Capitalism operates on the debatable assumption that human beings find increased well-being through

Bus iness eth ics

8t h e di t ion

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Will iam H. Shaw San Jose State Univers i ty

Bus iness eth ics

8t h e di t ion

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Business Ethics, Eighth Edition William H. Shaw

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v

Preface  ix

pa rt one | mor a l philosoph y a nd busine ss 1

cha pter 1 the nature of Mor al it y 1 Ethics  3 Moral  versus Nonmoral  Standards  5 Religion  and Morality  10 Ethical  Relativism  13 Having Moral  Principles  15 Morality  and Personal Values  19 Individual  Integrity  and Responsibility  20 Moral  Reasoning  24 Study Corner  30 Case 1.1: Made  in  the U.S.A.—Dumped  in  Brazil, Africa,  Iraq  .  .  .  31 Case 1.2:  Just Drop off  the  Key,  Lee  34 Case 1.3: The A7D Affair  37

cha pter 2 norMat iv e theor ies of e th ics 4 0 Consequentialist  and Nonconsequentialist Theories  42 Egoism  43 Utilitarianism  46 Kant’s  Ethics  53 other Nonconsequentialist  Perspectives  59 Utilitarianism once  More  66 Moral Decision Making: A  Practical Approach  68 Study Corner  70 Case 2.1:  Hacking  into  Harvard  71 Case 2.2: The  Ford  Pinto  74 Case 2.3:  Blood  for  Sale  77

cha pter 3 Just ice and econoMic d istr iBut ion 80 The Nature  of  Justice  83 The Utilitarian View  86 The  Libertarian Approach  90 Rawls’s Theory  of  Justice  97

contents

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vi CONTENTS

Study Corner  106 Case 3.1:  Eminent Domain  107 Case 3.2:  Battling  over  Bottled Water  109 Case 3.3:  Poverty  in America  111

pa rt t wo | a mer ic a n busine ss a nd its basis 114

cha pter 4 the nature of ca p ital isM 114 Capitalism  116 Key  Features  of  Capitalism  119 Two Arguments  for  Capitalism  121 Criticisms  of  Capitalism  125 Today’s  Economic Challenges  133 Study Corner  139 Case 4.1:  Hucksters  in  the  Classroom  140 Case 4.2:  Licensing  and  Laissez  Faire  142 Case 4.3: one Nation  under Walmart  144 Case 4.4: A New Work  Ethic?  147 Case 4.5:  Casino  Gambling  on Wall  Street  148

cha pter 5 corpor at ions 150 The  Limited-Liability  Company  152 Corporate Moral Agency  154 Rival Views  of  Corporate  Responsibility  158 Debating  Corporate Responsibility  164 Institutionalizing  Ethics within  Corporations  169 Study Corner  176 Case 5.1: Yahoo!  in China  177 Case 5.2: Drug Dilemmas  179 Case 5.3:  Levi  Strauss  at  Home  and Abroad  182 Case 5.4:  Free  Speech  or  False Advertising?  186 Case 5.5:  Charity  to  Scouts?  188

pa rt thr ee | busine ss a nd societ y 191

cha pter 6 consuMers 191 Product  Safety  193 other Areas  of  Business Responsibility  205 Deception  and Unfairness  in Advertising  214 The Debate  over Advertising  224

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CONTENTS      vii

Study Corner  227 Case 6.1:  Breast  Implants  229 Case 6.2:  Hot Coffee  at McDonald’s  231 Case 6.3:  Sniffing Glue Could  Snuff  Profits  232 Case 6.4:  Closing  the Deal  234 Case 6.5: The Rise  and  Fall  of  Four  Loko  236

