TRENDS IN BUSINESS ETHICS. To Lenny and Brita

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2 TRENDS IN BUSINESS ETHICS To Lenny and Brita

3 NIJENRODE STUDIES IN BUSINESS Volume 3 Advisory Board Michael Z. Brooke, Professor at The University of Manchester Institute of Science and Technology, Manchester, u.k. Edgar O. Edwards, Henry Gardiner Symonds Professor of Administration at Rice University, Houston, Texas, U.S.A. Myron J. Gordon, Professor at the University of Toronto, Faculty of Management Studies, Toronto, Canada Martin J. Gruber, Professor at New York University, Graduate School of Business Administration, New York, N.Y., U.S.A. Martin K. Starr, Professor at Columbia University, Graduate School of Business, New York, N.Y., U.S.A. Board of Editors Gerard B. J. Bomers, Professor at Nijenrode, The Netherlands School of Business, Breukelen, The Netherlands Cees van Dam, Professor at Nijenrode, The Netherlands School of Business, Breukelen, The Netherlands Frans G. J. Derkinderen, Professor at Nijenrode, The Netherlands School of Business, Breuke1en, The Netherlands Aart P. van Gent, Professor at Nijenrode, The Netherlands School of Business, Breukelen, The Netherlands Business is a broad field where science and business reality can and should meet to analyse and discuss old theories and to develop new ones, applicable for modern managers. One of the main objectives of the Nijenrode studies in business is to give a push to new developments in the multidisciplinary business area, to serve the profession as well as a wider audience.

4 Trends in business ethics Implications for decision-making Cees van Dam and Luud M. Stallaert editors tmartinus Vijhoff Social Sciences Division ~eidenl~oston 1978

5 Distributors for North America Kluwer Boston Inc. 160 Old Derby Street Hingham, MA USA ISBN-13: e-isbn: DOl: / by H. E. Stenfert Kroese B.V. Softcover reprint of the hardcover 1st edition 1978 No part of this book may be reproduced in any form, by print, photoprint, microfilm or any other means, without written permission from the publisher.

6 PREFACE In August 1976 the research seminar 'Decision-making in business' was organized at Nijenrode, The Netherlands School of Business. More than fifty scientists and practitioners from nine countries presented research papers in one of the six discussion groups. Some ofthem also presented some of their ideas in front of a large mixed audience at a one-day symposium. Many of the papers presented at Nijenrode were of such a high quality that the decision to publish a selection of them was an easy one. At the same time the new series Nijenrode studies in business was initiated. All who were involved, the policy committee 'Of the Nijenrode studies, the advisory and editorial board of the series, the publisher, and the organizing committee of the seminar and symposium, acclaimed the idea of publishing three volumes in the new series. A collection of eleven papers could be grouped under the title Trends in managerial andfinancial accounting, and has been published as volume 1 of this series. A collection of fourteen papers has been published as the second volume under the title Trends in financial decisionmaking, while this volume, consisting of twelve papers (and an introduction) explores the theme Trends in business ethics. The introduction by Stanley L. Jakiwas written for the symposium. It suggests why the papers of Pjotr Hesseling, Antoine Kreykamp, and Richard H. Viola, which were not presented at Nijenrode, are introduced here. They were invited to elaborate within the frame ofthe themes of the seminar on aspects that had been proven to be useful. Pjotr Hesseling gives some reflections on the nature of the confrontation between multinationals and developing countries. He suggests an intermediate set of practical requirements between a universal level and personal responsibility - a challenge for those in the field of business ethics. In his paper, Antoine Kreykamp relates technology to ethics. The problems of ethics transcend those of technology; they are not problems concerning restricted fields, but relate to being as a whole. Our minds have to be broadened to see what is, in reality, of greater importance. In a both history- and philosophy-oriented paper, Richard H. Viola accen-

7 VI PREFACE tuates the human values. Business is in a phase of transition; if it is to keep its leading place in society (and it should), it must be recognized as an open system, not one which is only market oriented. Management has to take steps to make the corporation 'a channel through which its employees can manoeuver on their way to full expression of newly acquired values.' The books are intended for those who are interested in new developments in the decision-making area. They are especially suitable for graduate or advanced undergraduate courses: volume 1 in managerial or financial accounting courses; volume 2 in courses on managerial finance, capital budgeting or decisionmaking; and volume 3 in courses on business ethics, business policy or related fields. Many people have contributed to the success of the seminar and the symposium and made it possible for these three books to be published. In the first place, the authors of the papers who were all willing, not only to write a paper, but also to present it at Nijenrode, to discuss it with critical colleagues, and last but not least to revise it according to the capricious ideas of the editors. My thanks to all of them. But the whole enterprise would not have gotten off the ground without the great support of the members of the organizing committee of the seminar and symposium. As the president of that committee I have never made a vain appeal to any of the members. Because I am not able, nor do I wish, to discriminate between them, I will give their names in alphabetical order: Peter Hesp, Piet Koeleman, Luud Stallaert and Tony de Wit. Of course, much had to be arranged, but the committee had dependable help in the person of Sybren Tijmstra, who was always there to bring the organizing committee down to earth. Many secretaries have made extra effort, but one of them in particular has to be mentioned because of her continuous enthusiasm before, during and after the symposium and seminar: Josee Terheggen. She did a wonderful job. Of course without the moral and financial support of the Board and different committees of Nijenrode all preparations would have led to nothing. I look back and still appreciate the year of enormous effort which went into the preparations for the congress. It is hoped that the first three volumes of the series N ijenrode studies in business will be received with as much enthusiasm outside Nijenrode as was always present within the group of people who have made it all possible. Cees van Dam

