Summary and Keywords
Serious research into corporate ethics is nearly half a century old. Two approaches have dominated research; one is normative, the other empirical. The former, the normative approach, develops theories and norms that are prescriptive, that is, ones that are designed to guide corporate behavior. The latter, the empirical approach, investigates the character and causes of corporate behavior by examining corporate governance structures, policies, corporate relationships, and managerial behavior with the aim of explaining and predicting corporate behavior. Normative research has been led by scholars in the fields of moral philosophy, theology and legal theory. Empirical research has been led by scholars in the fields of sociology, psychology, economics, marketing, finance, and management.
While utilizing distinct methods, the two approaches are symbiotic. Ethical and legal theory are irrelevant without factual context. Similarly, empirical theories are sterile unless translated into corporate guidance. The following description of the history of research in corporate ethics demonstrates that normative research methods are indispensable tools for empirical inquiry, even as empirical methods are indispensable tools for normative inquiry.
Keywords: corporate ethics, corporate purpose, business ethics, corporate governance, normative ethics, behavioral ethics, moral agency, corporate social responsibility, business and society, empirical ethics
Research in corporate ethics has mushroomed since the pioneering efforts made in that field in the 1960s (Baumhart, 1968). Those efforts divide conspicuously into two parts. Each part is marked by a distinctive research method: one is normative; the other empirical. Normative methods of corporate ethics research aim to develop frameworks and theories that guide corporate behavior. Researchers weigh and evaluate competing policies, purposes, governance structures and managerial decision-making, all with an eye to determining the “best” corporate behavior. In contrast, empirical methods aim to discover how corporations actually work: to understand, describe and predict their behavior. Researchers who use empirical methods examine governance structures, policies, corporate relationships, and managerial behavior all with the aim of clarifying how ethics is involved in corporate activity (Orts, 2017). With few exceptions, researchers trained in moral philosophy, theology, and legal theory have dominated the development of normative research. In turn, business school academics, including those trained in sociology, psychology, economics, marketing, finance and management, have dominated the development of empirical research.
Despite this cleavage of methods, each side inevitably bleeds into the other. Moral philosophy and jurisprudence offer normative guidance, but cannot do so in a factual vacuum. Facts about corporate behavior serve as the canvas upon which a better picture of corporate life can be drawn. Similarly, the values animating corporate life are obvious targets for empirical researchers who wish to understand how ethics is, in fact, is integrated into factual patterns of corporate behavior. Pressing issues of value, such as diversity, corruption, conflicts of interest, and corporate purpose often motivate empirical researchers who study corporate ethics (Kim & Donaldson, 2018). Often the implications of their studies for improving moral behavior in corporate life are obvious: for example, once one learns which specific employee training methods successfully decrease reported levels of sexual harassment, one can recommend those methods to corporate managers.
These two contrasting methods are more than casual acquaintances. A close reading of the history of research into corporate ethics confirms that normative research methods are indispensable tools for empirical inquiry into corporate ethics, and that empirical methods, in turn, are indispensable tools for normative inquiry into corporate ethics. The following article is predicated on this double-sided proposition.
For the purposes of this article, “corporate ethics” refers to corporate activity understood from the perspective of the activity’s rightness or goodness. A “corporation” refers to a group organized to act as a single person in the eyes of the law, and which is dedicated in part or in whole to achieving economic ends for the sake of its owners.
Again, two paths dominate research into corporate ethics, one normative and the other empirical.
“Normative” is a confusing concept because of its inconsistent use by management scholars and moral theorists. Management scholars use the term “normative” differently from moral theorists.1 Essential to both management and moral theory is that “normative” means “action-guiding,” or, in other words, “prescriptive.” However, here the similarity ends. Management scholars use the term in a “weak” sense that includes a variety of linguistic expressions. Philosophers, in contrast, use it in a “strong” sense that restricts the set of linguistic expressions located under the normative umbrella.
The imperative, “If you want good barbecue, then eat at Tuco’s,” is action-guiding only in the weak or hypothetical sense. The same is true for the expression, “If you want to increase efficiency, then show care and concern for your stakeholders.” These are meant in a hypothetical way because their guidance is conditioned by the hypothetical, “If you want good barbecue,” or “If you want to increase efficiency.” In this sense, any instrumental theory is normative from the standpoint of common usage in management science. A theory about how to minimizing shrinkage guides management behavior so as to minimize shrinkage, all on the assumption that the firm wishes to minimize shrinkage. In contrast, moral theory often uses the term “normative” in a strong sense, a sense that has been called action-guiding in a categorical rather than hypothetical way (Kant, 1959). Consider the simple propositions, “You ought to do the right thing,” or its twin imperative, “Do the right thing.” These linguistic expressions constitute all-things-considered, non-hypothetical guides to action. What marks “normative” in this strong sense is its all-things-considered, non-hypothetical (categorical) nature. Closely correlated are modal notions involving necessity and possibility. The advice, “If you want efficiency, then show care and concern for your stakeholders,” does not necessitate showing care and concern for stakeholders; it only does in case one decides to pursue efficiency. However, the moral claim, “Do not discriminate against persons of different race or gender in the workplace” necessitates refraining from discrimination. It is a “must” or “necessity,” not a “possibility.” Consider the most famous moral epithet, the Golden Rule, which asks a person to “Do unto others as you would want others to do unto you.” (The “Categorical Imperative,” advanced by Immanuel Kant, i.e., you should treat other persons as ends in themselves, and never merely as means to your ends (Kant, 1959) was believed by Kant to be an improvement on the Golden Rule.) It is normative in the “strong,” or all-things-considered sense.
Approaching corporate ethics from the normative moral side immediately requires us to confront two challenges: the first is “Can a corporation even act morally?”; and the second, related question is “How can one determine what counts as morally better and worse behavior?”
Corporate Moral Agency
The first of these questions is tied to the issue of corporate “moral agency,” and asks whether corporations can qualify as moral agents, that is, as entities capable of genuine moral action. Not all things that act are moral agents. For example, machines move and act—with robots now achieving amazingly sophisticated behavior—yet we cannot blame an automobile or a robot in the same manner that we blame a human being. If a self-driving car kills a pedestrian, we refrain from ascribing moral responsibility to the car. Instead, we ascribe it to the designers of the car. Court judges might sentence the designer of a robot or car to prison, but would never sentence a machine.
