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Business (Ethics) as Usual

Textbooks tend to take a superficial and often anti-market approach.

By Jason Fertig

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July 09, 2012

I abhor using traditional management texts for my courses because they present the practice of management from a theoretical approach that only works if the reader has never visited Earth. If a student really wants to learn something about managing, those books are overwhelmingly a waste of time. 

Still, I keep a collection of them as a reminder of what the kids are subjected to elsewhere.  Recently, I perused through the business ethics chapter in Cengage’s (formerly Thomson-Southwestern) 6th edition of Management by Richard Daft.  What I found was neither intellectually challenging nor fairly balanced. 

The bulk of ethics education was covered in a solo chapter titled “Managerial Ethics and Corporate Social Responsibility.“ (Ethics was integrated into other chapters, but through the useless “blue boxes” that students never read because they have heard that such content is rarely tested on exams.)

Because most readers have never had the privilege of learning business ethics from a 21st century textbook, I will give you the gist of it in about 400 words (please note that the boldfaced words are the ones that students see and are tested on; the summary descriptions are mine):

There are different criteria for making ethical decisions. You can do what’s best for everyone—this is called the utilitarian approach. If Joey decides to forgo dumping hazardous waste into public drinking water even though it may be cheaper, he is taking the utilitarian approach. 

You can do what’s best for yourself—the individualist approach. For example, when Fizzy Corporation produces bottle caps using Third World-country sweatshops, it is using the individualist approach to decision-making. 

You can do what protects the fundamental rights of humans. This is the moral-rights method. Hence, if the executives at Greenhouse, Inc. believe in human dignity, they won’t have administrative staff work in cages.  Instead, the staff would have cubicles.   

Finally, you can do what is the most fair for everyone. This is called the justice approach. In taking a justice approach, Foodway would not pay upper management at levels that are 100 times higher than the lowest paid worker.  It would have a more equitable distribution of wages and bonuses.

Furthermore, ethical decision-making processes can evolve over time.  It starts with what is best for the person.  This is the initial, preconventional stage.  Little children cry at night until they get a bottle.  They do not care if they deprive their parents of sleep.  

As people mature, they can evolve into doing what’s socially or legally acceptable, even if that action is not personally optimal – the conventional stage of moral development.  Most students don’t cheat on tests because they know it’s against the accepted rules of the classroom.  People don’t steal candy bars because they know it’s illegal. 

Finally, the most sophisticated level of moral decision-making is based on an individual’s view of right and wrong – possibly in contrary to what society views as correct. This is the principled, or postconventional method.  If a group of anti-capitalist people violently obstruct bankers from entering banks because these protesters want to send a message (even at the expense of the livelihood of others), their actions are ethically justifiable.

You might think that I have oversimplified and dumbed-down these texts, but I challenge you to look at any management textbook published in the last five years and show me otherwise. What I semi-sarcastically presented is what students hear when they are taught with this superficial, theoretical approach to business ethics.

The danger of this view of ethics is that ethics becomes another term akin to “core competencies” or “synergy,” when it is really an entire language that many students never learn. Ethics becomes just another word (or words) to memorize.

That's why I recommend that ethics instructors address students on their level. Students couldn't care less about corporate scandals, but ask them about “showrooming.” The retailer Best Buy is bleeding because shoppers play with the merchandise in the store, then go home and buy on Amazon. Are such people behaving ethically? Students rarely evaluate that kind of action on a moral scale.  

Oversimplification is only part one of the problem. Part two consists of the anti-business and anti-capitalist rhetoric that the books employ to characterize many business actions as unethical behavior. 

For example, the following examples are the topics in the pictures and captions (denoting ethical/unethical behavior) from Management’s ethics chapter:

  • An implication that embryonic stem cell research is ethical, but that refusing to do it would be unethical (pg. 140).
  • A businessman who hires employees off the street because “he thinks that everyone deserves a chance at a job” is acting ethically. Thus, business executives who hire selectively and don’t think that everyone deserves a job are not acting ethically (pg. 145).
  • A supermarket chain that urges customers to take an Earth Pledge and get involved in efforts to improve the natural environment is ethical, so business that fail to undertake such a campaign are not (pg. 150).
  • A secretary from Enron is pictured sitting on a pile of file boxes with a caption about how she lost her life savings because it was invested in company stock. The authors suggest that it’s unethical for a business to fail to tell employees not to invest too much of their wealth in company stock (pg. 153).

The 6th edition was published in 2003, so to be fair and current, I perused through the eTextbook for the most recent (10th) edition.  The content is the same and the visuals are still anti-business:

  • Page 131 contains tips for “challenging your boss on ethical issues.”  Hence, students read about how greedy executives will bleed civilization dry unless the newly minted management graduate steps in and stifles the wrongdoing.
  • Page 133 has a picture of a Walmart truck with a caption reflecting Walmart’s commitment to the green movement. However, nothing was mentioned about how Walmart’s pursuit of low prices enables low-income families to afford a large variety of groceries and household products.
  • Page 141 has a picture of younger workers with a caption stating that Gen Y-ers expect a serious commitment to sustainability from their employers. That is nice, but why does the book fail to note that young workers also seek to work for a business that produces a product or service that customers want to buy?  It’s difficult to buy carbon credits if an organization is in the red.

Rarely do business textbooks present any arguments in favor of the ethics of the pursuit of profit. Milton Friedman famously argued that business managers have their primary ethical obligation to the stockholders—to maximize their wealth. He claimed that ethical obligations to “social responsibility” amounted to telling managers that they should do nice things with money and property entrusted to them for other purposes. His position is seldom even presented, much less treated seriously.

Given the situation I have presented, one could question whether business ethics should be taught in college at all.  But that option isn’t viable—especially for the business schools, which have faced a great deal of scrutiny after the financial turmoil in 2008. 

A better discussion to have is one that asks whether college ethics courses are responsible for ethical outcomes or ethical processes.  The outcomes approach defines the expected behavior and encourages students to act that way when presented with given situations. The process approach challenges students to develop ethical frameworks for making decisions and then applying them to given situations. 

If we did that, the ethics education debate would shift from a left/right political debate to a discussion of whether we want to tell students how to think or to encourage students to contemplate their own actions. 

For those of us who value a classical liberal education, the latter is more appealing.

 


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