Another category includes actions that may be legal but are also, arguably, bad.
Many of the moral and ethical issues that affect business and management fall into this category. They are a reflection of the big question, raised in Chapter 1, of whether business has moral obligations beyond the proprietary claims of the
Table 2.1Illustrative cases of the major issues in business ethics Legal, but The NationwideAIDS drugs andPaying for staff’sProviding newBAT, Nottingham not a legalFoundationpatent rights inprofessionaldrugs for MSUniversity and obligationCase study South Africa. training.sufferers. the honorary 2.1, p. 48.Case study 2.3, Case study 2.6, Case study 2.9, professor. Case p. 51.p. 58.p. 64.study 2.13, p. 75. LegalBritish Sugar Child labour inExecutive fatThe BritishEconomy with The retention ofThe hospitalThe Firestone and Sunday developingcats. Case studyrailway system:the truth when dead babies’consultants.Tire recall issue. trucking. Case countries.Case2.7, p. 60.priorities, profitsdealing with the organs inCase study 2.21,Case study 2.25, study 2.2, p. 49. study 2.4, p. 53.and governancetax authorities.hospitals. Case p. 88.p. 93. The oil Case study 2.11,Case study 2.15, study 2.19, companies andp. 67.p. 77.p. 85.Supermarkets’The ‘Super size the 2000 fueltreatment of Me’ sales crisis. Case studytheir supplypromotion. 2.8, p. 62.chains. Case Case study 2.23, study 2.22, p. 91. p. 89. IllegalDiscriminating The case ofThe rise andBritish AirwaysSexual against employees.Shell’s missing fall of Parmalatand Virginharassment. Case study 2.10, oil barrels.Case study 2.16,Atlantic.CaseCase study 2.24, p. 65.Case study 2.12, p. 79study 2.20,p. 92. p. 72.Lord Black andp. 86. The JonathanHollinger Aitken story.International. Case study 2.14, Case study 2.17, p. 76. p. 81. BAT and allegations of cigarette smuggling. Case study 2.18, p.83. Illegal but David ShaylerHuntingdon Life just?and SciencesCase whistleblowing study 2.26, on MI5.Case p.94. study 2.5, p.55.
EthicsMorality Prescribing the good lifeProscribing bad actions GoodBenign IndifferentBad Positive action for good Avoiding doing harm,Ignoring harm done Taking action to do harm or to prevent harm supports the doing ofby or to others and being donegood but takes no positivedisregarding the rights Taking no action to prevent action to do goodof othersharm being done Social SocialReciprocityFairnessLying andCheatingBullying andHarming and developmentresponsibility dishonestyandSocialSocial & and Caringand Selfishnessirresponsibilityenvironmental Supportingdisengagement
shareholders. The claim that there are no ethical obligations on a private com-pany other than to obey the law and meet the demands of their shareholders was most famously articulated by Milton Friedman (1970).
Friedman’s position can be criticised from several perspectives. Solomon’s (1993) critique is based on the Aristotelian idea of virtue (see p. 101). He argued that the belief that business is simply about the financial ‘bottom line’ is untrue.
However, he claimed this misconception has generated many false metaphors for business that hide the truth from people. The idea of cowboy entrepreneurs who are driven by greed and profit and who see themselves as loners in competition with all others is one such metaphor. Rather, he argued, the purpose of business is to provide for the prosperity and happiness of the community. This cannot be achieved if people make a distinction between their business and their personal lives. People are social animals but their social needs are ignored if their business lives are focused on the individualistic pursuit of profit. The problem is intensi-fied if working lives are associated with necessary drudgery in contrast to the pleasure that can be had from personal and social lives. Virtues, according to Aristotle, are formed from the ability to find a sensible mean between such extremes as dreary work and pleasurable personal lives.
The bottom line of the Aristotelian approach to business ethics is that we have to get away from the ‘bottom line’ thinking and conceive of business as an essential part of the good life, living well, getting along with others, having a sense of self respect, and being part of something that one can be proud of.
(Solomon, 1993: 104)
There is a religious objection to the Friedmanite view of business that can be exemplified from the Roman Catholic position as expressed in the encyclical Centesimus Annus (John Paul II, 1991). Humans, it argued, have a capacity for transcendence – the ability to give themselves away to others, and to God. The role of capitalism and profit seeking has to be seen within this context.
The church acknowledges the legitimate role of profit as an indication that a business is functioning well. When a firm makes a profit, this means that pro-ductivity factors have been properly employed and the corresponding human needs have been duly satisfied. But profitability is not the only indicator of a firm’s condition. It is possible for the financial accounts to be in order and yet for the people, who make up the firm’s most valuable asset, to be humiliated and their dignity offended … In fact the purpose of a business firm is not simply to make a profit, but it is to be found in its very existence as a commu-nity of persons who in various ways seek to satisfy their basic needs and who form a particular group at the service of the whole society.
(John Paul II, 1991: §35)
Connexion point
Milton Friedman is an economist who is one of the major participants in debates about business ethics. His views are discussed in Chapter 8.
Large companies, such as Shell, are adopting forms of accounting that attempt to balance traditional financial accounting with a concern for environmental sustainability and social justice. This is known as triple bottom line accounting, which provides output and performance measures in the, potentially contradic-tory, fields of financial, social and environmental performance. The idea, similar to that of the balanced scorecard, is to make it obvious if financial success is only being achieved at a social and environmental cost. The technical problem of identifying measures that can illuminate a company’s performance on environ-mental quality and social justice is difficult. Comparing the many possible measures against each other and against financial performance is a matter of judgement rather than of accountancy calculation (Elkington, 1999).
The issues that arise from legal, but unethical, managerial and business actions all reflect one or more of these criticisms of the Friedmanite perspective.