What makes a leader ethical? This paper critically examines the answer given by developmental theory, which argues that individuals can develop through cumulative stages of ethical orientation and behavior (e.g. Hobbesian, Kantian, Rawlsian), such that leaders at later developmental stages (of whom there are empirically very few today) are more ethical. By contrast to a simple progressive model of ethical development, this paper shows that each developmental stage has both positive (light) and negative (shadow) aspects, which affect the ethical behaviors of leaders at that stage. It also explores an unexpected result: later stage leaders can have more significantly negative effects than earlier stage leadership.

Understanding the evangelical framework for business ethics is important, since business evangelicals are well positioned to exercise considerable future influence. This article develops the context for understanding evangelical business ethics by examining their history, theology and culture. It then relates the findings to evangelical foundations for business ethics. The thesis is that business ethics, as practiced by those in the evangelical community, has developed inductively from a base of applied experience. As a result, emphases on piety, witnessing, tithing, and neighborliness, important foundations in the evangelical model for business ethics, have resulted in a multitude of applied ethical strategies. This operative ethics model is then evaluated, particularly in regarding to its limited focus on the fundamental purposes and structures of business. The article concludes with several recommended sources which can enrich the evangelical tradition of business ethics, suggesting many resources from the Reformed Christian tradition as well as other ideas from contemporary Protestant and Catholic thinkers.

In an article in the Journal of Business Ethics, Professor Kevin Jackson raised a critical challenge to my claim in The Ethics of International Business that corporations should be excused from certain rights-honoring responsibilities. Surely he is right to sound a note of caution. Not lightly, and not without deep reflection, should we let rich and powerful global corporations off the moral hook. Not lightly should we excuse the Sonys and General Motors of the world from the burdens of remedying global rights abuses. And this is the nub of the issue between Professor Jackson and me; for even though I have written that corporations should bear heavy and often unacknowledged duties in honoring human rights, I have also stipulated that these duties (unless “exceptional” circumstances obtain) should fall only in two classes, namely:

Some business ethicists view agency theory as a cautionary tale—a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but its unilateral focus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for a bilateral cautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our bilateral cautionary-tale formulation extends the normative boundaries of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

The neglect of marginalized stakeholders is a colossal problem in both stakeholder and entrepreneurship streams of literature. To address this problem, we offer a theory of marginalized stakeholder-centric entrepreneurship. We conceptualize how firms can utilize marginalized stakeholder input actualization through which firms should process a variety of ideas, resources, and interactions with marginalized stakeholders and then filter, internalize, and, finally, realize important elements that improve a variety of related socioeconomic, ethical, racial, contextual, political, and identity issues. This input actualization process enables firms to innovate with marginalized stakeholders and develop marginalized stakeholder capabilities. To this end, firms fulfill both their moral and entrepreneurial claims to marginalized stakeholders.

Robert Solomon has usefully set forth the outlines of an ontology of ethics for the employee. I seize upon three of the insights in his paper—specifically, relating to employee role, social nature, and virtue— and develop them along Aristotelean lines, showing along the way how classic “dilemmas” of the business ethics literature can be recast as problems of employee character and virtue.

This research examines how two dimensions of moral intensity involved in a corporation’s external crisis response—magnitude of effectiveness and interpersonal proximity—influence observer perceptions of and behavioral intentions toward the corporation. Across three studies, effectiveness decreased negative perceptions and increased pro-organizational intentions via ethical judgment of the response. Moreover, the two dimensions interacted such that a response high in proximity but low in effectiveness led to more negative perceptions and to less pro-organizational intentions. This interaction was particularly pronounced if the corporation portrayed itself as communal-oriented. The interaction was mediated by individuals’ ethical judgment, which was a function of the corporation’s perceived benevolent concern. We termed the interaction the Strategic Samaritan, for it was when the corporation tried to appear like a Good Samaritan, displaying proximity with victims but not accompanying it with effective help, that it was seen as acting with less benevolent concern.

If the ultimate purpose of ethical argument is to persuade people to act a certain way, the point of doing business ethics is to persuade others about what constitutes proper ethical behavior. Given that teleological perspective, the role of the business ethicist is to be an orator or rhetorician. Further, since one cannot expect more certitude than the subject warrants, from Aristotle’s perspective,while rhetoric is the most persuasive means of arguing, it is not scientific demonstration. Rhetoric uses examples and enthymemes. Such an approach answers the postmodern claim that ethical argument cannot lead to certitude and shows how the use of rhetoric helps avoid relativism and leads to more effective persuasion. According to Aristotle, rhetoric involves gaining truth with a “rough and general sketch.” This rhetorical approach allows the listener to “see as” the persuader sees, by attending to aspects of our shared experience and language. This mirrors insights of Kant’s reflexive judgment in his third critique as well as the later Wittgenstein, who compares ethics to aesthetics.

