International business ethics, as the term implies, cannot be national in character, anymore than international law can be national in character. Yet the analogy to law is as misleading as it is enlightening. For although we can speak of American, German or Japanese law, it is odd to speak of American, German or Japanese ethics. The reason is that ethics is usually thought to be universal. Hence there is simply ethics, not national ethics. Despite this, there is a sense that can be given to American business ethics or German business ethics. American business ethics does not refer to American as opposed to German ethics, but rather to the approach taken by those who do business ethics in the United States. What characterizes the American approach is not that it uses a special ethics or a national ethics, but that it is concerned with certain problems that are embedded in the American socio-economic-political system and faced by American business. German or Japanese business ethics differs from American business ethics in the cases and topics it deals with, in the different set of background institutions it takes for granted or investigates, and in the different culture, history, and social setting in which business operates.

The same is true of what is often called international business ethics insofar as we can distinguish American, German, Japanese approaches to it. International business ethics might refer simply to the comparison of business practices and their ethical evaluation in different countries; it might investigate whether there are in fact ethical norms commonly recognized in all countries that should govern international business and economic transactions, and if there are variations in ethical norms, whether multinational firms are bound by the ethical norms of their mother country, by the ethical norms of their host countries, by either, by both, or by neither. International business ethics might involve broad issues about the economic inequality of nations, the justice of the present international economic order, the ethical status and justifiability of such organizations as the World Bank and the International Monetary Fund and of their structures and practices, as well as the ethical dimensions of international debt, and the claimed economic dependence of some countries on others, or such global issues as the role of industry in the depletion of the ozone level.

The aim of this essay is to present a model of ethical technology management which assumes that elites who make the system design and development decisions should minimize the risks to stakeholders rather than maximize gains for their organizations. Given the unsettled state in ehical theory a familiar substantive Social, Economic, Environmental and Rights value set or ‘SEER’ ethic is presented. To enable foresight of the negative SEER effects of innovations a technology life cycle is introduced. A cognate issue life cycle is presented to facilitate the ethical resolution of SEER issues associated with such effects. The resultant problem of increased front end load delays and costs, due to ongoing system redesign and stakeholder discussions is found to preferable to high ‘rear end load’ crisis costs, e.g., of the Ford Pinto, Exxon Valdez, Dalkon IUD Shield, and the Union Carbide Bhopal plant. Furthermore the model promises improved returns on the capital investments involved, indications for further research in ethics, economics and organizational theory are noted.

“Technology is not preordained. There are choices to be made.”

—Ursula Franklin, The Real World of Technology

The question of how far, if at all, values invade, or should invade, the realm of empirical research is the focus of this issue of Business Ethics Quarterly. Readers will find a variety of answers and perspectives, along with some illustrative examples that support one or another of the possible views. Feelings run high on this topic, and they occasionally break through the normally staid atmosphere that one finds in most academic journals. That in itself may tell something about whether inquiry may be safely cordoned from a contaminating normative orientation. In form of presentation also, some of the articles selected by the editors vary from the conventional design. Essays and opinion pieces take their place alongside more formal presentations. Also included are two discussant papers.

The original inspiration for this collection was a symposium presented during the 1992 annual meeting of the Social Issues in Management division of The Academy of Management. Held in Las Vegas, more than one attendee enjoyed the irony of business ethicists rubbing shoulders with gamblers and other related exotica found in Sin City. The symposium papers are grouped together and, with one exception, appear in the original order of presentation. They are followed by the two discussants’ comments. It is fair to say that in the intervening period, all of these authors have had second, or even third, thoughts and have revised their initial declarations somewhat. This echoes a time-honored practice in the U. S. Congress of allowing members to “extend their remarks” for the (official) Congressional Record, which is another way of giving politicians a chance to tell it the way they wished they had said it in the first place. That’s not bad in the case of academics also, if someone is careful to see that the “extensions” do not extend too far, and in that sense the editors have done what they could. The lead paper, though not part of the earlier symposium, is closely related to the general theme and is included for that reason.

The claim that managers have a fiduciary duty to shareholders to run the corporation in their interests is generally supported by two arguments: that shareholders are owners of a corporation and that they have a contract or agency relation with management. The latter argument is used by Kenneth E. Goodpaster, who rejects a multi-fiduciary, stakeholder approach on the grounds that the shareholder-management relation is “ethically different” because of its fiduciary character. Both of these arguments provide an inadequate basis for the fiduciary duties of officers and directors of corporations. The basis is to be found, rather, in considerations of public policy, a point that was established in the Dodd-Berle exchange of the 1930s. This conclusion also shows the inadequacy of Goodpaster’s solution to the so-called stakeholder paradox, and an alternative solution to the paradox is presented.

