ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Flashcards
COMPANIES
➢ Foxconn: A Chinese factory that produces electronics for companies such as Apple and Samsung. In 2010, 14 workers
committed suicide due to poor working conditions, including long hours, low pay, and strict disciplinary measures.
➢ Bangladesh Rana Plaza Factory: A garment factory in Bangladesh that collapsed in 2013, killing 1,100 workers. The
collapse was due to poor building construction and safety standards, which were overlooked in order to cut costs and
increase profits.
➢ Bankers fixing rates on foreign exchanges: In 2013, several major banks were found to be manipulating foreign
exchange rates for their own benefit, resulting in fines and legal action against the banks and their employees.
➢ Tesco overstates profits: In 2014, UK-based retailer Tesco was accused of overstating their profits, leading to a major
scandal and a drop in the company’s stock price.
➢ KitKat and palm oil: In 2010, Greenpeace launched a campaign against Nestle, the makers of KitKat chocolate bars,
claiming that the company’s use of palm oil was contributing to deforestation and the destruction of orangutan
habitats in Indonesia and Malaysia. After substantial public pressure, Nestle promised to switch to responsibly sourced
palm oil in their supply chain.
Overall, these examples highlight the importance of corporate social responsibility and the impact that corporations can have on
society and the environment. Companies that prioritize ethical practices and responsible stewardship of resources are more
likely to succeed in the long run, both in terms of financial performance and reputation
KEY ISSUES
➢ Protest campaigns and reputation damage: As consumers become more aware of social and environmental issues, they
are increasingly scrutinizing the actions of corporations. Protest campaigns and public pressure can lead to damage to a
company’s reputation and brand image, as well as increased legislative oversight and regulation.
➢ Financial costs of unethical practices: Companies that engage in unethical or irresponsible practices may face fines and
other tangible costs, as well as intangible costs such as loss of reputation and customer loyalty.
➢ Competitive advantage of responsible practices: Conversely, companies that prioritize CSR and responsible practices
may gain a competitive advantage over their peers. Customers are increasingly looking for companies that share their
values and prioritize sustainability and social responsibility.
➢ Standard practice of CSR statements: CSR statements and policies have become standard practice for many companies,
as they seek to communicate their commitment to responsible practices and build trust with stakeholders.
Overall, the message is that corporate social responsibility is increasingly important for companies that want to succeed in
today’s business landscape. By prioritizing sustainability, social responsibility, and ethical practices, companies can build strong
relationships with customers and stakeholders, while also mitigating the risks associated with unethical practices and negative
public perception.
DEFINITIONS
➢ Business ethics: Business ethics deals with the principles that should be used to govern business conduct. This includes
issues such as honesty, fairness, and responsibility in business dealings, as well as the ethical implications of business
decisions and actions. Business ethics provides a framework for companies to make decisions that are ethical and
responsible, and to ensure that they are held accountable for their actions.
➢ Corporate social responsibility (CSR): CSR looks at the wider responsibilities that businesses have and how they should
meet them. This includes not only ethical considerations, but also social and environmental concerns. CSR argues that it
is often in the firm’s interest to meet the needs of its stakeholders (including customers, employees, and the wider
community) in order to ensure its long-term survival. By taking a socially responsible approach, companies can build a
positive reputation, attract and retain customers and employees, and contribute to the betterment of society as a
whole.
Overall, while business ethics and CSR are related concepts, they focus on different aspects of business conduct. Business ethics
provides a framework for ethical decision-making and behaviour within the company, while CSR focuses on the broader social
and environmental responsibilities of the company beyond its immediate business operations.
1. Ethical dilemmas in the workplace: Some common ethical dilemmas in the workplace include cheating on the
company or client, working in an unethical industry, turning a blind eye to unethical acts of co-workers or
managers, and selling products that are harmful to people or the planet.
2. Normative ethics: Normative ethics provides a framework for determining what actions are morally right or
wrong. It helps individuals and companies make ethical decisions by providing a set of moral principles or values
to guide decision-making.
3. Descriptive ethics: Descriptive ethics seeks to understand how people actually behave in ethical situations and
why they behave that way. By understanding the factors that influence ethical behaviour, individuals and
companies can better navigate ethical dilemmas in the workplace.
