Business Ethics PDF

Business Ethics. A Path to Excellence for Business Students 2. C Chapter 2 Future of Work, Cultural Diversity, and Universal Principles for Business The previous section helped us to understand what are the main ethical approaches developed throughout the centuries, and...

Business Ethics. A Path to Excellence for Business Students 2. C Chapter 2 Future of Work, Cultural Diversity, and Universal Principles for Business The previous section helped us to understand what are the main ethical approaches developed throughout the centuries, and we will work to apply them to the business context. However, we also need to consider the fact that people and businesses are always embedded in an historical and social context, which needs to be taken into account when we make a decision. For this reason, this section aims at reviewing the phenomenon of the Fourth Industrial Revolution in our globalized social and business context, considering its relevance for the ethics of business. A special focus is dedicated to cultural diversity, and to the different ways of addressing it from a business perspective. The section concludes by describing the existence of some universal principles; finally, it explores the way the work of the United Nations and other international agencies helped in developing common principles and frameworks for human-centric business. 2.1 Future of Work For the part regarding the Future of Work and the Fourth Industrial Revolution, please refer to the slides and to the readings on Loop 2.2 Cultural diversity and business ethics Cultural diversity is an undeniable reality. In the context of business ethics, it is particularly relevant in the way business is conducted in different social and cultural environments. Globalization helps make cultural diversity more nuanced, but there are still practices typical of certain cultures that are hard to understand from an external point of view; moreover, they might be difficult to accept and it could also be immoral to adapt to them. As Melé (2009) affirms, business ethics is challenged by cultural diversity in two particular instances: Marta Rocchi, 2023 27  Business Ethics. A Path to Excellence for Business Students o “When moral or religious beliefs and values, at a personal or social level, clash with the dominant culture of the workplace”, or o “When a company operates in a cultural environment in which the local values and the values of the company are different or even in tension” (Melé, 2009, p. 47). Having highlighted these two points, the author asks: “What values or practices should prevail?” (Melé, 2009, p. 47). The author reports the example of an expatriate manager, who finds himself facing questionable local customs, e.g., discrimination against women or minorities, lack of respect to people, lack of respect for the environment. There are different options that can be used to answer the question: “What should he or she do?” (Melé, 2009; Melé & Sánchez-Runde, 2013) The options available are: o “When in Rome, do as the Romans do;” o When in Rome, bring the law which is in your country; o Or, even if in Rome, follow some universal principles. The first attitude corresponds to cultural relativism, the second to cultural imperialism, the third is the attitude of those who believe in the existence of some universal principles, and thus, it is called universalism. We are going to analyze these three divergent positions in the next few paragraphs. Figure 2.1: Cultural Diversity and Business Ethics Copyright: Marta Rocchi, 2020 Design: DCU IDEAS Lab, 2020 Marta Rocchi, 2023 28  Business Ethics. A Path to Excellence for Business Students 2.2.1 Cultural relativism In this paragraph, we will explore cultural relativism as one of the possible approaches to cultural diversity. Relativism is a way of thinking about the reality that many people think to adhere to when taking positions towards reality. In general, ethical relativism holds that “The justifiability—the validity status—of moral principles is relative, for instance, relative to custom, and that ethics, therefore, has no universally justifiable binding principles”(Audi, 2007, p. 25). This way of thinking seems to be very widespread, while those who study it warn about the practical shortcomings that this theoretical position has, given that a pure ethical relativist cannot really judge what is right or wrong, even in situations where a large majority of people would agree that a particular practice is completely wrong. In order to highlight the effect of this practical shortcoming, Audi (2007), when talking about this form of relativism, says that: “[It] is often affirmed but rarely taken to its logical conclusion. It implies that there is no universally valid justification for believing that it is wrong to torture little children, that the Nazis did wrong in massacring Jews, and that lynching black teenagers for looking at white women is grossly unjust. These implications are indefensible” (Audi, 2007, p. 26). A consequence of ethical relativism is cultural relativism. As Melé (2009) highlights, cultural relativism: o Rejects the existence of universal values; o States that different cultures cannot be judge, they are just different. Melé (2009, p. 48) lists some points of criticism directed at cultural relativism and these are the following: o “The existence of cultural diversity does not prove the truth of cultural relativism;” o “The moral judgement of cultural groups might be influenced by historical and social conditions and by false beliefs;” o “Cultural diversity can include basic common values and universal principles;” o “Some cultural practices are objectively better than others” (e.g., practices in clear violation of human dignity and human rights are worse than practices which respect them); o “Cultural relativism