Importance of Business Ethics in Venice Case Study

This paper analyzes the importance of business ethics in the Venice case study and discusses the actions taken by stakeholders based on normative theories. It also identifies the stakeholders, classifies them based on power, legitimacy, and urgency, and explores other issues related to business ethics.

Business Ethics
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Executive Summary
The paper helped in determining the importance of business ethics along with the issues related
to business ethics. After analyzing the case study, it is observed that it is significant for the
business to follow business ethics to enhance their business operations. The three major
normative theories like virtue, Kantian and utilitarian ethics helped in evaluating actions and
decisions of the stakeholders. The actions were considered right or wrong, depending on the
circumstances. It has been noticed that local population, tourist, Airbnb, owners of cruise ships,
the federal government, politicians, UNESCO, local and national authorities are the stakeholders
within the case study. The actions and decisions taken by these stakeholders affect the local
economy. It also identified other issues such as assumed decision-making, compliance with
national law, discrimination and harassment along with health and safety that are applicable to
the case study.

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Introduction
The primary aim of the paper is to critically evaluate the case study that demonstrates the factors
which affect the local population. It will provide relevant information related to the significance
of business ethics and how it creates an impact on common people if not followed adequately.
Business ethics is determined to be the relevant business practices and policies based on the
factors like fiduciary needs, corporate social responsibility, judgement, internal exchange,
corruption and business supremacy. There possess various issues related to business ethics that
will be discussed further based on the case study.
The paper will determine the actions of the major groups within the case study with the help of
three normative theories they are virtue, Kantian and utilitarian ethics. Such theories will help in
examining whether the actions taken are right or wrong. It will also help in identifying the
stakeholders within the case study and will classify them as per power, legitimacy and urgency.
It will help in determining the role played by the stakeholders within the case study. It will also
discuss other such issues that relate and applicable to the case study.
Analysis of normative theories based on the case study
Normative theories of ethics support in identifying what actions are to be taken and whether the
actions are right or wrong. Well-known normative theories involve virtue, Kantian and utilitarian
ethics. Each of these theories will be discussed below based on the actions of leading groups
within the case study.
Utilitarian ethics
Utilitarian theory focuses on the moral values of different decisions and actions that are made by
people to demonstrate whether the decisions or actions are wrong or right. Often the evaluation
of wrongness and rightness of an action or decision rely upon the aspects that are carried out by
the society. Thus, the theory emphasizes the verification of decisions or behavior as either
immoral or moral. In the case of Venice, it is observed that the sheer weight of the visitors is
creating a negative impact on the locals, which resulted in 53,000 declines in the Venetian
population. However, the theory states that gaining benefits by harming others is wrong as

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everyone counts1. Thus, the actions taken by the Italian Government to focus towards attracting
the visitors by giving less importance to the local population is a wrong act as it negatively
affects the Venetians. Such actions result in negative outcomes such as a reduction in Venetian
population as the government spends a lot of money on eat-and-run visitors who are creating
pressures on infrastructures and increasing the crowds rather than the local population.
Therefore, as per utilitarian theory, an action is considered to be wrong if it leads to negative
outcomes and right if it causes good outcomes and satisfies the needs of the individuals.
According to this theory, the actions taken by the Italian government to spend a lot of money on
short-term visitors instead of the local population is a wrong act as it creates a negative impact
on Venetians where they face economic challenges. The theory states that such actions are
considered to be ethically wrong as it harms individuals. In order to overcome this issue
ethically, the Italian government must focus towards the matters related to public interest like
social constructs, economic policies and concerning politics. It must give huge importance to the
local population as compared to short-term visitors as the local populations are determined to be
the strengths of the city. Hence, the theory reveals the fact that the decisions or actions by the
Italian government must be taken ethically so they can serve happiness to the local people.
Virtue ethics
Virtue ethics are determined to be a normative ethical theories that focus towards a sense of
honesty, the virtue of character and mind. Virtue ethicists explain the definition and nature of
virtues and other problems to emphasize the concerns of action. In the case of Venice, the
increase in accommodation that is enhanced by Airbnb is affecting the local people in Venice.
Leaving their own house affects the emotional belief of the local people. The agencies and
landlords like Airbnb transform residential apartments to profitable tourism rentals that enforces
the locals to move out of their residence2. According to this theory, positive evaluative belief
1 T Hahn, Frank Figge, Jonatan Pinkse, and Lutz Preuss. "A paradox perspective on corporate
sustainability: Descriptive, instrumental, and normative aspects." Journal of Business Ethics 148,
no. 2 (2018): 235-248. https://doi.org/10.1007/s10551-017-3587-2
2 Allen D Blay, Eric S. Gooden, Mark J. Mellon, and Douglas E. Stevens. "The usefulness of social
norm theory in empirical business ethics research: A review and suggestions for future
research." Journal of Business Ethics 152, no. 1 (2018): 191-206. https://doi.org/10.1007/s10551-
016-3286-4

