For our final episode of Season 2 of The BIS podcast, we’re honored to have Andrew Stark, professor of Strategic Management at the University of Toronto. Stark is also the author of the HBR article “What’s the Matter with Business Ethics?” Throughout season 2, we’ve been referencing this article to pull insights and look towards what the future of business ethics entails. Join us as Cindy Moehring and Stark discuss the where the field of business ethics has been and where it’s heading.
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Episode Transcript:
00:00 Cindy Moehring: Hi everybody, welcome back to another episode of The BIS and today we are fortunate to have with us Professor Andy Stark. Hi Andy?
00:09 Andrew Stark: Hi Cindy, how are you?
00:11 Cindy Moehring: I'm great. It is so good to see you. Even if it is remote. Professor Andy Stark is a Professor of Strategic Management at the University of Toronto so we have another international view here of the topic we're gonna talk about today. He has cross appointments to the strategic management area at Rotman School of Management and the Department of Political Science. Andy draws a normative theory for much of his research, political, moral and legal theory to analyze controversial public issues.
00:41 Cindy Moehring: Andy is the author of several books including Conflict Of Interest In American Public Life, The Limits Of Medicine, Drawing The Line: Public And Private In America and the Consolations Of Mortality: Making Sense Of Death. Wow! His articles have appeared in American Political Science Review, Harvard Business Review and the Wall Street Journal, among others and in fact, we're gonna be discussing today one of Andy's articles that is really the topic of season two here, called, What's The Matter With The Business Ethics?
01:12 Cindy Moehring: Andy's also been a guest Scholar at Brookings Institute and he has been a policy advisor in the Office of the Prime Minister of Canada, which that also sounds really interesting, I mean, I have to ask you a question about that but it is a real honor to have you here today. Thank you very much for joining us.
01:27 Andrew Stark: My pleasure, looking forward to it.
01:31 Cindy Moehring: I don't want to jump right in there, being a policy advisor for the Prime Minister in Canada, give us just a snippet of what that was like.
01:39 Andrew Stark: Well, it was exciting and interesting and I learned a lot. I was kind of the apex of an inverted pyramid, is how I put it, when I worked in the Prime Minister's Office, there were three or four senior advisors and I was the junior person for all of them, for a period of the time and it dealt with all sorts of constitutional and legal and social policy and economic policy issues and it was quite extraordinary.
02:10 Andrew Stark: I learned a fair bit about bureaucratic politics in the course of that. I learned about some of the advantages of... I noticed that my senior colleagues who were at the Prime Minister's ear more frequently than I ever would have were obviously able to influence him more than I ever could but they also were told what to do by him more than I ever was because they had that access, whereas I didn't have the same access or the same influence but on the other hand, he wasn't telling me what to do so I had a little more leeway than even some of my senior colleagues occasionally.
02:52 Andrew Stark: So I encountered at all sorts of little wrinkles like that in organizational life that I took with me when I left.
03:04 Cindy Moehring: What a great way to learn though. That was, I'm sure, just... It was like soaking it all in...
03:10 Andrew Stark: It was.
03:12 Cindy Moehring: And figuring things out and lots of things you learned explicitly but implicitly too, I'm sure just by being there.
03:20 Andrew Stark: Yeah. Absolutely.
03:21 Cindy Moehring: Well Andy, you wrote this intriguing article in the Wall Street Journal about... Gosh, I don't know, 26 years ago now called, What's The Matter With Business Ethics? And it has intrigued me because I think a lot has been done since then and it's a great opportunity to kind of bring your article forward but at the time, what you found is that, what you thought was wrong with business ethics is that it was just being taught in a way in business schools that was too theoretical and too general and too philosophical and it just wasn't working. It wasn't practical enough and so you concluded in your article that you thought the way forward had to do more with moderation and pragmatism and minimalism. What did you mean by that?
04:06 Andrew Stark: Well, those words were actually words that were used by business ethicists, whose work I thought was the way the field should be heading. Moderation was a term that the Foster Robert Solomon used to talk about virtues that managers should have that would allow them to moderate between different conflicting interests that they had to deal with. Pragmatism was a term that I think that Greg DES and Roger Crampton used to talk about the need for business people to mix un-self-interested and self-interested motivations in their business dealings and how to do that in a sophisticated way and minimalism was the term that Tom Donaldson and Tom Dunfee themselves used to describe their important work on trying to determine what kinds of norms universally apply.
