Business Ethics

The purpose of business ethics: The three ethical arguments
1. 1. To maximise profits for owners and shareholders
  1. This argument argues that only those activities which increase profit are to be encouraged, as this is the only way that companies will strive. This view is held by the economist Milton Friedman
2. 2. To have moral responsibilities towards stockholders including employees, consumers, the local community and society as a whole.
3. 3. Adapted Social Contract Theory-based on the ideas of John Rawls in his 'A theory of Justice'
  1. This argument considers that employees and other stakeholders should be given a voice as to how the business operates. It is criticised as businesses are property, not a means of distributing social justice.
Key Ideas in Business Ethics
1. Milton Friedman "the question is, do corporate executives, provided they stay within the law, have responsibility in their business activities other than to make as much money for their stockholders as possible? My answer to that is no, they do not"
2. Robert C Solomon "Good employees are good people, and to pretend that the virtues of business stand isolated from the virtues of the rest of our lives.. is to set up that familiar tragedy in which a pressured employee violates his or her personal values because, from a purely business point of view, they 'didn't really have any choice'
3. Immoral Business: the world of business is always changing and developing, but there is nothing new in the awareness of ethical issues in the world of business.
4. Elements of business ethics: more than just cheating, need to think about stockholders/shareholders/stakeholders, development from unchecked industrial revolution
Improvements over 200 years
1. trade unions
2. parliamentary action
3. improvements in Child Labour and working conditions
4. 1970- 1975 Equal Pay Act
5. 1971- Protection against unfair dismissal (eg. for race, gender, pregnancy, marriage, appearance)
6. Landmark of the Great Dock Strike, 1989- intervention from church and parliament of morality of employment
Corporate Social Responsibility
1. the belief that an organisation has ethical responsibilities both in its own conduct and to the wider community of stakeholders
2. range of stakeholders- anyone who is affected. Employees, families, communities, environment, community
3. conflicts with Friedman's idea
4. although most businesses try to always 'do the right thing', most have a max of philanthropic projects alongside hard business decisions that damage some stakeholders
5. CASE STUDY: Apple. Under Steve Jobs it was a fantastic business but with ethical issues and less corporate social responsibility. Critics questioned the health and safety conditions of the Foxconn factory in the town of Longhua, Shenzhen, China which had 200,00 workers. Tim Cook has received acknowledgment for progress in the business after 18 attempted suicides in 2010 and workers being paid 1.12 an hour. Aplle has incresed its audits of labour practices and offered a greater level of transparency than in the Jobs era. IN 2012 Apple published a list of all 156 supplies in its supply chain for the first time.
6. Cardinal Vincent Nichols, Archbishop of Westminister, drew on natural law and the tradition of Catholic social teaching to commend seven principles for good business. (here I have included the simplest ones)
  1. Human Dignity: This notion is part of the idea that we are all made in the image of God, but in secular terms it emphasises, as the Cardinal said, that 'each person can never be merely an instrument valued just for their usefulness'. William Temple had also insisted in his work that good is always personal. Things are done for the sake of the persons,
  2. The common good: Nichols defines this as 'the set of social conditions which allow people more easily to develop, individually and communally'. Like Temple, he examines the challenges of moving beyond profit as an end to the actual good of persons (for which profit may be an invaluable means).
  3. Solidarity: This was a major concern of Pope St John Paull ll. It is the expression of Donne's idea that 'no man is an island'. We are all in this world, dependent on each other; for Nichols, it 'means being in touch with the needs of communities, striving for the common good particularly by looking for ways of helping underprivileged communities'
  4. Sustainability: This stresses our duties to future generations, care for resources and the environment.
7. Kant's ethics focused on the need to treat people as ends and not just means for some other purpose because they are beings of dignity- autonomous and rationale. They have worth not because of what they own but because of what they are.
8. Utilitarian ethics focuses on the consequences for the greatest goo. The greatest good could be interested in terms of the greatest profit. This might lead to a ruthless attempt a maximise income at all costs.
Whistleblowing
1. Whistleblowing occurs when a member of an organisation reports misconduct by a superior or co-worker.
2. For
  1. When we join a company we do not lose our wider loyalties or our moral values.
  2. Utilitarians would argue that the employee must report misconduct that could cause potential harm because it is serving the greater good.
    1. Utilitarianism is the moral doctrine that one should always seek the greatest balance of good over evil. If the employee were to be loyal to the emplyer or co-worker, the cover up could lead to greater harm for those who are supposed to be protected.
