Common knowledge of the second kind

Although most of us know that human beings cannot and should not be replaced by computers, we have great difficulties saying why this is so. This paradox is largely the result of institutionalizing several fundamental misconceptions as to the nature of both trustworthy objective and moral knowledge. Unless we transcend this paradox, we run the increasing risks of becoming very good at counting without being able to say what is worth counting and why. The degree to which this is occurring is the degree to which the computer revolution is already over — and the degree to which we human beings have lost.I think that Aristotle was profoundly right in holding that ethics is concerned with how to live and with human happiness, and also profoundly right in holding that this sort of knowledge (practical knowledge) is different from theoretical knowledge. A view of knowledge that acknowledges that the sphere of knowledge is wider than the sphere of science seems to me to be a cultural necessity if we are to arrive at a sane and human view of ourselves or of science. (Hilary Putnam, Meaning and the Moral Sciences, 1981) David A. Bella is Professor of Civil Engineering at the College of Engineering at Oregon State University. He received his B.S. in Civil Engineering from Virginia Military Institute (1961), his M.S. and his Ph.D. in Environmental Engineering from New York University. His primary research interest is in the philosophy and sociology of technology, technological impact assessment, and moral philosophy. His most important publications are Engineering and Erosion of Trust and Organizations and Systemic Distortion of Information, Journal of Professional Issues in Engineering (1987), and Strategic Defense: Catastrophic Loss of Control, Journal of Peace Research (1989). Jonathan B. King is Associate Professor of Management at the College of Business at Oregon State University. He received his B.A. in philosophy from Antioch College (1965) and his M.B.A. in Finance (1975) and Ph.D. in Business, Government and Society (1980) from the University of Washington. His primary research interests are in the areas of moral philosophy, the philosophy of science, and critical thinking. His most important publications are The Three Face of Thinking, Journal of Higher Education (1986), Prisoner's Paradoxes, Journal of Business Ethics (1988), and Confronting Chaos, Journal of Business Ethics (1989).     

Justice: The root of american business ideology and ethics

Although there are many conceptions of Justice, these different perceptions can provide many interesting insights into a business person's ethical standards as well as that person's decision-making processes. Using the Bishops' Pastoral Letter on the U.S. Economy as the basis for asking questions about justice, twenty-four business executives were interviewed about their conception of justice. An analysis of these interviews reveals that this group of businesspeople operated under very different conceptions of Justice at the Macroenvironmental and Microenvironmental levels. This result has some interesting implications not only for those scholars concerned with business ethics but for everyone who has a stake in business education.Men are called good, chiefly on account of their Justice. Cicero, 56 B.C. Ideology is applied philosophy. Lodge, 1986 Richard McGowan, S. J. is an Assistant Professor of Operations and Strategic Management at Boston College. His research focus involves examining both the rationale behind business and public policy decisions as well as determining the effectiveness of these policy measures. Some of his recent publications include Deciphering the Japanese Import Quota, Policy Studies Journal (1988) and Public Policy Measures and Cigarette Sales: An ARIMA Intervention Analysis Study JAI Social Issues Management Volume (1989).     

Beyond bean counting: Establishing high ethical standards in the public accounting profession

Business professions are increasingly faced with the question of how to best monitor the ethical behavior of their members. Conflicts could exist between a profession's desire to self-regulate and its accountability to the public at large. This study examines how members of one profession, public accounting, evaluate the relative effectiveness of various self-regulatory and externally imposed mechanisms for promoting a climate of high ethical behavior. Specifically, the roles of independent public accountants, regulatory and rule setting agencies, and undergraduate accounting education are investigated. Of 461 possible respondents, 230 questionnaires (a 49.6% response rate) indicated that the profession's own rule setting body (The American Institute of Certified Public Accountants) and the use of peer review were perceived as the most effective mechanisms, while government regulation was ranked least. Respondents also evaluated the extent to which ethics should be covered in the accounting curriculum. For every course, the CPAs believed a greater emphasis on ethics is appropriate than presently exists. Suggestions for more effectively integrating ethics into accounting courses are made. Finally, respondents were also asked whether in answering the questionnaire they used a definition of ethics as either the Professional Code of Conduct or a moral and philosphical framework for guiding beliefs. Those who viewed ethics as abiding by a professional code had more confidence in the mechanisms addressed in this study to aid the public accounting profession's ability to ensure high ethical standards of conduct. Methodological implications of this distinction for future studies in business ethics are discussed. Jeffrey R. Cohen is Assistant Professor of Accounting at Boston College. He received his Ph.D. from The University of Massachusetts at Amherst. He is a C.M.A. and a Peat Marwick Research Fellow. His articles have appeared in the Journal of Accounting Research, Decision Sciences and The Organizational Behavior Teaching Review. His work on Ethics has appeared in Issues in Accounting Education, Management Accounting, and The CPA Journal. Laurie W. Pant is Assistant Professor of Accounting at Boston College. She holds an M.B.A. and a D.B.A. from Boston University and an M.Ed. from Emory University. She serves on the editorial board of Issues in Accounting Education. Her articles on Ethics have appeared in Issues in Accounting Education, Management Accounting and The Organizational Behavior Teaching Review.An earlier version of this paper was presented at the 1989 American Accounting Association National Meeting.     

