Since its inception, the field of business ethics has grown substantially both in terms of the sheer amount of research published and the wide range of topics addressed and debated by scholars. This has resulted in a series of seminal articles on key topics, as well as a number of important books. The field has grown, as scholars have sought to draw upon diverse theoretical perspectives to address perennial topics in business ethics and respond to changes in the business world that have continuously brought to light novel ethical challenges and new examples of corporate wrongdoing. Partially as a result of this pattern of growth, business ethics as an academic discipline has become increasingly fragmented with debates largely – albeit not completely – conducted within distinct clusters that rarely interact.

In this context, MacIntyreans, neo-Aristotelians, and Thomists may debate the potential for different organizations to foster or inhibit the development of virtues; Habermasians argue with radical critics about the possibility of consensus within stakeholder debates; and Rawlsians contend with other Contractualists over the implications of the principles of justice for market society. These debates are largely separate from other debates involving, for example, Utilitarians, Kantians, and Heideggerians, among many others. Moreover, this sort of theoretical fragmentation is embedded within a much more fundamental fragmentation between business ethics and the mainstream business disciplines and research fields such as strategic management, organization theory, accounting, marketing, finance, institutional theory, and so on. This not to say that there is not much work that attempts to integrate various strands of research in management and business academia but, as a result of the continual growth of these fields, this task is never fully completed.

This book is largely inspired by this fragmentation, by the thought that there is always good reason to ask whether a synthetic view of business ethics is possible. The results of our efforts are, of course, still fragmentary, ignoring influential strands of research and overlooking important topics that merit much more attention. Despite this, we have articulated a novel neo-Aristotelian approach to business ethics that both engages with other influential strands of business ethics research, especially the Market Failure Approach (MFA) and Political Corporate Social Responsibility (PCSR), and seeks to integrate research perspectives in organization theory, strategy, and finance, as well as empirical perspectives in the closely related field of business and society.

This begs the question: Why take an Aristotelian approach to business ethics? One must, inevitably, write from within one particular perspective, yet more can be said for adopting this point of view. First, this tradition takes very seriously the gap between ethical theories, which are discussed and debated by moral philosophers, and concrete modes of moral agency. This gap is also a primary motivation behind the MFA. Heath (Reference Heath2014: 70) says,

Yet, as we argue throughout the book, neo-Aristotelian virtue ethics has many more conceptual resources to address this gap – that is, to explain how plain persons exercise moral agency in a market context – and to articulate the ethical considerations implicit within the role of the manager than do other ethical theories. Notions of character formation, practical wisdom, and deliberation, for example, which figure centrally within our account of market ethics, go far beyond the MFA’s efforts to articulate a set of rules that are supposed to guide market actors, rules, which, we argue, are inadequate for this purpose. Instead, these Aristotelian notions explain how institutionalized social contexts foster the development of and sustain a capacity for nonrule-based moral agency (see McDowell, Reference McDowell1979).

This relates to a second point. Compared to many other ethical theories, neo-Aristotelian virtue ethics offers a more fine-grained analysis of moral agency. Rather than focusing on the distinction between actions that are right and those that are wrong, virtue ethics highlights the many different ways that someone can be good or bad. This comes out clearly in the range of virtues that we highlight, especially the market virtues that are specific to the transactional context of the market. As such, a manager might be unjust in imposing costs on nearby communities while also showing a deep sense of respect for customers’ preferences. This focus on heterogenous forms of goodness and badness, we maintain, provides a better basis both for identifying exemplary forms of moral agency within market contexts and for criticizing market actors who fail to live up to these ideals.

Neo-Aristotelian virtue ethics also provides a better basis for understanding the justification of ethics in constituting the firm as a type of moral community. Surprisingly, the moral constitution of the firm as a form of community has been a central topic both for neo-Aristotelian business ethicists (e.g., Sison & Fontrodona, Reference Sison and Fontrodona2012) and for organizational theorists aiming to understand how firms foster collaboration in ways that are typically impossible within markets (see Adler, Reference Adler2001; Adler & Heckscher, Reference Adler, Heckscher, Ringel, Hiller and Zietsma2018; Kogut & Zander, Reference Kogut and Zander1996). In his account of market ethics, Abraham Singer (Reference Singer2019: 145) similarly emphasizes the moral fabric of the firm, highlighting the importance of “norm-governed productivity,” which refers to “the organization, coordination, and orientation of work through the institutional creation of contexts that prime participants to see cooperative scripts and schemes (as opposed to market scripts) as salient.” However, this focus is on how organizations “prime” their members to act cooperatively, which fails to address the question of whether the imposition of these norms is ethically justified. A neo-Aristotelian perspective, with its focus on moral development as a necessary pathway to human flourishing, provides a superior basis, we argue in Part II, for understanding the justification of authority and moral norms within the firm. More broadly, neo-Aristotelianism provides not only insights into a wide range of problems confronting business ethics but also offers the potential for a unified perspective on these questions.