Next, consider the corporation. Often considered an artificial person or persona ficta, the corporation by definition is a single agent (actor) in the eyes of the law. Corporations can do many of the things humans can: they can own property, engage in contracts and be liable for damages. Moreover, corporations consist of individual human agents, and unless their employees and owners engage in acts, they cannot. But corporations do not walk on two feet, and are incapable of having emotions or living in families. Corporations do not cry at funerals, do not marry, and cannot bear children. Most corporations also possess decidedly inhuman capacities: they are typically granted limited liability and unlimited longevity; that is to say, their financial responsibilities are bounded by the level of their invested capital and they are allowed to live forever.
A cursory glance at the similarities and dissimilarities between corporations and people raises obvious questions: Can corporations truly be said to be morally responsible? Are they like people? Or are they instead more like machines and puppets? Do corporations have intentions and motives that are subject to moral evaluation? Further, is corporate behavior ever genuine moral behavior, or is it merely an aggregation of individual employee behaviors (French, 1979; Sepinwall, 2017)? The answers to these questions have important implications, because if the corporation is not a moral agent, then we humans, whether jurists, politicians, managers, journalists, or ordinary consumers, should refrain from expecting responsibility from it. We should, in turn, treat it as we would a complex, powerful machine. We wisely control machines in order to prevent harm to humans, but we refrain from looking to them for genuine moral responsibility. Only a fool seeks responsibility from a locomotive. If corporations are like machines, the expression “corporate responsibility” is nonsense. It is like the expression, “green idea.” The adjective “green” cannot qualify the noun, “idea.” “Corporate” cannot qualify “responsibility.”
Beginning in 1979 (French, 1979) moral theorists have examined these questions in detail (Arnold, 2016; Donaldson, 1982; French, 1996; Metzger & Dalton, 1996; Sepinwall, 2017; Sepinwall, 2015; Watson, Freeman, & Parmar, 2008; Werhane, 1985). Courts of law have also wrestled with the practical issue of ascribing moral qualities, such as rights, to corporations. Decisions in US courts referred to “moral” rights in the Supreme Court’s 2014 ruling in Burwell v. Hobby Lobby Stores and its 2010 ruling in Citizens United v. Federal Election Commission (Blair, 2015). They have ascribed “unlimited rights to expend resources on ‘independent’ political speech” (Citizens United v. Federal Election Commission, 2010) and the right to “exercise religion” (Burwell v. Hobby Lobby Stores Inc., 2014) (Blair, 2015, p. 416).
A small minority of theorists deny that any sort of moral agency attaches to the corporation, but a majority of theorists converge in attributing at least a few moral qualities to corporations, for example, “responsibility” and “rights.” Some allow this attribution as artificial, whether by way of analogy with human beings or through a special, artificially constructed notion of agency. Current debate, thus, centers less on whether corporations can be responsible at all, and more on which precise moral qualities corporations share with humans. For example, Amy Sepinwall stops short of granting fully human “personhood” to the corporation but acknowledges a special form of “corporate moral personhood,” a form to be filled in by the results of moral argument and deliberations. This acknowledgment of the special category of moral agency appropriate for the corporation is consistent with the ideas of most other theorists (Arnold, 2016; Donaldson, 1982; List & Pettit, 2011; Werhane, 1985).
Assuming that corporations do qualify as some kind of moral agents, what counts as “good” or “bad” moral behavior for a corporation? This question has been answered largely through varying interpretations of corporate “purpose.” Once we know the purpose of the corporation, we can proceed to determine what “good” and “bad” behavior is. What, then, should the purpose of the modern, for-profit corporation in modern economies be? Notice that the question is fundamentally a normative one; it asks not what the purpose of the corporation is, but rather what the purpose of the corporation ought to be.
During the latter part of the 20th century a stark dispute arose around this issue. The choice was framed by contrasting propositions:
“The only real goal of a company is making profit.” or
“Besides making profit, a company has a goal of attaining the well-being of various stakeholders, such as employees, customers, etc.”
Classical Views of Corporate Purpose
Impetus for such a simple way of framing came from a well-known article published in the New York Times Magazine by Milton Friedman, the economist and Nobel Prize winner. The title of the article specified his thesis: “The Social Responsibility of Business Is to Increase Its Profits” (Friedman, 1970). A similar view had been articulated before, notably by Theodore Levitt in an article titled “The Dangers of Social Responsibility” (1958). In his famous article, Friedman offers both principled and consequential moral arguments for his view. Spending shareholders’ money on social responsibility, he argues, violates an important principle, namely, the corporation’s duty to spend the shareholders’ money for what the shareholders want: profit. Moreover, well-intentioned contributions to social initiatives create bad consequences for society: lower levels of overall economic welfare, and a dangerous push down the road to socialism. Corporations should pursue profit because doing so creates an abundance of economic welfare for society.
Friedman’s view, while never supported in surveys by a majority of business managers (PWC, 2014), became the rallying cry for what is known as the “shareholder financial primacy” view. “Shareholder financial primacy” is a misnomer. It not only marks shareholders’ financial interests as the “primary” purpose of the corporation, but as the “ultimate and only basis for evaluating the success of corporate activity” (Sandbu, 2011). Later views are less explicit than Friedman’s in their endorsement of profit, but are in a similar vein. Let us call these views “Classical” because they represent the starting point for decades of debate starting from the 1950s. They also, not incidentally, draw heavily on traditional microeconomic theory. Such Classical views are often assumed by theories of corporate governance even when they are not argued for directly. For example the “Agency” view of corporate governance views the responsibility of the corporation through the “principal–agent” relationship in which the agent, that is, the corporation and its managers, have overriding duties to serve the interests of the principals, that is, the shareholders, who gave their money trusting that it would be used to achieve their own financial ends (Fama & Jensen, 1983a; Fama & Jensen, 1983b; Jensen, 2002; Jensen & Meckling, 1976). Another Classical view of corporate responsibility is embedded in the powerful approach to corporate governance known as “transaction cost economics.” With inspiration from the luminary economist, Ronald Coase, and with theoretical fulfillment by Oliver Williamson, transaction cost economics interprets the evolution of the firm as a process in which cost-economizing structures, including corporate hierarchies, historically ascend to their now powerful economic position. The same transaction cost-economizing approach is used to correct and improve the efficiency of corporate structures and obligations (Hansmann, 2012). In effect, then, transaction cost economics attempts to manage a subtle transition from “is” to “ought.” Corporate governance hierarchies, including structured duties of boards and managers to investors, evolve to meet cost-economizing goals efficiently. Such efficiency is, by definition, what corporations ought to pursue (Donaldson, 2012).
