Business Ethics Flashcards
CSR
Idea that businesses have responsibilities to community and environment not purely profit driven
Stakeholder
Anyone with involvement with the business
ESG
Measure of how businesses are judged on their responsibility
Whistleblowing
An employee discloses unethical or illegal business practices to the employer or public
What is the cost of whistleblowing
May lose job, friends, poor treatment from managers
Who champions Shareholder Theory
Friedman
How does Friedman argue that CSR is wrong
CSR leads to socialism instead of capitalism, they cant have responsibilities and CSR districts businesses from their main purpose of profit, also implying pursuing profit is immoral
How does Friedman argue that pursuing profit leads to benefits for all stakeholders
When businesses are successful in making money that benefits employers in wages, when people have more money society in general becomes better as people become more charitable
What everyday business practices is effectively Act Utilitarian
Cost Benefit analysis holds many similarities to the hedonic calculus in mathematically weighing up the good and the bad of an action
Advantages of Utilitarianism in Business Ethics
- Businesses are results driven so a teleological theory makes sense
- Act utilitarianism gives flexibility to different situations which is vital in business
- Advertisement plays on ideas of customers pain and pleasure
- Enforces and objective approach to business which is important, competent judge and impartial observer
Disadvantages of Utilitarianism in Business Ethics
- Act requires prediction of all consequences which takes a lot of time which is detrimental in the business world
- Bentham and utility has no right and wrong so could result in unethical business practices
- Good and bad can be very subjective in different circumstances
- Difficult to compare goods that would be measured in different ways, envirinemtal or wages
How would Kantian value of duty work in business ethics
Employer has duty to pay a fair wage, whilst employee has a duty to work hard and not take excessive breaks or expenses
How does Kant display the importance of motive with the shopkeeper example
A shopkeeper treats customers well as it is good for business, this isnt purely good act as his motive for treating customers well is wrong, treating them as a means
Universalisability applied in business ethics
Good business practices must be universalisable, employees must always be payed a fair wage, taxes must be paid by businesses, environmental concerns cant be universalised.
People as ends applied in business ethics
Companies must treat customers well treating them as ends, not means to an end of profit, branding with fair-trade and greenwashing and false advertisement both take advantage of customers good will
Kingdom of ends applied in business ethics
Kant would favour stakeholder theory as this treats all people involved in a business as they should creating a kingdom of ends
Kant view on globalisation
Main effect of globalisation which is transnational companies are normally exploitative to governments and employees in less developed countries, not treating as ends
Rawls veil of ignorance in Business Ethics
If we didn’t know whether we were gonna be rich or poor then we would all agree larger taxes for the rich, businesses are ethically inclined to pay their taxes to create a fair society
strengths of Kant in business ethics
- universal law ensures consistent decision making that builds trust and equality
- Ensures customers and employees aren’t treated like numbers
- Focus on good motives ensures CSR is genuine and not a marketing ploy
Weaknesses of Kant in business ethics
- Very abstract and unrealistic as no business would prioiritse ethics over profit to the extent Kant suggests
- Universal law isnt helpful in business as situations are so unique
- Motive is empirically unverifiable
- Duties will conflict very often in businesses due to the large number of stakeholders, but Kant doesnt provide judgement on this, such as whistleblowing
Globalisation
Integration and connection of world economies
What is the main impact of globalisation
Business and social interaction isnt restricted to one area, decisions have larger worldwide impacts
Technological and political impacts of gloablisation
Technological - communication and travel technology allows businesses to conduct business instantly online, allows for larger companies
Political - Countries are no longer self sufficient with large reliance on trade increasing the interconnected nature of economies
MNC
Multinational corporations 2/3 world trade
What are the three areas where globalisation is relevant in business ethics
Cultural issues
legal issues
Accountability issues
Cultural Issues created by globalisation
Different cultures have different views on business ethics, matter like child labour, gender equality. another concern is that gloabalisation and branding is creating a loss of local identity and cultures
Legal issues created by globalisation
MNCs exploit looser laws on cheap labour and environment to better their profits that would be stricter in their own country. No minimum wage or maximum working hours in some asian countries
Accountability issues cerated by globalisation
MNCs can act unethically but get away with it because these practices may be legal in the country they are operating in, some MNCs are so large and powerful they cant be held accountable
Reasons why Globalisation discourages ethical action
- Makes exploitation of environment workers rights and wages much more commonplace
- Gloabalisation tends to benefit the richer more increasing inequality
- MNCs treat people in the developed world as means to an end
- Neo colonialism effectively
2013 Rana Plaza Disaster
1000 people died when a factory collapsed due to employees ignoring safety regulations
Reasons why Globalisation encourages ethical action
- Harder for companies to hide unethical action due to internet, Nike exploitation in chinese factories got exposed causing boycotts
- Reduced number of extreme poor in china by 300 million as provides stable better wage than past agricultural jobs
Kant on CSR
Employers and employees are under contracts which give a sense of duty that must be upheld. Every in the business must be treated as an end so this is supporting CSR, For Kant CSR should be the primary even over profit
Benthams Act Utilitarianism on CSR
- Principle of utility concerns acting for benefit of others because we benefit ourselves, co-insides with Adam smith and shareholder theory about making profit as this will benefit society, invisible hand keeps all stakeholders happy
—-> This exploit the customer usually, tyranny of majority
Kant on Whistleblowing
It would seem whistleblowing is wrong as breaking a promise or contract is wrong, but also lying to customers about unethical business practice is also wrong, so Kants theory may struggle to solve whistleblowing
—–> Prima facie duties may help
Utilitarianism on whistleblowing
ACT - Whistleblowing would have to be weighed up on the happiness it created, if whisleblowing caused company to lose millions and workers be payed off then it is wrong.
