Subjectivist Economics and Ethical Business

A number of business ethics theorist have highlighted the potential for economics to contribute to the advancement of business ethics. In response, this article emphasizes the insights of a particular area of economics that could provide such expansion and development. Subjectivist economics may yet provide an effective analytical framework through which to investigate and evaluate business decision making, and hence the ethics of business. Integrating the concepts of uncertainty, time and imagination, subjectivist economic theory contributes to a greater appreciation of economic choice and behaviour. While such notions are often effectively omitted from modern economic analysis to aid formal representation, business ethicists could utilize such concepts more effectively than their colleagues in economic theory. Significantly, the well-known economists who have championed the insights of subjectivist economics have themselves recommended its extension to an analysis of ethics.     

Friendships of Virtue,Pursuit of the Moral Community,and the Ends of Business

It is argued here that business firms can and do provide an incubator that enables the Aristotelian category of friendships of advantage to develop into friendships of virtue. This contradicts other literature that views acquaintances of utility as the business norm, and expresses pessimism concerning more advanced virtuous development of friendship within the business firm. It is argued here, however, that this virtuous development is integral to the Kantian social aim of pursuing a moral community, an aim which declares the appropriate moral motivation for business, and that certainly should incorporate a role for developing virtuous relations as a component of that pursuit. An atmosphere that encourages the development of relations of virtue is feasible, exists in real business, and is optimal for pursuit of moral business communities.     

Reasons To Be Ethical: Self-Interest and Ethical Business

This paper examines the self-interested reasons that businesses can have for ethical behaviour. It distinguishes between economic and non-economic reasons and, among the latter, notes those connected with the self-esteem of managers. It offers a detailed typology of prudential reasons for ethical behaviour, laying particular stress on those to do with avoiding punishment by society for wrongdoing and, more particularly still, stresses the role of campaigning pressure groups within that particular category of reasons. It goes on to suggest that because of their occupation of the moral high ground, campaigning groups are well placed to damage the self-esteem of managers and that this is why those groups seem able to exert an influence that goes beyond their somewhat limited capacity to inflict economic damage upon businesses. The paper concludes with the suggestion that we may be witnessing a virtuous spiral whereby rising public expectations of morality in business lead to ever increasing moral commitments by business that then cause those expectations to rise still further.     

Do entrepreneurial goals matter? Resource allocation in new owner-managed firms

This paper focuses on how entrepreneurial goals affect the resource allocation of new firm owners. It connects research in psychology and management that examines the core motivations of entrepreneurs with research in economics that models the behavior of owner-managers as utility-maximizing rather than profit-maximizing. We hypothesize that new owners with nonmonetary goals allocate their resources differently than do owners with monetary goals and that the differences are meaningful in size. To test these hypotheses, we estimate firm level equations based on economic theories of input demand that show how input quantities depend on owner goals. Data come from a national survey of new U.S. business owners. We find owner goals have both a statistically and substantively significant effect on resource allocation for new firms. Owners with nonmonetary goals put in more of their own and family hours rather than hiring outside employees. Implications for research and policy are discussed.     

Pedagogical Challenges in International Economic Education within Traditional Classroom Contexts

Recent global university rankings show that many Hong Kong universities are among the top 100 in the world. However, they are constantly under fire for the persistent outdated pedagogies in higher education. Because economic education is so highly regarded in Hong Kong as an international business hub, introductory economics has been taken as the focal subject in this case study. This article endeavors to distinguish five ubiquitous pedagogic challenges confronted by educators and students within traditional classroom contexts. Avenues for improvement are correspondingly proposed in order to boost the global competitiveness of local university education. Amongst other confounding factors, the pursuit of higher global university rankings, funding parsimony and vocationalization of tertiary education have caused our particular concern.     

Towards an Interdisciplinary Theory of Entrepreneurship

Entrepreneurship is one of the least understood topics in economics. The rising significance of small companies and especially of start-ups for the creation of new jobs has been an intensively discussed subject for nearly one decade. But there is still no theory of entrepreneurship.First this paper reviews the role of the entrepreneur in the history of economic thought and concludes that there is no agreed upon definition of what an entrepreneur does or is. The unsolved problem is the non-rational human behavior. Schumpeter and Kirzner have developed economic models of the role of the non-maximizing entrepreneur in the price-mechanism. But they did not develop a theory of entrepreneurship.In the second part of the paper entrepreneurship is understood as the pursuit of opportunites without regard to resources currently controlled (Stevenson, Roberts, and Grousbeck). Based on that definition the contributions of economic decision theory, sociological system theory, psychoanalytical research and behavioral studies are reviewed and an interdisciplinary approach to the development of an entrepreneurship theory is proposed.     

