Business ethics

The Stockholder Theory
The stockholder theory, developed by Milton Friedsman’s approach to social
responsibility, states that the stockholders are the engine of the organization and it is the
only group that has to act responsible. The goal of the ?rm is to maximize pro?ts and
return a portion of those pro?ts to shareholders as a reward for the risk they took in
investing in the ?rm. Managers have to keep the stockholders happy to ensure pro?t. The
purpose is to maximize welfare for the stockholders.
The theory is problematic because the costs spent to be socially responsible makes the
price for the customers rise. The better social responsibilities the business have, more
money has to be spent. The stockholders will have to give more for better results.
The Stakeholder theory
The stakeholder theory, developed by Edward Freeman, includes customers, suppliers,
owners, employees and local communities. Everyone who are included are a part of the
stakeholder theory. The corporation should be managed to care for all players in the game.
The business must act in favor of the stakeholders. Management is obligated to give equal
consideration to the interests of all stakeholders.
Rawls’ theory of justice as fairness
Justice as fairness conveys the idea that the principles of justice are agreed to in an initial
situation that is fair.
Why should I be moral? (according to Rawl’s theory of justice as a fairness)
•
Because members of a democratic society want to live in a free and equal society and
live under institutions that respect these values.
•
The original position aims to represent these moral values of freedom and equality that
exist in the public culture of a democratic society.
•
If the original position offers the best articulation of such values, members of a
democratic society have reason to abide by the principles the original position selects.
•
the original position is understood as a purely hypothetical situation characterized so as
to lead to a certain conception of justice
Rawls begins his work with the idea of justice as fairness. He identi?es the basic structure
of society as the primary subject of justice and identi?es justice as the ?rst virtue of social
institutions. He considers justice a matter of the organization and internal divisions of a
society. The main idea of a theory of justice asks, What kind of organization of society
would rational persons choose if they were in an initial position of independence and
equality and were setting up a system of cooperation? This is what Rawls sees as a
hypothetical original position: the state in which no one knows what place he or she would
occupy in the society to be created.
Each person have equal right to the most extensive basic liberty together with similar
liberty for others. Social and economic inequalities should be both:

a) reasonably expected to be to everyone's advantage and
b) attached to positions and of?ces open to all.
Liberty Principle — provides for basic and universal respect for persons as a minimum
standard for all just institutions. But while all persons may be morally equal, we also know
that in the "real world" there are signi?cant differences between individuals that under
conditions of liberty will lead to social and economic inequalities.
Difference Principle – permits such inequalities and even suggests that it will be to the
advantage of all, but only if they meet two speci?c conditions.
Difference principle
only those social and economic inequalities are permitted that work to the bene?t of the
least advantaged members of society
The Difference principle provides fair equality of educational and employment
opportunities enabling all to fairly compete for powers and positions of of?ce; and it
secures for all a guaranteed minimum of all-purpose means (including income and wealth)
individuals need to pursue their interests and to maintain their self-respect as free and
equal persons.
This principle allows practices that result in unequal distribution of social and economic
bene?ts only if such practices bene?t those who are least well off relative to the state of
the least well off under other systems of practices. While the difference principle allows for
inequalities in the distribution of social and economic bene?ts, it does not allow inequalities
that bene?t the well to do at the expense of those who are least well off.
The difference principle also requires equality of opportunity.
Gender-speci?c harassment?
- supervisor’s abusive but non-sexual comments to a woman subordinate (example: “You
are a woman, what do you know?” “We need a man to do your job.” “You’re a dumb ass
woman”)
Gender-based harassment? (quid pro quo)
* Unwelcome sexual advances requesting for sexual favors.
* It is a sexual act as part of a bargain to obtain an employment bene?t or to avoid an
employment disadvantage.
To whom do the managers have a ?duciary duty in running the
corporation?
Management bears a ?duciary(trust) relationship to stakeholders and to the corporation as
an abstract entity. The corporation must act in the interests of the stakeholders as their
agent, and it must act in its interest to ensure the survival of the ?rm, safeguarding the
long-term stakes of each group.

Environmental considerations

Ecological Ethics

1. The welfare of at least some nonhumans is intrinsically valuable.
2. Humans have a duty to respect and preserve them.
3. It tries to extend moral rights to nonhumans.
4. An attitude of respect for all nature is morally demanded.
• The current trend in approaching to environmental issues - since 1980s, environmental
regulations began to subject to cost-bene?t analysis before they would be implemented.
• Utilitarian approach to environmental problems - they are “market defects.”
• The differentiation of “internal” costs and “external” costs.
1. Internal - fuel, labor, and equipment for which the manufacture pays.
2. External - clean up and medical care that the neighbors pay as a result of the pollution
3. The total cost: social costs
4. The solution: “Internalizing the external costs of pollution
5. Dif?culty: to measure the exact amount

How to “internalize” the external costs?

1. The costs of pollution control are carried by stockholders and by customers because
both of them bene?t from the polluting activities of the ?rm.
2. The bene?ts of pollution control ?ow to those neighbors who once had to put up with the
?rm’s pollution.

A call for an “ethics of care”

1. Nature must be seen as an “other” that can be cared for.
2. Nature must not be seen as an object to be dominated, controlled, and manipulated.
3. Justice to future generation (Hans Jonas) – “we hand to the next generation a situation
no worse than we received from the generation before us.”
4. “economic growth” and “conserving environment”
Whistleblower
A whistleblower (whistle-blower or whistle blower) is a person who exposes any kind of
information or activity that is deemed illegal, unethical, or not correct within an organization
that is either private or public. The information of alleged wrongdoing can be classi?ed in
many ways: violation of company policy/rules, law, regulation, or threat to public interest/
national security, as well as fraud, and corruption. Those who become whistleblowers can
choose to bring information or allegations to surface either internally or externally.
Internally, a whistleblower can bring his/her accusations to the attention of other people
within the accused organization. Externally, a whistleblower can bring allegations to light
by contacting a third party outside of an accused organization. He/She can reach out to
the media, government, law enforcement, or those who are concerned. Whistleblowers
also face stiff reprisal/retaliation from those who are accused or alleged of wrongdoing.


The Standard Theory

Utilitarianism - Will the whistleblowing have a good outcome?
* states suf?cient condition not necessary condition
* focuses on harm rather than wrongdoing itself
* divides into two conditions
*
Minimally decent Samaritan (a doing of what morality requires: when met all ?ve
conditions) Permissible (1-3)?
Required (when 4-5 added)
1. The potential serious harm to the public
2. Contacting the immediate superior and his/her doing nothing
3. Exhausting possible measures (internal)
4. Evidence convincing an impartial observer
5. Good reason to believe tha...