4. Managing ethics: Managing ethics refers to the ways in which companies seek to manage the behaviour of their
staff to ensure ethical conduct. This includes establishing a code of ethics, providing training on ethical decisionmaking, and creating a culture of ethics within the organization.
Overall, by understanding the key areas of business ethics and being aware of common ethical dilemmas in the workplace,
individuals and companies can make more ethical decisions and create a more responsible and sustainable business
environment
AN ETHICAL FRAMEWORK
➢ Virtue ethics: Virtue ethics focuses on personal character and moral excellence. It emphasizes the development of
virtuous traits such as honesty, compassion, and integrity as a means of guiding ethical behaviour.
➢ Deontological ethics: Deontological ethics focuses on duty and rules. It emphasizes that certain actions are inherently
right or wrong, regardless of their consequences. This approach prioritizes following moral rules and principles, even if
doing so may result in negative outcomes.
➢ Teleological ethics: Teleological ethics focuses on the consequences of actions. It emphasizes the importance of
evaluating the outcomes of different choices and selecting the option that leads to the greatest good or benefit for the
most people.
➢ Individual processes: Individual processes refer to the psychological and social factors that influence ethical decisionmaking at the individual level. This includes factors such as moral reasoning, cognitive biases, and social influence.
➢ Institutional structure: Institutional structure refers to the organizational policies, procedures, and practices that shape
ethical behaviour within a company. This includes factors such as the company’s code of ethics, training programs, and
incentives for ethical conduct.
➢ Policy: Policy refers to the rules, regulations, and laws that guide ethical behaviour within society. This includes legal
frameworks related to issues such as human rights, environmental protection, and consumer protection.
Overall, an ethical framework provides a systematic approach to ethical decision-making and behaviour. By considering different
ethical perspectives, individual and institutional factors, and broader policy considerations, individuals and companies can make
more informed and responsible ethical choices.
TELEOLOGICAL ETHICS
➢ Consequence-based evaluation: Teleological ethics evaluate actions based on their consequences, rather than on the
intentions or character of the person performing the action. This means that an action is good or bad based on the
results it produces.
➢ Well-being as the goal: Teleological ethics holds that the goal of ethical behaviour is to increase the overall well-being
of people. This means that an action is good if it produces more pleasure than pain.
➢ Cost-benefit analysis: Teleological ethics suggests that a cost-benefit analysis can be used to calculate the
consequences of a particular action. This means that the potential costs and benefits of an action can be weighed
against each other to determine whether it is ethical.
➢ Profit maximization: In business, pleasure is often equated with profit maximization. This means that an action that
produces more profit than loss can be seen as ethical, even if it causes harm to some individuals or groups.
Overall, teleological ethics provide a consequentialist approach to ethical decision-making, focusing on the outcomes of actions
and their impact on overall well-being. While it can be useful in assessing the costs and benefits of a particular action, it can also
lead to ethical dilemmas when the pursuit of profit conflicts with other ethical values such as fairness, justice, and
environmental responsibility.
DEONTOLOGICAL ETHICS
➢ Duty-based evaluation: Deontological ethics evaluate actions based on whether they are right, fair, and honest,
regardless of their consequences. This means that an action is ethical if it is done for the right reasons and is consistent
with universal moral principles.
➢ Universal rules: Deontological ethics focus on creating universal rules that apply to all individuals, regardless of their
personal beliefs or circumstances. This means that ethical behaviour is based on duty rather than reward, and that
individuals have a responsibility to act in accordance with moral principles, regardless of the consequences.
➢ Justice and rights: Deontological ethics prioritize justice and individual rights. This means that people have the right to
free choice and to act how they want, as long as they do not violate the law or the rights of others.
➢ Ethical dilemmas: Deontological ethics can lead to ethical dilemmas when universal moral principles conflict with
individual circumstances. For example, lying is generally considered unethical, but if lying can save someone’s life, the
right course of action is less clear.
