International Business Ethics
Lecture 1 Introduction
Why business ethics?
1. The ‘goodness’ of business cannot be taken for granted.
2. Decent ethics makes good pro ts (if business invest in good thinks, sustainability, decent pay
for employees, this will boost pro ts on the long term).
3. CEO’s and managers are in need of moral assistance.
4. Society at large expects decent moral behaviour and norms that underlie business practices.
5. It is just interesting to think about the values and norms that underlie business practices.
6. Philosophy has a lot to say about business.
7. It is important that people can trust corporations.
Recent business scandals
See BP in the book (in the sustainability chapter).
The textbook is about ‘crossings’
Crossings ..
• Between business and ethics.
• Between business and philosophy.
• Between business ethics and continental philosophy.
Combine things that are normally separated but bringing these concepts together can help in
making-sense of things.
The idea of crossings
• Implies a willingness to take a critical stance.
• To ‘cross’ positions that have remained unanswered.
• To develop your own position or perspective on business problems.
• Crossing ‘divides’.
The most important ‘divide’ here is the one between analytical and continental philosophy.
Business ethics is usually rmly entrenched in analytical philosophy. In the book, we try to make a
bridge between continental philosophy and analytical philosophy.
Analytical philosophy and continental philosophy (as seen from the perspective of analytical
philosophers)
Analytical philosophy
This claims that philosophy should be as scienti c as possible.
• Language analysis.
• Scienti c.
• Disciplined.
• Politically neutral.
• Methodological.
• Believe in progress.
• Real philosophy.
• Optimistic.
Continental philosophy
This claims that philosophy should not be about science.
• Poetry.
• Artistic, nonsensical.
• Wild, unruly.
• Politically left.
• Chaotic.
• There is no single truth; no progress.
• Rhetoric.
• Pessimistic.
1
fi fi fi fi fi
, Analytical philosophy and continental philosophy (as seen from the perspective of
continental philosophers)
Continental philosophy
• Analysis of being.
• Profound.
• Realistic.
• Politically engaged.
• Realistic.
• Critical about the endeavours of science.
Analytical philosophy
• Stuck in language games.
• Shallow.
• Naive.
• Neutral, but also petty.
• Docile followers of science.
• Docile followers of liberalism.
• Not serious.
The distinction between the two paradigms is only made in Anglo-Saxon countries, in analytical
philosophy. Continental is generally used there in a negative sense.
The claim of the book is that business ethics is deeply in uenced by analytical philosophy. We
explored what it might mean to have a business ethics infused with more continental elements.
This has led to the following organization of the book:
• Each chapter starts with a section in which the canonical part of business ethics is explained.
These sections are very important to understand for you to come to an understanding of issues.
• Then a section follows with critical and continental commentaries on the themes discussed in
earlier section. The idea is that you will be able of critically debating the most important issues.
What is ethics?
• It studies good and bad.
• It is re ective and critical.
• It does not provide answers but is aporetic.
What is morality?
Prevailing ideas about what is good and bad.
Ethics criticises morality.
What is business ethics?
• It studies good and bad in organizations.
• It is keen on improving the status quo in business and organizations.
• Criticism: it does not question the status quo (it does not, for example, ask questions about the
nature of capitalism or the principle or pro t).
• In this sense, it is nog a serious ethics (for such an ethics is critical and re exive and does not
provide clear-cut answers).
• In some sense, the agenda of our book is to infuse business ethics with more (philosophical)
ethics.
• We bring in continental thought in order to make this possible.
A di cult word: aporia
Philosophical problems are deemed to be aporetic if they do not lend themselves to easy
solutions. Literally, aporia means ‘no’ (a) ‘passage’ or ‘opening’ (poros). Aporias cause doubt,
puzzlement, confusion, and even perplexity. One of the synonyms frequently used for ‘aporetic’ is
‘undecidable’. Aporias are then theoretical situations in which one cannot make a decision. These
situations are, philosophers argue, characterized by undecidability. The concept of aporia has
been pivotal in the work of continental philosophers.It is often used by them to undermine the
idea that words, concepts, sentences, or language as such have determinate meaning.
2
ffifl fi fl fl
,Philosophers are not against solutions, but are against simple solution.
Lecture 2 Stakeholder theory (chapter 2)
The stakeholder theory is a way of handling complexity, not of reducing complexity.
