Business Ethics

Nagel's Defense of Affimative Action?

weak: special efforts to ensure equal opportunity - level playing field strong: definite preference: quotas, etc. strong AA undesirable but necessary (according to some)

Extraordinary Power of Multinational

• Bigger than GNPs of many countries

Alternatives to Fingerhut

• pawnshops (up to 300% interest) • lease-back dealers (up to 900% interest) • secured credit cards: high fees, low return on deposit • payday/cash-advance • refund-anticipation loans • rent-to-own:customers pay 3-4x what merchandise would cost otherwise

Signs/Signification

• something which indicates something else • signification: that which is signified by a sign, brands logos etc, are signs indicating all kinds of significations

ENVIRONMENT

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Under AA: Members of a group who are stereotyped are more likely to be compared in terms of that group

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why affirmative action? (4 reasons)

1. equal treatment 2. justice for past discrimination 3. diverse society is better for society 4. always acting fairly brings about most happiness for society at large

what are the five reasons giving my shelbey steele for why blacks suffer MORE from affirmative action?

1. makes black color of preferences, laws make us less color-blind -- leaps over hard task of developing formerly oppressed people 2. diversity not same thing as proportionate representation 3. demoralization: implication of racial inferiority is given legal status by AA 4. AA encourages blacks to exploit their own past victimization 5. Price of illusion: possible to repay blacks today for historic suffering of the race

Conditions (Bases) of International Rights [convergence points]

1. rights protect something of extreme importance 2. rights protect something subject to significant recurring threats 3. obligations of the right are affordable and fair 4. these are more cultural-specific, in that cultural context might alter our expectations more with these than with others...

Criticisms of Free Market View?

1.externality of pollution often not accounted for 2.lack of markets for such goods as endangered species and scenic vistas 3.lack of tradable property rights for clean water, oceans, atmosphere 4.inability of future generations to represent their own interest in contemporary markets

Explanation of Tragedy of Commons

Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another... But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit--in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.

Quote from Shelbey Steele on AA

"Suffering can be endured and overcome but not repaid" - real help comes not through AA but educational and economic development of disadvantage people, regardless of race and eradication from our society-through close monitoring and severe sanctions

Cross Benefit Analysis Assumptions

1. an act shouldn't be undertaken unless its benefits outweigh its costs 2. it is desirable to attempt to express all benefits and costs in a common scale or denominator so that they can be compared 3. CB technique is the best method of decision making so it warrants the expense and efforts needed to promote and use it over other possible methods

Cross Benefit Analysis Repsonses

1. certain decisions might be right even though benefits don't outweigh costs 2. are good reasons to oppose efforts to put $ values on non-marketed benefits and costs 3. since there are many situations where one would not wish to use CB, and given that many non-market values shouldn't be commodified and given a market value, it's best not to use CB Analysis

argument for affirmative action

AA is good b/c diversity will actually bring about more good and efficiency AA helps ensure justice so it is more fair

arguments against affirmative action

AA is unfair b/c it's unjust or AA is bad b/c it harms efficiency and so harms society

Equal Pay Act of 1963

Equal Pay Act of 1963 prohibits pay discrimination based solely on gender. Equal pay for equal work is the rule

Stirring it up examples

Patagonia Clif Bar Stoney Field Yogurt

What is social responsible investing?

Socially responsible investing (SRI), also known as sustainable, socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social good. Accomplished in three ways o Investment o Shareholder advocacy o Community Investing • Mutual funds are the most common way to invest in SRI

Galbraith & Hayek: Dependence effect, etc

Galbraith's critique of the "faculty Pillars of Marketing: says these assumptions of classic marketing are naively flawed • sovereign consumer (no, marketing has power) • pursuit of profit is the one goal (no, marketing's effects on society should be considered) • ownership = power (stockholder) (no, stakeholders affected must be considered) Galbraith's criticisms of traditional economists assumptions about advertising: Traditional economics: • wants diminish by being satisfied • desires originated the consumer • consumer is empowered through information Galbraith: • advertising causes frustration, frivolity • advertising creates desires • consumer's autonomy is undermined Hayeks's Responses to Gailbraith: • Artificial (non-innate) desires are some of the most noble desires humans have • to say that a desire isn't important b/c it is not innate is to say that the whole cultural achievement of man isn't important • if the fact that people wouldn't feel the need for something if it were not produced did prove that such products are of small value, all those highest products of human endeavor would be of small value • there have never been independently determined desires for literature before literatures has been produced

GNP

Gross National Product - the sum of all goods and services produced in a nation in a year

extrinsic?