prevents any moral progress.” Marta Rocchi, 2023 29  Business Ethics. A Path to Excellence for Business Students In a way, cultural relativism, if applied to the letter, makes it hard to generate a conducive environment when doing business activity. As Melé (2009) concludes: “The existence of some basic common values and norms makes business activity possible. Indeed, some values and norms are indispensable for sustained business relationship” (Melé, 2009, p. 50). Consider a board game: would it be possible to enjoy playing it if some of the players decided not to adopt the same rules of the game? Would it be possible to play? Would it be fair to proclaim a winner? The same situation occurs in the real market. There are authors who argue that a market can exist in light of two principles: honouring agreements and avoiding lies (Hausman & McPherson, 1993; Quinn & Jones, 1995). The problem of cultural relativism is that, if no absolute principles exist, then for the society itself it is hard to exist. On cultural relativism, Rachels affirms that: “There are some moral rules that all societies will have in common, because those rules are necessary for society to exist. The rules against lying and murder are two examples. And in fact, we do find these rules in force in all viable cultures. Cultures may differ in what they regard as legitimate exceptions to the rules, but this disagreement exists against a background of agreement on the larger issues. Therefore, it is a mistake to overestimate the amount of difference between cultures. Not every moral rule can vat from society to society” (Rachels, 2011, p. 44). On this note, we are now going to explore the meaning of cultural imperialism and then of ethical universalism. 2.2.2 Cultural imperialism Cultural imperialism is an attitude that is at the opposite extreme of cultural relativism. Tomlinson (2012) affirms that cultural imperialism “Refers most broadly to the exercise of domination in cultural relationships in which the values, practices, and meanings of a powerful foreign culture are imposed upon one or more native cultures” (Tomlinson, 2012). In the context of business, we can retrace the effect of cultural imperialism when a company operating in a country, which is not its country of origin, tends to impose its culture on the culture that it finds there. In a way, the assumption of cultural imperialists is that their culture is the best culture possible, and so they disregard the type of culture found in other places. Marta Rocchi, 2023 30  Business Ethics. A Path to Excellence for Business Students Sometimes, cultural imperialists also feel that they need to export their culture, so that a good culture can prevail everywhere. The kind of cultural imperialism practised in the context of business is regarded as a form of Neo-Colonialism. The problem of cultural imperialism is the imposition of the exported culture. Throughout history, cultural imperialism was responsible for some of the atrocities of imperialism. At the same time, what should a manager do who is going to work in a country where, for example, women are not granted the opportunity of having roles of responsibility? Should this manager impose his/her culture or, should he/she adapt to the standards that are in that country? A dialogue between cultures can lead to moral progress if no parties work in a manner that imposes a culture and, instead, are open to dialogue. 2.2.3 Moral pluralism and universalism Of course, the two extreme positions that were presented in the previous paragraphs (cultural relativism and cultural imperialism) represent only the polarized version of the understanding of the interactions between different cultures. There are middle grounds, which will be presented in this paragraph and which we are actually going to apply to the contemporary reality of business. There is a way of thinking about cultural diversity that respects the existence of different kinds of values, but at the same time believes in the existence of some shared principles that can be universally recognized and accepted. Authors like Crane and Matten (2016) present themselves as ethical pluralist. They characterize pluralism as a way of thinking that “accepts different moral convictions and backgrounds, while at the same time suggesting that a consensus on basic principles and rules in a certain social context can, and should, be reached” (Crane & Matten, 2016, p. 87). Ethical pluralism is a widely accepted position, which has the risk of being merely pragmatist. From the viewpoint of reflecting on cultural diversity, pragmatism would imply that there is no theoretical concerns about the theoretical reasons why a culture can be good or acceptable. However, the important point is that there are some principles that all cultures should subscribe to. Another position is universalism, which argues for the existence of absolute moral principles, whatever the culture is. Melé (2019) distinguishes the absolute universalism typical of Kant – to whom universal principles need to be respected anyway at any time in any circumstances – and a form that he calls moderate universalism, “which recognizes universal ethical values and basic principles valid for all persons, but these should be applied with practical wisdom” (Melé, 2019, p. 32). Marta Rocchi, 2023 31  Business Ethics. A Path to Excellence for Business Students In this latter version of universalism, there are norms which constitute an absolute, regardless of the circumstances (for example, the respect for human dignity), while other norms need to be considered in light of the circumstances. 