1 Introduction to Business Ethics
Oxymoron = a figure of speech in which two contradictory or opposing words are combined to create a unique or thought-
provoking phrase. The juxtaposition of these opposing terms often reveals a deeper meaning or adds complexity to an
idea. (eg. Bittersweet, jumbo shrimp …) like doing business and being ethical.
Business ethics = the study of appropriate business policies and practices regarding potentially controversial subjects. The
study of business situations, activities, and decisions where issues of right and wrong are addressed.
Typically discussed business ethics issues: fiduciary responsibilities, bribery, corporate governance, discrimination, social
responsibility, and environmental impact.
Mencius
- 372-289 BC
- There is this idea out there that people act out of self-interest. People don’t want to be ethical
necessarily. Our viewpoint will be the one of Mencius: all people are ethical. There is even a lot
of evidence nowadays from the scientific world that people are altruistic. They want to be
ethical It’s in our DNA. It turns out the human species is the stronger species, if we help each
other out. -> evolutionary strategy. Mirror neurons in our brain make us spontaneously act in an
ethical way and respond to other people’s feelings. So we act upon that understanding, which is
what makes us human. So what ethics does is it to take this natural tendency we have to care
about people and put it on a rational basis so it can work in the real world.
1.1.1 Ethical Dilemma
- Business ethics starts where the law ends. BE is primarily concerned with those
issues not covered by the law, or where there is no definite consensus on whether
something is right or wrong.
Eg. driving left or right, stopping for red (law)
- But there is no law that says you cannot cheat on your partner, but ethically it’s not
okay…
1.1.2 Ethics equals Rational Consensus
Ethics = rational consensus. Not the same as rational consensus out of self interest. It’s not about personal values, it’s
about interpersonal values. We have to agree on ground rules.
Rational consensus = a concept often used in political philosophy and decision-making processes. It refers to an agreement
reached through rational deliberation, where participants engage in logical and reasoned discussions to arrive at a
common decision.
In essence, rational consensus seeks to achieve broad acceptance of decisions by focusing on reasoned debate and mutual
understanding, rather than simply majority rule or coercion. See pwp for more information
1.1.3 Why is business ethics important?
- Business has huge power within society
- Business can provide a major contribution to our societies
- Business malpractice can inflict enormous harm on individuals, communities and the environment
- The demands being placed on business to be ethical by its various stakeholders are becoming more complex and
challenging
- Employees face significant pressure to compromise ethical standards
- Business faces a trust deficit
1
, 1.2 Globalization
Globalization = The ongoing integration of political, social and economic interactions at the transnational level, regardless
of physical proximity or distance.
1.2.1 Race to the bottom
The process whereby multinationals pitch developing countries against each
other by allocating foreign direct investment to those countries which offer
them the most favorable conditions in terms of low tax rates, low level of
environmental regulation, and restricted workers’ rights.
In the context of business ethics, this controversy over globalization plays a
crucial role. After all, corporations—most notably multinational corporations
(MNCs)—are at the center of the public’s criticism on globalization. They are
accused of exploiting workers in less developed countries (LDCs), destroying the
environment, and, by abusing their economic power, engaging less developed
countries in a so-called ‘race to the bottom’. This term describes a process
whereby MNCs pitch LDCs against each other by allocating their investment to
those countries which offer them the most favorable conditions in terms of low tax rates, low level of environmental
regulation, and restricted workers’ rights.
1.2.2 Globalization and Business Ethics
Globalization as defined as the closer integration of economic activities is particularly relevant for business ethics in three
main areas: cultural issues, legal issues and accountability issues.
1. Cultural issues: think theory
Capital punishment and topless sunbathing are interesting issues to think about when considering Globalization
theory and cultural dimensions of ethics, but they have little to do with business responsibility as such.
2. Legal issues
Business Ethics begins where the law ends, then globalization increases the demand for business ethics because
globalized economic activities are beyond the control of national (territorial) governments.
3. Accountability issues
Taking a closer look at global activities, one can easily identify corporations as the dominant actors on the global
stage: MNCs own the mass media which determines much of our information and entertainment intake, they supply
global products, they pay people’s salaries, and they pay (directly or indirectly) much of the taxes that keep
governments running. Furthermore, one could argue that MNCs are economically more powerful than many
governments. For example, the GDP of Denmark is about the same as the turnover of General Motors. However,
whereas the Danish government has to be accountable to the Danish people and must face elections on a regular
basis, the managers of General Motors are formally accountable only to the relatively small group of people who own
shares in the company. The communities in the USA, Brazil, or Germany that depend directly on General Motors’
investment decisions however have next to no influence on the company and, unlike a regional or national
government, General Motors at least in principle is not accountable to these constituencies.
TRIVIA: Now: 18/9/2019: first strike at GM in 12 years (US 9 states) because a deal wasn’t found re wages and new
workers.
The more global economic activities become, the less governments can control them, and the less they are open to
democratic control by the people affected by them.
Consequently, the call for direct (democratic) accountability of MNCs has become louder in recent years.