Having value come from the outside; Not part of the essential nature of someone or something; coming or operating from outside

How we affect culture and societal values through marketing.

How we affect culture and societal values through marketing. • Desensitizing our culture • Sex sells • Playing on consumers emotions

What is impact investing?

Impact investing is one form of socially responsible investing and serves as a guide for various investment strategies. Impact investing tends to have roots in either social issues or environmental issues, and has been contrasted with microfinance Impact investors actively seek to place capital in businesses, nonprofits, and funds that can harness the positive power of enterprise. Impact investing occurs across asset classes; for example, private equity/venture capital, debt, and fixed income.

North Omaha

North Omaha -- Michelle Troxclaire • Where only blacks could live, Omaha's ghetto • Trying to improve it

Pay Equity for Women

Problems which perpetuate low wages for women: • inconsistent in justifying pay differences • don't value women's innate skills • claim that market dictates - people accept pay, so its just - supply often irrelevant to low pay - women don't just work for money - considerations • Women on average earn approximately 69% of male salaries •

Equal employment opportunity (EEO)

The equal right of all citizens to the opportunity to obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities. • Tattoos- 40% of people 18-40 have tattoos EEOC says employers can impose appearance policies and dress codes that apply to all employees, so long as not religious or ethnic discrimination

Bottom of the Pyramid

The income gap is widening • Tier #1 consumers now use a disproportionate level of global resources • Marketing to those in Tier 4. 4 billion people who live on a dollar a day or less. Those in Tier 1 use a disproportionate amount of the world's resources. This taps into a huge market, helps economic growth, and helps the poor improve their lives. Is it bad to market to the already vulnerable? 5 Assumptions have to be modified with this type of marketing. 1. Poor is not the target market because they will not bring us profits. 2. Not worried about the functionality. Worried about making a good product that will sell. 3. Innovations come from Tier 1. We do not focus on business innovations, only product innovations. 4. We do not want to innovate around sustainable development. 5. Managers do not get excited about working with the bottom of the pyramid. • Arguments for 1. huge market 2. catalyst for economic growth 3. helps poor access goods to improve their lives • Arguments against 4. poor need to produce, not consume 5. marketing too vulnerable? 6. MNC profits flow abroad

Conditions (Bases) of International Rights [convergence points]

The trick in determining the specifics is in determining the affordability-fairness of each of these- what obligations, exactly, should be met by foreign corporations in these regards?? right to chemo in Omaha v. right to chemo in democratic republic of congo right to plumbing in USA vs right to plumbing in Mali

negative externalities?

cost imposed on a 3rd party, usually w/out knowledge or consent: 1. oil drilling - spillage which is not cleaned up, cleaning would add to cost of oil, and gasoline 2. countries not having pollution control measures which add to cost of energy or car manufacturing 3. companies which produce a product that causes health harm through pollution or otherwise that causes more health problems which insurance or public health coverage have to ultimately pay for (cigarettes, coal burning plants, obesity through cheap fast food, etc) a. these externalities are unfair and unjust, done as exploitation of powerless or ignorant, hidden and so hard to locate or notice

Bribery and Cultural Relativism

each culture creates its own values: i.e. Bribery in Japan Responses: 1. Bribery is not so widespread as some would say 2. Difference b/w bribery and extortion 3. foreign corrupt practices act: a. illegal to offer payment to foreign officials b. clerical workers and non-governmental workers not covered by FCPA

Triple Bottom Line Accounting

expanding the traditional reporting framework to take into account ecological and social performance in addition to financial performance

