Business Ethics

Question 1

what is a whistleblower

Answer 1

an employee that reports an employer’s misconduct. There are laws that protect whistleblowers from being fired/mistreated for reporting misconduct (Whistle-blower Protection Act)

Question 2

milton friedman quote on business responsibility

Answer 2

‘Do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not’

Question 3

solomon quote on business responsibility

Answer 3

‘Good employees are good people, and to pretend that the virtues of business stand isolate from the virtues of the rest of our lives (…) is to set up a familiar tragedy’

Question 4

business ethics in GB

Answer 4

• Industrial Revolution led to removal of workers’ rights. Trade unions, parliamentary action etc. have tried to combat this.
• Earl of Shaftesbury worked hard on this.
• 1970 - Equal Pay Act
• Until 1971, there was no protection of a worker against unfair dismissal. Women could be dismissed for being pregnant.
• William Temple coined term ‘Welfare State’ in 1942.
• More aware now that business does not operate in a vacuum, it affects others, element of morality involved.

Question 5

great dock strike

Answer 5

• 1889 - Great Dock Strike against the poor pay and no guarantee of work for Dockers.
o Effective trade union set up, but no progress.
o Anglican Bishop of London, Friedrick Temple and Archbishop of Westminster (Cardinal Henry Manning) did all in their power to create pressure for just, parliamentary settlement.
o Pope Leo XI published an encyclical in 1891, ‘The Workers Charter’ condemning the excesses of unbridled capitalism and materialist communism.
o Modern day popes continue this tradition, using NL as guidance.

Question 6

what is CSR

Answer 6

Business practices involving initiatives that benefit society. E.g. giving to charity, ethically sourcing goods, good working conditions, healthcare, no pollution etc.)

Question 7

milton friedman view on CSR and influence on others

Answer 7

• Milton Friedman argued that it is unethical for companies to do anything than increase their profits. Viewed taking money away from profits to fund CSR projects equivalent to stealing money from shareholders.
o Article ‘The Social Responsibility of Business is to increase its Profits’
• Uses the idea of the conflicting interests of stakeholders as reason for not spending money on CSR as ‘insofar as his actions raise the price to customers, he is spending the customer’s money. Insofar as his actions lower the wages of some employees, he is spending their money’
• Claims that a company spending on CSR is them ‘serving as an agent of the stockholders or the customers or the employees’ and that if these individuals wish to spend this money on CSR they should do so ‘separately’.
o ‘(CSR) is a fundamentally subversive doctrine’ (Capitalism and Freedom)
• Friedman convinced politicians like Ronald Reagan and Margaret Thatcher that of they ‘set free’ businesses, the benefits would ‘trickle down’ to the rest of the country. It meant that businesses had to accept more responsibility, as there was less gov intervention.
o Carroll called this ‘philanthropic responsibilities’ which is the idea of being a good citizen and improving quality of life.

Question 8

positive and negative externalities

Answer 8

• Positive externalities - positive ways the company can impact on the environment e.g. planting 3 trees for every 1 cut down
• Negative externalities (social/external costs) - costs imposed upon society/gov who pay for them e.g. pollution

Question 9

negative externalities examples

Answer 9

o E.g. Coca Cola
• Deplete water supplies in India, claimed they would replace every bit of water they took, did not happen.
• Claimed drinks were pesticide free - not true.
o Shell and the Niger Delta
• Maintain 90 oil fields in area
• Fishing stocks wiped out
• Amnesty International fighting against Shell’s claims
• 69,000 people dead as result
• Gas flaring
• From 1976 to 1991, oil spills numbered around 3,000 at an average of 600 barrels per spill.
• However…
• 98% of leaks in 2004-5 caused by damaging of pipe undertaken by people
• UN programme warned illegal refineries were inducing significant impact