05:01 Andrew Stark: Minimal norms that everybody has to or should abide by in business and distinguish them from norms that are not required of every business but that might vary across businesses so I borrowed those terms from the work of actual ethicists who were doing work that I was trying to suggest would be helpful if they were more of.
05:27 Cindy Moehring: Yeah, yeah. So what do you think, have there been advancements along the lines that you were concluding through the eyes and writing and thoughts of others? Do you think we've advanced the field in that way? Or in different ways, in the past 25 years?
05:46 Andrew Stark: Well, I'll focus on one thing and I say this because I've noticed that some of the other folks that you've talked to have focused on this and it's something I focused on in the article and it's one way to think of business ethics, it's certainly not the only way but one way to think of it is that it focuses on two kinds of issues. One is the kind of issue that arises, Laura Nash, who I quoted calls it The Acute Dilemma, where it's not clear what the right thing to do is. The right... Every option you have seems to come with something, some difficulty or a moral problem and the acute rationalization is the other issue and that's where you know what the right thing to do is but you face institutional pressures and incentives that make it... That are making it difficult for you to do the right thing and I think thinking of those central questions for the field is helpful.
06:47 Andrew Stark: My observation would be that the way, ideally, to deal with acute dilemmas, where you don't know what the right thing to do is, is you have business ethicists using moral reasoning to show us how to navigate difficult and complex moral issues and the way to deal with acute rationalizations where you know what the right thing is but feel pressure to not do it, is for business ethicists to suggest procedures and norms and ways of structuring organizational life to mitigate those pressures.
07:20 Andrew Stark: What I would say has happened in the field is almost the reverse. When talking about acute dilemmas where it's not clear what the right thing to do is, there's a lot of business ethics literature on procedures for how you might determine what the right thing to do is, get the stakeholders together, make sure you listen properly. Try and create a space for dialogue that is unencumbered. Great procedures but there's not much real... Where is the beef is, I guess is my question in terms of the moral arguments and reasoning that will help us with those dilemmas.
08:00 Andrew Stark: Meanwhile, when it comes to acute rationalizations, where we would like to have procedures designed that mitigate the temptation to do the wrong thing when the right thing is clear, we tend to have writing that uses moral reasoning to remind us that what the person was doing really was wrong and really... This was a terrible thing to do and we know that already but what we want to do is... So, we know that what Volkswagen leadership did, we know what Conley did was wrong. What we want to know is how to design organizations so that that doesn't happen in the future, what procedures we should have but instead a lot of business ethics writing is moral argument showing us that it's wrong.
08:42 Andrew Stark: So I think, if I can put it this way, we're asking the right questions but in some ways, we're reversing the way in which we ought to be dealing with them talking about acute dilemmas in a procedural way and acute rationalization in the subset of moral argumentative way, when we should be doing the reverse.
09:04 Cindy Moehring: Yeah. How interesting. Well so let me ask you this, since you're at the University of Toronto, what about the understanding of business ethics generally? Is it... Do you find that it's understood the same way and we come at it with the same lens in place in the US versus outside the US? What are your thoughts on that?
09:27 Andrew Stark: I think largely so. Canadian political culture is a little different from American political culture and I think... And also from European political culture significantly and I think the question you're asking goes to something that I think Derek Mattis has written about and spoken about, which is the debate over the boundary between what businesses should be doing on their own in terms of social responsibility and what government should be compelling them to do through law and regulation and what's interesting to me about that particular debate is not so much the differences across countries, it's the way in which the politics of it has changed.
10:11 Andrew Stark: So by that I mean, maybe 20 or 30 years ago, people who were advocating Corporate Social Responsibility were generally progresses. They were people on the left who wanted corporations to take into account environmental issues, health and safety issues, human rights issues in the way in which they weren't.
10:32 Andrew Stark: Now, a lot of people who are advancing the view of corporate social responsibility are actually business people themselves who think government doesn't handle social problems as well as they could and who are taking it upon themselves in various ways to address social problems and they are being resisted, interestingly, to some extent, by people on the left who don't want businesses to determine how our public schools should be run, how environmental policy should be...