Interface Carpet (7 steps)

from product sales to whole-product-life servicing; interface is attempting to revolutionize the industry by taking responsibility for the production-to-end-of-use loop in its entirety 1. eliminate waste 2. benign emissions 3. renewable energy 4. closing the loop 5. resource efficient transportation: produce close to use 6. sensitivity hookup: help people become aware 7. redesign commerce: transform the industry

instrumental?

having value because of what it can do

intrinsic?

having value in itself, or inherent value; we value it for its own sake

civil rights act of 1964

illegal for an employer with 15 or more employees to discriminate against someone on basis of race, color, religion, sex, national origin, pregnancy, age, disability

Response to 3 objections by nagel?

ineffcient -->True, there are some productivity costs unfair --> Yes, but unfair like conscription in wartime, or property condemnation Also, beneficiaries deserve it for past discrimination damages self-esteem -->This cannot be avoided, but it is necessary evil - what choice do we have

3 Objections to string affirmative action

inefficient unfair damages self-esteem

Free Market View?

let the markets decide the real value of natural resources like clean air, water, and endangered species;

what is sustainability?

not using more resources than we can replace (consider future generations) Ex of problem: at current rates of consumption, no more oil in 25 years critics of sustainability say that it's too conservative and even if we deplete some of our known resources, our resourcefulness will allow us to pursue other means of fueling our needs

Social Bottom Line

social capital is the measure of ability of people to work together for common purposes in groups and organizations; key element of social capital is sense of mutual trust also includes human capital in terms of public health, skill and education o measure of loyalty, honesty, and dependability (the moral qualities) o Businesses need to ask  What are the crucial forms of social capital to become a sustainable corp?  What are the underlying trends in terms of creation, maintenance capital?

absolute valuation

value is not dependent on any benefit, economic or other; value based on something unchanging-the honor of those who died for our country, or intrinsic value of not eliminating species - it's a basic obligation not something done for the sake of something else

existence values

value of something's existing (Gettysburg Warfield, endangered beetle, Mona Lisa)

Fingerhut

we provide service to a very risky market; we suffer a bad debt ratio-15% of sales! customers: I want things right away; fingerhut was only 1 who would give me credit • target lower-income (average income of fingerhut customer ~ ½ of norm) • boldface monthly payment amounts • customers who pay balance on time are promoted • personalized catalogs • database: fingerhut has as many as 1400 pieces of info about a household • extend credit to those who otherwise wouldn't get it

Quotes (Julian L Simon)

• "Almost every trend that affects human welfare points in a positive direction, as long as we consider a reasonably long period of time and hence grasp the overall trend" • Length of Life: "it go ok thousands of ears for life expectancy at birth to increase from just over twenty years to the high 20s" (Jumped from 30-75 in last two centuries • Agricultural Labor force is shrinking: "This has enabled us to increase our consumption per person by a factor of 20 or 40." • Raw materials: we will run out of "raw materials --all of them-- are becoming more available rather than more scarce" • Food: long run price of wheat relative to wages is down, hunger in Africa stems from civil wars • Cleanliness of the environment: "the irrefutable facts are that the air in the US is safer to breathe now than in decades past" • Vanishing Farmland

Autonomy & harm based critiques

• autonomy critiques: marketing and advertising undermine free will and autonomy; children, alcoholics, vulnerable, desperate, weak-willed • harm critiques: 'Sin products' (alcohol, tobacco, gambling, fast-food) • Distraction from common good: Advertisers, insofar as they provide materialistic goals and desires for me to pursue, and direct my attention towards attaining these goals, they inadvertently help me to forget about others and the societal needs around me • Associative advertising causes confusion of desires, as I start to desire stupid things, or things less important than essentials

Arguments against advertising to the bottom of the pyramid?

