers or the community (Freeman 2002; Hasnas 1998,
p. 23). If these costs are considerable, as they often are in
cases of human health, safety, and environmental degra-
dation, then profitable firms may reduce overall utility.
Both the variety of cases obtaining within a given
allocation problem and the formally distinct structures
among various allocative problems facilitate contextual
analyses of discrete ethical problems within business. Since
these allocation problems are widely recognized as real and
legitimate challenges (Heath 2006), constructivism’s aim
of explaining how problems might arise should a particular
issue lack normative guidance is made easier in those cases
reflecting these allocation problems. In other cases, con-
sensus may be less forthcoming, but the analysis would
proceed in a similar manner. It would explain how certain
fact patterns negatively impact a given set of human
interests, or fail to be ordered in a way that best realizes
those interests. While the analysis of a particular fact pat-
tern may reference the above allocation problems, it may
also reference the natural aims of various business prac-
tices, as I explain in the next section. In either case, the key
is to explain how the fact pattern fails to appropriately
realize the public interest, as I explain in ‘‘The Scope of
Public Interest Concerns Reflected in Business Practices’’
section.
The Teleological Structure of Business Practices
The existence of various allocation problems implies a
piecemeal approach to business ethics, since each analysis
is conducted in light of the unique structures associated
with the problem. However, a constructivist analysis may
also draw on the discrete aims associated with different
business practices, which again implies a piecemeal
approach given the variety of such aims. This thought
contrasts with what some scholars have argued, which is
that all businesses share an identical aim (Gini and Mar-
coux 2012, pp. 22–30). However, this latter position is
difficult to defend, since the proliferation of methods
applied to business ethics and the persistent questioning of
its very nature and boundaries suggests otherwise (Drucker
1981; Stark 1993; Olson 1995; Brand 2009). Perhaps, as
Wittgenstein famously argued in a different context, there
are no necessary and sufficient conditions for something to
count as a business. Rather, there is a cluster of productive
practices sharing what he called family resemblances
(Wittgenstein 1958, p. 32). This is an unexplored route in
the literature, one suggesting particular practices are called
‘‘business’’ because they share resemblances to other
practices we call business.3 Two practices might resemble
one another because they share one or more of the fol-
lowing: producing a product, competing for clients, gen-
erating revenue, allocating natural resources, answering the
needs or desires of people, or engaging in exchange
transactions. As a result, hospitals, parking garages,
newspapers, colleges, coffee shops, banks, hotels, and a
host of other different productive practices—and when you
think about it, these are remarkably different—all fall
under the cluster concept, ‘‘business.’’
While I cannot pursue this provocative thesis here, one
feature common to most businesses (although not all) is
that of a teleological structure, or a goal toward which the
practice naturally aims. Importantly, the goal is not gen-
eral, like the goal of increasing profits. Rather, the goal is
constitutive of the practice in that it defines the behavior of
practitioners as being of a certain kind; in the absence of
the goal we could not recognize their behavior as belonging
to a particular undertaking. This teleological property is
particularly conspicuous in cases like medicine, finance,
education, journalism, and many other business practices.
For example, if those involved in medicine were not2 Joseph Heath advocates an approach to business ethics that focuses
on certain allocation problems, but he mistakenly categorizes
logically distinct issues under the single problem of ‘‘market
failures,’’ obscuring the manner in which various problems must be
delineated in terms of their own logic (Heath 2006).
3 Remarkably, ‘‘The Philosopher’s Index’’ returns zero entries for a
search including both the terms ‘‘business ethics’’ and ‘‘Wittgenstein.’’
700 M. Buckley
123
through their activities contributing to the improvement of
physical or mental well being, then we would hardly rec-
ognize those activities as falling under the practice of
medicine. This is not to claim that the individuals per-
forming these actions are intentionally pursuing the aim. In
many cases they work for a paycheck or a promotion.
Nevertheless, the actions of those laboring within the field
must work toward the realization of that field’s intrinsic
telos if the work they conduct is to be recognized as being a
certain kind.
