1. APPROACHES TO BUSINESS ETHICS

 When business people speak about “business ethics” they usually mean one of three things:

(1) avoid breaking the criminal law in one’s work-related activity;

(2) avoid action that may result in civil law suits against the company;

(3) avoid actions that are bad for the company image.

Businesses are especially concerned with these three things since they involve loss of money
and company reputation. In theory, a business could address these three concerns by assigning
corporate attorneys and public relations experts to escort employees on their daily activities.
Anytime an employee might stray from the straight and narrow path of acceptable conduct, the
experts would guide him back. Obviously this solution would be a financial disaster if carried out
in practice since it would cost a business more in attorney and public relations fees than they
would save from proper employee conduct. Perhaps reluctantly, businesses turn to philosophers
to instruct employees on becoming “moral.” For over 2,000 years philosophers have
systematically addressed the issue of right and wrong conduct. Presumably, then, philosophers
can teach employees a basic understanding of morality will keep them out of trouble.

            However, it is not likely that philosophers can teach anyone to be ethical. The job of
teaching morality rests squarely on the shoulders of parents and one’s early social environment.
By the time philosophers enter the picture, it is too late to change the moral predispositions of an
adult. Also, even if philosophers could teach morality, their recommendations are not always the
most financially efficient. Although being moral may save a company from some legal and
public relations nightmares, morality in business is also costly. A morally responsible company
must pay special attention to product safety, environmental impact, truthful advertising,
scrupulous marketing, and humane working conditions. This may be more than a tight-budgeted
business bargained for.

            We cannot easily resolve this tension between the ethical interests of the money-minded
businessperson and the ideal-minded philosopher. In most issues of business ethics, ideal moral
principles will be checked by economic viability. To understand what is at stake, we will look at
three different ways of deriving standards of business ethics.

            Deriving Business Ethics from the Profit Motive. Some businesspeople argue that there
is a symbiotic relation between ethics and business in which ethics naturally emerges from a
profit-oriented business. There are both weak and strong versions of this approach. The weak
version is often expressed in the dictum that good ethics results in good business, which simply
means that moral businesses practices are profitable. For example, it is profitable to make safe
products since this will reduce product liability lawsuits. Similarly, it may be in the best financial
interests of businesses to respect employee privacy, since this will improve morale and thus
improve work efficiency. Robert F. Hartley's book, Business Ethics, takes this approach. Using
20 case studies as illustrations, Hartley argues that the long-term best interests of businesses are
served by seeking a trusting relation with the public (Hartley, 1993). This weak version,
however, has problems. First, many moral business practices will have an economic advantage
only in the long run. This provides little incentive for businesses that are designed to exclusively
to seek short-term profits. As more and more businesses compete for the same market, short-term
profits will dictate the decisions of many companies simply as a matter of survival. Second,
some moral business practices may not be economically viable even in the long run. For
example, this might be the case with retaining older workers who are inefficient, as opposed to
replacing them with younger and more efficient workers. Third, and most importantly, those
moral business practices that are good for business depend upon what at that time will produce a
profit. In a different market, the same practices might not be economically viable. Thus, any
overlap that exists between morality and profit is both limited and incidental.

            The strong version of this profit approach takes a reverse strategy and maintains that, in a
competitive and free market, the profit motive will in fact bring about a morally proper
environment. That is, if customers demand safe products, or workers demand privacy, then they
will buy from or work for only those businesses that meet their demands. Businesses that do not
heed these demands will not survive. Since this view maintains that the drive for profit will
create morality, the strong version can be expressed in the dictum that good business results in
good ethics, which is the converse of the above dictum. Proponents of this view, such as Milton
Friedman, argue that this would happen in the United States if the government would allow a
truly competitive and free market. But this strong view also has problems, since it assumes that
consumers or workers will demand the morally proper thing. In fact, consumers may opt for less
safe products if they know they will be saving money. For example, consumers might prefer a
cheaper car without air bags, even though doing so places their own lives and the lives of their
passengers at greater risk, which is morally irresponsible. Similarly, workers may forego
demands of privacy at work if they are compensated with high enough wages. In short, not every
moral business practice will simply emerge from the profit principle as suggested by either the
weak or strong views.

                Business Ethics Restricted to Following the Law. A second approach to business
ethics is that moral obligations in business are restricted to what the law requires. The most
universal aspects of Western morality have already been put into our legal system, such as with
laws against killing, stealing, fraud, harassment, or reckless endangerment. Moral principles
beyond what the law requires – or supra-legal principles --  appear to be optional since
philosophers dispute about their validity and society wavers about its acceptance. For any
specific issue under consideration, such as determining what counts as responsible marketing or
adequate privacy in the workplace, we will find opposing positions on our supra-legal moral
obligations. It is, therefore, unreasonable to expect businesses to perform duties about which
there is so much disagreement and which appear to be optional.
            The unreasonableness of such a moral requirement in our society becomes all the more
evident when we consider societies that do have a strong external source of morality. Islam, for
example, contains a broad range of moral requirements such as an alms mandate, prohibitions
against sleeping partners that collect unearned money, and restrictions on charging interest for
certain types of loans, particularly for relief aid. Thus, in Muslim countries that are not
necessarily ruled by Islamic law, there is a strong source of external morality that would be
binding on Muslim businesses apart from what their laws would require. Similarly,
Confucianism has a strong emphasis on filial piety; thus, in Chinese and other Confucian
societies, it is reasonable to expect their businesses to maintain a respect for elders even if it is
not part of the legal system. In Western culture, or at least in the United States, we lack a
counterpart to an external source of morality as is present in Muslim or Confucian societies. One
reason is because of our cultural pluralism and the presence of a wide range of belief systems.
Even within Christianity, the diversity of denominations and beliefs prevents it from being a
homogeneous source of Christian values. In short, without a widely recognized system of ethics
that is external to the law, supra-legal moral obligations in our society appear to be optional; and,
it is unreasonable to expect business people to be obligated to principles which appear to be
optional.

            In our culturally pluralistic society, the only business-related moral obligations that are
majority-endorsed by our national social group are those obligations that are already contained in
the law. These include a range of guidelines for honesty in advertising, product safety, safe
working conditions, and fair hiring and firing practices. In fact, the unifying moral force of
businesses within our diverse society is the law itself. Beyond the law we find that the moral
obligations of businesses are contextually bound by subgroups, such as with a business that is
operated by traditional Muslims or environmental activists. In these cases, the individual
businesses may be bound by the obligations of their subgroups, but such obligations are
contingent upon one's association with these social subgroups. And, clearly, the obligations
within those subgroups are not binding on those outside the subgroups. If a business does not
belong to any subgroup, then its only moral obligations will be those within the context of
society at large, and these obligations are in the law.

            Corporations that assume an obligation beyond the law, either in their corporate codes or
in practice, take on responsibilities that most outsiders would designate as optional. A good
example is found in the mission statement of Ben & Jerry's Ice Cream, which includes the
following:

Social Mission -- To operate the company in a way that actively recognizes the central
role that business plays in the structure of society by initiating innovative ways to
improve the quality of life of a broad community -- local, national, and international.

Consistent with this mission, the highest paid employees of Ben & Jerry's would not earn more
than seven times more than the lowest paid full-time employees. "We do this," they explain,
"because we believe that most American corporations overpay top management, and underpay
entry-level employees -- and because everyone who works at Ben & Jerry's is a major
contributor to our success." In spite of the merits of this pay scale policy, it clearly lacks majority
endorsement in our national social group, and would not be a binding obligation. In fact, it is not
even binding on Ben & Jerry’s itself since, in recent years, Ben & Jerry’s had to abandon its own
ideal pay scale in an effort to attract a CEO with the right skills to expand their company.

            Strictly following this legal approach to business ethics may indeed prompt businesses to
do the right thing, as prescribed by law. Nevertheless, there are two key problems with restricting
morality solely to what the law requires. First, even in the best legal context, the law will lag
behind our moral condemnation of certain unscrupulous, yet legal business practices. For
example, in the past, drug companies could make exaggerated claims about the miraculous
curative properties of their products. Now government regulations prohibit any exaggerated
claims. Thus, prior to the enactment of a law, there will be a period of time when a business
practice will be deemed immoral, yet the practice will be legal. This would be a continuing
problem since changes in products, technology, and marketing strategies would soon present new
questionable practices that would not be addressed by existing legislation. A second problem
with the law-based approach is that, at best, it applies only to countries such as our own whose
business-related laws are morally conscientious. The situation may be different for some
developing countries with less sophisticated laws and regulatory agencies.

                Deriving Business Ethics from General Moral Obligations. The third approach to
business ethics is that morality must be introduced as a factor that is external from both the profit
motive and the law. This is the approach taken by most philosophers who write on business
ethics, and is expressed most clearly in the following from a well known business ethics essay:

Proper ethical behavior exists on a plane above the law. The law merely specifies the
lowest common denominator of acceptable behavior. (Gene Laczniak, "Business Ethics:
A Manager's Primer," 1983)

The most convenient way to explore this approach is to consider the supra-legal moral principles
that philosophers commonly offer. Five fairly broad moral principles suggested by philosophers
are as follows:

Harm principle: businesses should avoid causing unwarranted harm.

Fairness principle: business should be fair in all of their practices.

 Human rights principle: businesses should respect human rights.

Autonomy principle: businesses should not infringe on the rationally reflective choices of
people.

Veracity principle: businesses should not be deceptive in their practices.

The attraction of these principles is that they appeal to universal moral notions that no one would
reasonably reject. But, the problem with these principles is that they are too general. These
principles do not tell us specifically what counts as harm, unfairness, or a violation of human
rights. Does all damage to the environment constitute harm? Does it violate an employee's right
to privacy if an employer places hidden surveillance cameras in an employee lounge area? Does
child-oriented advertising mislead children and thus violate the principle of veracity?

            The above principles are abstract in nature. That is, they broadly mandate against harm,
and broadly endorse autonomy. Because they are abstract, they will be difficult to apply to
concrete situations and consequently not give clear guidance in complex situations. An
alternative approach is to forget the abstract, and focus instead on concrete situations that affect
the particular interests of consumers, workers, stockholders, or the community. The recent
stakeholder approach to business ethics attempts to do this systematically. It may be expressed in
the following:

 Stakeholder principle: businesses should consider all stakeholders' interests that are
affected by a business practice.