Corporate democracy and the rights of shareholders

Some have argued that because of weaknesses in corporate democracy, there is widespread abuse of shareholders' rights in American securities markets. I describe a number of horror stories that shareholders might tell to support this claim. Then I argue that despite appearances to the contrary, there is not widespread abuse of shareholders' rights in American securities markets. This is because (i) corporations, when doing things that look abusive, are generally violating neither the legal rights nor the charter rights of shareholders and (ii) shareholders — in their role as shareholders — have no other rights than these. William B. Irvine is Assistant Professor of Philosophy at Wright State University. He is the author of The Ethics of Investing, Journal of Business Ethics, vol. 6, no. 3.     

A framework for thinking about Group Decision Support Systems (GDSS)

Strategic problem solving in organizations is a social process that disturbs established social relationships. Maintaining a negotiated social order is crucial to political feasibility and to emotional commitment from the participants in relation to a solution package. However, Group Decision Support Systems that attend overly to managing social order risk group think through bounded vision. This may be avoided if emotional commitment is also encouraged through participants experiencing the problem situation from multiple perspectives and in relation to alternative solution strategies. Commitment depends upon both means/ends rationality and procedural rationality. This acknowledges the balance in providing support to a group with respect to the negotiation of social order, with the more traditional group decision support for socially negotiating order out of the problem situation. This article argues that effective Group Decision Support Systems must attend to both aspects of creating order. OR modelling methods and the support that can be provided by modern micro-computers offer a new way forward—models can be toys that a group can play with together, enabling them to create knowledge as well as use it.     

Risk Management for E-Cash Systems with Partial Real-Time Audit

We analyze coin-wallet and balance-wallet under partial real-time audit, and compute upper bounds on theft due to the fact that not all the transactions are audited in real time, assuming that everything else is perfect. In particular, we assume that the audit regime holds for innocent payees. Let v be the maximum allowed balance in a wallet, and 01 be the fraction of transactions that are audited in real time in an audit round. Assume one unit transactions. We show that the upper bound on expected theft for coin-wallet is lim₀^–2, while for plausible (similar) parameter choice the bound for a balance-wallet is O(exp(mv)), where 1<m. The former is nicely bounded for small transactions, however, the bound for balance-wallet can become huge in those cases where we require very small false alarm probability. We conclude that partial audit, may be suitable for coin-wallets with low denomination coins, and possibly for balance-wallet, when we may tolerate a relatively high false alarm rate, but it may be too risky for balance-wallet, where very low false alarm rate is required.     

Integrating Religious Principles and Human Resource Management Activities

Many ethical problems faced by organizations concern human resource management. This paper shows how some religious principles can be integrated into a human resource management course. First, it presents a discussion of employee responsibilities and rights in Judaism, Christianity, and Islam. Next, it suggests how various principles can be applied to human resource management activities. Do to others as you would have them do to you is applied to equal opportunity. Thou shall not commit sexual impropriety (or in positive terms, respect and love) is the basis for no sexual harassment. Thou shall not steal (or in positive terms, deal fairly) is related to fair pay in exchange for excellent employee performance. Thou shall not lie (or in positive terms, be truthful) is needed for due process in employee disputes. Thou shall not kill (or in positive terms, respect life) is applied to employee safety and health, plus health care benefits. A list of potential readings is included for instructors to consider for their own courses.     