Question 10

why do companies take on CSR - FTSE4Good

Answer 10

• So they look good to potential investors
o E.g. FTSE4Good shows investors businesses that demonstrate good environmental, social and governmental practice in reducing green house gas emissions, in order to become energy efficient etc.
o However…
• Does not include arms/tobacco companies
• Coco Cola Australia rather ironically number 1 in 2012…
• Good for PR
• Social expectation
• Shows you are concerned
• Make a difference to community in which you work
o E.g. Anglo American (mining) - ‘we are committed to environmental stewardship and minimising the impact of our operations’
• Fear of customers boycotting one’s product/service e.g. VW test scandal resulted in lower sales
• Fear of employees striking/going to work for competitors e.g. amazing conditions at Google = high job satisfaction
• Fear of further regulation from governments
o Need to self regulate to avoid harsher rules of gov
o E.g. newspapers have to self-regulate with privacy etc. or might get in trouble

Question 11

aristotle view of csr

Answer 11

• Aristotle would argue that we have a responsibility to not only shareholders, but also stakeholders due to his emphasis on the communal aspects of ethics. For him the good of the community was greater than that of the individual (eudaimonia for all).
o ‘He who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god’

Question 12

cardinal vincent human dignity

Answer 12

(A Blueprint for Better Business, 2012):

1. Human dignity
   a. All made in image of God, ‘each person can never be merely an instrument valued just for his or her usefulness’.
   b. Alludes to Kant’s 2nd CI
   c. View shared by William Temple, good is always personal

Question 13

kant and csr

Answer 13

o Duty - everyone has a duty to be moral, no matter what outcome is
• CSR is good as should be moral even if it goes against making ££, should do it because it’s right, not for PR
• Duty is to all, not just shareholders
o 1st CI
• Cannot universalise duty to shareholders, must show a duty to all
o Would work well with 3rd formulation, kingdom of ends – good for all to follow.

o 2nd CI
• If only profit driven, you may use your customers/employees wrongly
• Employees - may result in abuse of human dignity etc.
• Customers - may result in using customers for money
• Community - e.g. Coca Cola in India
• Suppliers - should be treated fairly with a reasonable price
• E.g. False advertising would be deemed using customer as means to an end
• Kant was very much against slavery in that the slavery’s autonomy is not respected through forced labour. Aristotle would agree with this as this would be bad for the bonds that hold society together.

o Deontological – do action because it is right, not outcome based
o Must respect autonomy of businesses

Question 14

util and csr

Answer 14

o Bentham
• Focus on a free market economy, supply and demand determine price
• Only have gov intervention for weights and measures, as we must uphold contracts
• Companies should be left to resolve issues by themselves because they will normally make decisions that end up with the greatest good for the greatest number
• Need to decide what the greatest good is (profit vs. CSR) and who it is for
• Can use hedonic calculus to calculate who should benefit
• However…
o That could essentially justify anything e.g. child labour, as allows for competitive prices for more customers than children used
Bentham did not believe in human rights. This could impact rights of employees e.g. if you abuse workers in order to reduce prices for masses, it could be justified

o Mill
• Quality of happiness from CSR might be greater than for the shareholder…

o Peter Singer
• Preference of all must be considered, including those of all sentient beings and the environment - more likely to undertake CSR

Question 15

whistleblowing ed snowden and recent case study

Answer 15

o Edward Snowden
• Shared US intelligence documents with journalists in June 2013
• Revealed the shocking extent of global mass surveillance
• Sparked global debate, US passed laws to control government surveillance
o 7th March 2017
• It was discovered that CIA hacking capabilities was for bugging
• Could use smart TV to record you
• People can now change behaviour, consumer devices are insecure

Question 16

david kelly whistleblowing case

Answer 16

• 2002, UK gov commissioned dossier on weapons of mass destruction in preparation for invasion of Iraq in 2003.
• State of Iraq’s WMD horrifically over exaggerated, expressed concern to journalists.
• Given warning by MoD, had to appear before House of Commons.
• Supposedly commit suicide, but many questions have been asked.

Question 17

organisations that enable WB

Answer 17

o Wikileaks
• Created by Julian Assange
• Enables whistleblowers to leak information to journalists about governments etc.
o Whistle Blowers, 1997
• First UK agency to encourage public whistleblowing
o Safecall
• Confidential reporting line that allows employees to report managers etc.

