Business Ethics

Chapter 4 THREE SPECIAL STAKEHOLDERS: SOCIETY, THE ENVIRONMENT, AND GOVERNMENT

PowerPoint Image Slideshow

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Chapter Outline

• 4.1 Corporate Law and Corporate Responsibility
• 4.2 Sustainability: Business and the Environment
• 4.3 Government and the Private Sector

Figure 4.1

The Japanese concept of nemawashi broadly means “laying the groundwork” or “building strong roots.” In a business ethics context, nemawashi means building a strong foundation for an action or project by reaching out to all stakeholders and seeking their input, demonstrating how much the organization values their opinion as it builds support from the ground up. (credit: OpenStax)

Learning Objectives: Section 4.1

• 4.1 Corporate Law and Corporate Responsibility
• Explain how investors and owners benefit from doing business as a corporate entity
• Define the concept of shareholder primacy
• Discuss the conflict between shareholder primacy and corporate social responsibility

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Figure 4.2

Corporate shareholders elect directors who appoint the company’s officers—all of whom benefit from limited liability. (credit: OpenStax)

Figure 4.3

A corporation’s typical stakeholders include (but are not limited to) its customers or clients, the community in which it operates, the natural environment, its employees, the media, and the government. (credit: OpenStax)

Figure 4.4

In 1913, workers are shown laboring on a Ford assembly line (a) in Highland Park, Michigan. In Dodge v. Ford Motor Company (1919), the Michigan Supreme Court ruled that Henry Ford (b) must operate the Ford Motor Company primarily in the profit-maximizing interests of its shareholders rather than in the broader interests of his workers and customers. (credit a: modification of work “Ford assembly line - 1913,” https://commons.wikimedia.org/wiki/File:Ford_assembly_line_-_1913.jpg, Public Domain https://en.wikipedia.org/wiki/Public_domain; credit b: modification of work “Portrait of Henry Ford” by the Library of Congress, https://commons.wikimedia.org/wiki/File:Henry_ford_1919.jpg, Public Domain https://en.wikipedia.org/wiki/Public_domain)

Feature Box: Cases from the Real World

Critical Thinking

• Do you believe Unilever sponsors the Shakti program to help women, to boost its own profits, or both? Explain your answer.
• If Unilever has mixed motives, does this discredit the company in your eyes? Should it?
• How is this program an example of both corporate and personal sustainability?
• Could this model program be duplicated elsewhere, in another area and with different products? Why or why not?

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Figure 4.5

Discussion Point

• Business commentators and analysts are divided as to whether social responsibility actually drives more profitable business. This chart demonstrates the positive impact social responsibility can have.

This chart demonstrates that social responsibility can be profitable. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

Learning Objectives: Section 4.2

• 4.2 Sustainability: Business and the Environment
• Explain the concept of earth jurisprudence
• Evaluate the claim that sustainability benefits both business and the environment
• Identify and describe initiatives that attempt to regulate pollution or encourage businesses to adopt clean energy sources

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Discussion Point

• Sustainability is interpreted in two different, but related, ways in business. Originally, it referenced the ability of a firm to make money and survive. More recently, however, it has indicated the extent to which a company respects the natural environment in its operations. Both concepts are connected.

Figure 4.6

A warning in Honolulu regarding the damage done by ocean dumping. (credit: “No Dumping - Drains to Ocean” by Daniel Ramirez, https://commons.wikimedia.org/wiki/File:No_Dumping_-_Drains_to_Ocean_(18761281786).jpg, CC BY 2.0 Generic https://creativecommons.org/licenses/by/2.0/.)

Figure 4.7

Sustainability can create long-term cost savings for companies. (credit: Nattanan Kanchanaprat, https://pixabay.com/en/money-home-coin-investment-2724241/, CC0 1.0 Universal https://creativecommons.org/publicdomain/zero/1.0/.)

Figure 4.8

According to recent reports, close to fifteen thousand companies worldwide have chosen to be ISO 14000 certified, including Nissan, Ford, and IBM. (attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

Feature Box: What Would You Do?

