BUSINESS ETHICS

I. ETHICS

Ethics refers to the moral principles that govern a person’s behavior or the
conducting of an activity. It is the branch of knowledge that deals with moral
principles. Ethics is not only important in a professional setting but also in our
personal lives. Here’s a brief overview:

Professional Ethics: Professional ethics are standards or codes of conduct set

by people in a specific profession. They are the principles and values that guide
the actions of individuals in the business environment. These standards are
adopted by various professions to ensure consistency and integrity. They often
include aspects such as:

1. Integrity: Professionals should provide their services with honesty and

dedication. They should always strive for excellence in their work.
2. Confidentiality: Professionals should respect and protect the privacy of
their clients. They should not disclose any confidential information
unless required by law.
3. Accountability: Professionals should take responsibility for their
actions and decisions. They should also strive to rectify any errors on
their part.
4. Respect: Professionals should respect the rights and dignity of all
individuals. They should promote a work environment that is free from
discrimination and harassment.

Personal Ethics: Personal ethics, on the other hand, are the values and
principles that an individual believes in and uses in their everyday life. They
guide our decisions and behaviors and are influenced by various factors such as
culture, family, religion, and personal experiences. Personal ethics often
include values such as:
 1. Honesty: Being truthful to oneself and others.
2. Respect: Acknowledging the value and worth of individuals and
treating others as you would like to be treated.
3. Responsibility: Taking ownership of one’s actions and their
consequences.
4. Fairness: Treating others equally and making decisions without
favoritism or prejudice.

Both professional and personal ethics play a crucial role in shaping an

individual’s behavior and decision-making process. They help us distinguish
between what is right and wrong and guide us in our interactions with others.
It’s important to note that while professional ethics are often formalized and
enforced by professional bodies, personal ethics are more subjective and vary
from person to person. However, both are essential for maintaining trust and
integrity in both our professional and personal lives.

II. ETHICAL RESPONSIBILITIES

Ethical responsibilities refer to the duties that individuals, employees, and

organizations have to act in ways that are morally right or acceptable. These
responsibilities can vary based on different factors such as profession, industry,
and cultural context. They often include:

1. Honesty: Being truthful and transparent in all actions and

communications.
2. Integrity: Acting consistently with principles, values, and beliefs.
3. Fairness: Treating all people equally and making decisions without
bias.
4. Respect: Acknowledging the rights, dignity, and perspectives of all
individuals.
Legal Responsibilities: Legal responsibilities are the duties that are enforced
by law. These responsibilities can be defined at different levels, including local,
state, national, and international law. They often include:

1. Compliance with Laws: All individuals and organizations are required

to follow the laws of their country and the countries where they operate.
2. Respect for Rights: Legal responsibilities include respecting the rights
of others, including intellectual property rights, privacy rights, and non-
discrimination.
3. Reporting Obligations: Certain professions and situations require
individuals to report specific types of activities to legal authorities.
4. Liability: Individuals and organizations can be held legally responsible
for their actions, particularly if those actions cause harm to others.

It’s important to note that ethical responsibilities often go beyond legal

responsibilities. While legal responsibilities are typically clearly defined and
enforceable by law, ethical responsibilities are often more subjective and open
to interpretation. However, both are critical for maintaining trust and integrity
in professional and personal relationships.

III. PROFESSIONAL INTEGRITY IN BUSINESS:

Professional integrity refers to the consistency of actions, values, methods,

measures, principles, expectations, and outcomes. In the context of business, it
means adhering to ethical standards and doing the right thing in all business
interactions. Here’s a brief overview:

Honesty: Professionals with integrity are honest and transparent in their

dealings. They do not mislead their clients, employees, or business
partners. They communicate openly and ensure that their actions match
their words.
 Accountability: Professionals with integrity take responsibility for their
actions. They do not shy away from owning up to their mistakes and are
willing to face the consequences of their actions. They also hold others
accountable for their actions.

Consistency: Professionals with integrity are consistent in their actions.

They have a clear set of values and principles that they adhere to,
regardless of the situation. This consistency builds trust with clients,
employees, and business partners.

Respect: Professionals with integrity respect others. They value

diversity, are open to differing opinions, and treat others with dignity
and fairness. They also respect the laws and regulations that govern their
profession and industry.

Ethical Decision Making: Professionals with integrity make decisions

based on what is ethically right and fair rather than what is profitable or
convenient. They consider the impact of their decisions on all
stakeholders and strive to make decisions that benefit all parties
involved.

Having an ethical mindset in business is not just about adhering to laws and
regulations. It’s about going beyond what is legally required and striving to do
what is right. It’s about being honest, fair, and respectful in all business
dealings. It’s about building a reputation for integrity and earning the trust of
clients, employees, and business partners.

IV. ETHICAL COMPANIES

Ethical companies are organizations that prioritize doing business in a way that
is fair, transparent, and beneficial to all stakeholders, including employees,
customers, the community, and the environment. They often go beyond what is
legally required and strive to do what is right. Here are some examples of
ethical companies:

1. Aflac Incorporated: Aflac is the largest provider of supplemental

insurance in the US. It is known for its philanthropy, fair
purchasing, and ethical supply chain. Aflac has been an Ethisphere
honoree for 16 consecutive years1.
2. Ecolab: Ecolab is the global leader in water, hygiene, and infection
prevention solutions and services. Their strategy is based on
chemistry and digital technology working hand in hand to deliver
customized solutions that minimize human and environmental
impact1.
3. International Paper: One of the leading producers of fiber-based
products, International Paper has a long roster of ethical and
sustainable practices contained in the so-called IP Way Forward1.
4. Accenture: A leading global professional services company,
providing a broad range of services in strategy and consulting,
interactive, technology and operations, with digital capabilities
across all of these services.
5. Dell Technologies: A unique family of businesses that provides the
essential infrastructure for organizations to build their digital future,
transform IT and protect their most important asset, information.

