Business Ethics Business Ethics An Economically Informed Perspective Christoph Lütge and Matthias Uhl 1 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Christoph Lütge and Matthias Uhl 2021 The moral rights of the authors have been asserted First Edition published in 2021 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2020951616 ISBN 978–0–19–886477–6 DOI: 10.1093/oso/9780198864776.001.0001 Printed and bound in the UK by TJ Books Limited Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. Foreword This textbook would not have been possible without the cooperation of many people. First and foremost, we would like to mention Johanna Jauernig, Jan Gogoll, and Julian Müller. Special thanks also go to Manuela Schönmann for her great help. We are indebted to Martin Berger, Benjamin Großmann- Hensel, Immanuel Klein, Sebastian Seisenberger, and Johannes Waldorf for research assistance. We would also like to thank Adam Swallow, commis- sioning editor at Oxford University Press, for the critical review of the manu- script, and OUP for the accepting this work. Last but not least, we also thank our families for their unwavering support during the time- consuming work on this book. Christoph Lütge Matthias Uhl Munich August 2020 List of figures 1.1 Number of Internet users worldwide 6 1.2 Ethical preferences for autonomous cars across three clusters of countries 13 3.1 Regional averages of gross domestic product per capita, 1820–2010 45 3.2 Development of the proportion of the world’s population living in extreme poverty, 1820–2015 46 3.3 Estimated historical gross domestic product of the world from year 1 to 2008 (in million US dollars) 46 3.4 World income and population for last 2,000 years 47 3.5 Share of world population living in extreme poverty, 1820–2015 48 3.6 Globalization over five centuries 49 3.7 Islamic finance assets growth, 2012–2018 (US$ billion) 74 4.1 Pareto efficiency 112 4.2 Pure coordination games 116 4.3 Example of a prisoner’s dilemma 118 4.4 The generic prisoner’s dilemma 120 4.5 The stag hunt 121 4.6 The battle of the sexes 121 4.7 Trust game with self- binding option 125 4.8 The rationalist model and the social intuitionist model of moral judgment 136 5.1 Global distribution of extreme poverty by region and country, 2018 159 5.2 Under- five mortality rate by Sustainable Development Goal region, 1990, 2000, and 2018 160 5.3 Development of extreme poverty per region between 1990 and 2030 160 5.4 Percentage of poor households by country 164 5.5 Return on investment after taxes and global economic growth 166 5.6 The most important human rights to be protected from a global perspective 173 5.7 Effects of consent on organ donation per country 180 5.8 Exponential discounting 185 5.9 Hyperbolic discounting 187 6.1 Amount of the fines imposed by the Federal Cartel Office from 1993 to 2014 (in millions of euros) 207 x List of figures 6.2 The four information layers and the four characteristics of an ethics code 212 6.3 Basic elements of a compliance management system according to IDW PS 980 218 6.4 The structure of the internal investigation process 220 6.5 Autonomous organization of compliance 221 6.6 Matrix organization of compliance 221 6.7 The CSR pyramid 251 6.8 Growth in global CSR reporting rates since 1993 252 6.9 CSR reporting rates by region 253 6.10 Definition of sustainability 259 6.11 Tangible vs. intangible assets for S&P 500 companies, 1975–2018 260 6.12 Preconditions for the success of CRM cooperation 263 6.13 Stakeholder groups 265 6.14 Influences on productivity 267 6.15 Corporate citizenship in the narrower, broader, and broadest sense 273 List of tables 3.1 Regional average wages from 1820s to 2000s 50 5.1 Allegations of human rights violations and response rate by country of origin 178 6.1 Country ranking according to the Corruption Perception Index, 2019 (excerpt) 202 6.2 Corruption offenses 2017 and 2018 205 6.3 Different conditions for explicit and implicit CSR 257 6.4 Overview of normative approaches in the CSR discussion 258 6.5 Pros and cons of CSR 277 6.6 Excerpt from the reporting principles and standard disclosures of the Global Reporting Initiative 282