cha pter 7 the en v ironMent 239 Business  and  Ecology  242 The  Ethics  of  Environmental  Protection  246 Achieving our  Environmental Goals  251 Delving  Deeper  into  Environmental  Ethics  256 Study Corner  264 Case 7.1:  Hazardous Homes  in Herculaneum  265 Case 7.2:  Poverty  and Pollution  267 Case 7.3: The  Fordasaurus  269 Case 7.4: The  Fight  over  the Redwoods  270 Case 7.5:  Palm oil  and  Its  Problems  273

pa rt Four | the orG a niZ ation a nd the people in it 276

cha pter 8 the Work pl ace (1) : Bas ic issues 276 Civil  Liberties  in  the Workplace  277 Hiring  283 Promotions  289 Discipline  and Discharge  291 Wages  295 Labor  Unions  298 Study Corner  307 Case 8.1: AIDS  in  the Workplace  308 Case 8.2: Web Porn  at Work  310 Case 8.3:  Speaking out  about Malt  311 Case 8.4:  Have  Gun, Will Travel  .  .  .  to Work  312 Case 8.5:  Union Discrimination  314

cha pter 9 the Work pl ace ( 2 ) : today’s challenges 316 organizational  Influence  in  Private  Lives  317 Testing  and Monitoring  323 Working Conditions  329

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viii CONTENTS

Redesigning Work  337 Study Corner  341 Case 9.1:  Unprofessional  Conduct?  342 Case 9.2: Testing  for  Honesty  344 Case 9.3:  She Snoops  to Conquer  346 Case 9.4:  Protecting  the Unborn  at Work  348 Case 9.5:  Swedish  Daddies  351

cha pter 10 Mor al choices fac ing eMpl oy ees 353 obligations  to  the  Firm  354 Abuse  of official  Position  358 Bribes  and Kickbacks  364 Gifts  and  Entertainment  368 Conflicting obligations  370 Whistle-Blowing  372 Self-Interest  and  Moral obligation  377 Study Corner  381 Case 10.1: Changing  Jobs  and  Changing  Loyalties  382 Case 10.2: Conflicting  Perspectives  on Conflicts  of  Interest  383 Case 10.3:  Inside Traders  or Astute  observers?  384 Case 10.4: The Housing Allowance  386 Case 10.5:  Ethically Dubious Conduct  388

cha pter 11 JoB d iscr iMinat ion 390 The Meaning  of  Job Discrimination  393 Evidence  of Discrimination  394 Affirmative Action: The  Legal  Context  399 Affirmative Action: The Moral  Issues  404 Comparable Worth  408 Sexual  Harassment  410 Study Corner  414 Case 11.1: Minority  Set-Asides  415 Case 11.2: Hoop Dreams  417 Case 11.3:  Raising  the Ante  419 Case 11.4: Consenting  to  Sexual  Harassment  420 Case 11.5:  Facial  Discrimination  423

SuggeStionS for further reading  425

noteS  429

index  449

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ix

It  is difficult  to  imagine an area of study that has greater  importance to society or greater relevance to  students than business ethics. As this text enters its eighth edition, business ethics has become a well- established academic  subject. Most  colleges and universities  offer  courses  in  it,  and  scholarly  interest  continues to grow.

Yet some people still scoff at the idea of business ethics, jesting that the very concept is an oxymoron.  To be sure, recent years have seen the newspapers filled with lurid stories of corporate misconduct and  felonious behavior by individual businesspeople, and many suspect that what the media report represents  only the proverbial tip of the iceberg. However, these scandals should prompt a reflective person not to  make fun of business ethics but rather to think more deeply about the nature and purpose of business in  our society and about the ethical choices individuals must inevitably make in their business and profes- sional lives.

Business  ethics  has  an  interdisciplinary  character.  Questions  of  economic  policy  and  business  practice  intertwine with  issues in politics, sociology, and organizational theory. Although business ethics  remains anchored in philosophy, even here abstract questions in normative ethics and political philosophy  mingle with analysis of practical problems and concrete moral dilemmas. Furthermore, business ethics is  not just an academic study but also an invitation to reflect on our own values and on our own responses to  the hard moral choices that the world of business can pose.