It is also important to distinguish business practices
from the institutional support structures within which they
are embedded (Marcoux 2006). Institutions are primarily
concerned with maintaining and sustaining practices over
time (MacIntyre 1984, p. 194). As a result, they focus on
external goods such as money and other material necessi-
ties. While most practices require institutional support
structures for their long-term survival, too much attention
paid to these external goods can corrupt and in fact
undermine the realization of a practice’s natural end
(MacIntyre 1984, p. 196).
Similarly, when business ethicists focus too much on
organizational structures they tend to overlook the ethical
dimensions intrinsic to the practice. This has led some to
critique the discipline as focusing on peripheral issues
(Marcoux 2006). Whether that is true, it certainly is the
case that a focus on the teleological structure of business
practices lends itself to contextual analyses that can better
align managerial responsibilities with the aims internal to
practices. Business ethicists can isolate a set of obligations
implicit in the practice’s aim, not unlike the way doctors
and lawyers abide by obligations implicit in the aims of
medical and legal practices (Heath 2006). Having isolated
these aims, business ethicists can then use them as nor-
mative resources from which to construct a description of
the social problem, as I explain in the next section.
The Scope of Public Interest Concerns Reflected
in Business Practices
While those taking a teleological approach to business
ethics recognize the aims implicit in various business
practices, they tend to subsume these discrete aims under a
broader social or business goal (Solomon et al. 2003;
Sternberg 2000; Morrell and Clark 2010). The reason for
this is familiar. In the absence of a moral perspective
external to the practice’s aim, the practice itself is free from
moral scrutiny. This is especially disconcerting in political
philosophy where disreputable cultural practices are
sometimes defended on the grounds of moral relativism
(Nussbaum 1999, p. 125). However, the same relativist
logic is implicit in teleological approaches that rely solely
on the aims constitutive of practices. Questionable prac-
tices such as prostitution or gambling can escape moral
indictment in the absence of a moral measure outside the
practice (Scriven 1995, pp. 62, 64, 65). This renders some
teleological approaches subject to the charge of relativism,
a charge constructivism seeks to avoid.
A common way to overcome this charge is to absorb the
particular practice’s aim under a universal, top down
approach. Constructivism offers an alternative by relating
the different practices and their associative aims to specific
public interest outcomes. Usually, the normal channels of
private enterprise serve the public interest in virtue of
realizing their natural aim, as in the case of disseminating
news through a journalistic practice or providing housing
through a construction practice. Indeed, the utilitarian
justification of stockholder theory is based on this intuition,
and the innumerable instances of private firms delivering
goods and services to the public helps generate continued
support for this approach (Economist 2005). However, the
normal channels of private enterprise sometimes threaten
the public interest, at which point other mechanisms are
required to protect those interests. Whether these mecha-
nisms are industry-initiated best practices or government
regulation, the moral basis on which they rest is the public
interest.
Consider recent U.S. regulation of the use of antibiotics
in livestock. The regulation aims to protect public health. It
arose in response to a correlation between the overuse of
certain antibiotics within modern ranching practices and
the development of bacterial strains resistant to existing
antibiotic drugs (Harris and Gardiner 2012). Resistant
strains of bacteria are a public health threat and thus a
public interest problem if not addressed by regulatory
policy. This is a very specific concern addressed by an
equally specific regulatory constraint. It is not framed in
terms of a broad goal such as utility or profit, nor is it
specified in terms of a context-free conception of the public
interest (Morrell and Clark 2010). Instead, it is specific to
the context at hand.
Ideally, the ranching practice’s aim of providing quality
meat to the public could be achieved without external
regulation. However, informational lapses and collective
action problems can preclude individual firms from taking
action. Instead, correctives must be internally initiated by
the industry or externally imposed through public policy. In
either case, the example exposes the way in which a
practice’s aim is justified by reference to the public inter-
est. The quality of our food, the effectiveness of our
medicines, the integrity of the financial system, the
affordability of our schools, the reliability of our buildings
are public interest concerns worth protecting. Examining
the natural teleology of various practices and distinguish-
ing them from institutional support structures that help
A Constructivist Approach 701
123
sustain them over time—as argued in the previous sec-
tion—reveals their public interest dimensions. Various
forms of public policy—regulation, direct provision, and
subsidy—try to ensure that a business’ pursuit of its natural
aim actually realizes the public interest to its fullest
potential (Le Grand et al. 1992, pp. 54–60).