            A stakeholder is any party affected by a business practice, including employees,

suppliers, customers, creditors, competitors, governments, and communities. Accordingly, the
stakeholder approach to business ethics emphasizes that we should map out of the various parties
affected by a business practice. But this approach is limited since proponents of this view give us
no clear formula for how to prioritize the various interests once we map them out. Should all
stakeholders' interests be treated equally – from the largest stockholder down to the garbage man
who empties the factory dumpster? Probably no defenders of the stakeholder approach would
advocate treating all interests equally. Alternatively, should the stockholders' interests have
special priority? If we take this route, then the stakeholder principle is merely a revision of the
profit principle.

            Another way of looking at concrete moral obligations in business is to list them issue by
issue. This is the strategy behind corporate codes of ethics that address specific topics such as
confidentiality of corporate information, conflicts of interest, bribes, and political contributions.
Consider the following issues from Johnson and Johnson's Credo:
  

We are responsible to our employees, the men and women who work with us throughout
the world. Everyone must be considered as an individual. We must respect their dignity
and recognize their merit. They must have a sense of security in their jobs. Compensation
must be fair and adequate, and working conditions clean, orderly and safe. We must be
mindful of ways to help our employees fulfill their family responsibilities.

Although corporate codes of ethics are often viewed cynically as attempts to foster good public
relations or to reduce legal liability, a corporate code of ethics is a reasonable model for
understanding how we should articulate moral principles and introduce them into business
practice. The practical advantage of this approach is that it directly stipulates the morality of
certain action types, without becoming ensnared in the problem of deriving particular actions
from more abstract principles, such as the harm principle. But, the limitation of the corporate
code model is that the principles offered will appear to be merely rules of prudence or good
manners unless we can establish their distinctly moral character. And this requires relying on
more general principles of ethic described above, which, we’ve seen, comes with its own set of
problems.

            Conclusion. We’ve looked at three approaches to business ethics, and we’ve seen that all
three have limitations. If we hope to find an approach to business ethics that is free from
conceptual problems, we will not likely find any. Ethics is a complex subject and its history is
filled with diverse theories that are systematically refuted by rival theories. So, we should expect
to find controversies when applying ethics to the specific practices of business. However,
following any of the above three approaches to business ethics will bring us closer to acceptable
moral behavior than we might otherwise be. Close attention to one’s profit motive and the moral
interests of consumers might in fact generate some morally responsible business decisions. We
can indeed find additional moral guidance by looking at the laws that apply specifically to
businesses. In gray areas of moral controversy that are not adequately addressed profit motives
and the law, we can turn for guidance to a variety of general and specific moral principles.

            In addition to the above three approaches to business ethics, it also helps to examine
stories of businesses that have been morally irresponsible. By citing specific cases deceptive
advertising, environmental irresponsibility, or unsafe products, we can learn by example what we
should not do. Such cases often reveal blatantly crude, insensitive, or reckless attitudes of
businesses, which we can view as warning signs of unethical conduct.

Study Questions for “Approaches to Business Ethics”

    Introduction
 (1) What three things do business people usually mean by “business ethics”?

(2) Why can’t philosophers “teach” people to be ethical?

  Deriving Business Ethics from the Profit Motive

(3) What is the weak version of theory that connects business ethics to the profit motive?

(4) What are problems with the weak version?

(5) What is the strong version of theory that connects business ethics to the profit motive?

(6) What are problems with this?

  Business Ethics Restricted to Following the Law

(7) Define “supra-legal” principle.

(8) Why is it unreasonable to expect businesses to follow supra-legal moral principles?

(9) What are some supra-legal moral principles that are binding in Muslim countries?

(10) What are the problems with restricting business ethics to what the law requires?

  Deriving Business Ethics from General Moral Obligations

(11) Give an example of a broad moral principle suggested by philosophers.

(12) What is the problem with deriving business ethics from broad moral principles?

(13) What is a stakeholder?

(14) What is the problem with articulating good business behavior in corporate codes of
ethics?

    Conclusion

(15) What are some benefits of all three approaches to business ethics?

(16) What can we learn by looking at case studies in business ethics?

2. DOING BUSINESS IN FOREIGN COUNTRIES

 
            The moral challenge for businesses here in the United States it difficult enough when
balancing one’s profit interests against the needs of employees, consumers, governments and
special interest groups. The moral challenge is even more intense for multinational companies
who need to live up to moral expectations both in the US and in host foreign countries. In
developed countries, the moral expectations of the host country are as stringent as our own. With
third world host countries, though, the moral expectations often more lax, and multinationals are
tempted to lower their standards when situations permit. In this chapter we will look at three
areas of moral concern for multinationals: bribery, influencing foreign governments, and
exploiting third world countries.

                Bribery in Third World Countries. When we think of moral dilemmas that
multinationals face we usually think of the pressure on companies to bribe government officials
in third world countries. Although bribery of government officials also takes place in the United
States, it is rare and severely punished. By contrast, bribery happens with greater frequency in
third world countries, and there is a feeling that it is normal practice to bribe government
officials. We may succinctly define a bribery as condition in which a person, such as a
government offical, agrees to be paid to act as dictated by an interested party, rather than doing
what is required of him in his official employment. What is central to the notion of a bribe is that
an agreement is made, even if the act itself is never performed and the payment is never made. It
is also central that the person being bribed implicitly agreed to abide by the rules of his
government, organization, or legal system. We need to distinguish bribery from extortion, which
is where an official requires payment to perform his otherwise normal duties. For example an
agent of the FDA may extort a company by approving of a product that passes approval
standards anyway. Extortion has a victim, whereas bribery has no victim. We also need to
distinguish bribery from gift giving, which includes neither implicit nor explicit agreements,
even if the giver intends the gift as an inducement. An official may accept a gift innocently, and
sometimes genuine friendships are formed that involves exchanging gifts. Further, gift giving in
foreign countries is often part of a needed business ceremony. To avoid doing wrong, the
receiver of a gift needs to be confident that he remains impartial in conducting his official duties.
In some occupations, such as law enforcement, established codes often forbid gifts since it is too
important to risk losing impartiality through gift giving.

            Although few business people publicly defend bribing officials in third world countries,
there is a common attitude within multination organizations that condones bribery on several
grounds. First, there are strictly financial considerations. Payoffs can prevent delays that might
otherwise throw a company into financial ruin. In a truly capitalistic environment, we need an
even playing field, and if foreign businesses engage in bribery and US firms do not, then US
firms will be at a competitive disadvantage and will ultimately lose to foreign business. Second,
there are practical considerations owing to what appears to be the universal nature of bribery in
third world countries. Often foreign government officials are so corrupt that it is virtually
impossible to do business without playing by the unspoken rules. Thus, there’s nothing morally
wrong with participating in bribery, especially if the institution itself is in question, such as a
government like Nazi Germany.
            Both the financial and practical arguments above reflect a naïve view of doing business in
third world countries. Bribery is in fact outlawed in every country around the world and,
although bribery is more common in some foreign countries than in the United States, law
enforcement officials in those countries do take bribery violations seriously and punish
offenders. Americans in particular are naïve about his, as seen from the fact that, in middle east
countries, American companies are involved in bribery scandals twice as often companies from
other countries. The US government also takes oversees bribery seriously. Under US law, the
Foreign Corrupt Practices Act of 1977 establishes that,  if caught bribing, a company may be
subject to a 1 million dollar fine, and executives may be subject to $10,000 in fines and five
years in prison. These penalties are so severe that critics contend that it restricts ordinary well-
intentioned business activity because of the fear business people might have of entering a gray
area of activity that is actually legal. In any event, it is reasonably clear that the legal penalties of
international bribery outweigh the possible business benefits.

            A dramatic example of bribery naivete involves the Lockheed Corporation, which in the
1970s was caught offering a quarter of a billion dollars in bribes overseas. A major US defense
contractor, Lockheed fell on hard times for both economic and technological reasons. The US
government commissioned the company to design a hybrid aircraft, but, after one crashed, the
government canceled orders. Lockheed received other contracts based on bids that they made
that were far lower than the cost of producing the project. As a consequence, they lost money on
the projects. They tried to move into the commercial jet aircraft market by making planes with
engines built by Rolls Royce. Rolls Royce went bankrupt, and Lockheed lost 300 million in
canceled orders. They believed that the solution to their financial woes was to expand their
oversees sales. To get the contracts, they made a series of payoffs to middlemen from various
countries, including the Netherlands, Japan, Saudi Arabia, Iran, Italy, and Spain. Still on the
verge of bankruptcy, they requested a loan of 200 million dollars from the US government,
which meant opening their records for scrutiny. Government investigators discovered the extent
of Lockheed’s bribery. They also discovered that Lockheed offered bribes that totaled 10 times
more than the bribes made by other US companies. Lockheed’s chairman and president were
forced to resign. However, to avoid compromising national defense the US government chose
not to cancel its contracts with Lockheed.

                Endorsing, Influencing, and Opposing Foreign Governments. Whether in the US or

in foreign countries, big businesses have an intimate relation with governments. Businesses
lobby for fewer regulations, lighter taxes, governmental subsidies, and access to natural
resources. Businesses also depend on government offices, such as law enforcement agencies,
court systems, permit offices, and transportation networks. So, when a US company sets up base
in a foreign country, its interaction with government creates the possibility for unpleasant
situations. Multinationals often locate in countries with repressive right wing governments since
these tend to be more politically stable. By doing so, they implicitly support these governments,
which would otherwise not be supported by socially conscious people. At the other end of the
spectrum, sometimes multinationals find themselves in left wing countries that are hostile to the
business’s capitalistic interests. In these cases, the business might be tempted to oppose or even
undermine that government, irrespective of the benefit that local people derive from that
government’s left-wing policies. Between these two extremes, there is the normal course of
doing business in developing countries, which involves the normal lobbying efforts that we have
here in the US. This involves at least attempting to influence governments of third world
countries.