Overall, deontological ethics provide a rule-based approach to ethical decision-making, prioritizing duty, justice, and individual
rights over consequences. While it can provide a clear moral framework, it can also lead to conflicts between universal principles
and individual circumstances, and may not always produce clear guidance on ethical behaviour.
WHISTLEBLOWERS
The provided information highlights the challenges and risks faced by whistleblowers:
➢ Reporting wrongdoing: Whistleblowers report suspected wrongdoing within their organization, often on ethical
grounds. However, this can lead to personal and professional consequences, including being labeled as a traitor within
their organization.
➢ Personal suffering: Whistleblowers often suffer personal and professional consequences, such as job loss, ostracism, or
even physical harm.
➢ Reporting systems: Organizations may not have effective reporting systems in place, making it difficult for employees to
speak out without fear of retaliation.
➢ Pay and bonus schemes: In some cases, whistleblowers may be deterred from speaking out due to pay and bonus
schemes that reward loyalty and compliance over ethical behaviour.
➢ Corporate governance: The lack of effective corporate governance can also contribute to a culture of silence and fear
within organizations.
The role of society in supporting whistleblowers is an important consideration. This can include legal protections for
whistleblowers, public awareness campaigns to highlight the importance of speaking out against wrongdoing, and greater
corporate accountability for unethical behaviour. Overall, creating a culture that supports ethical behaviour and encourages
reporting of wrongdoing can help to protect whistleblowers and promote transparency and accountability within organizations.
VIRTUE ETHICS
- Individual focus: Virtue ethics places an emphasis on the personal qualities of individuals, such as honesty, compassion,
and integrity, and how these qualities can be developed and cultivated over time. - Moral education: Virtue ethics suggests that individuals can be trained or educated to develop virtuous qualities. This
means that managers can be taught to navigate the complex ethical landscape of modern life. - Criticisms: Critics of virtue ethics argue that it can overemphasize the importance of the individual, either by praising
individuals as heroic or blaming them as bad apples for immoral actions. It may also be difficult to define or measure
virtuous qualities, and there may be disagreement over which qualities are most important.
Overall, virtue ethics provides a unique perspective on ethics that emphasizes personal character and moral education. While it
may have some limitations, it can be a useful framework for managers to consider when navigating complex ethical dilemmas.
INDIVIDUAL GROWTH AND ORGANIZATIONAL LEARNING
The information provided highlights the importance of individual growth and organizational learning in ethical development, as
well as the perspective that community values should guide decision-making in business. Some key points to consider include:
➢ Learning and development: The emphasis on learning and development suggests that ethical behaviour is not innate,
but can be developed and improved over time. This requires a commitment to ongoing education and self-reflection.
➢ Community values: The perspective that community values should guide decision-making suggests that ethical
behaviour is not solely an individual responsibility, but is also shaped by the larger social context in which individuals
operate. This means that businesses must consider the impact of their actions on the broader community and align
their values accordingly.
➢ Personal values: The importance of personal values in decision-making highlights the need for individuals to understand
their own values and how they relate to ethical behaviour. By considering their own values, individuals can make more
informed and ethical decisions in their daily lives.
Overall, the ideas of individual growth, organizational learning, and community values are all important components of ethical
development in business. By recognizing the importance of each of these factors, individuals and organizations can work
towards creating a more ethical and socially responsible business environment.
THE CENTRAL PURPOSE OF BUSINESS
The different perspectives on the central purpose of business reflect a range of beliefs about the relationship between business
and society. Here are some key points to consider:
1. Shareholder capitalism: This view holds that the primary purpose of business is to maximize shareholder value.
According to this perspective, businesses should focus primarily on generating profits for shareholders, and should only
consider the interests of other stakeholders (such as employees, customers, and the broader community) to the extent
that doing so serves the goal of maximizing shareholder returns.
2. Stakeholder capitalism: In contrast to shareholder capitalism, stakeholder capitalism holds that businesses have a
responsibility to consider the interests of all stakeholders, including employees, customers, suppliers, and the broader
community, in addition to shareholders. This perspective recognizes that businesses have a social and environmental
impact, and that they must act in a way that is socially responsible and sustainable.
