Applied Ethics: Business Ethics

Business ethics examines the moral principles and problems that arise in the world of commerce. The AQA A-Level specification requires you to understand key concepts such as corporate social responsibility, globalisation, and the tension between profit and ethics, and to apply the major ethical theories (natural moral law, utilitarianism, Kantian ethics) to business practices.

Key Definition: Business ethics is the application of ethical principles and moral standards to business activities, institutions, and behaviour. It asks whether businesses have moral obligations beyond the pursuit of profit.

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Corporate Social Responsibility (CSR)

Corporate social responsibility is the idea that businesses have obligations not only to their shareholders (owners) but also to wider society. These obligations may include environmental protection, fair treatment of workers, community engagement, and ethical sourcing.

Key Definition: Corporate social responsibility (CSR) is the principle that businesses should consider the social, environmental, and ethical impact of their activities, not merely their financial performance.

Milton Friedman (1912–2006) vs Edward Freeman (b. 1951)

The debate about CSR is often framed as a disagreement between two perspectives:

Position	Key Thinker	Argument
Shareholder theory	Milton Friedman	The sole social responsibility of business is to increase its profits (within the law). Managers who spend company money on social causes are effectively taxing shareholders without their consent.
Stakeholder theory	Edward Freeman	Businesses have obligations to all stakeholders — employees, customers, suppliers, communities, and the environment — not just shareholders. Long-term success depends on maintaining good relationships with all stakeholders.

Friedman argued in his 1970 New York Times article that "the social responsibility of business is to increase its profits." He held that CSR is a distraction from the proper function of business and can actually harm society by diverting resources from productive activity.

Freeman, by contrast, argued that businesses cannot be separated from their social context. A company that exploits its workers, pollutes the environment, or deceives its customers may generate short-term profits but will ultimately face boycotts, regulation, and reputational damage.

Evaluation (AO3):

• Strength of CSR: It promotes long-term sustainability, protects vulnerable stakeholders, and can enhance brand reputation and employee morale.
• Weakness of CSR: It may be used as a marketing tool ("greenwashing") without genuine commitment to ethical practices. It can also reduce competitiveness if rivals do not adopt similar standards.

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Globalisation

Globalisation is the process by which businesses, economies, and cultures become increasingly interconnected across national boundaries. While globalisation has brought economic growth and opportunity to many developing countries, it has also raised serious ethical concerns.

Key Definition: Globalisation is the increasing integration of the world's economies, societies, and cultures through trade, investment, technology, and the movement of people and ideas across borders.

Ethical Issues in Globalisation

1. Exploitation of workers: Multinational corporations may locate production in countries with low wages, poor working conditions, and weak labour laws. The 2013 Rana Plaza disaster in Bangladesh, which killed over 1,100 garment workers, highlighted the human cost of global supply chains.
2. Environmental damage: Globalisation can lead to environmental degradation as companies exploit natural resources in developing countries with lax environmental regulations.
3. Cultural imperialism: Western corporations may displace local businesses and cultures, imposing Western values and consumer habits.
4. Tax avoidance: Multinational companies can structure their affairs to minimise tax payments, depriving governments of revenue needed for public services.

Evaluation (AO3):

• In defence of globalisation: It has lifted hundreds of millions of people out of poverty, provided access to technology and education, and promoted cultural exchange.
• Against: The benefits are unevenly distributed, and the costs (exploitation, environmental damage, inequality) are disproportionately borne by the poorest communities.

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Consumerism

Consumerism is the cultural and economic emphasis on the acquisition and consumption of goods and services. Critics argue that consumerism promotes materialism, waste, and environmental destruction, while defenders argue that consumer demand drives innovation, economic growth, and improved living standards.

Key Definition: Consumerism is the preoccupation with and inclination towards the buying of consumer goods, often criticised as promoting superficial values and unsustainable resource use.

Ethical concerns:

• Planned obsolescence — designing products to fail or become outdated, forcing consumers to buy replacements.
• Advertising — does advertising inform or manipulate? Does it create false needs?
• Exploitation — consumer demand for cheap goods may drive exploitative labour practices in developing countries.

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Profit vs Ethics

The central tension in business ethics is between the pursuit of profit and adherence to moral principles. Several positions exist: