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Business ethics - Coggle Diagram

- - - - Challenging corporate social responsibility
        
        Economist Milton Friedman has challenged the idea of CSR - he argued that whilst individuals in their own time may choose as persons to take on social responsibilities or do charitable things, as employees they must serve the corporation or company, and that company cannot have responsibilities
        
        Friedman argued that it is a mistake to imply that the pursuit of profit is immoral
        
        If the business makes more money than stockholders (those who own the company or own shares), CEOs for example may decide to spend their money benefitting the community, but this is not a responsibility of the corporation - likewise a free market may allow higher wages
        
        Friedman argued if we want business to benefit society then we make them into public employees not private companies
        
        Friedman argued that this involves an acceptance of socialism not capitalism
      - Belief in corporate social responsibilities may be motivated by:
        
        A pragmatic approach that suggests 'good ethics is good business' (Adam Smith)
        
        A Kantian sense of duty
        
        A religious sense of responsibility in how we treat humans and the rest of creation
        
        In the past, companies such as Cadbury have built schools and parks for its workers, as they believed this was their duty towards their workers, it is also keen to ensure its products are Fairtrade
        
        Companies' CSR is measured by the FTSE4Good Index - where companies are given an ESG (environmental, social, governance) rating
  - - - Ethics and whistleblowing
        
        Allowing whistleblowing ensures that companies take their CSR seriously - they know there may be consequences if they behave unethically
        
        Whistleblowing encourages integrity from employees - if employees know consequences will follow, they are less likely to behave dishonestly
        
        However it can be argued there are some situations where loyalty to the company is more important (eg Edward Snowden NSA controversy)
        
        In Kantian ethics, one must carry out one's duty as an employee, however there are occasions when wider duties to society and others may override these
        
        In some professions such as medicine and teaching, there are certain duties that are integral to the profession regardless of what an individual hospital or school may be saying
        
        For utilitarians, whistleblowers have to make calculations about the greater good or harm that may come from choosing to speak out or remain silent
  - - - Kant
        
        Kant would argue that good ethics, doing or duty, is more important than good business
        
        Kant uses the example of a shopkeeper who always charges others fairly because he knows this is good for business
        
        Kant concludes that even this is not sufficient for the action to count as morally good, as the shopkeeper is acting in his own interest - it is only if he charges people fairly out of duty that this becomes a good action
        
        Robert Solomons argued similarly that it is not possible to divide business from the rest of life - he believed too often people's behaviour in their business lives bears no relation to how they act outside of work, and that this should not be the case
        
        Good ethics is good for business because:
        
        For some thinkers it does not really matter whether CSR is genuine or not, the results are the same regardless of the motive - Adam Smith suggests that businesses have a symbiotic relationship with both their customers and their employees, our self-interest will more than likely lead us to treat others well - as business is built on reputations and confidence, an ethical approach will pay off, it does not matter if the motives are questionable
        
        Utilitarians will likely support Smith in this view - the consequences of bad ethical decisions are often very great, a reputation can be ruined in seconds and it can take years for business to recover
        
        Good ethics is not good for business because:
        
        Milton Friedman would reject any link between business and ethics - while agreeing with Smith that there could be occasions when being ethical increases profits, there may be other occasions where being overly ethical could cause losses - here the business should prioritise making money over being ethical
        
        Kant would also challenge the link but for a different reason - Kant would argue that good ethics, doing our duty, is far more important than good business
        
        Kant uses the example of a shopkeeper who always charges fairly because he knows it is good for business, Kant argues that this is not sufficient for the action to count as morally good - it is only if the shopkeeper does the right thing out of duty, and would continue to do so if he lost money, that this becomes a good action - therefore the business should prioritise ethics over making profit
        
        Companies such as Lush and The Body Shop represent companies who promote ethical public images, by advertising their products as vegan and cruelty-free, in order to attract customers who value this
      - Smith is primarily focused on how businesses can make money which he demonstrates in two ideas:
        
        The law of supply and demand - how much a business charges or how much it pays its workers is linked to how many workers are needed or are available
        
        The division of labour makes factory production more efficient - instead of one person doing all stages of the manufacturing process, a 'conveyer belt' type system splits production into more efficient stages
  - - - Ethics and globalisation
        
        Given that different countries have different laws and health and safety requirements, globalisation enables businesses to 'shop around' - companies can exploit this and move business to countries with lower minimum wage or limited workers' rights - eg the Rana Plaza Factory disaster in Bangladesh in 2013
        
        Difficulties can be raised due to different cultural beliefs and attitudes - European businesses have different attitudes to gender equality than Middle Eastern countries, Europeans regard child labour as completely unethical, whereas some Asian countries may take a very different view
        
        A utilitarian may point to the benefits of globalisation as millions of people have been lifted out of poverty in countries such as China as a result of global trade - however there is evidence that the gap between the rich and poor is increasing, a utilitarian may also not have a clear notion of rights and see the greater good of globalisation as worth the price of some individual suffering
        
        A Kantian may be concerned that globalisation may increase the exploitation of persons in developing countries where TNCs dictate the terms of business - this may be seen almost as neo-colonialism, which may lead to a loss of identity in developing countries - likewise in developed countries, jobs may be lost as things can be made more cheaply elsewhere
        
        Another issue of globalisation is the environment - there are concerns that TNCs damage the environment by working in countries where environmental laws are more relaxed - countries may have to choose between enforcing environmental rules and losing business
        
        Globalisation discourages ethical action because:
        
        Globalisation has been described as producing a 'race to the bottom' in terms of wages, workers' rights and environmental standards - corporations are keen to cut costs and consumers are keen to have goods as cheaply as possible - globalisation makes this possible by exploiting people and their environments
        
        In many countries the gap between rich and poor is growing - while globalisation benefits some people, many of the poorest in society have become even more badly off
        
        A Kantian may have real concerns about the effects of globalisation on people - a TNC is in effect treating those in the developing world as a means to an end, and in closing factories in the USA or Europe is treating these workers as a means to an end as well
        
        The rise of globalisation appears to have led to neo-colonialism, where the standards and values of the developed Western world are gradually imposed and produce tensions with indigenous cultures
        
        Globalisation encourages ethical action because:
        
        'Globalisation has reduced the number of extreme poor in India by 200 million and in China by 300 million since 1990' (Jeffrey Sachs, The End of Poverty) - a utilitarian may point to the benefits of globalisation as millions of people in developing countries have been lifted out of poverty
        
        The technological advances in communication, particularly around the internet and social media, mean that it is harder for companies to hide unethical practices - whistleblowers have instantaneous internet access and TV news can inform millions about what is happening - although Kant may argue this shouldn't be a company's motive in acting morally, in practice worries about reputation prevent much unethical behaviour