From Adam Smith to the American Catholic bishops: Debating visions of economic life

Considerable controversy was stirred by the contrast between the specific approaches to public policy contained in the first draft of the Catholic bishops' letter on the U.S. economy and the policies favored by the Reagan administration. However, a much more basic contrast actually existed between the bishops' underlying vision of economic life and contemporary capitalism. The pastoral challenges a separation between moral criteria and economic activity that is deeply embedded in modernity itself. Indeed, the splitting off of economic life from its moral-religious matrix is seen by the bishops' critics as a positive, defining feature of democratic capitalism. The critics see the separate economic and moral-religious spheres related by due balance; the bishops, while acknowledging an autonomy to economic life, emphasize that its fundamental choices remain moral. The bishops (and, for different reasons, their critics) have preferred to minimize the contrast between the letter's vision and the contemporary economy. They avoid any clearcut judgment on the economic system by stressing pragmatism and reforms; but implicitly they are granting a strictly conditioned acceptance of reformist capitalism, the condition being the system's openness to questioning and change. Peter Steinfels is Editor of Commonweal Magazine and he is the author of The Neoconservatives (Simon and Schuster, 1979).     

The Effects of Monetary Magnitude and Level of Aggregation on the Temporal Framing of Price

Existing research has shown that the pennies-a-day strategy of reframing a large aggregate expense as a small daily expense helps to reduce the perceived cost of a transaction (Nagle and Holden, 1995; Price, 1995; Gourville, 1998, 1999). This paper builds on this research and explores the robustness of the phenomenon across two dimensions – (1) the level of temporal aggregation and (2) the dollar magnitude of the transaction. First, we show that the effectiveness of a pennies-a-day strategy is not limited to per-day framing. Rather, we find a more general phenomenon in which a less aggregate expense is preferred to a more aggregate expense, such that if a per-day framing is preferred to a per-year framing, than a per-month framing also will be preferred to a per-year framing. Second, we show that this effectiveness reverses with the magnitude of the underlying expense, such that while a framing of $1 per day is preferred to one of $365 per year, a framing of $4200 per year is preferred to one of $11.50 per day.     

The Relationship of Communication, Ethical Work Climate, and Trust to Commitment and Innovation

Recently, Hosmer (1994a) proposed a model linking right, just, and fair treatment of extended stakeholders with trust and innovation in organizations. The current study tests this model by using Victor and Cullen's (1988) ethical work climate instrument to measure the perceptions of the right, just, and fair treatment of employee stakeholders.In addition, this study extends Hosmer's model to include the effect of right, just, and fair treatment on employee communication, also believed to be an underlying dynamic of trust.More specifically, the current study used a survey of 111 managers to test (1) whether right, just, and fair treatment influences trust, both directly as well as indirectly via communication, and (2) whether trust influences perceptions of commitment and innovation. Strong support for the study's hypotheses and Hosmer's (1994a) model was found. Such findings support those who argue that moral management may be good management.     

Effects of price uncertainty on consumer purchase budget and price thresholds

This article examines how uncertainty about prices affects: (1) the budget consumers allocate for purchasing a product and (2) consumer price thresholds (i.e., the prices that are considered too high or a good deal). In an experimental setting, the purchase budget as well as the absolute values of both thresholds for uncertain subjects were higher than those for certain subjects. Moreover, a relatively large decline from the budget was needed before a price was considered a good deal, whereas a relatively small increase from the budget was sufficient for a price to be considered too high. Price uncertainty widened the difference between the upper (i.e., too high) price threshold and the budget, making uncertain subjects more tolerant to prices exceeding the budget than certain subjects. However, price uncertainty did not have a significant effect on the difference between the budget and the lower (i.e., good deal) price threshold.We wish to thank the editor and anonymous reviewers for their helpful comments on an earlier draft. We also thank Professors S. P. Raj and Amiya Basu for their comments and suggestions at various stages of the study.     

Board-management relations in small firms: The paradox of simultaneous independence and interdependence

The author introduces constructs based on neo-classical and socio-economic assumptions, and argues that board-management relations should be characterized by both independence and interdependence. Interdependence is especially important in small firms. The article presents a model of directorates from research about directorates based on agency theory assumptions. This model is supplemented with constructs from the theory of contractual relations. Whilst traditional literature tends to focus upon independence from an agency theory perspective, this article argues that it is necessary to use more than one dimension of attributes regarding the board-management relations in order to understand the board's contribution to company performance, and that trust and solidarity is especially important in small firms. Board-management relations described by simultaneous independence and interdependence are proposed to give the highest contribution to company performance. The theoretical propositions are exemplified and supported by results of a field survey of directorates in small firms.     