Question 18

law concerning WB

Answer 18

o Public Interest Disclosure Act 1998
• Whistleblowers treated as witnesses, not required to provide evidence of what they report.
• Can whistleblow anonymously, should encourage public
• Arguably makes businesses take their CSR seriously as people more likely to report e.g. whistleblowers allow us to see through Coca Cola’s supposed CSR
o Law same in US, except in case of…
• Person simply making accusations because they have a problem with the business
• People who work for the armed/intelligence forces, as this could risk national security and not be in public interest

Question 19

why are actions not reported often through WB

Answer 19

o ‘Not my place’
• If you are on a short contract but know it will affect people in the future
• Different department
• Low position of authority
o Fear
• Fear of losing job
• Fear of losing friends
• Fear of not being given a reference
• Fear of others losing their jobs
o Sense of loyalty
• To employer
• Sense of complicity
• Sense of nationalism of working for gov
• Personal relationships within workplace
o Not telling tales
• Can be accused of lying especially if there is no evidence or you are in a low position
• Lose in court and lose job anyway if bad lawyers
o Neither confidentiality/loyalty imply unethical conduct should not be reported, especially when it concerns the welfare of others.
o There are now organisations that protect whistleblowers such as ‘Freedom to care’, which support employees that have ‘am ethical right to express serious public concerns’.

Question 20

example of good business

Answer 20

freedomtocare
promotes ethical right as human beings sharing one small planet to accountable behaviour from large organisations (Kant)
o Asserts people in authority have a duty to explain their actions and omissions
o Asserts all in company have right to express serious public concerns in the workplace and can go public if necessary

Question 21

contract between employee and employer

Answer 21

o Sets out duties and responsibilities that employee/er have towards eachother e.g. wages
• Employee
• Turn up on time
• Uphold corporate image
• Demonstrate loyalty
• Employer
• Provide good working conditions
• Job security
• Treat staff fairly
o There are assumptions in contracts e.g. being honest
o Contract means we have to come back to issue of loyalty and who you are loyal to in whistleblowing
o Norman Bowie claims whistleblowing violates a ‘prima facie duty of loyalty to one’s employer’

Question 22

kant and WB

Answer 22

• Duty
• Who is your duty to?
• Sign a contract of duties with employer
• Have duty to society…
• 1st CI
• Can you make it universal?
• Can you make covering up corruption universal?
• Honesty and promise keeping can be universalised. If we follow both, it should be clear what is going on in the company and lead to the kingdom of ends
• 2nd CI
• If company are using stakeholders as means to an end, whistleblowing is justified

Question 23

util and WB

Answer 23

• Bentham, Act Util
• Use hedonic calculus to weigh up quantity of pleasure for/against whistleblowing
• Could be against w.b. if good for consumers outweighed by bad for employees
• Need to look at impact on stakeholders, can justify a company breaking rules because of consequences
• Mill, Rule Util
• Rule Util might feel there is a greater good in companies always following rules to keep ethical systems
• Generally, rules = maximum happiness, therefore should whistleblow

Question 24

quakers as good example of business

Answer 24

o Many companies owned by Quakers exist, including Cadbury’s, Clarks etc.
o Mr Stoller from Quaker Finance, ‘arguably Quakers as big entrepreneurs have had their day because we have found other outlets that are easier to square with prevailing attitudes’
o However, Quakers and Business is a group made up of Quakers and non-Quakers who try to uphold Quaker principles in their work.
• The treasurer, Paul Whitehouse, said ‘Q&B was set up to encourage those Quakers in business to get together and give them mutual support, and to bring in those who were seeking support for an ethical approach to business, who might find the Quaker approach helpful.
• They even have a book called ‘Good Business: Ethics of Work’
o JHS Solar Solutions
• Set up by John and Angie Hill - they install slates and tiles etc.
• They promote environmental responsibility
• Claire Tucker said ‘they are very ethical. It’s paramount to the business to display their morals in everything they do’

Question 25

bad business examples

Answer 25

o Tesco, September 2014
• Boss Dave Lewis admitted they had overstated profits by £250 million, figure now risen to £326million, prompting internal and external investigations.
o Enron, 2001
• Built success on lies about profits and concealment of debts, not good foundations for business to succeed.
o Brazil 2014 World Cup and 2016 Olympics
• Whilst these events provided advertisement for country as a whole, 170,000 poor people lost their homes to make room for new stadium/infrastructure etc.

