Ethical Dilemmas In The Context Of Business

Introduction

Ethical dilemmas in the context of business are often complex and difficult to resolve. This was illustrated recently when Alexander Nix, CEO of data-mining company Cambridge Analytica, was forced to decide whether to employ questionable campaign advertising tactics to secure a client and maximize profits (Lapowsky, 2018). If Nix were to choose to exploit people’s data, he would be acting in the interest of his company and shareholders – his role as CEO. However, by doing this he is neglecting the potential negative consequences that would be borne by society. Appendix 1 explains Nix’s situation in detail. Decisions such as Nix’s have no clear ethical resolution, and as such, they force the decision-makers principles and values to conflict (Frank, 2004). Accordingly, Nix’s decision constitutes an ethical dilemma; he is forced to make an explicit trade-off between ethical standards.

The business context of Nix’s choice complicates the ethical dilemma further as it has implications on not merely an individual level, but also an organisational and systemic level (Goodpaster, 1991). Organisational forces, such as the pressure to meet a bottom line, would have a significant influence on Nix’s perspective. Nix’s role as CEO means he has the responsibility of maximizing value for his company and shareholders. Moreover, the cut-throat organisational norms of Cambridge Analytica impel him to fulfill his role by any means necessary (Browning, 2018).

For the purposes of this analysis, it is assumed that Nix has two distinct options: (Option 1) reject the client’s contract, and (Option 2) accept the contract and exploit people’s personal data for profit. This case study will explore Nix’s dilemma and provide solutions in accordance with three popular ethical frameworks, namely; Utilitarianism, Kantian Ethics, and Aristotle’s Virtue Ethics.

Utilitarianism

Utilitarianism asserts that an action is ethical if its consequences generate the greatest amount of net happiness (Mill, 2002). A Utilitarian analysis involves identifying every stakeholder group affected by the proposed action before predicting and quantifying the pleasure and pain affecting them. This is done by attributing ‘happiness points’ to each group, treating them equally and without prejudice (Westacott, 2019). This allows one to determine whether the action will produce greater net happiness than the alternatives.

Nix’s decision affects a wide range of different stakeholders. This imposes a challenge on the Utilitarian model due to the difficulty of integrating every stakeholder group into the model. Therefore, only the four most significant groups will be scrutinised in this inquiry: (1) the members of the public whose data is exploited, (2) Cambridge Analytica shareholders and employees, and (3) the political party employing Cambridge Analytica. Another challenge faced when applying this model is the fact that chance plays a significant role in the consequences of each decision. If Nix chooses Option 2, there is an inherent risk that he could cause irreparable damage to his company’s reputation. Therefore, the model will assume that there is no risk of public condemnation. It is also difficult to estimate and quantify the degree to which each stakeholder group would be affected (Lyons, 2002).

The first stakeholder group includes the members of the public. If Nix chooses Option 2, there will be a decrease of 500,000 happiness points, since their data rights are being breached. The next stakeholder group is the shareholders and employees, who will experience a 200,000-increase due to increased company profits. The last stakeholder group is the political party, who will achieve a 400,000-increase by gaining additional votes. The Utilitarian analysis model is illustrated below.

Options

• Stakeholder Reject Contract (Option 1)
• Accept Contract, Exploit People’s Data (option 2)
• Public 0 -500,000
• Shareholders and Employees 0 +200,000
• Political Party 0 +400,000
• Net Happiness points 0 +100,000

As illustrated in the prediction and calculation of happiness points, there would be a greater net increase in happiness if Nix were to choose to Option 2. Therefore, from a Utilitarian perspective, Nix’s only ethical option is to exploit people’s personal data to benefit his company and employer.

Kantian Ethics

Unlike Utilitarianism, Immanuel Kant’s ethical framework focuses on intention rather than a consequence to judge an action’s morality (Cholbi, 2016). Indeed, regardless of the consequences, an action is considered ethical if it is performed in accordance with one’s moral duty (Anscombe, 1995). This deontological approach involves testing a proposed action against the formulations of the Categorical Imperative, a term Kant used to describe the supreme natural law (Porter, 1886). If the proposed action agrees with the Categorical Imperative, then it is morally permissible (Kant, 1785).

Determining Nix’ morally appropriate course of action from a Kantian perspective is challenging as it varies based on how Nix’s intentions are interpreted. As it is impossible to know his true intentions, an assumption has been made that if Nix elects option 2, he is doing so in the sole interests of himself and his company.

