Book Review - Business Ethics as Rational Choice by John Hooker, Prentice Hall, 2011

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1 Journal of Business Ethics Education 8: NeilsonJournals Publishing. Book Review - Business Ethics as Rational Choice by John Hooker, Prentice Hall, 2011 Sefa Hayibor Carleton University, Canada In the preface to Business Ethics as Rational Choice, the author states that it is a different kind of ethics book, and it certainly does differentiate itself from other business ethics textbooks. John Hooker s stated goal is to build the student s decision-making skills so that he/she can arrive at, and defend, personal or company decisions. In my experience, while most business ethics texts could do a capable job of increasing awareness of and familiarity with various business ethics issues and concepts, very few provide a clear and useful template or templates for actually making decisions concerning ethical issues in organizations (and other aspects of life). This book, on the other hand, does a very admirable job of the latter by presenting tools for ethical decision-making and providing extremely extensive opportunities for the student (and, indeed, the instructor) to apply those tools in both fictional and real-world situations. It is a book concerned primarily with doing business ethics rather than simply knowing about business ethics. Thus, a given instructor s opinion of the utility of this book for his/her classroom is likely to be related to an extent to his/her position concerning the point of business ethics instruction. The goal for Hooker is to enhance the student s ability to make reasoned judgments when faced with decisions with ethical content. Achieving this particular goal, however, probably necessitates a stronger embrace of philosophy than some instructors might be comfortable with, due to both the depth of knowledge and the class time required. Instructors accustomed to the common type of business ethics text that incorporates in a single chapter the basics of typical approaches to prescriptive ethics and then moves on to other subjects may feel slightly out of their element employing a text like Business Ethics as Rational Choice. That said, this book (perhaps supplemented somewhat with other materials) would likely be very edifying for those business ethics instructors (perhaps trained in other fields of business) looking to increase their own capabilities with respect to the application of principles of normative ethics, and should appeal greatly to the instructor who feels that business ethics education is primarily concerned with augmenting the student s capacity to make ethical decisions. Given the short length of the book, and its focus on repeated analyses employing a few key concepts rather than a Subscribers are granted a licence to make 1 copy of the paper for personal use only. Apart from this licenced copy, none of the material protected by the copyright notice can be reproduced or used in any form either electronic or mechanical, including photocopying, recording or by any other information recording or retrieval system, without prior written permission from the owner(s) of the copyright. For multiple copy orders and reprint permissions contact the JBEE Publishing Editor, pneilson@neilsonjournals.com. All rights reserved NeilsonJournals Publishing.

2 424 Book Review - Business Ethics as Rational Choice more cursory discussion of the vast subject matter of business ethics, it might also prove particularly useful in shorter business ethics courses that appear in some MBA programs. In general, though, I suspect that anyone with an interest in business ethics will find Business Ethics as Rational Choice to be a stimulating, instructive, and insightful read. The format of Business Ethics as Rational Choice is certainly unusual for a business ethics text. The book consists of a very short introductory chapter, followed by two chapters on theories of normative ethics, and then four chapters presenting cases and analyzing them using those theories. A final chapter concerning cross-cultural ethics combines both theory and case analyses. While a look at the table of contents might give the surface impression that most of the work consists merely of cases, upon reading the book one finds that the case chapters present very detailed analyses of each of the 28 cases presented throughout. This seems to be an appropriate format given the author s stated intention of building decision-making skills: he presents the tools for ethical decision-making in the first third of the book, and then applies them repeatedly throughout the majority the following two-thirds, with the cases and analyses generally increasing gradually in terms of their complexity. Hooker also provides a very large number of exercises (about a hundred of them) throughout the work. Early on in the book these represent very brief situations to which the reader can apply the principles presented; however in the latter chapters they could safely be characterized as short (un-analyzed) cases. The exercises, like the analyzed cases, increase in complexity as the book progresses. In addition to describing the book and how to use it, the introductory chapter of Business Ethics as Rational Choice presents brief explanations of the author s rational choice (not to be confused with rational self-interest) approach to business ethics and why business ethics is a critical field of study, as well as a section concerned with dispelling, with either empirical evidence or logic, common myths about business