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1 January 2016 CFA Institute Journal Review

Universal Values and Virtues in Management versus Cross-Cultural Moral Relativism: An Educational Strategy to Clear the Ground for Business Ethics (Digest Summary)

  1. Marc L. Ross, CFA

The author examines and critically evaluates numerous suppositions that underlie the study and teaching of business ethics.

What’s Inside?

The author provides a critical analysis of the arguments both for and against moral relativism in business ethics and favors moral universalism, an approach that emphasizes universal values and virtues in business ethics and their real-world applications.

How Is This Research Useful to Practitioners?

Business ethics are taught to improve business behavior, but the philosophical basis for the prevailing mindset in ethics education—moral relativism—rejects the notion that there are universally valid principles of right and wrong. Indeed, many business professionals and academics favor an approach that affords leeway in judgment according to the circumstances of a particular situation, rationalizing cultural and experiential differences to explain why questionable conduct may be justifiable. Additionally, those adopting a relativist approach to ethics contend that moral universalism stems from the arrogance of supposed cultural imperialism and that the complexity of business decisions does not lend itself well to the application of moral universalism.

It is against this backdrop that the author examines and discusses the often fallacious arguments for moral relativism. For business ethics to free itself from the relativist trap, it must reject the relativism and skepticism that often accompany it. Moral relativism has several iterations that professors and students of business ethics sometimes confuse. One view holds that different peoples’ and societies’ ethical beliefs differ and often conflict. Another contends that there is no universal truth and that justification of one ethical judgment against another is thus futile. Given these contextual nuances, adherents of such views claim that it is impossible to defend one decision as more ethical than another.

The author examines what factors have given rise to the confusion surrounding moral relativism and its popularity. Its justification comes from the high degree to which the business world has become global and the attendant difficulties in applying judgments in cross-cultural situations. Another factor is the role of multicultural management consultants who overemphasize cultural differences to justify and perpetuate their existence. Finally, academics often subscribe to relativist tenets, which contribute meaningfully to the prevailing approaches to ethics training.

Getting students and academics to embrace moral universalism is difficult. They need to understand that there can be a better way to function when faced with complex ethical situations. Such an approach should not be equated with omniscience, and its defense should not be conflated with the notion of Western superiority. Rather than suggest that people absorb a complex body of philosophical writings, the author proposes several provocative, real-world examples that highlight the contradictory and confusing nature of relativism. Practitioners and students can thus engage in critical thinking and then be able to approach business case studies with a clearer perspective.

Academics, training directors, and practitioners should find this discussion thought-provoking and challenging to the conventional mindset that has dominated this area of business education.

How Did the Author Conduct This Research?

Because business has become increasingly multinational, ethical dilemmas are inevitable, arising from practices that span multiple cultures. How an individual evaluates and resolves such situations will depend on how much he or she embraces moral universalism and rejects moral relativism.

The author rigorously investigates and analyzes the philosophical basis of ethics and how leading proponents of moral relativism have achieved prominence in ethics education. From there, he considers actual cultural situations, applying and examining the moral relativist mindset, to encourage students and practitioners to think critically and consider the merits of moral universalism versus moral relativism in a way that recognizes the nature of ethics as a continuous process of clarification.

Abstractor’s Viewpoint

There should be a clear and unambiguous understanding of what constitutes right and wrong. Yet, prevailing academic literature and business practice argue otherwise. For business ethics to be meaningful in instruction and application, moral universalism must prevail. Too often, students, professors, and practitioners succumb to a relativist approach that avoids difficult and critical decisions. The application of this debate could not be more timely in the wake of the recent global financial crisis, which resulted from a decades-long decline in regulation in favor of free market arguments. Justifications for this approach seem to be more readily forthcoming than admission of wrongdoing and accountability. Business ethics education and training that returns to the basics of right versus wrong is both necessary and long overdue in a world that grows increasingly complex.

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