3. Ethical capitalism: Ethical capitalism seeks to combine the benefits of capitalism (such as innovation and economic
growth) with a commitment to ethical principles (such as fairness, justice, and respect for human rights). This
perspective recognizes that businesses have a social responsibility to act in the interests of all stakeholders, and that
ethical considerations should be integrated into all aspects of business decision-making.
4. Ethical within capitalism: This perspective is similar to ethical capitalism, but emphasizes the idea that ethical behaviour
can and should be promoted within the existing capitalist system, rather than through radical structural change. This
perspective focuses on the importance of individual and organizational ethics, and seeks to promote ethical behaviour
through education and training.
5. Against capitalism: Some people argue that the very nature of capitalism is incompatible with ethical behaviour, and
that the pursuit of profit inevitably leads to exploitation, inequality, and environmental degradation. This perspective
calls for a fundamental restructuring of the economic system, and seeks to promote alternative forms of economic
organization that prioritize social and environmental responsibility.
Overall, the different perspectives on the central purpose of business reflect a range of beliefs about the role of business in
society, and the relationship between economic growth, social responsibility, and ethical behaviour. Each of these perspectives
has its own strengths and weaknesses, and the ongoing debate over the purpose of business reflects the ongoing challenge of
balancing economic and social goals in a rapidly changing world.
ORGANISATIONAL DILEMMA
Individual needs vs Collective purpose
The organizational dilemma between individual needs and collective purpose is a common challenge faced by managers and
leaders. Individual needs refer to the personal goals, desires, and motivations of employees, while collective purpose refers to
the shared vision and goals of the organization.
Balancing these two can be difficult, as satisfying individual needs can sometimes conflict with achieving the collective purpose
of the organization. However, neglecting individual needs can also lead to disengagement, dissatisfaction, and turnover.
One approach to addressing this dilemma is through employee engagement, which involves creating a workplace culture where
employees feel valued and connected to the organization’s mission and purpose. This can be achieved by offering opportunities
for professional growth, creating a positive work environment, recognizing employee contributions, and providing work-life
balance.
Another approach is to align individual needs with the collective purpose of the organization, by creating a shared sense of
purpose and values. This involves communicating the organization’s mission and vision clearly, involving employees in decisionmaking, and creating a sense of ownership and responsibility for the success of the organization.
SHAREHOLDER CAPITALISM
Shareholder capitalism is a business model that prioritizes the interests of shareholders above all other stakeholders, including
employees, customers, and the broader society. It is based on the idea that the primary responsibility of a corporation is to
generate profits for its shareholders, and that this in turn benefits society by stimulating economic growth and creating jobs.
One of the main proponents of shareholder capitalism was economist Milton Friedman, who argued that the only social
responsibility of business is to increase profits within the boundaries of the law. Friedman believed that market competition and
the pursuit of profit would naturally lead to efficient and effective use of resources, which would benefit society as a whole.
Another influential figure in the development of shareholder capitalism was Adam Smith, who argued that the market is guided
by an “invisible hand” that promotes the greatest good for all. According to Smith, individuals acting in their own self-interest
would naturally lead to a more efficient and prosperous society.
Critics of shareholder capitalism argue that it can lead to short-term thinking and neglect of long-term societal and
environmental impacts, as well as exploitation of workers and communities. To address these concerns, some companies have
adopted a stakeholder capitalism model, which considers the interests of all stakeholders, not just shareholders, in decisionmaking. This approach can involve initiatives such as corporate social responsibility programs, ethical sourcing, and sustainable
practices.
STAKEHOLDER CAPITALISM
Stakeholder capitalism takes into consideration the interests of all stakeholders involved in the business, not just the
shareholders. This approach recognizes that businesses have a responsibility to create value for all stakeholders and not just
maximize shareholder profits. This includes employees, customers, suppliers, local communities, government, and other
pressure groups. The idea is to achieve a balance between the interests of all stakeholders while still generating profits for the
shareholders.
OTHERS
- Ethical capitalism argues ethics needs to be at the heart of business
- Ethical within capitalism argues: Organisations’ main purpose should be not to make money but to do social good
- Ethical against capitalism: It is the economic system itself that is destructive and needs overturning
