Defensible Decision-Making and Ethics in Business Settings

The overall objective of this research paper is to establish the knowledge requirements for defensible — or corrigible — decision-making, problem solving, and behavior in a business setting. The paper presents a comprehensive System of Inquiry for evaluating why, how, when, and by whom these requirements are used. It also outlines how a Code of Ethics would actually be implemented in the organization in question, predicting possible reactions to the code from employees and the effect the code would have on the organization.

There are good reasons to insist on the legitimacy of using "knowledge," "policy," and other related terms in ways that further a systematic effort to provide the intellectual foundations for human actions in a business setting. Most importantly, the assistance that might be obtained from closely related fields of systematic inquiry would have to be foregone if that strategy were not adopted. The traditional labels are therefore retained, but the meanings attached to them have been restricted in ways that allow productive borrowing from other disciplines and suggest the kinds of inquiries needed to further the overall enterprise.

Briefly, a set of fairly precise meanings is developed within the theoretical apparatus used to determine the intellectual requirements for directing human actions in a business setting. Since meanings created in this way are likely to differ from at least some of those in current use, that places an additional burden on both author and reader: the text must be written using the meanings found in the limiting or precising definitions, and read in the same terms (Ascher, 2003). Disagreements about the validity of applying a given label to a particular meaning should be reduced by the use of such definitions, although they are unlikely to be avoided altogether. In any event, only those inquiries and arguments that employ the same set of meanings will be relevant to, and potentially useful for, fulfilling the purposes of the present inquiry. It should be emphasized, however, that the acceptability of the proposed conception of "knowledge" is far less important for the argument that follows than either the validity of the analysis used to identify the intellectual requirements for directing actions or the usefulness of the findings for improving intellectual performance, particularly as it relates to the conduct of real-world affairs.

Given the overall purpose of the inquiry, the two tasks to be completed first were: (a) to identify or determine the intellectual requirements, both empirical and normative, for directing human actions in a business setting, and (b) to develop a theoretical apparatus — a set of fundamental assumptions — able to show how those requirements could be fulfilled within the limits of human capacity as presently understood and subject to all relevant environmental restrictions. The two tasks were reciprocally contingent; the limits or constraints encountered in one area directly influenced the possibilities available in the other.

Analytically, the crucial factor was the theoretical structure, for it provided the integrating mechanism that linked the various elements required to fulfill the overall purpose. The intellectual requirements were identified within that context, and the meaning of key terms was defined there. Once the basic theoretical apparatus was reasonably complete, its validity and usefulness could be explored through its connection to directing human actions in a business setting. Systematic testing was carried out in three major areas: first, the direction of collective actions or public decision-making; second, the conduct of inquiries meant to produce knowledge that could be used for making defensible policies; and third, the education of individuals in ways expected to improve intellectual performance in areas that impinge on individual or collective decision-making.

The usefulness of the analytic apparatus for assessing governmental performance and suggesting improvements was explored in extended studies of two federal activities: first, the public housing program, which was traced in some detail from its origins in the New Deal through the beginning of the 1980s; and second, the Inter-American Foundation, a small agency created by Congress in the early 1970s to learn how to manage overseas development assistance. The usefulness of the theoretical structure for criticizing academic inquiries meant to provide knowledge for making or improving policies was checked against a sample of recent work in economic theory, selected because economics is usually regarded as the most powerful of the social sciences.

An effort to create an education program able to improve intellectual performance of the kind required for defensible decision-making has served as the primary channel for developing and testing the overall theoretical structure. A course of study or training program derived from that apparatus provides an exceptional opportunity to test its validity and usefulness for directing actions. The principal objectives of such training, which can be summarized very succinctly as the "Three As" of education, are open to reasonably adequate measurement and thus provide a good indication of the extent to which the theory can fulfill its proposed functions. That is, an individual's capacity to acquire knowledge self-consciously and critically, to augment or add to the existing supply of knowledge, and to apply such knowledge efficiently and effectively in public or private affairs can be measured at least well enough to assess the effects of training and to provide the information needed for improving the underlying theoretical apparatus.

The results obtained from these and other tests and applications have been uniformly positive and, in some cases, exceptional. That is not to claim that the theoretical apparatus has been "proved," for such terms are inappropriate. But it is demonstrably useful for criticizing intellectual activity and suggesting ways of improving it, particularly where the activity relates to the formulation of public policies. More importantly, training programs using materials derived from the theory have consistently produced improved critical performance by both academic and nonacademic persons, in the United States and in Latin America. Until now, most of the development and testing has been targeted at the empirical or "scientific" part of the intellectual apparatus required for directing human actions in a business setting. The normative or ethical requirements were elaborated only to the point where they could be identified in broad terms and integrated into the overall structure (Burk, 1979). That emphasis is here reversed. The primary goals of the present work are a detailed statement of the normative requirements for directing actions and an elaboration of the theoretical structure sufficient to show how those specific requirements can be fulfilled. Only so much of the empirical apparatus has been included as is needed to follow the course of the argument.

The approach to inquiry maintained throughout the study has been methodological rather than substantive, in the broad sense of "methodological" that extends beyond mere technique or procedure (and would be labeled "epistemological" if philosophic usage were different). That focus is retained here. The aim is to produce a clear statement of the analytic characteristics of a normative structure adequate for directing human actions in a business setting in ways that can be defended within the limits of human capacity — and not to establish its substantive content — and to clarify the kinds of evidence and argument needed for adequate criticism or justification of normative judgments, rather than to justify, criticize, or defend any particular normative position. Some substantive assumptions must be made before an adequate theoretical framework can be created, but their function is to identify and bound the kinds of evidence allowed in justification or criticism.

The purposes that direct the present inquiry differ considerably from the purposes more commonly pursued within the mainstream of contemporary social science and within ethics or moral philosophy as well. Because the implications of those differences are extensive — for both the kinds of questions that are raised and the criteria of adequacy applied to proposed responses — some underscoring is essential. The effect of differences in emphasis is magnified by the need to ground justification or criticism of human actions in a business setting in the relation between actions taken and purposes sought; purposeless actions cannot be criticized or improved.