Business Ethics Flashcards
1
Q
What does business ethics examine?
A
The relationship between capitalism and ethical principles, questioning whether businesses should follow ethical guidelines or if ethics should have any relevance to business at all.
2
Q
Stakeholders vs. Shareholders
A
Those affected by business decisions vs. owners seeking profit.
3
Q
Good Ethics = Good Business?
A
The debate over whether ethical businesses financially succeed.
4
Q
Free Market Capitalism
A
An economic system with minimal government intervention.
5
Q
Public Relations (PR)
A
Managing communication to build a positive reputation.
6
Q
Monopoly
A
A market controlled by one company, eliminating competition.
7
Q
Corporate social responsibility
A
Corporate Social Responsibility (CSR) is the concept that businesses have ethical obligations towards the environment and the communities they impact.
8
Q
Environmental CSR
A
- Businesses have a responsibility to reduce their negative impact on the environment, such as pollution, and to use sustainable energy and products.
- Actions like offsetting environmental harm (e.g., planting trees to balance carbon emissions) are part of this responsibility.
9
Q
Community CSR
A
- Businesses must respect human rights, avoid exploitation (e.g., sweatshops, child labor), and ensure fair treatment of employees, such as minimum wage and safe working conditions.
- Philanthropy, such as donating to charitable causes, is also included.
10
Q
A modern version of CSR (ESG)
A
- Environmental, Social, and Governance
- Adds the requirement of avoiding political corruption like bribery.
11
Q
Utilitarianism on CSR
A
- Utilitarians like Bentham and Mill support environmental CSR due to the potential harm of climate change on happiness but would likely oppose philanthropy as a business obligation.
- They generally favor minimal regulations for businesses and believe the free market promotes human flourishing.
12
Q
Kantian Ethics on CSR
A
- Kant’s second formulation emphasises treating people with respect and not as mere means.
- This implies businesses must avoid exploitation (community CSR), pay fair wages, ensure safe working conditions, and avoid harming the environment (environmental CSR).
13
Q
Examples of CSR
A
- Innocent smoothies donates 10% of profits to charity.
- Pret-a-Manger gives leftover food to charities and advertises it on packaging.
14
Q
Criticism of CSR: Hypocritical window dressing.
A
- Seen as hypocritical window-dressing by left-wing critics.
- CSR can distract from unethical business practices, such as tax avoidance or union busting.
- Businesses might use CSR to improve their public image while maintaining harmful practices.
15
Q
Anand Giridharadas’ critique
A
- CSR is not true generosity, but a strategy to protect profits and avoid backlash.
- Example: Jeff Bezos starting a school for underpaid workers is an attempt to address the very issues caused by his business practices.
- CSR efforts are minimal compared to the harm caused by businesses, like inequality and exploitation.
16
Q
Further critique of CSR
A
- CSR may be used to disguise the role of businesses in creating economic problems.
- CSR can be a PR tactic rather than a genuine attempt to help society.
17
Q
CSR as an Ethical Practice
A
- Kantian Ethics – CSR aligns with Kant’s principle of duty and treating stakeholders (employees, consumers, the environment) as ends in themselves rather than means to an end. A genuinely ethical CSR policy would mean acting responsibly regardless of profit.
- Utilitarianism – If CSR leads to the greatest happiness by benefiting society (e.g., reducing pollution, improving worker conditions), it can be seen as ethically good.
- Virtue Ethics – A company committed to CSR out of genuine concern for social good rather than profit is demonstrating virtues such as justice, generosity, and integrity.
18
Q
CSR as a Marketing Tool
A
- Business Ethics and Self-Interest – Many companies use CSR as a branding strategy to attract ethical consumers and improve their public image rather than out of genuine moral concern.
- Kantian Critique – If a company only engages in CSR to boost sales and deceive customers, it treats stakeholders as a means to an end rather than respecting their intrinsic value.
- Milton Friedman’s View – Friedman argued that the only responsibility of a business is to maximize shareholder profits, suggesting CSR is often just a PR move rather than a genuine moral obligation.
19
Q
Intentions behind CSR Matter (Deontological/Kantian Perspective)
A
- Kantian ethics focuses on duty and good will rather than consequences. If a company engages in CSR only to enhance its reputation and profits, rather than from a sense of moral duty, it is not truly ethical.
- If CSR is done out of genuine respect for humanity, such as fair wages and sustainable practices because they are right, then it is ethically valuable.
- Companies treating workers and the environment as a mere means to an end (profit) violate Kant’s principle of treating people as ends in themselves.
20
Q
Intentions behind CSR Don’t Matter as Much (Utilitarian/Consequentialist Perspective)
A
- From a utilitarian standpoint, what matters is the outcome, not the intention. If CSR benefits society (e.g., reducing pollution, improving worker conditions), it is ethically good, even if the company’s motive is profit.
