Managerial Discretion, Market Failure and Democracy

Abstract

Managers often have discretion in interpreting their ethical requirements, and they should seek democratic guidance in doing so. The undemocratic nature of managerial ethical discretion is shown to be a recurring problem in business ethics. Joseph Heath’s market failures approach (MFA) is introduced as a theory better positioned to deal with this problem than other views. However, due to epistemic uncertainty and conceptual indeterminacy, the MFA is shown to allow a much wider range of managerial discretion than initially appears. The paper explores how this range can be narrowed down with democratic input, comparing models based on formal state institutions and on the informal public sphere. A case study from the pharmaceutical industry illustrates the merits of the informal public sphere approach.

Guest Editors’ Introduction: The Challenges and Prospects of Deliberative Democracy for Corporate Sustainability and Responsibility

“…How can deliberative initiatives like MSIs be more closely connected to the political and regulatory bodies at the center of the deliberative system? In answering this question, we must also take seriously the sorts of power that companies wield and the ethical constraints they must respect to avoid undermining broader democratic inclusion and empowerment (see, e.g., Bennett, 2022;Nyberg, 2021;Singer & Ron, 2020.…”