Question 26

ford and roddick definition of good business

Answer 26

o Anita Roddick: ‘Being good is good business’
o Henry Ford: ‘A business that makes nothing but money is a poor kind of business’. ‘A business absolutely devoted to service will have only one worry about profits, they will be embarrassingly large’.

Question 27

differing definitions of good ethics is good business

Answer 27

1. Good ethics is necessary for good business
   • If this were the case, then there would never ben conflict between ethics and profits
   • Lots of successful businesses with awful ethics
   • Therefore, statement is hopefully optimistic
2. A business will do better if it is run ethically than if it is not
   • Could give them a USP…
   • This means that an unethical successful business would be even more successful if they had good ethics also
   i. Does this hold true?
   ii. Tobacco companies would not sell anything if they were ethical due to nature of products.
3. Good ethics generally correlate with good business
   • Depends on consumers
   • Virtuous people do not always prosper
   o Competition is driving force of our capitalist economy, shareholders want largest profits and lowest costs, and good ethics can go against this idea due to it being expensive.
   • However, can give USP, like with Body Shop
   o Although consumers push businesses to accept CSR, they are also constantly wanting new updates, models etc.
   o Limited brand loyalty due to consumer culture
   o Links to Adam Smith’s idea of ‘invisible hand’, whilst pursuing profit, society will somehow benefit
   o If permanent commitment to ethics seems unrealistic, perhaps businesses could commit instead to involving ethics in important decisions, then good ethics would help business make good choices.

Question 28

kant and good business

Answer 28

i. Kant’s approach should be deemed attractive to businesses, as it is clear-cut and absolutist, no ambiguity.
ii. CIs can clarify position on issue
1. Does good ethics result in good business?
iii. Honesty can be universalised, which will create good ethics and business
iv. Do not treat people as means to an end
1. This is hard, as in a way, we are always using someone (Milton Friedman)
2. Often part of success is taking advantage of someone
v. Ethical business will lead to kingdom of ends

Question 29

what is globalisation

Answer 29

Globalisation (World economies, industries, markets, cultures and policy-making is integrated due to internet and companies’ want to produce in other countries for lower costs)
• Free market economy (countries trading based on supply and demand) stimulates trade e.g. through abolition of border controls to allow for free movement of labour and standardisation of taxes/laws as seen in the EU.
• Creates interdependency between countries, results in consumer society open to products from all parts of the globe.
• Much easier to run a business/source raw materials abroad, trade and labour is much cheaper.

Question 30

advantages and disadvantages of globalisation for business

Answer 30

Advantages for Business
•	Wider market to sell to
•	Faster trade
•	Cheaper tax e.g. Dublin Apple Base
•	Cheaper to operate
•	Spread of ideas and innovation
•	Better global deals
•	Electronic investment makes it easier and quicker to invest and trade	

Disadvantages for Business
• Language barriers (although world becoming more anglicised)
• Exchange rates (universal EU in most EU member states)

Question 31

advantages and disadvantages of globalisation for others

Answer 31

Advantages for others
• More investment in poorer countries due to providing jobs etc.