It is with reference to the public interest that the moral
dimensions of particular problems take shape. Recall,
constructivist analyses begin by describing the underlying
structure of a social problem. The description references
the contextual features of a business practice’s aim as well
as the allocation problem it might face when pursuing its
aim. However, it must also reference some normative
content if the problem is to be characterized as a social
problem. The public interest provides that content, and
while this is true of the utilitarian justification of stock-
holder and stakeholder approaches, a constructivist
approach isolates the discrete public interest serviced by a
particular business practice and the specific resource allo-
cation problems threatening that interest. It is with refer-
ence to the public interest that substantive principles are
justified. That is, principles are justified in virtue of rem-
edying public interest problems that might arise if a fact
pattern fails to be governed by an appropriate principle.
Since public interest problems are characterized by
reference to both formal allocation problems and the tele-
ological structures of various business practices, it is pos-
sible to view these two features as tools with which one can
construct an analysis of a public interest problem. That is,
one looks to see if the pursuit of a practice’s aim hits its
public interest target and, if not, whether there any formal
allocation problems precluding its realization. Once public
interest problems are isolated, principles are constructed to
solve them. Since the purpose of the principle is to remedy
the problem, it will reflect the values implicit in the anal-
ysis of the problem. In the next section, I explain how one’s
judgment about the ‘efficient’ pursuit of a particular busi-
ness practice depends upon values that can be used to
inform the construction of principles.
Competing Values Implicit in the Concept of Efficiency
The teleological structure of business practices implies a
means end relationship insofar as businesses must pursue
certain means to realize their ends. In business and eco-
nomics, this relationship is often captured by the term
‘efficiency.’ But efficiency is a concept subject to misuse
(Okun 1975; Barry 1990, pp. 1–15; Le Grand 1990). To see
this, consider that the term is often treated as a value to be
weighed and balanced against other values, as when people
argue that an ideal tax system ‘‘strikes a balance between
efficiency and equality,’’ thereby balancing two important
social values (Economist 2011, p. 84). This use conceals
rather than exposes the plurality of values on which the
concept depends. ‘Efficiency’ is not a value to be traded off
against other values. Instead, the concept refers to a series
of possible trade-offs among competing values (Le Grand
1990). In the language of economics, an efficient outcome
is Pareto optimal in that it cannot be rearranged so as to
realize a greater share of one value without at the same
time reducing the share of another value. A proper treat-
ment of the term requires a prior understanding of the
values to be traded off. Absent a clear understanding of the
underlying values, we cannot make proper judgments about
whether some state of affairs is in fact efficient.
It may be that ‘efficiency’ is often misinterpreted as a
value because it is often identified with productivity, where
productivity is understood as total output divided by total
input (Mankiw 2012, p. 14). This might mislead people
into equating the resulting ratio with efficiency. If this were
the case, one would then view an improvement in total
output as an improvement in efficiency. But an improve-
ment in output is clearly not the same as an improvement in
efficiency. To see this, consider the rapid proliferation of
cells within the body relative a given input of energy.
Further proliferation does not imply greater efficiency.
Rather, it could be a sign of cancer, which is an example of
an inefficient organism. We can arrive at this latter judg-
ment because the process on which the production of cells
depends has a context in which values take root. Judgments
about efficiency, but not productivity, are made with ref-
erence to those values.
If this is correct, then judgments about efficiency are at
the same time judgments about the proper tradeoff of
values relative to some end. As I illustrate in the next
section, an efficient pharmaceutical company achieves the
widest possible access consistent with the greatest possible
profit for sustaining innovation, since ‘access’ and ‘inno-
vation’ are values supporting a pharmaceutical company’s
aim of improving health (De George 2005, p. 552, Mait-
land 2002, p. 457). Since the justification of any business
practice’s end has already been grounded in the public
interest, it follows that judgments about the proper tradeoff
of values for a given business practice are at the same time
judgments about a practice’s proper relation to the public
interest. The construct of moral principles is guided by
these considerations, since principles appropriate to a
particular problem respond to these values insofar as they
help facilitate a business’ pursuit of its aim toward the
fullest possible realization of the public interest.
