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Contrasting the Behavioural Business Ethics Approach and the Institutional Economic Approach to Business Ethics: Insights from the Study of Quaker Employers

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Order Ethics: An Ethical Framework for the Social Market Economy

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Abstract

The paper suggests that in a modern context, where value pluralism is a prevailing and possibly even ethically desirable interaction condition, institutional economics provides a more viable business ethics than behavioural business ethics, such as Kantiansim or religious spiritual ethics. The paper explains how the institutional economic approach to business ethics analyses morality with regard to an interaction process, and favours non-behavioural, situational intervention with incentive structures and with capital exchange. The paper argues that this approach may have to be prioritised over behavioural business ethics which tends to analyse morality at the level of the individual and which favours behavioural intervention with the individual’s value, norm and belief system, e.g. through ethical pedagogy. Quaker ethics is taken as an example of behavioural ethics. The paper concludes that through the conceptual grounding of behavioural ethics in the economic approach, theoretical and practical limitations of behavioural ethics as encountered in a modern context can be relaxed. Probably only then can behavioural ethics still contribute to raising moral standards in interactions amongst the members (stakeholders) of a single firm, and equally, amongst (the stakeholders of) different firms.

This chapter reproduces revised material that has previously been published in S. Wagner-Tsukamoto, “Contrasting the Behavioural Business Ethics Approach and the Institutional Economic Approach to Business Ethics: Insights From the Study of Quaker Employers”, Journal of Business Ethics 82, 4: 835–850. We thank Springer Science + Business Media B.V. for their permission to reproduce it here.

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Notes

  1. 1.

    As discussed below, such principles of behavioural ethics can, to a considerable but not full degree be reconstructed through an economic approach to ethics.

  2. 2.

    See, for example, Fort (2000) who reviewed Donaldson and Dunfee’s approach.

  3. 3.

    Besides, behavioural researchers often interpret personal gain merely on empirical-behavioural grounds. However, the idea of self-interest, as applied in economic research, may have to be methodically interpreted in the first place (Wagner-Tsukamoto 2003).

  4. 4.

    The present paper here shares Cima and Schubeck’s (2001) position that self-love can constitute a sound conceptual starting point for moral philosophy. But differences exist (1) regarding the present paper’s moral evaluation of pareto-inferiority or ‘economic injustice’, as Cima and Schubeck might call it; (2) regarding the present paper’s positive evaluation of governmental intervention and the restriction of individual liberty; (3) regarding the present paper’s suggestions on realigning economics with behavioural ethics through the concept of ethical capital; (4) regarding a methodological interpretation of self-interest.

  5. 5.

    For other types of stakeholder interactions, such as firm-customer interactions, cooperation (pareto-superiority) stands a better chance of comprehensively reflecting an economic understanding of morality.

  6. 6.

    As North’s (1993a) institutional analysis hinted, the Coase theorem (Coase 1937, 1992) can in this respect be projected to effectiveness and efficiency assessments of ‘psychological contracting’.

  7. 7.

    It was probably no coincidence that moral philosophers like Adam Smith or Mill who seriously began to question the role of behavioural ethics had, in the wake of industrialization, intensively encountered modernity.

  8. 8.

    Whether stakeholders were here conceptualised as utilitarians, religious believers, virtuous persons, etc. can be left to behavioural ethics and behavioural (economic) research.

  9. 9.

    The failure of communist societies to create the ‘new good man’ (Buchanan 1987b, p. 275, footnote 9) tells a similar story.

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  1. School of Management, University of Leicester, Leicester, UK

    Sigmund Wagner-Tsukamoto

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  1. Sigmund Wagner-Tsukamoto
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Correspondence to Sigmund Wagner-Tsukamoto .

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  1. Peter Löscher Chair of Business Eth, Technische Universität München, Munich, Germany

    Christoph Luetge

  2. München, Bayern, Germany

    Nikil Mukerji

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Wagner-Tsukamoto, S. (2016). Contrasting the Behavioural Business Ethics Approach and the Institutional Economic Approach to Business Ethics: Insights from the Study of Quaker Employers. In: Luetge, C., Mukerji, N. (eds) Order Ethics: An Ethical Framework for the Social Market Economy . Springer, Cham. https://doi.org/10.1007/978-3-319-33151-5_13

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