Business ethics

Overview

Recall questions on corporate social responsibility, stakeholders and shareholder theory, whistle-blowing, the claim that good ethics is good business, globalisation and supply chains, greenwashing, flourishing under capitalism and consumerism, Kantian and utilitarian approaches to business, and religious assessments of business practice.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is corporate social responsibility?

   Model answer

   It is the view that a company owes obligations beyond making money for its owners, extending to the communities it operates in and to the natural environment. In practice it covers working conditions, environmental impact, honest marketing, tax conduct and local investment. The underlying claim is that a business is a participant in society rather than a machine for generating returns, and so is answerable for its effects.

2. 2

   Who are a company's stakeholders?

   Model answer

   Everyone with an interest in what it does: employees, customers, suppliers, shareholders, the local community, the wider country and its government, and on many accounts future generations and the environment. The point of the term is that a company's decisions land on many groups who never chose to be affected, and that being affected creates a claim to be considered.

3. 3

   What is the difference between shareholder theory and stakeholder theory?

   Model answer

   Shareholder theory holds that managers are agents of the owners and their duty is to maximise returns within the law, so spending company money on social causes is spending other people's money without authority. Stakeholder theory holds that the company owes duties to all those it affects and must balance their interests. The disagreement is about who a business belongs to and to whom its managers are accountable.

4. 4

   What is whistle-blowing?

   Model answer

   It is an employee disclosing wrongdoing inside their organisation, either internally to management or externally to a regulator or the public. Typical subjects are safety failures, fraud, corruption, environmental damage and the concealment of harm. It is distinctive because the person raising the alarm has usually agreed to confidentiality and depends on the organisation for their livelihood.

5. 5

   Why does whistle-blowing create a conflict with the employment contract?

   Model answer

   An employee has normally accepted duties of confidentiality and loyalty, and the employer has a legitimate interest in controlling its own information. Disclosure breaks that agreement. The counter-argument is that the contract cannot bind a person to conceal serious harm to others, since no one can validly promise to help conceal wrongdoing, and that loyalty to an organisation does not outrank duties to the public. Most defences of whistle-blowing therefore set conditions such as seriousness, good evidence and internal channels having been tried first.

6. 6

   What protections and costs does a whistle-blower typically face?

   Model answer

   Legislation in the United Kingdom protects workers who make qualifying disclosures in the public interest from dismissal and detriment. In practice whistle-blowers frequently report being sidelined, subjected to disciplinary action, forced out or unable to find comparable work afterwards, and legal remedies come slowly and after the damage. The gap between formal protection and lived experience is itself an ethical issue for the debate.

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