The above considerations also help support the idea of
ethical pluralism. Ethical pluralism is the natural outcome
of a constructivist approach that views various subjects as
calling for distinct investigations in light of their unique
contextual features. Those features imply that substantive
702 M. Buckley
123
moral principles are neither derived from, nor represent the
substantive applications of, an overarching principle of
justice. However, this contextual approach must also be
universal in reach if it is to offer a genuine method for
approaching ethical issues in business. The constructivist
interpretation outlined above is universal in reach, since it
isolates general features from which to construct both the
description of a public interest problem and the principles
remedying the problem. In the next section I provide a brief
example of how a business ethicists might employ these
features in an analysis of both a problem and its solution.
Outline of a Constructivist Approach Toward
Managerial Responsibility
A constructivist approach analyzes the contextual dimen-
sion of a problem and then constructs concrete principles as
a response to the problem. By contrast, a universal
approach considers contextual features only when applying
a given principle. Ian Maitland provides a good example of
a universal approach toward the issue of life saving drugs
(Maitland 2002). He argues that pharmaceutical companies
should be free to charge whatever price the market bears,
since profitable firms are also innovative firms, and inno-
vation helps everyone, including the poor. I will argue that
the problem with this argument is not that it is wrong, but
that it is used to cover too much (De George 2005, p. 551).
Maitland gets something right, but in virtue of disregarding
morally relevant contextual features his conclusion is
inappropriate to the context at hand.
I argued in ‘‘Universal Analyses of Ethical Issues in
Business’’ section that the application of a universal
approach to business ethics often raises questions about the
appropriateness of a principle to a particular case. If cir-
cumstances are not referred to when defending a principle,
its application may appear arbitrary or in need of further
justification. Maitland’s case ‘‘for leaving drug makers free
to set prices rests (almost) entirely on judgments about the
efficacy of the market at discovering and delivering med-
icines to more people who need them… If a better way is
found (say, one that dispensed with drug companies), then
that would become morally mandatory’’ (Maitland 2002,
p. 471). For Maitland, contextual considerations are made
only when applying the principle of utility. It is therefore
not surprising that his defenses leave us ill equipped to
articulate a ‘better way’; for the moral analysis of the
circumstances is already framed by a utilitarian logic
focused on outcomes rather than problems and their solu-
tions. Had Maitland employed the above outlined con-
structivist approach he would have considered the
contextual circumstances when analyzing the issue. The
description of the issues as a public interest problem would
have then pointed the way toward a solution, and the
solution would have borne only a vague resemblance to
Maitland’s preferred market-based solution and its under-
lying utilitarian logic. This, at least, is what I aim to
illustrate in the following argument.
Previously, I argued that constructivism’s four features
facilitate a contextual approach to real or potential public
interest problems. With respect to pharmaceutical manag-
ers’ moral responsibility to the global poor, these features
suggest a familiar and noncontroversial point of departure,
namely, the practice’s natural aim of improving people’s
health through the production and distribution of medicines
(Maitland 2002, p. 453; De George 2005, p. 552; Sonder-
holm 2009).4 This aim expresses a value—improving
health—and that value requires for its realization both the
creation of new medicines and the wide distribution of
those medicines to those affected by disease.
Aggregate data suggests that the R&D expenditures on
which innovation depends have outpaced inflation in recent
decades, placing upward pressure on prices that in turn
threaten access (DiMasi et al. 2003, p. 154). This has
placed pharmaceutical companies squarely within the
moral crosshairs of those stressing the importance of
access. Pharmaceutical companies have in part responded
through a practice called differential pricing. Differential
pricing allows ‘‘drugs to be sold cheaply or donated in low
income countries, while maintaining high prices in markets
like the United States’’ (Outterson 2005, p. 195). The net
result produces an average price supportive of R&D while
simultaneously achieving wide access, particularly to the
global poor. An ideal trade-off achieves the widest possible
access consistent with the greatest possible profit for sus-
taining innovation. Differential pricing works toward that
ideal.