Disadvantages for others
• If there is a major catastrophe in one country, the markets of the whole world will suffer.
• Cultural effect on indigenous people
• Impact on the environment
• Size of transnational companies means their stakeholders extend to national government and child workers in developing countries

Question 32

case study: negative effect of globalisation

Answer 32

• Factory supplied Primark, Wal-Mart and Benetton, low cost clothing.
• Over 1,100 people died, 2,500 injured.
• Building had shown cracks before, workers forced to continue work, threatened them with a month’s pay.
• Upper factory floors had been built without reinforcement.
• Accusations that transnational corporations had not spent the proper amount of time or money making sure their suppliers were providing decent working conditions.
• However…
o Could argue that a positive effect came from this atrocity:
o Companies were pressured into accepting CST for more stakeholders
o Fund set up so companies would provide compensation for injured workers and families of those who died, reached target of $30 million after 3 years
o Pressure on city authorities in Bangladesh meant health and safety inspections were conducted, 35 unsafe factories closed.

Question 33

pope john xxii on globalisation

Answer 33

o ‘The solidarity which binds all men together as members of a common family makes it impossible for wealthy nations to look with indifference upon the hunger, misery and poverty of other nations’

Question 34

why does globalisation work against ledcs often

Answer 34

• Terms of trade make it more difficult for poorer countries to compete, larger trade gap. Latin America’s share fallen from 11% to 5% and Africa’s from 8% to 2%.
• There is discrimination against LEDC workers who do not get paid as much as MEDC workers. Although people claim it is relative to living costs and that the wages are better than those at a local firm.

Question 35

bentham on globalisation

Answer 35

o Children being exploited form smaller group than other stakeholders such as customers who benefit from a lower price.
o Hedonic calculus may allow for exploitation of workers to produce good quality, cheap goods.

Question 36

mill on globalisation

Answer 36

o View would greatly differ to Bentham
o He would argue that the emotional, physical and psychological suffering of Indonesian children in sweatshops far outweighs the material and financial gain of the customers in the West.
o May have recognised some of the advantages of globalisation in economic growth and more developed countries.

Question 37

singer on globalisation

Answer 37

o Article 2009, applauds Harvard graduates wanting to create sustainable social, economic etc. way forward in terms of business.
o In his book ‘the life you can save: acting now to end world poverty’, Singer argues those from affluent countries have a duty to help others in poor countries.
o Should provide people with excellent working conditions as a by-product of globalisation, there is great injustice atm and sees a need for change, despite this inevitably taking a while.
o Gives example of drowning child (James Rachels) and says you cannot just watch the child drown, ‘there is no morally relevant difference between the drowning child situation and the situation of the affluent with regard to children dying of avoidable poverty related causes’.

Question 38

kant on globalisation

Answer 38

o Universalising certain parts of globalisation would be problematic.
o E.g. in Jaipur, if a business fielded its call centre to Jaipur in India to reduce costs and increase profits, Kant would argue this should be universalised. However, this would forma contradiction, as the people of the U.K. would see massive unemployment.
o 2nd CI: Coca Cola against this, taking people’s water in order to mass-produce. Treating people as means to and end in order for the country to make excessive profit. (example of neo-colonialism)
o If companies went abroad in their business to help the people and not exploit them, this would be good, however, in reality, businesses go abroad usually for cheap labour and exploitation.
o Could argue that globalisation is the first step towards a world moral system of perpetual peace as businesses have the opportunity to contribute to an ethical ideal. However, idea that globalisation will enable this is a utopian dream.
o Karl Popper hated the idea of ‘it’s fine in theory, but it won’t work in practice’. He believed that a theory was not good unless it could be applied, perhaps a limit to Kantian ethics in this aspect.

Question 39

why do companies take on CSR - principles for responsible investment

Answer 39

o UN supported Principles for Responsible Investment (PRI). Put together 6 principles for RI; intend to understand the implications of sustainability for investors in order to develop a more sustainable global financial system.
• Nov 2016: 1,600 signatures, representing $62trillion assets under management.

Question 40

cardinal vincent on CSR subsidiarity

Answer 40

4. Subsidiarity
   a. Expressed by Pope Pius XI, idea that decisions should be made at the lowest level compatible with efficiency.
   b. Those who know the most should make decisions e.g. locals should decide where a bench should go.
   c. Not only good for business practice, but also for those involved.
   d. J. S. Mill also explored this idea, ‘though individuals may not do the particular thing so well, on the average, as the officers of government, it is nevertheless desirable that it should be done by the, rather than the government, as means to their own mental education’.

