This paper argues that business ethics as a field requires a normative reconstruction of its foundations. Over the course of several centuries, social misdevelopments have occurred in the economic sphere of business firms and markets. Successive approaches in business ethics such as those flying under the banners of corporate social responsibility, stakeholder theory, ESG (environmental, social, and governance), and business purpose have so far proven inadequate to the task of addressing these misdevelopments because they do not go deep enough to explore the normative foundations of the division of labor in society. The social philosopher Axel Honneth, following Friedrich Hegel, Adam Smith, and others, has argued for a method of “normative reconstruction.” This paper reviews Honneth’s approach in the context of business ethics. It argues for a normative reconstruction of business that recommends institutional change from both the bottom up (business participants) and the top down (governance and law).

How significant are pay gaps in the U.S.? Utilizing the release of Type 2 EEO-1 forms by the Department of Labor, which covers over 11,000 public and private U.S. contractors, we estimate gender and race/ethnicity pay disparities. Our analysis reveals that these government contractor firms save, on average, over $49 million annually for public firms and $6 million for private firms by employing women and minorities. Notably, private firms exhibit larger pay gaps per worker than public firms, and pay disparities increase with firm size within both public and private sectors. We also analyze market reactions to the disclosure of these EEO-1 forms and identify a positive association between market responses and the size of the firm's pay gap, indicating that investors perceive pay gaps as net value-enhancing. Our results remain consistent across various control variables, including firm productivity, workplace diversity, the job functional structure, and state and industry influences. These insights should enlighten stakeholders regarding the magnitude, drivers, and market valuation of pay gaps. Moreover, they imply that capital markets alone may not effectively resolve systemic pay inequities in the U.S.

Industry awards convey status and visibility to their winners, but evaluation biases can limit how equitably these benefits are distributed. Indeed, award-giving organizations are often criticized for not recognizing the achievements of women and racial minority workers. Interventions to close these gender and racial gaps have focused on diversifying award committees to reduce evaluation biases, with mixed direct effects on awards decisions. This paper investigates the indirect effects of these interventions, specifically how diversifying award committees influences hiring decisions within the evaluated industry. Using archival data on 193,394 hiring decisions on 6,999 films released in the U.S. from January 2010 to April 2021, I examine an intervention by the Academy of Motion Picture Arts and Sciences to increase the number of women and racial minority Oscar voters. The results show a positive association between the Academy’s intervention and the likelihood of award-seeking film productions hiring women or racial minority workers. Moreover, these hiring effects are concentrated in visible occupations and primarily benefit workers who are Academy members, suggesting a strong strategic component in organizations’ response to the evaluator’s diversity intervention. These findings provide insights into the role that awards and third-party evaluators can play in reducing inequality within an industry.