Market-based differential pricing has produced some
success stories, such as the antiretroviral drug, Combivir,
which prices for approximately $20/day in the US but just
$0.90/day in sub-Saharan Africa (Outterson 2005, p. 253).
However, differential pricing only works well when there
is demand for the drug in affluent countries (Danzon and
Towse 2003). It provides no financial incentive to develop
drugs for extremely neglected diseases predominately
found in poor countries, so its effectiveness is very limited.
Indeed, the systemic pressures represented by the global
demand curve for pharmaceutical drugs tends to pushes
pharmaceutical innovation away from the global poor
toward the global rich, since the curve is both highly
inelastic, representing the affluent world’s ability and
willingness to pay various prices for the drugs they need,
and highly elastic, representing the developing world’s
4 Merk, Pfizer, and GlaxcoSmithKline mention this aim as part of
their mission or purpose.
A Constructivist Approach 703
123
sensitivity to small changes in a drug’s price (Pogge and
Thomas 2009a). Pharmaceutical managers are at once
discouraged from targeting diseases prevalent in poor
countries and encouraged to target diseases in the rich
world. As a result, managers tend to neglect the public
health issues of the global poor and concentrate their
efforts on those populations occupying the steep slope of
the global demand curve—the rich world (Hollis and
Pogge 2008, p. 4).
Free market defense of pharmaceutical production and
distribution recognize these systemic pressures as legitimate
reasons for defending the status quo. According to this logic,
if a company were to develop drugs for the global poor, it
would risk underfunding its R&D program. Such downside
risk is not in the public interest, since less innovation hurts
all. Consequently, one might argue—as Maitland and
Sonderholm argue—that it is morally better to follow the
dictates of the marketplace by targeting that portion of the
global demand curve supportive of innovation.
A free market approach, while based on a coherent
logic, should appear less reasonable in light of the above
contextual considerations. For it is now clear that the logic
assumes the global demand curve to be a fixed contextual
fact, and then infers from this assumption that the curve’s
incentive matrix places a practical constraint on pharma-
ceutical managers’ ability to address the health issues faced
by the global poor. This in turn justifies their avoidance of
diseases prevalent in developing countries. But from a
constructivist perspective, the curve is not a fixed contex-
tual fact taken into account when applying a universal
principle. Rather, it is a contextual consideration figuring
into the description of a public interest problem. When
taken into consideration with other contextual features,
including the practice’s natural aim and its supporting
values, the global demand curve is viewed as a resource
allocation problem hindering the full realization of the
practice’s aim. As such, it is not a fixed fact setting limits
on practical possibility, but rather a problematic contin-
gency for which a solution must be found. When viewed as
a problematic contingency, managers following the dictates
of the marketplace fail to act morally, since they neglect
their share of moral responsibility in reshaping the demand
curve by addressing its underlying conditions.
It is clearly within the purview of pharmaceutical
managers to reshape the economic and legal environment
within which pharmaceutical drug development and dis-
tribution takes place. Recent examples of such efforts
include orphan drugs and TRIPS (De George 2005, p. 560);
so one cannot argue that a similar effort with respect to the
global poor is beyond the moral scope of pharmaceutical
managers. Indeed, the entire task of reshaping the global
demand curve has been made much easier by an interna-
tional and interdisciplinary group of scholars and
practitioners that have developed the health impact fund
(HIF) (Hollis and Pogge 2008). The HIF specifically
address the systemic pressures associated with the global
demand curve. It is a voluntary program constructed
around a pay-for-performance remuneration model (Pogge
2009b, p. 546). Pharmaceutical companies choosing to
register a drug with the HIF are compensated from a pool
of money, financed primarily through governments, on the
basis of how well that drug adds to the length and quality of
human lives based on the number of quality-adjusted years
(QALYs) saved worldwide (Pogge 2009b, p. 547; Hollis
and Pogge 2008, pp. 28–34). This provides pharmaceutical
companies with an incentive to develop drugs targeting an
enormous, underserved market—the global poor. Should a
pharmaceutical company believe itself to be in possession
of a promising drug for the global poor, it can pursue its
research program confident in the fact that it will realize a
profit from its efforts. Whether the poor can afford prices
sufficiently high to maintain R&D is no longer an issue,
since the money does not come from the consumer.