ethics. Many instructors in business ethics may find the latter section useful for discussions with occasional students who are reticent to accept the utility of business ethics courses. In fact, I would have preferred to see a somewhat more detailed approach to dealing with these myths. Admittedly, most if not all of the five presented are easily proven to be unreasonable, and Hooker s approach to undermining the logic of some of them is probably satisfactory for those who possess reasonably good reasoning skills. However, in my experience, some of these myths are so pervasive among business students as are relatively undeveloped critical thinking skills that a deeper rebuttal than, for example, the admittedly humorous one sentence argument by reductio ad absurdum (omitting most of the argument) used to falsify the myth that ethics is a matter of opinion, might be in order. The second chapter of Business Ethics as Rational Choice begins the presentation of the basic ethics toolkit to be employed in all of the analyses to follow, and describes how the tools represent aspects of rational choice. The rational choice emphasis may not be seen as necessary by some, but does act as a source of cohesiveness to (and in some cases a mechanism for prioritization of)

3 Journal of Business Ethics Education the three basic approaches to normative ethics which are represented in the book: a (deontological) generalization test; a (consequentialist) utilitarian test; and a virtue test. So, while many ethics texts present (Kantian-oriented) generalizability, utilitarianism, and virtue ethics as relatively distinct, here Hooker expresses them as three aspects of the underlying concept of rational choice, and states that ethical tests based on all three concepts must be passed in order for an action to be considered ethical. The first tool Hooker puts in his ethics toolkit is the Generalization Test, which is presented in an initial form as well as in four corollary forms and a refined form, before being applied to questions of professional ethics and fiduciary duties to stockholders. I suspect that many readers will find in the Generalization Test concepts akin to aspects of Kant s Categorical Imperative: indeed I was surprised to find no reference to Kant in the book, though I am fairly certain that Hooker s Generalization Test would not have come about without previous knowledge of the Categorical Imperative. Though there is no particular reason why a business student or practitioner needs to know about Kant s existence or work in order to learn and apply the Generalization Test, the ethicist in me wanted to know more about the distinction between Hooker s test and Kant s prescriptions, since they appear quite similar. Though not critical, I also suspect that a typical business student might benefit from an explication of the distinction between the logical consistency required of the Generalization Test and the layman s definition of consistency. (Indeed, given the author s focus on rational choice, his employment of concepts like logical consistency, necessity, and sufficiency, and his very systematic approach to analyzing each business case, a section or perhaps even a chapter on the rudiments of logical reasoning might actually prove very useful for many students.) The second tool Hooker presents is the Utilitarian Test. While utilitarianism will doubtless be familiar to business ethics instructors, Hooker presents a slightly different though somewhat ambiguous take on the subject. As with the relationship between Generalization Test and Kant s work, the ethicist in me wanted to know more about the distinctions between Hooker s deontological approach to utilitarianism and the familiar versions of the theory, though once again such a delineation is probably not necessary for students and practitioners who might use the ethical tests presented in this book. One clear distinction is that Hooker s version avoids the cognitive and informational impossibility of a decision-maker actually being able to accurately predict the consequences of her actions so as to act to maximize utility. In using Hooker s Utilitarian Test, rather, the decision-maker simply attempts to maximize utility by choosing what appears to be the utility-maximizing alternative after doing her due diligence to find and assess information relevant to determining the total utility of each of her various options. Hooker explicitly acknowledges a trade-off between information-seeking on the one hand, and actually making a decision on the other, and notes that a balance must be struck between the two. He also explicates connections between utilitarianism and altruism, but notes that requiring any proposed action to pass his Generalizability Test limits altruism aimed at