            An example of the first extreme – businesses endorsing right wing governments – is the
presence of American multinationals in South Africa, especially during the 1970s and 1980s.
The white Apartheid government at the time endorsed a policy of what amounted to
institutionalized slavery of its black citizens. Although constituting less than 10% of the
country’s population, the white Afrikaners controlled the vast majority of the country’s
economic wealth. Blacks were segregated, restricted in their speech, jobs, and movements, and
constantly under threat from white policing forces. The white Afrikaners justified their Apartheid
policy by arguing that it was God's plan that Afrikaners are in Africa, and it is God’s plan to
divide people into groups. US multinationals all recognized the inherently immoral nature of the
Apartheid government and that, at minimum US businesses in South Africa needed to be
sensitive to the oppressed condition of the blacks. The harshest critics, though, called for
complete divestment of American business interests from South Africa. Politically, U.S. business
in South Africa offered legitimacy to the Apartheid government. Economically, whatever helped
South Africa's economy helped Apartheid, and divestment would cripple the South African
economy. Also, American companies in South Africa had a history of civil rights abuses towards
blacks.

            More moderate critics maintained that companies whose products directly benefit the
government should divest, such as those the make police weapons. However, companies whose
products directly benefit Blacks should not divest. Companies whose products directly benefit
both can go either way. For example, the Polaroid Company chose to leave South Africa since
they could not control the flow of their product into government hands, such as use in passbook
pictures that regulated the movement of the black South Africans.

            However, other businesses argued that continued American involvement in South Africa
was actually a good thing. The Apartheid government was making some progress toward racial
integration, and American companies would be vital sources of peaceful change. Further, US
presence in South African would bolster its economy, which would be good for blacks since it
would reduce overall unemployment and inflation, and improve education. Severing ties with
South Africa would at best be a symbolic act, with little or no economic clout since all products
made by U.S. firms could be bought elsewhere. In this vein, Leon Sullivan, an Afro-American on
General Motors board of directors, recommended several principles for operating in South
Africa. They are, (1) non-segregation in eating, restroom, and work facilities; (2) equal
employment practices; (3) equal pay; (4) training programs for blacks; (5) more blacks in
management; and (6) improving employees lives outside work, including housing,
transportation, schooling, recreation, and health.

            The situation of South Africa illustrates what can happen when American businesses set
up camp in countries with oppressive right-wing governments. At the other extreme, we noted
that problems also emerge when American businesses locate in countries with left-wing
countries of communist leanings that are hostile to capitalist ventures. A vivid illustration of this
is International Telephone and Telegraph’s interference in the Chilean government during the
1970s. At the time, ITT was the 8th largest fortune 500 company, with 350,000 employees in 80
countries, including Chile. The South American country of Chile was poor, but politically stable
politically. A presidential candidate named Salvador Allende campaigned on a communist
platform, emphasizing the issue of land reform, and indicating a desire to take control of
privately owned Chilean telephone companies because of their inefficiency. Government
acquisition policies work two ways. First, a government might buy controlling shares of private
companies, paying them at a fair market price. Alternatively, a government might nationalize or
simply take ownership of the company with no compensation, as happened with private
businesses in Cuba and Peru during their communist takeovers.

            ITT feared the worst and tried to stop Allende from being elected, part of which involved
an offer of 1 million dollars to the CIA for support. The scandal surfaced, and critics world wide
attacked ITT for interfering in the activity of a foreign government. Some of ITT’s property was
even bombed in protest. Allende was elected anyway, and in retaliation, he nationalized ITT’s
Chilean property. Allende did not nationalize other firms, however, even though some had to sell
the government shares of its stock. Allende was assassinated shortly after, and ITT later sued for
losses.

            The actions of American multinationals in foreign markets have a direct effect on the
image on the U.S. itself. People around the world see the United States as an economic
imperialist, ready to gobble up the resources of small foreign countries. The situation is made
worse when multinationals coerce foreign governments especially in Third World countries.

                Exploiting Third World Countries. Critics frequently accuse multinational

corporations of exploiting the resources and workers of third world countries. Agricultural
businesses often take the best land and use it for export crops, which diminishes the amount of
good land that the locals can use for their own food needs. Drug companies and hazardous
chemical industries take advantage of more lax safety regulations, which often results in disaster.
Mining industries exploit the wealth of the country for only a few rich landowners. Since many
of these natural resources are in finite supply, developing countries have little hope of relying on
them for future security once they are used up. Banks and financial institutions do not hire the
local people, yet these businesses benefit by bringing in local money. Manufacturing and service
industries introduce poverty to many areas by attracting more people to a factory than they can
employ. They typically pay much less to third world employees than to Americans, which
suggest a double standard of labor value. If they pay wages to third world employees that are
higher than what indigenous businesses can pay, then they attract the best workers, which hurts
employers in surrounding businesses. Also, all of the above types of businesses destroy the local
culture by introducing an American climate.

            Two cases illustrate the disastrous effects of exploiting third world countries. In 1984, a
pesticide factory owned by Union Carbide in Bhopal India exploded killing 2,500 people and
injuring and additional 300,000 people. With a population of 700,000 people, Bhopal is the
capital of Madhya Pradesh, one of India’s poorest and least developed states. The city is
geographically divided between rich and poor sections, with the factory located in the poor
section. Although it was a multinational, Indian investors owned almost half of the shares of the
Indian plant, and Indians operated the plant. The active ingredient for the pesticide was stored in
600 gallon tanks. The size of the tanks themselves was a problem. Larger tanks are economically
efficient since they hold more gas, but they pose greater risks in case of a tank leak. For his
reason, regulations in Germany required a similar Union Carbide plant in that company to
restrict its tank size to 100 gallons. The tank that exploded in the Indian plant was supposed to be
refrigerated to zero degrees centigrade; instead the refrigeration unit was not working and it was
at room temperature. Although the Indian factory had safety features to prevent disasters, several
of the safety systems were not functioning. The temperature alarm was shut down; the gas
scrubber was shut off, which was supposed to neutralize escaped gas; and a flare tower was out
of service, which was supposed to burn escaped gas.

            The explosion started when someone added water to a 600 gallon tank of the chemical,
perhaps done as an act of sabotage by a disgruntled employee. The temperature in the tank rose
in a chain reaction, and the tank blew up. A fog of the gas drifted through the streets of Bhopol,
killing people on the spots that they stood. Long term medical problems for the survivors
included respiratory ailments and neurological damage. The Indian government quickly arrested
plant managers and eventually spent 40 million on various disaster relief projects. Union Carbide
Stock plummeted with losses totaling almost a billion-dollars; Union Carbide sales were also
impacted for several years. The company eventually paid half a billion dollars to victims.
Although the US parent company acted quickly and compassionately to the disaster, the tragedy
raised serious questions about the parent company’s views on safety in third world countries.
Even though Indians ran the Bhopal plant, Union Carbide’s laissez-faire policy of decentralizing
subsidiaries was not appropriate in matters of safety. The tragic lesson is that multinational
should follow U.S. safety standards worldwide, and should not give cost cutting the highest
priority.

            A second case illustrating exploitation in third world countries concerns the tobacco
industry. Information about the atrocious activities of US tobacco companies over the years is
continually being made public. As deceptive and uncaring as they have been in the US, they are
even worse in third world countries. In developed countries, tobacco tar levels have decreased,
but in third world countries they have increased. Almost all developed countries have tobacco
legislation, and less than half the third world countries do, which is partly the result of cigarette
companies’ heavy lobbying efforts. Without restrictions to cigarette production, advertising and
sales, cigarette companies expand the bounds of third world markets with no thought of the
health hazards they create for consumers. In Argentine, for example, tobacco companies buy
20% of all advertising time. Thus, although cigarette smoking is on a decline in developed
countries, it is on a rise in third world countries and, globally, cigarette consumption is growing
faster than population. US tobacco companies create strong incentives for local growers to shift
to tobacco production by paying startup costs to farmers, underwriting loans, and guaranteeing
purchases. By growing tobacco, less acreage is available for domestic food production, which
particularly bad in countries with large numbers of people living at subsistence levels. There are
also ecological effects of flue-cured tobacco production that requires fire. In third world
countries, wood fires are a main method for curing tobacco, which requires one tree for every
300 cigarettes. This bad since firewood accounts for 90% of the heating and cooking fuel in
developing countries.

            There are three basic positions to take on the problem of businesses exploiting third
world countries. The harshest critics of third world exploitation argue that we should just stay out
of third world countries altogether, and let those countries manage their resources as they see fit
for themselves. Although well intended, this position is unrealistic especially in view of the
growing economic interdependence of countries around the world. Most large companies today
have multinational interests, and, if anything, these interests will increase. This position is also
undesirable from the standpoint of the interests of the third world countries themselves.
Isolationist economic policies are typically ineffective. If a third world country blocks off outside
capitalist ventures, outside countries are less inspired to support the business ventures of that
third world country.

            On the other extreme, some business people argue that, although issues of exploitation
are sociologically interesting, they are not moral issues. On this view, we should not equate US
standards with universal moral standards. For example, FDA, OSHA, and minimum wage
standards are good, but not morally required of all businesses around the world. Further, local
governments in the host country must also accept responsibility for what happens, especially
when they require some control of the company. Governments by and large set the agenda for
what businesses can and cannot do. By accepting control, they also accept responsibility.

            A third and middle ground position on exploitation is that multinationals from rich
countries can operate effectively in third world countries when adhering to basic moral
principles. In the next section we will look at some suggested moral principles for multinationals.

                Cultural Relativism and Universal Moral Principles. The above-discussed problems
of interference in foreign government, bribery, and exploitation all raise a range of ethical
questions, perhaps the most important is whether companies should adopt the attitude that
“When in Rome, do as the Romans.” This is the issue of cultural relativism, namely, whether
moral values vary from society to society. Cultural relativism implies that moral values are
completely defined by cultural contexts, and there is no universal standard of morality that
applies to all people at all times. As long as we stay within our own cultural environment, this is
no problem since we simply act morally as our society dictates. However, multinationals face the
problem of relativism directly by placing one foot in the moral context of American culture, and
another foot in the moral context of a foreign culture. Driven by the profit motive, multinationals
will be tempted to adopt the least costly moral principles that a given cultural context will allow.

