In 1954, Richard Braithwaite chose as the topic of his inaugural lecture at Cambridge The Theory of Games as a Tool for the Moral Philosopher. Braithwaite argued that by using the recently developed mathematical theory of games, philosophers could resolve certain problems in moral philosophy previously considered unsolvable. Formal game theory is a product of the twentieth century. John von Neumann and Oskar Morgenstern established game theory as an important new branch of social science with the publication of their 1944 treatise Theory of Games and Economic Behavior. However, the basic idea that motivates game theory has much older intellectual roots in the work of philosophers such as Hobbes (1651) and Hume (1740). This basic idea can be expressed in the following way: How agents behave in a given social interaction depends crucially upon their reciprocal expectations. To give an example adapted from Braithwaite’s lecture, if you and I wish to have a telephone conversation, then exactly one of us must call. I should wait for your call precisely when I expect you to call, which you should do when you expect me to wait. Even in an example this simple, issues of fairness can come into play. We both want to coordinate our behavior and have our telephone chat. But each of us may prefer to call, so as to avoid having the other pay for the call. Braithwaite used game theory to model this example, and to propose a method for assigning the roles of caller and receiver equitably. He conjectured that this method could be applied in general to problems of distributive justice.

This study examined the relationship between the individual difference variables of personal moral philosophy, locus of control, Machiavellianism, and just world beliefs and ethical judgments and behavioral intentions. A sample of 602 marketing practitioners participated in the study. Structural equation modeling was used to test hypothesized relationships. The results either fully or partially supported hypothesized direct effects for idealism, relativism, and Machiavellianism. Findings also suggested that Machiavellianism mediated the relationship between individual difference variables and ethical judgments/behavioral intentions.

The employment of foreign workers is one of the most crucial problems today in the domain of work relations. Absorbing workers from abroad poses serious questions concerning the moral obligations of the employers as well as the government authorities in the migrant-receiving country. Unfortunately, the moral dilemmas of foreign labor have been largely neglected by business ethics researchers. This paper develops a conceptual framework based on the multinational corporation (MNC) ethical research to help examine the moral obligations of employers and states toward foreign workers, as opposed to citizens. The main argument is that domestic employers, who have the power to affect crucial aspects in the lives of migrant workers, incur obligations to these people and bear moral responsibility for their subsistence. As regards the host country in a universal social order based on the existence of nation-states, the employment of foreign workers poses a genuine ethical dilemma between two valid moral duties: the duty to improve the welfare of nationals and the duty to promote the interests of everyone, regardless of their nationality.

Lately, the field of business ethics has begun to take an intense interest in the relationship between religion and business ethics. Various books and articles are being produced at an increasing rate using theoretical and qualitative research methods. However, to date, almost no data exist quantifying relationships between religion and business ethics. This paper begins to provide such data by testing the relationships between religious upbringing, religious practice, Christian beliefs, and attitudes toward corporate social responsibility. Analysis of our sample demonstrates that religious practice and Christian beliefs have a weak relationship to attitudes toward corporate social responsibility.

Most writers on international business ethics adopt a universalist perspective, but the traditional expression of problems in terms of a discrepancy between (superior) home country and (inferior) host country values makes it difficult to preserve the symmetry required by a universalizability criterion. In this paper a critique of Donaldson’s (1989) theory is used to illustrate some of the ways in which ethnocentric assumptions can enter into a supposedly universalist argument. A number of suggestions are then made for improving Donaldson’s approach by careful attention to the requirement of universalizability, expressed in a contractarian theory in the form of agent symmetry or reciprocity.

We argue that the Rawlsian social contract argument advanced for stakeholder theory by R. Edward Freeman, writing alone and with William M. Evan, fails in three main ways. First, it is true to Rawls in neither form, nor purpose, nor the level of knowledge (or ignorance) required to motivate the veil of ignorance. Second, it fails to tailor the veil of ignorance to the fairness conditions that are required to solve the moral problem that Freeman and Evan set out to solve (whereas Rawls’s own use of the device surely tailors the veil of ignorance to the problem of designing a just social order). Third, the argument, considered apart from its claimed Rawlsian pedigree, fails to bolster the stakeholder theory because it fails to demonstrate the rationality of adopting the institutional rules that Freeman and Evan favor.