These companies are recognized for their unwavering commitment to business

integrity. They promote transparent and sustainable business practices, use
renewable materials, and are aware of their social impact.

V. DEONTOLOGY
is a branch of ethics that revolves around duty or obligation. It suggests that an
action is morally right if it aligns with a certain set of rules, duties, or
obligations, regardless of its outcome. The term “deontology” is derived from
the Greek words “deon” and “logos,” which mean “duty” and “science,”
respectively.

Here are some key points about deontology:

Rule-Based Ethics: Deontological ethics are rule-based. They suggest

that there are certain absolute ethical standards that people must adhere
to, regardless of the circumstances.

Intent Over Outcome: Deontologists argue that the morality of an

action should be based on whether that action itself is right or wrong
under a series of rules, rather than based on the consequences of the
action.

Duty and Obligation: Deontologists believe in fulfilling one’s duty and

obligations. They argue that certain actions are inherently right or
wrong, regardless of their outcome.

Universal Application: Deontological principles are universally

applicable. They apply to everyone, regardless of their personal goals or
desires.

One of the most famous deontologists was the philosopher Immanuel Kant. He
argued that moral obligations stem from “categorical imperatives” that bind us
morally, regardless of our personal desires or the potential outcomes of our
actions.

In the context of business ethics, deontology might imply that businesses have
certain ethical duties that they must fulfill, regardless of the impact on their
profitability or success. For example, a business might have a duty to treat its
employees fairly, to be honest in its advertising, or to avoid causing harm to the
environment, even if these actions do not maximize profits.

VI. KANTIAN ETHICS, while highly influential, has been subject to critique
in the context of business management. Here are some key points of critique:

Absolutism: Kantian ethics is often criticized for its absolutist nature. It

does not offer management a choice other than to be either ethical or
unethical1. There is no middle ground and one’s behavior, and even
more importantly one’s intentions, cannot be both — ethical and
unethical — at the same time1. This can be problematic in complex
business situations where ethical dilemmas may not have a clear right or
wrong answer.

Lack of Practical Guidance: While Kantian ethics provides a strong

theoretical framework, it can be criticized for not providing enough
practical guidance for managers. The categorical imperative, while a
powerful concept, can be difficult to apply in practice1.

Contradiction with Business Goals: Kant’s universal openness is in stark

contradiction of many managerial practices that include, for example,
non-disclosure clauses and are done behind closed doors 2. These
practices are often set up not to be universal but to serve a narrowly
defined situation. Because they exclude the free market they achieve the
ultimate goal of management – profit-maximization.

Overemphasis on Rationality: Kantian ethics places a strong emphasis

on rationality and logic. However, in the real world, decisions are often
influenced by emotions, intuition, and other non-rational factors 3. This
 overemphasis on rationality can make Kantian ethics seem detached
from the realities of human decision-making.

Neglect of Consequences: Kantian ethics is often criticized for

neglecting the consequences of actions. In business, the outcomes of
decisions can have significant impacts on stakeholders, and these
consequences are often a crucial part of ethical considerations3.

These critiques do not necessarily invalidate Kantian ethics as a whole, but

they highlight areas where the theory may need to be adapted or supplemented
to be more applicable to the complex ethical challenges faced in business
management.

VII. JUSTICE THEORY

Justice Theory, often associated with the work of philosopher John Rawls, is a
significant concept in business ethics. Here’s an overview:

Justice Theory: Justice Theory is based on the idea that fairness is the most
important consideration for justice. Rawls developed this theory based on
Enlightenment ideas of thinkers like John Locke and Jean-Jacques Rousseau,
who advocated social contract theory.

Key Principles:

1. Original Position: This is a hypothetical situation in which rational

people can arrive at a contractual agreement about how resources are to
be distributed in accordance with the principles of justice as fairness.
2. Veil of Ignorance: This principle suggests that decisions should be made
without knowledge of one’s status or identity to ensure fairness.
3. Unanimity of Acceptance: The original position should be unanimously
accepted.
Application in Business: In a business context, Justice Theory can serve as a
guideline for corporate governance. It allows businesses to understand the right
path in terms of a balance between ‘moral’ and ‘just’ obligations of a business
operating in a community3. This theory allows setting up a benchmark for
businesses to practice corporate governance as effectively as possible.

VIII. CRITIQUE OF JUSTICE THEORY

Justice Theory, particularly as proposed by John Rawls, has been subject to

critique in the context of business management. Here are some key points of
critique:

Absolutism: Justice Theory is often criticized for its radical, egalitarian

form of liberalism in which redistribution of material goods and services
occurs without regard for historical context or the presumption many
share that it inherently is wrong to take the property legally acquired by
one and distribute it to another.

Lack of Practical Guidance: While Justice Theory provides a strong

theoretical framework, it can be criticized for not providing enough
practical guidance for managers. The principles such as the “original
position” and “veil of ignorance,” while powerful concepts, can be
difficult to apply in practice.

Contradiction with Business Goals: Rawls’s universal openness is in

stark contradiction of many managerial practices that include, for
example, non-disclosure clauses and are done behind closed doors.
These practices are often set up not to be universal but to serve a
narrowly defined situation.
 Overemphasis on Rationality: Justice Theory places a strong emphasis
on rationality and logic. However, in the real world, decisions are often
influenced by emotions, intuition, and other non-rational factors. This
overemphasis on rationality can make Justice Theory seem detached
from the realities of human decision-making.

Neglect of Consequences: Justice Theory is often criticized for

neglecting the consequences of actions. In business, the outcomes of
decisions can have significant impacts on stakeholders, and these
consequences are often a crucial part of ethical considerations.

