Business Ethics

  • Created by: Chantal
  • Created on: 27-03-14 09:12

What is it?

  • Considers the relationship between businesses and consumers, between businesses and their employees
  • Considers the impact of globalisation on the environment and society  as a whole
  • Purpose of business is discussed:
    • Milton Friedman= maximise profits for shareholders
    • John Rawls= businesses have moral responsibilities to shareholders (employees, consumers, community) employees and stake holders given a voice
  • Business and corporate responsibility are becoming more crucial driven by social, political and economic developments in the world
  • Body shop and cooperative= championing key issues (human and animal rights, fair trade and environment impact)
  • No one agreed moral code and multination’s operate in different parts of the world employing and serving people from different countries
  • Moral technologies create ethical dilemmas
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Business and Consumers

  • Consumer rights:
  • Originally= quality, safety, price and consumer service
  • Now=  consumers expect more, treatment of employees, the community etc
  • Some companies have been the focus of consumer criticism forced to change:
  • Eg Nike's child labour now monitors its factories (BBC panorama programme)
  • The Body Shop:
  • One of the first ethical businesses
  • Pioneered by Anna Roddick
  • Mid 1980’s, following a change in consumer awareness in how beauty products were tested, began to look at alternate methods
  • If enough consumers boycott it could be dangerous eg Huntingdon Life Sciences caused the animal liberation group to set up SHAC starting an international campaign to close the company down by threatening employees and banks causing the company to nearly go bust forcing the company to change tactics
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Employers and Employees

  • Working together
  • 1978= Advisory, conciliation and arbitration service (ACAS) set up to create good and harmonious working relationships by negotiating disputes and setting guidelines
  • Balance of interests
  • Internet allows for rapid spread of information- whistle blowing
  • Whistle blowing:
    • ‘***********’ (code name of informant in 1972 Watergate scandal
    • Risk their lives to tell the trut
    • More acceptabl
    • Ethical?- confidentiality and loyalt
    • ‘Freedom to care’ offers protection and promotes our ‘right to accountable behaviour from large organisations’ and encourage that employees have an ‘ethical right to express serious public concerns’ in the work place
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  • Businesses are very protective of information, paying a large amount of money to keep electronic information secure
  •  Workers may have to sign complex confidentiality agreements
  • Some companies pay a large amount of money to spy on their competitors
  • They may head hunt managers from competitors, paying them inflated salaries in the hope that they would bring information, as well as experience, with them
  • It is not uncommon for phones to be tapped, emails to be hacked, offices bugged
  • If staff in a company go across the road for lunch, spies may sit and listen to their conversations
  • There is even a practice of 'dumpster diving', which is often completely legal
  • Once you throw something out, it's in the public domain, so a competitor can pay someone to sift through your rubbish to get clues as to what you are developing and how it's going
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Business and Environment

  • Environmental responsibility is crucial as it not only helps the environment but also wins the trust of communities and gains respect of the government
  • Pressure present from consumers as well as international groups eg WWF
  • Min standards how businesses treat the environment (UN and UK law)
  • Businesses impact on environment:
    • Emit pollution
    • Wast
  • Encouraged to improve approach to environment eg business commitment to the environment award and to have an environment policy
  • Supermarkets:
    • Importance of ‘green credentials’ has become increasingly popular
    • Plastic carrier bag/ packaging
    • Supermarkets are competing as environmental ethical credentials are preferred by consumers
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Business and Environment Examples

  • Co-operative:
    • Winner of award 2007
    • Reduction by 86% of CO2 emission
    • Use of 98% green electricit
  • Velvet-
    • Grow 3 trees for everyone they cut down
  • Anglo American Mining company:
    • 1/20 largest UK based companies heavily involved in mining and quarrying (activities which have immediate impact on the environment
    • When carrying out mining operations it tries to have positive effects:
      • In the area it carries out its operations with care and tries to improve lives of local people eg minimising noise/ pollutio
      • Area surrounding the mine it’s active in conservation and improvemen
      • Wider region around the mine it contributes financially to local communities
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  • A business which engages in environmental responsibility wins the trust of communities and governments
  • In 2007, a prestigious award, Business Commitment to the Environment Award, was won by the Co-Operative bank for its response to global climate change
  • Organisations such as WWF, UK law and UN Global Compact provide minimum standards for how environment should be treated and green credentials are becoming more important for supermarkets
  • The Anglo-American Mining Company (one of 20 of largest UK businesses), tries to have positive effect on the environment by minimising noise and other pollution, playing an active role in conservation and contributing financially to local communities
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  • The reduction of the difference between one economy and another, so trade all over the world, both within and between different countries becomes increasingly similar
  • Reasons for increase in the pace of globalisation:
    • Technological advancement (communication technologies
    • Transport is faster and cheape
    • Deregulation (increase in privatisation- countries now able to own businesses in other countries)
    • Free trade (many barriers removed especially countries in EU
    • Consumers taste have changed so more willing to try foreign product
    • Emerging markets in developing countrie
  • Businesses are now free to choose where they work from and can move to countries where labour is cheaper Eg manufacturers have moved to countries such as Indonesia and call centres to India
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Problems with Globilisation

