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Part Three
Corporations, Persons, and Morality
Part Three consists of an Introduction followed by Chapter 7–- The Role of Organizational Values;
Chapter 8 –- Values of the Virtuous Manager; Chapter 9 –- Issues in Employment; and Chapter 10
Diversity.
The introduction to Part Three (pp. 239 - 249) gives a very good synopsis of the material to be
covered and the questions to be raised by each chapter. You should consult it along with the chapter
summaries provided in this Manual.
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Chapter 7 –- The Role of Organizational Values (pp. 250-293)
Chapter 7 starts with a case study (pp. 250 - 256) entitled “Merck & Co. Inc.” which details a disease
known as “river blindness” and a human pharmaceutical company Merck was able to develop as an
offshoot from one of its veterinary pharmaceuticals that was able to effectively treat the disease.
However, the disease existed in very poor countries and Merck faced many economic decisions along
the way as to whether they should develop a treatment even if eventually they would have to donate it
for it to be effective.
Article: “Does Business Ethics Make Economic Sense?” by Amartya Sen (pp. 256 - 264).
In this article, Nobel laureate Amartya Sen discusses the need for business ethics. He starts with the
idea that many people think there is no need for business ethics but that this view is probably, at best,
a distortion.
He focuses first on the need for rules and trust. If there were no rules nor trust in business could
anything ever be accomplished? The obvious answer is it could not be.
He discusses the distinction between a public good and a private good. A private good being
something that one person can use but multiple people cannot -- examples would be a toothbrush or
an apple. A public good is something that is enjoyed by all or that all benefit from such as a fresh air
or freedom from disease. The success of a firm or of an economy is clearly a public good, and
therefore, is subject to principles of ethics rather than principles of selfishness.
Further, Sen recognize the problem of distribution in economics. Distribution -- perhaps recognized as
both how to ”cut the pie” and also how to deliver the pie is largely a question of ethics in society.
In debunking the idea that Adam Smith, Professor of Moral Philosophy at the University of Glasgow,
meant to remove ethics from economics, Sen points to Smith’s academic title, but also to the idea that
Smith’s famous phrase, “It is not from the benevolence of the butcher, the brewer, or the baker that
we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to
their humanity but to their self love . . . ” really includes the ethical considerations of the butcher, the
brewer, and the baker which they each either think through, come across naturally, or come across
through trial and error, and which allow them to each stay in business, to gain the trust of their
customers, and to treat their communities fairly.
Article: “Can Socially Responsible Firms Survive in a Competitive Environment” by Robert H.
Frank (pp. 264 - 274)
Similarly, Robert H. Frank’s article takes a look back at what Milton Friedman said, “There is one,
and only one, social responsibility of business -- use its resources and engage in activities designed to
increase its profits so long as it stays within the rules of the game, which is to say, engages in open
and free competition without deception or fraud.”
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Frank believes, and he believes that the application of game theory to business helps show, that firms
profit by being socially responsible.
He indicates that being socially responsible does several things for business. One of these is to solve
commitment problems with employees, another one is to solve commitment problems with customers,
the third is to solve commitment problems with other firms, the fourth is to reflect consumers’ moral
values, and the last is to reflect prospective employees’ moral values. By doing all of these things,
Frank believes, it is clear that a business will increase its profits overall to a much greater extent than
it would by trying grab each piece of potential profit only as it presents itself.
Article: “Managing for Organizational Integrity” by Lynn Sharp Paine (pp. 274 - 287)
Paine believes that management and ethics are inextricably linked and proposes that organizational
integrity is necessary “to foster a climate that encourages exemplary behavior. . . .” Naturally,
exemplary behavior is well beyond merely complying with the law. It contains legality along with
managerial responsibility for ethical behavior within an organization. Paine clearly states that
organizations can shape the behavior of the individuals that act under the guise of that organization.
To Paine, integrity strategy means “a conception of ethics as the driving force of enterprise.” And
organizational ethics is a very real concept. Some of the characteristics of organizational ethics that
she illustrates by case studies are: an emphasis on core values, building and continuing shared
aspirations, and defining right actions (and by contrast, wrong actions as well).
Article: “The Parable of the Sadhu” by Bowen H. McCoy (pp. 287 - 293)
McCoy tells us of a trip he took to the Himalayas. During it, he and a number of hikers passed an
Indian holy man, who clearly was not dressed for the trip and clearly did not have enough supplies.
Due to the treacherousness of the journey, nobody could carry this man to safety and also expect to
live himself. Most of the hikers tried to help in some small way, but those who thought about it were
sure that without significant help this man would die. Very few did indeed think about it, most offered
a little bit of aid and continued on their once-in-a-lifetime trip.
One of McCoy’s traveling companions was greatly distressed by this happenstance. He felt that a
well-dressed, attractive, or obviously wealthy person would have been helped more than this Indian
holy man had been helped. McCoy’s companion felt that they should have stayed until one of the
following occurred: that the man actually died in their care, that the man actually demonstrated that he
could walk to safety by himself, or that they carried the man to the village and got someone in the
village to care for him. None of these three options did occur, and the companion took this to be
contributing to the death of a fellow man.
McCoy took this incident to be an example of the contrast between the individual and the group ethic.
His companion, after all, did not stay with the holy man to die, but rather continued on with the rest of
his group to safety. And yet, on reflection, they all perhaps thought that more could have been done to
save this man. McCoy thinks of ethics as a positive force rather than a constraint. We should think of
what we should do rather than what we should not do. He takes as a lesson from this event that in a
complex situation the individual requires and deserves support of the group in order to know how to
act.
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Ultimately, business ethics means following the business goals as well as the cultural goals of the
corporation, its owners, its employees, and its customers. McCoy concludes that, “those who cannot
serve the corporate vision are not authentic business people and therefore are not ethical in a business
sense” because business ethics “has to do with the authenticity and the integrity of the enterprise.”
Discussion Questions
1. Imagine you can help save someone’s life. Now imagine that to do so, you will miss a day of
work. Now imagine that to do so, they must get a blood transfusion from you. How much are
you willing to do? How much can you do and still have a life yourself? Suppose the
circumstance presents itself again - are you willing to do this once an hour, once a day, once a
week, once a month, once a year, once a decade, once in your lifetime, never?
2. Can business serve society better by external pressures (government rules) or by following
what people want (market factors)? Are both necessary to some extent?
3. Do you personally regard ethics more as a positive force or more as a constraint? Why?
Resources for further study -- Film, Literature, and the Web:
Merck & Co., Inc. “Mission Statement” http://www.merck.com/about/mission.html (June 1, 2007)
BBC News. “River Blindness Resistance Fears.” June 14, 2007.
http://news.bbc.co.uk/2/hi/health/6753003.stm (June 27, 2007)
Ethics Resource Center. “Does Ethics Pay?” Volume 1, Issue 9. May 12, 2003.
http://www.ethics.org/erc-publications/ethicstoday.asp?Aid=731 (June 1, 2007)
The Rainmaker Dir. Francis Ford Coppola, Perfs. Matt Damon, Danny DeVito, Claire Danes, Jon
Voigt American Zoetrope. 1997. (Based on the novel of the same name by John Grisham.)
