Business Ethics

A Virtue Ethics and Common Good Approach

Alejo José G. Sison, Ignacio Ferrero, Gregorio Guitián

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781315277837
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Can business activities and decisions be virtuous?

This is the first business ethics textbook to take a virtue ethics approach. It explains how virtue ethics compares with alternative approaches to business ethics, such as utilitarianism and deontology, and argues that virtue ethics best serves the common good of society.

Looking across the whole spectrum of business—including finance, governance, leadership, marketing and production—each chapter presents the theory of virtue ethics and supports students' learning with chapter objectives, in-depth interviews with professionals and real-life case studies from a wide range of countries.

Business Ethics: A Virtue Ethics and Common Good Approach is a valuable text for advanced undergraduates and masters-level students on business ethics courses.

1

VIRTUES AND THE COMMON GOOD IN BUSINESS

Alejo José G. Sison, Ignacio Ferrero and Gregorio Guitián

Learning objectives

In this introductory chapter, we shall:

• Define the meaning and scope of the virtues and the common good in business, in accordance with Aristotle, Catholic Social Teaching (CST) and Alasdair MacIntyre.
• Illustrate how personal virtues enmesh with corporate culture and traditions.

Virtue ethics is one of the three major schools of ethics in business and management, together with utilitarianism and deontology. The virtue ethics tradition is “agent-centered,” focusing on what choices and decisions do to individuals, while utilitarianism and deontology are “action-centered.” Utilitarianism judges actions based on results or outcomes, preferring situations when benefits outweigh costs, while deontology prescribes actions in conformity with rules or laws. Utilitarian storekeepers would most likely keep a €500 bill (they actually exist!) lying on the floor, happy they’re now that much richer, whereas deontological storekeepers would bring it immediately to the police station in accordance with local ordinances, proud that they’ve done their duty. Virtuous storekeepers, for their part, may hold on to the money for a day, just in case the owner returned, and only afterwards report to the police. Why? Because it’s more likely for whoever lost the money to go back to the shop than to proceed to the police station. The last thing virtuous shop owners would do is to keep what doesn’t belong to them—that makes them somewhat like thieves. However, they would also think of the best way to return the money to its rightful owner. So, although virtuous shop owners may eventually do the same as their deontological colleagues, the motives are different.

This example may be a bit too simple, but we nevertheless think the virtue ethics tradition is superior to both utilitarianism and deontology. Despite being “agent-centered,” that is, asking in first place “what kind of person do I become in performing this action?,” virtue ethics also considers actions, albeit secondarily. Virtue ethics weighs the consequences of actions (like utilitarianism) as well as their agreement with rules (like deontology). However, for virtue ethics, unlike utilitarianism, there are “exceptionless prohibitions” or actions that should never be done, regardless of consequences, such as killing the innocent; and unlike deontology, rules are to be followed while paying close attention to particular contexts (including results), never for the sake of rules alone. Virtue ethics, then, afford a more holistic and integral account of agents and actions than the alternatives.

In business and management, deontology has been dominant in theory, with the proliferation of organizational codes of conduct, while utilitarianism has been dominant in practice. Virtue ethics, for its part, had all but disappeared among English-speaking academics, until the publication of Anscombe’s essay “Modern moral philosophy” in 1958, sparking the beginning of a revival. A recent literature review of business and management journals reveals that virtue ethics articles shot up from one in the decade of the 1980s to close to 80 in the decade ending in 2010, signaling a strong trend (Ferrero and Sison 2014). Aristotelian, MacIntyrean and Catholic Social Teaching-inspired virtue ethics schools have been the most influential, with topics clustering round “virtues in relations between individuals and firms as moral agents,” “virtue ethics as a model for the study and teaching of business ethics” and “virtues in moral psychology, decision-making and leadership” (Ferrero and Sison 2014). Empirical and quantitative methods have also been introduced through Positive Organizational Studies (POS) and the notion of “virtuousness,” and interest in Confucian virtue ethics has likewise been stoked, strengthening the tradition’s universalist claims (Sison, Beabout and Ferrero 2017).

1. Sources for virtue ethics in business

The three main sources for virtue ethics in business are Aristotle, Catholic Social Teaching and Alasdair MacIntyre.

a. Aristotle

“Virtue” comes from the Latin word “virtus,” which originates from “vis,” meaning “force,” “power” or “strength.” “Virtus” is the translation of a Greek concept, “arête,” which stands for “what is best” or “excellence” in human beings. “Virtue” therefore means “what is best in human beings” or “human excellence.” To discover the best for human beings, in a typically Aristotelian fashion, we first have to know what human beings are and the aim or goal of human life. This leads us to examine, on the one hand, the “nature” (physis) of human beings, that is, their distinctive activity or function (ergon), and on the other, their “final end,” which ultimately leads to “happiness” or “flourishing” (eudaimonia) (Nicomachean Ethics, henceforth NE: 1097b–1098a).