Will the Real A. Smith Please Stand Up!

In both the public and the business world, in academe as well as in practice, the ideas of Adam Smith are regarded as the bedrock of modern economics. When present economic conditions and management practices are criticised, Adam Smith is referred to by defenders and detractors of the current status quo alike. Smith, it is believed, defined the essential terms of reference of these debates, such as the rational pursuit of self-interest on part of the individual and the resultant optimal allocation of goods in free markets thanks to the workings of an “invisible hand.” In this article, we question whether this standard view of Smith, the economist, is tenable. We provide an extensive review of the extant secondary literature from economists, business ethicists, and philosophers, comparing their assessments to crucial elements of Smith’s theoretical system. As a result, we show that Smith, far from being an advocate of a value-free or even value-averse conception of economic transactions, stood for a virtue-based and values-oriented model of business. Accordingly, we argue current management education and the pedagogy of business ethics ought to be changed, and certain strategic conclusions drawn for business practice.     

Behavioural Economics: Next Steps

This essay briefly reviews select key accomplishments of a young field, behavioural economics, and then turns to suggest additional steps that are called for by the nature of the subject (economic behaviour) and the approach to its study embodied in this relatively new field (for a previous such survey, please see Fudenberg (Journal of Economic Literature, 44:694–711, 2006)).     

Richard H. Thaler — Wirtschaftsnobelpreisträger 2017

Richard H. Thaler was awarded this year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel “for his contributions to behavioural economics”. He studied systematic departures of human behaviour from the standard “homo oeconomicus” assumption. His famous work on boundedly rational behaviour considers both cognitive limitations and limited self-control. The cognitive limitations he studied are in particular the endowment effect, i.e. the observation that individuals assign a higher value to an object if they possess it, and mental accounting, a collection of theories regarding how individuals think about money. Furthermore, he provided path-breaking evidence on the nature of social preferences, which laid the groundwork for the development of several widely used economic theories incorporating altruism, fairness and reciprocity.     

Re-Thinking the Anthropological and Ethical Foundation of Economics and Business: Human Richness and Capabilities Enhancement

This article aims at showing the need for a sound ethical and anthropological foundation of economics and business, and argues the importance of a correct understanding of human values and human nature for the sake of economics and of businesses themselves. It is suggested that the ethical-anthropological side of economics and business can be grasped by taking Aristotle’s virtue ethics and Amartya Sen’s capability approach (CA) as major reference points. We hold that an “Aristotelian economics of virtues”, connected with the CA’s notion of human richness, can promote the shift to the concept of personhood, and can lead to a more “humanized” business, by fostering human flourishing, the enhancement of human capabilities, and the pursuit of a more humane development for each and every person.     

Rethinking corporate governance in the digital economy: The role of stewardship

Digital technologies are increasingly changing the nature of competition and generating externalities that impact society. On the one hand, digitalization allows organizations to create substantial economic value in shorter periods of time through improved economies of scale, scope, and learning, resulting is increasing returns on capital and competitive concentration. On the other hand, ensuing societal concerns with inequities, regulatory lapses, and lack of transparency and truthfulness represent significant challenges for effective corporate governance. This article addresses the consequences to stakeholders that emerge from the digital economy, discussing how traditional governance mechanisms are ill-equipped to subvert negative externalities. We offer a stewardship-based model of corporate governance as a solution to the pressing problems plaguing consumers, employees, and other salient stakeholders of digital business excesses, with an emphasis on truthful disclosures, enhanced transparency, improvements in equitable allocation of organizational resources, and heightened trust relationships. The focus is on the positive role that organizational leaders can play as exemplars of virtuous stewardship in a highly networked society. The article redefines a modern view of stewardship in a digital economy and applies its principles to the four Ts of virtuous stewardship, a practical corporate governance model that encompasses truthfulness, transparency, trust, and technological equity.     

Unmastered risks: From crisis to catastrophe: An economic and management insight

In contrast to sociology, economics, and above all, business economics has not yet discovered disaster management as a research topic even though this subject affects many areas of economics due to its interdisciplinary character. The enormous economic losses suffered by private parties, businesses and public institutions in crisis events, the huge amounts of money which are spent in disaster prevention, as well as the challenges that providing emergency management and disaster control present, contain many issues and have an increasing social and economic relevance. This article takes a close look at the concept of disaster from an economic and management point of view to mitigate the impact on human beings and environment. Based on the rational choice approach the study analyzes the state of preparedness that is mainly responsible for good or poor disaster prevention and presents a theoretical framework for a comprehensive disaster management including examples of practical applications. The conclusion outlines several important areas of future research in business economics.     

