Ethical Innovation in Business and the Economy
(Northhampton, MA: Edward Elgar Publishing Ltd., 2015)
Georges Enderle & Patrick E. Murphy
A Review by William C. Frederick, March 2016
Any book bearing the names of these two editors , both well known in the field of Business Ethics, will attract the attention of scholars around the world. Each one has authored treatises that open new and creative pathways for executives, academics, and students, while also challenging them to make decisions and shape organizational strategies that match and reinforce those ideational principles. One can count on discovering practical ways to bring their foundational ideas about ethical behavior into the workplace. That's what they and their colleagues do in this book.
The new element in this collection of essays, written by some eighteen scholars of notable intellectual accomplishment, is about "ethical innovations" newly discovered and advocated by them and endorsed by the editors. The proposed innovations take various shapes: conceptual, theoretical, behavioral, organizational, methodological, managerial, transcultural, and systemic – altogether, an admirably broad range of innovative ethical pathways.
Georges Enderle, Professor of Business Ethics in the Mendoza College of Business at the University of Notre Dame, is the main cheerleader of this movement. Indeed for him, the need for ethical innovations in business and the economy is "a challenge that cannot be postponed." "Globalization, sustainability, and financialization" pose these new ethical challenges – each one creating novel behaviors difficult to fit into traditional ethical categories. He proposes an integrative approach that "gives equal importance" to the descriptive and normative dimensions of such ethical quandaries. "It involves not only material and technological but also spiritual and human aspects . . . driven by motivations that are other-regarding as well as self-regarding." One cannot help but feel that Enderle's call for action by the entire philosophy field reflects more than simply playing "catch up" ethics – so more about this possibility later on.
But first, what is innovation, anyway? I found a definition in my Shorter Oxford English Dictionary that seems to match what Enderle and his colleagues mean. It's the definition of innovation in the field of botany: "a newly formed shoot which has not completed its growth". Most of the chapters in this book explore various "newly formed shoots" while some of them lack fuller development.
I want to feature three chapters that particularly illustrate the effects of such an innovative approach: Chapters 14, 10, and 4.
Chapter 14: System D
The book's most ethically-insightful chapter is authored by Peter John Opio, currently a visiting professor at Notre Dame University's Mendoza College of Business. Dr. Opio brings relevant experiences from African universities in Kenya and Uganda as well as the Business Ethics Network Africa. His chapter describes, defends, and ethically rationalizes the informal underground economies found in several African nations and across the globe. Called "System D" (from the first letter of the French term, debrouillard , meaning smart, quick, resourceful), such informal economies serve the basic economic needs of many – sometimes the majority – of people who live at the "bottom of the pyramid" in underdeveloped nations, who are shut out of the formal, legal economy by poverty, unemployment, lack of formal education, bureaucratic regulatory requirements, high taxes, etc. For these excluded groups, System D's informal economy "is a matter of life or death and the only option at their disposal to . . . pay rent, put food on the table and send their children to school." Unable to live within the "formal" economic system, they are forced to rely on System D's "informal" economy, with its occasional illegal and illicit activities.
However, System D is also home to "inventive, self-starting, entrepreneurial citizens who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes . . . ." Opio acknowledges that System D involves "bending rules as well as performing illicit transactions " and is not "morally flawless", but he proposes five ethical principles that justify the need for and presence of System D economies:
Opio admits that these principles "are definitely limited but so are "formal moral principles" which "do not . . . offer . . . meaningful solutions to the complex ethical challenges [in] the underdeveloped world." His five principles do at least "help shed some light on the need to establish a more inclusive ethical discourse." Dr. Opio concludes that "System D is not just an important means to enact economic rights for all . . . [but for] exercising personal responsibility. . . ."
Chapter 10: Social Innovation in Latin America, Egypt, and India
This chapter is closely related to the ethically-innovative approach advocated by Peter John Opio, but the authors take it one step further. It is written by two scholars with vast experience dealing with ethical dilemmas in many European and North American nations and across the globe: Knut Ims and Laszlo Zsolnai.
They address the ethical problems posed by contradictions within capitalist market systems, particularly issues of widespread poverty, and they demonstrate how socially-innovative systems can "not only serve the interests of commercial markets but also advance social development." However, true social development "requires going beyond the logic of the market and transcending profit making as the primary goal of business." And what then is the proper goal? Their answer: ". . .social, spiritual and humanitarian goals . . . ." found in three "alternative business models": Brazil's Economy of Communion (EoC); Egypt's SEKEM; and India's Aravind Eye Care System.
The EoC culture is based upon "communion, gratuity, and reciprocity" and "service for the common good, aiming at the excluded [people] in every part of the world and every social context." The authors say that "Unity with God and thinking in terms of community" are the essence of EoC."
SEKEM's goals are many, including promotion of organic agriculture, support for various educational plans, vocational work, fair pricing, social entrepreneurship, human dignity, and equal rights for all citizens. As they say, "Our main goal is a developmental impulse for people, society, and the earth."
