Hume’s Theory of Business Ethics Revisited

Hume’s examination of the conventions of property, trade, and contract addresses the moral foundations that make business possible. In this light, Hume’s theory of justice is also a foundational work in business ethics. In Hume’s analysis of these conventions, both philosophers and game theorists have correctly identified “proto” game-theoretic elements. One of the few attempts to offer a Humean theory of business ethics rests on this game-theoretic interpretation of Hume’s argument. This article argues that game-theoretic reasoning is only one part of a Humean business ethics and this can be shown by further analyzing Hume’s theory of justice. As we examine his theory, it becomes clear that Hume is not trying to show how it is always rational to respect the rules of business. Hume is not engaging in, or attempting, a reconciliation project and neither is a Humean business ethics. The final section of the article is a brief Humean analysis of the effectiveness of codes of ethics. The purpose of this section is not to decide the issue but to show how a Humean approach is both useful, relevant, and involves more than reconciling rationality and morality.     

Moral Agency,Profits and the Firm: Economic Revisions to the Friedman Theorem

The paper reconstructs in economic terms Friedman’s theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the “rules of the game,” largely legal ones; and (3) the creation of ethical capital, which allows moral conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm. Dr. Sigmund Wagner-Tsukamoto is researcher in business ethics at the School of Management of the University of Leicester, UK. He holds two doctorates, one in social studies from the University of Oxford, UK, and one in economic studies from the Catholic University of Eichstaett, Germany. He has widely published on green consumerism and institutional economic issues that concern organization theory and business ethics theory. His publications include the books Understanding Green Consumer Behaviour (Routledge, 1997 & 2003) and Human Nature and Organization Theory (Edward Elgar, 2003).     

Value Creation,Management Competencies,and Global Corporate Citizenship: An Ordonomic Approach to Business Ethics in the Age of Globalization

This article develops an “ordonomic” approach to business ethics in the age of globalization. Through the use of a three-tiered conceptual framework that distinguishes between the basic game of antagonistic social cooperation, the meta game of rule-setting, and the meta-meta game of rule-finding discourse, we address three questions, the answers to which we believe are crucial to fostering effective business leadership and corporate social responsibility. First, the purpose of business in society is value creation. Companies have a social mandate to organize mutually advantageous cooperation. Second, business ethics should teach the management competencies necessary to fulfill business’s societal mandate. These competencies are optimization competence in the basic game of value creation, governance competence in the meta game of (political) rule setting, and the three discourse-related skills of orientation competence, reception competence, and communication competence necessary for engaging in the meta-meta game. Third, companies can help solve global problems through global corporate citizenship if they participate as political and moral actors in rule-setting processes and rule-finding discourse aimed at laying the foundation for value creation on a global scale.     

Game theory in marketing science uses and limitations

This paper reviews some major concepts in game theory and indicates how they may apply to marketing science. The theory of games provides a framework for addressing problems of competitive strategies and of buyer-seller interactions. These issues are important in studying industrial markets where there are a small number of buyers as well as for studying how to incorporate knowledgeable, active competitors into consumer marketing mix models.Few marketers have seen much benefit in the past from developments in game theory. This is partly because of the historical preoccupation of game theorists with complete information, zero sum games. The richer area of games of incomplete information may have much more to offer the marketing scientist.In this paper we review how game-theoretic approaches (interactive models) differ from most previous approaches, which are optimizing and asymmetric. We then look at how these alternative approaches apply to two problem areas - competitive entry and bargaining. Then we review potential applications of game theory in marketing and the value of applying marketing science approaches in game theory. We conclude with a perspective on future developments in this field.     

Contracting in dynamic games

We study the bargaining problem in the dynamic framework. The classical way of solving a dynamic bargaining problem is to transform the extensive form game into the normal form and then apply the theory of bargaining well developed for normal form games. This means that the parties sign a binding contract in the beginning of the game which defines their actions for the full duration of the game. In this article, we consider the setting where the players monitor the contract as the game evolves. The main purpose of the article is to study conditions under which the players do not have a rationale to renegotiate a new contract at any intermediate time period; i.e., the contract is time consistent. Time consistency restricts the set of bargaining solutions in dynamic games. We will show that time consistency of the contract is guaranteed if the bargaining solution satisfies the controversial independence-of-irrelevant-alternatives property.     

