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Published in: Journal of Business Ethics 3/2022

07-01-2021 | Original Paper

The Radical Behavioral Challenge and Wide-Scope Obligations in Business

Author: Hasko von Kriegstein

Published in: Journal of Business Ethics | Issue 3/2022

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Abstract

This paper responds to the Radical Behavioral Challenge (RBC) to normative business ethics. According to RBC, recent research on bounded ethicality shows that it is psychologically impossible for people to follow the prescriptions of normative business ethics. Thus, said prescriptions run afoul of the principle that nobody has an obligation to do something that they cannot do. I show that the only explicit response to this challenge in the business ethics literature (due to Kim et al.) is flawed because it limits normative business ethics to condemning practitioners’ behavior without providing usable suggestions for how to do better. I argue that a more satisfying response is to, first, recognize that most obligations in business are wide-scope which, second, implies that there are multiple ways of fulfilling them. This provides a solid theoretical grounding for the increasingly popular view that we have obligations to erect institutional safeguards when bounded ethicality is likely to interfere with our ability to do what is right. I conclude with examples of such safeguards and some advice on how to use the research findings on bounded ethicality in designing ethical business organizations.
Footnotes
1
As an anonymous reviewer points out, this might sound like Kim et al. are proposing something akin to the ‘reasonable person’ standard as commonly employed in law. It is important to clarify that this is not so. The hypothetical ‘rational agent’ that Kim et al. have in mind is a being very different from any actual person in that they do not suffer from any of the psychological limitations that afflict humans in general. By contrast, the ‘reasonable person’ employed in law is an ordinary human being equipped with ordinary common sense.
 
2
The term ‘bounded ethicality’ is an obvious reference to Simon’s concept of ‘bounded rationality’ (Simon 1957). And indeed, there is significant overlap between these concepts and many phenomena can be classified as either bounded rationality or bounded ethicality. The main difference between the two concepts is that bounded rationality draws a contrast to the ideally rational ‘homo economicus’ who uses their flawless rational capacities in pursuit of self-interested goals, while bounded ethicality points to the fact that the same computational and psychological limitations also apply when pursuing altruistic goals, or attempting to follow moral principles.
 
3
As the editor pointed out to me, some readers may think of auditor objectivity as a merely legal, rather than moral, obligation. Since accounting is a self-regulating profession, it might then be up to professional bodies to decide how strictly to interpret the requirement to be objective. However, I would argue that the requirement to be objective in one’s audits is not a free-standing legal or self-regulatory requirement. Rather, it is a moral requirement and ensuring it is abided by is part of the mandate of the accounting profession. Were the accounting profession to reject this, society would have much less reason to grant it the privileges that come with being a recognized profession (e.g., monopoly over the service offered and the right to self-regulate) (de Bruin 2015, p. 186).
 
4
This problem is exacerbated when epistemic injustice leads to vicious cycles. Groups that are consistently subject to epistemic injustice might increasingly see efforts to obtain and communicate knowledge as fruitless. This may lead them to reduce such efforts thereby apparently validating the prejudices that started the cycle (De Bruin 2019).
 
5
For a detailed investigation of various versions of this argument-form specific to implicit bias, see Holroyd (2012).
 
6
An anonymous referee helpfully points out that there are large swaths of normative business ethics that do not seem imperiled by bounded ethicality in the way RBC suggests. The examples provided by the referee are “don’t pollute, don’t undermine fair competition, don’t lie in your advertisements”—all surely central parts of the canon of normative business ethics. Nonetheless, I share Kim et al.’s worry that RBC, if successful, would undermine very significant parts of normative business ethics, because in business (though, of course, not only there) we are often supposed to adhere to particularly stringent standards of objectivity. Doing audits is perhaps the most obvious example. More generally we might think that the normative justification for our current economic system assumes an ideal of fair competition that is threatened when decisions are based on biases that systematically (dis)advantage some participants.
 
7
To illustrate, imagine a dispute between Kim et al. and a skeptic. The skeptic claims that when they discriminate based on implicit biases they do not violate an obligation, because they cannot help but do so. Kim et al. reply that the obligation still exists because, if the skeptic was rational, he could avoid such discrimination. The skeptic charges that this reply entails that Adelaida has an obligation to defuse the MathBomb, since she could do that if she was rational. Kim et al. now reply that this is not the kind of rationality they have in mind. At this point the skeptic will demand to know more about the concept of rationality being used, and will insist, rightly, that the answer is justified without reference to the disputed judgment about the propriety of discrimination based on implicit biases.
 
8
It is worth noting that Kim et al. also point out that ethically bounded agents can avoid violating their obligations by recusing themselves instead of acting on their biases (Kim et al. 2015, p. 353). I will return to the question as to how much of a difference there is between Kim et al.’s position and mine at the end of the “Implications of the Wide-Scope View” section.
 
9
I would like to thank an anonymous referee for raising this objection.
 
10
This is not to advocate placing blind trust in algorithms. As many have pointed out, algorithmic decision making comes with its own significant ethical pitfalls (see, e.g., O’Neil 2016). The point is to take the biases and limitations of human decision makers seriously, and install carefully designed institutional supplements. Such supplements need to be subject to rigorous and ongoing review.
 
11
I would like to thank the editor for raising this point.
 
12
Note that institutional solutions need to be devised and implemented by individuals, and can work only with sufficient buy-in from most individuals inside the institution. Thus, the suggestion is not to displace all responsibility from the individual to the institutional level, but rather that there is a complex interplay between individual and institutional responsibilities (cf Madva 2016).
 
13
Thanks to an anonymous reviewer who insisted on this point.
 
14
For a helpful framework for thinking about organizational design that helps to eliminate or insulate the foibles of individual members of an organization see de Bruin’s discussion of strategies by which financial organizations can become more epistemically virtuous. De Bruin distinguishes three broad categories of such strategies: virtue-to-function matching, organizational support for virtue, and organizational remedies against vice (de Bruin 2015, pp. 106–139).
 
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Metadata
Title
The Radical Behavioral Challenge and Wide-Scope Obligations in Business
Author
Hasko von Kriegstein
Publication date
07-01-2021
Publisher
Springer Netherlands
Published in
Journal of Business Ethics / Issue 3/2022
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-020-04716-w

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