Stakeholders
Ed Freeman’s de nition: “A stakeholder is any group or individual who can a ect, or is a ected by,
the achievement of a corporation’s purpose. Stakeholders include employees, customers,
suppliers, stockholders, banks, environmentalists, governments and other groups who can help or
hurt the corporation” (p. 37).
Friedman is a famous economist. He was an advocate
Friedman versus Freeman debate (pp. 38-41)
Milton Friedman Ed Freeman
Individualist position of instrumental, managerial Unless executives understood the needs and
economics that suggests only the interest of concerns of these stakeholders groups, they could
shareholders are of signi cance to managers. not formulate corporate objectives which would
receive the necessary support for the continued
survival of the rm.
There is just one social responsibility of the We need a plural apperception of the relation
corporation: to increase its pro ts (as long as it between business and society (pluralisme is het
stays within the rules of the game). samenwerken van verschillende beginselen).
Stakeholder theory is dangerous (for it undermines Isolating economic tasks from social tasks is
democracy): few trends could so thoroughly intellectually fallacious (the separation fallacy!).
undermine the very foundation of our free society Thinking that economy does not belong to the
as the acceptance by corporate o cials of a social social is systematically wrong-headed.
responsibility other than to make as much money
for their stakeholders as possible.
It is the task of politicians, not of entrepreneurs, to Stakeholders’ interests should therefore inform
decide about the distribution of wealth. strategic management.
Stakeholder theory is a form of socialism. Freeman opts for a prescriptive approach: it is,
however, not di cult to understand stakeholder
theory in a descriptive sense: many organizations
are overwhelmed by clashes of interests.
Shareholder capitalism serves the institutions of
democracy.
Leave companies to vent for themselves. Tell companies that they are involved in a highly
complex system and that they have to cope with
this.
Corporate Social Responsibility (CSR) - Freeman
From this conceptual starting point, Freeman suggests, we can trace the in uences of the
stakeholder concept in at least four distinct, mainstream management directions. For the interests
of this chapter we shall follow mainly the CSR strand of management for its contribution to
business ethics. Freeman views CSR literature, rather than in the terms we have just discussed,
as applying stakeholder concepts to non-traditional stakeholder groups: “less emphasis is put on
satisfying owners and comparatively more emphasis is put on the public or the community or the
employees”.
3
fiffi fi fi fi ffi flff ff
, Separation fallacy - Freeman
Freeman claims that ethics and economics
cannot be separated, just as social issues and
economics cannot.
Management theory is distinctly prescriptive -
Freeman
Good theories of management are practical.
The stakeholder model developed here is
prescriptive in the sense that it prescribes
action for organizational managers in a
rational sense.
Models of stakeholding
One of the ways in which Freeman most e ectively communicates the stakeholder approach to
strategic management is through models of stakeholding.
A traditional stakeholder map
The rm is at the hub and a number of spokes radiating to and from the hub to outlying
stakeholder categories. This model is supposed to demonstrate the interrelated relationships
between various stakeholders and the rm.
Why does this matter?
1. In fact, it is a debate about what we (i.e. society) are supposed to expect from corporations in
terms of their performance.
2. It matters in a pragmatic sense: managers are keen to know that society expects from them.
3. It is politically relevant: are business corporations better equipped to solve societal problems
than politics?
4. Freeman advocates a ‘reasonable pluralism’, which is supposed “to blend together the central
concept of business with those of ethics” (p. 41).
Generic stakeholder approach
Freeman suggests that stakeholder theory is not any single axiomatic theory, but rather that is is a
generic approach from which a ‘reasonable pluralism’ may be shown to arise.
Back to stakeholder theory: Freeman remains optimistic about the willingness of
entrepreneurs to embark on his ‘reasonable pluralism’
Many other business ethicists are as well
• So, there has been a wild proliferation of stakeholder models in the wake of Freeman’s
intervention.
• The chapter considers some of them (see Donaldson & Preston and Mitchell, Agle & Wood).
Two developments based on the stakeholder
approach
Other authors in business ethics have adopted
the stakeholder concept as the basis of fuller
analysis.
Concepts of structure: Donaldson and Preston
Donaldson and Preston suggest that
stakeholder theory has three typological
formulations. Freeman volunteers a simple
prescriptive intent, Donaldson and Preston have
a richer potential:
• Descriptive or empirical dimension: this arises
from the way in which the stakeholder
concept sees the rm as an interaction of
intrinsically valuable and potentially collaborative, competitive interests.
