Business Ethics of Innovation

Innovations are said to be the key drivers of economic development. They are the root for competitive advantages that allow firms to take the lead in particular markets (Albach 1994, Freeman and Soete 1997). Seen as the establishment of new products — that correspond to new means for specific ends — on markets they are a genuine object of economic and business research (Brockhoff 1999). In a widened view they are social phenomena that every now and then substantially change aspects of everyday life. The development of antibiotic medications as well as the introduction of personal computing are of this kind. Nanotechnologically facilitated drug delivery, converging technologies and pervasive computing might be contemporary candidates. These innovations are a societal challenge and as such are meanwhile attributed a considerable share of attention in policy-making.

The fundamental defect of global society today is not that the reach of corporations is too big, but that our ability to govern is too small. We face governance gaps and governance failures on a monumental scale. Our core challenge, therefore, is to stimulate social and political processes that will help bridge the gaps and reduce the failures. The dynamic interplay between business, civil society, and the public sector constitutes an essential platform from which to mount the campaign.

In this paper I argue that drug resistance is an important ethical issue in virtue of (1) the severe — and potentially catastrophic — consequences of drug resistance, (2) the fact that drug resistance largely results from the way that medicines (and research resources) are distributed, and (3) the fact that drug resistance is a clear example of a public goods problem. Recognition that freedom from infectious disease in general and drug resistant disease in particular are public goods provides additional reasons to those traditionally appealed to by bioethicists for treating health care as something special when making policy decisions about its distribution. The fact that freedom from infectious disease should be recognized as a public good, that is, provides additional (i.e. utilitarian and self-interested) reasons to standard egalitarian and human rights reasons for removing antibiotic distribution and development from free market mechanisms. While the problem of drug resistance largely results from lack of access to existing antimicrobial medications and while a primary solution to the problem of drug resistance would be the development of new vaccines and medicines, the problem of drug resistance intersects with debate over intellectual property rights in pharmaceuticals. What does all this mean for business ethics? I argue that recently proposed incentive schemes alternative to the standard patent regime reveal that conflict between corporate profit promotion, on the one hand, and corporate respect of standard humanitarian ethical duties, on the other, is not in fact inevitable. Implementation of “pull programs” such as those recently proposed by Thomas Pogge and Michael Kremer et al. would better allow industry to meet humanitarian obligations and serve the world’s most important medical needs without (necessarily) sacrificing profits. I conclude that pharmaceutical corporations have an ethical obligation to provide the political support necessary to put such programs into place.

Corporate managers responsible for the research, development, and marketing of pharmaceutical products inevitably encounter challenging ethical issues. One main reason is that, to reach the market, drugs must be studied in animals and humans, activities that have historically been plagued with ethical dilemmas about weighing the benefits and risks to subjects and the goal of advancing medical science and, in the case of human research, issues of free and informed consent. The second main reason that ethics has special relevance to the pharmaceutical industry is related to the intrinsic nature of drug products. Drugs become intensely personal when they make the difference between life and death, health and disability. The more grave the illness, the more patients care about them. Drug products are also unavoidably unsafe — no drug can be taken without some risk of harm. The diseases that have produced the need for drug therapy also make patients more vulnerable than other consumers. Fairness issues are generated by pharmaceutical products since they are often costly and therefore create access disparities. The vital importance of these products ensures that company research, development, and marketing will be closely scrutinized by governments, physicians, patients, and the press. Such scrutiny means that any lapse in corporate ethical conduct is increasingly detected and engenders a loss of public trust in the industry.

This paper applies the metaphor of citizenship to business-society relations because citizenship is concerned with power and responsibility as two major themes in the context of ethical implications of corporate innovation. After exploring and explaining these themes, we investigate the application of the citizenship metaphor to corporations in three ways: corporations as citizens; corporations deploying government-like powers in relation to human citizens; and corporations as arenas for stakeholders to act in citizenship-like ways. We illustrate how citizenship status, processes and entitlements of corporations themselves, of human members of societies, and stakeholders of corporations are structured. We consider the usefulness of our approach for understanding corporate responsibility in the context of innovation as well as for future research.

Pharmaceuticals are a key input in health care systems. For many diseases, they provide the basis of treatment or even the entire treatment. In OECD countries, pharmaceuticals account on average for 10–15% of total health expenditure¹. In developing countries, the share of pharmaceuticals is usually higher (up to 50% and more), partly because there is only a limited range of other, more sophisticated services available.

The internet makes data become an increasingly transient good. Almost any song and even entire movies are available in a digital form — not always to the delight of the copyright owners. Another type of good, which can be considered as predestined to be distributed over the channel internet, is software. Vendors use the internet for direct sales purposes as well as for making software explicitly available free of charge, what offers interested people the possibility to test preliminary software versions (beta versions) and to report possible software errors (bugs) to the vendor. This concept of distributed quality assurance isn’t very innovative. The idea of Open Source even incorporates the integration of all involved people and all parts of a software product’s lifecycle via an open license model (DiBona et al. 1999, Feller et al. 2005).