This is Business Ethics An Introduction

Take a seat in the boardroom. What will you decide?

Corporations make difficult decisions about the right thing to do every day, but as an organization made up of people with different perspectives and values, how can a business behave ethically? This is Business Ethics offers a dynamic and engaging introduction to the study of corporate morality.

• Offers real-world practical advice for navigating ethical dilemmas in business, developed and explained through illustrative high-profile case studies like the Ford Pinto case, Enron, Walmart and British Petroleum.

• Explores how ethical theory informs business policy and practice.

• Presents unresolved contemporary case studies for consideration, inviting readers to participate in the decision-making and offer their own recommendations.

• The latest in the This is Philosophy series, This is Business Ethics features supplemental online resources for instructors and students at  https://www.wiley.com/enus/thisisphilosophy/thisisbusinessethicsanintroduction

TOBEY SCHARDING is Visiting Assistant Professor at Rutgers Business School and Assistant Professor of Philosophy at the Bloomsburg University of Pennsylvania. She specializes in business ethics and ­finance ethics, with a focus on issues concerning risk and uncertainty. Her articles have appeared in leading academic journals such as Business Ethics Quarterly, Public Affairs Quarterly, and Georgetown Journal of Law and Public Policy.

Preface xii

Part I Problems in Business Ethics 1

1 Ethics: Doing the Right Thing 3

Introduction to Ethics 3

What are ethical questions 3

How to answer ethical questions 4

Introductory Case Studies 5

Sam and the substandard notes 5

Casey and the overly-demanding internship 6

Tatiana and the fair distribution of chores 7

Alex and the too-easy-to-cheat course 8

Evaluating the Case Studies 9

Non-ethical guidelines for thinking about the cases 9

Ethical guidelines for thinking about the cases 11

Limitations of ethical evaluation: the problem of controversy 12

Reference 13

2 Business: Maximizing Profit 14

Theory of the Firm 14

Firm organization 15

Why the firm exists at all 16

Problems for firm organization 17

Business Decision-Making: Shareholders and Cost-Benefit Analysis 17

The Dominant Model 19

Shareholder Theory 22

Cost-benefit analysis 25

Business in Society: Consumers, Employees, and Community 27

References and Further Reading 31

3 Classic Business Ethics Dilemmas: When Doing the Right Thing Does Not Maximize Profits 32

Doing Right by Consumers: The Ford Pinto Case 33

Doing Right by Employees: The Walmart Case 38

Doing Right by the Community: The B.P. Case 40

Doing Right by Shareholders: The Enron Case 42

References and Further Reading 46

Case Cited 46

Part II Tools to Solve Business Ethics Dilemmas 47

4 Ethical Theories 49

The Three Major Ethical Theories 51

Utility-based ethics 52

Kant’s duty-based ethics 61

Aristotle’s virtue-based ethics 67

Other Bases for Ethics 72

Natural law theory 72

Contract theory 73

Ethics of care 74

Feminist ethics 75

References and Further Reading 76

5 Theories of Corporate Personhood 77

Businesses as Ethical Persons 78

Businesses as Bureaucracies 83

Businesses as Collective Persons 87

References and Further Reading 91

6 Theories of Political Economy 92

Private Property 95

The justification of private property 96

Distributive justice 106

The Division of Labor 112

Smith’s productivity-based defense of the division 112

Marx’s alienation-based criticism of the division 115

References and Further Reading 118

Part III Contemporary Case Studies 119

7 Business Ethics in Employment 121

Employment at Will: The Bechtel Case 121

Bechtel’s corporate identity 122

Facts of the case 122

What happened 124

Historical significance 124

Ethical significance: conditions of employment 125

Executive Compensation: The A.I.G. Case 130

A.I.G.’s corporate identity 131

Facts of the case 131

What happened 133

Historical significance 133

Ethical significance: executive compensation 134

Preventing Discrimination and Achieving Diversity: The Google Case 136

Google’s corporate identity 137

Facts of the case 138

What happened 139

Ethical significance: unconscious bias 141

