BUSINESS ETHICS

Question 1

What is corporate social responsibility?

Answer 1

A belief that businesses have a responsibility towards society as well as their own interests.

Question 2

What was the main claim of Friedman in his shareholder theory?

Answer 2

“the social responsibility of business is to increase its profits.”

Question 3

What did Friedman state social responsibility was?

Answer 3

A delusion, for him the only responsibility for corporations was to their stockholders.

Question 4

How did Friedman use Adam Smith’s invisible hand theory to justify his shareholder theory?

Answer 4

Smith holds that, in the economic sphere, self-interested actions tend to promote the general welfare.

Question 5

How is Friedman’s theory criticised?

Answer 5

Today ethics in business and social responsibility to stakeholders are becoming crucial as consumers are becoming increasingly vocal.

Question 6

What is Freeman’s Stakeholder theory?

Answer 6

Says that corporations should be run for the benefit of all “stakeholders”, not just the shareholders.

Question 7

What does the Stakeholder theory claim executives have a duty to promote?

Answer 7

The interests of all affected parties and balance their interests appropriately when they conflict.

Question 8

What is the issue with giving this power to executives?

Answer 8

The “balancing” of interests could be abused.

Question 9

What does Wilcockson state about the relationship between business and consumers?

Answer 9

Calling people consumers rather than customers, suggests a subtle but significant shift in the way businesses regard people.

Question 10

How does Adam Smith see the relationship between employers and employees?

Answer 10

As being based on the need of the employee for work and the need of the employer for labourers.

Question 11

Whats does Marx state about the relationship between employers and employees?

Answer 11

Unequal - to survive the proletariat have to work for the bourgeoise.

Question 12

Give a problem for employees in the UK.

Answer 12

Multi-national companies are increasingly out sourcing work to poorer countries - impacting on workers in the UK.

Question 13

Give one conference that has been held to discuss the affect of business on the environment.

Answer 13

Paris agreement - governments are being called on to reduce pollution and the progression of global warming.

Question 14

When do people tend to ‘whistle-blow’?

Answer 14

When they think that the normal complaints procedure within the business will not remedy the situation.

Question 15

How can whistle-blowers themselves be considered acting unethically?

Answer 15

Because they may bring the business into disrepute and could have handled the problem more discreet, when they only represent one side of the story.

Question 16

Give two reasons why someone might become a whistle-blower.

Answer 16

1. Illegal activity

2. Danger to the public

Question 17

Give an organisation that protects whistle-blowers.

Answer 17

“Freedom to Care”

Question 18

What is globalisation?

Answer 18

The idea that the world is getting smaller due to the interconnection of economies, information and culture.

Question 19

Why has the pace of globalisation increased?

Answer 19

• Technological changes e.g. communication.

- De-regulation.

Question 20

What is the impact of globalisation? Give 2.

Answer 20

1. Large multinational companies control 2/3 of all global products.
2. Increase in child labour and sweatshops.

Question 21

What may the idea of “good ethics is good business” be motivated by?

Answer 21

• A pragmatic approach e.g. Adam Smith.

- A Kantian sense of duty.

Question 22

How might corporate social responsibility be measured?

Answer 22

FTSE4Good Index. Companies are given an ESG rating.

Question 23

What does the idea of “good ethics is good business” mean?

Answer 23

That doing the right thing will make business more attractive and increase its profits because consumers will like and trust it.

Question 24

Give two positive of using Kantian ethics in business.

Answer 24

1. “Duty for duty’s sake” - a business should behave ethically out of a sense of duty.
2. CI- Universal Law. E.g. “Businesses can use bribes.”

Question 25

Give a negative of using Kantian ethics in business.

Answer 25

The highest good is a good will - his ethics are not based on consequences but duty - how can business operate like this?

Question 26

What would Kantian Ethics say about whistleblowing?

Answer 26

Whistleblower has a duty to tell the truth. But has also made promises of loyalty to his employer. Conflicting duty.

Question 27

Give two positives of using utilitarianism in business.

Answer 27

1. Utility principle - maximising happiness means more people will benefit.
2. If multinational companies treat LEDC workers well and invest in local communities this will lead to further development.

Question 28

Give two negatives of using utilitarianism in business.

Answer 28

1. Whatever decisions are being made it is likely one group will not be happy - the minority?
2. Consequentialist approach it may justify the pay people receive in LEDCs means they have a better standard of living.

Question 29

What would utilitarianism say about “good ethics is good business”? Which scholars talk about this?

Answer 29

Crane and Matten: close links between a utilitarian approach and the approach of economics because decisions are based on the most beneficial outcome.

Question 30

What would utilitarianism say about whistleblowing?

Answer 30

The utilitarian would have to weigh up whether whistle blowing would maximise pleasure or not.

Question 31

Whether or not the concept of corporate social responsibility is nothing more than ‘hypocritical window-dressing’ covering the greed of a business intent on making profits. (give two)

Answer 31

• Businesses have a legal responsibility - not optional.

* Businesses may choose to act in an ethically – but are not obliged to do so by law.

Question 32

Whether or not human beings can flourish in the context of capitalism and consumerism. (give two supports)

Answer 32

• Consider how capitalism and consumerism encourages good entrepreneurism.
• If a company takes their social responsibility seriously, humans can flourish and grow.

Question 33

Whether or not human beings can flourish in the context of capitalism and consumerism. (give two against).

Answer 33

• Does capitalism and consumerism promote greed and selfishness?
• Do they encourage wastefulness? Exploitation of our environment?

Question 34

Whether globalisation encourages or discourages the pursuit of good ethics as the foundation of good business. (give one)

Answer 34

• Consider how multi-national companies ensure that they act in a socially responsible way in their dealings with poorer countries.