Thus in its simplest form, the Classical view of the purpose of the corporation is this:
• “Shareholder financial primacy” = shareholders’ financial interests constitute the ultimate and only basis for evaluating the success of corporate activity.
However, in 2017 an important modification of the Classical view was offered by two well-known economic theorists. Oliver Hart, a Nobel Prize recipient, and colleague Luigi Zingales, former President of the American Finance Association, published an article entitled “Companies Should Maximize Shareholder Welfare Not Market Value,” in which they criticized Milton Friedman for narrowness in his definition of shareholder interest (Hart & Zingales, 2017a; Hart & Zingales, 2017b). They argued that shareholders can have many interests, some of which are not financial, but which can serve as proper ends for corporations. Let us call their definition “Shareholder primacy” in contrast to Friedman’s more specific “Shareholder financial primacy.”
• “Shareholder primacy” = shareholders’ interests constitute the ultimate and only basis for evaluating the success of corporate activity.
What, Hart and Zingales ask, is the appropriate objective function for a firm? In instances “where shareholders are prosocial and externalities are not perfectly separable from production decisions” they argue that “maximization of shareholder welfare is not the same as maximization of market value” (Hart & Zingales, 2017a, pp. 247–274). “Serving shareholders,” they argue, “doesn’t mean putting profit above all else.” They continue:
Shareholders care about more than just money. Many shareholders pay more for fair-trade coffee, or buy electric cars rather than cheaper gas guzzlers, because, using the current economic lingo, they are prosocial. They care, at least to some degree, about the health of society at large. Why would they not want the companies they invest in to behave similarly?
(Hart & Zingales, 2017b, p. 1)
In this manner Hart and Zingales soften the emphasis of the Classical view from a pure profit perspective to one inclusive of shareholders’ moral interests. For some, however, even this revised Classical theory is incomplete.
Neoclassical Views of Corporate Purpose: Stakeholder and Social Contract
A common criticism of the Classical view begins by noting that it depends upon adequate legal and regulatory structures. What happens when laws are inadequate (say, in a developing country) or when laws lag behind knowledge in an industry? Some regulatory authorities in developing countries are unable to keep pace with the evolution of sometimes dangerous and carcinogenic pesticides. Even regulatory authorities in developed countries such as the United States often lag behind in their knowledge of rapidly evolving, hazardous technology. It took years in the United States before regulators knew facts that had been known earlier by scientists working inside the asbestos industry. By the time they could regulate, it was too late. Perhaps such a concern is eliminated by the Hart/Zingales revision of the Classical theory to include shareholders’ moral concerns. After all, shareholders would never want managers to serve their financial interests at the expense of public safety. Or would they? Suppose shareholders sometimes preferred satisfying their own financial interests—so long as the corporate action was not illegal—before satisfying even critical social interests?
These and other considerations prompt some theorists to discard Classical views of corporate purpose for what we shall call a “Neoclassical” approach. Neoclassical views typically acknowledge that both in law and in practice, shareholders have special rights and hence deserve special emphasis. But they enlarge this special responsibility to satisfy shareholder interests to include other, non-shareholder based obligations. These Neoclassical approaches may be divided into two kinds: stakeholder theories and social-contract theories.
The most popular alternative to the Classical conception of corporate purpose is stakeholder theory. Beginning with Freeman’s landmark interpretation of business strategy by way of conceiving the firm as enmeshed in an array of groups that have a “stake” in that firm’s behavior, such as customers, shareholders, and employees, stakeholder theory has expanded to become a powerful umbrella concept for many kinds of researchers, both normative and empirical (Freeman, 1984; Freeman, Harrison, Wicks, Parmar, & de Colle, 2010). Many defenders of the stakeholder concept interpret it not only as a better way to describe the behavior of corporations than the Classical model, but as a better normative guide (Donaldson & Preston, 1995). “The primary responsibility of the executive,” Freeman writes, “is to create as much value for stakeholders as possible, and . . . no stakeholder interest is viable in isolation of the other stakeholders” (Evan & Freeman, 1988, p. 49). Today stakeholder theory’s defenders interpret it as more than a simple combination of normative and descriptive components; they see it as reflecting a continuous amalgam of what is and ought to be: “Business is a set of value-creating relationships among groups that have a legitimate interest in the activities and outcomes of the firm and upon whom the firm depends to achieve its objectives” (Harrison, Barney, Freeman, & Phillips, 2019, p. 3).
The research falling under the banner of “stakeholder theory” has proliferated since the 1980s (Evan & Freeman, 1988; Freeman, 1984, 1997, 1998; Freeman & Gilbert, 1988; Freeman & Reed, 1983; Freeman, Wicks, & Parmar, 2004; Harrison & Freeman, 1999; Hillman & Keim, 2001; Phillips, 2011; Wicks & Harrison, 2013). Normative stakeholder views share a central dictum: namely, corporations should be managed in the interests of their stakeholders, defined to include at least employees, owners, customers, and communities. Owners’ interests may be primary, but do not dominate in all instances.
Common criticisms of normative stakeholder theory target the difficulty of defining a “stakeholder” and the difficulty of balancing the interests of various stakeholders. Who, we might ask, counts as a stakeholder? For example, do terrorists, such as people who kidnap corporate executives in order to extract ransom, count as stakeholders? They certainly seem to have a “stake” in what the corporation does. But most of us would not want to add them to the list of corporate stakeholders. Stakeholder theorists respond to this criticism by arguing that the “stakes” must be “legitimate” ones. Terrorists do not hold legitimate stakes. However, defining precisely what counts as a “legitimate” stake has proven troublesome.
Next, if normative stakeholder theory means that managers should not favor stockholders exclusively, then how is the satisfaction of stakeholder interests to be balanced? Suppose that adding new pollution abatement equipment to a manufacturing process, while not required under existing regulations, will benefit community members who suffer from pollution. Suppose also that the new equipment is costly. It may turn out that shareholders receive fewer financial benefits owing to the cost of the equipment. Whom, then, should managers favor in such a trade-off? Such challenges have driven even theorists who are nominally sympathetic to the stakeholder idea to conclude that stakeholder theory obfuscates the task of evaluating managers, and in this way creates unacceptable inefficiencies. A single objective function for the corporation offers a rigid, and thus better yardstick by which to measure managerial input effectively (Jensen, 2002). Freeman and others defend stakeholder theory from this challenge, however, by pointing to its managerial emphasis: “Managing for stakeholders,” Freeman writes, “is about creating as much value as possible for stakeholders, without resorting to tradeoffs” (Freeman, 2007, p. 64). But is doing so always possible?
