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Economic rationality and ethical behavior

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Abstract

This paper argues that economic rationality and ethical behavior cannot be reduced one to the other, casting doubts on the validity of formulas like 'profit is ethical' or 'ethics pays'. In order to express ethical dilemmas as opposing economic interest with ethical concerns, we propose a model of rational behavior that combines these two irreducible dimensions in an open but not arbitrary manner. Behaviors that are neither ethical nor profitable are considered irrational (non-arbitrariness). However, behaviors that are profitable but unethical, and behaviors that are ethical but not profitable, are all treated as rational (openness). Combining ethical concerns with economic interest, ethical business is in turn an optimal form of rationality between venality and sacrifice. Because every one prefers to communicate that he acts ethically, ethical business remains ambiguous until some economic interest is actually sacrificed. We argue however that ethical business has an interest in demonstrating its consistency between communication and behavior by a transparent attitude. On the other hand, venal behaviors must remain confidential to hide the corresponding lack of consistency. This discursive approach based on transparency and confidentiality helps to further distinguish between ethical and unethical business behaviors.

Suggested Citation

  • Marc Le Menestrel, 2001. "Economic rationality and ethical behavior," Economics Working Papers 584, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:584
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    References listed on IDEAS

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    1. Velasquez, Manuel, 1992. "International Business, Morality, and the Common Good," Business Ethics Quarterly, Cambridge University Press, vol. 2(1), pages 27-40, January.
    2. Committee of Experts on Tobacco Industry Documents, World Health Organization, 2000. "Tobacco Company Strategies to Undermine Tobacco Control Activities at the World Health Organization," University of California at San Francisco, Center for Tobacco Control Research and Education qt83m9c2wt, Center for Tobacco Control Research and Education, UC San Francisco.
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    Cited by:

    1. Alexandros-Andreas Kyrtsis, 2011. "Insurance of Techno-Organizational Ventures and Procedural Ethics: Lessons from the Deepwater Horizon Explosion," Journal of Business Ethics, Springer, vol. 103(1), pages 45-61, April.
    2. Rode, Julian & Le Menestrel, Marc & Cornelissen, Gert, 2015. "Can monetary valuation undermine nature conservation? Evidence from a decision experiment," UFZ Discussion Papers 9/2015, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    3. Marc Le Menestrel & Mark Hunter & Henri Claude de Bettignies, 2001. "Internet e-ethics in confrontation with an activists' agenda: Yahoo! on trial," Economics Working Papers 577, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Marc Le Menestrel & Sybille van den Hove & Henri Claude de Bettignies, 2001. "Processes and consequences in business ethical dilemmas: The oil industry and climate changes," Economics Working Papers 591, Department of Economics and Business, Universitat Pompeu Fabra.

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    More about this item

    Keywords

    Rationality; business ethics; economic rationality; transparency; confidentiality;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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