Morality of competition in business
A simple example is hotel rooms which may be triple the price on a busy weekend, not because it is a just price, but because there are people willing to pay that price because it is worth it to them.
Chapter 3 is perhaps Heath's clearest explanation of what he means by the market failures approach, as well as why stakeholder theory has serious problems.
In the same way, the point of staging a baseball competition is to have fun, but players on the field are not bound by a rule of trying to maximize the fun.
Business related competitive strategies
Harrison, Andrew C. He argues that many agency theorists do downplay the fiduciary obligations of agents Jensen and William Meckling , or downplay the information asymmetries Clark , but this is agency theory misconstrued, in Heath's view. Before Heath, much of the debate in the field was between two major theories—stockholder and stakeholder theory. Heath is to be commended for this provocative book, explaining a provocative approach to business ethics market failures approach that sees as its guiding star the always elusive Pareto-optimal market conditions. Further, he argues that Milton Friedman, in his focus on free and open markets and fiduciary responsibility, was wrong primarily because he focused only on a limited few of the conditions of Pareto optimal markets. Norms include prohibitions against exploiting market failures, gamesmanship where you follow the letter of the law but not the spirit of the law, and resisting attempts to do end-runs around regulatory constraints. This includes employees, suppliers, customers, local and national governments, and, well, everybody. Heath says, "If all companies fully internalized all costs, and charged consumers the full price that the production of their goods imposed upon society, I believe it would be impossible to make the case for any further 'social responsibility' with respect to the environment. We are all even the poorest of us vastly better off with markets than without them, but for markets to make us much better off, we cannot require competing businesses to treat each other the way we expect family members to treat each other. Both of these theories are either false, or vacuous and empty, depending on the interpretation. Gauthier, David. But market and government regulation are not enough to make the system work well; we need morality as well. This is because in market transactions, the norm is constrained efficiency, according to Heath. Third, Heath's criticisms of philosophical theory and suggestion that business ethicists simply focus on psychological rationalizing why people do wrong when they know what is right is confusing.
Concluding, Heath says, the "Paretian approach to business ethics. But now suppose most competitors are already engaged in rent seeking.
Heath claims that in the face of criticisms from social psychology, sociology and political theory, the only reason philosophers continue to pursue virtue ethics "is not intellectual heroism, but rather just obstinacy" Ultimately, Heath provocatively concludes that, when properly understood and critically used, "Agency theory allows us to see that in many cases, the alternative to ethical business enterprises is not the presence of unethical business enterprises, but rather the absence of any enterprise at all" A situation is Pareto-efficient just in case it is impossible to make one person better off without making someone else worse off.
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