  • Injustice towards poorer countries:
    • Richest countries eg USA have strong trade barriers to protect national interest
    • Eg Bhopal- chemical countries concerned continued to deny responsibility for a long time, some survivors still await compensation and toxic waste still pollutes the environment
    • Poor working conditions eg child labou
  • Anti-globalisation movements:
    • Amnesty International campaigns for a global human rights framework for business based on the UN Norms for busines
    • WCC campaigns for responsible lending and unconditional debt cancellation
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Problems for Ethics and Businesses

  • Increase costs for business eg most expensive suppliers/ good wages
  • Businesses are products of the society in which they operate and if society does not have clear standards eg some people are ok with animal testing others not
  • Ethics do not help achieve businesses aims of profit, provide jobs and create wealth in society
  • In order to be ethical a business may have to change its whole practice
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Christian Ethics Approach

  • Old testament-
    • Contains laws and injunctions about the fair treatment of employees
      • Letvicus= justice honesty and fairnes
      • Deuteronomy= fair payment
  • New testament-             
    • Golden rule= treat others as you wish to be treate
    • Jesus was concerned with not amassing wealth for the sake of it and sharing with those in need- Jesus cleansing the temple ('MY HOUSE SHALL BE CALLED A HOUSE OF PRAYER'; but you are making it a ROBBERS' DEN."
  • Christian churches have increasingly (as organisations and individuals) monitored and corrected the harm done by the businesses they are share holders
  • In the eighteenth century the Quakers refused to invest in companies that were involved in slave trade
  • Church still refuses to invest in lending/money companies (eg wonga scandal)
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Utilitarian Approach

  • General good of the organisation is more important than that of individuals
  • Eg an employee, though qualified for a certain position, will have to give way to another for the interest of the business or a farmer may have to give up his land for the benefit of a number of other farmers
  • The best business transactions are the ones in which the best result is achieved when both business and consumer, employer and employee, shareholder and stakeholders are considered and benefited- all options need to be considered
  • Difficult to apply as whatever the business does it is going to upset one group or another:
    • Closing a polluting factory may be good for the environment but not for the local community who may need jobs
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Kantian Approach

  • Morality was very important in all parts of life
  • Categorical imperative: people should only act to things they are willing to see become universal
  • People should never be treated as a means to an end (even if the end is profit):
    • Being honest to gain reputatio
  • Ethics of duty, so your duty to employees and consumers
  • Business is a moral community (employers and employees, stakeholders and shareholders share a moral relationship-business organised democratically)
  • Business laws would have to be universal eg  no bribery or corruption having a beneficial impact (Bowie suggests if business brings people- globalisation- together then the chance of peace between nations improves)
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Natural Law Approach

  • Ordered society- businesses need to be regulated to prevent them mistreating workers
  • Education-against child labour - it prevents a child fulfilling his God-given purpose
  • People who support Natural Law take an absolutist stance on the sanctity of life, and would not work for or invest in businesses that benefitted from experiments on embryos
  • Natural Law provides absolute, deontological secondary precepts against all forms of exploitation and human rights abuse
  • Some companies look to save money and cut corners to increase profits- Money here is an efficient cause for business - it is the thing that fuels the business, or provides the drive to do business.
  • However, Aristotle said that the final cause was more important
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Virtue Ethics Approach

  • According to Aristotle, virtues are defined by the community we live in, and business is part of that community
  • Aristotle talked about two types of business:
    • Oikonomikos or household trading
    • Thought this sort of trading was an essential part of eudaimona society
    • Clearly an individual cannot be an expert in all areas of life, and it would be inefficient to try to make everything one need
  • Chrematisike or trade for profit - Aristotle saw this as 'wholly devoid of virtue':
    • Trade, if done purely for profit, does not involve acquiring any true wealtH
  • Virtue based business - competition valued but not at expense of co-operation, avoids the vices of business espionage
  • For virtue theory, general traits such as trustworthiness and co-operation are important as they make society harmonious
  • These traits should therefore apply to business and might allow competition within the context of co-operation
  • A virtuous business person deals justly with employees
  • A virtue theorist might argue that business is not separate from society, making a profit is just a means to living together.
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