不同零售商在相同时期需求不同的经济批量博弈

经济批量博弈是库存博弈的子问题,已经建立了经济批量的模型以及相关的基本理论知识,为研究经济批量模型所对应的博弈奠定了理论基础,对于合作博弈需要保证合作联盟的稳定性,因此需要研究经济批量博弈的凸性。利用合作博弈论的理论知识,线性函数的凹性,对推广的经济批量博弈证明了其凸性,进一步完善了经济批量博弈的数学理论。凸博弈保证合作联盟的稳定性,减少了商家的成本,增加了商家的利润。     

Preferential rules of origin—A conceptual outline

The European Community’s preferential trading agreements with third countries all contain origin rules, which lay down a number of detailed criteria that must be met in order for goods to qualify for preferential customs treatment. These “preferential rules of origin” are currently under discussion by policy-makers¹ and economists developing guidelines for policy-makers. However, no such discussion is apparent in the more recent academic literature. It appears that scientific debate so far has not analysed in depth the basic legal concepts and instruments contained in preferential trading agreements. The following article attempts to identify these instruments and draft a conceptual overview.     

Strategic Aspects of the 1995 and 2004 EU Enlargements

While the 1995 entrants to the EU are by now fully integrated, those joining in 2004 still “enjoy” a secondary status for a number of years. We attribute this difference to the fact that unlike the former EFTA members joining in 1995, the 2004 entrants formed a group with heterogenous interests, one that lacked the same strong internal economic ties. Not being able to act as a unified block they had a considerably weaker bargaining position. We support our arguments by qualitative results from a simple model, a dynamic partition function game based on Yi (Games Econ Behav 20:201–237, 1997) and Morelli and Penelle (Economic integration as a partition function game 1997).     

The Effects of Framing on Inter-group Negotiation

The present paper explores the way in which groups cognitively represent information framed as danger and the way in which such collective cognitive representations influence group performance during inter-group negotiations. One hundred and two participants were distributed over 34 three-person groups and were involved in a negotiation game developed by Lewicki et al. (1999, Negotiation: readings, exercises and cases. McGraw-Hill, Boston). The groups were organized in 17 pairs and each pair played the negotiation game in two rounds. The game rules and the available resources were the same for both groups, but one of the groups in each pair received the game information framed as “danger”, while the other group in the pair received a neutral framing. The groups with a “danger” frame developed a more defensive strategy during negotiations, adopted more often a collaborative approach and had a significantly lower performance as compared to the groups in the non-framing condition.     

Government Intervention,Perceived Benefit,and Bribery of Firms in Transitional China

This article examines whether (1) government intervention causes bribery (or corruption) as rent-seeking theory suggested; (2) a firm’s perceived benefit partially mediates the relationship between government intervention and its bribing behavior, as rational choice/behavior theory suggested; and (3) other firms’ bribing behavior moderates the relationship between government intervention and a firm’s perceived benefit. Our study shows that government intervention causes bribery/corruption indeed, but it exerts its effect on bribery/corruption through the firm’s perceived benefit. In other words, a firm’s perceived benefit fully mediates the relationship between government intervention and its bribing behavior. We also find that other firms’ bribery positively moderates the relationship between government intervention and a given firm’s bribery. This study partly proves that firms are rational actors. Potential benefit encourages them to practice bribery. Besides, this research also supports the rent-seeking view of bribery/corruption, which argues that government intervention is a source of bribery/corruption. However, we have also identified that only those government interventions that will create “rent” can cause bribery/corruption.     