Another version of Neoclassical theory is “social contract” theory (Calton, 2006; Crane, Palazzo, Spence, & Matten, 2014; Donaldson & Dunfee, 1994, 1999; Hsieh, 2015; Keeley, 1988; Rousseau, 1995; Sacconi, 2000, 2007; Wempe, 2008). Particular versions of social contract theory vary in structure and emphasis, but most draw inspiration from the traditional social contract arguments used in the seventeenth and eighteenth century in the West to justify the legitimacy of the state (Hobbes, 1651; Locke, 1948; Rousseau, 1997). In one of its broadest interpretations the social contract for business specifies an implicit social contract existing between society and for-profit corporations that identifies rights and responsibilities for both sides. Society must provide corporations with benefits, such as status in the law as a single entity, and the opportunity for unlimited longevity and limited liability. But in return for these benefits, corporations must shoulder duties to society (Donaldson, 1982, ch. 3). The two most important of these duties are to: (1) function efficiently in order to enhance economic well-being; and (2) to honor promises made to investors. Other moral duties for the corporation include providing accurate information to investors, not violating basic principles of justice and fairness, and avoiding exploiting the environment.
Some theorists drew a distinction between “macro” and “micro” social contracts. “Macro” social contracts are grand, hypothetical agreements between business and society that specify the legitimate functions of corporations and (sometimes) of individual economic participants. “Micro” social contracts, in turn, are narrower, often implicit, contracts between and among economic participants that structure daily economic life. For example, members of an industry may decide upon particular standards for safety, or members of a neighborhood may follow the norm of tipping service providers 10%. Unlike macro social contracts, micro social contracts may be legitimate or illegitimate. A neighborhood norm of not selling one’s house to a member of a particular ethnic group constitutes an illegitimate microsocial norm. What separates legitimate from illegitimate microsocial norms is whether those norms conflict with higher-order norms, called “hypernorms” (Donaldson & Dunfee, 1999).
Straddle Views of Corporate Purpose: Shared Value and Team Production
Some views of corporate purpose straddle the Classical and Neoclassical approaches. The well-known strategic theorist, Michael Porter, has with colleague, Mark Kramer, advanced a framework known as CSV or “Creating Shared Value” (Porter & Kramer, 2006; Porter & Kramer, 2011). “Shared value” is defined as “creating economic value in a way that also creates value for society by addressing its needs and challenges” (Porter & Kramer, 2011, p. 4). Porter and Kramer identify distinct ways in which shared value can be created. Firms can: (1) Reconceive products and markets; (2) Redefine productivity in the value chain; and (3) Enable local cluster development. Banks can make money, for example, by developing a line of products that help poor customers budget and manage their credit. “Big-box” firms can save money by cutting down on packaging and by redesigning transportation routes, even as they help the environment in the process; and firms operating in developing countries can save costs by helping suppliers, farmers’ co-ops, and labor groups organize more effectively. Creating shared value may seem to qualify as simply one more version of stakeholder theory. But it exhibits an important difference, one that has proven controversial. According to Porter and Kramer, when considering shared value, one part of that “shared” value is sacrosanct. They specify that “CSV...is about solving societal problems in order to create economic value, not about blending or balancing” (Crane et al., 2014, p. 149). In the end, then, there can be no balancing of societal and economic value. Maximal economic value remains necessary, much as it does in Classical theory.
A final “straddle” view of the purpose of the corporation is called “team production.” Drawing heavily on economic concepts, including those from transaction cost economics, the economist Margaret Blair and the legal theorist Lynn Stout have articulated a view they believe is both normative and empirical (Blair & Stout, 1999a; Blair & Stout, 1999b). The economic literature identifies the class of problems known as “team production.” Corporate activities by definition involve activities where two or more persons are involved in a productive activity. The challenge, then, is to allocate rewards efficiently to the different members of the team involved in production. As someone once quipped, “When 10 people are pushing a truck out of the mud at midnight, nobody knows who is not pushing.” How to allocate the economic surplus created by the corporation among individual employees is a challenge both for efficiency and fairness. Firm-specific investments made by employees, that is, ones with which employees develop skills with little value on the open labor market, are critical for efficient corporate production. But, unless workers are rewarded fairly, they may shirk in ways that damage overall firm efficiency.
The solution to such team production problems, say Blair and Stout, is a governance structure that understands fairness and efficiency and that wisely rewards employees. Such a structure is not a simple market mechanism. Indeed, its best-known version is a well-known aspect of the corporate hierarchy, namely, the board of directors. Boards of directors have gained special prominence over the course of US history, Blair and Stout note, and they play the role of hierarchical umpire. The board of directors has evolved in law to be legally insulated from the constant demands from shareholders—and for good reason. In this way it can play its hierarchical umpire role and, in turn, deliver both better returns to shareholders and fairer outcomes for employees.
Blair and Stout explicitly identify their team production model as a “stakeholder” theory. However, the theory’s strong dependence upon traditional economic theory, and in particular upon transaction cost economics, qualifies the view as a hybrid or “straddle” version of Classical and Neoclassical perspectives.
Lurking behind the Classical and Neoclassical views is a deeper question about the nature of business itself. Theorists have written volumes about the question of “what is the purpose of the firm?” But perhaps we should ask first, “what is the purpose of business?” Only once we know what we want from business broadly, can we then determine what individual firms should pursue. Perhaps, moreover, once knowing the purpose of business, we might decide that not all firms need fit the same univocal model of purpose. Some firms might be Classical in their purpose; others might be Neoclassical. Yet the broader amalgam of firms in society might successfully achieve the broader purpose of the entire business system. Hence, interwoven with the issue of the purpose of the individual firm is a deeper question of the purpose of business in the social order. What should business achieve in society? What kind of “welfare” does business properly deliver to society? Traditional answers to this question of social welfare are drawn from economic theory, and include concepts such as Pareto optimality, optimized preference satisfaction, gross domestic product, and optimized utility (Hausman, 2018; Hausman & McPherson, 1993; Sen, 1987, 1997). Recent work has suggested new and different conceptions of the ultimate welfare business delivers, including optimized happiness and optimized “collective value” (Jones et al., 2016; Jones & Felps, 2013a, 2013b; Donaldson & Walsh, 2015).