These critiques do not necessarily invalidate Justice Theory as a whole, but

they highlight areas where the theory may need to be adapted or supplemented
to be more applicable to the complex ethical challenges faced in business
management.

IX. EUDAIMONIA/ TELOS/ TELEOGY

Eudaimonia is a Greek term often translated as “happiness” or “flourishing”. It

was a central concept in ancient Greek ethics, particularly in the work of
Aristotle1. In the context of business ethics, eudaimonia refers to the idea of
pursuing activities that lead to human flourishing, growth, authenticity, and
excellence23. It suggests that ethical purposes in business can motivate
individuals and promote organizational resilience.

Telos/Teleology: Telos is a Greek term meaning “end” or “goal”. Teleology is

the study of the purposes or goals of actions4. In ethics, a teleological approach
focuses on the outcomes or consequences of actions to determine their moral
value. This is in contrast to deontological ethics, which focuses on the inherent
rightness or wrongness of actions, regardless of their outcomes. In business
ethics, teleology might involve making decisions based on the potential
outcomes for stakeholders, the business, or society.
X. UTILITARIANISM:

Utilitarianism is a form of teleological ethics that holds that the most ethical
choice is the one that will produce the greatest good for the greatest number. It
is a form of consequentialism, meaning it judges actions based on their
outcomes or consequences. Utilitarianism is often used in business decision-
making because it allows for a cost-benefit analysis, weighing the potential
positive and negative outcomes of different choices. However, it also has
limitations, such as the difficulty of predicting outcomes and the potential for
infringing on individual rights in the pursuit of the "greater good".

Sure, let’s delve into the concepts of “Shareholders” and “Stakeholders” in the
context of Business Ethics.

XI. SHAREHOLDERS AND STAKEHOLDERS

Shareholders are individuals, companies, or institutions that own shares in a

public or private company. They advance capital to a company’s managers,
who are supposed to spend corporate funds only in ways that have been
authorized by the shareholders. The main goal of shareholders is for the
company’s share price to increase. As Milton Friedman wrote, "There is one
and only one social responsibility of business — to use its resources and
engage in activities designed to increase its profits so long as it … engages in
open and free competition, without deception or fraud".

On the other hand, Stakeholders is a broader category that refers to all parties
with an interest in a company’s success. This includes shareholders, customers,
employees, suppliers, and the local community. Stakeholder theory asserts that
managers have a duty to both the corporation’s shareholders and "individuals
and constituencies that contribute, either voluntarily or involuntarily, to [a
company’s] wealth-creating capacity and activities, and who are therefore its
potential beneficiaries and/or risk bearers".
In recent years, there has been a shift from a shareholder-centric model to a
stakeholder-centric model. This is in line with the emergence of corporate
social responsibility (CSR), a business model that encourages companies to
take into consideration the interest of a wide range of stakeholders and
constituents in the business environment. Under this philosophy, the aim of
companies has evolved from “making money” to creating shared value,
operating under a more sustainable approach from a social and economic
perspective.

In conclusion, while shareholders are primarily interested in financial returns,

stakeholders encompass a broader range of interests, including social and
environmental impacts. Balancing these interests is a key aspect of business
ethics.

XII. FRIEDMAN DOCTRINE

The Friedman Doctrine, also known as the Shareholder Theory, is a normative

theory of business ethics proposed by economist Milton Friedman. Here are the
key points:

1. The primary social responsibility of a business is to increase its profits1.

2. Shareholders are viewed as the economic engine of the organization and
the only group to which the firm is socially responsible.
3. The goal of the firm is to maximize returns to shareholders.
4. Friedman argues that shareholders should decide for themselves what
social initiatives to participate in, rather than having an executive, whom
the shareholders appointed for business purposes, decide such matters.
5. Friedman introduced this theory in a 1970 essay for The New York
Times titled "A Friedman Doctrine: The Social Responsibility of
Business is to Increase Its Profits".
6. He argued that a company has no social responsibility to the public or
society; its only responsibility is to its shareholders.
 7. He justified this view by considering to whom a company and its
executives are beholden.
8. Friedman argued that an executive spending company money on social
causes is, in effect, spending somebody else’s money for their own
purposes.

The doctrine has been influential in the corporate world from the 1980s to the
2000s. However, it has attracted criticism, particularly since the financial crisis
of 2007–2008.

XIII. TYPES OF SHAREHOLDERS AND STAKEHOLDERS

Sure, let’s break down the types of shareholders and stakeholders:

Shareholders can be classified into two types:

1. Common Shareholders: They own a company’s common stock and have

the right to vote on matters concerning the company. They are the more
prevalent type of stockholders1.
2. Preferred Shareholders: They own a share of the company’s preferred
stock and have no voting rights. Instead, they are entitled to a fixed
amount of annual dividend, which they will receive before the common
shareholders are paid.

Stakeholders, on the other hand, can be categorized as3:

1. Internal Stakeholders: These are individuals or groups within a

company, such as employees, company executives, and board
members3. They have a direct relationship with the company.
2. External Stakeholders: These are individuals or groups outside of the
company that are affected by its operations. Examples include suppliers,
distributors, or community members.
It’s important to note that shareholders are always stakeholders in a
corporation, but stakeholders are not always shareholders. A shareholder owns
part of a public company through shares of stock, while a stakeholder has an
interest in the performance of a company for reasons other than stock
performance or appreciation.

XIV. PRIORITIZING STAKEHOLDERS

Prioritizing stakeholders is a crucial process in stakeholder management. It

involves identifying and ranking stakeholders based on their level of influence,
impact, and interest in a project. Here are some steps and techniques to
prioritize stakeholders:

Identify Stakeholders: Start by creating a list of all impacted areas or

departments, internal and external. Stakeholders can include customers,
employees, community members, politicians, media, shareholders,
suppliers, investors, government departments, regulators, neighboring
businesses, and nearby residents.