• • •

goal s, org ani z at ion, and topics Business Ethics  has  four goals:  to expose students  to  the  important moral  issues  that  arise  in  various  business contexts; to provide students with an understanding of the moral, social, and economic environ- ments within which those problems occur; to introduce students to the ethical and other concepts that are  relevant for resolving those problems; and to assist students in developing the necessary reasoning and  analytical skills for doing so. Although the book’s primary emphasis is on business, its scope extends to  related moral issues in other organizational and professional contexts.

The book has four parts. Part one, “Moral Philosophy and Business,” discusses the nature of morality  and presents the main theories of normative ethics and the leading approaches to questions of economic  justice. Part Two, “American Business and Its Basis,” examines the institutional foundations of business,  focusing on capitalism as an economic system and the nature and role of corporations in our society. Part  Three, “Business and Society,” concerns moral problems involving business, consumers, and the natural  environment. Part Four, “The organization and the People in It,” identifies a variety of ethical issues and  moral challenges that arise out of the interplay of employers and employees within an organization, includ- ing the problem of discrimination.

Case studies enhance the main text. These cases vary  in kind and  in  length, and are designed to  enable instructors and students to pursue further some of the issues discussed in the text and to analyze  them in more specific contexts. The case studies should provide a lively springboard for classroom discus- sions and the application of ethical concepts.

Business Ethics covers a wide range of  topics relevant  to  today’s world. Three of  these are worth  drawing particular attention to.

preface

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x PrEfaCE

Business and Globalization The moral challenges facing business in today’s globalized world economy are well represented in the book  and seamlessly integrated into the chapters. For example, Chapter 1 discusses ethical relativism, Chapter  4 outsourcing and globalization, and Chapter 8 overseas bribery and the Foreign Corrupt Practices Act; and  there are international examples or comparisons throughout the book. Moreover, almost all the basic issues  discussed in the book (such as corporate responsibility, the nature of moral reasoning, and the value of the  natural world—to name just three) are as crucial to making moral decisions in an international business  context as they are to making them at home. In addition, cases 1.1, 2.3, 5.1, 5.2, 5.3, 6.3, 7.2, 7.5, 9.5,  and 10.4 deal explicitly with moral issues arising in today’s global economic system. 

The Environment Because of its ongoing relevance and heightened importance in today’s world, an entire chapter, Chapter  7,  is devoted  to  this  topic.  In particular,  it  highlights  recent environmental disasters,  the environmental  dilemmas and challenges we face, and their social and business costs, as well as the changing attitude of  business toward the environment and ecology.

Health and Health Care Far  from being a narrow academic pursuit,  the study of business ethics  is  relevant  to a wide  range of  important social issues—for example, to health and health care, which is currently the subject of much  discussion and debate in the United States.  Aspects of this topic are addressed in the text and developed in  the following cases: 2.3: Blood for Sale, 4.2: Licensing and Laissez Faire, 5.2: Drug Dilemmas, 6.1: Breast  Implants, 8.1: AIDS in the Workplace, and 9.4: Protecting the Unborn at Work. 

• • •

changes in th is ed it ion Your Textbook Instructors who have used the previous edition will find the organization and general content of the book  familiar. They will, however, also be struck by its fresh design and by the graphs, tables, photographs, and  other information that now supplement the pedagogical features introduced in previous editions.

Feedback from students and instructors suggests that readers benefit greatly not only from marginal  summaries and highlights but also from visual breaks, visual guidance, and visual presentation of data and  information. So, the new design was crafted to help readers navigate the text more easily, retain content  more effectively, and review and prepare for tests more successfully. In addition, the Study Corner now  also includes “For Further Reflection,” a set of open-ended questions intended to help students articulate  their own response to some of the issues discussed in the text. An updated Suggestions for Further Reading is intended to provide appropriate material for independent research by students on topics cov- ered in Business Ethics.