A conflict of interest is a situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties as, say, a public official, an employee, or a professional. For example, imagine your boss asks you to sort through a large pile of job applicant resumés, and pick the three best applicants to interview. If your sister is one of the applicants, you are in a conflict of interest. You have an official duty to do — namely, to select the best applicants. But you also likely have a bias in favour of your sister; you probably want to see her get the job. So it is reasonable to expect that your judgment will be influenced in her favour, even if you do your very best to be fair and impartial.
Conflict of interest is ethically important for two reasons. First, a person who is in a conflict of interest may not be able to exercise his or her duties in an objective, professional manner. In spite of his or her best intentions, his or her judgment may be biased in a way that leads to giving bad advice or making a bad decision. Just as importantly, if a conflict of interest is not dealt with properly, it can lead to a loss of faith in an entire decision-making process, and ultimately to a loss of faith in an entire organization.
It is important to see that conflict of interest is not an accusation, but rather a situation in which an individual may find him or herself. Many people get this wrong, especially when discussing conflict of interest in the public sphere. It is common, for example, for politicians to accuse each other of conflict of interest. But there is nothing unethical about being in a conflict of interest. Being in a conflict of interest can happen to you through no fault of your own. The crucial question, ethically, is how an individual handles being in a conflict of interest. To be in a conflict of interest is not unethical; but failure to do the right thing when in a conflict of interest can be.
The standard ethical advice with regard to conflict of interest is that you should avoid conflicts of interest when you can. When you cannot avoid them you should disclose the conflict to interested parties, so that they can adjust their own behaviour accordingly; and if possible remove yourself from the decision-making process.
See also in CEBE:
- John Boatright, “Conflict of Interest,” in Robert W. Kolb, ed., Encyclopedia of Business Ethics and Society. Sage Publications, 2007.
- Daylian M. Cain, George Loewenstein, and Don A. Moore, “The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest,” Journal of Legal Studies, vol. 34 (January 2005)
- Michael Davis and Andrew Stark, Conflict of Interest in the Professions, (OUP, 2001)
- Chris MacDonald and Wayne Norman, “Conflict of Interest” Oxford Handbook of Business Ethics (OUP, 2009)
- Chris MacDonald, Michael McDonald, and Wayne Norman, “Charitable Conflicts of Interest,” Journal of Business Ethics 39:1-2, 67-74, Aug. 2002. https://doi.org/10.1023/A:1016379900781