Rule - General principles would assert always reporting unethical business practices
Kant on Globalisation
International trade can be universalised as it improves relations between countries and reduces conflict, creating a kingdom of ends with peace.
However MNCs treat employees and governments in developing countries as a means to an end.
Utilitarianism on Globalisation
relativist with no absolute right or wrong, Utilitarianism can be used for and against MNCs operating in developing countries, as ensures basic wage for all, but also exploits large majority in that country.
Mills Rule Utilitarianism on CSR
A purely profit driven business may be subject to the tyranny of the majority, by putting low pleasure profits over higher pleasures societal goods and peoples welfare
Example of a firm treating employees as ends
Springfield Manufacturing Company created open book financial information to all employees
Friedman on CSR
Social concerns are governmental not the businesses
how is fair trade an example of kingdom of ends
Contractual agreement is agreed with farmers so they aren’t exploited, employers duty to uphold the agreement
What do critics say about principle of utility in globalisation
Its used to justify exploiting workers by saying they are payed a better wage than before MNCs, and customers are happier because they have cheap goods, as a consequentialist theory surely must look into future effects of pollution
Ford Pinto case study
Ford began to lose market share, they were so focused in profit that they created a cheap car as quickly as they could whilst disregarding health concerns. They created a dangerous car that caused 500 deaths in the 1970s
What does Shareholder theory say about ford pinto
Enforces that shareholder theory only operates within the law, ford had gone beyond committing fraud
Stakeholder theory
Businesses should work in the interests of all stakeholders equally not just profit, businesses exist also for human need to work
Body shop example of stakeholder theory
They accepted smaller profits in order to pay better wages and take part in fair trade supply schemes
Co-op example of stakeholder theory
Employers have a owning in the business so they can enforce a positive work environment, incentive to keep prices low
Separation fallacy
When something unethical is called a business decision, because there is no separation between business and ethics
Roger Boisjoly
Blew the whistle on the construction of the rocket boosters for nasa space shuttle in 1980s, but he was ignored and overrides by management and ostracised for whistleblowing
Why is complicit whistleblower theory better than standard theory
Allows whistleblower to speak out even fi they cant prevent the harm, more significance on exposing the wrongdoing publicly due to ones own involvement in the wrongdoing
Socialism and capitalism in cuisines ethics
Capitalism is more profit focused whereas socialism is more social goods focused
Socialism and communism on division of labour
Dividing labour makes factory production much more efficient and more profitable, but socialism would say it alienates the workers by turning people into machines
Reasons why capitalism doesnt allow humans to flourish in society
- based on competition for profit so brings out the worst in people
- Huge inequalities between workers and shareholders
- Religious theachings place emphasis on good of all people, capitalism disregards wellbeing of some
- capitalism treats everyone as main to an end
Why capitalism allows humans to flourish in society
- Everyone becomes richer in capitalist countries
- Capitalism co-insisdes with utility theories
- Parable of the tales supports using talents to make money in competition with others
- Communism and socialism has always had bigger social costs and more oppressive to people
- No true capitalist state as the government intervenes to stop people being exploited
- When socialism has worked in china post Mao that is because they introduced a level of capitalism
Adam Smith on GEIGB
outlines symbiotic relationships that interact for good of eachohet like businesses and customers as businesses get more customers when they treat them ethically and well, especially present in age of globalisation when bad ethics news travels quick
GEIGB
good ethics is good business
Freidman on GEIGB
Ethics has no connection to business within legal frames
Kant on GEIGB
Good ethics is more important than good business, as they decision in business must always first be categorically morally good, uniersalisabliity and mass to an end ensure that ethics is put in priority over business as false advertising cant be universalised but abiding by a work contract can.
Examples of GEIGB being used to gain customer attention for profit purposes
Bodyshop and M and S
Utilitarianism on GEIGB
If a business is ethical than they may make more profits which keeps everyone in the business happy so agrees with GEIGB. However good ethics can fail a business by driving costs to high and causing them to collapse which is bad for everyone.
Rule and Act utilitarianism on GEIGB in zero hour contracts
Act may agree with the use as by exploiting minority employees the majority of customers and shareholders can be kept happy with profits and low prices, However Act would argue that a higher pleasure is the dignity and wellbeing of the employee so would disagree with zero hour contracts
Facebook data scandal in showing bad ethics is bad business
Facebook allowed political consulting firm access to 50 million users data to target them with political advertising, this cut Facebook share price by 16%
france telecom scandal
Workers were delibaretly given demeaning jobs away from their families in order to pressure them to resign during a drastic restructuring process, caused 19 suicides
How can extreme Good ethics in Knats case mean bad business
By refusing zero hour contracts due to ethical concerns the business will lose out on large amounts of profit and be undercut by competition
How does Kant oppose ethical marketing
This is GEIGB for the wrong reason, businesses are using customers as a means to an end by exploiting their good will by appearing ethical to make more profit