Work-related Attitudes, Values and Radical Change in Post-Socialist Contexts: A Comparative Study

Marcoux argues that job candidates ought to embellish non-verifiable information on their résumés because it is the best way to coordinate collective action in the résumé ‚game’. I do not dispute his analysis of collective action; I look at the larger picture, which throws light on the role game theory might play in ethics. I conclude that game theory’s conclusions have nothing directly to do with ethics. Game theory suggests the means to certain ends, but the ethics of both the means and ends must be assessed separately before any ethical recommendation can␣be made. Marcoux makes several highly disputable assumptions in order to fit résumés into game theory; his analysis does not take into account the consequences that embellishing has beyond the submission and assessment of␣résumés; his argument depends on his claim that a résumé system in which everyone embellishes is attainable; and finally, his argument relies on an idealization of human␣motivation, rather than abstraction. I conclude that candidates should never embellish their résumés.John Douglas Bishop is a Professor in the Business Administration Program at Trent University in Peterborough, Ontario. His research interests include both business ethics and ethics and capitalism. He is the editor of Ethics and Capitalism, University of Toronto Press, 2000.     

Advertising to a social network

Direct advertising—sending promotional messages to individual customers—is increasingly used by marketers as a result of the recent improvements in consumer reachability. Most current methods to calculate optimal budgets for such advertising campaigns consider customers in isolation and ignore word-of-mouth communication (WOM). When the customer base forms a network (as is the case in telecom or social network databases) ignoring WOM clearly leads to suboptimal advertising budgets. This paper develops a model to help address this challenge. We assume that firms know the network structure formed by customers but do not know (or are not allowed to use) data on individuals’ connections. Under this scenario, we compare the optimal campaign of a monopolist to that of firms competing in simultaneous-move or sequential-move games. The analysis provides two key insights: (i) we show that ignoring the existence of WOM leads to significant profit loss for firms and this is more so under competition. In particular, knowing the “density” of consumer connections is crucial for the design of optimal campaigns. (ii) Competition in direct advertising exhibits strong first-mover advantages and, even in a simultaneous-move game between identical firms, highly asymmetric outcomes are possible. The paper also explores two extensions. First, we study the nature of the trade-off between increasing network size versus increasing the connectivity between existing network members. Second, we investigate how firms’ advertising activity may endogenously grow the membership base.     

Clearing Up the Egoist Difficulty with Loyalty

This paper seeks to analyze and to motivate a trend toward virtue ethics and away from deontology in the business ethics account of organizational loyalty. Prevailing authors appeal to “transcendent” values (deontology), skepticism (there is no loyalty), or Aristotelianism (loyalty is seeking mutual self-interest). I argue that the “Aristotelian” view clears up the “egoist” difficulty with loyalty. Briefly, critics feel we must “transcend,” “replace,” “overcome” and most especially sacrifice self-interest on the altar of ethics and loyalty. I argue that few things can be more ethical than loyalty to shared values. When a company and I both pursue the same value X, there becomes no difference between my seeking my best interest and my seeking the best interest of the company (and vice versa). Hence, the way out of the egoist difficulty with loyalty is seeing a company’s interests as my own (Aristotle’s third stage of friendship).     

服务补救悖论产生的条件:"应该期望"的作用

This paper proposes a theoretical framework which applies concepts of “will expectation” and “should expectation” to exploring the effects of service recovery on customers’ post-recovery satisfaction. The relationship among customers’ perceptions of service recovery and their different expectations for service recovery will determine the probability of customers’ post-recovery satisfaction exceeding their pre-failure satisfaction (service recovery paradox, SRP). Only when perceptions are higher than both will and should expectations, SRP is much likely to occur. In other cases, it will be difficult to have SRP. We extend this theory to dynamic process. The proposed theory could explain the conflicting findings of previous studies about SRP. Results of exploratory studies provide empirical support for our theory in the static case. Managerial implications and further research direction are also discussed.     

Examining the Effects of Moral Development Level,Self-Concept,and Self-Monitoring on Consumers’ Ethical Attitudes

This study investigates the possible effects of self-concept, self-monitoring, and moral development level on dimensions of consumers’ ethical attitudes. “Actively benefiting from illegal activities,” “actively benefiting from deceptive practices,” and “no harm/no foul 1–2” are defined by factor analysis as four dimensions of Turkish consumers’ ethical attitudes. Logistic regression analysis is applied to data collected from 516 Turkish households. Results indicate that self-monitoring and moral development level predicted consumer ethics in relation to “actively benefiting from questionable practices” and “no harm/no foul” dimensions. Actual self-concept is also a predictor variable in relation to “no harm/no foul” dimension. Age and gender make significant differences in consumers’ ethical attribute dimensions.     