• poor need to produce, not consume; marketing to vulnerable?; MNC profits flow abroad

Women's issues in the workplace

• self-doubt: women not as confident as should be, don't give themselves enough credit/value; wait for others to give them permission to be successful • models-how you are raised • mentoring: female leaders benefit from mentors (gain insight quickly) • leaders discussed mentors' contributions and how they can accelerate the pace of learning • paths to leadership are different: family considerations/concerns, expected to follow the man, men relocate family easier, stress and loneliness inherent in leadership • Women leaders often have to prove themselves more than men: it has been a men's world, men already thought of as leaders, as a male certain doors already open but not for women • women have to work harder and have fewer opportunities to pursue leadership: women have higher expectations and higher standards, not as many leadership opportunities for women, women have hard time getting loans • often women need to be invited to seek advancement • women get less for same work

The Bottom of the pyramid

• the BoP is largest but poorest socio-economic group (3.7 billion ppl who are largely excluded from formal markets, group earns less than $2/ day and 60% live in China and India) • they lack access, are charged more, and generally get lesser quality products BUT they have $$, need products, are brand conscious, and technologically aware and capable

Triple Bottom Line explanation

Encourages managers not only to think about the traditional bottom line, but also the social and environmental bottom line. Some say that this approach is misguided. Adding up the financial plusses and minuses is just a lot easier, as it turns out, than totaling up, say, the ethical achievements and shortcomings of a firm. So while it makes perfect sense to take the costs of labour and materials and subtract those from sales revenues, it makes little sense to talk about (for example) taking a social "minus" such as a sexual harassment lawsuit and subtracting that from a social "plus", like having engaged in corporate philanthropy. If you want to be effective, try and find a way to assign dollar values to social and environmental issues.

Environmental Bottom line

Environmental bottom line: capital comes in 2 forms... • critical natural capital essential to integrity of ecosystems, • substitute natural capital which can be renewed or replaced

Scarcity of People (Julian L Simon)

Frequently the root of the difference is the length of the period you focus on -- the short run or the long run. More people are an economic benefit in the long run, though they are a burden in the short run. There is only one important resource which has shown a trend of increasing scarcity rather than increasing abundance -- human beings. Yes, there are more people on earth now than ever before. But if we measure the scarcity of people the same way that we measure the scarcity of other economic goods -- by how much we must pay to obtain their services -- we see that wages and salaries have been going up all over the world, in poor as well as rich countries. The amount that you must pay to obtain the services of a manager or a cook has risen in India, just as the price of a cook or manager has risen in the United States over the decades. The increases in the prices of peoples' services are a clear indication that people are becoming more scarce even though there are more of us. (Julian L Simon)

Cost Benefit Analysis

A study that compares the costs and benefits to society of providing a public good

Colonial Style Practices?

Companies convert land from food crops to cash-crops for export

Fair trade

A market-based approach to pay higher prices to producers on exports from developing countries to developed countries in order for the developing countries to obtain better trading conditions and promote sustainability. • Coffee, pressure on manufacturers etc.: it is easier to manipulate and coerce workers and companies in LDC's because o There are often less regulations on business practices (dumping) o There are often less options for LDC's since their economic infrastructure is much weaker (not many options for them)

Arguments for Advertising to the Bottom of the Pyramid?

Arguments For: • huge market; catalyst for economic growth; helps poor access goods to improve their lives

Haslett's statement on colorblindness

Color-Blindness is generally how a company should operate, but in some rare cases race may be a legitimate factor determining whether or not to hire someone

Conflicts of Development vs Conflicts of Tradition:

Conflicts of Development vs Conflicts of Tradition: • Donaldson says that ethics abroad will inevitably involve ambiguity. Most ethical issues are neither black nor white, but occur in a 'gray area' - what he has elsewhere called "Moral Free Space" • He asks how managers can discover the boundaries of moral free space. He says that when there are diff. ethical standards at work, and the host country's seem lower than those at home, there are 2 types of conflict, each requiring a specific kind of reasoning 1. conflicts of relative development: these arise b/c the countries being compared are at diff. levels of economic development. Thus wage rates may be acceptable to attract investment in a country at a low level of development 2. conflicts of cultural tradition: these may happen at any level of economic development and reflect deeply held religious and cultural tradition - for example, the exclusion of women from most professions in Saudi Arabia

contingent valuation?