4 426 Book Review - Business Ethics as Rational Choice increasing utility. By couching both generalizability and utilitarianism (and, later, virtue) as aspects of rational choice, Hooker seems to avoid some of the logical and practical shortcomings of traditional act utilitarianism. While he does eschew addressing some of the important questions presented or implied by this discussion (e.g., how the bounded rationality that characterizes his version of utilitarianism fits with his overall premise that ethical choices must be rational choices and his requirement of rationality for a Rawlsian test), overall I found Hooker s deontological utilitarianism to be a more satisfactory approach to and description of utilitarianism than the vast majority of those I have encountered in other business ethics textbooks. I was less convinced of the success of Hooker s attempts to ameliorate virtue ethics the Virtue Test being the third of his requirements for rational choice in ethical decision-making though admittedly I have never found virtue ethics to be particularly compelling. Compared to the other two tests, very little ink is spent on delineating virtue ethics, and the results of the various applications of the Virtue Test to cases seem to hinge critically and undesirably on either how one (subjectively) defines one s purpose or role, or on reference to existing professional codes of ethics. Given the myriad ways in which one might define the purpose of one s vocation, and the large number of employment (and other) situations for which no professional code of ethics exists, I was left feeling that the Virtue Test would not allow one to assess the ethical value of another s actions except in the case where a single, unambiguous professional code of conduct existed, and as a consequence it seemed to be of limited utility in analyzing most decisions by people and organizations. Further, while the Virtue Test might conceivably be applicable to my own decision-making were I extremely consistent in my definition of the purpose of professors (or what it means to be one ), the unfortunate reality is that my subjective definition of the purpose of my vocation can vary drastically (and rapidly), which would lead to associated variations in my perception of what was right according to the Virtue Test. (In fact, the author admits that virtue ethics is vague and generally does not advocate precise courses of action.) Finally, it was unclear why one should accept Hooker s premise that virtue ethics cannot override the generalization principle (p. 22). In the end, I was as dissatisfied with Hooker s version of virtue ethics as I have been with other versions I have encountered, though of course others tastes will vary. Chapter 3 of Business Ethics as Rational Choice addresses questions of distributive justice and autonomy (and was noteworthy for being the only chapter in a business ethics textbook I have read that closes with two mathematical notes). Here the relative simplicity of Hooker s initial presentation of the Utilitarian Test unfortunately gives way to calibration of utility functions (hence the mathematical notes), the questionable assumption that one may suppose that everyone has very similar utility functions, and consultation with company economists to estimate such functions. Though the author makes a point of asserting that his goal is simply to point out the plausibility and practicality of conducting a utilitarian analysis in the context of a complex business decision

5 Journal of Business Ethics Education (like the layoff at AT&T he discusses in this section), his introduction of utility curves and mathematical proofs may actually serve to make utilitarian analyses seem less practical rather than more, and does not correspond well with his own much more straightforward applications of the Utilitarian Test even in relatively complicated cases in subsequent chapters. Also in this chapter, Hooker turns to the issue of distributive justice, and discusses Rawls Difference Principle (along with a revision and an extension of it, including a caveat that it concerns the distribution of utility rather than, say the distribution of resources) and Liberty Principle. (He does not address Rawls Fair Equality of Opportunity.) Chapters 4 through 6 consist of cases and their analysis using Hooker s various tests, and many supplementary exercises (for which analyses are not presented). As noted, both cases and exercises become gradually more complicated as the book progresses. Chapter 4 presents and analyzes Initial Case Studies dealing with situations such as corporate espionage, product safety, and conflict of interest. Chapter 5 concerns actual ethical dilemmas faced by the author s MBA students, touching upon issues such as honesty, accepting perks, information privacy, and balancing the interests of various clients. Here, the use of real business situations faced by student-practitioners adds a sense of realism to the cases and their subsequent analyses, and will probably resonate well with students. Chapter 6 presents and analyzes several Business Case Studies. While, in fact, all of the cases in the book concern businesses or business contexts, these latter cases concern more complex real-world ethical issues faced by (generally) large corporations, most of which should be readily recognizable by business students. Thus, Hooker discusses situations such as the Ford/ Firestone rollovers, income smoothing at Nortel Networks, marketing of antidepressants by GlaxoSmithKline, and the like. These are the most complicated cases in the book, and the author gives them lengthy treatments. During the analyses these cases, Hooker presents very detailed applications of his various tests, leading to conclusions (where conclusions can be derived some tests are inconclusive) about the ethical status of the decisions made. These analyses are generally both easy to follow and convincing logically (though, in any case, he explicitly notes that disagreement about the results of the tests may very well occur). Hooker is appropriately methodical in his analyses, which focus on applications of the Generalization Test, the Utilitarian Test, and the Virtue Test; however, the tests are sometimes applied inconsistently, and in these cases it was often unclear why a particular test was not applied. It was also uncertain why, after discussions of the Difference Principle and Liberty Principle in Chapter 3, they only very rarely seemed to be applied to the cases (though each was applied at least once, as a form of generalization test). Some explanation of the lack of relevance of a test, or its inapplicability, would have been desirable, if in fact these are the reasons why tests were omitted. I found the applications of the generalization and utilitarian tests to be the most compelling. As noted earlier, I was not entirely convinced by Hooker s version of virtue ethics, and consistent with my concerns I found that applications of the Virtue Test tended to either produce somewhat ambiguous results based on some definition of what a