This presidential address to the Society for Business Ethics argues that business ethics rests upon the mistaken assumption that teaching and research in the field ought to aim at the incorporation of ethics into managerial decision making. An alternative to this Moral Manager Model is a Moral Market Model, in which the aim is to develop markets that produce ethical outcomes. The differences between the two models are discussed with reference to the themes of responsibility, participation, and relationships.

Fifty years ago, two Princeton professors established game theory as an important new branch of applied mathematics. Game theory has become a celebrated discipline in its own right, and it now plays a prestigious role in many disciplines, including ethics, due in particular to the neo-Hobbesian thinking of David Gauthier and others. Now it is perched at the edge of business ethics. I believe that it is dangerous and demeaning. It makes us look the wrong way at business, reinforcing a destructive obsession with measurable outcomes and a false sense of competition. It falsely characterizes or insidiously advocates a style of human behavior that is utterly unacceptable. To put the matter quite crudely, a person who actually practiced the form of “rationality” advocated by game theory would be something of a monster.

We should not ask for more precision than a subject is capable of giving us. — Aristotle, (384–322 B.C.E.) Nicomachean Ethics Bk. 1

Not that you won or lost—but how you played the game. — Grantland Rice (1880–1954) “Alumnus Football”

In a recent paper Allen Buchanan makes a basic distinction between two types of ethical problems which arise in business: “genuine ethical dilemmas, in which the problem is to discover what one ought to do, when two or more valid ethical duties (or values or principles) conflict, and compliance problems, which occur when one knows what one’s moral obligations are, but experiences difficulty in fulfilling them due to pressures of self-interest or loyalty to group or organization.” Buchanan argues that most business ethicists believe that this simple dichotomy is exhaustive. He claims it is not and argues that there is a third area of concern that involves perfecting imperfect duties, or coming to “have definite ethical duties, where before there were at best vague ethical goals.” However, I wish to argue that there is a further area of concern in business ethics and this area does not involve deciding between competing moral principles, values etc, attempting to comply with known principles, or imparting determinate content to vague, non-specific imperfect principles of obligation (the subject of Buchanan’s recent paper). This sort of problem occurs frequently in the third world in circumstances in which the agent entirely fails to recognize the normative structure that underpins the considered options.

As the author of one book on the elements of game theory and another on the possible applications to ethics (Binmore [3,4,5]), I suppose it is natural that I should be asked to reply to Robert Solomon’s (13) claim that “game theory has been a disaster in ethics, and now it threatens to become devastating to business ethics as well.” However, I find myself somewhat at a loss as to know what to say, since the game theory he attacks is not practiced by any game theorists with whom I am familiar. At first, I thought this was because my friends and I were deemed to fall into the class of “refined” game theorists to whom Solomon is willing to grant grudging acceptance, but it turns out that their refinement lies in appealing to principles that contradict the essence of the game theoretic enterprise. My guess is therefore that the plain old “vulgar” game theory which he attacks is actually intended to be the same game theory for which John Harsanyi, John Nash, and Reinhard Selten were recently awarded the Nobel Prize. My strategy in replying will therefore have to be the same as those innocent men who are asked why they beat their wives. Instead of explaining why wife beating is a good idea, I shall have to insist that I don’t beat my wife at all.

Rights, justice, and power raise many interesting questions. Why do such basic concepts as rights and justice have such different points of concern—equality, proportionality, medium rei (moderation or the middle of the thing itself without reference to the person using it)? Why are there such different perspectives in philosophy, theology, and law? Why is the notion of power in business ethics so isolated from the general discussion of applied justice in treatises on business contracts, employee relations, and in other related topics? Discussions of power seemed parallel with discussions of justice. The two did not seem to intersect.