            Is cultural relativism true? Philosophers have debated this question for over two thousand
years. Many cultural practices are unquestionably shaped by cultural environments, such as rules
requiring women to covering their heads in public, and prohibitions against drinking alcohol or
eating types of meat. However, there seem to be some foundational principles that appear
uniformly, such as obligations to care for one’s children and elderly parents, prohibitions against
assault, rape, stealing, and murder. Some philosophers argue that these principles appear
universally in societies since, without them, a society simply could not continue. For example, if
a society permitted murder, we would all move out of town and live in seclusion. Also,
philosophers point out that many seemingly diverse standards of behavior in fact reflect common
values. For example, some cultures kill their elderly, which is a practice that we find abhorrent.
However, putting the elderly to death is based on the principle that children should see to the
happiness of their parents, and this is a principle that we too have.

            So, if we grant that there is some commonality to moral values around the world, then, to
that extent, multinationals have moral responsibilities that cross cultural boundaries. Philosopher
Norman Bowie recommends three universal moral standards that are appropriate to the activities
of multinationals. First, multinationals should follow the norms that constitute a moral minimum,
which are advocated in all societies. Second, multinationals should follow principles of honesty
and trust, which are moral norms of the market place. These are required as foundational for any
business operations, and the systematic violation of moral norms of the marketplace would be
self-defeating. Third, multinationals should not violate human rights, such as basic liberty rights.
Business depends on economic liberty, which is part of political and civil liberty in general. So,
if we accept economic liberty, we must accept the whole liberty package. This means that
businesses should not operate in countries with human rights violations unless they can be
catalysts for democratic reform.

            Philosopher Richard T. De George offers a more specific set of guidelines for the
following:

        Do no intentional direct harm to the host country

        Produce more good than bad for the host country

        Contribute to the host country's development

        Respect the human rights of its employees

        Pay one’s fair share of taxes

        Respect the local culture and work with it

        Cooperate when local governments reform social institutions, such as land and tax reform.

De George believes that third world countries lack adequate background institutions, such as
regulatory agencies, which makes it all the more necessary for businesses to adherence to moral
standards.
            In view of how strong the profit motive is to businesses, we may wonder how realistic
many of these cross-cultural moral principles are. Until a few hundred years ago, most
philosophers believed that moral principles were pretty useless unless people believed in God
and were afraid that God would punish them for evil deeds. In more recent times, social contract
theorists argue that fear of punishment from governments is the only thing that will motivate us
to follow moral principles. Perhaps we can generalize from these views and say that we may not
follow even the best moral principles unless an external authority monitors our actions and
punishes us when we go wrong. We can see the moral responsibility of multinationals in the
same light. There are reasonable moral guidelines that multinationals should follow, such as
those offered by Bowie and De George, which managers of multinationals can probably figure
out on their own. Without an external monitoring authority, though, businesses may set them
aside for reasons of profit. Fortunately, several external mechanisms are already in place to
punish irresponsible multinationals. News organizations, the United Nations, international
human rights groups, and environmental groups all take special interests in seeing that
multinationals live up to high standards. All of these organizations have limited clout, though,
and rely mainly on the threat of bad publicity to bring about change. But even this is effective
since most large businesses believe that their reputation is their biggest asset.

Study Questions for “Doing Business in Foreign Countries”

    Bribery in Third World Countries

(1) What is the definition of bribery, and how does it differ from extortion and gift
giving?

(2) What are the two main arguments usually given in favor of bribery?

(3) What is the main problem with both of the arguments for bribery?

(4) What penalty did Lockheed pay when it was caught in a bribery scandal?

    Endorsing, Influencing, and Opposing Foreign Governments

(5) What problems might arise when a multinational sets up in right-wing country and
left wing foreign countries respectively?

(6) During the 1970s and 1980s, some critics argued that US companies should leave
South Africa. What were some of their reasons?

(7) What were the negative consequences of ITT interfering in Chile’s government in the
1970s?

    Exploiting Third World Countries.

 (8) What are some ways that multinationals exploit third world countries?

(9) What were the principal irresponsible actions of Union Carbide in the Bhopal
explosion?

(10) What actions of the Tobacco companies in third world countries are especially
exploitive?

(11) What reasons do some multinationals give for not abiding by US standards in third
world countries?

  Cultural Relativism and Universal Moral Principles

(12) Define cultural relativism

(13) What are some moral values that seem to be held by all cultures?

(14) What are Norman Bowie’s three recommended moral principles for multinationals?

(15) What external monitoring organizations help assure that multinationals act
responsibly?

3. BUSINESS AND THE ENVIRONMENT

            The greatest damage done to the environment is inflicted by business and industry, and
not from domestic activities. Businesses extract the greatest tolls in terms of energy
consumption, toxic waste, air and water pollution, and deforestation. Increasing amounts of
industrial toxic waste contaminates ground water, which in turn becomes harmful for human
consumption. Oil spills from petroleum industries destroy shorelines and kill millions of sea
animals. The burning of fossil fuels such as oil, gas and coal produces excess carbon dioxide,
which adds to global warming through a greenhouse effect. Fluorocarbon gasses used in making
domestic products such as refrigerators and styrofoam depletes the earth's ozone layer, which
shields the earth from the sun’s life-destroying ultraviolet rays. Some of these problems are
expensive nuisances, such as oil spills and toxic waste. Others, though, threaten the survival of
life on our planet, such as carbon dioxide production and the release of fluorocarbon gasses. In
this chapter we will look at some of the causes of environmental irresponsibility in businesses,
and some theories about why businesses should be more responsible.

 
            Businesses’ Resistance to Environmental Responsibility. Although businesses don’t
consciously set out to harm the environment, several factors create an unfortunate situation,
which in many cases is worse than it needs to be. First, large businesses and industries are
inherently imposing on nature. They take pieces of nature and reshape them into things that
didn’t exist before, such as automobiles, skyscrapers, television sets and shopping malls. Not
only are the end products artificial, and in that sense unnatural, but the means of producing these
things are taxing on natural resources. Second, it is easy to disregard natural resources that are
held in common and seem abundant, such as air and water. It doesn’t seem wrong to pollute the
air if, technically, no one owns the air and the particular damage that I do isn’t too noticeable.
Environmentalists sometimes refer to this phenomenon as a tragedy of the commons, that is, a
disaster that happens to things that are held in common. Given the size and complexity of
businesses in industrial countries, such as the US, it is not surprising that they contribute heavily
to this tragedy.

Third, businesses are driven by the motive to make a profit. Stockholders demand a
return on their investment, and this mandate transfers down through the management hierarchy.
Part of making a profit is to reduce costs, and environmental responsibility is highly costly, with
few immediate financial rewards. Finally, government environmental watchdog agencies, such
as the Environmental Protection Agency, are limited in what they can do in imposing restrictions
on businesses. To protect their financial interests, businesses lobby for support at all levels of
government, and agencies such as the EPA must be politically compromising. Agencies such as
the EPA say that they know that they do their jobs correctly when everyone is angry with them.
That is, businesses feel that the EPA restricts them too much, and environmental advocates such
as the Sierra Club will feel that the EPA does too little to protect the environment.

            On a global level, many of the environmental offenders are businesses in third world
countries. Underdeveloped countries are trying to catch up to the economic level of
industrialized countries, and certainly have a right to do so. However, they cannot play catch up
in a way that is both economically feasible and environmentally responsible. Maintaining a
balance between economic development and energy conservation is far more difficult for poorer
countries than it is for wealthier ones. For example, developed countries can shift to energy
sources that give off less pollution, but developing countries cannot do so easily. Environmental
problems are intensified in third world countries because of growth in population, which doubles
about every 70 years. Increased population places increased demand on the utilization of land,
which, in turn, leads to deforestation. It is not effective to simply encourage developing countries
to do better. Recommendations from world organizations, such as the United Nations, have only
limited leverage. Sometimes developed countries, such as the United States, try to assist
developing countries by offering them free technology. But this is only partially effective.

                Since the 1960’s, our society has become increasingly more environmentally
conscious, and now we simply take it for granted that we all are responsible for maintaining the
integrity of the environment. However, conservative businesses people commonly feel that their
responsibility to the environment is limited. Typically, they give two distinct arguments for their
views. First, they argue that businesses do not have an obligation to protect the environment
above what the law requires. Although laws are strict concerning environmental regulation, they
are not perfect and they allow for many kinds of environment judgement calls. If businesses
showed special concern for the environment beyond what the law requires, then this would
interfere with their ability to compete. Ultimately, they argue, environmental responsibility rests
with consumers. If consumers are not interested in favoring businesses that have environmentally
friendly policies, then it is not up to businesses to champion environmental policies on their own.
The problem with this view is that environmental responsibility cannot be left to what consumers
are willing to tolerate. Most consumers will be attracted to the least expensive consumer
products, irrespective of moral considerations surrounding the manufacturing of those products.
Even if I knew that a pair of tennis shoes was manufactured in a third world sweatshop, my
purchase decision might still be motivated only by the price tag. This is so too with my
motivation to purchase products that are manufactured by environmentally unfriendly
companies. In a sense, businesses need to save consumers from succumbing to their most thrifty
inclinations. 

            Second, if businesses agree that they have an environmental responsibility beyond what
the law requires, they often take a “good ethics is good business” approach and emphasize areas
of environmental responsibility that will generate a profit. For example, they might push
recycling, which they can indicate on their packaging and thereby attract environmentally
conscious consumers. They might also update older energy-hungry heating or production units if
the investment has the right payoff. However, as noted above, what is best for the environment is
not always financially best for business. When cases of conflict arise between the environment
and profit motive, the “good ethics is good business” approach quickly appears deceptive and
shallow.