The purpose of this paper is to enter the conversation about stakeholder theory with the goal of clarifying certain foundational issues. I want to show, along with Boatright, that there is no stakeholder paradox, and that the principle on which such a paradox is built, the Separation Thesis, is nicely self-serving to business and ethics academics. If we give up such a thesis we find there is no stakeholder theory but that stakeholder theory becomes a genre that is quite rich. It becomes one of many ways to blend together the central concepts of business with those of ethics. Rather than take each concept of business singly or the whole of “business” together and hold it to the light of ethical standards, we can use the stakeholder concept to create more fine-grained analyses that combine business and ethics; or more simply, we can tell many more, and more interesting, stories about business.

A complex organization is in effect a commons, which supervisory techniques cannot preserve from free riding. A corporate culture strong enough to create the requisite community-minded second-order desires and beliefs may be morally illegitimate. What morality requires is not local enforcement of foundational moral principles—a futile undertaking—but that the organization be a good community in that it permits the disaffected to exit, encourages reflective consideration of morality and the good life, and creates appropriate loyalty.

This paper delineates the normative and empirical approaches to business ethics based upon five categories: 1) academic home; 2) language; 3) underlying assumptions; 4) theory purpose and scope; 5) theory grounds and evaluation criteria. The goal of the discussion is to increase understanding of the distinctive contributions of each approach and to encourage further dialogue about the potential for integration of the field.

Russian is presently in a transition stage between the old centrally administered command economy and a market economy. The result is uncertainty and instability. In such a situation there is both little room and little concern for business ethics. The objective conditions for this include distortions in the systems of supply and exchange, political instability, and judicial ineffectiveness. The subjective conditions include the breakdown of morality under the communist system, and the wide acceptance of “wild” capitalism as a necessary stage in the development of a capitalist market system.

This paper views corruption as a form of contracting amenable to analysis from the viewpoint of transaction-cost economics. Concepts such as transaction, bounded rationality, opportunism, and asset specificity are shown to apply to cases of corruption. Both market and parochial corruption are hypothesized to vary in accordance with changes in the specificity of assets invested to support the corruption transaction. Evidence from a number of different studies tends to support the hypothesized relation. The implications of the transaction-cost perspective are developed for policy makers and directions for future research are suggested.

Our approach in this response is as follows. In § 1, we try to identify accurately Boatright’s central claims—both about Goodpaster’s original paper and about matters of substance independent of that paper. In § 2 and 3, we discuss the plausibility of those claims, first from a legal point of view and then from a moral point of view. Finally, in § 4, we defend the concept of paradox (and, in particular, the Stakeholder Paradox) as a limitation on practical reason which is not necessarily to be lamented. In fact, we believe, some paradoxes are better preserved from rather than guided toward resolution.

What is a corporation? Ed Hartman momentarily hesitates, commenting that “the last thing we need is another metaphor for organizations.” The truth is that we can all too easily imagine—and will no doubt get—much worse than another metaphor or model for organizational structures, functions and behavior, but the critical question is, of course, how apt a metaphor is “the corporation as commons”? If excitement about a subject can be measured by the number of current metaphors,—witness the current overuse and abuse of the “information superhighway” image—then the nature of the corporation would still seem to be a vibrant topic. But whether a metaphor depicts business organizations as teams playing games, as free-for-alls, as military hierarchies or as “dog-eat-dog” jungles makes all the difference, not only in our understanding of organizations but in the way that the people in those organizations understand themselves and, consequently, behave and treat one another.

Hartman suggests that corporations and other large organizations are a lot like, in fact are (at least metaphorically) identical to, “a commons.” This is, admittedly, not a very pretty or exciting metaphor. It is rather rural for such an urbane subject, and the metaphor of sheep farming may suggest some unintended and unfortunate images in the corporate world. But, nevertheless, the metaphor of “the commons” has the virtue of being an old, rather established philosophical and political metaphor. Indeed, it is so well established that it is no longer considered to be a metaphor. Literally, the commons is publicly owned land on which any villager’s sheep may graze. It is obviously a finite resource, and its maintenance is in the interests of all.

This paper outlines three conceptions of the relationship between normative and empirical business ethics, views we refer to as parallel, symbiotic, and integrative. Parallelism rejects efforts to link normative and empirical inquiry, for both conceptual and practical reasons. The symbiotic position supports a practical relationship in which normative and/or empirical business ethics rely on each other for guidance in setting agenda or in applying the results of their conceptually and methodologically distinct inquiries. Theoretical integration countenances a deeper merging of prima facie distinct forms of inquiry, involving alterations or combinations of theory, metatheoretical assumptions, and methodology. This paper explicates these positions, summarizes arguments for and against each, and considers their implications for the future of business ethics research.

Readers of Business Ethics Quarterly will be grateful to Professor Hartman for this very fine paper. He has, at last, advanced the dialogue on organizations. Instead of the usual attack on Peter French, et al., Hartman has introduced the notion of the commons as a heuristic device to get at the moral dimension (or lack thereof) or organizations. And unlike much of what goes on in business ethics, he has avoided the usual utilitarian/deontology/Rawlsian approaches. Instead he has depended on work of Frankfurt and Aristotle to introduce the notions of second-order desires, virtue, and community, all of which, at the very least, enriches the notion of an organization and the scope of its moral point of view.