11:08 Andrew Stark: They want the government to do that because the government represents all that and interestingly, they are allied with people on the right, like Milton Friedman a few years ago, who thought if we're gonna have social responsibility, it's gotta come from the government, the government sets the level playing field that we all have to abide by, business people are not experts in what should be done in terms of social responsibility, they shouldn't have any social responsibility.
11:34 Andrew Stark: Government should decide all those things and enforce it, if it wants to. So, interesting to me is that those who are advocating for a larger space for business or corporate social responsibility, now are on both the right and the left and those who are pushing back and saying no, it's... Government should take more of a role are also both on the right and the left and to me, how they sort that out over time is gonna be interesting to watch.
12:04 Cindy Moehring: I would agree and that kinda leads right into the next question, which is tied a little bit to your answer here. So a little over a year ago, the business round table here in the United States put out a new statement on what they viewed as the purpose of a corporation and had 181 of the US largest corporations, many of which are global, sign on to that and they hadn't changed that statement for 22 years.
12:32 Cindy Moehring: It had been the primary purpose of the corporation is to serve the shareholders interests and then a little over a year ago, they changed it in 19, 2019, to say; "Actually the purpose of a corporation is to serve all of the stakeholders." and sort of adopted that stakeholder mentality and approach and said a corporation should focus on not just shareholders but also employees and communities and all of the stakeholders they serve, including dealing ethically with suppliers and so completely like 180 degree difference.
13:06 Cindy Moehring: What do you think about how that ties into your description of how the politics, if you will, of stakeholder capitalism has changed with people on both sides? What impact do you think that new statement has had from the business round table?
13:29 Andrew Stark: I think it's been helpful and certainly stakeholder theory has been a great contribution of business ethics and business ethicists over the past 20 years or so. I look at it and I did this to some extent in the article, in comparative terms. By comparative I mean, I think it's always a good idea for business ethicists to keep an eye on how legal ethicists and government ethicists and medical ethicist are handling their fields because that can be constructive.
14:05 Andrew Stark: So I'll respond to that question in this light and I guess we talk about suppliers and consumers and shareholders and competitors and employees, major stakeholder groups. What I think we should bear in mind is how unique that is compared to the other professional fields. In medicine, for example, doctors run into ethical issues dealing with suppliers, drug companies but lawyers and government officials don't have the same kinds of problems with suppliers. When it comes to employees, obviously, government has employees. It's a large organization like businesses, they have whistle-blower issues just like businesses do but lawyers and doctors don't really operate in the same kind of large organizations with the same kinds of issues.
14:56 Andrew Stark: When it comes to competitors, a lot of legal ethics talks about how you should deal with... How a lawyer should deal with their adversaries and obviously a lot of business ethics has to do with how to deal with competitors and treat them in a fair way. But of course, bureaucrats and doctors don't have competitors in that way. At all three of those other professions, the consumer is also the principal to whom the professional owes a fiduciary duty. Patient is both the consumer and the principle. The citizen for the government, the bureaucrat and the client for the lawyer.
15:33 Andrew Stark: But in business, of course, the two are different. Shareholders are the so-called fiduciary bearers of the... The objects of the fiduciary responsibility of managers, whereas consumers are yet another group. So, my point is that what business ethicists face is hugely more complicated and difficult in trying to reconcile the ethical issues of their profession than any other profession and what that suggests to me is that while the stakeholder approach is very important, it also presents enormous intellectual challenges and when I say I'm not sure how far we've advanced along that road, it's not meant as a criticism of those trying to advance us, it's meant simply as a caution that it's difficult and our aims may have to be moderated as to what we can do in that area.
16:32 Andrew Stark: Also, it might be useful to look at how these other professional areas have dealt with some of the issues individually that we all have to face in business ethics collectively. But I would just put that out there as sort of my sense of stakeholder issues.
16:48 Cindy Moehring: That is so interesting to think about it in that way that you just described, of having the end-user consumer also being the fiduciary, if you will, the principal in some of those situations like Doctor-Patient. But you're right, when you get into the business arena, most of those are different sometimes.
17:11 Andrew Stark: Sometimes. What I said was a general statement.
17:14 Cindy Moehring: A general... Yeah.
17:14 Andrew Stark: You'll find... You can quibble with it on specifics but I think it has some general merit.