This section has examined a cluster of issues centered on normative corporate ethics: namely, moral methods, moral agency, and corporate purpose. Notably, however, “ought implies can.” We cannot say that Amit ought to do something unless Amit can do it. Amit also had better know how to do what he ought to do (Schreck, van Aaken, & Donaldson, 2013). Discovering whether Amit, or a corporation, can do the right thing, and just how it can be done, are tasks that fall outside the ambit of normative insight. For these tasks, researchers must turn to empirical approaches.
Empirical or descriptive research on corporate ethics analyzes, describes, predicts, and explains corporate policy and practice, as well as the attitudes and behavior of individual corporate actors. In this way it provides evidence that can guide corporate behavior in the normative sense (Schreck et al., 2013). The term “descriptive” can lead to a misinterpretation that this research is “merely descriptive,” when, in fact, it is so much more. At the corporate level, empirical ethicists examine the actual purpose of the firm and its governance. This view encompasses many of the theoretical perspectives previously discussed, including agency theory and stakeholder theory. Empirical corporate ethicists also pursue the individual-level question of why people behave as they do, ethically or not, in corporations. Once we have possible answers, we can consider what corporations can do in order to influence people to behave ethically.
Thus empirical corporate ethicists explore societal-level, industry-level, organizational-level, and individual-level factors linked to ethical behavior. At the organizational level, questions of corporate ethics arise over whose interests the corporation is meant to serve, as well as which corporate governance structures and policies are best suited to achieve those interests. As discussed, shareholder primacy suggests that managers act only in the interests of shareholders and profitability, whereas corporate social responsibility (CSR) and stakeholder theory offer a broader account of corporate purpose. Research on CSR, broadly construed, studies how companies manage their business processes to produce an overall positive impact on society and includes the study of corporate sustainability, corporate citizenship, and corporate social performance (Carroll, 1999).
As noted earlier, Freeman (1984) pioneered work in the area of stakeholder management, challenging the view that shareholders are the only stakeholders that corporations do and should serve. In addition to normative stakeholder research, stakeholder theory has prompted multiple streams of empirical research. Here the most frequently asked question is about the nature of the correlation between meeting the needs of stakeholders, sometimes framed under the broader aegis of corporate social responsibility or corporate social performance, and corporate financial performance (see, e.g., Margolis & Walsh, 2003). The idea that attempting to satisfy many stakeholder interests will result in better financial performance is proposed by Jones (1995). This view, instrumental stakeholder theory, is a consequential approach in which corporations engage their stakeholders according to a core set of ethical principles with the aim of enhancing their competitive advantage. Although a normative basis for the treatment of stakeholders is acknowledged, this line of research mainly suggests that the only reason for corporations to meet the needs of their stakeholders is that it is profitable to do so. A normative or principled approach, in contrast, stipulates that corporations pay attention to stakeholders because they are worthy of ethical treatment, that is, because it is the right thing to do. In fairness, not all empirical work linking corporate social performance and financial performance ignores the normative basis of that responsibility, but further research that integrates normative and empirical perspectives is needed.
A chapter on corporate ethics cannot avoid the issue of corporate scandals. When members of the public hear about the never-ending corporate scandals unfolding in the media, they are more likely to ask what has gone wrong in companies than what has gone wrong with the ethics of individual businesspeople. They may see the corporation as exercising moral agency, as previously discussed. However, it is the individual employees whose acts put the corporation in ethical jeopardy. Thus, what we learn from unpacking the motivation behind individual unethical behavior may help prevent, or at least ameliorate, the phenomenon of the corporate scandal writ large. In addition to empirical research on the corporation itself, a more micro-level focus on the individual employee is warranted.
At the individual level, going back to the classic person–situation interactionist model of Treviño (1986), empirical corporate ethics research has recognized the impact of characteristics of the corporation on employee ethical or unethical behavior. Treviño’s work represents a shift from a sole focus on the psychology underlying an individual’s moral development to the addition of a sociological perspective acknowledging the importance of corporate factors in ethical decision-making and behavior. Ethical behavior is not only a function of the individual employee’s upbringing and stage of moral development, but is a function of interaction of these factors with features of the corporation, including corporate culture, compensation and control systems, and corporate codes of ethics. Treviño’s work is foundational to much of the empirical business ethics research that followed and is based on the expectation that corporations can have an impact. If corporations could not have any impact, the only possible control over employee ethical behavior would be to set up selection processes such that they would hire the most ethical people.
The empirical work that followed from Treviño’s model includes specification of the effects of perceived ethical climate, including: organizational values (Victor & Cullen, 1988); perceived ethical culture, including a corporation’s systems and procedures around ethical behavior (Treviño, 1986); ethical or responsible leadership (Maak, Pless, & Voegtlin, 2016; Voegtlin, 2011); interest in whether a corporate code is compliance-based or integrity-based (Paine, 1994; Weaver & Treviño, 1999), the impact of compensation and control (monitoring) systems (Robertson & Anderson, 1993), and punishment of ethical infractions (Butterfield, Treviño, & Ball, 1996). Additionally, Kish-Gephart, Harrison, and Treviño (2010) look at intention as well as behavior, a fundamental feature of the recent behavioral ethics research discussed below.
All this work contains either implicit or explicit normative underpinnings. Treviño (1986), for example, reveals little about what constitutes unethical behavior, the nature of which seems to be taken as a given. Other studies have included more specific forms of unethical employee behavior, such as lying, cheating on expenses, shirking, and employee theft. However, even those studies that delineate the nature of the unethical behavior often fail to explain why it is unethical from a normative perspective. Furthermore, the meta-analyses of studies of ethical decision-making point to the divergent nature of the unethical acts studied, rendering it challenging to draw definitive conclusions about their relative normative nature. For example, is lying more unethical than shirking? Is cheating on your expense account more unethical than taking credit for someone else’s work?
A promising approach to making explicit the normative elements of ethical decision-making is the issue-contingent model of Jones (1991). His model looks at the nature of the ethical issue itself—a concept he terms “moral intensity,” which is dependent on six factors: magnitude of the consequences of the proposed act; probability of effect; temporal immediacy; concentration of effect; social consensus about the good or evil of an act; and proximity. In their review of research on ethical decision-making processes, Lehnert, Park, and Singh (2015) point out that the concept of moral intensity is increasingly included in recent research. This would seem to be a positive indicator that the normative principles underpinning an unethical act are receiving growing attention in business ethics empirical scholarship.