I cannot respond to all the arguments in the paper, and I found myself surprisingly in agreement with much of it. However, agreement is not one of the virtues of a commentator. So I shall comment on two points: first on what I shall label Hartman’s communitarian approach, and second, on the notions of exit, voice, and loyalty.

In response to what is sometimes called “individualism” in ethics which, Hartman alleges, takes “time-honored moral principles as foundational and try[s] to figure out what communal or organizational arrangements best encourage people to treat one another according to them,” Hartman argues that a more propitious approach in organizational ethics is to “try to say something about what a good community looks like, and then see how a good community requires people to treat each other.” It turns out that a good community is, minimally, one in which “the commons is preserved, and [where] there is enough consensus that people are able to have extended conversations about morality from which moral progress may emerge.”

This paper discusses the normative ethical theory of the business firm advanced principally by William E. Evan and R. Edward Freeman. According to their stakeholder theory, the firm should be managed for the benefit of its stakeholders: indeed, management has a fiduciary obligation to stakeholders to act as their agent. In this paper I seek to clarify the theory by discussing the concept of a stakeholder and by distinguishing stakeholder theory from two varieties of stockholder theory—I call them ‘pure’ and ‘tinged.’ I argue that the distinctive claims of stakeholder theory, as contrasted with tinged stockholder theories, have been inadequately supported by argument.

A synthesis of the two theoretical bases of business ethics—normative philosophy and descriptive social science—is called for. Examples from the literature are used to demonstrate that to ignore the descriptive aspects of moral behavior is to risk unreal philosophy, and that to ignore the normative aspects is to risk amoral social science. Business ethics is portrayed as a single unified field, in which fact-value distinctions are inappropriate.

The measure proposed here, the ratio of the price reported in a given trade to the average world price for that commodity, is based on the average world price for a given commodity reported for all trades between the U.S. and all other countries for a given period. This new measure can be used to enable government agencies to identify trades between U.S. firms or individuals and their counterparts in other countries which are designed to further prohibited activities such as money laundering or tax avoidance. This measure would also enable the U.S. government to monitor trade flows more accurately, facilitating more analysis of trade imbalances between countries and tracking trade in strategic materials, for example, weapons. Use of this new measure could enable naive buyers and sellers of goods, for example, those situated in remote or underdeveloped markets, to know what their counterparts in more central and informed countries are paying or being paid for comparable goods, and hence to become more informed as trading partners.

Underlying this paper is the conviction that it is of utmost importance that business ethics should indeed become an integral part of business culture in all, and therefore also in developing countries. It is not to be denied that business ethics has to a much larger extent become part of the business culture in developed countries than in developing countries. In this paper, I first of all wish to provide an explanation for the fact that business ethics is fighting an uphill battle in becoming part of the business culture in developing countries. Secondly I want to give a thumbnail sketch of the preconditions that have to be fulfilled in order to stimulate the development of a moral business culture in developing countries. In order to achieve these goals I will focus mainly on Africa, and more specifically on South Africa.

In an engaging and provocative paper, Linda Trevino and Gary Weaver spell out the differences between the methodological approach characteristic of the natural sciences on the one hand and that of normative inquiry on the other (Trevino and Weaver, 1991). Near the end of their paper they raise a haunting question that will have increasing significance as the management literature in ethics evolves: namely, “Can the two approaches be integrated?”

As C. P. Snow (1962) noted, no one can deny either the stark differences between the two worlds of normative and empirical inquiry, or the mutual suspicion shown by their inhabitants. The methodology of natural science implies a non-normative, thoroughly descriptive vision of the world in which reality awaits discovery by the scientist prepared to use increasingly sophisticated techniques. In contrast, the methodology of normative inquiry, i.e., that of traditional moral philosophy, implies a world-vision in which most important issues are allocated to ethics, where empirical pursuits are frequently trivial and always require ethical guidance, and where empirical theories contain normative presuppositions unrecognized as normative even by their scientific adherents.

Competing schools of contemporary jurisprudence can be “internationalized” to elucidate special problems in interpreting obligations of multinational firms under emergent corporate and international codes. An “integrity” model proves superior to a relativist conception of international business precepts. An integrity jurisprudence provides a coherent vision of a global rule-of-law and ethics-of-principle for the world community’s rights correlative to MNC obligations while accomodating the indeterminate and contestable nature of interpretations of such textually-based directives.

In the canonical view of the corporation, management is the agent of the owners of the corporation—the stockholders—and, as such, has a fiduciary duty to manage the corporation in their best interests. Most business ethicists condemn this arrangement as morally indefensible because it fails to respect the right of other corporate constituencies or “stakeholders” to self-determination. By contrast, the modern agency theory of the firm provides a defense of this arrangement on the grounds that it is the result of stakeholders’ right to self-determination. This paper uses the example of managers’ fiduciary duty to stockholders to argue that different normative judgments often mask empirical disagreements.