In this paper I shall argue that rights, power, and justice are interrelated. While natural rights are the basis for justice, rights cannot be realized nor justice become operative without power. I shall call this relationship and the theory underlying it “Transforming Justice.” One of the basic concerns of this article is to notice the lack of interaction between rights and power in the traditional theories of justice. Granted that for many philosophers it is sufficient to determine what is just. But the notion of justice as an active virtue that persons are to exercise in their dealings with others goes further. It touches the realities of life that every person experiences. Life does not separate rights from power. Reflection upon the current separation of rights from power both in theory and in action is analogous to the separation of the “sensory” from the “imaginative” in art and in life. The urge to devise a framework of justice that brings out the wholeness of its existential being is the underlying rationale for developing a theory of transforming justice. Another purpose for developing a theory of transforming justice is to suggest a conceptual framework of business ethics and corporate social responsibility that incorporates values, rights, power, and virtue. Authors and teachers approach these issues either from a value (or rights/justice) perspective or from the view that institutions respond only to those who exercise power (apart from legitimate claims). Thus, it is necessary for a conceptual framework to incorporate the dynamics of power and the qualifying aspects of rights or claims. A natural law approach to justice and rights argues that humans have certain basic rights that others, whether humans or institutions (regardless of source), are required to respect. Natural rights theory places the burden or duty on each individual to respect the rights of every other person. In addition, justice is usually defined by natural law theorists as “giving each person his or her due,” what is required by natural rights, what is owed, earned, or deserved. But its applications fall short of reality. It raises other questions. How does one person get another to give him what is “his due”? How are duties and claims entailed by natural rights enforced in practice? The notion of transforming justice attempts to answer these questions.

Our research investigated pricing policies of fast-food restaurants in predominantly black neighborhoods. We argue that the lack of monitoring of franchisees’ pricing policies leads to higher prices. Results indicate that franchisees are significantly more likely than company-owned outlets to charge higher prices based on the proportion of blacks in a neighborhood. These price differences do not appear to be explained away by cost or competition factors. Our findings do not establish an intent to discriminate; nevertheless, we discuss the fairness of the pricing structure found.

Solomon’s article and Binmore’s response exemplify a standard exchange between the game theorist and those critical of applying game theory to ethics. The critic of game theory lists a number of problems with game theory and the game theorist responds by arguing that the critic’s objections are based on a misrepresentation of the theory. Binmore claims that the game theorist is in the position of the innocent man who, when asked why he beats his wife, must explain that he doesn’t beat his wife at all (Binmore, 2). However, even if we agree that the denial is true, we might still like to know why, if you are not beating your wife, do others consistently accuse you of doing so? Or, to get away from this rather sexist metaphor, why are critics of game theory like Solomon (according to game theorists) consistently getting game theory wrong?

While, as I argue in the first section, critics of game theory such as Solomon may misrepresent game theory, this misrepresentation is not entirely their own fault. The way in which game theory is traditionally presented is misleading. For example, students are usually first introduced to game theory through the prisoner’s dilemma. It is compelling drama, but lousy PR for the use of ethics in game theory. (You want to know what to do? Let’s see how two thieves reason.) However, while Binmore is right to argue that game theory neither assumes nor entails the theory of human nature that Solomon finds objectionable, Solomon is also right to argue that game theory is promulgated and applied with what appear to be a robust set of assumptions about human motivation. I argue in the second section, however, that in fact neither these applications of game theory, nor game theory itself, is committed to a particular theory of human motivation. Thus, while game theory is not able to provide a complete ethical theory (assuming that a theory of human motivation is essential to such a theory), it is not contrary to ethics. In the final section I note that Aristotle, rather than being the alternative to using game theory in business ethics, as Solomon suggests, actually points the way to an ethical theory that can combine a discussion of both game theory and “those nagging and controversial questions about what it is that people do and ought to care about” (Solomon, 7).

This paper is a report of an empirical psychological study of the relationship between the ethical and financial beliefs and desires of ethical investors. Semi-structured interviews of 20 ethical investors have been carried out by the project 10 of which have been analysed using qualitative data analysis software. All of our participants faced the problem that, while they had ethical concerns, they were not prepared to sacrifice their essential financial requirements to address them. We found four common ways of dealing with this problem: they divided up their money into core and surplus accounts; they decided that it was enough to only be a partial ethical investor; they avoided detailed consideration of the costs of ethical investment; and they avoided rigorous ethical thinking. One equilibrium position arising from these responses is a portfolio approach to ethics, which allows people to assuage their consciences by investing only a small proportion of their investments ethically, while leaving the rest in non-ethical investment vehicles.

Legal issues have long been a prominent part of the discourse of business ethics. This widespread attention to legal questions within business ethics arises primarily because specific legal issues are as a practical matter often intertwined with prominent ethical issues occurring in the workplace. Many of the central issues of business ethics—issues such as whistle blowing, insider trading, and workplace privacy—have significant legal dimensions.