Analyze Impact: Determine the significance of stakeholders and their

needs. This enables project managers to allocate resources and address
concerns accordingly.

Stakeholder Mapping: This involves classifying stakeholders based on

their level of influence, impact, and interest. From there, you can
develop engagement strategies according to the stakeholder mapping
groups you’ve created.
 Engage Stakeholders: Engaging stakeholders can help empower people,
create sustainable change, build relationships, build a better
organization, increase success, and educate.

Remember, different aspects of operations have different sets of stakeholders

and the respective extents of implications on various stakeholders. For
example, a production plant design has direct and strong implications on the
environment and employees, while a supply chain has implications on the
environment, suppliers, consumers, and so on.

In general, employees are often prioritized as they are what make up the
company and they are the key stakeholders to convert financial resources into
what customers need. Good work culture and environment promote a healthy
and stable workforce. Happy employees mean good products and services,
which leads to happy customers, which then leads to happy investors.

XV. PROMISES OF BUSINESS TO STAKEHOLDERS

Businesses often make promises to stakeholders to ensure trust, cooperation,

and long-term success. Here are some common promises that businesses make
to their stakeholders:

For Customers: Businesses promise to offer quality and valuable

products and services that incorporate innovative and traditional
technologies as well as sensibilities and refined creativity.

For Employees: Businesses place the highest priority on the health and
safety of all people who work with them. They aim to create a corporate
culture where each person’s individuality and creativity are respected,
and that encourages everyone to take on challenges to achieve self-
fulfillment through their work.
 For Business Partners: Businesses value mutual understanding and trust
and build sound business relationships with all of their business
partners, including distributors and suppliers.

For Regional Communities and Society: Businesses comply with the

laws with the highest ethical standards, and as good corporate citizens,
contribute to the development of society and culture through their
accumulated technologies and expertise to address various social issues
as well as efforts that only they could do.

For Earth: Businesses actively work to reduce CO2 emissions and

conserve and make effective use of resources such as timber, and take a
role as a company to hand down the precious global environment to the
future.

For Shareholders: Businesses ensure sound business performance,

continue to deliver proper returns to shareholders, and pursue
sustainable development through transparent and high-quality
management.

It’s important to note that these promises can vary depending on the company’s
mission, values, and the specific needs of its stakeholders. Also, it’s worth
mentioning that there are debates about whether these promises are always kept
or whether they are sometimes more of a public relations exercise

XVI. BURDEN OF THE SOCIAL CONTRACT

The “burden of the social contract” in Business Ethics refers to the

responsibilities that businesses have towards society, as per the principles of
social contract theory. This theory is often used to address questions about the
responsibilities of business actors.

Social contract theory asks you to consider ethical decisions behind a “veil of
ignorance”, not knowing how you will be affected by the outcome. It’s a
framework based more heavily on political theory, and begins by considering
the role of government.

In the context of business ethics, the social contract between a business and
society can be seen as an agreement where businesses are given certain rights,
such as the right to operate and make a profit. In return, they have certain
responsibilities or burdens, such as operating ethically, respecting human
rights, protecting the environment, and contributing to the communities in
which they operate.

One of the key figures in this field, Thomas Donaldson, has developed a
comprehensive account that aims to justify the existence of for-profit
corporations and to specify and ground their responsibilities 1. His work
suggests that we would do well to continue engaging with his account because
of its distinctive and challenging conception of the purpose and responsibilities
of productive organizations.

However, it’s important to note that the specifics of the “burden of the social
contract” can vary depending on the societal and cultural context, the nature of
the business, and other factors. Therefore, it’s crucial for businesses to
understand and respect the specific social contracts that apply to them.

XVII. CORPOATIONS AND LIABILITY

In the context of Business Ethics, “Corporations and Liability” refers to the

legal responsibilities that corporations have. This is a complex area that
involves various aspects of law and ethics.

Limited Liability: One of the key concepts in corporate law is that of limited
liability. This means that the owners (shareholders or stockholders) of
corporations, as well as directors and managers, are protected by laws stating
that in most circumstances, their losses in case of business failure cannot
exceed the amount they paid for their shares of ownership 1. This concept
increases the investment’s attractiveness to potential new shareholders and
ultimately increases both the potential number of willing investors and the
amount of capital they are likely to invest.

Corporate Responsibility: However, corporations also have responsibilities.

They are expected to operate ethically, respecting human rights, protecting the
environment, and contributing to the communities in which they operate. This
is often referred to as Corporate Social Responsibility (CSR).

Torts and Liability: In reference to business torts, a corporation has a level of

liability for the period of time the employees or directors were employed
depending on the type and the expected result of the tort. Corporations will, as
a general rule, avoid the liability for intentional torts where employees and
directors were involved.

It’s important to note that the specifics of corporate liability can vary
depending on the societal and cultural context, the nature of the business, and
other factors. Therefore, it’s crucial for businesses to understand and respect
the specific laws and ethical guidelines that apply to them.

XVIII. GARRETT HARDIN: TRAGEDY OF THE COMMONS

“Tragedy of the Commons” is a term coined by ecologist Garrett Hardin in a

1968 Science Magazine article1. It refers to a situation where individuals,
acting independently and rationally according to their self-interest, behave
contrary to the best interests of the whole group by depleting a common
resource.

In the context of Business Ethics, this theory is often used to explain the
environmental degradation caused by businesses. When businesses act in their
self-interest and overuse or pollute shared resources (like air, water, or forests),
it can lead to resource depletion or environmental harm, which is detrimental to
society as a whole.
Hardin’s theory has profoundly influenced environmental thinking and has
been a foundational case study in business ethics 3. It highlights the need for
regulations and collective action to manage shared resources sustainably.
However, the credibility of the essay’s premises has been undermined by both
experience and scholarship, challenging the assumption that humans are
innately and incorrigibly self-interested in their behavior.