4
results in positive emotional responses, whereas negative evaluative belief results in negative
emotional responses. The actions taken by Airbnb is regarded as wrong as it steals the properties
of local people to develop accommodation. As per virtue theory stealing others, properties is
encouraged by inadequate thoughts and beliefs to make more money by harming others. Thus,
the actions taken by Airbnb is determined to be a wrong action as it affects the emotions and
economic status of the local people that is against ethics. However, this particular problem can
be mitigated by understanding and taking care of the emotions of local people. Airbnb must
implement appropriate ethical actions that are beneficial for the local population, as caring for
others is regarded as superior.
Kantian ethics
Kantian ethical theory is a moral theory which states that the wrongness or rightness of actions
rely on whether they fulfil the duty rather than the consequences. It explains that individuals
must behave rationally that proves to be normal for everyone. It is believed that individuals must
not behave in such a way that is wrong for others3. Based on the case study, it is observed that
the development of more than 500 cruise ships in Venice created physical damage to the city as
well as to the buildings4. Such physical damage caused air pollution that affects local people.
According to the theory, causing pollution is not wrong unless it harms individuals. It states that
if people rationally demand business to create less pollution than similar demand will be
applicable to them. Thus, as per the theory causing pollution is not a wrong action as it can be
avoided by taking medicine.
Moreover, it is said that the amount remunerated by cruise ships are provided to the Venetian
population. Whereas, the local economy said that the money is provided to the federal
government of Italy instead of the local economy as promised5. Hence, the theory reveals that it
is significant for keeping a promise as it is a rational requirement but breaking a promise is not
3 Mike Bull, and Rory Ridley-Duff. "Towards an appreciation of ethics in social enterprise business
models." Journal of Business Ethics (2018): 1-16. https://doi.org/10.1007/s10551-018-3794-5
4 Jonathan Doh, Bryan W. Husted, and Xiaohua Yang. "Guest editors’ introduction: Ethics,
corporate social responsibility, and developing country multinationals." Business Ethics
Quarterly 26, no. 3 (2016): 301-315. https://doi.org/10.1017/beq.2016.40

5
ethically wrong. Therefore, the action taken to pay the amount to the local economy is not wrong
as it is taken for some reason.
Identification of the stakeholders within the case study
Stakeholders are one who possesses the ability to affect or affected by the actions, policies and
objectives of the organizations. In the case study related to Venice, local population, Airbnb,
owners of cruise ships, the federal government, politicians, UNESCO, local and national
authorities are regarded as the significant stakeholders6. It is observed that the federal
government, Airbnb and the owners of cruise ships affects the local economy to a great extent. It
creates a negative impact on their economic status and also affects them emotionally.
Classification of stakeholders according to power, legitimacy, and urgency
The stakeholders within the case study such as local population, tourist, Airbnb, owners of cruise
ships, the federal government, politicians, UNESCO, local and national authorities are classified
into urgency, legitimacy and power.
Urgency
Urgency is regarded as the degree where the requirement of the stakeholders are given utmost
importance and immediate attention. It relies upon two factors they are criticality and time-
sensitivity. Within the case study, UNESCO and local economy come under urgency
stakeholders. The local economy in Venice possesses huge requirement where they want the
federal government to provide them sufficient amount of money to stay in the city without facing
any economic challenges7. Therefore, based on these circumstances, UNESCO will strive hard to
5 G De Los Reyes Jr, Tae Wan Kim, and Gary R. Weaver. "Teaching ethics in business schools: A
conversation on disciplinary differences, academic provincialism, and the case for integrated
pedagogy." Academy of Management Learning & Education 16, no. 2 (2017): 314-
336.https://doi.org/10.5465/amle.2014.0402
6 SD Beets, Douglas, Bruce R. Lewis, and Holly H. Brower. "The quality of business ethics journals:
An assessment based on application." Business & Society 55, no. 2 (2016): 188-213.
https://doi.org/10.1177%2F0007650313478974
7 Liz C. Wang, and Lisa Calvano. "Is business ethics education effective? An analysis of gender,
personal ethical perspectives, and moral judgment." Journal of Business Ethics 126, no. 4 (2015):
591-602. https://doi.org/10.1007/s10551-013-1973-y