From this empirical research a number of general conclusions can be drawn. Employee perceptions are key. Employees need to know and understand what behavior is expected of them. These expectations will be formed partially by formal policies and codes of ethics, but more importantly by informal norms and the actions of others in the workplace, most notably of senior managers, but also of peers. The actions of senior management set the tone. Codes of ethics are only effective if they are reinforced by senior management and are seen to be enforced. Employees who perceive a great deal of pressure to perform are more likely to cut ethical corners. What gets rewarded in organizations is what drives ethical behavior, and what gets measured is what gets rewarded. Perceptions of the moral intensity of an act will have an impact on employee behavior. All these conclusions have implications for corporate behavior. They suggest that managers who wish to elicit employee ethical behavior would do well first to understand employee perceptions and then to structure corporate policy and messaging so that the behavior expected from employees is crystal clear. Research on moral intensity suggests that messages need to be unequivocal not only about the fact that a specific act is considered unethical, but also, why that is the case.
On a cautionary note, corporate ethics initiatives constitute a form of social control, as corporations both determine what is and is not ethical or accepted behavior and enforce that conception of behavior on employees (Laufer & Robertson, 1997). The caution is relevant, however, only if corporations take ethics initiatives and enforcement to an extreme; for the most part this does not seem to be the case.
Looking to the future of empirical business ethics research reveals a relatively new stream is behavioral ethics, a scholarly field most promising for its applicability to corporate settings. Behavioral ethics aspires to explain the motivation behind individual ethical decision-making and behavior that is at odds with “larger social prescriptions” (Tenbrunsel & Smith-Crowe, 2008, p. 548) or “generally accepted moral norms of behavior” (Treviño, Weaver, & Reynolds, 2006, p. 952). Behavioral ethics seeks to elucidate the curious and frequently observed phenomenon that good people do bad things. As its name suggests, it is concerned with actual behavior, especially “ordinary unethical behavior” (Gino, 2015), rather than with attitudes or intended behavior. Our focus here is on how behavioral ethics research can be helpful to managers who both want to do the right thing themselves and to elicit ethical behavior from their employees.
Perhaps the most important overall finding from behavioral ethics research concerns the process by which people make decisions about ethical issues. These decision process findings tap into individual psychological tendencies underlying human behavior. Once one understands how individuals think about ethical issues (or in some cases don’t think about them, but react unconsciously), one can formulate better recommendations for corporations trying to elicit ethical behavior.
Intuition and Emotion
A well-accepted theory suggests that there are two types of thinking about ethical issues, System 1 and System 2 (Haidt, 2001; Kahneman, 2011). System 1 thinking operates automatically and quickly, sometimes below the level of consciousness, whereas System 2 thinking involves attention and mental engagement and effort. Behavioral ethics assumes that System 1 thinking underlies much of decision-making about ethical issues. Intuition leads individuals to decide how to behave when confronted with an ethical question. This contrasts with slower, rational thinking, in which individuals evaluate the risks and rewards of acting unethically, as well as the probability of detection. With ethical issues, System 2 thinking often comes into play after a decision has been made as an attempt to explain the decision. A recent review acknowledges the importance of this distinction by dividing the study of ethical decision-making into rationalist (reason-based) and non-rationalist (intuition- and emotion-based) (Schwartz, 2016).
One way to better understand System 1 thinking is through cognitive neuroscience findings, which corroborate the importance of intuition and also call attention to the role that emotion, rather than rationality, plays in ethical decision-making. Greene, Sommerville, Nystrom, Darley, and Cohen (2001) were among the first to demonstrate how moral dilemmas engage emotional processing, and to show that emotional engagement influences moral judgment. Greene (2003) tested two scenarios and found that judgments in response to “personal” dilemmas (the man by the side of the road) compared to “impersonal” ones (donating money to the poor in another part of the world) involved greater activity in brain areas associated with emotion and social cognition. Future research on the role of emotion in organizational neuroscience holds promise for understanding workplace dynamics and individual well-being (Butler & Senior, 2007). For example, instead of thinking about the man by the side of the road, studies could be designed to test different emotions evoked when a person at the next desk, rather than an employee on the other side of the globe, acts unethically. We should point out that Greene’s (2003) study does not address the normative question of whether it is better to help the man by the side of the road than it is to donate money to the poor on the other side of the world. Instead it only tells us how people perceive these two scenarios differently and that different emotional responses are evoked. This example illustrates the importance of linking a normative perspective to empirical ethics findings.
A noteworthy and overarching finding from behavioral ethics research is that individuals prefer to think of themselves as ethical and can engage in unethical acts without being aware that they are doing anything wrong (Tenbrunsel & Bazerman, 2012; Chugh, Bazerman, & Banaji, 2005). Because of their moral self-image, individuals can recognize the conflicts of interest of other people, but fail to see the ones that apply to themselves. Lying to a client, for example, can unconsciously be reframed as loyalty to the firm. Maintaining one’s ethical self-image is so important that individuals will cheat only up to a certain extent in order to maintain that image (Mazar, Amir, & Ariely, 2008).
Corporations do well to keep bounded ethicality in mind as they design programs to elicit employee ethical behavior. Corporate messaging needs to be explicit about what constitutes unethical behavior, especially conflicts of interest. The nuanced messaging has to convey to employees that the firm has faith in them as good people, but that at the same time, good people can act unethically, not out of ill intentions, but out of lack of awareness. A second conclusion is that corporate monitoring systems should be designed so that they do not overlook the small opportunities to cheat, for example, on an employee expense account. Again, the messaging needs to be explicit about what is and is not acceptable behavior, and why from a normative perspective some behavior is not ethical.
One way in which individuals can act unethically and still think of themselves as good people is that they act from unconscious biases or blind spots (Bazerman & Tenbrunsel, 2012). Blind spots can narrow one’s vision and potentially influence one’s behavior so that individuals fail to see their unethical actions in an objective light. One starts with the assumption that most people want to do the right thing in organizations, but implicit biases and unconscious reactions may get in the way. Corporations are designing programs to make employees aware of their blind spots and to learn to act to counter their unconscious or implicit biases. Recently, two black men sat in a branch of Starbucks, without making a purchase, while waiting for a friend. When asked to leave, the men refused. They were arrested, after which Starbucks issued a public apology and announced that it was closing its stores for an afternoon of mandatory employee racial bias training. Whatever the specific content of the Starbucks training, it no doubt included how to recognize and counter one’s implicit racial biases. Today corporations do well to think about implicit biases in the workplace and how they lead to unethical behavior.