In the corporate world, this theory underscores the importance of Corporate

Social Responsibility (CSR). Businesses, especially large corporations, are
encouraged to act responsibly, considering the impact of their actions on the
environment and society.

However, it’s important to note that the “Tragedy of the Commons” is a

simplified model, and real-world situations can be more complex, involving
various stakeholders, regulations, and market forces.

XIX. A MORAL MINIMUM VS. A MORAL MAXIMUM

In the context of Business Ethics, the terms “moral minimum” and “moral
maximum” refer to different standards of ethical behavior that a business could
choose to follow.

Moral Minimum: The “moral minimum” is the least amount of ethical behavior
required by society1. This often equates to simply following the law 1. For
example, a company might comply with all environmental regulations but do
nothing beyond that to protect the environment1. The moral minimum is about
avoiding harm and wrongdoing.

Moral Maximum: On the other hand, the “moral maximum” represents the
highest standard of ethical behavior. This often involves going above and
beyond legal requirements and actively working to promote good and benefit
others. For instance, a company adhering to the moral maximum might not
only comply with environmental regulations but also implement innovative
practices to reduce its carbon footprint and contribute positively to the
environment.

In practice, most businesses fall somewhere between these two extremes. It’s
important to note that while the law can guide businesses towards the moral
minimum, achieving the moral maximum often requires a commitment to
ethical principles and values that go beyond what is legally required.

XX. CAP AND TRADE

“Cap and Trade” is a market-based strategy used in regulations to reduce

greenhouse gases1. The government sets a limit or ‘cap’ on the amount of a
pollutant that can be emitted. Companies or other groups are issued emission
permits and are required to hold an equivalent number of allowances (or
credits) which represent the right to emit a specific amount. The total amount
of allowances and credits cannot exceed the cap, limiting total emissions to that
level.

Companies that need to increase their emission allowance must buy credits
from those who pollute less. The transfer of allowances is referred to as a trade.
In effect, the buyer is paying a charge for polluting, while the seller is being
rewarded for having reduced emissions.

In theory, those who can reduce emissions most cheaply will do so, achieving
the pollution reduction at the lowest cost to society. Cap and trade thus
provides a balance between environmental and economic considerations.

However, ethical issues can arise with cap and trade systems, such as the
potential for companies to pass the cost of buying credits onto consumers.
Therefore, it’s crucial for businesses to consider the ethical implications of
their actions within such systems

XXI. A FAIR WAGE

“A fair wage” in the context of Business Ethics refers to the ethical obligation
of employers to compensate their employees adequately

Concept: A fair wage is often defined as a wage that allows an employee to

enjoy a ‘normal’ standard of living 3. It’s not just about one worker’s pay or
one company’s policy, but an economic concept critical to the nation as a
whole.

Importance: Ensuring workers are paid a fair wage is not only an ethical
practice; it is also an effective way to achieve employees’ highest and most
productive level of performance. It can make workers more loyal to the
company and less likely to leave for a slightly better wage elsewhere.

Issues: Compensation is a controversial issue in the United States. The ethical

issues for the business community and for society at large are to identify
democratic systems that can effectively eradicate the financial suffering of the
poorest citizens and to generate sufficient wages to support the economic
sustainability of all workers.

Economic Data: Over the thirty-five years between 1980 and 2014, the
inflation-adjusted hourly wages of most middle-income American workers
were nearly stagnant, rising just 6 percent, or an average of less than 0.2
percent, per year.

In conclusion, a fair wage is more than just a number; it’s a reflection of a

company’s values and its commitment to its employees.

XXII. NOMINAL VS. REAL WAGE

In the context of Business Ethics, “Nominal Wage” and “Real Wage” are two
important concepts that help understand the value of a worker’s earnings1234.

Nominal Wage: Nominal wage, or money wage, is the literal amount of money
you get paid per hour or by salary1. For example, if your employer pays you
$12.00 an hour for your work, your nominal wage is $12.001. Similarly, if your
employer pays you a salary of $48,000 a year, then your nominal wage would
be $48,0001. Another way to define nominal wage is wages measured as
current dollars1. Current dollars refer to a person’s income amount without
considering how inflation rates will affect it1.

Real Wage: Real wage, or adjusted wages, is the amount of pay a person can
expect to receive after factoring in the current inflation rate 1. For example, if a
person’s nominal wage is $12.00, their real wage is above or below that
amount depending on the current inflation rate1. In this situation, a low
inflation rate would mean that a person’s $12.00 per hour wage could get them
more than if they had a $12.00 pay rate during a high inflation period1.

Understanding the difference between nominal wage and real wage is

important as it allows you to determine how much a particular pay rate will
support you in relation to the current value of goods and other living
expenses1. It can help you evaluate job offers, decide which jobs to go for, and
advocate for higher pay from an employer1.

XXIII. UNIONS AND COLLECTIVE BARGAINING

“Unions and Collective Bargaining” are key concepts in the field of labor
relations and Business Ethics.

Unions: Unions are organizations that represent the interests of workers. They
are formed to negotiate with employers on behalf of their members on issues
such as wages, working conditions, and other terms of employment.

Collective Bargaining: Collective bargaining is the process by which unions

and employers negotiate the terms of employment. The goal is to reach a
collective agreement that both parties can accept.

In the context of Business Ethics, unions and collective bargaining play a

crucial role in ensuring fair treatment of workers. They help balance the power
between employers and employees, promote fair wages and safe working
conditions, and contribute to a more equitable workplace.

However, the process of collective bargaining can also present ethical

dilemmas. For example, the bargaining process between labor unions and firms
can influence a firm’s tax aggressive behavior. Therefore, it’s crucial for
businesses to approach these processes with a commitment to ethical
principles.

