Is Business Bluffing Morally Acceptable?

Landon Bangerter

Business 1040

Professor Matt Hatcher

1 May 2018

Is Business Bluffing Morally Acceptable?

    One of the more interesting and controversial topics of ethical discussion is whether or not business bluffing is morally acceptable.  In the world of business, to bluff means to present your company and anything that is affiliated with it on a higher level than it probably is.  Basically, to be deceptive.  And while that sounds like a dirty action, many would argue that business bluffing is a good thing since it can not only help you but possibly those with whom you are transactioning with.  But at the same time, bluffing is still, essentially, a form of lying, and many others would argue that this is inherently a bad thing.  The purpose of this assignment is to come to a general conclusion as to whether business bluffing is ethically appropriate or not.  My initial thought is that it is unethical and business leaders should be as honest as possible, but researching this topic could very well change my mind.  I will be researching the opinions of esteemed ethical-thinkers and examples of business bluffing.  As I write out the research, I will contrast opinions that have priorly been presented as we progress through this paper.  At the close of this paper, I will attempt to give a general conclusion from the research collected regarding business bluffing and I will also provide my personal opinion on the matter.

    We’ll start off with Albert Z. Carr, a man who’s explanation on the subject can be found in many books on ethics and who’s insight will basically serve as the basis of this paper.  This particular section of his thoughts is taken from “Ethics in the Workplace” compiled together by Robert A. Lamar.  This is perhaps the most popular explanation on business bluffing and is often used as the prime description on the subject in many ethics textbooks..  Carr argues that bluffing in business is only part of the game.  He likens the ideal to a game of poker.  He says the winner of the game “is the man who plays with steady skill.  In both games ultimate victory requires intimate knowledge of the rules, insight into the psychology of the other players, a bold front, a considerable amount of self-discipline, and the ability to respond swiftly and effectively to opportunities provided by chance.  In poker it is right and proper to bluff a friend out of the rewards of being dealt a good hand.” (Larmer, Carr, 2002, 4-5)

    Another textbook, “Honest Work: A Business Ethics Reader” contains some more explanation of Albert Z. Carr’s viewpoint.  In this textbook, he presents several examples of executives bluffing in business.  The justification here is that if it is in the legal confines of the law, then it is completely ethical, regardless of the outcome for any party.  One example Carr gives is of a firm that manufactures mouthwash.  This company was accused of selling products with a cheap form of alcohol that was possibly harmful to a buyer’s health.  In a private comment, the CEO stated that they had not broken any laws.  Their justification was that everything they did was perfectly legal.  He was clearly getting agitated that the general view of ethical treatment was frustrating his company.  The CEO says, “If the ethics aren’t embodied in the laws by the men who made them, you can’t expect businessmen to fill the lack.  Why, a sudden submission to Christian ethics by businessmen would bring about the greatest economic upheaval in history!” (Ciulla, et al., 2017, 46)

    Fritz Allhoff was an admirer of Carr’s concept of bluffing.  He too believes that the ethical implications associated with games like poker are comparable to the business world.  He claims that it is only human nature for people to bluff.  When given the opportunity to raise your sales price above your reservation price, it is only rational that you’d take it.  It is rational and human to want to have more money.  He says that it is “morally acceptable since business is governed by role differentiated morality” and “because the coherence of the idea of business negotiations itself presupposes that bluffing is accepted.” (Varelius, Allhoff, 2006, 163-164)

    However, with fans like Allhoff, there are also critics.  Professor Jerry Kilpatrick of California State Polytechnic University wrote an article citing his critiques of Carr’s views on bluffing, aptly titled “A Critique on ‘Is Business Bluffing Ethical?’”.  Kilpatrick states that there are three premises that are to be challenged.  One is Carr’s lack of including other ethical theories into his insight.  He is basically only including the Judeo-Christian religious theory of altruism.  According to Kilpatrick, there are many other views to consider when presenting such a statement on bluffing.  The second challenged premise is that business is a game.  Kilpatrick says that business is not only not a game, but that mindframe can be used to justify really distasteful acts, such as cowardice.  And the third premise to be challenged is Carr’s claim that deception is only part of the negotiation process, something that Allhoff greatly defended.  Kilpatrick then shares a piece of work from Gerard I. Nierenberg, who says, “In a successful negotiation, everybody wins. Negotiation is not a game—and it is not war. Its goal is not a dead competitor. A negotiator ignores this point at his own peril. The purpose of negotiation is to achieve agreement, not total victory. Both parties must feel that they have gained something. Even if one side has had to give up a great deal, the overall picture is one of gain.”  (Kilpatrick, Nierenberg, 2002, 1-10)

    In her book “Just Business,” Elaine Sternberg takes the side of Kilpatrick.  Business is not a game.  Not only that, but she explains that games themselves are not immune to moral judgement.  She explains that the best kind of games are the games that are fair and challenging.  We tend to not want to play games that are cheap or unfair.  And when someone is cheating at a game, the credibility and even dignity of that person (at least for the game) are uncredited.  The business world is viewed differently.  There aren’t a whole ton of rules to winning in the business world, but there’s still the morality of it all.  She exclaims, “Neither the nature of business nor the model of a game provides any justification for exempting business from moral judgement.” (Sternberg, 2000, 64-66)

    To compare with Carr’s thinking, Sternberg and Kilpatrick are both basically explaining that games and business are uncomparable.  Gamers play knowing full well the rules and what they are getting themselves into.  Most gamers participate with the intention to play fairly, abiding by the rules.  And if you lose, it’s no big deal.  It’s only a game.  Carr’s and Allhoff’s thoughts are interesting and relatable, but Sternberg and Kilpatrick share much more convincing cases.  Poker is only a game where every player abides by rules (usually).  The world of business has a significantly higher chance of moral consequences, especially when taking into consideration that everyone has at least a slightly different ethical standard than others.