2.3 Exploring some universal principles Everyone who is making a decision is relying, consciously or unconsciously, on an inspiring principle. We will now look at some universal principles that different cultures would agree to respect, when making a decision. In the following paragraph, we will learn how these universal principles have been transformed into principles for busines. In this paragraph, we will review these principles (please refer to Melé, 2019) and try to understand where they come from. 2.3.1 Human dignity The principle of human dignity states that every person is unique and has worth, not because this person does something, but because this person is someone. The history of this concept is very old, and it can be traced back many centuries. In more recent times, Kant offered an account of human dignity. In Section 1, we learned about Kant’s formulation of the categorical imperative called the Formula of Humanity, which urges us to treat people as an end in themselves and not merely as means to something else. This principle has its foundation in the idea that every human being has an intrinsic dignity. “Intrinsic” means that this dignity is related to the mere fact of being a person, not to any other condition that arises in the course of this person’s life. The distinction that Kant characterizes between a person and a thing is very clear in his book Groundwork of the Metaphysic of Morals (Kant, 1998). He affirms: “in the kingdom of ends everything has either a price or a dignity. What has a price can be replaced by something else as its equivalent; what on the other hand is raised above all price and therefore admits of no equivalent has a dignity” (Kant, 1998, p. 42). This principle can be considered universal. We can see how important it is, thanks to its inclusion in the first article of the Universal Declaration of Human Rights (United Nations, 1948), which states the existence of this dignity: “All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood” (United Nations, 1948). In this paragraph, it is important to remark that every business choice should be absolutely respectful of human dignity. Recently, a movement called Humanistic Management Network is trying to re-centre business activity taking human dignity as a reference point (Pirson, 2017). Marta Rocchi, 2023 32  Business Ethics. A Path to Excellence for Business Students 2.3.2 Golden rule The Golden Rule can be formulated in a simple way, as “treat others as you want to be treated” or, in a negative formulation, “do not do to others what you do not want others to do to you.” In a way, the Golden Rule follows the idea of our common human dignity: if I do not think that the others are worth the same as myself, there is no reason to respect the Golden Rule, not even for mere convenience. There have been studies on how the Golden Rule impacts on business ethics and this simple rule is very easy to apply to everyday choices, both big and small (Burton & Goldsby, 2005). 2.3.3 Stewardship for the environment Currently under the spotlight in media and public discourse because of the worrying issue of climate change, the attention to the environment has been increasing more and more in recent years. It is widely accepted – at least in words, not yet in deeds – that the environment is the common place to protect and to leave as a legacy for the next generation (Melé, 2019). Towards the end of the module we are going to tackle this issue more deeply, especially with reference to the relationship between business and the implementation of the United Nations Sustainable Development Goals. 2.4 International standards for business Is there any way to set some principles that every business in the world should respect? There has been a history of different documents and standards issued with the intention of making shared universal principles more easily applicable to business, and we are going to review some of these documents in the next paragraphs. Before we start to explore the international standards for business, think about the following question: What if you were the Secretary General of the United Nations? Imagine that you are the Secretary General of the United Nations and at present no principles for business activity exist. Think about the first three principles that you think should be issued by the United Nations as a set of international principles for business. Globally recognized authorities have been developing principles that can be valid everywhere in the world for any business. We are going to revise three sets of standards in particular. Each of these derive from a particular need, which came from the observation of business activity. They are as follows: o The United Nations Global Compact o The Principles for Responsible Management Education o The Standards of the International Labour Organization Marta Rocchi, 2023 33  Business Ethics. A Path to Excellence for Business Students 2.4.1 United Nations Global Compact Thanks to a proposal by Kofi Annan, Secretary-General of the United Nations, a group coordinated by John Gerald Ruggie worked on the United Nations Global Compact (Ruggie, 2013). The idea was to find a way to set some principles that businesses around the world should respect in order to be aligned to the universal principles of the United Nations. The following is a definition of what the UN Global Compact is. UN Global Compact: “A call to companies to align strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and take actions that advance societal goals” Source: https://www.unglobalcompact.org/what-is-gc/mission/principles The Ten Principles of the United Nations Global Compact are derived from: o the Universal Declaration of Human Rights; o the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work; o the Rio Declaration on Environment and Development; and o the United Nations Convention Against Corruption. The Ten Principles stated in the UN Global Compact are divided into four areas: o Human Rights o Labour o Environment o Anti-Corruption For further