Closely related to implicit bias is lack of awareness of the ethical dimension of a business decision. Moral neglect occurs when individuals literally fail to see or overlook the ethical dimension of their actions (Moore & Gino, 2013; Tenbrunsel & Messick, 2004). A specific type of moral neglect is ethical fading, which occurs when more compelling and self-interested aspects of the business decision obscure the importance of ethical considerations (Tenbrunsel & Messick, 2004). As individuals become numb to the ethical nature of their actions, they may even use language that focuses attention away from ethics. A lie becomes hyperbole, or “alternative facts,” for example, and discrimination becomes choice or selection. “Creative accounting” can easily slide into fraud. Accompanying this notion of ethical fading is the concept of ethical erosion, or the slippery slope. In a series of experiments, Gino and Bazerman (2009) found that people were more likely to accept the unethical behavior of others if it occurred gradually over time rather than in “one abrupt shift.” This suggests that corporations should be vigilant about paying attention to employee behavior. Not only is it easier for an individual to gradually slide down a slippery slope toward unethical behavior, but it is less likely to be detected if it occurs gradually over time.
Once an individual has engaged in an unethical act, the ethical dimension may rise to a conscious level. At that point, individuals may begin to justify their actions. Moral justification or rationalization is the way in which individuals are able to shift blame for their behavior away from themselves. Common rationalizations include, “That’s the way the game is played”; “Everyone is doing it”; “I am just following orders”; “No one gets hurt.” Such rationalizations may be conscious, but they can also occur below the level of consciousness. For example, people are inclined to believe that they are worthy of fair treatment by their employer, perhaps even entitled to that treatment. When they perceive that they are not being treated fairly, say when pay cuts are implemented, they may feel justified in bad behavior toward their employer. Greenberg (1990) found that groups of employees whose pay was cut had significantly higher employee theft rates than groups whose pay was unchanged. The psychological mechanism underlying the theft may well be a rationalization that by stealing, I am only taking what the firm owes me. Similarly, Ariely (2012) found that individuals who were given too much change were less likely to return it if they thought the clerk had been rude to them. Individuals try to justify or rationalize unethical behavior on the basis of previous mistreatment.
Moral priming is a particularly promising area of research for understanding how individuals can be “prompted” or “nudged” to behave ethically or unethically. Perhaps it is easier to study how to lead people to behave unethically, but our interest lies more in how organizations can elicit ethical behavior by designing cues, such as the moral symbols described by Desai and Kouchaki (2017). In that study, moral or non-moral messages were added to the bottom of an email or displayed on a T-shirt. The moral quote read, “Better to fail with honor than succeed by fraud” and the neutral quote read, “Success and luck go hand in hand.” The results of the authors’ multiple studies demonstrated that exposure to a moral symbol led to decreases in overall unethical behavior, in this case, deception, a practice that is almost universally agreed to be a violation of ethical principles. Respondents in the studies were unaware of the influence of these messages.
Multiple studies have confirmed the power of moral priming. Ariely (2012) found that merely asking subjects to try to remember moral standards was enough to improve moral behavior. Similarly, Young and Durwin (2013) asked people to think about the idea that objective moral facts exist and found that this priming increased their charitable donations, and a further study found that people acted more ethically after being prompted to list the Ten Commandments (versus ten books they had read) (Mazar et al., 2008). These constitute conservative tests of priming in that the prompts are fairly subtle, demonstrating how powerful priming through prompts can be. Signing at the beginning versus signing at the end of a self-report to assert an individual’s honest intent also reduces unethical behavior (Shu, Mazar, Gino, Ariely, & Bazerman, 2012). In corporations employees can be asked to sign their intent to report expenses or billable hours before submitting them. Signing afterwards, on the other hand, results in immediate mental justifications that employees use to maintain their image as a good person.
One specific approach to countering this tendency of individuals to deny their unethical actions is to construct situations such that the behavior occurs below the level of consciousness. Choice architects can structure a context in a certain way so that choices presented to individuals will lead them to make specific ethical decisions (Bowie, 2009), in other words, a “nudge” to encourage the decision-maker to make a certain decision (Thaler & Sunstein, 1999). Take a simple example such as the position of codes of ethics in organizations. If codes are prominently displayed and the message is communicated to employees that their peers are following the codes, this can constitute a nudge.
Perhaps it can be argued that compensation systems in and of themselves constitute a less-than-subtle nudge for employees to act in certain ways. Clearly employees pay attention to the behavior that is rewarded in a firm in the form of promotion and monetary reward. There is also preliminary evidence that acting ethically can provide its own form of intrinsic reward. If corporations expect ethical behavior from their employees, it seems to follow that senior managers needs to be concerned about the ethical culture of their firm. This means rewarding ethical behavior and punishing unethical behavior and making these rewards and punishments visible within the corporation. It also means keeping the firm’s code of ethics alive and meaningful by means of discussions and training and relating stories of the firm’s ethical leaders and behavior.
Moral licensing provides a kind of balance sheet of ethical and unethical behavior. An individual can, in a sense, bank ethical credits to offset ethical debits. The logic is that “If I behave ethically in one instance, then I have more license to behave unethically on the next occasion and still remain a good person.” The assumption behind moral licensing is that individuals make this type of calculation, either consciously or unconsciously. One of the first demonstrations of this phenomenon found that individuals prompted to disagree with sexist arguments were subsequently more likely to endorse a male candidate for a traditionally male position (Monin & Miller, 2001). Individuals asked to imagine themselves performing a pro-social act subsequently chose luxury over utilitarian products (Khan & Dhar, 2006). The mere act of writing about oneself using positive words (“generous”) resulted in fewer helping behaviors, such as environmentally friendly behaviors, or lower donations to charity, than did that of writing stories criticizing oneself (Sachdeva, Iliev, & Medin, 2009). These seemingly counterintuitive findings are attributed to moral licensing.