6 428 Book Review - Business Ethics as Rational Choice certain role (e.g., financial advisor) is for, or to be entirely reliant on a preexisting code of ethics. As would be expected due to Hooker s very detailed applications of his ethical tests, I had many other questions and concerns over the course of reading them. For example, I did not follow why an inconclusive result of the Utilitarian Test equates with passing the test to me, one might want to either accept an inconclusive result as providing no information upon which to base her decision, or perhaps, if the stakes were high enough, err on the side of caution and take it as a fail. In one case, an action was given a pass of the Virtue Test without an application of the test being explicitly conducted. During one analysis I was led to infer that, subject to the virtues associated with my specific profession, deception is fine as long as my reasons for doing so are rare. (I found this conclusion counterintuitive, which is not to say it is necessarily wrong, and of course the author may disagree with my thinking.) In an analysis of Conoco s Green Oil Strategy, the author mentions a violation of property rights, but otherwise the book does specifically address the topic of rights, nor how the concept of rights fits with the author s rational choice ethics. Aforementioned questions and concerns aside, though, I found the case analyses to be rather discerning, and very effective at reinforcing the decision-making techniques propounded in the first chapters. The final chapter of the book concerns cross-cultural ethics, and is the least developed part of the book: the author, in fact, notes that it represents only a starting point and does not provide sufficient background for the reader to become skilled at cross-cultural ethical decision-making. Here, Hooker presents a version of the generalization principle geared toward determining the acceptability of actions in a host country, and applies it to business cases involving corruption. This chapter brought to mind several further questions and issues. The author argues that it is not the case that the great ethical systems are at root very similar, and clearly relates ethical systems to modes of structuring a society, or to a culture s worldview; however, his analyses of the cross-cultural cases are based on the Generalization Test from his rational choice approach to ethics. If, as Hooker suggests, rationality is simply how we do it in the West, and Westerners are incorrect in thinking there could be only one legitimate ethical system, it seemed in doubt that one should favour his (distinctly Western to him) Generalization Test over other ethical systems in dealing with crosscultural ethical questions. By presenting the Western ethical traditions which ground the rest of the book as aspects of one ethical system of many, the result of our worldview or mode of structuring society, Hooker seems actually to diminish the applicability of rational choice ethics to cross-cultural settings. The decisionmakers in these cases are Westerners, to be sure, but if they cannot presuppose the universal legitimacy of rational choice ethics, one might argue that they could legitimately eschew it (including the Generalization Test) when making decisions in a non-western culture. This premise also seems to devalue what I consider to be Hooker s considerable achievement in the rest of the book: concisely and coherently linking three approaches to ethics deontology, consequentialism,

7 Journal of Business Ethics Education and virtue ethics that are often seen as distinct or even irreconcilable. If one should not presuppose the universality any one ethical system, I did not see as much of an advantage in linking these approaches under the purview of rationality : perhaps one might just as well view them as complementary but fundamentally distinct ways of thinking about ethical issues. In general, I found the cross-cultural case analyses in Chapter 7 rather less convincing than those earlier in the book. The Virtue Test is not applied, nor are the Rawlsian generalization tests, though it was not clear why these would not be relevant if the Generalization Test were. Adding to my confusion concerning the relevance of other aspects of rational choice, the Utilitarian Test was applied without explanation to one case in the chapter, but not to the other six. Many of these analyses also rely on a somewhat simplistic distinction between rulebased and relationship-based cultures. Hooker s main contention here (which seems plausible enough) appears to be that an action that would represent and instance of corruption in Western contexts might have a functional social role (and therefore a different ethical status) in a different culture; for example, actions regarded as simple cronyism in North America might represent a valuable