                Examples of Environmentally unsound Business Practices. Although most

companies are guilty of varying degrees of environmental irresponsibility, some extreme cases
vividly illustrate irresponsibility at its worst. A first case involves resistance to air pollution
control measures. In the early 1950s, Union Carbide built a series of metal and chemical plants in
the Ohio valley, between Ohio and West Virginia. Mountains on both sides of the valley trap in
soot, ash, and other air pollutants, which resulted in increased incidents of respiratory disease
among local residents. During the 1960s, Union Carbide refuse to participate public discussions
about the problem and ignored a governmental request for an on site inspection. The company
soon became a symbol of corporate resistance to pollution control. Part of their resistance owes
to the fact that the environment was not an issue in the 1950s and new pollution control measures
were both expensive and untested. Also, Union Carbide was less susceptible to consumer
boycotts since only 20% of its products were direct consumer goods that we might purchase in a
department store, such as antifreeze. In 1970s they became the target of the investigation by the
newly formed Environmental Protection Agency, which instructed Union Carbide  on several
pollution control measures. Union Carbide responded by shutting down a boiler plant and laying
off workers, claiming that was the only way they could comply with the required pollution
reduction. Critics charged that Union Carbide’s tactics amounted to environmental blackmail,
threatening to cut jobs if they had to be environmentally responsible. Ultimately, Union Carbide
restructured their company and adhered to pollution control standards.
            A second case of environmental irresponsibility involves nuclear power accidents. There
are currently around 400 nuclear power plants world wide, providing about 15% of the world’s
electricity. For the past few decades, the nuclear power industry has been under attack by
environmentalists and few new plants have been started. Ironically, the original intent of nuclear
power was to provide a safe, clean, and cheap alternative to coal and oil, which are notoriously
damaging to the environment. Nuclear power produces no smoke or carbon dioxide, and only
harmless steam. It also doesn’t require environmentally intrusive mining or drilling efforts. Two
major disasters contributed to the now tarnished image of the nuclear power industry, both the
result of safety violations and human error. First occurred at the Three Mile Island nuclear power
plant in Harrisburg, Pennsylvania. In 1979, a series of mechanical and human failures
contributed to a partial core meltdown to one of its reactors. Radiation was released into the local
community, and, although connections with health problems were difficult to prove, a family of
a Down’s Syndrome child received 1 million dollars in compensation. A much more serious
nuclear power disaster occurred in 1986 in the Ukrainian city of Chernobyl, then part of the
Soviet Union. Partly from negligence and partly from design problems, a steam explosion and
fires threw tons of radioactive material into the environment. 31 people were killed and 1,000
injured from direct exposure to radioactive material by means of inhaling radioactive gasses and
dust, and ingesting contaminated food or water. 135,000 people were evacuated from the
surrounding area, hundreds of square miles of land was contaminated, and the long term health
effects of the accident are still being assessed. Financial losses reached $3 billion, and countries
throughout Europe claimed losses into the hundreds of millions of dollars.

            Although the Soviet government owned the Chernobyl plant -- and not private industry --
the disaster had a decisive impact on the entire nuclear power industry. In addition to the risks of
catastrophic disasters such as Chernobyl, nuclear power plants create other environmental
problems that involve nuclear waste disposal. Nuclear waste is deadly to animal life, and remains
toxic for a very long time. After Three Mile Island and Chernobyl, critics called for a
moratorium on the construction all future nuclear power plants, and a systematic closing of the
ones currently in use. Defenders, though, argue that nuclear energy is necessary in view of the
limitations of alternative energy sources, such as coal, oil, and solar technology. They also argue
that nuclear waste sites need to confine wastes for only a few thousand years since after 1,000
years the ingestion toxicity is comparable to that of the original uranium from which the wastes
were derived. Finally, defenders say that we can reasonably expect a decrease in nuclear
accidents even if we increase nuclear power use, similar to how airline travel has increased while
their accident rate has decreased. Defenders recommend that clustered reactors provide better
operational support, security, and handling of wastes.

            A third and final case of environmental disaster involves large-scale oil spills. In 1989, an
Exxon oil tanker called the Valdez struck a reef in Alaska’s Prince William Sound and created
the largest crude oil spill in US waters. The captain of the ship, 42 year old Joseph Hazelwood,
was with Exxon for 20 years. He had a reputation as a drinker, which some departments at
Exxon knew about, and at the time of the disaster his blood alcohol level was .06. The tanker trip
was part of a routine convoy from Alaska to Long Beach California that was successfully made
by other tankers over 8,000 times. Hazelwood assigned the piloting of the vessel to a less
experienced officer and then retired to his quarters. Icebergs were in the path of the ship, which
an ineffective radar system failed to detect earlier. The ship was so large that it took a full minute
to respond to steering changes. Attempting to navigate around an iceberg, the piloting officer
miscalculated and ran the ship into a reef. Oil poured from the ship and, when the weather
changed, it sloshed onto the beaches for hundreds of miles. Initially viewing it as only a public
relations problem, Exxon was slow to respond with cleanup efforts, which made the situation
worse. The spill had a terrible impact on plant and animal life in the area, which the news media
vividly captured in pictures and on television. The cleanup was also expensive; the average cost
of rehabilitating a seal was $80,000. Hazelwood was ultimately fired for not being on the bridge
at the time of the disaster and was convicted of negligent discharge of oil, with a punishment of
1000 hours of community service in the cleanup. Exxon paid in excess of 2 billion dollars in the
cleanup efforts and, just as significantly, suffered an almost irreplaceable loss of reputation
because of the disaster. 40,000 Exxon credit card holders destroyed their cards.

            Three Philosophical Theories of Environmental Responsibility. As noted earlier, some

businesses argue that their environmental responsibility is confined to what the law requires and
what will yield a profit. However, ethicists typically argue that businesses need to look beyond
profit motive and legal regulations to find more persuasive reasons for environmental
responsibility. We will consider three of these theories, each of which yields substantially
different conclusions about the environmental responsibility of businesses.

            The first of these theories is anthropocentric, or human centered. Environmental

anthropocentrism is the view that all environmental responsibility is derived from human
interests alone. The assumption here is that only human beings are morally significant persons
and have a direct moral standing. Since the environment is crucial to human well-being and
human survival, then we have an indirect duty towards the environment, that is, a duty that is
derived from human interests. This involves the duty to assure that the earth remains
environmentally hospitable for supporting human life, and that its beauty and resources are
preserved so human life on earth continues to be pleasant. Some have argued that our indirect
environmental duties derive both from the immediate benefit which living people receive from
the environment, and the benefit that future generations of people will receive. But, critics have
maintained that since future generations of people do not yet exist, then, strictly speaking, they
cannot have rights any more than a dead person can have rights. Nevertheless, both parties to this
dispute acknowledge that environmental concern derives solely from human interests.

            A second general approach to environmental responsibility is to base it on the moral

consideration that we owe to animals, a position that we will call the animal rights view. On this
view, higher animals qualify as morally significant creatures, such as dogs, cats, cows, horses,
pigs, dolphins, and chimpanzees. Animal rights advocate Peter Singer goes a step further and
argues that even lower animals, such as chickens, deserve equal moral consideration insofar as
they are capable of experiencing physical pleasure and pain, just as humans are. For Singer, the
mistreatment of animals is analogous to racism and slavery since it gives unequal treatment to
beings with equal interests. Singer describes this inequity toward animals as speciesism. Our
responsibility toward the environment, then, hinges on the environmental interests of animals,
either higher or lower, as well as the environmental interests of humans. Thus, environmental
responsibility derives from the interest of all morally significant persons, which includes both
humans and at least some animals.

            The third theory is that of ecocentrism, which is that we have direct responsibilities to
environmental collections, such as animal species and rain forests, just as we have direct
responsibilities to humans. Even if there is no direct human consequence of destroying
environmental collections, we still have a moral responsibility to those collections anyway.
Ecocentrists use various terms to express this direct responsibility to the environment. They
suggest that the environment has direct rights, that it qualifies for moral personhood, that it is
deserving of a direct duty, and that it has inherent worth. Common to all of these claims, though,
is the position that the environment by itself is on a moral par with humans. Aldo Leopold first
articulated econcentrism in his highly influential essay "The Land Ethic" (1949). Leopold
explains that morality evolved over the millennia. The earliest notions of morality regulated
conduct between individuals, as reflected in the Ten Commandments. Later notions regulated
conduct between an individual and society, as reflected in the Golden Rule. Leopold argues that
we are on the brink of a new advance in morality that regulates conduct between humans and the
environment. He calls this final phase the land ethic. For all three of these phases in the
evolution of ethics, the main premise of morality is that the individual is a member of a
community of interdependent parts. For Leopold, "The land ethic simply enlarges the boundaries
of the community to include soils, waters, plants, and animals, or collectively: the land." This
involves a radical shift in how humans perceive themselves in relation to the environment.
Originally we saw ourselves as conquerors of the land. Now we need to see ourselves as
members of a community that also includes the land.

            Implications for Businesses. Each of the above theories has different implications on
business’s responsibility to the environment. From the anthropocentric perspective, businesses
have an obligation not to damage the environment in ways that negatively impact on human life.
From the animal rights perspective, businesses have an obligation to avoid harming animals
either directly or indirectly. They need to avoid harming animals directly, such as they might do
through animal testing, or inhumane food production techniques. They need to avoid harming
animals indirectly, such as they might do by destroying animal environments. For example, we
should not control pests through poisoning, since this causes animals to suffer; instead we should
prefer a sterility chemical. This is especially pertinent given that the environment is the
immediate habitat of animals, and damage to the environment harms animals more than it harms
humans. Finally, from the ecocentrist perspective, businesses have a direct obligation to protect
the environment since it is wrong to harm members of the moral community, and the
environment is a member of the moral community.

            In many cases the anthropocentric, animal rights, and ecocentric interests overlap. For
example, toxic waste, air and water pollution, excess carbon dioxide, and release of
fluorocarbons equally affect humans, animals, and environmental collections. In many cases,
though, the interests of the three do not overlap. For example, sometimes when businesses are
found legally responsible for polluting a stream, several corrective options may be open to them.
First, they may restore the stream, which costs a lot of money, or they may pay off a community
in compensation for living with the polluted stream, which might cost them less money.
Although the anthropocentrist will be satisfied with paying off the community, this would not
touch the concerns of the animal rights and ecocentrist. To use another example, suppose that a
business considered building a factory on a site that, if constructed, would destroy a breeding
ground for birds. Typically, from the anthopocentrist position, the business would only need to
take into account the recreational value that the bird breeding ground would have to human bird
watchers. For the animal rights advocate and ecocentrist, though, this reasoning ignores the
needs of animals and the integrity of the ecosystem itself.

