Business ethics - just an excuse to act up

It is becoming more and more common for philosophy professors to teach business ethics. The University of Pennsylvania, for example, has four philosophy professors in its business ethics school within the philosophy department. Robert Solomon at UT Austin, better known for his work in existentialism, in his later years started teaching business ethics too.

The problem with business ethics is that is forces the same criteria it uses for business management down the throats of ethics professors. Because of this, ethical standards are viewed as a means to an end; they are determined by their 'performance' in the marketplace, and are scrutinized under cost benefit analysis.

Business professionals learn to think of ethics as something which serves their business, rather than the other way around. When ignoring ethical norms would prove disastrous for the business, your business should speak up about the company's reputation for high ethical standards, or how the company goes beyond compliance with the law, or how any unethical actions do not reflect the company's code of conduct, etc.

Philosophy can lend itself easily to this problem because philosophy is not instructive, and other academic pursuits are. More often, what business professionals glean from philosophy is how to argue their way out of nasty moral dilemmas. A philosophy professor typically will not want to pontificate "the answer" to a difficult moral dilemma, unless they want to defend or entertain a particular perspective. Philosophy does not teach teach truths and values, but to puts them into a perspective, and argues for the superiority of that perspective.

On the other hand, the business ethic perspective frames ethics in terms of business - "How valuable are ethics to my business?" This is not philosophy, it is business. The superiority of the business perspective is totally taken for granted. What happens, then, is that philosophy becomes the handmaiden to business professionals - the age-old sophist tendency.



To illustrate this point I want to mention the work of HIV/AIDS activists and the effect it had on business practices. The group Act Up - originally started by the friends of Michel Foucault to raise awareness and dispel myths about AIDS - made its way into an International Marketing textbook authored by Terpstra, Sarathy, and Russow, in a chapter titled "Ethics and Global Marketing".

A little bit of background. Africans account for 25.4 million of the 39.4 million people around the world who have HIV/AIDS. Naturally, the place to bring HIV/AIDS prevention drugs would be Africa. In 2005 the US drug manufacturer Gilead needed to determine whether its drug, tenofovir (marketed as Viread), could prevent HIV/AIDS in a similar way to a vaccine. The drug was thought to prevent an exposed person from contracting HIV/AIDS. Once Viread passed the clinical trial test, it would then be sold globally at a premium prices. African prostitutes would be the proverbial guinea pigs in the clinical trial process.

The cost of AIDS "cocktail" drugs, which stop the progress of AIDS and allows patients to achieve some level of stability, averages over $10,000 a year. This is well beyond the reach of most Africans. Viread, while cheaper than some, costs around $17 a day and must be taken daily, which is roughly $6,400 a year. Still beyond the reach of many AIDS-affected Africans. Remember, a billion people in the world live on a dollar a day, many of them live in Africa.

The group Act Up-Paris, after perusing Gilead's clinical trial's research reports, decided that this needed to be protested, stopped, and added that the African trial participants "got too little information and care for their participation" - a legal claim that would stop the trial. The Wall Street Journal reported that "Act Up claims that by holding trials in Africa, '[Gilead knows] they will find...women willing to let them carry out a trial at minimal cost.'"

A probable side-effect of the drug is kidney dysfunction. It was not known whether the drug would cause kidney problems, or worsen existing kidney trouble. Gilead decided it would go ahead and test female prostitutes from Ghana, Nigeria, Malawi, Cameroon, and Cambodia. The unfortunate five women who contracted HIV/AIDS in Cameroon during the study were promised long-term access to therapy.

On the flipside, WSJ commentator, Roger Bate, said,

"Act Up is being flat-out hypocritical in its attempts to keep the trials from being conducted in low-cost environments. Activists are always complaining about the high price of drugs, and the best way to keep prices down is for trials--the most expensive part of any drug development--to be as cheap as possible."

Now, as a student of marketing, let's look to our textbook to learn more about this ethical problem.

Our International Marketing textbook says that "ethical conflicts can arise when the only access to health care for low-income patients is through participation in such clinical trials." This was certainly the case for Viread. But other than this, the text doesn't come close to a stance on whether this practice set ethical standards high or low, or whether Gilead went "beyond compliance with the law." It does not even provide a list of key international legal frameworks to judge Gilead's practices by.

Instead it ends the section on ethical international research with a quote from a pro-Africa-testing AIDS group called Treatment Action, which decried Act Up-Paris's actions as "ethical imperialism", and backs up the study by mentioning that the clinical trials were supported by the Bill and Melinda Gates foundation. Certainly, if other activists are complaining about the work of activists in Paris, it must not be legitimate. And certainly if philanthrocapitalists support the AIDS research then it must have been carried out in an ethical way, or at least had the right intentions.

In the next section, the authors advise that an ethical move would be to employ market segmentation for poorer people, or what author K. Prahalad calls "inclusive capitalism", so that "companies can do well financially and and develop new sources of value." This means lowering the price of products in emerging markets, in order to find an entry path into that market. Proctor & Gamble (their example) sells bottles of shampoo in India for a penny a piece, which allows them to outsell competitors and maintain dominance. By including Africans in its clinical trial, by analogy, they are saying it was an act of inclusive capitalism.

On one hand, I can appreciate the moral complexity of the problem Act Up-Paris and Gilead Sciences have dealt with. Eventually the clinical trial was canceled due to pressure from Act Up-Paris. But is providing 400 prostitutes with a little bit of retro-viral drugs, just to take them away and sell them to rich people in the First World, a fair practice? Who is John Rawls? Who is Ronald Dworkin? Who is Derek Parfit? The only question I have boggling in my mind is, "Is this 'inclusive capitalism'??" Do the authors really think Gilead would have provided 25 million people with affordable Viread? But isn't that what they should have done? And what about the four people who got AIDS from the clinical study itself? Where was Immanuel Kant when all of this went down?

On the other hand, what is the value of a textbook that proclaims to know something about business ethics, when it cannot provide a solid philosophical basis for judging the right course of action? Instead, the text is more like a set of clues to form better strategies for further exploitation. It teaches the marketing student how to get around ethical norms, how to promote an image of ethical leadership, and to think in terms of what is better for the business, without ever explicitly mentioning that this is what the text is here for.

If we say that the textbook neither agrees nor disagrees with those activists who criticize certain business practices, we're right about that. It only tells the reader how the business operation was affected by the activist criticism, and then asks the reader to form an opinion. The point I am making is subtle. The textbook wants you to see its literature reviews as objective information, but by limiting the scope to the business perspective, they imply that the only implied ethical criterion is the business's reputation and profit.

Here are a few questions at the end of the chapter related to this problem.


Questions and Research

1. How can concerns over ethical behavior affect global business practices? Provide examples.
2. Why should a firm be concerned about ethics in international marketing activities?
3. How can a firm connect moral principles to the development of ethical standards that would govern its international activities?
4. How do ethical issues affect the clinical testing of new pharmaceutical drugs in emerging markets?