foundation for trust in another culture. As a result, such actions may pass the Generalization Test when conducted in the latter culture, and I suspect that the author focuses on this test because it can, in effect, distinguish between actions in a foreign context that may appear to be acts of corruption and those that actually are. However, the focus on the generalization principle here, in the absence of something amounting to Kantian reversibility or reference to justice (either through Hooker s Rawlsian principles or some other means), seemed to allow for some rather permissive ethical decision-making. Aside from clarification of some arguments in the final chapter, another augmentation I would particularly like to see in a future edition of Business Ethics as Rational Choice is a section or chapter clearly identifying some of the general conclusions that the author derives over the course of the 28 case analyses. For example, after reading the analyses, one might reasonably deduce that deception is, as a rule, not generalizable, and is therefore unethical; indeed, the author points this out several times throughout the book. There are many other general conclusions, both expected and unexpected, presented throughout the case analyses: breaking a promise to benefit oneself is unethical; free-riding is unethical; violating someone s autonomy is generally unethical; manipulative advertising is unethical, but advertising that only tempts consumers need not be; ethical negotiation requires parties to conceal information about what is acceptable to them; lenders generally are ethically obligated to get tough with borrowers who cannot repay their loans, unless the lender will benefit from a renegotiation; it is probably unethical for a business to pollute in a developing nation more than it would be allowed to pollute in a developed one. These and other similar conclusions are interesting and usually well-argued, and I suspect that the typical student or practitioner reader would gain substantially from a clear and separate delineation of the various general ethical rules which were derived from and interspersed throughout the analyses of the various cases.

8 430 Book Review - Business Ethics as Rational Choice One of these, which particularly struck me during the reading of one of Hooker s analyses, was the statement that illegal behavior is normally unethical, because it is ungeneralizable, since I myself attempt to clearly separate the notions of ethics and the law when teaching business ethics. Reading this led me to wonder what the world would be like were it not for the recalcitrance of historic individuals who were willing to violate unjust laws. Though earlier in the book, in his discussion of utilitarianism, Hooker suggests that stealing a loaf of bread to feed one s starving family might in fact be generalizable (despite presumably being illegal), thereby acknowledging that illegal behaviour is not necessarily unethical, this quotation seemed to me to be quite a strong one, and one which required substantial further explanation (e.g., what is meant by normally?) in order to avoid, for example, paradoxically advocating compliance with unethical laws in the name of ethics. Absent such explanation, given that unethical laws appear to exist on occasion, it was unclear whether or not this statement suggested a flaw in either the generalization principle itself or its position at the top in the Hooker s hierarchy of principles. I suspect it is possible that breaking unethical laws might routinely pass Hooker s Generalization Test, but in that case there is little reason to make a statement like illegal behaviour is normally unethical, since whether or not a law should be obeyed depends on its ethical status rather than its mere existence. While some of Hooker s positions can certainly be questioned, others could gain considerably from further elucidation, and he eschews addressing important questions suggested by his arguments or analyses (e.g., the supposition that virtue ethics cannot take primacy over the generalization principle), it is worth pointing out that I am able to articulate my questions and concerns about his thoughts because his book encouraged me to spend a great deal of time thinking about them in short, while I may not be completely convinced by all of the specifics of Hooker s arguments, Business Ethics as Rational Choice made me think more profoundly about ethics and its application to business contexts than virtually any other textbook I have read. Despite my occasional reservation (and, of course, it is likely that some of my concerns could be rebutted, or alleviated through some brief clarification), I found Hooker s arguments to be routinely compelling and often insightful he has clearly put a very substantial amount of thought into this work. My qualms notwithstanding, I found his focus on rational choice as the foundation of ethical decision-making, and as a means of unifying what are often seen as disparate streams of normative ethics, to be astute and appealing, worthy of consideration and further development. As a book, I found Business Ethics as Rational Choice to be a very enjoyable read, from the establishment of theoretical premises through the analyses of the diverse cases, and I suspect others will too. As a textbook perhaps supplemented to taste by other materials to address subjects (e.g., rights) that do not appear in the book it would be an excellent choice for instructors whose goal is to genuinely improve the ethical decisionmaking abilities of their students.