8. Ethical Theories & Business Practice

Question 1

What are the theoretical roots?

Answer 1

1. Economic Theory - JK Galbraith 1950’s onwards
2. Social theory
3. Political ideologies (capitalism and socialism)

Question 2

What is the school of ethical universalism?

Answer 2

This view is;
- A common understanding does exist across the world & cultures in the most important concepts of what is considered right or wrong (truthfulness, honesty & integrity)

Question 3

What does the school of ethical universalism mean in a business perspective?

Answer 3

Would be helpful and make conducting business transactions, negotiations, developing relationships etc less complex & risky

Question 4

What is the school of ethical relativism?

Answer 4

This view is;
- multiple sets of standards or ethical norms across the world which relate to different societies, cultures, way of living and conducting business.

Question 5

What does the school of ethical relativism mean in a business perspective?

Answer 5

Increased complexity and risk, makes life harder for organisations.

Question 6

School of ethical relativism; Ethical differences to business practice are attitudes and behaviour in relation to:

Answer 6

1. Bribery and inducements
2. Child labour
3. Working hours
4. Role of woman at work
5. Consumer protection

Question 7

Hofstede’s Cultural Dimensions View;

Answer 7

Strong view supporting the extent of significant national cultural differences, which are still held to be influential in today’s world

Question 8

Hofstede’s Cultural Dimensions include:

Answer 8

1. Power distance (relationship & distance of authority & differences in power between managers & employees)
2. Uncertainty avoidance (attitude to risk)
3. Individualism/Collectivism (tenancy to work as individuals or in groups or to make decisions individually or as a group seeking consensus of agreement)

Question 9

Hofstede’s study for power difference showed:

Answer 9

• High power difference in Latin American Countries, Greece & Turkey
• Lower power distance in USA, UK & Germany

Question 10

Hofstede’s study for uncertainty and avoidance showed:

Answer 10

Japan high
USA low

Question 11

Hofstede’s study for individualism/collectivism showed:

Answer 11

Japan and many other Asian countries showed high levels of agreement
USA showed a high level of individualism

Question 12

What other factors are key factors in cultural differences?

Answer 12

1. Business’s such as different attitudes to providing tips
2. Language - English main business language, companies need to be careful how they use or translate certain words.

Question 13

What is the Ethics & Integrative Social Contracts Theory?

Answer 13

1. Aims to bridge gap between ethical universalism & ethical relativism
2. Forms a common understanding for a social contract for everyone to follow
3. Refers to ethical norms - seen universally and ethically essential
4. Second order ethical norms - local & reflect cultural & regional differences
5. Universal norms are stricter than second order

Question 14

What is Archie Carroll’s - The Pyramid of CRS (1991)?

Answer 14

Focuses on the relationship between the economic, legal, ethic and philanthropic responsibilites of an organisation. Level of responsibility moves from basic (economic) to higher (philanthropic)

Question 15

How is CSR defined and by whom?

Answer 15

Johnson, Whittington & Scholes, Exploring Strategy - Commitment by organisations to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.

Question 16

Who debates the definition of CSR?

Answer 16

1. Milton Friedman (1970); “business of a business is business, the only social responsibility of a business is to create a profit”
2. Charles Handy (2002); “purpose of a business is not to make a profit, it is to make a profit so that the business can do something more, or better. That something becomes the real justification of the business”.
3. R Edward Freeman (1984 - Stakeholder Approach) - Western world organisations should take a wider and more socially accountable view of their responsibilities.

Question 17

What is the outcome of just looking after profit & shareholders?

Answer 17

• Bad for business
• Bad publicity
• Lose customers, clients, suppliers and damage relationships with other stakeholders

Question 18

What is the outcome of recognising and satisfying wider stakeholder interests?

Answer 18

• Good for business, eg good reputation, positive image etc.
• Can be described as enlightened self-interest

Question 19

What are the different views of CSR?

Answer 19

• Western countries; may be viewed as actions, behaviour and commitment beyond legal requirements
• Asia; may be just meeting legal requirements
• Different national cultures; Can have intrinsic values that relate directly to social responsibility (eg Buddhism, Confucianism)

Question 20

What are some CRS Issues & challenges?

Answer 20

1. Working conditions/employee safety
2. Executive pay
3. Supplier control/coercion (late payment made to small suppliers)
4. Consumer health (smoking, alcohol, obesity, gambling)
5. Product failure
6. Environmental pollution
7. Carbon emissions/global warming
8. Tax evasion
   10.0 Market control