XXIV. NEMAWASHI VS. CODETERMINATION

In the context of Business Ethics, both Nemawashi and Codetermination

represent different approaches to decision-making and employee involvement
within a company.

Nemawashi is a Japanese business practice that involves building consensus

for a proposed change or project by talking to the people concerned and
gathering support and feedback before a formal announcement. This practice is
seen as respectful and inclusive, fostering a sense of unity and cooperation
within the company. However, it can also be seen as manipulative or coercive
if those consulted feel they have little choice but to agree.

Codetermination, on the other hand, is a practice common in Europe that

provides for the participation of employees and their representatives in the
management of a company. This allows them to actively influence the
decision-making process through legally stipulated rights. While this practice
promotes transparency and democratic decision-making, it can also lead to
conflicts of interest and slow decision-making.

From an ethical perspective, both practices aim to involve employees in

decision-making, promoting fairness and respect. However, they also raise
ethical questions about power dynamics, manipulation, and the potential for
exploitation. Therefore, companies need to carefully consider these ethical
implications when implementing such practices.

XXV. WORKPLACE HARASSMENT AND THE ROLE OF

MANAGEMENT

Workplace harassment is a serious issue that can have significant impacts on

individuals and organizations. It includes any unwelcome verbal, written, or
physical conduct that either denigrates or shows hostility or aversion towards a
person on the basis of some characteristic.

The role of management in addressing workplace harassment is crucial. Here

are some key responsibilities:

Prevention: Management has the responsibility to prevent harassment by

creating and enforcing policies that clearly define harassment and its
consequences. This includes providing training to all employees to ensure they
understand these policies.

Response: When harassment occurs, management must take it seriously and

respond promptly. This includes conducting a thorough investigation and
taking appropriate action against the perpetrator.

Protection: Management must also protect victims from retaliation. This means
ensuring that the victim can report harassment without fear of reprisal.

Culture: Ultimately, management plays a key role in shaping the culture of the
organization. By promoting a culture of respect and zero tolerance for
harassment, management can help prevent harassment from occurring in the
first place.
In conclusion, management plays a critical role in preventing and addressing
workplace harassment. It’s not only about adhering to laws and regulations, but
also about fostering a culture of respect and dignity.

XXVI. FIDUCIARY DUTY

Fiduciary duty is a legal obligation that arises when one party, known as the
fiduciary, owes another party, typically referred to as the principal or
beneficiary, a duty of loyalty and care. This duty often occurs in relationships
where the law imposes a special relationship between two parties, such as a
board of directors to shareholders or partners to a partnership.

The fiduciary is expected to act solely in the best interest of the other party. For
instance, lawyers have a fiduciary duty to act in the best interest of their clients,
physicians to their patients, and trustees to the beneficiaries of a trust.

Some examples of fiduciary duties include duties of undivided loyalty, due

diligence and reasonable care, full disclosure of any conflicts of interest, and
confidentiality. A breach of fiduciary duty, whether accidental or intentional, is
considered a breach of ethics.

In the context of business ethics, fiduciary duty is crucial as it ensures that

those in positions of trust and power are held to a higher standard of behavior,
ensuring the protection of stakeholders’ interests.

XXVII. GIG ECONOMY AND FREELANCERS

The gig economy, characterized by temporary or flexible jobs, is an emerging

trend that has significantly impacted the business landscape. It’s driven by
companies hiring independent contractors and freelancers instead of full-time
employees.

In the gig economy, freelancers, also known as gig workers, take on temporary
jobs (or “gigs”). These can range from short-term projects to long-term
contracts. This model offers flexibility and independence for workers, and cost
savings for businesses.

However, the gig economy also presents several ethical dilemmas. One major
concern is the lack of job security and benefits for gig workers. Unlike
traditional employees, gig workers often do not have access to benefits like
health insurance, paid leave, or retirement plans.

Another ethical issue is the potential for exploitation. Without the protections
afforded to traditional employees, gig workers may be vulnerable to low pay,
long hours, and poor working conditions.

In the context of business ethics, it’s important for companies participating in

the gig economy to consider these ethical dilemmas. They should strive to treat
gig workers fairly, provide reasonable compensation, and ensure safe and
healthy working conditions. Regulators also play a crucial role in addressing
these challenges and ensuring the rights and welfare of gig workers.

XXVIII. TACIT KNOWLEDGE AND TRADE SECRETS

Tacit Knowledge is the kind of knowledge that is difficult to transfer to another

person by means of writing it down or verbalizing it. It’s the knowledge that
people carry in their minds and is often difficult to access. Tacit knowledge is
considered more valuable because it provides context for people, places, ideas,
and experiences. Effective transfer of tacit knowledge generally requires
extensive personal contact and trust.

Trade Secrets are a type of intellectual property that comprise formulas,

practices, processes, designs, instruments, patterns, or compilations of
information that have inherent economic value because they are not generally
known or readily ascertainable by others, and which the owner takes reasonable
measures to keep secret. Trade secrets are a rich source of material for
exploring questions of business ethics alongside the law.
In the context of business ethics, the sharing of tacit knowledge and the
protection of trade secrets can sometimes be at odds. While sharing knowledge
can be beneficial for organizational learning and innovation, it can also lead to
the unwanted dissemination of trade secrets. Therefore, businesses must strike
a balance between promoting a culture of knowledge sharing and protecting
their valuable trade secrets.

XXIX. A WHISTLEBLOWER

A whistleblower is an individual who reports insider knowledge of illegal,

illicit, or fraudulent activities occurring within an organization. This person
could be an employee, supplier, contractor, client, or any individual who
becomes aware of dubious business activities.

Whistleblowers play a crucial role in bringing problems to light, often being

the first to know about trouble within an organization. Their knowledge can
help a business solve problems and avoid further issues. However,
whistleblowing is often a risky proposition for an employee who would like to
stay working at the company.

