WHY ETHICS MATTERS:
A DEFENSE OF ETHICS IN BUSINESS ORGANIZATIONS
Abstract: I argue that Plato was right in claiming that justice is more profitable,
more rational, and more intrinsically valuable than injustice, and
that this is particularly true for business organizations. The research on
prisoners' dilemmas and social dilemmas shows that ethical behavior is
more profitable and more rational than unethical behavior in terms of
both the negative sanctions on unethical behavior when interactions
with stakeholders are iterated, and the positive rewards of habitually
ethical behavior when stakeholders can identify those who are predisposed
to be ethical. In addition, the psychological research on justice
shows that justice is intrinsically valued, both from an outcome and from
a process perspective, and so crucial for business organizations, particularly
in terms of organizational effectiveness.
In an article in the Harvard Business Review Amar Bhide and Howard H.
Stevenson write that "Treachery, we found, can pay," and "There is no
compelling economic reason to tell the truth or keep one's word."^ Bhide and
Stevenson are not the first to suggest that unethical behavior may be more
profitable than ethical behavior. Over two thousand years ago, exactly the
same claim was made by Thrasymachus, a character in Plato's Republic who
concluded that while justice is for the simpleton, injustice is for the wise:
[Socrates:] Well, then, Thrasymachus... suppose you begin at the
beginning and answer me. You say that being perfectly
unjust is more profitable than being perfectly just?
[Thrasymachus:]Yes, that is what I say, and I have given you my reasons...
I affirm injustice to be profitable and justice not...
[Socrates:] And would you call justice a vice?
[Thrasymachus:] No, I would rather say it is a sublime simplicity.
[Socrates:] Then would you call injustice malignity?
[Thrasymachus:]No; I would rather say discretion.
[Socrates:] And do the unjust appear to you to be wise and good?
As readers of Plato's Republic know, Plato's aim in the Republic is to show
that Thrasymachus is wrong, that injustice is neither more profitable nor more
rational than injustice.
In their article, however, Bhide and Stevenson are on the side of Thrasymachus.
They assert that their claims are based on the empirical data provided
©1996 Business Ethics Quarterly, Volume 6, Issue 2. ISSN 1052-150X. 0201-0222.
202 BUSINESS ETHICS QUARTERLY
by "extensive interviews." It is unclear just what this data is supposed to be,
since they do not bother to provide it in their article. Perhaps they think that the
readers of the Harvard Business Review might not be up to plowing through
tables of numbers and statistics. Instead, what they provide are anecdotes and
snippets of conversations taken, apparently, from their interviews with a variety
of business people. These business people describe incidents where dishonesty
or broken promises paid off...