8 CONTENTS Preface v Contributions to the volume / XI I. Decision-making in business: amoral? / Stanley L. Jaki II. Standards and values in the business enterprise / 11 Christiaan H. I. E. M. Teulings 1. Introduction / II 2. The growing pluriformity of our value judgements Ethical problems are nearly always problems of choice / The gap between moralists and entrepreneurs I The company's changing raison d'etre: towards unity of values and objectives I Choice is common to ethical action and economic action I Who is the bearer of the standards for an organisation? I Standards as actualised values / 21 III. Theses on man and private enterprise / 23 Johan C. Ramaer 1. On man I On man's organisations / On private enterprise: its purposes and responsibilities I On international private enterprise I 27 IV. A moral interregnum for multinationals in the Third World? / 29 Pjotr Hesseling 1. The nature of formal organizations I Personal responsibility I The need for an intermediate level of business ethos I The development gap / Some proposals I Conclusions / 40

9 VIII V. Trade unionism and ethics Arij Hordijk CONTENTS Introduction / Individualism or collectivism? / The Christian-social idea / Some consequences for social ethics / The structure of the modern enterprise / A social bill of rights / 49 VI. Moral policy and public policy / 51 Maurice A. M. de Wachter 1. The ethical component in public policy? / What makes public policy different? / Fetal research / Doctors, experts, politicians or laymen? The backdrop / 60 VII. Power and legitimation / 63 Willem L. van Reijen 1. Introduction / Personal and structural violence / Can power be legitimated? / Is the problem of legitimation correlated with seeking the truth? / 70 VIII. The social responsibility of business / 73 Hein Schreuder I. Introduction / Economic theory and ethics / The social responsibility of business / 77 IX. A reconnaissance into technology and ethics / 83 Antoine Kreykamp 1. A challenging offer / Narrowing consciousness / Research and development / Emancipation / Current questions concerning research and development / Agoraphobia / I am more than... / Blinding specialization / Apparent illumination / Visible impotence I Still, the show must go on 91

10 CONTENTS IX 12. Shocking information I Beyond science I Ethical problems are are-problems I World models only provide material I An ethical chat by the fire-side I Unschooled on wasteland I 94 X. The business corporation and human values / 95 Richard H. Viola 1. Introduction I The problem of organizational life I The need for a new organizational analysis I Effects of decision makers' myopia / The meaning of values / A new perspective / A new understanding of morality / The age of technology and its impact on human values / Conclusions / 119 XI. Ethics and profit 123 Luud M. Stallaert 1. The illusion of objectivity / The meaning of ethics / Goals of business / Profit and ethics / 136 XII. Ethics and the science of decision-making in business: a specification of perspectives / 141 Stanley L. Jaki 1. Perspectives on science I Perspectives on decision-making / Perspectives on ethics / 151 XIII. Incorporating ethics in business decision-making / 157 R. Sybren Tijmstra 1. Introduction / Decision-making in business situations / Ethics and social responsibility / Incorporation of social responsibility in laws and guidelines Goals of firms and participants in the decision-making process / Decision-makers and ethics / Conclusion / 171 Index / 175

11 Contributors to the volume PJOTR HESSELlNG, Professor of Organization and Management at Erasmus University, Faculty of Economics, Rotterdam, The Netherlands. ARIJ HORDIJK, Secretary-General of the Dutch Confederation of Christian Trade Unions (CNV), Utrecht, The Netherlands. STANLEY L. JAKI, Distinguished Professor at Seton Hall University, South Orange, New Jersey, U.S.A. ANTOINE KREYKAMP, Civil servant engaged in problems of adult education, Amersfoort, The Netherlands. JOHAN C. RAMAER, Manager of the Bureau for External Economic Relations of N.V. Philips' Gloeilampenfabrieken, Eindhoven, The Netherlands. WILLEM L. VAN REIJEN, Associate Professor of Social Philosophy at the State University Utrecht, Department of Philosophy, Utrecht, The Netherlands. HEIN SCHREUDER, Head of business research at the Economic and Social Institute-of the Free University, Amsterdam, The Netherlands. LUUD M. STALLAERT, Associate Professor of Methodology and Business Ethics at Nijenrode, The Netherlands School of Business, Breukelen, The Netherlands. CHRISTIAAN H. I. E. M. TEULlNGs, Member of the executive board of VNU (United Dutch Publishers), Haarlem, The Netherlands. R. SYBREN TIJMSTRA, Assistant of the President of Nijenrode, The Netherlands School of Business, Breukelen, The Netherlands. RICHARD H. VIOLA, Professor of Management and Organizational Behavior at Temple University, School of Business Administration, Philadelphia, Pennsylvania, U.S.A. MAURICE A. M. DE WACHTER, Associate Professor of Medical Ethics, University ofnijmegen, School of Medicine and Dentistry, Nijmegen, The Netherlands.