Monday, 17 January 2011

Application of Kantian Ethics to Business Ethics

In this video I explore how Kantian ethics can be applied to business and consumers; employees and employers; business and globalisation; and business and the environment.

Application of Kantian ethics to Business ethics

Employees + Employers 
Kantian Ethics has one fundamental belief which protects both employees and consumers and that is that profit is not an end in itself. Implying that firms cannot exploit consumers and employees for profit and profit should be used to satisfy all stakeholders. Kantian ethics follows the Stakeholder theory which is supported by Havard Business School. Kant saw business enterprises as moral communities which is further support to the view that employees and consumers should be treated with care and respected.
Employees are also expected to work in a democratic manner i.e. contributing to business decisions and the third formulation, Kingdom of Ends principle, implies that employees have a right to whistle blow in fact it is their duty to do so. Employees should also not give or accept bribes or engage in any similar activity e.g. sleeping with your boss to get a promotion as this cannot be universalized.
There are two crucial practical application of Kantian Ethics in respect to the relationship between employees and employers. The first is that contracts cannot be broken and must be fulfilled. This is because if contracts were allowed to be dismantled on a universal scale havoc would be caused.This protects employees as in theory redundancies should not be allowed (but now they are written in contracts!). The second is that a scheme called Open Book Management and it has been popular among firms. This supports views held by Kantian ethics as it every so often is a way of informing employees on a one-to-one basis on their progress, career opportunities etc.
Business + Consumers

Clearly, if the ends and means principle was taken literally then business and commerce could not exist because ‘price’ would not exist. However, Kant a canny business man himself made no delay when chasing students for lecturer’s fees. This shows that Kant himself had no problem with fees. What he had a problem is firm’s overcharging and using consumers purely as a means of making profit. 
Kant explains this more clearly with his greengrocer example. In this example he says two shopkeepers selling homogenous goods for £3. However, grocer A utilizes this price because this is the market price but grocer B charges this price so the consumer does not go to grocer A. The later grocer would be doing an immoral thing because he is using the consumers as a means to an end.
Business + the Environment

When we looked at environmental ethics an interesting point is that Kant would give the environment legal rights not moral rights (Paul Taylor’s point of view). This makes sense when we explore the relationship between business and the environment. Businesses should follow environmental law as this is something that can be universalised. So basically businesses need to use the environment in moderation due to the universalisability principle.
Business + Globalisation 

In this area of business ethics I will focus on the use of cheap labour abroad. Kant would disagree with businesses using cheap labour abroad in countries like India and China. The first reason is that the point of using cheap labour is to cut costs and maximise profits and Kant said you cannot use these workers as a means to an end. Furthermore, they should be treated equally to workers in the UK. Four conditions should be met in order for using labour from overseas to be correct and those are (i) workers must freely chose work (ii) the work should be ‘meaningful’ and provide opportunities (iii) workers should be allowed to develop morally and (iv) the salary must be fair and leisure activities of some sort should be offered. It can be conceived, that duty and goodwill gets rid of problems of globalisation!
  • The stakeholder approach is supported by Havard Business School which demonstrates the practicality.
  • The idea that there is nothing wrong with fees and that Kantian ethics can be applied through schemes like Open Book management make the theory practical.
  • It preserves the dignity of individuals and provides a critique to utilitarianism
  • Promotes democracy and fairer business atmosphere
  • Bowie believes this can help promote world peace
  • Supports businesses adhering to laws (a bit like Natural Law)

  • It is impossible to 100% apply this theory to business ethics given the nature of Kantian ethics which makes it unrealistic
  • Also, can we really make firms not be driven by profit but rather by duty?
  • It talks about the grocers and their motivation but if you are a monopoly or a similar market structure how can you arrive at a fair price?
  • It is a bit vague at times. 

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