Bus Ethics Exam Past Paper PDF 9.11.09 PM

# Business Ethics Exam ## Week 10: Whistle blowing **What is the definition of Whistle blowing? Goals? Characteristics?** - Making public matters that organizations have ignored or wish to keep hidden but which constitute a significant moral wrong, such as immediate danger to the employees or pub...

# Business Ethics Exam ## Week 10: Whistle blowing **What is the definition of Whistle blowing? Goals? Characteristics?** - Making public matters that organizations have ignored or wish to keep hidden but which constitute a significant moral wrong, such as immediate danger to the employees or public. - Whistle blowers often face conflicting obligations & serious consequences. - Some argue whistleblowing is seen in a negative light because we live in a "Culture of Silence" - The public interest (including fellow employees) must be threatened by some policy or procedure (or lack thereof). - Employees of the organization have attempted to resolve the problem, i.e., internally. - External whistleblowing is justified only when these have failed. ## Edward Snowden - 41-year-old former US citizen & employee for National Security Administration (NSA). - May 2013: He leaked highly classified documents to journalists regarding NSA's surveillance programs. - These included programs like PRISM, which were shown to be operating without any public oversight, outside the US Constitution. - June 2013: US gov charged Snowden: theft of gov. property, 2 counts of violating the espionage act, unauthorized communication of national defense information, & "willful communication of classified communications intelligence information to an unauthorized person." - Snowden fled to Russia and lives there now. - Many consider him a hero, a whistleblower, & he won many awards. - But, some consider him a traitor & harm to national security. - Director of GCHQ said Snowden compromised UK&allies security, & that he should be accountable for that. - Snowden: Felt like he had an obligation as a human being to help free people from oppression. He said he selected only the documents that served public interest. ## Stages of whistle blowing 1. **Internal whistleblowing**: Reporting concerns outside the normal channels of authority, but still keeping matters internal to the organization. The goal is not just to communicate information but the exposure of potential harm & to pursue changes in order to avoid such harm. 2. **Escalation**: Report to someone "higher up" (ex. Challenger Shuttle): Only once you have exhausted all options above without any change then... 3. **External whistleblowing**: Seeking external intervention (ex., inform media). Only external whistleblowing, which is riskier & motivated by the gravity of the situation, is genuine whistleblowing. ## Oliveri Pharmaceutial Case - She is a hematologist & after 6 years of testing a drug, she deemed it ineffective & a possible cause of liver fibrosis. - She reported concerns to Research Ethics Board @ Hospital for Sick Children, who instructed her to inform participants & Health Canada. - She reported to Apotex inc., who told her if she informed patients they would take legal action against her for violating confidentiality. - Two years later (1998) the New England Journal of medicine published her findings. - 2009, she received an award & currently teaches @ uofT. - This is whistleblowing. ## The Challenger Shuttle Case - Jan 1986, the Challenger Shuttle broke apart in 73 seconds into flight, killing all 7 crew members. - 6 months earlier, engineer Morton I sent a memo to superiors warning of a faulty design in the O-rings. He said "the result could be a catastrophe of the highest degree, loss of human life." - Night before launch, engineers urged NASA & VP's to postpone. - They went ahead with it anyways, and the cause was O-ring failure. - *Not whistle blowing* ## Why people become whistleblowers (WB) - Complicity and Guilt. - Complicity and Dirty Hands problem: - Whistleblowers face competing obligations, so even when they do the morally superior thing (blow whistle), they still do something wrong. - Whistle blowing & reflective equilibrium: Trying to achieve some kind of balance between conflicting obligations. - WB are typically members of the organization & are complicit in the harm the organization causes. - WB are motivated by anticipated guilt/guilt: The thought of not preventing harm. - Competing moral obligations: 1. As a person: I have a moral obligation to prevent foreseeable harm to fellow persons. 