6
fulfill the needs of the local economy by instructing the national and local authorities in Italy to
take some difficult decisions. In other words, it will take immediate actions to protect Venice by
serving a helping hand to the local economy.
Legitimacy
Legitimacy is considered to be genuineness of engagement with the project. In the case study,
the tourist and national and local authorities are less interested in this issue faced by the local
economy. The tourist is focused towards fulfilling their needs after arriving to the city8. They are
less aware of the issues faced by the local economy due to the increased pressures and crowds
created by them. Moreover, the national and local authorities are less interested in mitigating the
threats faced by the local population in Venice. They will take suitable actions after instructions
given by UNESCO. Thus, there is no need to manage such stakeholders as they do not possess a
legitimate interest towards the issues faced by the Venetian population9. Meanwhile, Airbnb
along with the owners of the cruise ships are also not interested in concentrating towards the
problems faced by Venetian due to their unlawful policies. Rather such agencies are highly
focused on increasing the company's growth.
Power
Power is regarded as the influence or authority of the stakeholders on the project, along with its
objective. The federal government of Italy are determined to be the powerful stakeholders within
the case study as they possess the power to take important decisions and actions related to the
city of Venice and its local people. It is powerful as it plays a significant role in the overall case
study by influencing the businesses to take a right or wrong decisions10. The positive or negative
outcomes based on the case study are dependent on the decisions made by the government. On
8 RP Nielsen. "Action research as an ethics praxis method." Journal of Business Ethics 135, no. 3
(2016): 419-428. https://doi.org/10.1007/s10551-014-2482-3
9 M Painter, Sally Hibbert, and Tim Cooper. "The development of responsible and sustainable
business practice: Value, mind-sets, business-models." (2018): 1-7.
https://doi.org/10.1007/s10551-018-3958-3
10 S Randles, and Oliver Laasch. "Theorising the normative business model." Organization &
Environment 29, no. 1 (2016): 53-73. https://doi.org/10.1177%2F1086026615592934

7
the other hand, the politicians are also regarded as powerful as they are tied with the public
interests. Within the case study, this stakeholders has power to grab the amount remunerated by
cruise ships that are to be provided to the Venetian population.
Other issues and ideas applicable to the case
The other ideas and issues related to business ethics that are applicable to the case study are
assumed decision-making, compliance with national law, harassment and discrimination along
with safety and health. All these problems are associated with business ethics that creates a
negative impact on the business as well as to the local economy11. By focusing on these factors, a
specific business wants to gain huge profits by harming others. The other issues and ideas that
can be applied to the case study are as follows:
Assumed decision-making
The processes of ethical decision-making must concentrate on preventing the rights of the local
economy by ensuring that the business operations are fair and individual beliefs and values are
secured12. This issue is applied to the case study as the wrong and unethical decisions made by
the federal government of Italy, Airbnb and the owners of cruise ships affects the local economy.
The decisions are made against the right of the local people and without their consent which
negatively affected their emotional beliefs and values.
Compliance with national law
It is significant for business to comply with national laws, civil rights laws, monetary and fiscal
reporting statues and state and federal safety regulations. This issue relates to the case study as
Airbnb and the owners of cruise ships are not complying with national laws and take illegal
actions that affects the local economy13. However, this issue is applicable to the case study as
11 J Frynas, George, and Siân Stephens. "Political corporate social responsibility: Reviewing
theories and setting new agendas." International Journal of Management Reviews 17, no. 4
(2015): 483-509. https://doi.org/10.1111/ijmr.12049
12 M Alzola, "Virtuous persons and virtuous actions in business ethics and organizational
research." Business Ethics Quarterly 25, no. 3 (2015): 287-318.
https://doi.org/10.1017/beq.2015.24
13 M Chell, Laura J. Spence, Francesco Perrini, and Jared D. Harris. "Social entrepreneurship and
business ethics: Does social equal ethical?." Journal of business ethics 133, no. 4 (2016): 619-