17:21 Cindy Moehring: Yeah. So, how do you... When you think about it that way, in general terms, how do you think that affects the outcome of... And the application of a stakeholder theory?
17:34 Andrew Stark: Well, I think what it suggests is that it's difficult and we should recognize that and proceed with caution and slowly... Or not slowly, slowly may not be the right word but we should acknowledge that we face in this field complexities that are more significant than any other professional ethics field and that... I'll just veer off on a slight tangent here.
18:11 Andrew Stark: One of the things that I've often wondered about is why we have a lot of moral philosophers in the field of business ethics. We don't have a lot of political philosophers in business ethics and yet these issues are issues of political philosophy as much as moral philosophy. The language that we use to talk about representation and dialogue and interests and so forth are all terms the political philosophers have dealt with over time. So I've often wondered whether the field could benefit from an injection of political theory into its analysis in addition to the very helpful moral philosophy that it typically draws upon.
19:09 Cindy Moehring: And I would say it's probably a caution to not draw the comparison too closely between doctors and government because the ethics are just different. So the analogy can only go so far actually. Interesting. So thinking about the whole field of business ethics then and bringing it back to that, which as you said is more complex in some respects than the others, what do you think is the future of business ethics in terms of where the education of it needs to go?
19:46 Andrew Stark: Well, I think some of your other interviewees have made some great suggestions along those lines so instead of repeating them, I will just add a new one and that is, we have seen... We've had a summer in which the use of the market's sphere for political and moral purposes has exploded in a way that we haven't seen for a long time. What I mean by that is people are boycotting Goya Foods because the CEO said something favorable about Donald Trump. Facebook employees are using their positions as employees to critique the management's own political decisions.
20:45 Andrew Stark: Columnists are leaving newspapers where they think the political environment has been hostile and readers have pressured those publications to get rid of them. The Colin Kaepernick kinds of issues. The Washington Football team issues that arose where there were the concerns that for a very long time, there were companies that had participated or individuals who had participated in the ownership of that, of the Washington Football team who did not use their market clout to make a political change. We could go on and on.
21:34 Andrew Stark: I think this is a very rich field for business ethicists to help us sort out. For example, is there a difference between consumers who boycott a company because they don't like the stand taken by its CEO, as in Goya and consumers who boycott a company because they want a particular individual employee to be fired? I think that there probably is. Is there a difference between a company that wants to part ways with an employee because it doesn't want to be associated with his or her politics? Think of Fox News firing, I think the man's name was Blake Neff, because of his offensive tweets, versus a company that or an economic entity, business entity, that even after an employee has left, takes action meant to silence his political expression? And I'm thinking of Colin Kaepernick who was let go by the 49ers but then found himself arguably...
22:45 Andrew Stark: This is a contestable thing but I think arguably blacklisted even after he left for continuing his politics. So I think there's a difference. So I think we have some terrain here, in addition to some of the other stuff that your other guests have discussed to get into.
23:04 Cindy Moehring: Yeah. The COVID-19 situation combined with the racial tension that's really at a peak, not just here in the US but has even gained traction around the world, has really created some rich fodder, I would say, for ethicists. Particularly when you combine that with the empowerment that individuals now have through the use of digital media, social or otherwise. So, yeah, that's a good add, what you just threw in there. So if you had three words or three phrases is what I try to ask everybody to describe the future of business ethics... And I got that, of course, because you used three words in your past article to describe what you thought the future should be. So if that was... I call it ethics 1.0, when you wrote the article 25 years ago and if we're now in ethics 2.0 and we've advanced in many ways, behavioral ethics being one of them which has come on to the scene and Mary Gentilly's approach of course, for thinking about what do I do when I already think I know what's right. What do you think, Andy, are the best words to describe ethics 3.0, where we need to go in the future for the next 25 years?
24:22 Andrew Stark: Well, I'm gonna be a bit retrograde but I will refer to the three critiques that I made about business ethics. They were controversial, not everybody accepted them at that time and it's still, I think, a subject of some debate by many of them. One of those critiques was that business ethicists were too theoretical, they overloaded their writings with theoretical moral theory, deontology, utilitarianism, in ways that was not necessarily helpful. It often seemed more like attempts to vindicate a particular moral theory by showing how it applied to a particular business situation than to illuminate the moral complexities of the situation.
