BUSINESS ETHICS Flashcards
(34 cards)
What is corporate social responsibility?
A belief that businesses have a responsibility towards society as well as their own interests.
What was the main claim of Friedman in his shareholder theory?
“the social responsibility of business is to increase its profits.”
What did Friedman state social responsibility was?
A delusion, for him the only responsibility for corporations was to their stockholders.
How did Friedman use Adam Smith’s invisible hand theory to justify his shareholder theory?
Smith holds that, in the economic sphere, self-interested actions tend to promote the general welfare.
How is Friedman’s theory criticised?
Today ethics in business and social responsibility to stakeholders are becoming crucial as consumers are becoming increasingly vocal.
What is Freeman’s Stakeholder theory?
Says that corporations should be run for the benefit of all “stakeholders”, not just the shareholders.
What does the Stakeholder theory claim executives have a duty to promote?
The interests of all affected parties and balance their interests appropriately when they conflict.
What is the issue with giving this power to executives?
The “balancing” of interests could be abused.
What does Wilcockson state about the relationship between business and consumers?
Calling people consumers rather than customers, suggests a subtle but significant shift in the way businesses regard people.
How does Adam Smith see the relationship between employers and employees?
As being based on the need of the employee for work and the need of the employer for labourers.
Whats does Marx state about the relationship between employers and employees?
Unequal - to survive the proletariat have to work for the bourgeoise.
Give a problem for employees in the UK.
Multi-national companies are increasingly out sourcing work to poorer countries - impacting on workers in the UK.
Give one conference that has been held to discuss the affect of business on the environment.
Paris agreement - governments are being called on to reduce pollution and the progression of global warming.
When do people tend to ‘whistle-blow’?
When they think that the normal complaints procedure within the business will not remedy the situation.
How can whistle-blowers themselves be considered acting unethically?
Because they may bring the business into disrepute and could have handled the problem more discreet, when they only represent one side of the story.
Give two reasons why someone might become a whistle-blower.
- Illegal activity
2. Danger to the public
Give an organisation that protects whistle-blowers.
“Freedom to Care”
What is globalisation?
The idea that the world is getting smaller due to the interconnection of economies, information and culture.
Why has the pace of globalisation increased?
- Technological changes e.g. communication.
- De-regulation.
What is the impact of globalisation? Give 2.
- Large multinational companies control 2/3 of all global products.
- Increase in child labour and sweatshops.
What may the idea of “good ethics is good business” be motivated by?
- A pragmatic approach e.g. Adam Smith.
- A Kantian sense of duty.
How might corporate social responsibility be measured?
FTSE4Good Index. Companies are given an ESG rating.
What does the idea of “good ethics is good business” mean?
That doing the right thing will make business more attractive and increase its profits because consumers will like and trust it.
Give two positive of using Kantian ethics in business.
- “Duty for duty’s sake” - a business should behave ethically out of a sense of duty.
- CI- Universal Law. E.g. “Businesses can use bribes.”