2. As an employee: I have a moral obligation to confidentiality & loyalty to my emplyer/country unless it comes at the expense of harm to others. - Aim is to reach Rawl's equilibrium between (1) & (2). ## Hannah Arendt "The Benality of Evil" - Arendt's Eichmann in Jerusalem (1963) explores Eichmann's role in the Holocaust & introduces the concept of "banality of evil." Eichmann, a Nazi bureaucrat captured in 1960, executed in 1962. Arendt describes him as ordinary, unoriginal, & thoughtlessly following orders, not a sadistic monster. She argues evil arises from "thoughtlessness" blindly conforming to norms and obeying authority without critical reflection. ## Key ideas: 1) Benality of Evil: - Evil isn't always monstrous; it can emerge from people acting without thinking critically about moral consequences. - Eichmann wasn't stupid, but lacked the ability to reflect on his actions from other perspectives. - Some criticize Arendt for making genocide seem commonplace, but her point is that evil is human, not alien. Anyone can fall into it under the "right" conditions. ## 2) Controversy: - Some criticize Arendt for making genocide seem commonplace, but her point is that evil is human, not alien. Anyone can fall into it under the "right" conditions. ## 3) Lessons: - Avoid complicity by questioning dominant norms, challenging authority & reflecting on moral consequences. - Cultivate empathy, critical thinking, & moral reasoning throughout life. Evil thrives when we fail to think and act morally. ## Corporate world and Edward Snowden - Jackall's "fundamental rules of corporate life" - Unwritten rules to follow: - Never bypass your boss. - Tell your boss what they want to hear. - Drop issues your boss wants dropped. - Cover up what your boss wants hidden. - Violating these rules often leads to being fired, while following them can cause workplace disasters. Ordinary people perpetuate harm by blindly "going with the flow" and obeying unjust systems. - Sometimes, breaking rules or disobeying unjust laws is necessary to prevent harm. → St. Augustine: "An unjust law is no law at all!" - Edward Snowden highlights how normalized wrongdoing can build up until individuals feel morally compelled to speak out, even when ignored or dismissed. ## Week 11: Corporate Governance ## Corporate Governance - Corporate governance refers to the controls put in place that ensure a corporation acts in an ethical, legal, & transparent manner in the best interest of its shareholders, and stakeholders "aka Corporate responsibility." - For most corporations, basic structure: - Shareholders vote for board of directors, who act on shareholders' interests. - At each step of the chain, there is a flow of power down, and accountability back up. - This scheme is traditional and shareholder-oriented. - Governance also has economic dimensions: Companies with the best corporate governance records yield an 18% higher return. - Governance also has legal dimensions: e.g., Sarbanes-Oxley (2002) Act, a US federal law that expanded American Board Requirements in things like financial record keeping. ## Peso Silver Mines v. Cropper (1966) (Supreme Court of Canada) - Cropper, managing director of Peso, was offered mineral claims. The board (including himself) had rejected in good faith due to financial strain. Later, he formed a private company (Cross Bow) to acquire the claims. Peso accused him of violating his fiduciary duty, but the court dismissed the case, ruling: - Copper acted in good faith while rejecting the offer as director. - The claims were later offered to him as a private individual, not director. - No confidential or exclusive information was involved. - Key debate: whether Cropper learned of the claims solely as a private citizen, but the court found no breach of fiduciary duty. ## Canada Aero Service v. O'Malley (1974) - O'Malley, Zarzycki, and Wells (OZW), senior officers of Canaero, resigned and formed Terra Surveys. Shortly after, Terra won a Guyana government contract based on work OZW had done for Canaero. Canaero sued, claiming OZW misused a company opportunity. - Supreme Court decision: OZW breached fiduciary duties by exploiting Canaero's opportunity for personal gain. - Fiduciary Duty: Requires loyalty, good faith, & avoidance of conflicts between personal & company interests. - Senior officers cannot secretly or without approval take business opportunities belonging to the company or pursued on its behalf. - Terra secured the Guyana contract due to Canaero's prior efforts and OZW's direct involvement in the negotiations before resigning. OZW had to pay $125,000. ## Fiduciary Relationship - Built on trust, where one party (fiduciary) holds power and responsibility to act in the best interest of another (principal/beneficiary). - Key features: - Trust & Power: Professionals are trusted for their expertise and given power over aspects of a person's life. - Power Imbalance: This creates vulnerability for the principle, requiring the fiduciary to act ethically & avoid conflicts of interest. - Duties: Fiduciaries must prioritize the principal's interests, avoid harm, & not exploit their position for personal gain. - Ex. Dentist & Parent - A dentist using unnecessary treatments for personal profits harms the patient, who trusted the dentist's expertise & lacks the knowledge to know otherwise. ## Principle-Agent Problem - Occurs when there's a conflict of interest between a principal and an agent entrusted to act on their behalf. Risky relationship. - Key features: - Conflicts of interest: Agents may act in their own best interests instead of the principal's. - Separation of Ownership: Shareholder (owners) appoint managers to run the business, creating potential for misaligned goals. - Asymmetry of information: Agents often have more info than principles, making it harder for principles to monitor actions. For example, doctors and patients. ## External & internal Incentives for avoiding Conflicts of interest - Theory: A manager's main responsibility is profit maximization, aligning decisions with shareholder financial interests. - Challenges: - Owner Manager Separation: When managers run the business, conflicts of interest can arise. - Incentive Structures: - External: Market-driven pressures like profit goals, takeovers, or job security. - Internal: Pay-for-performance, stock options, and profit-sharing to align interests. - Ex. Apple: To align financial interests, Apple requires executives to hold shares. - Tim Cook must hold 10x his base salary. - Ethical Risks of rewards: - Rewards for goal achievement can encourage unethical behavior as people prioritize shortcuts over integrity. - Lessons from MLB: Teams with large pay gaps perform worse, as low-paid members feel undervalued, reducing effort. ## Intrinsic Motivators for Avoiding Conflicts of interests - Alternatives to Financial Incentives are Autonomy, Connection, & purpose. 1. **Autonomy**: Freedom to choose tasks, timing, location, and methods to enhance workplace performance & satisfaction. - Workers with autonomy are more productive and develop efficient processes. - 98% of workers prefer hybrid work and make more money by being more effective. 2. **Purpose & Connection**: Feeling connected to work or contributing to a meaningful cause increases job satisfaction & engagement. - Ex. Radiologists shown patient photos detected errors at higher rates, and felt more empathy, enhancing effectiveness & accuracy. 3. **Creating meaning**: Meaningful work leads to less turnover, higher engagement, and greater productivity. ## Week 12: Business and the Environment ## Alberta Oil Sands Case - The oil industry includes some of the wealthiest companies globally. - Conflict oil linked to human rights abuses and socio-economic issues (i.e. Saudi Arabia). - Ethical oil: Canadian oil sands are framed as a more ethical alternative, though they raise severe environmental concerns. - Customers lack transparency. Oil is not labelled by country of origin. - Alberta Oil Sands: - Both have ethical shortcomings: Saudi = human rights abuses. Canadian = environmental degradation. - Fourth-largest proven crude oil reserve globally. It covers 142,000 sq km of boreal forest. It's also one of the major contributors Alberta's economy; employing 133,000 people, with a revenue of $1.48 billion in 2016/17. - The extraction process is highly labor-intensive and environmentally harmful. It contributes 11% of Canada's carbon emissions, destroys forests, and uses/contaminates fresh water. - In addition, 23,000 indigenous live in the oil sands region. These effects are disproportionately harming indigenous & lower-income people. ## Paris Agreement: - Adopted by 196 countries to keep global warming below 2°C. ## Tragedy of the Commons - Describes depletion of shared resources due to individual self-interest. When resources are held in common, they are often misused or neglected because no single individual assumes responsibility for their upkeep. - Term coined by William Lloyd, a British economist & popularized by Garrett Hardin. - Root Cause: Individuals act independently & prioritize short-term self-interest over long-term sustainability. Consequence = a shared, finite resource is overexploited, leading to its depletion. ## Uk Mushroom - Wild mushrooms in the UK, especially in the New Forest, are disappearing due to over-picking driven by high demand from restaurants. Northern parts of the New Forest now have no edible mushrooms. - Solutions: - Privatize resources for accountability. - Encourage voluntary limits on picking. - Regulate and enforce restrictions. - Action taken: UK forestry commission banned commercial picking & imposed personal harvest limits. ## Grand Bank Fisheries - Advances in fishing tech 1960s-70s caused overfishing in Newfoundland's Grand Banks. By 1990s, cod stocks were severely depleted, leading to industry collapse. Although recovery signs exist, scientists doubt the system will recover. ## Tragedy of the Commons x Alberta Oil Sands Case - Applies to the Oil Sands. The environment is a shared resource, owned by everyone and not managed collectively. The self-interest actions of oil companies & governments who prioritize profits over environmental impact lead to carbon emissions and ecological harm. Over time, this causes damage to the planet, making it less habitable for all. ## Mike and Nancy Thought Experiment - Humans damage the environment due to narrow self-interest – acting without consideration of the greater planet. This is linked to ethical egoism, which argues that people should act only in their self-interest. - The Mike & Nancy thought experiment, a version of the prisoners dilemma, shows how individuals, motivated by self-interest, may make choices that harm everyone. If both Mike & Nancy dump their waste-water in the lake, it becomes toxic. If both cooperate by building septic systems, they each benefit more. But without knowing the other person's choice, they may choose to cheat, receiving benefit still. - This is similar to US-China Climate Agreement: If both countries cheat, they gain but not as much if they work together. The best option for long-term self-interest is cooperation, yet temptation to cheat remains due to short-term gains. ## Obligations to Protect the Environment - The Shareholder perspective on environmental obligations suggests businesses should only care abt the env. if maximizes