Even organizations may be swayed by moral licensing effects. A recent study found that when CSR was introduced, 20% of employees acted against the best interests of the firm by shirking on their job duties. The authors submit that the positive social impact of the firm’s CSR provides a moral license for employees to engage in cheating behavior (List & Momeni, 2017). This suggests that organizations need to proceed cautiously in touting their CSR to their employees. When they do so, they should emphasize that the employees cannot rest on their ethical laurels and convey, however subtly, that CSR policies are not a license to behave unethically. Perhaps employees think that because a CSR box has been ticked and the firm has acted responsibly, individual employees are free to act irresponsibly. Whatever the psychological reasoning, a firm needs to be cognizant that it should not overdo the righteousness of its CSR positioning.
Behavioral Ethics Study Design
A recent handbook provides an excellent overview of methodologies in both normative and empirical business ethics (Werhane, Freeman, & Dmytriyev, 2017). What is striking about the chapters on empirical business ethics is what is and is not included. Categories for empirical ethics are: qualitative approaches, quantitative and experimental approaches, contemporary approaches, and case study approaches, with contemporary approaches including behavioral ethics (despite its shortcomings) (Sonnenshein & DeCelles, 2017) and neuroscience and business ethics (Sabatella, Pless, & Maak, 2017). But if you look carefully at what is included, you will see that the studies mentioned are about ethics, but not necessarily about business ethics.
As this article demonstrates, a great deal of today’s empirical ethics research falls in the realm of behavioral ethics. However, there are limitations to this approach, especially given this point that so many of the experiments are not really about business or corporations. In 1988 with the publication of the seminal work, Moral Mazes, Robert Jackall used several years of field work to reveal the ways in which organizational settings shape employee perceptions of ethical issues. This is why some experimental lab studies may have shortcomings—they cannot come close to duplicating the nuances of day-to-day life in organizations. Lab experiments are useful for establishing cause and effect because they are able to isolate the impact of particular variables on unethical behavior. However, it is the very strength of such isolation that is also this method’s greatest weakness. Life does not come in neat packages of manipulation of variables, one variable at a time. Instead everything comes at an employee at once, and often with extremely mixed messages. For example, a salesperson may be told simultaneously to do everything possible to get the sale, but not to cut any ethical corners. The salesperson’s firm may have a strong, visible, reinforced code of ethics, but also have an equally strong compensation system based on commission and sales performance.
Despite these limitations, lab studies could be designed to reflect more rather than less of a true organizational context. Some lab studies engage the subjects in hypothetical situations mirroring those in organizational settings. Lavelle, Folger, and Manegold (2016) placed experimental subjects in the role of delivering news about being laid off to another employee. Moran and Schweitzer (2008) asked subjects to imagine that they were competing with four coworkers for a promotion and, that after putting in long hours at work, they were not given the promotion. Envy and perceptions of unfairness led to increased dishonesty.
These studies show promise for achieving ecological validity, and similar experimental lab studies could focus on everyday issues in organizations, as well as broader themes of social responsibility. One can imagine, for example, designing studies that test reactions to the fair or unfair treatment of employees and to racial and gender biases in corporate hiring and promotion. At the broader corporate level, one could test the effectiveness of various forms of corporate codes of ethics and the corporate messaging around them, as well as corporate policies, on the environment and stakeholders, including customers and suppliers. Such studies would address at least one of the concerns of Sonnenshein and DeCelles (2017) about the lack of organizational context. One simple observation is that behavioral ethical experiments for the most part do not include managerial implications, whereas it is de rigueur for management scholarship to do so.
Similarly, neuroscience studies could be designed to be more specific to corporations. For example, it would be interesting to design neuroscience studies that track brain activity as individuals react to specific types of nudges. Using the codes of ethics example, subjects could be exposed to hypothetical codes and then asked to make a decision involving an ethical issue. Embedded in the study could be manipulations such as whether the code is based on law or more general ethical principles, whether as an employee you have been required to sign that you agree with the content of the code, whether your senior executives ever refer to the code, and whether there is organizational training on the code, as well as whether others in the organization are adhering to the code. The design of the study would involve investigating the impact of the codes on the decisions made, but would go further in exploring brain activity both as individuals are exposed to the codes and as they make their decisions based on these experimental variations.
Another favorable behavioral ethics study design is that of the field experiment, or more specifically, field experiments conducted within corporations. This design would seem to be ideal for studying the complexities of employee behavior in corporations. Unfortunately, such studies to date have been few and far between. Behavioral ethics field studies have investigated customer behavior in restaurants (Azar, Yosef, & Bar-Eli, 2013), as well as taxi drivers’ treatment of customers (Balafoutas, Beck, Kerschbamer, & Sutter, 2013). These are valuable contributions to our understanding of ethical and unethical behavior, but they do not address the issue of such behavior in corporations. Shu, Mazar, Ariely, Gino, and Bazerman (2012) investigated insurance claims and Aven (2015) used archival data to draw inferences about fraud at Enron. These studies come closer to achieving the desired ecological validity. One could study the impact of, for example, styles of leadership, corporate norms and roles, and team dynamics on ethical behavior. Jackall’s (1988) ethnographic methodology is labor intensive and difficult to replicate, and corporations may be especially reluctant to open their doors to researchers wanting to study ethics. However, archival data could be more accessible.
This article has indicated ways in which corporations can use empirical research results, and suggested future research designs for greater application to corporations. There is still a great deal that is not known about why individuals behave ethically or unethically in corporations. Further exploration of this compelling research question is clearly needed.
Normative Methods Are Essential for Empirical Inquiry, and Vice Versa
The above evaluation of the normative and empirical aspects of corporate ethics clarifies why both the normative footings of empirical research (Robertson, 1993) and the empirical footings of normative research should be made more explicit. One cannot describe and explain unethical behavior without determining why a particular act is unethical from a normative point of view. Some empirical research, unfortunately, takes the unethical nature of an act as a given, rather than analyzing it from a normative perspective. This is true at an individual, personal level as well. People often have intuitive reactions to behaviors they feel are wrong—for example, to lying—without examining why they are wrong. But, similarly, even though law and morals can guide, they are vacuous without empirical detail. For example, the norm of nondiscrimination requires factual detail for its application. What qualifications have male and female applicants possessed when applying for similar positions? What has been the pattern of applicant success? Norms of nondiscrimination demand empirical context.
In sum, norms without facts are empty. Facts without norms are blind. This article issues a clarion call to empirical researchers to establish closer ties with normative theoretical foundations, and vice versa.
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(1.) The terms “moral” and “ethical” are used in this article as synonyms. This conforms to standard use among moral theorists.