            In view of these various theories of environmental obligation, what should businesses do?
First, businesses will automatically be bound by the environmental regulations that are required
by law. Although this covers much ground, it doesn’t cover everything. Second, businesses
should at least be sensitive to environmental concerns from both the anthropocentric and animal
rights perspectives. Animal rights and environmental lobby groups today are becoming
increasingly more influential, and, as a matter of good public relations and even survival,
companies need to take this into account. Many environmental problems lend themselves to
graphic portrayal by the media -- such as sea animals covered in oil -- which intensifies negative
public opinion towards a company. If companies don’t respond properly, they appear arrogant
and uncaring, which greatly harms their reputation.

Study Questions for “Business and the Environment”

   Introduction

(1) What are some of the life threatening environmental issues connected with business
and industry?

 Businesses’ Resistance to Environmental Responsibility

(2) What are the four reasons why businesses have such a negative impact on the
environment?

(3) Why do many businesses in third world countries pose big environmental problems?

(4) What is wrong with businesses saying that their environmental responsibility is
confined to what the law requires?

(5) What is wrong with businesses saying that their environmental responsibility is linked
with what will generate a profit?

    Examples of Environmentally unsound Business Practices

 (6) What is “environmental blackmail”?

(7) What are some of the environmental problems associated with nuclear power plants?

(8) What reasons do some people give in defense of nuclear power plants?

(9) What were some of the negative consequences for Exxon resulting from the Valdez
accident?

 Three Philosophical Theories of Environmental Responsibility

(10) What is the basis of our environmental responsibility according to

anthropocentrism?

(11) What is speciesism?

(12) What is the basis of our environmental responsibility according to ecocentrism?

    Implications for Businesses

(13) On what environmental issues do anthropocentism, animal rights, and ecocentrism

overlap?

(14) Why should businesses be sensitive to environmental concerns from the

anthropocentric and animal rights perspectives?

This is the html version of the file http://www.business.utah.edu/~mgtab/BS-06.ppt.

Google automatically generates html versions of documents as we crawl the web.

 
 
 
 

1 

1 

Business Ethics
Fundamentals 
 
MGT 3800 Chapter 6
 
 
 
 

2 

Chapter Outline  

 Business Ethics and Public Opinion

 What Does Business Ethics Mean?
 Ethics, Economics and Law: Venn
Model
 Four Important Ethics Questions
 
 
 
 

 Three Models of Management Ethics

 Making Moral Management Actionable
 Developing Moral Judgment
 Elements of Moral Judgment
 Summary
 
 

 
 
 
 

3 

Introduction  

Business Ethics
 Public’s interest in
business ethics
increased during the last
four decades
 Public’s interest in
business ethics spurred
by the media
 
 
 
 
 4 

Introduction  

Inventory of Ethical Issues

in Business  

 Employee-Employer
Relations
 Employer-Employee
Relations
 Company-Customer
Relations
 Company-Shareholder
Relations
 Company-
Community/Public Interest
 
 
 
 

5 

Public’s Opinion of
Business Ethics  

 Gallup Poll finds that only

17 percent to 20 percent of
the public thought the
business ethics of
executives to be very high
or high
 To understand public
sentiment towards
business ethics, ask
three questions
o Has business ethics really
deteriorated?
 o Are the media reporting ethical
problems more frequently and
vigorously?
o Are practices that once were socially
acceptable no longer socially
acceptable?
 
 
 
 

6 

Business Ethics: What Does It Really

Mean? 
 
 

Expected and Actual Levels 

of Business Ethics 
Ethical Problem 
Ethical Problem 
Society’s Expectations of Business Ethics 
Actual Business Ethics 
1950s 
Early 2000s 
 Time 

Business Ethics:Today vs. Earlier Period

 
 
 
 

7 

Business Ethics: What

Does It Really Mean?  

Definitions
 Ethics involves a
discipline that examines
good or bad practices
within the context of a
moral duty
 Moral conduct is behavior
that is right or wrong
  Business ethics include
practices and behaviors
that are good or bad
 
 
 
 

8 

Business Ethics: What

Does It Really Mean?  

Two Key Branches of

Ethics
 Descriptive ethics
involves describing,
characterizing and
studying morality
o “What is”
  Normative ethics involves
supplying and justifying
moral systems
o “What should be”
 
 
 
 

9 

Conventional Approach to
Business Ethics  

 Conventional approach to
business ethics involves
a comparison of a decision
or practice to prevailing
societal norms
o Pitfall: ethical relativism
 
Decision or Practice
Prevailing Norms
 
 
 
 

10  

Sources of Ethical Norms  

 
 

Fellow Workers 
Family 
Friends 
The Law 
Regions of Country 
Profession 
Employer 
Society at Large 
Fellow Workers 
Religious Beliefs 
 The Individual
Conscience
 
 
 
 

11  

Ethics and the Law  

 Law often represents an

ethical minimum
 Ethics often represents a
standard that exceeds the
legal minimum
 

Ethics 
Law 
Frequent Overlap
 
 
 
 
 12  

Making Ethical Judgments  

 
 

Behavior or act that has been committed 

Prevailing norms of acceptability 
Value judgments and perceptions of the observer 
compared with

Ethics, Economics, and Law  

6-14
 
 
 
 

14  

Four Important Ethical

Questions  

 What is?
 What ought to be?
  How to we get from what
is to what ought to be?
 What is our motivation for
acting ethically?
 
 
 
 

15  

3 Models of Management
Ethics  

 Immoral Management—A style devoid

of ethical principles and active
opposition to what is ethical.
 Moral Management—Conforms to high
standards of ethical behavior.
 Amoral Management
o Intentional - does not consider

ethical factors
 o Unintentional - casual or careless
about ethical considerations in
business
 

 
 
 
 

16  

3 Models of Management
Ethics  

Three Types Of Management

Ethics  

Moral
Amoral
Immoral
Three Approaches to
Management Ethics  

6-18

Three Models of
Management Morality and
Emphasis on CSR  

6-19

Moral Management Models

and Acceptable Stakeholder
Thinking
 

6-20
 
 
 
 

20  
Making Moral Management
Actionable  

Important Factors
 Senior management
 Ethics training
 Self-analysis
Developing Moral Judgment  

6-22

Developing Moral Judgment  

6-23
 
 
 
 

23  

Developing Moral Judgment  

 External Sources of a
Manager’s Values
 Religious values
 Philosophical values
 Cultural values
 Legal values
 Professional values
 
 
 
 

24  

Developing Moral Judgment  

Internal Sources of a
Manager’s Values
  Respect for the authority
structure
 Loyalty
 Conformity
 Performance
 Results
 
 
 
 

25  

Elements of Moral Judgment  

 Moral imagination
 Moral identification and
ordering
 Moral evaluation
  Tolerance of moral
disagreement and
ambiguity
 Integration of managerial
and moral competence
 A sense of moral
obligation
 
 
 
 

26  

Elements of Moral Judgment  

Amoral Managers  

Moral Managers  

Moral Imagination
Moral Identification
Moral Evaluation
Tolerance of Moral Disagreement and
Ambiguity
Integration of Managerial and Moral
Competence
A Senses of Moral Obligation
 
 
 
 

27  

Selected Key Terms  

 Amoral management
 Business ethics
 Compliance strategy
 Conventional approach to business
ethics
 Descriptive ethics
 Ethical relativism
 Ethics
 Feminist Ethics
  Immoral management
 
 

 Integrity strategy
 Intentional amoral management
 Kohlberg’s levels of moral development
 Moral development
 Moral management
 Normative ethics
 Unintentional amoral management
 
 
 
 

28  

Selected Key Terms  

 Amoral management
 Business ethics
 Ethics
 Immoral management
 Levels of moral development
 Moral management
 Morality
 

Corporate success being a dependent variable has become an increasingly controversial and
the growing number of research and studies around the world has focused more attention
on the basic assumption of corporate ethics and its effects. The purpose of this Literature is
to broaden the boundaries of the debate on corporate success in an era of societal
globalization and increase an understanding of its influence beyond the economic sphere.
The winners and losers resulting are identified along with evidence of the impact of key
Variables or factors which determines corporate success. Ethics and Etiquettes emerging as
major determinants of individual/corporate success.

The article indicates the role, importance, uses and effect of ethics and etiquettes to result
in success. Ethics matters because it makes good business sense to 'do the right thing'.
Additionally good corporate Ethics result in:

 Attracting better talent

 Retaining Employees.
 Retaining customers
 Attracting new Customers
 A positive effect on Return on Investment.
 A positive effect on corporate reputation.

CONCEPT: To understand the concept of Ethics we require management perspective.

Attention is focused on the attitudes, Experiences, Expectations, Problems and changes in
individual and Groups as they interact at work. Answers are sought to such questions as:

 Why do people do the things they do while at work?

 Why do people work Anyway?
 What effects do groups have on individual behavior?
 Are managers and Non managers alike or different in their work motivation and
responsibilities?
 To who do, these managers have responsibilities and obligations?
 What changes and Trends are occurring today with organizations that have a bearing
on people at work? And
 Why do people frequently resist change and ethical behavior?

"Ethical Behavior" means getting the right kind of behavior from people as individuals and
groups. Ethical Behavior is activity that results in the right thing being done. But what is the
right thing? Sometimes it is dictated by our culture. Most of the times though employees of
an organization must determine for themselves what is right or wrong. In our rapidly
changing world there are many situations in which no absolutely clear, indisputable course
of ethical action exists.

Some authors think that laws are dependent upon too heavily as behavioral guidelines. In
business field they propounded 4 codes of ethics like:

 A description of organizational values and principles.

  Standards of relationships among Directors, shareholders, stakeholders Managers,
Employees, Regulators and Customers.
 Standards of behavior which includes provision as compliance on conflicts of interest
and corporate opportunities on competition interplay and on discourse.
 And the implementation or enforcement framework it means tightening upon Ethics.

INTRODUCTION:

In this era of globalization and multinational competition, Ethical practices in business are
assuming importance as relationships with various suppliers and customers are shaped by
ethical practices and mutual trust, so ethical decision taking assumes importance in today's
corporate world. There are various issues relating to ethics and corporate ethics in the
corporate world. This article discusses those issues and also takes into consideration in brief
the two models, which are termed as models of ethical decision making. They are as
follows:

1) Joseph son institute Ethical decision making model : This model is widely
used in taking ethical decisions. It consists of 3 Steps:

 All decisions must take into account and reflect a concern for the interest and
wellbeing of all stakeholders.
 Ethical values and principles always take predence over non ethical ones.
 It's proper to violate an ethical principle only when it's clearly necessary to advance
another true ethical principle, which according to the decision maker's conscience will
produce the greatest balance of good in the long run.