- A company may engage in CSR purely for marketing reasons, but if it leads to real improvements (e.g., cleaner energy, fairer trade), it is still creating the greatest happiness and is therefore justified.
21
Q
Globalisation
A
- Businesses have become global entities, spanning multiple countries and continents.
- Global economies, industries, markets, cultures, and policies are interconnected.
22
Q
Problems with Globalisation
A
- Can lead to the violation of Corporate
Social Responsibility (CSR). - Businesses may use their power and
wealth to pressure people, cultures,
and governments, especially in
developing countries. - Offshore outsourcing moves jobs to
third-world countries, causing
unemployment in developed nations. - Monopolies may form when
businesses dominate markets,
eliminating competition and hindering
innovation and economic progress.
23
Q
Corporate Power and Globalisation
A
- Globalisation has granted businesses
unprecedented power, sometimes
more than governments. - Corporations can influence laws and
regulations through political
contributions or threats, creating
monopolies that benefit them at the
expense of society. - Examples:
- Facebook acquiring Instagram
- Amazon copying successful
products.
- Uber underpricing to eliminate
competition before raising prices.
24
Q
Critique of Monopolies
A
- Monopolies reduce free market
competition, limiting innovation and
societal progress. - However, Adam Smith’s belief in free
markets is challenged by corporations
using their power to avoid
competition.
25
Utilitarianism on Globalisation
- Against aspects of globalisation that
undermine free markets and increase
business control over policy.
- Might accept offshore outsourcing if it
maximises happiness.
26
Kant on Globalisation
Globalisation is problematic for Kantian ethics as it can lead to violations of CSR and mistreatment of individuals.
27
Whistleblowing
Whistleblowing occurs when an employee leaks information about a company's wrongdoing, such as unethical business practices affecting employees, customers, society, or the environment.
Example: Frances Haugen leaked internal Facebook documents (The Facebook Files) revealing that Facebook’s algorithm promoted harmful content, worsening body image issues for teenage girls.
28
Upsides and Downsides of Whistleblowing
Upside: Exposes unethical practices, leading to potential change or cessation of harmful behavior.
Downside: The company may suffer financial losses or go bankrupt, resulting in job losses. Good business practices might also be halted.
29
Utilitarianism on Whistleblowing
- Act utilitarianism assesses
whistleblowing based on its
consequences.
- If whistleblowing creates more
happiness (e.g., stopping exploitation),
it is morally right.
- If it causes more harm (e.g., business
collapse affecting employees), it may
be morally wrong.
30
Kant on Whistleblowing
- Kant believes lying is always wrong, so
he would oppose covering up negative
business practices, even if it results in
business failure or job loss.
- Kant’s second formulation of the
categorical imperative states that
treating people as mere means is
wrong. Most whistleblowing cases
expose exploitative or deceptive
practices, which Kant would oppose,
making him in favor of
whistleblowing.
31
Sweatshops
Sweatshops are factories that employ workers, sometimes children, under poor conditions with low pay, long hours, and unsafe environments. They exploit the lack of opportunities for workers, forcing them to accept these conditions.
- Seen as a violation of corporate social
responsibility (CSR) and often linked
to issues of globalisation and
whistleblowing.
- Businesses are expected to ensure
their supply chains do not involve
sweatshops (community CSR).
If a company uses sweatshops,
whistleblowing may be seen as
justified.
- Sweatshops are often the result of
offshore outsourcing, which is a
consequence of globalisation.
32
Utilitarian Defence of Sweatshops (William MacAskill)
- William MacAskill argues that while
sweatshops are horrific, boycotting
them might hurt workers by removing
their best job opportunities.
- For many workers in poor countries, a
sweatshop offers a step up from
starvation, even if the working
conditions are bad.
- If businesses were forced to stop
using sweatshops to avoid exploiting
workers, they might stop operating in
poor countries altogether, leading to
worse conditions for workers.
- A utilitarian might support
globalisation and oppose CSR or
whistleblowing in this context.
33
Primark Case Study (Sweatshops)
Primark was found to source from factories using child labor and exploitative conditions. After the discovery, Primark cut ties with those suppliers.
34
Utilitarianism on sweatshops
Justifies sweatshops if they provide a better quality of life compared to alternatives and benefit overall happiness (lower prices for consumers, workers' survival).
35
Kant on sweatshops
Rejects sweatshops because they treat workers as mere means, violating human dignity regardless of the outcomes.
36
Mill's harm principle on sweatshops
Argues that sweatshops may not be harmful if workers are free to leave and prefer working there to starvation. However, child labor and forced labor (e.g., withholding pay) are morally wrong, as seen in the Bangladesh factory collapse case.