The responsibility of the food and beverage industry for noncommunicable diseases is a controversial topic. Public health scholars identify the food and beverage industry as one of the main contributors to the rise of these diseases. We argue that aside from moral duties like not doing harm and respecting consumer autonomy, the food industry also has a responsibility for addressing the structural injustices involved in food-related health problems. Drawing on the work of Iris Marion Young, this article first shows how food-related public health problems can be understood as structural injustices. Second, it makes clear how the industry is sustaining these health injustices, and that due to this connection, corporate actors share responsibility for addressing food-related health problems. Finally, three criteria (capacity, benefit, and vulnerability) are discussed as grounds for attributing responsibility, allowing for further specification on what taking responsibility for food-related health problems can entail in corporate practice.

Empirical research is largely supportive of the assertion of instrumental stakeholder theory that a positive relationship exists between “managing for stakeholders” and firm performance. However, despite considerable debate on the subject, the amount of variation across firm investments in stakeholders (stakeholder management performance) has not been adequately investigated. We address this gap using a sample of more than eighteen thousand firm-level observations over ten years. We find evidence to support an inverted U–shaped relationship between variation in stakeholder management performance and Tobin’s q, suggesting that firms that have some imbalance in their stakeholder management, but not too much, perform best. We discuss the implications of our study for instrumental stakeholder theory and managerial practice.

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.

The link between firm corporate social performance (CSP) and executive compensation could be driven by a sorting effect (a firm’s CSP is related to the initial levels of compensation of newly hired executives), or by an incentive effect (incumbent executives are rewarded for past firm CSP). Existing empirical work focuses exclusively on the incentive effect. In contrast, in this paper we explore the sorting effect of firm CSP on the initial compensation of newly hired executives. In doing so, we develop a novel theoretical approach based on an integration of stakeholder theory and human capital theory, suggesting a positive association between the initial compensation of executives and firm CSP strengths and concerns. It also suggests that the strength of this relationship varies between different executive roles (as a function of stakeholder-management responsibilities). We find support for this theoretical framework in a large sample of newly-hired executives employed by Standard & Poor 1500 firms.

According to one prominent view of rationality, for the choice of alternative to be justified, it must be at least as good as other alternatives. Michael Jensen has recently invoked this view to argue that managers should act exclusively to maximize the long-run market value of economic enterprises. According to Jensen, alternative accounts of managerial responsibility, such as stakeholder theory, are to be rejected because they lack a single measure to compare alternatives as better or worse. Against Jensen's account, this paper argues that choosing the alternative that is at least as good as other alternatives need not preclude managers from respecting considerations in addition to long-run market value. The paper argues that such considerations may be incorporated into managerial decision-making by introducing constraints and priorities into the process of maximizing long-run market value and by allowing for “clumpy” values.

In this article we investigate a philosophical problem for normative business ethics theory suggested by a phenomenon that contemporary psychologists call “bounded ethicality,” which can be identified with the putative fact that well-intentioned people, constrained by psychological limitations, make ethical choices inconsistent with their own ethical beliefs and commitments. When one combines the idea that bounded ethicality is pervasive with the idea that a person morally ought to do something only if she can, it raises a doubt about the practical relevance of the moral principles that business ethics theory prescribes. We call this doubt the Radical Behavioral Challenge. It consists in the idea that people cannot generally conform to the normative ethical principles that business ethics theorists prescribe, and that these principles are therefore practically irrelevant. We answer the Radical Behavioral Challenge and explore normative implications of our answer.

This article puts forth the thesis that the contractualist account of moral justification affords a powerful reply in business contexts to the question why a business person should put ethics above immediate business interests. A brief survey of traditional theories of business ethics and their approaches to moral motivation is presented. These approaches are criticized. A contractualist conception of ethics in the business world is developed, based on the work of John Rawls and Thomas Scanlon. The desire to justify our choices in terms that others can be reasonably expected to accept, or at least in terms that others cannot reasonably reject, is identified and differentiated from other accounts of motivation. It is this desire that constitutes the core motive to be moral in business on the contractualist conception. Implications of this contractualist conception for the theory and practice of business ethics are then discussed.

In their article, “Shrewd Bargaining on the Moral Frontier,” J. Gregory Dees and Peter C. Crampton challenge us with a puzzle about deception in bargaining. How can the practice of misleading others about our settlement preferences—the terms on which we are willing to come to an agreement —possibly be justified? On any standard ethical theory, they claim, Brer Rabbit's trick of professing fear of the briar patch in order to avoid being eaten by the fox would seem to be wrong, and yet we read this tale to our children for their moral edification. The discussion by Dees and Crampton of this apparent inconsistency is penetrating, instructive, and well-informed. It is also a delight to read.