2) The Plus Decision –Making Model : To make it easy to understand and apply
these ethics filters, the researchers have adapted to mnemonic word "PLUS"

 P = Policies (It is consistent with my organizations Policies, Procedures and

Guidelines?)
 L = Legal (Is it Acceptable under the applicable laws and Regulations?)
 U = Universal (Does it conform to the universal principles values my organizations
has adopted?)
 S = Self (Does it satisfy my personal definition of Right, Good and Fair?)

What is unethical Behavior?

The former Prime Minister A.B. Vajpayee call for "Zero tolerance" for corruption in order to
restore ethics cannot become a reality unless we work with the foundation of human values:

The main forms of unethical behavior by individuals can be:

 Lying
 Greed
 Free Riding
 Employee crime
 White collar Crime
 Embezzlement and Fraud
 Bribery
If these unethical behaviors can be overcome then the path towards enlightment can be
achieved. And this was the essence of enlightment of Lord Buddha, Tagore, Nehru, and
Gandhi to name a few. Lord Buddha gave 4 noble truths which constitute the essence of
Buddha's enlightment that he was eager to share with all fellow beings. These have come to
be known as 4 noble truths. They are:

 Life is full of suffering

 There is a cause of this suffering
 It's possible to stop this suffering
 There is a path which lead's to the cessation of these suffering.

The path recommended by Buddha consists of 8 steps and is called the 8 fold noble path.
This gives the essentials of Buddhist ethics. The noble path consists of the Acquisition of the
following 8 good things:

 Right Views
 Right Resolve
 Right Speech
 Right Conduct
 Right Livelihood
 Right Effort
 Right mindfulness
 Right Concentration

It's been rightly said:

"In sin we lust after pleasures, not because they are truly desirable, but because the red
light of passion makes them appear desirable, We long for things not because they are
great in themselves, because our greed exaggerates them. These exaggerations break the
harmony of our life at every step,  and we lose the true standards of Values".
                                          (Tag ore)

CORPORATE ETHICS

Gone are the days of Milton Friedman, Noble Laureate in Economics and Patron Saint of
laissez-Faire, who asserted that the sole objective of a business is and should be the
maximization of shareholder's value. Social missions according to him are the
responsibilities of individuals, social Agencies and the government. Business today far from
being a profit making institution is largely looked upon as a social institution pursuing a
social mission and having a far reaching influence on the way people live and work together.
Modern corporate do not operate in isolation. The resource they make use of are not limited
to those of the proprietors and the impact of their operation is felt also by many a people
who are in no way connected with the business. The shareholders, the suppliers of
resources, the consumers, the employees, the local community and the society at large are
affected by the way an enterprise functions.

The successful functioning of a firm requires social sanction. No business can exist without
the acceptance and sanction of the society in which it carries out its activities. The
organization is so dependent on its social environment that it's very existence, survival and
growth depends on its acceptance and approval by the society. Way back in 1963
Peter.F.Drucker the renowned management guru in his book entitled "The practices of
Management" stated that the relationship between business and society is "like the
relationship between a ship and the sea which engirds it and carries it, which threatens it
with storm and shipwreck, which has to be crossed but which is yet alien and distant, the
environment rather than the home of the ship. But the society is not just the environment
of the enterprise. Even the most private to private enterprise is an organ of the society and
serves a social function. Given the mutual relationship between the business and the
society, Business cannot and should not be allowed to conduct itself in a manner that may
be detrimental to the interest of the society. How the business should conduct its
multidimensional activities in order to pursue its social obligations in a transparent manner
forms the subject matter of corporate ethics.

CORPORATE ETHICS CONCEPTUALISED:

The words "ethics" which in Latin is called "ethic us" and in Greek is called "ethikos" has
come from the word ethos meaning characters or manners."Ethics is thus said to be the
science of morals, a treatise on this moral principles recognized rules of conduct. As applied
to business firms, ethics is the study of good and evil, Right and wrong and just and unjust
actions of businessmen. If protecting others from any harm is considered to be ethical, then
a company which recalls a defective or harmful products from the market is an ethical
company. To be considered ethical, business must draw their ideas about "What is desirable
Behavior "from the same source as any body else would draw. People who are in business
are bound by the same ethical principles that apply to others. In common parlance the term
"corporate ethics" refers to the systems of principles rules of conduct applied to business. In
practice, the term has been used to describe the do's and don'ts for the business the
various things that business should or should not do viz not violating any law, avoiding
unethical practices, making donations to charitable causes, taking up development projects
in backwards areas, paternalism towards employees, good public relations etc.

A GLOBAL PHENOMENON

The concept of corporate ethics is no longer confined to academic discussions. Leading

corporate the world over have started practicing them in their various facets and
dimensions. Levi Strauss, a leader in socially responsible behavior in US refused to open
factories in Alabama, which practiced segregation. It also refused to operate in south Africa
where apartheid existed. On the other hand,  the company deliberately decided to operate
in South Africa and assit the non white population there to enter business. All these
decisions were taken in disregard to profit or growth consideration. Again globalization is
reported to have resulted in an increase in the use of child labour. when Levi Strauss was
accused of using child labour in Bangladesh, it's top executives immediately went there,
stopped their contractors from using child labour, put the children in school and promised to
employ them in future.

MBB the biggest German aerospace company has donated expensive equipments to a New
Delhi hospital for bloodless surgery. Brown Boveri and Migros two large Swiss companies
have involved themselves in a massive programme of consumer education.

Maruti Udyog Limited is another name associated with social responsibility. In the year
1997, of the entire car's sold between January and April this responsible company recalled
about 50000 of their most popular products, Maruti 800 from the Market Because they
suspected them to be made of inferior steel. This made newspaper headlines as it was the
biggest ever recall of cars from the Indian Marketplace.
Critical as the present post globalization phase is Indian corporate with such a questionable
track record cannot afford to take on the global giants, many of whom have established
them as "the leader of the socially responsible behavior". Concerted efforts therefore will
have to be made by the Indian corporate to measure up to his broader expectations of the
society at large. How to do it? Gandhiji furnishes a convincing reply to this billion dollar
question. His doctrine of trusteeship contains practically everything that may enable Indian
Corporates to come out of the present Morass.

DISCORDANT NOTES

It will not be out of place to mention here that fingers have been raised on the trusteeship
principle like many others principles propounded by leaders like M.K.Ganhdhi,J.L.Nehru
Swami Vivekananda etc. During the very life time of these leaders people starting
questioning their theory that it will pay the way for a large no. persons to emerge as the \
trustees of a business enterprise "After all how many persons Gandhiji is prepared to
accommodate as the real trustees of an enterprise" Cryptically asked the opponents of this
theory. However such criticisms don't appear to have shaken the confidence of the leaders
like M.K. gandhiji, Nehru etc. Let us see how these leaders reacted to these criticisms:

"We adhere to my doctrine of trusteeship in spite of the ridicule that has been poured upon
it. It's true that it's difficult to reach. But we made up our minds in 1920 to negotiate that
steep ascent. We have found it worth the effort. The question how many can be real
Trustees according to this definition is beside the point. If the theory is true it's immaterial
whether many live up to it or only one lives up to it. The question is of conviction there's
nothing in this theory which can be said to be beyond the grasp of intellect, though you may
say it's difficult to practice. 

CONCLUSION:

Even a cursory glance at the modern corporate practices will amply demonstrate the
doctrine of trusteeship has proved to be beacon light for the practitioners of modern
management in discharging their responsibility towards the society. It's not a fact that a
business today confesses that it has ruthlessly pursued brute profit long enough unmindful
of it's obligation and impact on the society.can there be any denying the fact that business
owes a debt to the society and hence it has to repay it in a transparent and easily
perceivable manner. In fact it is in response to such a realization that the business has
started taking care of the cross sections of the society:

The consumers, the workers, the equity holders, the national economy and also the ecology
and the environment.

The vision of great leaders and their vision of a socio Economic order have tremendous
potential for shaping the policies and programmes of modern corporate All the leaders it
must be remembered here were not a utopia builder but a men of action practicing the art
of possible. They were not interested in filling in details in their picture of the ideal society.
It's is largely in the specific Indian context that they worked out a few concrete programmes
and which then they related to their larger concept of an Ideal socio economic order. So,
while considering how they further elaborated their idea and filled in some details in their
model. We must remember the specific context with in which they worked and separated
specific remedy from the universal principle.
Business ethics set the standard for how your business is conducted. They define the value
system of how your operate in the marketplace and within your business. With legal scandals
concerning insider trading and employee theft making the news, it is no wonder that businesses
are increasingly giving attention to the ethical basis of their business and how to lead in an
ethical way.

While the examples above seem to be clear cut breaches of ethics, many ethical dilemmas that
not so clear cut are faced on a daily basis in business. In fact, there may not even be a "right" or
"wrong" answer to the dilemma, but how you deal with it will say much about you and your
business. These decisions are often referred to as being in the "gray" area. They are not black-or-
white, but could be argued appropriately either way.

Here is an example. Jane has been operating a consulting business for about a year and has been
doing very well. About a month ago, she decided she needed to hire someone to help her. After
interviewing several candidates, she decided to hire the best one of the group, Sara. She called
Sara on Monday to tell her she had gotten the job. They both agreed that she would start the
following Monday and that Sara could come in and fill out all of the hiring paperwork at that
time.

On Tuesday, of the same week, a friend of Jane's called her to say that she had found the perfect
person for Jane. Jane explained that she had already hired someone, but the friend insisted. "Just
meet Kim. Who knows, maybe you might want to hire her in the future!" Rather reluctantly, Jane
consented. "All right, if she can come in tomorrow, I'll meet with her, but that's all." "Oh, I'm so
glad. I just know you're going to like her!" Jane's friend exclaimed.

