This paper draws heavily on Sternberg's book 'Just Business: Business Ethics in Action' (see Bibliographies section of this web-site). Sternberg is first critical of the stakeholder approach to business ethics before offering her own Ethical decision Model.

Sternberg discusses different usages of stakeholding, arguing forcibly against the notion that stakeholders must be accountable to their stakeholders and not just take them into account. However, it is not clear who exactly sees stakeholding in this way. Sternberg characterises this view, interchangeably, as both a theory and a doctrine, which is confusing. At the same time, Sternberg does not specify whom the 'misguided academics' are who take this view of stakeholding. Sternberg argues that '… stakeholder theory is not a straw man' (page 16) but as portrayed in this paper then this is exactly how it appears.

Sternberg is very clear about the role of business ethics: '…business is ethical when it maximises long-term owner value subject to distributive justice and ordinary decency'. (p 40)

By distributive justice, Sternberg means that those who do most for the organisation deserve most from the organisation. By ordinary decency, Sternberg argues that business must be conducted with honesty, fairness, an absence of coercion and with respect for the law. The problem with the first condition is that it is often extremely difficult to calculate the contribution an individual makes to overall company performance. Executive pay, for example, may be determined by market forces as much as any notion of performance. Similarly appeals to 'ordinary decency' depend upon how it is defined by different parts of society.

Sternberg offers us her Ethical Decision Model as a tool to understand business ethics. The model has five steps:

Step 1 Clarify the question
Step 2 Determine the question's relevance for this business
Step 3 Identify the circumstantial constraints
Step 4 Assess the available options
Step 5 Conclusion: the right course of action

The course of action that will be chosen is the one that maximises long-term owner value while respecting distributive justice and ordinary decency.

However, in offering a much shorter version of her book, Sternberg loses some of the strength of her argument. Yet, the ideas expressed here are still provocative and worthy of serious consideration.

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