25:08 Andrew Stark: So one of the words I would use instead of theoretical is analytical and that may not be the best word but when I say it, I think of work like Tom Donaldson's stuff on the ethics of international business, where he provided a very neat analytical framework having to do with conflicts of economic stages between different countries that a multinational may be operating in and conflicts of cultural development and there was no overlay of moral theory in that at all. He derived those morally helpful categories from actual practice but it was analytical. It was very sharp and it drew distinctions. It was not fuzzy, etcetera. So I guess analytical would be one word.
26:04 Andrew Stark: I suggested that some work in business ethics was too impractical, so practical would be a word I would use and again, since I'm a big fan of Tom, I'll suggest that the work I just discussed was a good example of something that was practical because a manager could read that article and read that work and understand what to do. It provided a pretty user-friendly way of thinking about what you should do if you're faced with... If you're a multi-national, your home country has a certain view of gender equity or bribery and the country that you are doing business in has a different view.
26:54 Andrew Stark: And it was very user-friendly and I think my final suggestion was that business ethicists were writing it too general and by that, I meant that they were talking about systemic changes to capitalism, the market system, to an extent that you wouldn't find in other... In some other professional ethics fields, where the ethicists are sort of working within the existing... Not that there's anything wrong at all with critique in capitalism but it may not be as helpful to managers as something that was more... So I guess instead of general, I would use the word pluralistic.
27:41 Andrew Stark: And again, by that I mean... And I'm gonna refer to Tom Donaldson yet again but there are others who are doing this as well. What that suggests is looking at business as an ecology of pluralistic entities, some of which should be motivated more by the profit motive than others and that that's a good thing because they work together in an ecology to provide an optimum social and economic wellbeing and that we should get into the fine weeds of different kinds of businesses and try and help them within their situations to figure out where they fit in that ecology and how to weigh off the business versus social imperatives that that particular business might have instead of talking in a general way about all businesses.
28:40 Cindy Moehring: Got it. Yeah. So, analytical, practical and pluralistic. I like it, I like it. That's great. I was waiting to hear what you would have to say on that question. [chuckle] That's great. This has been a fun conversation, Andy, very eye-opening and I've appreciated you sharing your thoughts with us and I always like to end with a couple of fun questions. We've all... During this period of COVID, when we're in this time of a lot of time that we find that we need to be doing more reading or watching something or just some downtime, what have you been reading or watching or listening to for fun but that also has a bit of an ethical dilemma to it?
29:27 Andrew Stark: Well reading, I'll mention one, I wouldn't necessarily call it for fun but it wasn't a fun read but it was for work and it's something that I was blown away by. It's a book called The Sunflower and it was written by Simon Wiesenthal who was a prominent pursuer of Nazis to bring them to justice after World War II and the book is about his experience during the war, when toward the end of the war, a German solider... He was called by a wounded German soldier who was dying, into his room and the soldier asked Wiesenthal for forgiveness. He wanted Wiesenthal to forgive him on behalf of the Jewish people for his part in the Holocaust and in what had happened and Wiesenthal presents this, it's beautifully written, as a moral dilemma and at the end, he decides that he can't do that, he can't grant that forgiveness, it's not his place to grant it and doesn't and then the book... And I assume the book is always issued this way, is followed by small essays on that moral question by an unbelievable array of people, Primo Levi, Desmond Tutu, Abraham Joshua Heschel.
30:58 Andrew Stark: Incredible moral figures of the late 20th century, Arthur Hertzberg, who then asked themselves, "Well, was that the right thing to do?" And it's really a beautiful, moving and intellectually challenging work as a whole when you take Wiesenthal's book, it's a short book and the commentary together.
31:28 Cindy Moehring: Oh, I love that suggestion. I'm gonna add that to my list. Alright. Well, this has been fantastic and I have enjoyed the conversation with you very much and it's just been wonderful to have you participate in this and continue the conversation about the future of business ethics, which I think is here to stay and everybody recognizes that now. It's about how the field is gonna evolve and you've really added some great thoughts there. So Andy, thank you so much for being here with us.
32:00 Andrew Stark: Thank you, Cindy. I've enjoyed it very much.
32:02 Cindy Moehring: You bet. Alright. Well, talk to you soon, bye bye.
32:04 Cindy Moehring: Thanks.
32:05 Andrew Stark: Bye.