Contingent Valuation (CV) method = economists use to determine how much individuals are willing to pay for policies consistent with their disinterested moral beliefs o "empirical research shows responses to CV questionnaires reflect moral commitments rather than concerns about personal welfare"

Cultural and Individual Relativism (Donaldson)

Cultural relativism is not right. Just because a country allows for bribery does not mean a company must engage in this activity even if it means gaining a business opportunity. Cultural relativism: "when in Rome, do as the romans do" o If bribery or insider trading is tolerated in a certain country, then unless we adapt to the local standards, we are likely to be putting ourselves at a competitive disadvantage Imperialism o An imperialist will act abroad exactly as he does at home.  There is a single list of truths  These truths can only be expressed with only one set of concepts  They call for the same behavior around the world • The guiding principles to help distinguish between acts that are merely different and those that are wrong: o Respect for core human values which give the moral threshold for all business activity o Respect for local traditions o The belief that context matters in deciding what is right and wrong

Walmart effect—benefits and drawbacks

Walmart saves working class families-2,395 a year. created 210,000 jobs nationwide. The lower costs at walmart lead to lower costs at other stores as well. Walmart will tell their suppliers exactly what to do, and the suppliers will do it because if they do not sell their products at walmart they will lose profits. • Benefits and drawbacks • Good o Wal-Mart saves working class families money e/a year o Created 210,000 jobs nationwide o Lighting efficiency program o Experimental stores o "Wal-Mart has done more good for America by several thousand orders of magnitude than they've done bad" - John Mariotti • Bad o Illegal immigrants mopping its floors o Workers locked inside overnight o Gender discrimination o Wages low enough to make other companies' workers go on strike

Willingness to Pay

Willingness to Pay (WTP Existence Values Absolute Valuation Contingent Valuation • WTP = value of environment depends on what people now and in future are willing to pay for it

Workers Rights

Workers are often kept from unionizing due to government or other pressure

Affirmative Action?

a policy designed to redress past discrimination against women and minority groups through measures to improve their economic and educational opportunities

Sexual Harrasment

comments, gestures, or physical contact of sexual nature that are deliberate, repeated, and unwelcome. • a behavior which is typically associated with a mental state representing an attitude which seeks sexual ends without any concern for the person from whom those ends are sought, and which typically produces an unwanted and unpleasant response in the person • need not necessarily: entail sexual discrimination, be against interest of harassee (benefits), involve a misuse of power (no response, veteran - janitor could harass CEO), involve intention or any particular state of mind • Harassment: "Unwelcome conduct that is based on race, color, religion, sex, national origin, age, disability or generic information by supervisor, coworker, or nonemployee" • Susan Dobbs: Sexual Harassment need not necessarily: o entail sexual discrimination o Be against the interest of the harasse (benefits) o Invovle a misuse of power (no response, veteran) o Involve intention of any particular state of mind • Unlawful to harass a person because of that person's sex. Includes unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. Can just be making offensive comments about gender in general

Persuasive Advertising

• A type of product promotion that attempts to influence a consumer in favor of purchasing particular good or service. o Ex. encourage first time customers to try a product • Advocates of persuasive advertising argue that it a) stimulates the economy, b) informs consumers, c) prompts innovation and competition, d) keeps media free from the government, and e) has natural limits due to the autonomy and reason of consumers. Critics of persuasive advertising point out the negative consequences of advertising upon society. Lippke for example, calls persuasive advertising 'manipulative', and says, o There are numerous drawbacks to the consumer lifestyle extolled in manipulative advertising. It is costly, stressful, and time-consuming. It may estrange us from loved ones, isolate us from our fellow citizens, and ultimately fail to provide us with much satisfaction or stimulation. It may also be ecologically foolish. Given these drawbacks, there may be numerous benefits to the curtailment of manipulative advertising, even if the consequence is a net reduction in consumption. • Critics believe that advertising has negative financial or health-related effects, negative impact on efficiency, harmful effects on familial and community ties, critiques that it promotes self-centered hedonism, and lastly, advertising may have negative environmental impact.

The economic bottom line

• A. economic bottom line: traditionally measured in terms of physical and financial capital o Traditionally the economic bottom line is measure in terms of  Physical capital (plant, machinery, real estate)  Financial capital (investments, cash in hand) o Typical economic issues for business people  Are we competitive?  Is the demand for our products sustainable?  is our rate of innovation competitive?