In the context of business ethics, whistleblowing is a complex issue. While it’s

important for organizations to encourage reporting and ensure that
whistleblowers do not face retaliation for doing so, the decision to act on
conscience in response to wrongdoing can be fraught with challenges.
Therefore, it’s crucial for businesses to create an environment where people
feel comfortable reporting unethical behavior, and for regulators to ensure the
rights and welfare of whistleblowers.

XXX. EMOTIONAL INTELLIGENCE

Sure, as a teacher teaching Business Ethics, here’s how you might explain
“Emotional Intelligence” to your students:
Emotional Intelligence, often abbreviated as EI or EQ (Emotional Quotient), is
the ability to understand, use, and manage our own emotions in positive ways
to relieve stress, communicate effectively, empathize with others, overcome
challenges, and defuse conflict. It reflects competencies in four key domains:

Self-awareness: This is the ability to recognize your own emotions and

how they affect your thoughts and behavior. It includes understanding
your strengths and weaknesses, and having self-confidence.

Self-management: This involves controlling impulsive feelings and

behaviors, managing your emotions in healthy ways, taking initiative,
following through on commitments, and adapting to changing
circumstances

Social awareness: This includes understanding the emotions, needs, and

concerns of other people, picking up on emotional cues, feeling
comfortable socially, and recognizing the power dynamics in a group or
organization.

Relationship management: This is the ability to develop and maintain

good relationships, communicate clearly, inspire and influence others,
work well in a team, and manage conflict.

In the context of Business Ethics, Emotional Intelligence is crucial. It helps in

making ethical decisions as it involves empathy and understanding the impact
of decisions on others. It also aids in creating an ethical workplace culture
where everyone is treated with respect and understanding.

XXXI. DIVERSITY AND INCLUSION

“Diversity and Inclusion” is a crucial concept in the business world and

beyond. It refers to the practice of including people of different social and
ethnic backgrounds, and of different genders, sexual orientations, etc., in a
group or organization.
 Diversity: This is about representation and demographic mix. It
involves having a workforce that includes people of various races,
ethnicities, genders, ages, religions, disabilities, and sexual orientations.
It also includes people with diverse backgrounds, experiences, and
skills.

Inclusion: This is about culture and environment. It involves creating an

environment where all individuals are treated fairly and respectfully,
have equal access to opportunities and resources, and can contribute
fully to the organization’s success.

In the context of Business Ethics, “Diversity and Inclusion” is essential. It

promotes fairness, respect, and equality in the workplace. It can lead to
increased creativity and innovation, better decision making, and higher
employee satisfaction. Moreover, it aligns with ethical principles of fairness
and respect for all individuals. It’s not just about having diversity within the
company but also about making sure everyone feels included and valued.

XXXII. ABERCROMBIE & FITCH

Abercrombie & Fitch Co. is a company that values honesty, integrity, respect,
and doing the right thing in conducting its business. They have established a
Code of Business Conduct and Ethics, and a Whistleblower Policy to uphold
these commitments.

The company believes that everyone, regardless of their location, seniority, or

title, has a responsibility to follow the Code. They also expect their suppliers
and other business partners to acknowledge and align with the principles of
their Code when doing business with them.

Abercrombie & Fitch Co. is also committed to promoting worker safety, fair
social and labor conditions, gender equality, and well-being.
There’s a research paper titled “Abercrombie & Fitch: A Business Ethics
Perspective in the Fashion Industry” that discusses some ethical issues in the
fashion industry and starts a debate about business ethics from a stakeholder
perspective. The paper analyzes the implications of fashion companies for
employees, with policies and practices, and for customers, with the messages
and the lifestyles they communicate, especially when targeting adolescents.

It’s important to note that the values communicated and promoted by the
company, both internally and externally, have a real impact on society and this
may have negative consequences for brand perception and company
performance.

XXXIII. ANIMAL RIGHTS (UK)

Animal rights in the UK are taken very seriously and are protected by various
laws and regulations. The UK government has publicly stated that animals are
sentient beings, not merely commodities, and has confirmed its commitment to
the highest possible standards of animal welfare.

The first general animal protection law, called the Protection of Animals Act,
was introduced and updated several times since. This law and others like it
ensure that animals are protected from cruelty and neglect.

In the context of Business Ethics, companies operating in the UK have a

responsibility to adhere to these laws and regulations. They must ensure that
their business practices do not harm animals and that they contribute to the
welfare of animals when relevant. This includes industries such as animal
agriculture, tourism, experimentation, research, and entertainment.

Moreover, businesses are increasingly recognizing that their ethical

responsibilities extend beyond just legal compliance. Many companies are now
adopting policies and practices that promote animal welfare, even when not
explicitly required by law.

For example, some companies are choosing to use cruelty-free ingredients in

their products, adopt more humane practices in their supply chains, or donate a
portion of their profits to animal welfare organizations. These actions not only
benefit animals but can also enhance the company’s reputation and appeal to
consumers who value animal welfare.

In conclusion, animal rights in the UK are an important aspect of business

ethics. Companies need to understand and respect these rights, and strive to
promote animal welfare in their business practices.

XXXIV. A MINIMUM WAGE

Minimum wage is the lowest remuneration that employers can legally pay their
workers. The purpose of the minimum wage is to protect workers against
unduly low pay. It helps ensure a just and fair labor market and prevents the
exploitation of workers.

In the context of Business Ethics, the minimum wage is a significant issue. It

touches on the ethical responsibilities of businesses to ensure fair compensation
for work. Paying a wage that allows employees to afford basic necessities is not
only a legal requirement but also an ethical one.

However, the concept of a ‘fair’ wage can be subjective and controversial.

What constitutes a ‘fair’ wage can depend on various factors, including the
living costs in a particular location, the nature of the work, and the skills and
experience required.