We shall now explain some characteristic features of Aristotle’s teachings on the virtues: (1) the reference to the “nature” and “final end” of human beings; (2) their presence in a full range of dispositions to action; and (3) the link to “practical wisdom” (phronesis).

Virtues refer to the “nature” and “final end” of human beings

Aristotle defines human nature as that of a “political animal” (NE: 1097b; Politics, henceforth Pltcs: 1253a) or a “living creature that uses words” (Pltcs: 1253a, Metaphysics 1037b). Unlike other animals, humans live and thrive in complex, organized structures called cities (poleis, the plural form of polis). Also, human beings are distinctively capable of rational thought (logos), making use of words to communicate with each other. Virtues perfect human beings in their nature as social and rational creatures.

Virtues as “excellences” are anchored on a specific account not only of human nature, but also of its goal or end, happiness or flourishing (eudaimonia). Virtues are necessary for and partially constitutive of flourishing. For Aristotle, flourishing is the end or purpose of politics, because it can only be achieved in a political community (NE: 1095a), which represents fully developed human existence (Pltcs: 1252b). This stresses the need for community, with its web of relationships and spheres (familial, educational, religious, economic, civic or political, and so forth). Since flourishing can be attained only with the help of others and together with them, it is a common good.

Flourishing involves “living well and doing well” (NE: 1098a). This requires both material means and virtues. Hence the importance of the economy, concerned with material resources (“external goods” and “goods of the body”), and ethics, particularly the virtues (“goods of the soul”) (NE: 1098b; Pltcs: 1323a). There is a proper order between them, however. External, bodily goods are mere conditions for the performance of excellent actions, the goods of the soul (the virtues) (Pltcs: 1324a). Both the economy and ethics are subordinated to politics (NE: 1094a), as they contribute to the supreme good of flourishing. Flourishing is the highest good because we desire it for itself, and whatever other good we desire, we desire it for flourishing’s sake.

Virtues apply to a full range of dispositions

Although virtues as “excellences” apply primarily to character, they speak to other dispositions to action such as habits as well (NE: 1103a). A virtuous character comes from the cultivation of virtuous habits. Virtuous habits themselves result from the repeated performance of virtuous actions, and virtuous actions, in turn, arise from virtuous inclinations or tendencies. Inclinations and tendencies are called “virtuous” insofar as they are in accord with human nature and its final end. Therefore, a conscientious reading of Aristotle reveals that virtues as “excellences” designate, apart from character, inclinations and tendencies, actions and habits, and, indeed, even lives as a whole. They are “multi-track dispositions” attributable to a “certain sort of person with a certain complex mindset” (Hursthouse 2013). We shall proceed with how the virtues may be found in each of these capacities or dispositions.

Actions

Aristotelian ethics is premised on a “proper human function” (ergon). This consists of “some sort of life of action of the [part of the soul] that has reason” (NE: 1098a). Human excellence resides in fulfilling this function finely and well: “the human good turns out to be the soul’s activity that expresses virtue” (NE: 1098a).

How do we account for the moral significance of actions? First, we must distinguish between involuntary and voluntary actions. Involuntary acts occur by force of nature; people are passive subjects (NE: 1110a). Voluntary actions are those that agents perform intentionally and deliberately, receiving praise or blame (NE: 1111a). They proceed from an internal principle, such as an appetite, feeling, desire or will. Only voluntary actions are truly human actions.

Good voluntary actions are virtuous actions. Their moral valence comes from a triple source in a specific order: the object, the agent’s end or intention, and the circumstances. First comes the object of the action: what the agent does as a meaningful whole, not just the physical motions. The object principally determines whether an action is good or evil. Certain actions are prohibited because of their object, such as lying, theft, murder or torture (NE: 1110a). They constitute the matter of absolute or “exceptionless” moral prohibitions.

Next comes the agent’s intention, which has to be properly oriented towards the agent’s final end. An action choiceworthy by its object may become flawed due to the agent’s intention. Think of almsgiving just for show. In third place are the circumstances. “Unfavorable” circumstances sometimes render a good action censurable, as when a person gave so much money to charity that he jeopardized his own solvency. However, “favorable” circumstances do not change the moral quality of an action from evil to good. The evil of torturing just one person is not offset by the belief it could save many lives.