    In his book “The Good, the Bad, and Your Business”, Jeffrey L. Seglin uses a different term to describe business bluffing.  He calls it posturing and essentially states that posturing is not a bad thing.  He doesn’t believe it’s dishonest nor does he believe that it lacks integrity.  When given the choice to say nothing or to disclose every truthful detail, there may be some cases where it is more generally beneficial for everyone.  An example of this he gives of this is someone he interviewed, a CEO of Inc. 500., to seek out examples of unsavory tactics.  “I called all of my people together and said: ‘Look, we’re handing out payroll checks, but we’re broke.  If you have to cash your check, I understand.  But this is where we are financially.  Could you guys just hold off cashing your checks for a week?’  All 40 employees ran to the bank that day.” (Seglin, 2000, 137-138)

It seems that Seglin takes sort of a middle ground between Carr and Allhoff, and Sternberg and Kilpatrick.  While he never really digs into the legalities of business bluffing (or posturing), his arguments tend to swing towards logical reasoning and determining what’s best for everyone.  In this sense, he stands with Sternberg and Kilpatrick a little bit.  But because he defines there to be nothing wrong with business posturing, he also takes a little bit of Carr’s side as well.  So here we have two polar opposite opinions, and a person who takes more of the median.

Determining a general conclusion is proving to be difficult.  It is fascinating to see how large of an influence Carr’s comments have had on thinkers everywhere, considering all of the opinions gathered in this paper are based on responding to Carr’s words.  There are people like Allhoff who unapologetically agree with Carr but then there are those who simply disagree with his claims like Kilpatrick and Sternberg.  And then there are those who take sort of a middle ground like Seglin.

Whatever the case may be, everything seems to circulate around the very fact that Carr stated that bluffing in business is only a game like poker.  When determining whether business bluffing is ethical or not, it always comes back to whether or not business should be treated as though it were a game.  The responses on this seem to be pretty mixed.  It wouldn’t be completely unreasonable to say that opinions on the matter are almost split at 50/50.  Although if I had to pick which side seemed more favorable, I would tip my hand towards those who largely disagreed with Carr.

As for my personal conclusion, my opinion has only been slightly swayed.  I actually tend to side more with Jeffrey Seglin than anyone else.  But it turns out to be more of a situational scenario.  You should allow yourself to bluff in certain situations.  I agree that you should generally be concerned for yourself and try to determine what is best for you and your company.  But you need to be aware of the price you could pay.  I’m not talking about physical price.  I’m talking about moral price.  How much of your soul are you willing to sell to ensure profits?

Carr has a point when he says business is like poker.  Business is not like any other game, but it is like poker.  It shouldn’t have to be, but it is.  It’s a bit more severe in business.  In poker, you usually only lose money (which is a lot for some people), but in business, careers and even lives are at stake when bluffing.  The main question here isn’t exactly how are you going to ensure that you don’t go under, but rather, who are you okay with deceiving and hurting in order to save yourself?

My conclusion ultimately ends up like this: bluffing is only okay if it seeks to not only help yourself, but not inflict dire consequences on those you are dealing with.  You owe it to those you interact to know as much of the truth as they can benefit (and possibly as much as they will take consequence from), if not only for the fact that you would probably want to know as much of the truth as you need also.  Even if they don’t know everything, they need to know enough.  Let’s be frank, it is very selfish to justify bluffing that really hurts someone else.  When your bluffing is being set up to hurt someone else, you need to reconsider your actions.  The question I would like to pose is: when given the choice to be a rich man or a good man, which will you choose?  Any day of the week, I would much rather be a good man than a rich man.

References

• Larmer, Robert A., and Albert Z. Carr. Ethics in the Workplace: Selected Readings in Business Ethics. West, 2002.

• Ciulla, Joanne B., et al. Honest Work: a Business Ethics Reader. Oxford University Press, 2017.
• Varelius, Jukka, and Fritz Allhoff. “Allhoff on Business Bluffing.” SpringerLink, Kluwer Academic Publishers, May 2006, link.springer.com/article/10.1007/s10551-005-4665-4.
• Kilpatrick, Jerry. “A Critique of ‘Is Business Bluffing Ethical?".” Cal Poly Pomona, 2002, www.cpp.edu/~jkirkpatrick/Papers/CritBluff.pdf.
• Sternberg, Elaine.  Just Business: Business Ethics in Action.  2nd ed., Oxford University Press, 2000.
• Seglin, Jeffrey L. Good, the Bad, and Your Business. Orient Paperbacks, 2011.