Moreover, there are debates about the impacts of minimum wage policies on
businesses, employment rates, and the economy. Some argue that higher
minimum wages can lead to increased prices for consumers and potential job
losses, particularly for small businesses. On the other hand, proponents argue
that higher minimum wages can reduce income inequality, stimulate economic
demand by increasing workers’ purchasing power, and improve worker
productivity and morale.

Therefore, businesses need to balance these considerations when deciding on

wage policies. They should comply with minimum wage laws, consider the
broader impacts of their wage policies, and strive to pay a ‘living wage’ that
allows their employees to meet their basic needs.

XXXV. BUREAUCRATIZATION ENTREPRENEURSHIP

As a teacher teaching Business Ethics, here’s how you might explain

“Bureaucratization in Entrepreneurship” to your students:

Entrepreneurship is often associated with innovation, flexibility, and risk-

taking, while bureaucratization is typically linked with larger, more established
organizations that have standard procedures and hierarchies. However, as
entrepreneurial ventures grow and become more successful, they often face the
process of bureaucratization.

Bureaucratization involves the implementation of a formal organizational

structure and standardized procedures. This can include creating specific roles
and responsibilities, establishing formal reporting relationships, and
implementing standardized rules and procedures. While bureaucratization can
help improve efficiency and control, it can also potentially stifle innovation and
flexibility, which are key aspects of entrepreneurship.

In the context of Business Ethics, bureaucratization can have significant

implications. On one hand, it can help ensure consistency and fairness, which
are key ethical considerations. For example, standardized procedures can help
ensure that decisions are made consistently and that employees are treated
fairly.

On the other hand, bureaucratization can also potentially lead to ethical

challenges. For instance, an overemphasis on rules and procedures can
sometimes lead to bureaucratic insensitivity, where the needs of individuals are
overlooked in favor of following the rules. Moreover, in a highly bureaucratic
environment, employees may feel less personally accountable for their actions,
as they are simply ‘following orders’.

Therefore, it’s important for entrepreneurs to carefully manage the process of

bureaucratization, balancing the need for structure and control with the need for
innovation, flexibility, and ethical sensitivity. They should strive to create an
organizational culture that values ethical behavior and holds individuals
accountable for their actions, even as the organization grows and becomes
more bureaucratic.

XXXVI. ADVERTISING AND CHILDREN

Advertising and children is a topic that raises important ethical considerations.

Children, particularly younger ones, may not fully understand the persuasive
intent of advertising, making them a vulnerable audience.

In many countries, there are regulations that limit the ways companies can
advertise to children. For example, there are strict rules about advertising
unhealthy food to children. Despite these regulations, children are still exposed
to a vast amount of advertising, particularly through digital media and online
games.

From a business ethics perspective, companies have a responsibility to ensure

their advertising practices do not exploit children’s vulnerability. This includes
being transparent about when an activity or content is advertising, avoiding
deceptive or unfair practices, and respecting children’s privacy.
Moreover, companies should consider the potential impacts of their advertising
on children’s health, well-being, and development. For example, advertising
that promotes unhealthy foods or unrealistic body images can contribute to
health problems like obesity and negative body image.

In conclusion, advertising and children is a complex issue that requires careful

ethical consideration. Companies need to balance their marketing objectives
with their responsibilities to protect and respect the rights of children.

XXXVII. Disaster insurance and ethical issues

Certainly, here’s a version without numbers:

Disaster insurance is a type of coverage that protects against losses caused by

natural disasters such as hurricanes, earthquakes, floods, and wildfires. While it
provides essential financial protection for individuals and businesses, it also
raises several ethical issues.

One of the main ethical issues is the decision of insurers whether to offer
disaster insurance. This decision involves a delicate balance between the need
to provide coverage and the realities of risk and cost. For instance, in areas
prone to certain types of disasters, the risks might be so high that insurance
companies could face significant financial losses if they offered coverage. As a
result, they might choose not to offer disaster insurance in these areas, leaving
residents without access to this important financial protection.

Another ethical issue is the concept of redlining, which refers to the practice of
insurers refusing to offer coverage or charging higher premiums in certain
geographical areas based on perceived risks. While this practice is based on
risk assessment, it can result in unfair treatment and discrimination against
residents of these areas.

Moreover, the pricing of disaster insurance can also raise ethical issues.
Insurance companies need to set premiums at a level that allows them to cover
potential claims and make a profit. However, if premiums are too high, disaster
insurance can become unaffordable for many people, particularly those in high-
risk areas who need it the most.

In conclusion, while disaster insurance plays a crucial role in financial

protection against natural disasters, it also involves complex ethical issues that
insurance companies need to carefully consider and manage.

XXXVIII. PUFFERY & SUBLIMINAL ADVERTISING

Sure, here’s a version without numbers:

“Puffery” refers to exaggerated or false praise used in advertising. In law,

puffery is a promotional statement or claim that expresses subjective rather
than objective views, which no “reasonable person” would take literally.
Puffery serves to “puff up” an exaggerated image of what is being described
and is especially featured in testimonials.

On the other hand, “Subliminal Advertising” conveys hidden messages of

which viewers are not consciously aware. This ad strategy poses serious ethical
issues, particularly because subliminal ads can manipulate consumer behavior
even when consumers aren’t making a conscious choice and aren’t aware of
what they’ve seen.

From a business ethics perspective, both puffery and subliminal advertising

raise significant ethical concerns. While puffery can be seen as harmless
exaggeration, it can also be misleading if consumers take the claims seriously.
Subliminal advertising, on the other hand, can be seen as manipulative because
it influences consumers without their knowledge.

Therefore, advertisers must carefully consider the ethical implications of their

advertising strategies. They should strive for honesty and transparency in their
advertising, and respect the autonomy and intelligence of their consumers.