Business ethics

what is ethical consumerism?

the deliberate choice to purchase certain goods or services rather than others based upon moral beliefs and values

what is Fair-trade?

A movement which seeks fair treatment for developing world workers and producers in the supply chain. it seeks fair prices, living wages, safe conditions and rights for workers, together with greater transparency and justice in trade.

what does the Co-op 2012 report say about the ethical consumer market?

has risen from £13.5 billion in 1999 to £47.2 billion in 2012

give another statistic proven by the 2012 Co-op report?

50% of consumers would avoid a product based on its ethical reputation of the firm

what are the implications of the ethical consumer market?

as customers are stakeholders, companies that are interested in long term growth and survival need to treat their customers well and provide quality goods and services.

give another way in which consumer power can be seen in business ethics?

through shareholder advocacy at annual general meetings of corporations, which put pressure on boards to adopt ‘corporate social responsibility’ and act as corporate citizens engaging in philanthropic and green agendas

what is globalization?

the interconnectedness of global finance, markets, institutions, business, technology, culture, politics, law and environment.

how may globalisation be negative for business ethics?

it can constrict choice as smaller competitors are put out of business and consumer tastes are moulded.

give examples of rights that employers are legally obligated to uphold?

right to healthy and safe working environment,

to belong to a union,

to have holidays and time off a minimum wage,

maternity and paternity leave

. Additionally, they should not discriminate against age, race, religions, gender or sexual orientation.

what are stakeholders?

parties such as customers, local communities, government suppliers, employees, civil society and shareholders who are affected by business practice and therefore have an interest or stake in it, making it more democratic and accountable

what are externalities?

the consequences (neg or pos) of commercial and industrial activity for other parties (e.g. where true costs of production are dodged by the producer)

how do Business’s seek to maximise profit?

by externalising the wider social costs of their goods and services. for example Mcdonalds- voluntarily offsets 2.66 billion pounds of CO2 created in the making of 550 million Big Macs sold in the United States every year

what is corporate social responsibility?

in this concept, business is seen as having an obligation to society that extends beyond the duty to its owners or shareholders, and beyond its legal and economic imperatives.

It ought to protect society and minimise negative impacts that may arise from its operations (pollution_ indeed it should seek to improve the welfare of society.

Businesses need to be economically viable and efficient in a competitive marketplace.

But also they have discretion to act for the public benefit (through their wealth creation)

what are the four key elements of CSR?

legal

economic

ethical

philanthropic

explain the legal aspect of CSR

keeping within the law by avoiding fraud, corruption, and health and safety breaches

explain the economic aspect of CSR?

Behaving responsibly economically by paying fair wages and producing services or products that adhere to regulatory standards.

In an anti-competitive manner, some companies have informally set prices between them, agreeing to avoid competition to inflate their profits.

other giants like Microsoft have abused their monopolistic position to disadvantage competitors

what are the terms of the ethical and philanthropic aspects of CSR?

go beyond regulatory requirements and reflect a sense that businesses are corporate citizens of society with a moral obligation to ensure public benefit. Society expects businesses to act ethically and desires that they act philanthropically.

explain the ethical element of CSR?

given that the turnover of multinationals can exceed the GDP of many nation states, they are powerful players with huge resources and influence.

they are expected to reduce their greenhouse gas emissions and to audit properly developing world factories to which they have outsourced production.

where child labour and workplace safety standards can be flouted in other countries, companies are not expected to keep their relationships with unethical supply chains at arms length in order to deny abroad or of executive abuses of the expense account.

may not be criminal but when investigating journalists or activists uncover it, public distrust and brand damage result.

explain the philanthropic element of CSR?

philanthropic- philanthropy may be translated from the Greek as “love of your fellow human’.

Examples can be seen in a business’ charitable contributions, its sponsorship of the arts or sport, or improvements it delivers for the lives of its employees or local communities .

this element of CSR is sometimes seen as less important, and even as in conflict with others.

in a ruthlessly competitive market, a company may put jobs at risk and lose investors their money if it is too generous for its own good. what anti-capitalists may see as ‘greed for profit’ could be prudent judgment about a business economic survival.

what is Whistle Blowing?

a practice in which employees who know their company to be engaged in activities that are illegal, to violate human rights, or to cause unnecessary harm inform the public or a government body. As long as they are acting in good faith and in the public interest, they are protected in law against retaliation.