Work-Life Balance: The Amazon Case 143

Amazon’s corporate identity 144

Facts of the case 144

What happened 145

Historical significance 146

Ethical significance: work-life balance 146

References and Further Reading 147

Case Cited 148

8 Business Ethics in Advertising 149

Manipulative Advertising: The Four Loko Case 149

Phusion Projects’ corporate identity 150

Facts of the case 150

What happened 151

Historical significance 152

Ethical significance: manipulative advertising 152

Targeted Advertising: The Facebook Case 155

Facebook’s corporate identity 156

Facts of the case 156

What happened 157

Historical significance 157

Ethical significance: targeted advertising 158

The Dependence Effect: The Lipitor Case 158

Pfizer’s corporate identity 159

Facts of the case 159

What happened 160

Historical significance 160

Ethical significance: the dependence effect 161

Discriminatory Advertising: The Abercrombie & Fitch Case 161

Abercrombie & Fitch’s corporate identity 162

Facts of the case 163

What happened 163

Historical significance 164

Ethical significance: discriminatory advertising 164

References and Further Reading 165

9 Business Ethics in the Financial Sector 167

Predatory Lending: The Countrywide Financial Case 167

Countrywide Financial’s corporate identity 168

Facts of the case 168

What happened 170

Historical significance 171

Ethical significance: predatory lending 171

Investment Risk: The Lehman Brothers Case 172

Lehman Brothers’ corporate identity 173

Facts of the case 175

What happened 176

Historical significance 176

Ethical significance: investment risk 176

Short Selling: The Herbalife Case 178

Herbalife’s corporate identity 179

Pershing Square Capital Management’s corporate identity 179

Facts of the case 180

What happened 181

Historical significance 182

Ethical significance: short selling 182

Insider Trading: The Nomura Case 184

Nomura’s corporate identity 184

Facts of the case 185

What happened 186

Historical significance 186

Ethical significance: insider trading 186

References and Further Reading 187

10 Business Ethics in the Environment 190

Water Supply: The Coca-Cola India Case 190

Coca-Cola India’s corporate identity 191

Facts of the case 191

What happened 192

Historical significance 193

Ethical significance: tragedy of the commons 193

Indigenous Populations: The TransCanada Case 194

TransCanada’s corporate identity 194

Facts of the case 195

What happened 196

Historical significance 196

Ethical significance: indigenous populations 197

Food Supply: The FieldScripts Case 198

Monsanto’s corporate identity 199

Facts of the case 199

What happened 201

Historical significance 202

Ethical significance: data privacy and trust in business 202

Emissions: The VW Case 203

VW’s corporate identity 204

Facts of the case 205

What happened 206

Historical significance 207

Ethical significance: emissions 207

References and Further Reading 208

11 Business Ethics in Globalization 210

Obtaining Raw Materials: The GlaxoSmithKline Case 210

GlaxoSmithKline’s corporate identity 211

Facts of the case 211

What happened 213

Historical significance 214

Ethical significance: raw materials 214

Child Labor: The Victoria’s Secret Case 214

Victoria’s Secret’s corporate identity 215

Facts of the case 215

What happened 217

Historical significance 217

Ethical significance: child labor 218

Different Cultures: The Yahoo! Case 218

Yahoo’s corporate identity 219

Facts of the case 219

What happened 220

Historical significance 221

Ethical significance: repressive political regimes 221

Doing Business with Corrupt Regimes: The IKEA Case 222

IKEA’s corporate identity 222

Facts of the case 223

What happened 223

Historical significance 224

Ethical significance: bribery 224

References and Further Reading 225

Part IV The Future of Business Ethics 229

12 Predicting and Preventing Future Business Ethics Scandals 231

Resolving Conflicts in Ethics 232

What kind of a person do you want to be 234

What kind of world do you want to live in 238

Looking for and Understanding New Cases 240

Patterns of wrongdoing 240

Key values for business 244

Technology and the Future of Business Ethics 245

Index 247

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