The moral goodness, excellence or virtue of human actions requires the integrity of all three—object, intention, and circumstances. Any defect would turn a voluntary human act evil.

Habits

Habits develop from the repetition of voluntary human actions (NE: 1103a). Every action leaves a trace or by-product called “habit”: a stable disposition or manner of being, doing, acting or behaving. Habits comprise a second level in the virtues.

Habit-formation or habituation presupposes freedom. Education, the primordial task of legislators, is nothing else but the formation of good habits (NE: 1103b). Freedom exists on three levels. The first is physical freedom, an openness or capacity for movement. A human being is deprived of physical freedom when bound or imprisoned, for example. Next comes psychological freedom or freedom of choice. Whenever people choose, their sovereign will is the determining factor. They identify with their moral choices, taking responsibility for them. The third level of freedom is moral freedom. Unlike the first two levels, which are “givens” forming part of our natural condition, moral freedom is a conquest. Physical freedom and psychological freedom are “negative freedoms”—freedoms from contrary physical forces and psychological determinants. Moral freedom is a “positive freedom,” a freedom to aspire to something superior and greater than our natural condition. People achieve moral freedom when they develop virtues as good habits. Virtuous habits enable people to perform more good actions better, not only improving their “moral skill” but also deriving greater pleasure and satisfaction. It’s similar to how pianists improve through practice, eventually becoming “virtuosos,” perhaps. As new, improved and reinforced dispositions, habits constitute a “second nature” for human beings.

Both virtues and vices arise from the repetition of actions (NE: 1103b), but only good actions produce virtues. For example, when faced with a terrifying situation, those who have the habit of courage react bravely and confidently, while those with cowardice, fearfully. How are we to distinguish between right and wrong habituation?

First, to acquire proper habituation, “actions should express correct reason” (NE: 1103b). Individual actions whose repetition constitutes a habit should be done in accordance with reason, with what is opportune in each particular case, as expert doctors or navigators do in practice. Second, right habituation shuns excess and defect (NE: 1104a). The stable disposition generated by repeated action is oriented towards a “golden mean,” defined with regard to the individual agent. For instance, someone who is temperate in food and drink neither eats and drinks too little nor too much, but just right. Third, proper habituation comes from an individual’s experiencing pleasure or pain in the appropriate kind of action (NE: 1104b). The temperate person delights in eating and drinking just right, abhorring both indulgence and want. With respect to a good habit,

virtue is a state that decides, [consisting] in a mean, the mean relative to us, which is defined by reference to reason, i.e., to the reason by reference to which the intelligent person would define it. It is a mean between two vices, one of excess and one of deficiency.

(NE: 1107a)

Character

Although character is constituted by different habits, the whole is greater than the sum of parts. Character displays greater permanence than habits and is more difficult to change. Character provides a more accurate and complete picture of a person than habits, which are limited to single traits. Knowing a person’s character, we would be able to predict actions and reactions better.

Just as a habit unifies many different acts, character integrates diverse habits. Habits perfect a person’s operational “faculties,” and each habit can exist in various stages of development. A person could be not only temperate or brave, but also braver than temperate. Character accounts for a person’s various habits and their degree of development. A habit may reinforce or diminish the effect of others in a person’s character. For example, a prudent person is more likely to be brave, just or temperate. Character lends a unique, personal touch to an individual’s habits.

Aristotle considers character states the proper genus for virtue (NE: 1106a). Virtue is a good state that causes possessors to perform their specific function well (NE: 1106a). Virtues of character are valued both for their instrumental (they enable one to function well) and their absolute worth (they make one a good human being).

The right character state lies in a mean—not a numerical mean, but one relative to agents. Virtue of character is an intermediate state that eschews the superfluous and the deficient (NE: 1106b).

How do we to acquire virtues of character? Since virtue of character lies in the mean, Aristotle admonishes, first, to avoid the more opposed extreme (NE: 1109a). W...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• List of illustrations
• List of abbreviations
• Notes on contributors
• Foreword: why business needs virtue
• Editorial preface
• 1 Virtues and the common good in business
• 2 Virtues and the common good in leadership
• 3 Virtues and the common good in finance
• 4 Virtues and the common good in production
• 5 Virtues and the common good in marketing
• 6 Virtues and the common good in human resource management
• 7 Virtues and common good in corporate legal practice
• 8 Practical wisdom in corporate governance
• 9 Confucian traditions in virtue ethics
• Index