Whistle blowing case study

Edward Snowden – worked for the NSA in America and told the media that they were illegally spying on innocent American citizens.

when was whistle blowing established?

in UK legislation iin 1988 Public Interest Disclosure at Work act.

they should not be treated unfairly for doing so, or lose their job.

this even applies to gagging clauses or confidentiality settlement agreements made at the end of someones employment, as they are invalid in certain instances

when may a gagging clause or confidentiality settlement agreement be invalid?

incidents such as:

a criminal offence

the breach of a legal obligation

a miscarriage of justice

a danger to the health and safety to any individual

damage to the environment

deliberate attempt to conceal any of the above

what is the requirement that was set out in 2013?

employees be allowed to report wrongdoings of the kind mentioned above if they reasonably believe their disclosure to be in the public interest.

this was to insure against employees who didnt act in the spirit of the law by disclosing information that was purely private and not deemed to be in the public interest.

they must act in good faith, and not for personal interest, or risk losing compensation or employment protection.

how can retaliation against whistle blowers occur?

subtly- being moved out of a role where malpractice is going on, and sidelined into another role in the company which is effectively a demotion, cutting of hours, pay or future job prospects.

what is the Sarbanes- Oxle Corporate Reform Act?

US act, which for the first time, gave legal protections to whistle-blowers.

give reasons against whistle blowing?

being perceived as disloyal

risk job or shares in company

fear of retaliation or alienation from peers

being overlooked from promotions

belief that senior management will dislike those who wont turn a blind eye to unethical company conduct

give reasons for whistle blowing?

legal protection against retaliation by employer

acting in good faith in the public interest is the right thing to do- it is ones duty

other whistle blowers are seen heroically or justified

the CEO and senior management are committed to a transparent culture and an honest open-door policy on unethical conduct being reported.

What do utilitarians think about sweatshops?

• Will MacAskill points that that people who work in sweatshops are technically better off as they would likely starve without it. So technically happiness is being increased.

• Most people want to counter that we should just demand that the sweatshops treat its employees better.

• However, if we force a business to lose profit to do that, it would also lose its incentive to open a factory in the developing country in the first place. 

• So it looks like the benefit gained by sweatshops is inseparable from its exploitation. 

Give an example of utilitarian beliefs on sweatshops being carried out

• Primark example clothes were being made by exploited workers in a sweatshop. When the public became away, Primary simply cut ties with the sweatshop. This meant those workers lost their jobs, leaving them worse off.

what is Stakeholder theory rooted in?

Kantian ethics- it gives consideration to employees, local communities and so on, not merely as a means, but an end in themselves.

what do kantian ethics say about the environment?

1. Act only according to that maxim by which you can at the same time will that it should become a universal moral law

kantian ethics warns us against an unsustainable view of the environment as an infinite resource. as fossil fuels, rainforests and ecosystems are finite, this establishes duties of care that we owe to them

his second forumation of the categorial imperative would rule out exploitation of the environment and animals for short-term profits. we ought to revere nature as possessing an intrinsic good of its own- independent of human interests.

what does Kantian ethics say about companies responsibilities towards employee?

they cannot deny responsibility for the poor pay and conditions of workers by outsourcing production to suppliers in developing countries and not disclosing their suppliers.

if profits are produced through the exploitation of the powerless and the poor, this goes against his second formulation of the categorial imperative in treating others as a means to an end.

this is especially the case with child labour, where both exploitation and the denial of education are involved.

if a business sells substandard goods or services that it charges a high price for, it again uses the customer as a means to an end

what does Kantian ethics say about tax avoidance?

3. Act as if you were, through you maxims, a law- making member of the kingdom of ends.

   morality is rooted in the universal and therefore to avoid tax by registering a company in a tax haven is to take from the common wealth and not pay ones fair share of costs. they need educated and healthy workers yet they are contradicting themselves by not paying their taxes

criticisms of Kantian ethics?