    2. Utilitarianism is a teleological theory which means it judges the goodness of an action by its outcome
    3. Bentham's brand of utilitarianism, Act utilitarianism, judges every situation individually. In every case Bentham considered would action would bring out the greatest good.
    4. Bentham's principle of utility would argue that the employee must report the misconduct because you must 'seek always the greatest balance of good over evil'.
    5. This ethical theory can be helpful because its flexible t individual circumstances.
    6. However, the problem with act utilitarianism is that it needs to suplemented by the theory of what good is'. For one person the greatest good could in fat be being honest and true to your employer.
    7. How would Bentham's Hedonic Calculus benefit this decision making process?
    8. Rule Utilitarianism
      1. John Stuart Mill developed Bentham's brand of utilitarianism, and made the jump to justify 'the greatest number'.
      2. Mill developed 'Rule utilitarianism' to make this ethical theory practical to use when creating rules for society.
      3. In some cases, using rule utilitarianism can mean that individual pleasure is sacrificed for the greater good of a wider community. In the case of whistleblowing, rule utilitarianists would decide that although reporting misconduct may make the employee uncomfortable, it must be done to ensure the greatest good is given to the greatest number in society
      4. For Mill, it was necessary to tell the truth, in this case reporting illegal or dangerous activity, because that leads to the greatest happiness of the greatest number.
      5. Rule utilitarianism can be helpful when deciding whether whisteblowing is the correct action to take because it as in ethical theory based on common sense, and is accessible to everyone.
      6. However, Mills rule of liberty could argue that the company or co-worker should be free to act as they please, which would not produce the greatest happines
3. Against
  1. People do not like to seem disloyal. 'Loyalty matters for building trust and good relationships that are the social glue of functioning organisations- part of Aristotle's civic friendship'
  2. Knowing what to do, and having the courage to do so are two different things.
  3. In organisational structures like the military, the entire culture as the code of conduct in which superiors are never questioned.
  4. Kantian Ethics would argue that we must do our duty, and this includes loyalty to your employer and co-workers.
  5. For many employees, whisteblowing can be seen as 'snitching' and being dishonest, consequently ruining relationships in the work place.
  6. Kant believed that duty was different to being kind. For example, the kind thing to do in the case of whistleblowing would be to report the misconduct to protect others.
    1. However, our duty is to be loyal to the company and whistleblowing would question our loyalties.
    2. Kant's first formulation of the categorical imperative would argue that if everyone reported misconduct in companies, there would be mass breakdown in the relationship between employers and employees.
    3. However, it could be argued that our duty includes wider loyalties to our own values, and the public
4. The employee must make the decision between their morals and their loyalty to the company,
5. In most cases, whisteblowing is not a personal complaint against the employer, it is reporting something that affects, or threatens the wider public.
Globalisation
1. trading has taken place throughout history
2. one of the most significant inventions of the middle ages was the invention of the double entry bookkeeping- Muslim civilisations from about 624 AD
  1. deposit money in a bank in one country and draw against that deposit at a branch in another country
3. fast food restaurants eg. Mcdonalds
4. power of governments is more constrained than business
5. companies exploit labourers in LEDCS as they create the most profit
6. the value of global trade has increased 'astronomically' in the last 60 years. Between 1958 and 1998 it was believed to have increased by a factor of over 80. There is a big money to be made if you are a transnational corporation as they seem to control approximately 2/3 of all global products and the international trade that sells them (Phillippe Hugon)
7. it is now easier to run a business and source raw materials in foreign countries where trade is cheaper and so are labourers
8. 'integration of national economies into the international economy through trade, foreign direct, investment, capital flows, migration, and spread of technology' definition of globalisation by Jagdish Bhagwati
9. Worldwide Investment
  1. Major disaster in one country = stock markets of all the world suffer eg. Wall Street Crash
  2. Electronic investment means that investors/companies can trade instantly all over the world. Big banks and companies become global- known worldwide
  3. fortunes of big global companies affect whole economies- investment but also use of local suppliers and labour
10. The Global Issue
  1. accusations are made that multi-national companies are guilty of exploiting conditions in the nation they are subject to the regulations of eg- workers safety
  2. also may treat suppliers in developing countries unfavourably to get goods at minimal prices
  3. another issue in globalisation is the cultural effect on indigenous people as they are affected by business whose values are different from their own- eg deforestation of the amazon rainforest
  4. however- communications raises awareness of such issues

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	Created by daisy jones almost 7 years ago