4
fi fi fi ff
Lecture 1 Introduction
Why business ethics?
1. The ‘goodness’ of business cannot be taken for granted.
2. Decent ethics makes good pro ts (if business invest in good thinks, sustainability, decent pay
for employees, this will boost pro ts on the long term).
3. CEO’s and managers are in need of moral assistance.
4. Society at large expects decent moral behaviour and norms that underlie business practices.
5. It is just interesting to think about the values and norms that underlie business practices.
6. Philosophy has a lot to say about business.
7. It is important that people can trust corporations.
Recent business scandals
See BP in the book (in the sustainability chapter).
The textbook is about ‘crossings’
Crossings ..
• Between business and ethics.
• Between business and philosophy.
• Between business ethics and continental philosophy.
Combine things that are normally separated but bringing these concepts together can help in
making-sense of things.
The idea of crossings
• Implies a willingness to take a critical stance.
• To ‘cross’ positions that have remained unanswered.
• To develop your own position or perspective on business problems.
• Crossing ‘divides’.
The most important ‘divide’ here is the one between analytical and continental philosophy.
Business ethics is usually rmly entrenched in analytical philosophy. In the book, we try to make a
bridge between continental philosophy and analytical philosophy.
Analytical philosophy and continental philosophy (as seen from the perspective of analytical
philosophers)
Analytical philosophy
This claims that philosophy should be as scienti c as possible.
• Language analysis.
• Scienti c.
• Disciplined.
• Politically neutral.
• Methodological.
• Believe in progress.
• Real philosophy.
• Optimistic.
Continental philosophy
This claims that philosophy should not be about science.
• Poetry.
• Artistic, nonsensical.
• Wild, unruly.
• Politically left.
• Chaotic.
• There is no single truth; no progress.
• Rhetoric.
• Pessimistic.
1
fi fi fi fi fi
, Analytical philosophy and continental philosophy (as seen from the perspective of
continental philosophers)
Continental philosophy
• Analysis of being.
• Profound.
• Realistic.
• Politically engaged.
• Realistic.
• Critical about the endeavours of science.
Analytical philosophy
• Stuck in language games.
• Shallow.
• Naive.
• Neutral, but also petty.
• Docile followers of science.
• Docile followers of liberalism.
• Not serious.
The distinction between the two paradigms is only made in Anglo-Saxon countries, in analytical
philosophy. Continental is generally used there in a negative sense.
The claim of the book is that business ethics is deeply in uenced by analytical philosophy. We
explored what it might mean to have a business ethics infused with more continental elements.
This has led to the following organization of the book:
• Each chapter starts with a section in which the canonical part of business ethics is explained.
These sections are very important to understand for you to come to an understanding of issues.
• Then a section follows with critical and continental commentaries on the themes discussed in
earlier section. The idea is that you will be able of critically debating the most important issues.
What is ethics?
• It studies good and bad.
• It is re ective and critical.
• It does not provide answers but is aporetic.
What is morality?
Prevailing ideas about what is good and bad.
Ethics criticises morality.
What is business ethics?
• It studies good and bad in organizations.
• It is keen on improving the status quo in business and organizations.
• Criticism: it does not question the status quo (it does not, for example, ask questions about the
nature of capitalism or the principle or pro t).
• In this sense, it is nog a serious ethics (for such an ethics is critical and re exive and does not
provide clear-cut answers).
• In some sense, the agenda of our book is to infuse business ethics with more (philosophical)
ethics.
• We bring in continental thought in order to make this possible.
A di cult word: aporia
Philosophical problems are deemed to be aporetic if they do not lend themselves to easy
solutions. Literally, aporia means ‘no’ (a) ‘passage’ or ‘opening’ (poros). Aporias cause doubt,
puzzlement, confusion, and even perplexity. One of the synonyms frequently used for ‘aporetic’ is
‘undecidable’. Aporias are then theoretical situations in which one cannot make a decision. These
situations are, philosophers argue, characterized by undecidability. The concept of aporia has
been pivotal in the work of continental philosophers.It is often used by them to undermine the
idea that words, concepts, sentences, or language as such have determinate meaning.
2
ffifl fi fl fl
,Philosophers are not against solutions, but are against simple solution.
Lecture 2 Stakeholder theory (chapter 2)
The stakeholder theory is a way of handling complexity, not of reducing complexity.