As such, this book aims to accomplish three things. The first involves the development of a neo-Aristotelian approach to market ethics. By market ethics or the ethics of markets, we refer to the strand of business ethics research focused on identifying norms implicit within and appropriate to markets. Influential proponents of this approach include Joseph Heath and Abraham Singer. It is characterized by a focus on efficiency as the principal aim and constitutive norm governing the interactions of market actors. We challenge, Heath’s (Reference Heath2014, Reference Heath2023) MFA on a number of grounds, arguing that Pareto efficiency is too ideal to be relevant in the real world, not only because market failures may be offsetting but also because negative externalities are ubiquitous. We also challenge the normative adequacy of the MFA’s reliance on preference satisfaction as the good to be promoted by economic transactions.

In place of Pareto efficiency, we introduce the notion of eudaimonic efficiency, as an alternative ideal of market activity. From this perspective, the fundamental aim of market activity is to promote human flourishing through decentralized, mutually beneficial transactions. Likewise, the complex requirements for human flourishing, especially the demands of justice in interactions with others, represent a fundamental constraint on market activity. This conception of the aim of the market allows for a more realistic appraisal of market activity as it permits negatives externalities, which are clearly unavoidable, only prohibiting the imposition of unjust harms, especially those that egregiously obstruct the flourishing of other stakeholders. In light of this ideal, we also introduce a set of market virtues, virtues specific to the institutionalized context of the market, which both prohibit the exploitation of market failures – like the MFA’s efficiency imperatives – and, going beyond these norms, foster higher levels of (eudaimonic) efficiency.

A second objective of the book is to draw together disparate perspectives in business ethics with relevant research in management, organization studies, and related fields. We do this by extending the analysis of Part I, which focuses on the ethics of markets and engages with the MFA from a neo-Aristotelian perspective, in Part II, which centers upon the firm and draws heavily on research in organization theory, strategic management, and corporate governance and finance. While we do not draw directly on MacIntyre’s (Reference MacIntyre2007) concept of a practice, which has influenced much research on the ethics of the firm (see Moore, Reference Moore2017), or the common good theory of the firm (Sison & Fontrodona, Reference Sison and Fontrodona2012), our account of the firm builds upon and extends this work in two ways.

First, drawing upon themes from the Knowledge-Based View (Kogut & Zander, Reference Kogut and Zander1996) and the Theory-Based View (Felin & Zenger, Reference Felin and Zenger2009), we explain the fundamental importance of collaboration, shared-purpose, moral development, and mutual respect for the long-term success of contemporary organizations. In this way, we show how key themes emphasized by neo-Aristotelian and especially MacIntyrean accounts of the firm also have a central place within organizational research, a point made by MacIntyre (Reference MacIntyre2016) in his recent discussion of management in Ethics in the Conflicts of Modernity. Second, we link the neo-Aristotelian theory of the firm, as a locus of moral community and the cultivation of virtues, with big-picture economic considerations, arguing that firms exist because they promote (eudaimonic) efficiency by creating a social context where participants willingly specialize to produce better goods and services at a lower cost. Moreover, when they are operating well, firms do this in way that also fosters the flourishing of their employees, thereby justifying their internal use of authority.

In Part III, we extend this analysis further, by showing the relationships between stakeholder deliberation, especially as this has been conceptualized within the field of PCSR the cultivation of virtues, and the big-picture economic considerations, especially efficiency, which animate market ethics. Accordingly, we argue that stakeholder deliberation, if it is to be constructive and lead toward a shared recognition of salient reasons for action, requires the exercise of a range of virtues and, furthermore, that such deliberation is a crucial way for market actors to mitigate harms and rectify injustices that obstruct flourishing. As such, virtuous stakeholder deliberation is an important way for market societies to enhance efficiency. This is especially clear in the light of the concept of eudaimonic efficiency that we introduce in Part I and elaborate throughout the book.