The EU’s migration and development policy: New approaches in economics for more effective public aid

Among the EU member states, increasing immigration has led to a recent debate over changes to European refugee and migration policies. The desire among the poor to escape from a hopeless economic and social situation in their home countries is the most common impetus for their migration. As the EU is the world’s biggest donor of public development aid, new approaches in European development politics are much needed to increase the effectiveness of this aid and to create a sustainable improvement of the economic situation among the poor. This article focuses on a new approach to implement more efficient and cost-effective development strategies that include individual time preference as well as insights from behavioural and experimental economics.     

流通经济学:从概念到科学

在大流通时代,流通经济研究却出现了低潮,这是应该引起思考的。本文在甄别流通经济学核心概念的基础上,认为流通领域的资源配置是流通经济学的研究对象,流通经济学的学科体系分为流通的基本假设、流通产业组织理论、流通产业结构研究、流通产业政策研究、流通发展与经济增长的关系研究、流通产业的发展趋势研究以及流通经济学专题等七大部分。文章提出,研究流通经济学首先要严格遵守形式逻辑内部一致的要求等一系列科学的研究方法,重视因果式、递推式的研究方法的运用,增加定量分析的比重,重视博弈论、计量经济学、系统经济学在流通经济学中的运用,使之真正成为科学。     

Internet Growth and Economic Theory

This paper focuses on economic implications of the Internet. We argue that some effects of the Internet can be understood within the context of traditional economics. Specifically, the Internet has the potential to make market more contestable and hence more competitive. Policy issues are also discussed.     

Cooling-Off Periods in the Consumer Laws of the EC Member States. A Comparative Law and Economics Approach

Lawyers tend to see cooling-off periods in consumer laws as a remedy for the problems caused by unequal bargaining power between sellers of goods and consumers. This article takes a different approach and argues that cooling-off periods can be seen as efficiency-enhancing devices. From an economic point of view, cooling-off periods provide a remedy for irrational behaviour on the part of consumers and may cure market failures, in particular problems caused by situational monopolies and asymmetric information. In spite of these important benefits, the economic approach also warns against possible disadvantages. The latter range from a moral hazard problem on the side of the consumer to the adverse counter-productive effects of cooling-off periods. A legislator who is informed by economic analysis may design cooling-off periods in ways that maximise their ability to cure inefficiencies and at the same time minimise their potential detrimental effects. Unfortunately, the relevant EC Directives and the current consumer laws of the Member States are not in perfect harmony with an efficiency enhancing-approach.     

Wirtschaftswissenschaften: zu wenig Pluralität der Methoden und Forschungsrichtungen?

The authors discuss the merits of including pluralist methods, theories and paradigms into the traditionally mainstream. They also evaluate the progress made by German faculties in this regard. The pluralism debate is in itself plural. There are numerous international and Germany specific dimensions and associated critiques of mainstream economics. Different approaches to economic policy must be organised in a manner which guarantees theoretical and paradigmatic pluralism — on which economic policy proposals ought to be based. Another view focuses on the educational effect and states that the mental frames of economics students are subject to manipulation; the foundation of their thinking is narrowed and recontextualised in an emotionally and politically highly charged semantic environment.     

The interface between globalization,trade and development: Theoretical issues for international business studies

Globalization, widely cited as the dominant international economic trend of the post-World War II era, is deeply connected with the opening of the world economy. The relationship between trade and growth has been intensively debated in the economic literature, within the fields of economics, sociology, political sciences, and others. However, in the areas of International Business (IB) and management studies, research about an integrated approach to the issues of globalization deserves further attention. In particular, in the 21st century, companies are being challenged to think differently about the purpose and societal impact of their activities on the poorest nations. Therefore, this paper addresses economic and social issues of accelerating globalization within a framework of IB and management studies.     

Productivity in the services sector: conventional and current explanations

One of the most conventional statements in economics, with regard to the services sector, suggests that, as a whole, this sector has a lower productivity level and growth rates than the other productive sectors. From this approach, we can derive the relative lower productivity in some advanced economies (such as the European countries versus the USA and some particular emergent economies) as an explanation of the growth of the tertiary sector. This paper will look in greater depth at issues related to services productivity, from conceptual aspects regarding the definition and meaning of productivity to methodological and measurement of services productivity. This work is essentially a necessary revision of the literature on economic growth, productivity and the services sector, reviewing not only the conventional literature but also those new waves of thinking.