Kant referred to the first formulation of the Categorical Imperative as the ‘universalizability principle’. It asserts that one should “act only according to that maxim whereby one can at the same time will that it become a universal law” (Kant, 1785). To test if Option 2 is morally permissible, it must be formulated into a maxim and then reconstructed to be universal. Such maxim could be: “I will exploit people’s personal data to influence elections”. Accordingly, the universalised form would be: “Everybody will exploit people’s personal data to influence elections”. There is nothing irrational about this statement in and of itself since influencing an election does not thereby render the election futile; people are still free to vote for whomever they choose. This implies that there is no contradiction in conception, as the concept of elections would remain meaningful.

Notwithstanding, the universal maxim does manifest a contradiction in the will. This is because no rational person would will – or want – the situation described to be actualised. Indeed, a society in which everybody is attempting to influence elections would hinder the attainment of the population’s ends and goals. Therefore, the rational autonomy of individuals would be eliminated, contradicting the ideas at the heart of Kantian Ethics (Cholbi, 2016).

In the second formulation of the Categorical Imperative, Kant stated that one should “act in such a way that you treat humanity never merely as a means to an end, but always at the same time as an end” (Kant, 1785). Influencing people’s voter choices through targeted advertising is considered treating humanity as a means only. This is because it reduces voters’ ability to act rationally and choose their own ends. Nix would be furthering his own and his company’s goals to the detriment of society, and thus, his actions would not be respecting the goals of human beings.

Option 2 explicitly violates two of Kant’s formulations for the Categorical Imperative. Therefore, from a Kantian perspective, Nix’s only ethical option is to reject the client’s contract.

Aristotle’s Virtue Ethics

Aristotle’s virtue ethics focuses not on the outcomes of an action or the adherence to moral rules; but rather, on the individual and their character (Gottlieb, 2009). Aristotle’s approach can be dissected into four fundamental components: (1) Function, goals and the good, (2) Eudaimonia or Human Flourishing, (3) the Virtues, and (4) Developing the virtues (Curzer, 2012). There a few challenges associated when applying this model. Firstly, the virtues are not weighted by significance, making it difficult to prioritise between them. Additionally, the virtues are – to some extent – subjective, making recommendations less absolute (Curzer, 2012).

Nix’s role as the CEO of Cambridge Analytica suggests one of his functions is to add value to his company and maximize profits for his shareholders. A good CEO will need a variety of intellectual excellences, in addition to certain character-based excellences. Nix has a wife and three children, meaning he would also need character-based virtues to be a good husband and father. For Nix to achieve Eudaimonia, the actions and choices he makes in both his everyday life and corporate life would need to be consistently aligned with these virtues (Curzer, 2012).

To be a good CEO, Nix requires the intellectual virtue of Knowledge (of data analytics, company performance etc.). He also needs the character-related virtues of Justice and Temperance, which would eliminate any proclivity towards greed and unfairness. To be a good father and husband, Nix needs the character-related virtues of Generosity and Conviviality. These would increase his tendency to treat his wife and children in a favourable way.

If Nix were to elect Option 1, he would be exhibiting the virtues of Temperance and Justice, both required for his function. He would also be avoiding vice. Although Option 2 would best satisfy Nix’s function as CEO, it clearly manifests a variety of vices. Nix would be exhibiting the vices of Greed and Selfishness since he would be acting in the hopes of increasing his personal wealth. Furthermore, he would be risking his company’s reputation, reflecting both a lack of Practical Wisdom and the vice of Over-ambition.

Option 2 clearly reflects a variety of vices and a distinct lack of virtue. If Nix were to act in such a way to facilitate the development of the relevant virtues, he would select Option 1. Therefore, from the perspective of Aristotle’s Virtue ethics, Nix’s only ethical option is to reject the client’s contract.

Conclusion

As illustrated, the ethical course of action varies depending on which framework is accepted. How then can one make an appropriate recommendation? To answer this question, the strengths and weaknesses of each model must be examined. Kantian ethics and Aristotle’s virtue ethics – both which recommend Option 1 – are based on few assumptions. Conversely, the Utilitarian analysis – which recommends Option 2 – is based on a myriad of assumptions, outlined earlier. Additionally, the Utilitarian model fails to consider the long-term consequences of undermining the democratic process. For these reasons, the recommendation from Kant and Aristotle’s frameworks is considered more reliable. Moreover, Option 1 is supported by the UN declaration of human rights, specifically article 21 which states “The will of the people shall be the basis of the authority of government” (United Nations, 2019). Therefore, through the integration of the models based on each of the three ethical frameworks, it is recommended that Nix reject the client’s contract and refuse to exploit people’s personal data.