1.3 Ethical Problems and a First Case Study: Masterpiece Cakeshop

A big part of our practical approach to business ethics will be thinking about case studies. A case study is a situation, real or imaginary, that illustrates a problem. Case studies can be long or short, detailed or vague, realistic or fanciful—as long as they give us something to think about. You might have encountered case studies in courses on management or entrepreneurship. The case studies we’ll cover in this course will be similar, but they’ll focus on the ethical aspects of a business situation.

Case studies are important because they help us refine our ability to reason about ethics. No one is born a master of business ethics; we get better at sorting through difficult situations by practicing certain skills. We’ll get a lot of practice in this course.

On to our first case study, then! It’s about a cake store in Colorado named Masterpiece Cakeshop.

This case study is about a bakery and its business practices. Unlike case studies in management, operations, or other areas of business, however, this one focuses on the ethical aspects of these events, or the features that have to do with right and wrong. There are a lot of those features, too—you probably noticed many as you read through the case.

Before we get to the ethical aspects, though, let’s use this case to think a bit more about what ethics is and why it should be important to you.

In the previous section we defined ethics as the study of right and wrong. People have many different opinions about what’s right and wrong, and conflict over those opinions creates an ethical problem. An ethical problem, also called an ethical dilemma, is a situation in which people with opposing ideas about right and wrong clash over those ideas.

Many case studies in business ethics illustrate ethical problems. Ethical problems are special kinds of problems that differ in some ways from, say, math problems. Here’s a math problem: 2x = 4. If you know any algebra, you’ll know that you can divide both sides of that equation by 2 and discover that x = 2. If you don’t know algebra, you could learn it and gain the ability to find the answer for yourself. Math problems have specific answers and methods for discovering those answers, even when we might not know the answers ourselves or how to find them. Someone might assure us that x = 5 and show us a method for getting that answer, but if we know the right way to do the problem, we would know that the person was wrong.

Ethical problems are like math problems in that we can get better at solving them. But they are also unlike math problems because we see such great disagreement over both the answers and the methods for finding them. Even now, many years after the Supreme Court made same-sex marriage legal in the United States, some people still cannot agree on whether it is actually right or wrong.

Seeing such strong disagreement over same-sex marriage might lead you to think that ethical problems don’t have answers, or that ethics is just a matter of taste or opinion, like someone’s favorite ice cream or baseball team. But we shouldn’t conclude that just yet. Even though people may disagree over ethical problems, it doesn’t follow that those problems have no answers. It just means that we need to put in the work to figure out the possible answers, the evidence supporting each answer, and which one is best. This process is practical—it has real-world implications for everything we do as business professionals.

In other words, doing ethics doesn’t just involve reasoning about ethical problems. It also involves reasoning about ethics itself! That’s one of the most remarkable things about business ethics: we have to figure out not only the answers but the way to get the answers, too.

Now let’s jump back into the details of the Masterpiece Cakeshop case and do some of that reasoning ourselves. This case study features many disagreements over right and wrong. Here are two of the most prominent:

• Some people believe that same-sex marriage should be legal, while other people believe that it violates God’s will and therefore shouldn’t be legal.

• Some people believe that a business can refuse service to someone on the basis of religious beliefs, while other people believe that businesses can’t refuse service for that reason.

These disagreements are just on the surface of the case. There are many others lurking in the background. Here are two of these deeper disagreements:

• Some people believe that religious belief can be a legal defense for many kinds of behavior, while other people believe that religious belief can’t provide that kind of defense.

• Some people believe that individual citizens can own property, like the Masterpiece Cakeshop, while other people believe that no one should be able to own private property of any kind.

While these two ethical problems may not be obvious in the Masterpiece Cakeshop case, they’re still there. If we kept looking, we would find others too. In many business situations, we don’t have to look very hard to find them.

Thinking about these ethical problems helps us think about ethics itself and why we need it. For instance, one common feature of many ethical problems is harm. Harm is damage to something, and that damage could be of different kinds. Many ethical problems involve harm: one person is harming another, a business is harming the environment, a law is harming certain industries, and so on.

In such situations, the ethical problems leap out at us—there’s pain, suffering, infringement of rights, financial damage, or some other kind of harm. As ethicists, though, we don’t just want to know that there’s harm. We also want to know how to think about the harm and what to do about it. Many of the skills we develop in this course will help us answer these questions.

We could even consider harm as a feature of ethical problems. The concept itself raises many important questions. Here’s one: what counts as “harm”? Does it count as harm when Jack Phillips of Masterpiece Cakeshop claims that he lost 40 percent of his business in the years following the initial allegations?5 Does it count as harm when a same-sex couple like Charlie Craig and David Mullins can’t use a certain bakery because of the owner’s religious beliefs? Does it count as harm to set a legal precedent that allows certain kinds of discrimination?

These questions may be difficult, both to ask and to answer. In posing them, though, we don’t prejudge the answers; we don’t ask the questions as though the answer were obvious to us or as though we expect everyone to agree. Rather, we ask them because, for most ethical problems, we don’t already know the answers. We ask them as real questions, without knowing the answers beforehand. We ask them expecting to find an answer—or at least get closer to one— but we don’t start out with answers in mind. We’ll discuss this point more later on.

We can even—and you might be noticing a pattern here—go deeper than those questions about harm. Who gets to decide what counts as “harm”? The courts, or someone else? And how do we weigh different kinds of harm against each other, such as financial liability versus physical suffering?

Those questions, like all the others we’ve been asking, are ethical problems. Ethics involves right and wrong but goes beyond them to consider how to think about right and wrong, how we know about right and wrong, and other issues. We use case studies, like the Masterpiece Cakeshop situation, to bring out these ethical problems.

In reasoning about ethical problems, we’re often convinced that certain ideas in ethics just must be correct. Some of these ideas are ethical principles, and we’ll discuss such principles in the next section.