Variations in entrepreneurship

This article is written in the style of a “bildungsroman,” a fictional autobiographical “coming of age story” about the author’s experiences of his beginning to recognize the: great diversity of entrepreneurs, many types of startup firms, multiple ways entrepreneurs go about starting firms, and innumerable situations in which entrepreneurial activity takes place. In this remembrance of things past, the author realizes: the phenomenological underpinnings of his understanding of entrepreneurship, his belief in the primacy of facts as the arbiter of theory, that his theory predisposed him to look only for certain kinds of facts and ignore others which then makes theory paradoxically the arbiter of the facts found, and, finally, that knowledge is hard won and wisdom elusive. “Nothing is more uncertain, more contradictory, more unsatisfactory than the evidence of facts”—William Godwin     

Moral Differentiation: Exploring Boundaries of the “Monkey See,Monkey Do” Perspective

Research in ethical decision making has consistently demonstrated a positive relationship between others’ unethical behavior and observers’ unethical behavior, providing support for the “Monkey See, Monkey Do” perspective (e.g., Robinson and O’Leary-Kelly, Acad Manage J 41:658–672, 1998). However, the boundaries of this relationship have received little research attention. Guided by theory and research in interpersonal distancing, we explore these boundaries by proposing and examining “moral differentiation,” the set of individual and situational characteristics that affect the degree to which one is willing to be influenced by others’ unethical behavior. Using data from 655 undergraduate business students in two U.S. universities, we test moderating hypotheses regarding the influence of moral differentiation characteristics on the relationship between others’ unethical behavior and observers’ unethical behavior. Results suggest that strong moral identity, low need for affiliation, and extraversion weaken the relationship between others’ unethical behavior and observers’ unethical behavior. Implications for managers and future research are discussed.     

Reconciling Corporate Citizenship and Competitive Strategy: Insights from Economic Theory

Neoclassical and Austrian/evolutionary economic paradigms have different implications for integrating corporate social responsibility (corporate citizenship) and competitive strategy. Porter’s “Five Forces” model implicitly rests on neoclassical theory of the firm and is not easily reconciled with corporate social responsibility. Resource-based models of competitive strategy do not explicitly embrace a particular economic paradigm, but to the extent their conceptualization rests on neoclassical assumptions such as imperfect factor markets and profits as rents, these models also imply a trade-off between competitive advantage and corporate social responsibility. Differences in Austrian/evolutionary economic model’s assumptions about equilibrium, profits, and other economic concepts allow this paradigm to embrace alternative views of strategy such as the activities or dynamic capabilities views. These alternative views of strategy focus on learning and adaptation; they align more easily with corporate social responsibility. In practice this alignment comes about because social engagement facilitates the learning and adaptation that are a source of competitive advantage. Among the many business arguments for CSR such as improved employee morale/productivity or brand differentiation, this view prioritizes innovation.     

Consumption,Resistance and Everyday Life: Ruptures and Continuities

This paper makes the case for regarding political consumption and more generally individual collective action as an instance of “everyday resistance.” In doing so it seeks to make connection with the political case against representative politics, one that stretches back to the origins of “official” politics at the start of the 19th century. Three moments in the history of the idea of everyday resistance are presented: Max Stirner’s egoistic individualism, Leo Tolstoy’s critique of violence, and Agnes Heller’s evocation of the everyday as a site of civic courage. The examples show the longevity and persistence in political thought of the idea of the individual as the locus of social power, one that puts it at odds with the normative assumptions of theories of representation. They also show the dangers of assuming that individual collective action can unproblematically be considered a form of participation in democratic processes as opposed to a resistance against incorporation into mainstream or “official” politics. Rights which are often at the core of efforts of activists become remodelled as a weapon of contingent “everyday” struggles as opposed to a universal or transcendentally posited phenomenon.