2
Oxymoron = a figure of speech in which two contradictory or opposing words are combined to create a unique or thought-
provoking phrase. The juxtaposition of these opposing terms often reveals a deeper meaning or adds complexity to an
idea. (eg. Bittersweet, jumbo shrimp …) like doing business and being ethical.
Business ethics = the study of appropriate business policies and practices regarding potentially controversial subjects. The
study of business situations, activities, and decisions where issues of right and wrong are addressed.
Typically discussed business ethics issues: fiduciary responsibilities, bribery, corporate governance, discrimination, social
responsibility, and environmental impact.
Mencius
- 372-289 BC
- There is this idea out there that people act out of self-interest. People don’t want to be ethical
necessarily. Our viewpoint will be the one of Mencius: all people are ethical. There is even a lot
of evidence nowadays from the scientific world that people are altruistic. They want to be
ethical It’s in our DNA. It turns out the human species is the stronger species, if we help each
other out. -> evolutionary strategy. Mirror neurons in our brain make us spontaneously act in an
ethical way and respond to other people’s feelings. So we act upon that understanding, which is
what makes us human. So what ethics does is it to take this natural tendency we have to care
about people and put it on a rational basis so it can work in the real world.
1.1.1 Ethical Dilemma
- Business ethics starts where the law ends. BE is primarily concerned with those
issues not covered by the law, or where there is no definite consensus on whether
something is right or wrong.
Eg. driving left or right, stopping for red (law)
- But there is no law that says you cannot cheat on your partner, but ethically it’s not
okay…
1.1.2 Ethics equals Rational Consensus
Ethics = rational consensus. Not the same as rational consensus out of self interest. It’s not about personal values, it’s
about interpersonal values. We have to agree on ground rules.
Rational consensus = a concept often used in political philosophy and decision-making processes. It refers to an agreement
reached through rational deliberation, where participants engage in logical and reasoned discussions to arrive at a
common decision.
In essence, rational consensus seeks to achieve broad acceptance of decisions by focusing on reasoned debate and mutual
understanding, rather than simply majority rule or coercion. See pwp for more information
1.1.3 Why is business ethics important?
- Business has huge power within society
- Business can provide a major contribution to our societies
- Business malpractice can inflict enormous harm on individuals, communities and the environment
- The demands being placed on business to be ethical by its various stakeholders are becoming more complex and
challenging
- Employees face significant pressure to compromise ethical standards
- Business faces a trust deficit
1
, 1.2 Globalization
Globalization = The ongoing integration of political, social and economic interactions at the transnational level, regardless
of physical proximity or distance.
1.2.1 Race to the bottom
The process whereby multinationals pitch developing countries against each
other by allocating foreign direct investment to those countries which offer
them the most favorable conditions in terms of low tax rates, low level of
environmental regulation, and restricted workers’ rights.
In the context of business ethics, this controversy over globalization plays a
crucial role. After all, corporations—most notably multinational corporations
(MNCs)—are at the center of the public’s criticism on globalization. They are
accused of exploiting workers in less developed countries (LDCs), destroying the
environment, and, by abusing their economic power, engaging less developed
countries in a so-called ‘race to the bottom’. This term describes a process
whereby MNCs pitch LDCs against each other by allocating their investment to
those countries which offer them the most favorable conditions in terms of low tax rates, low level of environmental
regulation, and restricted workers’ rights.
1.2.2 Globalization and Business Ethics
Globalization as defined as the closer integration of economic activities is particularly relevant for business ethics in three
main areas: cultural issues, legal issues and accountability issues.
1. Cultural issues: think theory
Capital punishment and topless sunbathing are interesting issues to think about when considering Globalization
theory and cultural dimensions of ethics, but they have little to do with business responsibility as such.
2. Legal issues
Business Ethics begins where the law ends, then globalization increases the demand for business ethics because
globalized economic activities are beyond the control of national (territorial) governments.
3. Accountability issues
Taking a closer look at global activities, one can easily identify corporations as the dominant actors on the global
stage: MNCs own the mass media which determines much of our information and entertainment intake, they supply
global products, they pay people’s salaries, and they pay (directly or indirectly) much of the taxes that keep
governments running. Furthermore, one could argue that MNCs are economically more powerful than many
governments. For example, the GDP of Denmark is about the same as the turnover of General Motors. However,
whereas the Danish government has to be accountable to the Danish people and must face elections on a regular
basis, the managers of General Motors are formally accountable only to the relatively small group of people who own
shares in the company. The communities in the USA, Brazil, or Germany that depend directly on General Motors’
investment decisions however have next to no influence on the company and, unlike a regional or national
government, General Motors at least in principle is not accountable to these constituencies.
TRIVIA: Now: 18/9/2019: first strike at GM in 12 years (US 9 states) because a deal wasn’t found re wages and new
workers.
The more global economic activities become, the less governments can control them, and the less they are open to
democratic control by the people affected by them.
Consequently, the call for direct (democratic) accountability of MNCs has become louder in recent years.
2