Marketing ethics and the techniques of neutralization

The need for conceptual work in marketing ethics is addressed by examining the five techniques of neutralization as a means for partially explaining unethical behaviors by marketing practitioners. These techniques are often used by individuals to lessen the possible impact of norm-violating behaviors upon their self-concept and their social relationships. Borrowed from the social disorganization and deviance literature, the five techniques of neutralization are: (1) denial of responsibility, (2) denial of injury, (3) denial of victim, (4) condemning the condemners and (5) appeal to higher loyalties. Examples of marketing professionals using each of the five techniques are given, and a conceptual model linking the techniques of neutralization with unethical behavior is presented. Finally, relevant research questions are offered for consideration.Scott J. Vitell is Assistant Professor of Marketing at The University of Mississippi. His most important publications include A General Theory of Marketing Ethics (1986) (with Shelby D. Hunt) and Marketing's Contribution to Economic Development: A Look at the Last 30 Years (1985) (with Van R. Wood). Stephen J. Grove is Assistant Professor of Marketing at Clemson University. His articles have appeared in the Journal of Health Care Marketing, the International Journal of Sport Psychology, the Journal of Sport Behavior, the Bulletin of the Association for Business Communication, Simulation and Games, and several national and regional conference proceedings.     

Trust in Scientific Publishing

Trust is an important phenomenon to reduce organisational complexity and uncertainty. In the literature many types of trust are distinguished. An important framework to understand the variety and development of trust in organisations is provided by Zucker. She distinguishes three types of trust: process-based trust institutional-based trust characteristic-based trustIn this article we will add a fourth type: values-based trust.Similarly, it is customary in scientific communication to distinguish four main communication functions: registration archiving certification awareness.These types of trust and the communication functions offer somewhat similar classification schemes. In this paper we will elaborate on these classification schemes with the aim to analyse possible similarities or even mapping. Such similarities will allow drawing conclusions on the development of trust in a (virtual) organisation in general and the process of scientific communication as a special kind of a (virtual) organisation in particular.     

Norman Bowie and Richard Rorty on multinationals: Does business ethics need ‘metaphysical comfort?’

Norman Bowie wrote an article on the moral obligations of multinational corporations in 1987. This paper is a response to Bowie, but more importantly, it is designed to articulate the force and substance of the pragmatist philosophy developed by Richard Rorty. In his article, Bowie suggested that moral universalism (which he endorses) is the only credible method of doing business ethics across cultures and that cultural relativism and ethnocentrism are not. Bowie, in a manner surprisingly common among contemporary philosophers, lumps Rorty into a bad guy category without careful analysis of his philosophy and ascribes to him views which clearly do not fit. I attempt to provide both a more careful articulation of Rorty's views, and to use his pragmatism to illustrate an approach to business ethics which is more fruitful than Bowie's. This brand of philosophy follows the Enlightenment spirit of toleration and attempts to set aside questions of Truth, whether religious or philosophical, and have ethics centered around what James called that which is good in the way of belief. Rather than looking for metaphysical foundations or some type of external justification, ethicists perform their craft from within the cultural traditions, narratives and practices of their society.Andrew C. Wicks, M.A. in Religious Ethics. Currently a fourth year Doctoral Candidate in the Religious Studies Department at the University of Virginia, Charlottesville.     

Ethics in organizations: A framework for theory and research

In a climate of increasing interest and activity within the field of business ethics, as yet there exists no coherent conceptual framework for organizational theory and research. From a review of current thinking and previous writings a framework of concepts is suggested to help set an agenda for empirical research. The elements of this are, first, a taxonomy of ethical domains: the foci of organizations' and their agents' ethical concerns and conduct. Second, it is considered how ethical functioning might be analysed in terms of causal relationships between expressive forms, voluntary action and instituted forms. Third is discussed ethical process, the means by which ethical awareness is aroused. Fourth and last, the paper examines how normative evaluations might apply to the ethical condition of organizations and their agents, meaning change or stability in reputation and integrity. At each stage of the argument possible objectives for research are developed.Professor Nigel Nicholson is Chairman of the Organisational Behaviour Group and Director of the Centre for Organisational Research at London Business School. Previously, he led investigations into Individual and Organisational Change at Sheffield University's Social & Applied Psychology Unit, and has also held visiting appointments at American, Canadian and German universities. He has published 8 books and over 65 articles on a wide range of topics, and been honoured with an award from the Academy of Management for his contribution to theory.     