37
Kant vs Utilitarianism on sweatshops
Kantian ethics focuses on the inherent rights of individuals, regardless of consequences, while utilitarianism evaluates actions based on overall happiness or harm.
38
The issue of the value of consequences: Kant
Kant’s ethical framework does not consider the consequences of actions as morally significant. This can be problematic in situations where actions lead to very positive or negative outcomes.
In some cases, Kant’s refusal to factor in consequences may seem morally wrong.
Example - Murderer at the Door:
Kant’s approach would demand telling the truth to a murderer at the door, even if it results in death, ignoring the disastrous consequences.
Some cases of whistleblowing have negative consequences (e.g., loss of jobs, starvation, even death), yet Kant would still advocate for truth-telling regardless of these harmful outcomes.
39
The issue of the value of consequences: Utilitarianism
A Utilitarian would allow the exploitation, as the happiness gained from curing the disease would outweigh the suffering.
A scenario where a sadistic scientist is the only one capable of curing a disease, but their work relies on exploiting workers.
Utilitarianism would accept globalisation and CSR, even if they involve exploitation, as they provide cheap products for first-world countries and jobs for third-world countries.
40
Kant's response to the issue of consequences
Kant argues we cannot predict or control consequences.
However, some degree of control over outcomes exists, and therefore, consequences do matter ethically in determining the rightness or wrongness of actions.
41
Issue of intentions: Utilitarianism
Utilitarianism focuses solely on the consequences of actions, not the intentions or character of the person performing them.
This contrasts with the intuition that a person can have good or bad intentions, regardless of the outcomes.
Utilitarianism would view a business engaging in CSR for PR as morally acceptable if the overall consequences are positive, regardless of the business's underlying motives (e.g., greed or deception).
If whistleblowing is done for self-interest (e.g., bringing down a rival), Utilitarianism might still justify it if it leads to good outcomes.
42
Issue of intentions: Kant
Kantian ethics considers moral intentions as essential to the goodness of an action. For Kant, the intention (acting out of duty) is central to moral worth, not just the result.
43
Mill’s View on Character and Intentions
- John Stuart Mill argues that character
and intentions matter because they
influence future actions.
- A person with a bad intention (e.g., a
stabber) should be condemned, while
someone with a good character (e.g.,
a priest) might be forgiven.
- For Mill, good character is important
because it contributes to overall
happiness, and intentions can affect
long-term consequences.
44
Kant’s Critique of Consequentialism
Kant would reject Mill's approach, arguing that greed and deception are morally wrong in themselves, regardless of their consequences.
45
Critique of Kant on consequentialism (human emotion)
It is impractical to expect humans to act without emotion.
Utilitarianism accepts emotions as part of human nature, acknowledging that avoiding negative emotions and seeking positive ones is part of the ultimate human goal.
46
Adam Smith and Capitalism
Adam Smith, often called the father of capitalism, argued that when individuals pursue their self-interest in a free market, it leads to economic prosperity and societal benefits.
The competition driven by self-interest encourages innovation and productivity, leading to growth, with the market functioning as if guided by an "invisible hand" to benefit society.
47
Utilitarianism on Capitalism & Business Ethics
Bentham and Mill, influenced by Smith, believed free markets generally maximize happiness but recognized the need for some restrictions.
Bentham supported government intervention (e.g., minimum wage) to ensure happiness.
Mill advocated for government involvement in cases of market failure (e.g., public services) and supported worker-owned co-ops.
Utilitarians generally view CSR positively, and if globalisation reduces CSR, it is seen negatively.
48
Kant on Capitalism & Business Ethics
Kant, influenced by Smith, agreed with the importance of division of labor but emphasised that individuals must be treated as ends, not means, in business practices.
If capitalism leads to people being treated as mere means (e.g., exploitation), Kant would view it as immoral, even if profitable.
Kant argues that CSR is a moral duty, and globalisation undermining CSR is wrong.
49
Milton Friedman vs. Kant & Utilitarianism
Milton Friedman, a libertarian, argued that the sole responsibility of businesses is to maximize profit for shareholders, rejecting the need for market restrictions.
Friedman believes any market control, even for good purposes, requires force and leads to corruption. He argues that capitalism and free trade are essential for economic growth and poverty reduction.
However, Friedman acknowledged that unregulated markets could lead to monopolies, which stifle innovation. He accepted that government intervention might be necessary to prevent monopolies and corruption.
50
Critique of Friedman
Adam Smith's arguments made sense in his time, but the macro effects of globalised capitalism (e.g., environmental damage, monopolies) challenge the original vision of free markets.
This supports Kant and Utilitarianism's view that some market restrictions are necessary to protect society and the environment.