information on each of the Ten Principles click on the links below. Figure 2.2: The Ten Principles of the UN Global Compact Area Principle Reference Document Human Principle 1: Businesses should Universal Declaration of Rights support and respect the protection of Human Rights, 1948 internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Marta Rocchi, 2023 34  Business Ethics. A Path to Excellence for Business Students Labour Principle 3: Businesses should ILO Declaration on uphold the freedom of association Fundamental Principles and and the effective recognition of the Rights at Work, 1998 right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should Rio Declaration on support a precautionary approach to Environment and environmental challenges; Development, 1992 Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti- Principle 10: Businesses should work UN Convention against Corruption against corruption in all its forms, Corruption, 2003 including extortion and bribery. Global Compact mission: “At the UN Global Compact, we aim to mobilize a global movement of sustainable companies and stakeholders to create the world we want. That’s our vision. To make this happen, the UN Global Compact supports companies to: …Do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labour, environment and anti-corruption; and …Take strategic actions to advance broader societal goals, such as Marta Rocchi, 2023 35  Business Ethics. A Path to Excellence for Business Students the UN Sustainable Development Goals, with an emphasis on collaboration and innovation” (UN Global Compact, Mission https://www.unglobalcompact.org/what-is-gc/mission). The Global Compact worked from 2000 to 2015 to support the Millennium Goals; it now works on supporting the Sustainable Development Goals (2015-2030). We will learn about the Sustainable Development Goals in the section of this module dedicated to the relationship between business and society. Following on the efforts of the UN Global Compact, John Ruggie later suggested the “Protect, Respect and Remedy” Framework. In 2011, the “Guiding Principles for Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework” was published (United Nations Global Compact, 2018; United Nations Human Rights Office of the High Commissioner, 2011). In the next paragraphs, we will learn about the Principles of Responsible Management Education (PRME) and the standards of the International Labour Organization. 2.4.2 Principles for Responsible Management Education DCU Business School (as are other higher education institutions) is part of a large network of universities that actively promote the Principles for Responsible Management Education. PRME represents the efforts of universities in supporting the UN Global Compact in reaching its goals. “The Principles for Responsible Management Education (PRME) is a United Nations-supported initiative founded in 2007 that aims to raise the profile of sustainability in business and management education through Seven Principles focused on serving society and safeguarding our planet. PRME engages business and management schools to ensure they provide future leaders with the skills needed to balance economic, environmental, and social goals, while drawing attention to the Sustainable Development Goals (SDGs) and aligning academic institutions with the work of the UN Global Compact. Driven by its mission to transform management education, PRME equips today's business students with the understanding and ability to deliver change tomorrow. The Principles of PRME, as well as those of the UN Global Compact, offer a framework for continuous improvement in business Marta Rocchi, 2023 36  Business Ethics. A Path to Excellence for Business Students practices and education focused on fostering sustainability and ethical conduct. These principles guide organizations toward achieving the SDGs. While the SDGs have specific timelines, the Principles are designed for ongoing guidance, promoting long-term sustainability. As a voluntary initiative with over 800 signatories worldwide, PRME has become the largest organized relationship between the United Nations and management-related higher education institutions.” (Source: https://www.unprme.org/about). What are the principles of responsible management education? Please see the following figure. Figure 2.3: Principles of Responsible Management Education Source: https://www.unprme.org/about Marta Rocchi, 2023 37  Business Ethics. A Path to Excellence for Business Students 2.4.3 The standards of the International Labour Organization Another important source of international standards for business is the ILO, the International Labour Organization. Before we learn about the activities of the ILO and how it helps to protect the rights of workers around the world in observance of the principles of human rights, please watch this video on the activity of the ILO. The ILO issued four principles in 1998, which are as the follows: (a) freedom of association and the effective recognition of the right to collective bargaining; (b) the elimination of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and (d) the elimination of discrimination in respect of employment and occupation. 2.4.3.1 Modern slavery More recently, the ILO promoted an international protocol to fight modern slavery. The following link contains useful information on the topic: https://50forfreedom.org/ 2.5 Review of Chapter 2 On completion of Chapter 2, we now know how to: o Describe what is the fourth industrial revolution (material in the slides) o Describe in detail the different approaches to cultural diversity; o Reflect on the universal principles for business; o Describe the institutions that promote the implementation of universal principles for business. o Describe the EU AI Act (slides + pdf on Loop) Marta Rocchi, 2023 38