1. to abstract and purist for globalised industrialised world in which managers have to handle concrete problems according to the values of the firm

2. it is imperialist to think that moral norms are to be universalised- not considerate of other cultures and societies and norms and values are often relative to local cultures.

3. businesses need to make a profit to survive- commercial logic is full of the ‘if then’ hypothetical imperatives and lives or dies by how effectively it takes consequences into account. utilitarianism is more pragmatic.

4. Kantian ethics is action based. whereas more recently there has been a revival of character based virtue in business- kantian ethics focuses too much on doing and not being

5. kantian ethics is too depersonalised, neglects the more vulnerable and puts the human factor out of focus.

6. kants seems to think that duties will never conflict.

What does Utilitarian thought say about the enivronment?

the focus of the greatest good of the greatest number also encourages global responsibility.

addtionally Bentham focuses ethical considerations to non-human animals; the question is not can they reason… can they suffer?

rule utilitarians may even advocate for animal welfare needing to be expressed in legislation.

what would Mill do when considering ethical business issues?

balance the liberties of individuals or companies against the harm principle. Law ought to intervene or regulate when significant harm is done to others and environmental law and policy on carbon emissions reflects this.

Give a weakness of utilitarianism in regards to business ethics exlpotation

• More generally, it’s hard to calculate how dangerous it is to allow businesses the right to exploit people. If we allow a business to ignore people’s rights, and businesses gain even more power over our laws, then the exploitative practice could spread. 

• Noam Chomsky made this argument, that we must not give businesses too much power, otherwise they will trample our rights at the first opportunity.

• Allowing exploitation is a dangerous game. It’s difficult to calculate the long-term effects – including whether it could really be limited to those cases where it maximises happiness. It’s a slippery slope. Give businesses an inch of exploitation and they will take a mile. 

what are the weaknesses of utilitarianism in business ethics?

utilitarians may neglect the interests of the future people. generations yet to be born inherit the planet with acid rain and so forth if business is not reminded of its duty to future generations

how do you weigh costs and benefits. can the end justify the means in using an unethical supplier to keep a company afloat by lowering costs in order to save jobs? what if the suffering of the workers in a developing country is outweighed by the interests of thousands of pensioners dependent of pension funds?

the problem of injustice- if all that counts is the sum total happiness or the maximisation of preferences, and there are no objective rights and wrongs of duties, then why not exploit the cheap labour of a relatively small number of factory workers to provide a high standard of living to a greater number of people

with ‘tone at the top’ recognising the importance of values and characters of business leaders ‘act’ rather than ‘agent’ based ethics overlook the dynamic of power in business institutions. an institutional culture and character may mould young grads in its image and shape their moral outlook and judgment. neglectful of virtues, Utilitarianism makes business ethics seem a simple matter of calculation consequences. vision and virtue go together- an unjust employer may not see the health and safety of employee as a priority, may show no empathy for exploited developing world workers, and care nothing for the size of their companies carbon foot print as long as production costs are low and profits are high.

explain the ford pinto case?

during crash tests which proceeded sales of the Pinto to the public, a serious design flaw was discovered. the gas tank was so designed that when it was involved in a rear end collision at an impact speed of 20 MPH or greater, the tank was likely to rupture, causing a fire and explosion

suggested changes to the car would be about 11 dollars per car. a confidential company memo directed that the safety feature not be adopted until required by law

they knew about the problems but manufactured and sold anyways even thought thye owned the patent for a much safer gas tank in order to maximise profits

what are the seven principles for good business using NL?

1. Human dignity- each person can never be merely an instrument valued just for there usefulness

2. the common good- the set of social conditions which allow people more easily to develop individually and communally

3. solidarity - we are all dependent on each other, means we must be in touch with communities and strive for common good

4. subsidiarity- is not only good business practice it is good for the people concerned efficiency

5. fraternity-fellowship towards those of different culture, building relationships

6. reciprocity- giving to everyone what is due and being willing to do more than strict justice requires

7. sustainability- duties to future generations, care for resources and the environment