Reactions to ethical dilemmas: A study pertaining to certified public accountants

This study discusses how perceptions of ethics are formed by certified public accountants (CPAs). Theologians are used as a point of comparison. When considering CPA ethical dilemmas, both subject groups in this research project viewed confidentiality and independence as more important than recipient of responsibility and seriousness of breach. Neither group, however, was insensitive to any of the factors presented for its consideration. CPA reactions to ethical dilemmas were governed primarily by provisions of the CPA ethics code; conformity to that code may well be evidence of higher stage moral reasoning.Gregory A. Claypool is Associate Professor of Accounting and Finance at Youngstown State University.David F. Fetyko is Professor of Accounting at Kent State University. Michael A. Pearson is Professor of Accounting at Kent State University. He is the author of Enhancing Perceptions of Auditor Independence, Journal of Business Ethics 4 (1985), 53–6, and Auditor Independence Deficiencies and Alleged Audit Failures, Journal of Business Ethics 6 (1987), 281–7.     

Women,unions, and social policy

We contend in this paper that the trade union role in social policy is expanding due to the debate on women's issues. The Centrale de l'enseignement du Québec is seen as a forerunner of this trend, with its policy positions on questions previously seen as personal. The method of promotion of these interests is also new, with caucusing and networking. The significance of these changes goes beyond unionized women workers and affects all women. Dr. Margaret Beattie is Professor adjoint at the Département de Service Social, Université de Sherbrooke, Quebec, Canada. Her most important publication is: Women and Factional Politics in a Teacher's Union, Atlantis: A Women's Studies Journal (Fall 1982).     

A reply to Thomas Mulligan's “critique of Milton Friedman's essay ‘The Social Responsibility of Business to Increase Its Profits’”

Professor Thomas Mulligan undertakes to discredit Milton Friedman's thesis that The Social Responsibility of Business Is to Increase Its Profits. He attempts to do this by moving from Friedman's paradigm characterizing a socially responsible executive as willful and disloyal to a different paradigm, i.e., one emphasizing the consultative and consensus-building role of a socially responsible executive. Mulligan's critique misses the point, first, because even consensus-building executives act contrary to the will of minority shareholders, but even more importantly, because he assumes that the mandate of a shareholder majority brings legitimacy to efforts of corporate managers to utilize corporate wealth in solving social problems. It is the role of our democratic institutions to deal with national agenda issues such as inflation, unemployment, and pollution, not that of the private sector. Corporations and private individuals do have a role to play in enhancing the quality of the human environment, however, and the author suggests a coherent means of developing that role in an effort rescue corporate social responsibility from Mulligan no less than from Friedman. Bill Shaw, Lynette S. Autrey Visiting Professor of Business Ethics at the Jesse H. School of Administration, Rice University, is Professor of Business Law at the University of Texas at Austin. He is staff editor of the American Business Law Journal and the Midwest Law Review. Among his most recent publications are The Structure of the Legal Environment (with Art Wolfe), Environmental Law: Text and Cases, The Global Environment: A Proposal to Eliminate Marine Oil Pollution (With Frank Cross and Brenda Winslett, The Natural Resources Journal), and Comparable Worth and Its Prospects (The Labor Law Journal).     

Learning to solve the right problems: The case of nuclear power in America

Three general types of problems entail different strategies. Continuing to seek solutions to tame problems when we face messes, let alone wicked problems, is potentially catastrophic hence fundamentally irresponsible. In our turbulent times, it is therefore becoming a strategic necessity to learn how to solve the right problems.

But then, you may agree that it becomes morally objectionable for the planner to treat a wicked problem as though it were a tame one, or to tame a wicked problem prematurely, or to refuse to recognize the inherent wickedness of social problems. Rittel and Webber (1973).

Jonathan King is Associate Professor of Management at the College of Business at Oregon State University. His primary research interests are in the areas of moral philosophy and modern technology. His most important publications are Confronting Chaos and Common Knowledge of the Second Kind,Journal of Business Ethics (1989).