Business Ethics

What did Milton Friedman say about business?

as long as a business stays within the law it has a responsibility to create as much profit as possible

What is Corporate Social Responsibility (CSR)?

• Responsibility of business to people and environment

• acceptance of impact had on variety of people/issues

European Commission: ‘companies integrate social and environmental concerns in their business operations…’

What are the strengths of CSR?

• attracts more motivated workforce

• gives consumer greater choice of products

• environmental issues are a factor in business practice

What are the weaknesses of CSR?

• seen as ‘window-dressing’ - making a business look ethical

• hypocritical - a company might try and be ethical for the wrong reasons

• intentions of CSR all aesthetic, not genuine

CSR and its application to stakeholders

• stakeholder = anyone with an interest in a business

• CSR is a responsibility of a business towards them

• primary purpose of a business - make as much profit as possible

• also has a responsibility towards best interest of stakeholders

What is whistleblowing?

• employee disclosing wrongdoing to public via media

• reporting systematic failure and wrongdoing

• legal responsibility

• protected under 1998 Public Interest Disclosure Act

Is whistleblowing ethical?

YES

• stops unethical/illegal practices

• holds people to account

• keeps workplace safe

NO

• sows distrust - lose friends

• what if it is ignored/covered up?

What is globalisation?

• economies, industries, markets, cultures integrated

• the world is becoming more interconnected

What are three key features of globalisation and the effects they may have on stakeholders?

1. Moving factories to lower-wage countries (e.g. BT India)

   • Stakeholders pay less

   • Poor factory wages, emissions bad for environment

2. Sharing of information about products/employees

   • Transparency within country

   • breakdown of trust/relationships

3. Use of internet to buy/sell goods from all over world

   • quick delivery

   • access to product reviews

   • damaging environmental costs

   • scamming/fraud

How does John Lewis’ business model promote CSR to employees?

• partnership in company, annual bonus

• incentivises hard work and commitment

• engages employees, leading to increased productivity

How did pressure from consumers cause changes in Nike’s ethical practices?

• employing and exploiting children

• strict regulations

• compliance with business laws and ethical standards

• minimum standards for safe working conditions

• performs well in climate category - 100/100

Terry Bryan and Winterbourne view hospital (2011)

• saw other nurses ‘slap extremely vulnerable residents’

• reported abuse to management, nothing done

• Panorama doc resulted in 11 prosecutions

Does Good Ethics = Good Business?

• BBC expose of Amazon - workers on night shift could walk up to 11 miles

• Nestle in 1970s - exposed for promoting bottled baby milk to poor communities

• Estee Lauder, Nars, Mac - animal testing

General strengths of applying Kant to business ethics

• Consistent - principle of universal law requires consistency in moral decision-making

• Ends not a means - important in ensuring that customers/employees not treated as just number/data

• Importance of motives - ensures social responsibility is genuine, not just a marketing ploy to attract customers

General weaknesses of applying Kant to business ethics

• Too abstract/purist - isn’t practical for global companies. Local wage levels?

• Conflicting duties - numerous stakeholders that businesses have a duty to

  ‘one firm’s whisteblower is another’s disloyal rat’

• Principle of Universal Law - each situation is unique, universal actions are not helpful

General strengths of applying Util to business ethics

• Results-driven - focus on achieving best outcome (profit)

• Flexibility - act util/weak rule util flexible in different situations

• Hedonistic - humans motivated by pain and pleasure; concept used in advertising

General weaknesses of applying Util to business ethics

• Injustice - no concept of rights, does not value justice. Bentham (of human rights): ‘nonsense on stilts’

• Time consuming - in fast-paced business world (Hedonic Calculus - Act Util)

• Objectivity - not clear that objectivity and impartiality util is possible

Applying Kant to ‘CSR and Employees’

• Cat 2 (‘ends not a means’)

• employees treated with respect and dignity as rational, autonomous decision-makers

• as much worth as other human beings

• duty of company to ensure fair wages

Applying Util to ‘CSR and Employees’

• principle of Utility implies unethical business practice is acceptable

• Mill looks at quality of pleasure involved and determines: quality of pleasure a consumer gains from a cheaper product compared to making it is outweighed

Applying Kant to ‘CSR and Environment’

• no intrinsic worth in environment

• duty of care to humans to look after environment

• modern Kantians stress importance of looking after environment

‘destroying habitats…dehumanises this rational dignity of human beings’ (Coffey and Brown)

Applying Util to ‘CSR and Environment’

• PofU encourages environmental responsibility

• Rule/preference util emphasise animal rights, would not allow testing on animals

• Act looks after environment for instrumental reasons

Applying Kant to ‘Good ethics is good business’

• duty is costly, but better than breaking rules

• maintain honesty even if a competitor does not

• use our reason - treat people as an ends/rational autonomous decision makers

Applying Util to ‘Good ethics is good business’

• If greatest good = profit max then practice is acceptable

• utility can be measured (esp in business)

Moving all employees to 0-hour contracts to cut costs

• ACT - agree that it serves PofU

• RULE - disagree; pleasure vs pain caused

Applying Kant to Whistleblowing

• Cat 1 emphasises loyalty, promise-keeping

• employee has loyalty to employer AND consumer

• support whistleblowing to disclose corruption/ wrongdoing

Applying Util to Whistleblowing

• utilitarians have to abide by PofU

• if whistleblowing is greatest good then they should do it

• consequences considered to be most important factor