Aravind's Eye Care System – "now one of the largest providers of eye surgeries in the world" – "moves away from the pure economic logic" and has "a management style that break[s] away from profits, markets, products, and consumers." Aravind doesn't just sit and wait for patients to find it, but reaches out to find patients via eye-screening camps in villages and schools, offering services to some 2.3 million sight-impaired people, including 270,000 sight restoration surgeries.
The common element in these three cases of social innovation is a "strong intrinsic-spiritual motivation to serve the common good of society . . . and measure success in holistic terms that go beyond monetary results and market outcomes." The philosophic base of all three is a combination of spirituality, "ultimate reality", "God", transcendence, existential notions, community holism, social interactions, mutual care, and organic sustainability. "The primary goal is not profit-making but providing livelihood, enabling services that enhance people's well-being."
Interestingly, the religious affiliation of these three innovations is Christian for EoC and Islamic for both SEKEM and Aravind. In other words, religious beliefs allow all three to "transcend the logic of the market in business and the economy and introduce more holistic approaches . . . ."
Chapter 4: Innovative Methodology, an Experimental Approach to Ethics.
In this chapter, coauthors Christoph Luetge and Matthias Uhl offer an alternative "how-to-do it" method for understanding ethics which supplements the intuitive "armchair philosophy" that has dominated philosophic thinking for many years. They might well have cited similar supportive attitudes and approaches by philosopher John Dewey but do not do so, admitting that their "chapter aims to give not a complete overview" of 'experimental ethics'".
The authors support the idea of a "practical philosophy" that "has connections with other disciplines" such as psychology, economics, evolutionary biology, game theory, and moral psychology. This broader disciplinary approach frees them to undertake several laboratory studies of harmful behaviors, in-group versus out-group factors, public commitments
to obey laws followed by subsequent harmful behaviors, and winners-losers in competitive games. Field studies are also planned and underway.
In spite of these empirical studies, it is worth noting their almost apologetic comments to fellow philosophers: "Philosophy cannot just hand over all its problems to the experimental disciplines" but should "integrate experimental work into its own fields." Thus, "it remains a philosophic enterprise to develop a sound conceptualization of competition or fraud." (emphasis added).
Although they favor the use of empirical insights to understand ethical issues raised by globalization, sustainability, and financialization, they believe that the field of philosophy is an "interface of sciences" within what they label a "philosophical zoo." Subsequently, they conclude by saying that "the philosophical zoo" is wide enough to add "a new inhabitant: experimental ethics." One might hope that this new zoo inhabitant is not simply caged within the traditional network of strictly-intuitive, non-experimental arm-chair philosophers.
The Rest of the Story.
Several other well-known ethics scholars present their own views of innovative possibilities: Thomas Beschorner, Nien-he Hsieh, Joanne Ciulla, Patricia Werhane, George Brenkert, and others. Some of them struggle to integrate long-standing philosophic principles with the newly-evolved technological, globalized world of business. As in the botanic world, their "newly formed shoots" have not yet completed their growth. However, mostly they forge ahead, mindful of Enderle's "challenge that cannot be postponed."
One gains an impression that Enderle is advocating that philosophers become more pragmatic by looking at the actual effects of human behavior and organizational elements . It's almost as if he is saying, "Hey, wake up and look around at the real world."
Enderle issues a general call for innovative thinking: ". . . ethical innovation . . . calls for thoroughly new thinking . . . that inspires and strengthens new practices in business and the economy." Speaking of business ethics, he says that "its fundamental task is to enhance the
ethical quality of decision-making and action at all levels of business: personal . . ., organizational . . ., systemic." He himself helps meet this basic ethical challenge by focusing on the broader and deeper meaning of wealth creation as encompassing both "material and spiritual aspects." In addition, the various ethical innovations presented in the book do themselves involve "not only material and technological but also spiritual and human aspects . . . driven by motivations that are other-regarding as well as self-regarding."
That formula, Georges, will be welcomed in many quarters of today's troubled world.
I want to add a final note about co-editor Patrick Murphy. For many years, I have used one of his many books – Eighty Exemplary Ethics Statements (University of Notre Dame Press, 1998) – as a valuable guide in my own studies of corporate social responsibility and business ethics. His views have surely influenced the work and attitudes of many others in the business world and in academic circles here and around the world. You can be sure that his long-time experience about ethical realities, possibilities, and potentials has influenced the wisdom found within Ethical Innovation in Business and the Economy. Thank you, Pat!
1 For an analysis and discussion of these natural processes, see William C. Frederick, Values, Nature, and Culture in the American Corporation (New York: Oxford University Press, 1995) and William C. Frederick, Natural Corporate Management: From the Big Bang to Wall Street (Sheffield, UK: Greenleaf Publishing Ltd., 2012).