Sut Jhally Advertising and the end of the

• Commercialized our culture • Inside everything • Have to make fundamental changes if we want to avoid the effect down the road • Unique responsibility for this generation • Advertising cannot think down the road • Advertising is unavoidable • Advertising is going straight to emotions and feelings and not head/thoughts o I want to be pretty so I buy make-up • Ads are trying to get our attention so they go more and more insane

Grameen Bank

• Gives small loans to poor women so they can start a business • Omaha has one of the first in the USA • Grameen Bank gives micro loans to small business owners. Mainly women. Muhammed Yunus believe that credit should be a basic human right. the center has people in charge of the loans. they discuss how people will repay their loans. the loans average $220, that small amount of money changes peoples lives. Each center has 16 decisions to make about socioeconomic issues.

Basic Rights and legitimate expectations may vary from one country to another:

• May vary from one country to another: "you as a citizen of the US may have the right to kidney dialysis; but a citizen of Bangladesh may not"

Advertising, art, and religion (Levitt)

• People want less fluff and more facts about what they are advertising • The producer is a powerful giant over the consumer • As with art, the purpose is to influence the audience by creating illusions, symbols and implications that promise more than pure functionality • Advertisements are the symbol of man's aspirations

Another argument against cost benefit analysis

• Pricing something decreases its perceived value o Non-market exchange is non-market because it is not supposed to be able to be bought. It is thought to have a priceless value -- not for sale o When we try to price non market 'goods' such as clean air, peace and quiet, or views, we run into two key problems: 1. People usually want more to give up what they have than they are willing to pay for what they don't 2. Lots of factors go into price fluctuations, and to artificially single out one factor is misleading:

The Tragedy of Commons

• The Tragedy of the commons is an economics theory by Garrett Hardin, which says that individuals acting independently and rationally according to each one's self-interest behave contrary to the whole group's long-term best interests by depleting some common resource.

Associative Advertising (Waide)

• The advertiser wants people to buy the product • In order to increase sales, the advertiser identifies some deep-seated non-market good for which the people in the target market feel a strong desire • In most cases the marketed product bears only the most tenuous relations to the non-market good with which it is associated in the advertising campaign • The Marketed product is associated with the non-market desire it cannot possibly satisfy • Associated Advertising is o Bad for advertisers o Bad for consumers • Buying more, less satisfied

Guidelines for developing a global ethical perspective among managers

• Treat corporate values and formal standards of conduct as absolutes • Design and implement conditions of engagement for suppliers and customers • In host countries, support efforts to decrease institutional corporation • Exercise moral imagination o The facility to think around a problem creatively without being biased towards a solution that favors one side o Coca-Cola resisted bribes, but sponsored a project to plant fruit trees

Supply chain management for Ethics in China

• Wal-Mart would begin demanding Chinese suppliers to stores in the US, UK and Canada sign up to rigorous environmental and social standards in three months. Within three years, all suppliers to Wal-Mart stories anywhere in the world would have to sign up • Judged on their air emissions and hazardous waste disposal • "Green supply chain initiative" aimed at working with individual suppliers on energy saving and other issues, and is expected to extend to other US and European retailers, covering another 20,000 factories • Pressure from companies in China can put positive pressure on the government there • Criticism: o Conrad MacKerron: "if you go to a supplier that is already feeling the squeeze financially, and you say that they need to reduce energy and stop waste water, how do they do that given that Wal-Mart's business model is basically to pay less year after year?"

Target Marketing: children, malt liquor, etc world video

• advertising to children: 1. veracity - reality/fantasy - it is easier to deceive them about the truth 2. fairness and respect - unfair advantage of business up against children 3. harm to children - there is harm done to children by advertising • Our easy examples for problems are racial-targeting, children-manipulation, women-self-concept issues, and the promotion of sin products. Less easy to sort out are questions about the increased materialistic-centeredness of culture, the impact of advertising upon our cultural norms and values, and the consequential impact on our family and personal lives