Critical Thinking

• As a member of the urban planning commission, you will have to convince the stakeholders that a proposal to require more green space is a workable solution. You must get everyone, including developers, investors, neighborhood homeowner associations, politicians, media, and local citizens, on board with the idea that the benefit of sustainable development is worth the price. What will you do?
• Is this a matter that should be regulated by the local, state, or federal government? Why?
• Who pays for flood damage after a hurricane? Are your answers to this question and the preceding one consistent?

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Feature Box: Ethics across Time and Cultures

Critical Thinking

• Should a U.S. or European company take advantage of a country’s weak approach to business and political ethics?
• Would your answer change if your decision saved your company $1 million?

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Discussion Question

• When a Western company is presented with the possibility of taking advantage of the absence of laws addressing business ethics or lax enforcement of those which do exist in a non-Western setting, what are the appropriate steps for it to take?

Figure 4.9

Although solar panels can reduce your carbon footprint, the tiles are much more expensive than standard roofing tiles. (credit: “Typical Solar Installation” by Tim Fuller, https://www.flickr.com/photos/timtimes/5599777777, CC BY 2.0 Generic https://creativecommons.org/licenses/by/2.0/.)

Feature Box: Cases from the Real World (2)

Critical Thinking

• Should corporations and individual consumers bear joint responsibility for sustaining the environment? Why or why not?
• What obligation does each of us have to be aware of our own carbon footprint?
• If individual consumers have some obligation to support environmentally friendly technologies, should all consumers bear this responsibility equally? Or just those with the economic means to do so? How should society decide?

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Learning Objectives: Section 4.3

• 4.3 Government and the Private Sector
• Identify three public health issues that might warrant government regulation
• Explain what is meant by “revolving door” in a political context
• Compare constitutional arguments for and against government regulation of industry

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Figure 4.10

Groups across the political spectrum have come together to protest the proposed Keystone pipeline route. (credit: modification of work “Protest against the proposed KeystoneXL tar sands pipeline” by Fibonacci Blue, https://www.flickr.com/photos/fibonacciblue/6186416499, CC BY 2.0 Generic https://creativecommons.org/licenses/by/2.0/.)

Feature Box: What Would You Do? (2)

Critical Thinking

• How should society and governments react to aggressive environmental protest?
• How would you balance a protestor’s First Amendment right of free speech, expression, and assembly with concern for public safety and protection of property?

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Discussion Point

• Consider that aggressive environmental protest entails physical harm to others and/or property damage.

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Figure 4.11

The 2010 Deepwater Horizon oil rig fire and resulting river of oil in the Gulf of Mexico. (credit left: modification of work “Deepwater Horizon offshore drilling unit on fire” by the US Coast Guard, https://commons.wikimedia.org/wiki/File:Deepwater_Horizon_offshore_drilling_unit_on_fire.jpg, Public Domain https://en.wikipedia.org/wiki/Public_domain; credit right: modification of work “Defense.gov photo essay 100506-N-6436W-023” by Petty Officer 1st Class Michael B. Watkins, https://commons.wikimedia.org/wiki/File:Defense.gov_photo_essay_100506-N-6436W-023.jpg, Public Domain https://en.wikipedia.org/wiki/Public_domain)

Feature Box: Cases from the Real World (3)

Critical Thinking

• Should the U.S. government pass a law requiring the use of the automatic shutoff valves on oil rigs in its waters?
• Should privately owned oil companies be allowed to lobby against safety regulations?
• Research whether public attitudes in the United States support stronger offshore drilling safety regulations. What do you think accounts for your findings?

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Discussion Point

• This requirement would include automatic shutoff valves and as many redundant, or backup, safety features as possible on oil rigs in U.S. waters.

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Copyright

This OpenStax ancillary resource is © Rice University under a CC BY-NC-SA 4.0 International license; it may be reproduced or modified for noncommercial purposes only but must be attributed to OpenStax, Rice University and any changes must be noted. Any adaptation must be shared under the same type of license.