Stakeholders
Ed Freeman’s de nition: “A stakeholder is any group or individual who can a ect, or is a ected by,
the achievement of a corporation’s purpose. Stakeholders include employees, customers,
suppliers, stockholders, banks, environmentalists, governments and other groups who can help or
hurt the corporation” (p. 37).
Friedman is a famous economist. He was an advocate
Friedman versus Freeman debate (pp. 38-41)
Milton Friedman Ed Freeman
Individualist position of instrumental, managerial Unless executives understood the needs and
economics that suggests only the interest of concerns of these stakeholders groups, they could
shareholders are of signi cance to managers. not formulate corporate objectives which would
receive the necessary support for the continued
survival of the rm.
There is just one social responsibility of the We need a plural apperception of the relation
corporation: to increase its pro ts (as long as it between business and society (pluralisme is het
stays within the rules of the game). samenwerken van verschillende beginselen).
Stakeholder theory is dangerous (for it undermines Isolating economic tasks from social tasks is
democracy): few trends could so thoroughly intellectually fallacious (the separation fallacy!).
undermine the very foundation of our free society Thinking that economy does not belong to the
as the acceptance by corporate o cials of a social social is systematically wrong-headed.
responsibility other than to make as much money
for their stakeholders as possible.
It is the task of politicians, not of entrepreneurs, to Stakeholders’ interests should therefore inform
decide about the distribution of wealth. strategic management.
Stakeholder theory is a form of socialism. Freeman opts for a prescriptive approach: it is,
however, not di cult to understand stakeholder
theory in a descriptive sense: many organizations
are overwhelmed by clashes of interests.
Shareholder capitalism serves the institutions of
democracy.
Leave companies to vent for themselves. Tell companies that they are involved in a highly
complex system and that they have to cope with
this.
Corporate Social Responsibility (CSR) - Freeman
From this conceptual starting point, Freeman suggests, we can trace the in uences of the
stakeholder concept in at least four distinct, mainstream management directions. For the interests
of this chapter we shall follow mainly the CSR strand of management for its contribution to
business ethics. Freeman views CSR literature, rather than in the terms we have just discussed,
as applying stakeholder concepts to non-traditional stakeholder groups: “less emphasis is put on
satisfying owners and comparatively more emphasis is put on the public or the community or the
employees”.
3
fiffi fi fi fi ffi flff ff
, Separation fallacy - Freeman
Freeman claims that ethics and economics
cannot be separated, just as social issues and
economics cannot.
Management theory is distinctly prescriptive -
Freeman
Good theories of management are practical.
The stakeholder model developed here is
prescriptive in the sense that it prescribes
action for organizational managers in a
rational sense.
Models of stakeholding
One of the ways in which Freeman most e ectively communicates the stakeholder approach to
strategic management is through models of stakeholding.
A traditional stakeholder map
The rm is at the hub and a number of spokes radiating to and from the hub to outlying
stakeholder categories. This model is supposed to demonstrate the interrelated relationships
between various stakeholders and the rm.
Why does this matter?
1. In fact, it is a debate about what we (i.e. society) are supposed to expect from corporations in
terms of their performance.
2. It matters in a pragmatic sense: managers are keen to know that society expects from them.
3. It is politically relevant: are business corporations better equipped to solve societal problems
than politics?
4. Freeman advocates a ‘reasonable pluralism’, which is supposed “to blend together the central
concept of business with those of ethics” (p. 41).
Generic stakeholder approach
Freeman suggests that stakeholder theory is not any single axiomatic theory, but rather that is is a
generic approach from which a ‘reasonable pluralism’ may be shown to arise.
Back to stakeholder theory: Freeman remains optimistic about the willingness of
entrepreneurs to embark on his ‘reasonable pluralism’
Many other business ethicists are as well
• So, there has been a wild proliferation of stakeholder models in the wake of Freeman’s
intervention.
• The chapter considers some of them (see Donaldson & Preston and Mitchell, Agle & Wood).
Two developments based on the stakeholder
approach
Other authors in business ethics have adopted
the stakeholder concept as the basis of fuller
analysis.
Concepts of structure: Donaldson and Preston
Donaldson and Preston suggest that
stakeholder theory has three typological
formulations. Freeman volunteers a simple
prescriptive intent, Donaldson and Preston have
a richer potential:
• Descriptive or empirical dimension: this arises
from the way in which the stakeholder
concept sees the rm as an interaction of
intrinsically valuable and potentially collaborative, competitive interests.
4
fi fi fi ff