Question 41

cardinal vincent - sustainability

Answer 41

7. Sustainability
   a. Our duty to future generations.
   o + Provide good summary of CSR
   o + Makes it clear that it is more than simply performing our duties, must be a certain type of person in our business dealings, must be genuinely concerned.
   o - Could argue that the harsh nature of business means sentiment is irrelevant.
   o Some argue that business is better by making ethics central to its purpose.

Question 42

robert c solomon view of CSR

Answer 42

o Robert C. Solomon argues along the Aristotelian line:
o ‘Productivity and serving the public and taking care of one’s own employees are neither mere means or an afterthought of business but rather its very essence’
o He argues that there is no contradiction between exhibiting good values in business behaviour and being successful.

Question 43

cardinal vincent - the common good and solidarity

Answer 43

2. The common good
   a. ‘The set of social conditions which allow people more easily to develop, individually and communally’.
3. Solidarity
   a. Major concern of Pope St JP II
   b. ‘No man is an island’ - Donne
   c. We are all dependent on eachother

Question 44

subsidiarity - fraternity and reciprocity

Answer 44

5. Fraternity
   a. Fellowship towards those of different cultures.
   b. Temple viewed it as ‘social glue’
   c. Developed idea of Aristotle’s civic friendship
6. Reciprocity
   a. Lowest level of reciprocity = justice
   b. Higher level = charity, ‘when we care for others, we do not just give them what we must give them, but go further in our generosity’

Question 45

intro

Answer 45

Business ethics became increasingly important with the Industrial Revolution and treatment of employees and impact of industry. Now very relevant with outsourcing and globalisation. Language of business has a lot to do with morality – rights, duties etc.
Live debate very relevant e.g. Oxfam scandal

Question 46

modern example - Oxfam scandal

Answer 46

Oxfam covered up claims that senior staff working in Haiti in the wake of the 2010 earthquake used prostitutes, some of whom may have been underage.

Question 47

impact on business practice of law etc.

Answer 47

•	Environment 
o	Pollution
o	Climate change 
•	Corruption
o	UK 2011 legislation, prosecution for bribery in any country 
•	Modern slavery
o	48.5 mill enslaved
o	68% subject to forced labour 
o	1 in 3 detected victims of slavery are children 
o	Businesses must take this into account when looking at supply chain, e.g. if you outsource work 
o	Law: must site your business’ measures to combat slavery 
•	Skills shortages
o	Move away from heavy industry 
o	Lacking in science and technology, particularly for women 
o	Must up skill own workforce, training 
•	Legislation
o	Companies Act 2006
♣	2014 Greenhouse Gas reporting 
♣	2015 Human rights
♣	2015 Gender diversity 
o	Modern slavery act 2015
o	Gender pay reporting, 2017
o	Payment practices regulations 2016
o	Forcing companies to be transparent
•	Current affairs – no country is fully independent, all dependent on one another 
•	Millennium Goals, published in 2000

Question 48

sam Healy - positives of CSR

Answer 48

she is the Group Corporate Responsibility Director at QinetiQ

• Building trust
• Investor expectations
• Business opportunities, sustainable solutions
• Recruitment and retention
• Compliance with legislation
• Resource efficiency

Question 49

which theories do you apply to business ethics

Answer 49

kant

util

Question 50

scholars and whistleblowing - arendt

Answer 50

o Hannah Arendt pointed out how in totalitarian countries such as Nazi Germany/Soviet Russia, individuals think they can make no difference and so just concentrate on themselves. This is called ‘group think’ and is arguably avoided by the tight regulations on anonymity etc. surrounding whistleblowing.

Question 51

scholars and whistleblowing - bowie

Answer 51

o Norman Bowie claims whistleblowing violates a ‘prima facie duty of loyalty to one’s employer’