The Business Ethics Blog

Ethics, at its most basic level, consists in acting in principled ways to resist the urge to indulge in short-term gratification of our desires. It’s about resisting temptation, and thereby adopting ways of acting that, in the long run, are mutually beneficial. In the world of commerce, temptation isn’t merely passive: in many cases, temptations are thrust upon us. And when we make purchasing decisions with money that is not our own, the problems multiply.

See this short bit from the CBC’s Money blog: Air Canada marketing unethical: U of O prof

A University of Ottawa business professor says an Air Canada marketing tactic is crossing an ethical line.

Mike Miles, director of the MBA program at the University of Ottawa, said Air Canada offers frequent flyers, like him, coupons to upgrade their flights to business class. However, travellers have to purchase their tickets at a higher fare to qualify for the upgrade.

Miles said because much of his travel is for his work as a business professor, those extra costs would be passed on to the university, and it’s unethical for the airline to put him in that dilemma….

Basically, Miles is saying to Air Canada, ‘you shouldn’t tempt me like that to misuse my institution’s money!’ And I think there are certainly cases where we do think it’s unethical for one party to tempt another that way. I’ll quote a blog entry of mine from 2008:

…this falls very generally into the very broad category of doing things that encourages, promotes, makes more likely, that someone else will do something bad. Think of suborning perjury. The lawyer who puts a witness on the stand, knowing that witness is planning to lie, is doing something very bad, even if she herself isn’t the one doing the lying. Now, I’m not saying there’s a direct parallel here….

Now for what it’s worth, notice that in this case, Air Canada isn’t targeting business travellers exclusively: anyone who wants to use an upgrade coupon faces the same dilemma, namely whether to spend more to get (a lot) more. The difference is that for people like Miles (and me), whose travel is mostly paid for either by our institutions or by research grants, Air Canada’s policy amounts to a temptation to spend more of someone else’s money. And that difference constitutes a problem (an agency problem) for any institution that empowers employees to spend money on its behalf.

But then again, Air Canada surely knows that the vast majority of its frequent fliers are travelling on someone else’s dime, so a policy like this is bound, intentionally or not, to create huge numbers of agency problems. The question then becomes, at what point do the rewards for acting against your employer’s interests (e.g., by spending more than necessary) become sufficiently attractive that we start to think of the party offering those rewards as doing something unethical?
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Addendum / Clarification: I don’t think Air Canada’s practices here are unethical. But I do wonder at what point simple temptation becomes unfair inducement in cases like these.
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Thanks to Samantha for the story!