But this widespread attention to specific legal issues obscures a more significant deficiency within business ethics. This deficiency relates to the consideration of law at a much more fundamental level. Business ethics lacks any developed awareness of the images of law within its discourse.

Unlike jurisprudence, the field of business ethics has little in the way of fully developed models or concepts of law. Rather, our understanding of the law here exists more at the level of images—general, unreflected-upon depictions of the law, determinate in some aspects, indeterminate in others.

Such images are epistemologically potent, containing unexamined assumptions and exerting an often unrecognized influence over the development of our knowledge. As such, they deserve our attention, especially within a newly evolving field such as business ethics. Of particular importance to business ethics is how such images portray the relation of law to ethics.

Recent developments in personality research point to an alchemy of character composed of five elements: extroversion, agreeableness, conscientiousness, neuroticism, and openness to experience. This paper surveys this research for its implications to the study of the virtues in organizational ethics. After subjecting each of these five character traits to several tests as to what constitutes a virtue, the empirical evidence supports an organizational virtue of agreeableness and an organizational virtue of conscientiousness. Although the empirical evidence falls short, an argument is mobilized on behalf of an additional organizational virtue of openness to experience.

This article elaborates a normative Stakeholder Management Theory (SHMT) from a critical theory perspective. The paper argues that the normative theory elaborated by critical theorists such as Habermas exhibits important advantages over its rivals and that these advantages provide the basis for a theoretically more adequate version of SHMT. In the first section of the paper an account is given of normative theory from a critical theory perspective and its advantages over rival traditions. A key characteristic of the critical theory approach is expressed as a distinction between three different normative realms, viz., legitimacy, morality, and ethics. In the second section, the outlines of a theory of stakeholder management are provided. First, three basic tasks of a theoretically adequate treatment of the normative analysis of stakeholder management are identified. This is followed by a discussion of how a critical theory approach to SHMT is able to fulfill these three tasks.

In recent years, a number of authors have used game-theoretic reasoning to explain why purely self-interested agents would ever conform their economic activities with the requirements of justice, when by doing so they forego opportunities to reap unilateral net gains by exploiting others. In this paper, I argue that Hume’s justification of honest economic exchanges between self-interested agents in the Treatise foreshadows this contemporary literature. Hume analyzes the problem of explaining justice in self-interested economic exchange as a problem of agents coordinating on a pattern of reciprocal cooperation, as opposed to some other behavioral pattern such as reciprocal exploitation, in exchanges repeated over time. Hume’s arguments anticipate informally the contemporary interpretation of just economic practices as forming part of an equilibrium of a repeated game. I close the paper by arguing that Hume does not provide a satisfactory explanation of how the mutual expectations that support justice in economic exchange arise in a community of self-interested agents. The problem Hume leaves unsolved is one of equilibrium selection, that is: Why do agents follow an equilibrium corresponding to just economic exchanges rather than some other equilibrium corresponding to unjust exchanges? I also argue that contemporary game theory still lacks a satisfactory theory of equilibrium selection, but that such a theory would lead us closer to a satisfactory Humean reconciliation of justice and self-interest in economic exchange.

Stakeholder theorists have generally misunderstood the nature and ramifications of the fiduciary responsibilities that corporate directors owe their stockholders. This fiduciary duty requires the exercise of care, loyalty, and honesty with regard to the financial interests of stockholders. Such obligations do not conflict with the normative goals of stakeholder theory, nor, after a century of case law that includes Dodge Bros. v. Ford, do fiduciary responsibilities owed shareholders prevent managerial policies that are generous or sensitive to other corporate stakeholders. The common law recognizes a multitude of legal relationships between various corporate constituents, and fiduciary duties are only a subset of the obligations that arise from these relationships. This article argues that statute and case law can bring comparable legal protection to constituents other than stockholders, and suggests ways that these protections might be further strengthened. Implications for management education are also discussed.

The organization is importantly different from both the nation-state and the individual and hence needs its own ethical models and theories, distinct from political and moral theory. To develop a case for organizational ethics, this paper advances arguments in three directions. First, it highlights the growing role of organizations and their distinctive attributes. Second, it illuminates the incongruities between organizations and moral and political philosophy. Third, it takes these incongruities, as well as organizations’ distinctive attributes, as a starting point for suggesting an agenda for an ethics of organizations.