returns. Corporate responsibility can boost profits, as shown by surveys indicating that 77% of consumers value socially responsible companies. - Solutions include: - Legal Compliance: Adhering to environmental laws is essential to avoid fines & reputational damage, which hurts profits. - Innovation: Regulations, even when restrictive, can drive innovation and shift industry attitudes toward environmental responsibility. - Win-Win Situations: Businesses improve environmental performance while saving money. For example, 3M's 3P Program, saved millions by restructuring processes to minimize waste, proving that environmental progress can be financially beneficial. ## Where are we now - The carbon pricing solution involves implementing a carbon tax to reduce CO2 emissions and promote clean energy. This tax is placed on the carbon content of fuels to encourage polluters to use alternatives. Ex. Sweden's tax (1991) was $120-126/tonne of carbon pollution. Canada introduced this in 2016 starting at $10/tonne, now at $50/tonne. ## The humanistic argument: - We should care for the environment to benefit humans. - This view values the environment for its usefulness to human wellbeing. ## The naturalistic argument: - We should care for the environment for its own sake. - This view says the environment has intrinsic value, independent of its utility to humans. ## Duty to future generations: - Future humans have the same rights as current generations, & we are obligated to preserve resources & ensure the health of generations. ## The Human Rights Conflict in the Republic of Congo - Cobalt mining in the DRC: Cobalt is essential for batteries in electric cars & mobile phones and is critical for low carbon technologies. - DRC has the largest Cobalt reserve in the world. - Yet mining Cobalt led to a humanitarian crisis due to exploitation, child labor, and dangerous working conditions with no protective gear and fear of mines collapsing & toxic exposure. Extreme environmental damage. ## Ethical Concerns: - Kara argues that we cannot pursue a green future by harming the people and environment in the DRC. There is no "clean" Cobalt supply chain, and the mining industry involves severe human rights abuses, including child trafficking & modern-day slavery. ## What can Consumers do? - Be aware & reduce demand. ## Four Key Theories ## Utilitarianism - Four essential features: - Consequences of actions - Principle of utility - Overall welfare for most - POV of spectator - Consequences: Places value on consequences of actions rather than motives. - Principle of utility: An action is right if it's likely to promote the most amount of happiness for the most amount of people involved. - Long - term overall welfare: Overall welfare for most people = promoting long-term pleasure and diminishing pain. - Disinterested Spectator: "As between his own happiness and that of others, utilitarianism requires him to be as strictly impartial as a disinterested spectator." ## Deontology - Intentions: What matters is the morality of the action itself, measured by intentions. - Kant's ethics focuses on the rightness/wrongness of the action itself, regardless of the outcome (contrary to utilitarianism). ## Categorical Imperatives: Absolute Commands: - First Formulation: - "Act only according to the maxim by which you can at the same time will that it should become a universal law" - What would happen if everyone acted the same way? - Second Formulation: - Human beings are an "end" ∴ not to be treated as a "mere means to an end." - Intrinsically valuable. ## Shareholder Theory - Milton Friedman: Shareholder theory - Albert Carr vibes (business is a game) - Stockholders should be the main beneficiaries of business decisions. - Key decisions should prioritize stockholder interests. - The purpose of business is profitability, making managers responsible to profit-bearers. ## Instrumentalist: - All decisions are made for the ultimate goal of maximizing profit for shareholders. - Engages in instrumental reasoning: Something is only valuable for the result it can bring about. - Ex. Profit - Aside from what is required by law, a business need not and should not have interest in anything other than benefiting shareholders. - To engage in social responsibility or to look out for the interests of others outside the shareholders is to steal from the shareholders. ## Freidman: - Shareholders have a rightful claim to a corporation's concern. ## Limitations: Shareholder theory - Too narrow: Corporations are a complex organism with many interests, stakes, & goals. - "Maximization": The goal of business is profit maximization, and maximization means limitless production - leading to harm people and the environment. - Greed without limit: (Ford Pinto Case, Nevsun Mining, Facebook breaking customer privacy.) - Critics: The Corporation is a member of the moral community with relevant responsibilities. ## Stakeholder theory - Edward Freeman: Stakeholder theory. - Background assumption: Businesses exist for purposes other than just profit. - There is social value to businesses. ## Narrow: - Any individual vital to the survival and success of the corporation. - (Primary) essential to business long-term survival ## Broad: - Anyone who can be affected by the corporation. - (Secondary) Indirect effect on business.