Instead, it comes from a publicly supported pool of funds.
Nor is the remuneration based on the price established by
the company. Rather, it is based on the impact of the drug.
The greater the global impact, the greater the revenue
realized by the company.
‘‘The HIF is not a system which looks to the pharma-
ceutical companies for philanthropy: instead the idea is to
offer them the opportunity for market-based rewards for
the contribution their products make to improving global
health’’ (Hollis and Pogge 2008, p. 5). However, the HIF
does not, as Maitland advocates, allow pharmaceuticals to
set their own prices. Instead, companies agree to supply
their products at an administratively determined price in
exchange for a future stream of revenue based on the
effectiveness of the drug (Hollis and Pogge 2008, p. 14).
This is a contextually appropriate solution to a particular
public interest problem pertaining to a specific industry. It
represents an opportunity to remedy the inhospitable mar-
ket environment reflected in the global demand curve. It
recognizes the value of innovation by ensuring the financial
incentives necessary to create new drugs. It recognizes the
value of distributional access through a remuneration
mechanism designed at improving the quality of life for a
large, underserved portion of humanity. It protects a
company’s freedom and private property rights in virtue of
being entirely voluntary, which in turn reinforces market
incentives. Consequently, it better reflects and is thus more
appropriate to the values implicit in a pharmaceutical
practice than market mechanisms alone.
These considerations imply the following principle:
pharmaceutical managers are to support and participate in
the HIF (or some similar program). Or, to make a weaker
claim sufficient for my purpose, pharmaceutical managers
704 M. Buckley
123
are to make a good faith exploration of how they can
support and participate in the HIF. This is an exact and
appropriate principle for pharmaceutical managers given
their practice’s natural teleology and the health conditions
of the global poor. It was constructed from contextual
considerations concerning the natural aim of a business
practice, various structural problems associated with
resource allocation, the sub-values upon which the concept
of efficiency within the pharmaceutical industry ultimately
rests (access and innovation), and the scope of public
interest concerns associated with the practice’s response to
diseases prevalent in poor countries. When framed in terms
of a public interest problem, the description simultaneously
pointed the way toward a resolution, namely, a need to
correct the perverse incentive matrix reflected in the global
demand curve for pharmaceutical drugs. It is from this
solution that an exact and appropriate principle peculiar to
pharmaceutical managers was derived.
Conclusion
The above example, along with the previous sections, pro-
vides an outline for how one might apply a constructivist
approach to ethical issues in business. One implication of the
approach developed in this paper is that it will likely involve
collaboration across disciplines. This follows from its jus-
tificatory structure, which requires specifying a public
interest problem and a principled solution to the problem.
While ethicists are well trained to perform the normative
analyses associated with both parts, substantial time and
effort would be required to isolate the contextual facts
bearing on the issue. Ethicists are not in the best position to
isolate such facts and, as a result, require help from practi-
tioners possessing deep knowledge of their subject. Or, to
put it the other way around, managers, along with their key
advisors, are in a good position to isolate the contextual facts
bearing on the issue. However, they may be less adept at
analyzing the normative dimensions of the issue, thereby
failing to uncover a morally appropriate course of action. A
contextual interpretation of constructivism exposes the way
in which managers can benefit from consultation with ethi-
cists—they can benefit not because ethicists already posses a
universal moral metric for assessing the issue, but rather
because ethicists can help analyze the unique normative
dimensions of a particular moral problem. It is in light of this
analysis that principles can be formulated as exact measures
for guiding managerial decisions.
These considerations connect with an earlier point worth
repeating. Applied ethics must explain how ethical theory
might suitable cover a variety cases without sacrificing
exact guidance on specific issues. Constructivism meets
this challenge. It is methodological general and thus
provides a general method for addressing various cases.
However, since the method treats various problems as
calling for distinct investigations in light of their unique
contextual facts, the distinct investigations generate con-
crete principles appropriate to the context. Given that two
central approaches to business ethics—stakeholder and
stockholder approaches—fail by one or the other require-
ment, business ethicists may find it worthwhile to explore
this version of constructivism.
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