A final objective of the book is to offer a comprehensive restatement of a neo-Aristotelian approach to business ethics. Well-known texts in this genre include Robert Solomon’s (Reference Solomon1993) Ethics and Excellence: Cooperation and Integrity in Business, Edwin Hartman’s (Reference Hartman2013) Virtue in Business: Conversations with Aristotle, and Geoff Moore’s (Reference Moore2017) Virtue at Work: Ethics for Individuals, Managers, and Organizations. Our book is different, both because it is focused on engaging with rival perspectives in business ethics, especially the MFA and Habermasian PCSR research, and because we engage much more substantially with research in organization theory (especially in Part II) to show the great extent to which this research dovetails closely with a neo-Aristotelian perspective on the firm. Our book is also distinct because we highlight the relevance of recent metaethical discussions among neo-Aristotelians for business ethics research. Accordingly, in Chapter 2, drawing on the work of Mark LeBar (Reference LeBar and Bagnoli2013a,Reference LeBarb), Jennifer Frey (Reference Frey2019), and Sebastian Rödl (Reference Rödl2007), we argue that basic Aristotelian ethical notions such as human flourishing, moral virtues, and practical wisdom can be grounded in an account of human agency. Thus, this chapter provides a more robust basis for our claims about the importance of flourishing and the virtues within the economic contexts of markets, firms, and stakeholder interactions. It also supports our introduction of the concept of eudaimonic efficiency by providing reasons to reject the focus on preference satisfaction presupposed by the MFA’s commitment to Pareto efficiency.

More broadly, we follow Thomas Aquinas in thinking that economic activity, like any other human action, is subject to evaluation in terms of the virtues. For this reason, our analysis extends beyond a consideration of their role within the communal context of the firm, the topic that has been given the most attention by neo-Aristotelians, to encompass the transactional context of the market as well as that of stakeholder deliberations where the deficiencies of market transactions may be corrected. Thus, this book provides a foundational framework for considering the way that human flourishing may be realized within market society and, as such, a basis for considering a wide range of ethical questions regarding markets and firms. Accordingly, Part I focuses on the role of the virtues within markets, Part II on their role within firms, and Part III their role in interactions between stakeholders. Our methodology is also novel, in that we engage in a form of “imminent critique” (Heath, Reference Heath2014: 19) of the MFA, arguing that it cannot fulfill its aim of articulating the implicit morality of the market without revising its conception of efficiency, incorporating an account of various virtues, conceptualizing the firm as a community that fosters moral development, and considering the role of the deliberation between stakeholders in forcing market actors, especially firms, to internalize externalities.

We begin, in Chapter 1, by critiquing the MFA and arguing that a neo-Aristotelian perspective provides a plausible alternative approach to market ethics. Chapter 2 outlines an account of the virtues that is both constitutivist and moderately particularist, linking virtue ethics with an account of human agency (see Frey, Reference Frey2019) and emphasizing the central role of practical wisdom as a nonrule governed capacity for judgment. In Chapter 3, we introduce an account of market virtues that both mitigate market failures and foster higher levels of efficiency. In Chapter 4, the first in Part II, we argue that authority and norms within the firm, which promote efficiency, are justified insofar as they contribute to the flourishing of those subject to them. Chapter 5 extends this argument, highlighting the role of the firm in realizing higher levels of efficiency by providing a social context where firm members can specialize in the production of goods and services that contribute to customers’ flourishing, a task made possible by the exercise of a range of virtues. In Chapter 6, we outline a neo-Aristotelian account of corporate governance, explaining the role of the board in creating and sustaining the conditions necessary for the firm to efficiently produce goods and services that foster flourishing. Thus, these three chapters, which comprise Part II, present a neo-Aristotelian theory of the firm.

Chapter 7 offers a critique of Habermasian PCSR arguing that an account of the virtues is needed to distinguish between constructive forms of deliberation and those where powerful actors manufacture consent. Chapter 8 extends this argument by highlighting the role of a range of virtues in facilitating deliberation within multi-stakeholder deliberations. Finally, in Chapter 9, we argue that injustices inflicted on employees within the firm represent an important type of externality that reduces efficiency. Accordingly, we argue that managers have an obligation to rectify these injustices by fostering business model change to give employees better working conditions. Thus, Part III outlines the role of the virtues in mitigating injustices and other externalities that obstruct flourishing.