Summary Corporate Ethics and Corporate Governance

fore positioned in the conditions within which each business subject can freely operate. (c) Finally, there are those who regard economic action exclusively as a means of realising other aims. In their view, moral decisions only affect the indi- vidual level. Economic action is therefore viewed as neither moral nor im- moral. The decisive factor in the moral quality of the action is the individ- ual goal of the actor. The question of adequacy conditions for economics and morality is thus returned to the level of the subject. Economic action is morally justified as long as it does not violate norms of individual ethics. As regards (2), if ethics and economics are considered compatible, then business ethics must also answer the second question concerning “moral deficiencies” of economically rational action which are inherent in the system. In other words, are there situations where obeying the principle of economic rationality would neces- sarily lead to unwanted results? Game theory provides clues to situations of this kind. Assuming economically rational action on the part of all those involved, real market situations can be de- scribed as dilemma structures. No participant in the market will give up the pursuit of maximising individual profit unless he can be sure that all the others are willing to do so too. This can be interpreted in two ways: (a) On the one hand orientation towards maximising profits leads to a dilemma which is desirable in the context of the market economy. Each market par- ticipant is forced to comply with the rules of the competition for fear of perishing if caught breaking them. (b) On the other hand this dilemma makes it difficult to enforce ethical stan- dards. Ethical action, for example voluntarily accepting higher production costs by implementing environmental technology or offering better welfare benefits, is seen by competitors as a weakness to be exploited. Business Ethics 41 In game theory, this situation can be represented in the form of the prisoner’s di- lemma (Rapoport/Chammah 1965). Two prisoners are accused of having committed a crime together. They have no way of making contact with each other to come up with a common defense strategy. If both prisoners keep quiet, they can be sentenced to two years in jail for a less serious offence. If one of the prisoners incriminates the other, and the other does not talk, the King’s Evidence rule applies: the witness es- capes unpunished and the other is sentenced to fifteen years imprisonment. If both prisoners incriminate each other, they each receive a ten-year sentence. Regardless of the strategy of the other prisoner, from an individual point of view the non-cooperative strategy appears best. If both prisoners act rationally, they each receive ten years in prison. In this case, rational strategies have worse results for both prisoners than they would have been able to achieve by co- operating. This means that economically rational action does not necessary lead to the best results for all those involved. This is where business ethics must develop methods and decision-making rules which can break out of economic dilemma structures. The dilemma’s underlying rewards matrix must be changed using positive and negative incentives so that ethical behaviour is perceived as being worthy of re- ward and unethical action is avoided (Assländer 1998, p. 323ff.). Ethical Assessment Methods In today’s modern market economy, an ethical system must meet three conditions (Zimmerli/Wolf 1993, p. 316): (1) Ethics must be oriented towards problems, instead of principles. Formal (universal) and material (situational) principles are integrated in ethics so that differentiated decisions can be made according to the situation. (2) It is often forgotten that plurality of values requires an irreconcilable differ- ence between value systems and therefore not consensus but disagreement. This means models must be developed for dealing with disagreement. (3) Orientation towards the consequences of technological and economic ac- tion must take priority. In other words, it becomes a matter of (deontologi- cal) conscience to be a (teleological) ethicist of responsibility. Discussions on morality within the pluralistic value systems of market economies must be restricted to formal ethics. Material ethics are subject to individual prefer- ences. By reducing dissensus on formal moral values, this problem-based concept allows for dissenting on values from a material point of view. Ethical evaluation of each action must follow a four stage procedure from top to bottom (fig. 1). Anything that cannot be decided on the top level as “required” or “forbidden” is put in the category “undecided” and dealt with on the next level, 42 Walther Ch. Zimmerli and Michael S. Assländer Table 1. Four-level model of ethical assessment according to Zimmerli/Wolf forbidden further clarification permitted 1) formal principles 2) regional principles 3) professional principles 4) material values and so on. Amongst the formal principles (1st level) there are the ethical principles of modern reason (such as universalizability, equality, justice), while the regional principles (2nd level) include principles limited to particular times and places (such as worst case priority). The professional principles (3 rd level) take account of the specialisation between various professions in society in the form of professional ethics (such as the principle of informed consent). It is only on the lowest level (4 th level) that material values come into effect. This model meets the requirements for the pluralism of values typical in market economies and shows the extent to which moral action requires a general problem- oriented ethical system. Moral Qualities of Economic Action...