Fairness In Business

A tricky problem in business research is understanding the role of fairness concerns. It is pretty obvious from just a cursory look at social interactions (of which business relations are a special type) that fairness matters to a lot of people a lot of the time. Often consumers and workers complain about lack of fairness. Even when negotiating together representatives of one firm will demand a fair deal from another firm.

There are, of course, mayor challenges bringing fairness into business research, and even into business decisions. It is notoriously hard to agree what is fair.  We all have self-serving tendencies and so can easily end up seeing what is fair as biased in our direction. If one divides up the “fair” claims people have one can easily end up with claims on a lot more than 100% of the proceeds of a group action.

Coming from an ethical standpoint Joel Rubin argues for the value of considering fairness. He notes that firms get punished for being perceived as unfair. It may be hard to specify exactly what unfair is but a firm sure doesn’t want to be seen as it. He discusses what it means to be fair. In this he examines what influences community expectations of fairness. He draws heavily on Kahneman and Tversky and it is not very surprising that what we get relative to other people matters to us. He notes that this impacts the problem of divvying up limited resources — a key problem in organizations.

Perhaps it is not too surprising that he doesn’t come up with any major new ways of thinking about fairness but the advice is worth heeding. “Since allocation  based on contribution, ability, or need may be the best available method in certain situations … when faced with such a situation the allocator should attempt to mitigate the perception of unfairness by making public, to the largest extent possible, the criteria by which it measured contribution, ability or need.” (Rubin, 2012, page 15).

Read: Joel Rubin (2012) Fairness in Business: Does it matter, and what does it mean?, Business Horizons, 55, 11-15