Business Ethics and Cultural Relativism - Case Study Example

BUSINESS ETHICS-THE AUTO COMPANIES IN CHINA Xiaochen Lian University of Canberra Unit convener: Dr. Lorraine Carey Faculty of Business, Government and Law Business Ethics – 6397 STD F-2-F Semester 1 I declare that this work is my own and that all sources are acknowledged and accordingly referenced. Word count=2189 The main aim of any business corporation is to maximize returns on investment. Most companies today are so keen in designing and implementing a sustainable corporate social responsibility programs in addition to upholding high standards of ethical practice. However, in some cases the due ethics are not upheld leading to detrimental effects on the lives of clients and the environment. This paper will discuss ethical theories and their application to the auto companies in China as a case study. Utilitarianism The main focus that guides decision under this theory is the outcome or consequence of an act as opposed to the act itself hence a consequentialist theory. Utilitarianism is concerned with the best available actions that can produce the best consequence.. Utilitarianism stands for the greatest goodness for the greatest number. There are two main features of uilitarianism: the utility principle which states that the only thing good in itself lies in the specificity of state such as happiness, welfare, pleasure among others (Pojman, 1995). Therefore it holds pleasure and pain as the only good and evil respectively (Pojman, 1995). The second principle, the consequentialist principle believes that the rightness or wrongness of any act is determined by the resultant consequence. Utilitarians can be categorized into two: rule utilitarians and act utilitarians (Pojman, 1995). Rule utilitarians hold that any act is right if it conforms to a valid set of principles that when upheld will result in the best outcomes. On the other hand, act utilitarianism holds that we must always apply the principle to all the available options we have at any given moment before making a moral decision (Pojman, 1995). Ethical issues and discussion From the case study of auto companies in China, (Velasquez 2012), and based on the utility principle, the company ensures that it provides comfort, convenience and affordable automobiles to the middle class that comes with pride of ownership. This holds an ethical decision based on pain or pleasure as the outcomes that determine the best option. The government and other partners are also funding the sector with the main aim to ensure that the economy gets a boost which in turn uplifts the living standards of the people which according to the utility principle is ethical since the masses are bound to benefit. On the other side the effects of pollution from the vehicles is posing a real threat to the environment by depleting the ozone layer. The smog has escalated the cases of tuberculosis and lung cancer, while the fuel consumption is depleting the scarce natural oil resources. Consequently there is rise in fuel prices which makes the living standards more expensive and has even resulted in civil unrest in the Middle East. The decision to expand and sustain this industry is for the good of the people and the economy on one side. On the other hand, the same decision has many different resultant negative effects to the global community on a larger scale. Based on the utilitarianism theory the decision is not ethical since by making the lives of a few individuals who can afford the luxury of a car better, it is threatening the lives of billions of others all over the globe. The decision to counter the effects by introducing electric cars still depletes the coal resource which means that the depletion is being transferred from oil to coal which is still unethical. This is therefore not a decision made with the “goodness of the greatest numbers and also as concluded by (Leonard & Zeckhauser, 2001: Kelman, 2001) who hold that when the benefits of a decision are outweighed by the cost of making it then it is not worth. Kantian deontology Deontology as opposed to teleology focuses on duty to others and personal responsibility in our actions as being either moral of immoral intrinsically without basing on their consequences. It is therefore classified as a non-consequentialist theory. This theory is founded on the assumption that all human beings are reasonable and possess free will. It holds that the only rationally accepted definition of “good” is in terms of “good will” which is the desire to act within the laws of reason irrespective of the outcomes, personal emotions and traditional norms. This duty is absolute and universally applicable to all regardless of circumstance affiliations or inclinations. Another categorical imperative according to the Kantian ethics, states that human beings can only act in accordance with reason if they treat themselves and their kind as such. It advocates for the treatment of humans as ends and not as means. Ethical issues and discussion In line with the case study and the Kantian deontology, several issues arise. The decision to expand and support the industry is meant to provide comfort, efficiency and affordability to the people which according to Kant is ethical since universally everyone would want to be comfortable. The government is also striving to support the sector to grow the economy to uplift the statuses of its people as part of its role and responsibility which is also ethical according to Kant. Generally, the decision standing on its own without looking into the consequences is morally ethical since it is beneficial to the people as a duty of the state. On the other hand the decision can be unethical since morality is not always universal especially when we consider personal differences. The government and other partners could be doing this for the benefit of the people consciously knowing the negative implications on the people which qualify it as being unethical. But since the impact of the pollution on the environment equally affects the decision makers, it is assumed that the decision is for the “good will” and benefit of the people and not a selected few and therefore ethical. Justice (Rawls and Nozick) Rawls egalitarian theory of justice Rawls explains an egalitarian theory of justice as an alternative to utilitarianism (Boatright, 1997). He argues about two main views he considers the pillars of justice: each person is entitled to the most extensive total just system of basic liberties that subscribe to a similar system for everyone. The others principle suggests that social and economic inequalities ought to have an arrangement that is of greatest benefit to the least advantaged with equality and fairness in opportunities (Boatright, 1997). Rawls charges that utilitarianism does not take into account personal difference. Rawls takes issues when free and equal persons attempt to move forward and conflict with those advancing self interest. He defines injustice by the ability of the society to evaluate principles based on whether they help them or not in achieving their goal (Boatright, 1997). Therefore any reason agreed by everyone is “just” irrespectively. Nozick’s entitlement theory These principles differ with Rawls’s since they are historical rather than end-state. They are concerned about the process leading to justice rather than the outcomes of the process. Nozick’s theory is not patterned like Rawls’s. A patterned theory is one that has specific features that are used to evaluate its particular distribution based on the presence or absence of the features (Boatright, 1997). Nozick therefore believes that any principle of justice should not be patterned since the patterns can be used and maintained to perpetrate injustices. He therefore concludes that no end state principle can be achieved without progressive interference with peoples living (Boatright, 1997). Nozick also concludes that by tracing the source of the decision or transfers to a just beginning, it means that the outcomes are equally just. Ethical issues and discussion Based on Rawls principle of justice, the social economic inequality brought about by the classes where the middle class can now afford cars and luxury and not the lower class is in itself unjust since according to Rawls the inequality is not favoring all the social classes. On the other hand, it can be argued that it favors all the classes since by making cars affordable to the middle class, the lower class is brought closer to ownership too and indirectly enjoys the benefits that come with a thriving economy from the auto industry and hence a just decision to further expand the industry. According to Nozick, the decision is just since tracing back the inception of the decision was informed by a just market system that seeks to promote equality across the social classes by availability and affordability of auto comfort. As much as the owners and stakeholders are wrecking in profits from their investments, the people have not been exploited since there is a just and mutual exchange and transfer of commodities (automobiles) without infringing on anyone’s right. Rights principles They claim that people ought to be treated in a particular dignified way. The claim is ethical since people do not necessarily prefer to be held with such esteem but they “ought” to. There are two sides to the rights argument, the claim to be ethically treated in a certain way and also a choice made by somebody to exercise at will. It is therefore an obligation or duty for others to treat one the way he thinks is entitled and vice versa. There are two rights: negative rights also called liberties that obligate other s not to act in a certain way towards others. There are also positive rights also called claim-rights or welfare rights where something is to be provided such as healthcare (Van Hooft, Gillam & Byrnes, 1995). The main question is what defines a right; the most common point of reference is the Universal Declaration on Human Rights (Van Hooft, Gillam & Byrnes, 1995). From a neutral perspective, not all claims are equally granted when there is a conflict and therefore it is important that in the case of two rights interfering with one another, then the one that is more important and weighty must be upheld. Ethical issues and discussion From the rights perspective it can be argued that the Chinese auto company is acting in upholding the rights and disregarding the rights of others at the same time. According to the Universal Declaration of Human rights, it is the right of everyone to own property lawfully which according to the manufacturers and the stakeholders funding the industry is ethical since they are looking for returns on investments. The government is also trying to make the living standards of its people better which the people are entitled to as an obligation by the government. On the other side by exercising their rights to do business and own property the stakeholders are infringing on the rights of the citizens to a clean environment and the right to life through pollution and fueling civil unrest in the Middle East. In the view of the rights principle, the whole decision of the government and the investors to support the industry is unethical since on evaluation of the two rights of the stakeholders and the consumers of the products, the consumer’s right is more important centering on the right to life. Normative ethical relativism This principle is based on the relative norms and ethics that vary from place to place. There are two kinds of relativisms: individual relativism and cultural relativism. Bowie, (1993) Individual relativism dictates that what is right or wrong is dependent on the individual’s attitudes of feelings The cultural relativism which holds that the legal, religious business and the sum total of the cultures in an area is the deciding factor in the norms that should be followed in international business (Bowie, 1993). Therefore it holds that the two interacting cultures of the individual and the community must not be in conflict. It is argued that in most vases individuals will tend to be “self interested” in their decisions rather than rational to both parties (Pojman, 1995). Ethical issues and discussion Based on the case study, the normative relativism principle categorizes the act of the motor company’s investment in China as ethical since the government’s regulations and legal framework for international business was upheld before they entered the Chinese market. This ultimately means that the cultural ethics of the investors and the Chinese people had to match in order for any business to occur. From the individual perspective, the decision might be unethical based on the environmental and economic implications that come with the industry but the individuals voice is most probably swallowed by the Masses and most of all the highest authority in the land-the Chinese government. This theory therefore leaves a big gap of disparity between the individual and the community’s decision (Pojman, 1995) based on the vested interests of the government political and the business elites. Conclusion The underlying factor in my opinion is that in helping the Chinese expand the motor industry and trade, the economy is being favored on one side and the international relations bond is strengthened. On the contrary it is unethical since the companies are in full knowledge of the environmental impacts the increased industrial activities are posing on the environment with more impact on the Chinese immediate environment and the global village in general. But due to personal interests and government interests of the manufacturers and China, the trend is bound to remain the same. References Boatright, J.R. (1997). Ethics And The Conduct Of Business (2nd ed.) (pp. 83-104). Prentice Hall. Bowie, N.E. (1993). Business Ethics and Cultural Relativism. In T.I. White (Ed). Business ethics: a philosophical reader (pp. 790-799). Macmillan. Kelman, S. (2001). Cost-Benefit Analysis: An Ethical Critique. In W.M. Hoffman, R.E. Frederick & M.S. Schwartz (Eds). Business ethics: readings and cases in corporate morality (4th ed) (pp. 104-110). Boston: McGraw-Hill. Leonard, H.B. & Zeckhauser, R.J. (2001). Cost-benefit analysis defended. 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