And Jane did like her. She like her a lot. Jane had met with Kim on Wednesday morning. She
was everything that Jane had been looking for and more. In terms of experience, Kim far
surpassed any of the candidates Jane had previously interviewed, including Sara. On top of that,
she was willing to bring in clients of her own which would only increase business. All in all,
Jane knew this was a win-win situation. But what about Sara? She had already given her word to
Sara that she could start work on Monday.

And yet she only had the resources to hire one person at this point. Clearly, the best business
decision was to hire Kim. But what about the ethical decision? If her business did poorly or Sara
couldn't provide enough support, the business would suffer. As a result, her family would suffer.
Money was already tight, what with two boys in college. And yet she knew Sara also had a
family she was supporting. Plus, she had been so enthusiastic about starting to work.

Obviously, Jane had a problem - an ethical problem. Should she hire Sara (whom she'd already
given her word) or Kim (who was obviously the best person for the job)? Questions like these
touch on our deepest values. Depending on who you would ask, you would get strong arguments
for both decisions. This is what we mean when we talk about "gray" area. So what is the answer?

According to Kenneth Blanchard and Norman Vincent Peale, authors of The Power of Ethical
Management, there are three questions you should ask yourself whenever you are faced with an
ethical dilemma.
  Is it legal?
In other words, will you be violating any criminal laws, civil laws or company policies by
engaging in this activity?

 Is it balanced?
Is it fair to all parties concerned both in the short-term as well as the long-term? Is this a
win-win situation for those directly as well as indirectly involved?

 Is it right?
Most of us know the difference between right and wrong, but when push comes to shove,
how does this decision make you feel about yourself? Are you proud of yourself for
making this decision? Would you like others to know you made the decision you did?

Most of the time, when dealing with "gray decisions", just one of these questions is not enough.
But by taking the time to reflect on all three, you will often times find that the answer becomes
very clear.

Many businesses are developing an Ethics Policy to clearly state what employees and customers
should expect. This not only defines for your employees what you consider to be inappropriate
actions, but also sends a clear message about who you are and what is important to you. A
number of the resources listed below in the "Related" section provide further information about
training in ethics, setting up ethics policies, and ethical dilemmas faced by others and how they
handled them.

Research indicates that the integrity demonstrated by your business can have a positive effect on
your bottom line. The challenge is to not only believe and voice your ethical principles, but to
also practice them in all your business transactions. When the world knows that your business
can be trusted to act ethically, you will see the results in lower employee turnover and better
customer relations - both well-documented as being critical to business survival. The old adage
that "what you sow, you will reap" also supports this premise. Sow the seeds of ethical values in
your business and you will see it return in value to your business.

Ethics is one of the oldest disciplines, the object of study of which is morality. The term ethics
was introduced by Aristotle, who thoughtfully remarked that ethics "helps to know what to do
and what should be avoided". 

Modern ethics is first and foremost, the science that allows to consider human relationships, as
well as to evaluate the behavior of people in terms of generally accepted norms. There are
professional ethics, which includes a system of moral norms of human behavior, belonging to a
particular social group. An entrepreneur should not only know the ethical behavior standards, but
also to follow them.

There are so-called professional ethics, and in particular - business ethics, which includes
standards of entrepreneur behavior. Entrepreneurial activity is impossible without the numerous
contacts with people; it is not designed to work alone.
What is the difference between business etiquette and business ethics? Business ethics is
primarily a negotiation with partners; ethics recordkeeping; use ethical methods of competition.
Business ethics considered to be the same for businessmen from different countries. Business
etiquette - are certain rules governing the work style, manner of communication between firms,
the appearance of businessmen, sequence and manner of negotiating and so on.

Business etiquette is formed under the influence of certain traditions and the prevailing historical
conditions of the country. Therefore, those entrepreneurs who cooperate with foreign partners, is
very useful to have a national business etiquette cooperating party prior to the joint activity.

The issues of business social responsibility, ethics, and environmental protection are on the
agenda of modern companies.Social responsibility of business ethics and environmental
protection are equally important and urgent tasks of modern business than the financial
performance of the organization or the pay of top managers, because the issues of corporate
responsibility are able to provide the same impact on business reputation and business value, as
well as standard indicators of economic growth.

"Social responsibility is a voluntary effort on the part of business to take various steps to satisfy
the expectation of different interest group... the interest group may be owners, investors,
employees, consumers, government, society or community. " (nos.org, 05.21.2009)

In our days environmental protection, for some business industries as automotive industry, drives
to new technology and innovation. And this is true even for General Motors Company. "As an
automotive manufacturer, environmental responsibility is a key issue for GM. It is playing an
active role in the development of hydrogen fuel-cell powered vehicles that emit only clean water
and offer twice the energy efficiency of traditional engines." (Alex Blyth, 11.05.2003)

Without being perceived as a sign of economic strength, social responsibility has today the form
of corporate civic - a way to create stable and profitable business relationship for all parties, a
non-aggressive way, less harmful to work around the community, a friendly way of
communication with society. In this form, social responsibility is nothing but a modern and open
way of flexible management. Practices and social responsibility programs are more accessible
and more interesting for small business enterprises.

Questions emanate as to the ethical considerations of the professional's liability and how power
and dominance should be utilized in service to the society and customer. Most professions have
internally implemented principles of practice that associates of the profession must abide by, to
forbid exploitation of the customer and uphold the wholeness of the profession. This is not only
to the advantage of the client but to the advantage of those belonging to the profession. For
instance, an American business may ask an engineer to manifest the safety of a project which is
not safe. While one engineer may deny manifesting in the project on moral basis, the business
may find a less painstaking engineer who will be ready to manifest in the project for a payoff,
thus saving the business the cost of restyling. Disciplinary principles permit the profession to
formulate a standard of behavior and assure that one meets this standard, by checking them from
the professional body if they do not practice consequently. This permits those professionals who
act with moral sense to practice in the cognition that they will not be counteracted commercially.
by those who have less ethical qualms. It also maintains the public's trust in the profession,
meaning that the public will continue to seek their services.

One can show integrity in every step of professional life, and that comprises the truthfulness of
statements in one's curriculum vitae. It is common cognition that many people amplify their
skills or experience when searching for jobs. They may over-accentuate their role in projects,
their participation in certain industries or areas, or their acquaintance with various Information
Technology packages. The interviewers can easily catch this foolishness, and thus one will have
to face failure at the very beginning by not getting selected for the particular job. Potency-based
interviewing is grounded on the premise that past performance is a good revealer of possible
future performance. It uses elaborate questions about what one has done to inculcate one's your
past behaviors. Thus, starting with one's resume, one can demonstrate his/her ethical values in
the professional arena. In the professional arena, a person should not adopt unethical methods,
such as accepting bribes, trying to hurt the sentiments of associates or not showing respect to the
sub-ordinates.

Everyone has an ethical ambit. As a professional, one needs to make sure that one has a firm
cornerstone. If one can meet the moral standards as expected of him/her, one is potent to
encourage and urge on others and attain career honors and rewards. 

Workplace Ethics is a subject that we have all heard of. In fact, the subject of Ethics in general is
something that most people are familiar with. And, what is commonly understood about ethics is
there are ethics and then there are workplace ethics. What most people do not realize, however,
is that there is no such thing as workplace ethics; ethics are the same, (or, should be) whether in
the workplace or in personal life.

What's It About

Ethics are about making choices that may not always feel good or seem like they benefit you but
are the right choices to make. They are the choices that are examples of model citizens and
examples of the golden rules. We've all heard the golden rules: Don't hurt, don't steal, don't lie,
or one of the most famous: Do unto others as you would have done to you. These are not just
catchy phrases; these are words of wisdom that any productive member of society should strive
to live by.

In our personal lives, most people try to do exactly that. Ethics are thought of by many people as
something that is related to the private side of life and not to the business side. In many
businesses, having ethics is frowned upon or thought of as a negative subject. This is because
business is usually about doing what's best for number one, not about what's really the right thing
to do. You probably are already feeling uneasy just reading this.

A Good Example

Take ENRON, for example. Were the actions of ENRON CEO a good example of ethics? No.
But, what they WERE was a CLASSIC example of two things: One, those actions displayed how
ethics were not used in any way. Two, their actions painted a grim and realistic picture of what
can happen when ethics are neglected. Had ethics been considered in the first place by the
leaders of the company, there would have been no scandal. If ethics were used on a daily basis in
every company, there would never be scandals.

Martha Stewart comes to mind when speaking of ethics. Again, there is a feeling of uneasiness
when dealing with this topic. But, why is it like that? Ethics are supposed to improve our lives
and invoke good feelings. Perhaps the reason ethics is such a sore subject is because they are so
often poorly used, if used at all.

A New Way

Ethics are making a comeback. To begin with, more and more corporations and businessmen and
woman are now realizing that ethics are not checked at the door when entering the workplace.
Ethics have every bit as much a place in the public as they do the private. How is it there should
be separate sets of ethics, depending upon whether it is your personal life or your work life? The
answer is that there should not be a separate set and in light of recent events that we see on our
television sets as of late, more and more companies are realizing this fact.

Some companies are incorporating ethics into their training. It is is a subject that can go hand-in-
hand with business and when employees and CEO's alike understand what ethics are about,
business can improve. Not only will the community take note of the ethical nature of a business
but also so will customers.

Periodic reevaluations are suggested in ethics training as well, since times change many things
that some would never consider ethical or non-ethical. For instance, when the first computer
hacker sent a worm into a university computer system and crippled the entire network, it was
considered a prank more than an unethical act. Computers were new, at the time and no one had
ever been able to do such a thing before. With new times comes new technology and new ways
of doing things. Ethics will still play a part of it all and refreshing ethics training only strengthens
what has already been learned, when new ages come about.

In the end, it’s all about what a person understands about ethics. Many university curriculums are
now heavily applying the teaching of Ethics and for good reason. Young minds will take this
information into the workforce and understand that ethics need to be applied there as well as in
the private sector. Corporations will be able to avoid embarrassing scandals that are presented all
over the national news. Small business will be able to keep and attract more clients and
customers. Negotiations between businesses could be accomplished with more consideration for
the other company in mind, which would only help both.

Above all, a high level of ethics in your business should be in place at least for the customers. If
anything, it is the customer that should be considered the most when it comes to ethical business
practices. In the long run, a company will reap great profits from a customer base that feels it is
being treated fairly and truthfully.