8
both Airbnb and the owners of cruise ships fails to adhere to government and business policy as
well as business ethics. The wrong actions taken by these agencies creates a harmful effect on
the mind and economic status of Venetian.
Discrimination and harassment
Discrimination and harassment are significant ethical issues faced by the local economy because
of the inadequate decisions taken by businesses14. It relates to the case study as the Italian federal
government has taken wrong actions of giving more importance to short-term visitors rather than
the local economy. In other words the local people in Venice are discriminated from using their
rights and due to increased pressure and crowd they were forced to leave the city. The ethical
issue of harassment is also applied to the case study as the local citizens are harassed by the
agencies such as Airbnb to leave their residence for transforming the residence into profitable
tourism rentals15. The citizens especially the middle class also faced harassment of paying more
amount of rent which consumes half of their income. Moreover, the local economy also faced
discrimination from the owners of the cruise ships where they were promised to pay the amount
received by cruise ships but the money was provided to the federal government of Italy. The
money was also not provided to taxi drivers, bars and workers, rather it was given to the
politicians who are considered to be powerful.
Health and safety
Health and safety is determined to be one of the significant ethical issue that is given utmost
importance by different businesses. This issue relates to the case study as the pollution caused by
the cruise ships are affecting the health of the local citizens. On the other hand, climatic change
is another issue that affects the health of the Venetian population16. The cruise ships causes
625. https://doi.org/10.1007/s10551-014-2439-6
14 AM Quarshie, Asta Salmi, and Rudolf Leuschner. "Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and business
ethics journals." Journal of Purchasing and Supply Management 22, no. 2 (2016): 82-97.
https://doi.org/10.1016/j.pursup.2015.11.001
15 M Wallace, and Neroli Sheldon. "Business research ethics: Participant observer perspectives."
Journal of Business Ethics 128, no. 2 (2015): 267-277. https://doi.org/10.1007/s10551-014-
2102-2

9
physical damages to the buildings that in turn creates a negative impact on the safety of the
individuals. This states that the local economy has to face the issues related to health and safety.
Conclusion
The paper demonstrated an understanding of the business ethics that needs to be followed by the
business while executing their business operations. Based on the case study different normative
theories have been described such as utilitarian, Kantian, and virtue ethics. As per utilitarian and
virtue ethical theories the actions of the groups within the case study is determined to be the
wrong actions as it negatively affects local economy. Kantian theory states that the players
within the case study have taken right actions and decisions. It is seen that the stakeholders
within the case study are local population, tourist, Airbnb, owners of cruise ships, the federal
government, politicians, UNESCO, local and national authorities. All these stakeholders are
classified as per power, urgency and legitimacy. UNESCO and local economy are classified
under urgency, the federal government of Italy and politicians are classified under power and
national and local authorities, tourists, owners of cruise ships and Airbnb are classified under
legitimacy.
The paper critically evaluated other ideas and issues such as assumed decision-making,
compliance with national law, discrimination and harassment along with health and safety which
are applicable to the case study. Therefore, the paper critically analyzed the factors that creates
threats for the local economy in Venice through appropriate theoretical concepts.
References
Alzola, Miguel. "Virtuous persons and virtuous actions in business ethics and organizational
research." Business Ethics Quarterly 25, no. 3 (2015): 287-318.
https://doi.org/10.1017/beq.2015.24
Beets, S. Douglas, Bruce R. Lewis, and Holly H. Brower. "The quality of business ethics
journals: An assessment based on application." Business & Society 55, no. 2 (2016): 188-
213. https://doi.org/10.1177%2F0007650313478974
16 C Rhodes. "Democratic business ethics: Volkswagen’s emissions scandal and the disruption of
corporate sovereignty." Organization Studies 37, no. 10 (2016): 1501-1518.
https://doi.org/10.1177%2F0170840616641984

10
Blay, Allen D., Eric S. Gooden, Mark J. Mellon, and Douglas E. Stevens. "The usefulness of
social norm theory in empirical business ethics research: A review and suggestions for
future research." Journal of Business Ethics 152, no. 1 (2018): 191-206.
https://doi.org/10.1007/s10551-016-3286-4
Bull, Mike, and Rory Ridley-Duff. "Towards an appreciation of ethics in social enterprise
business models." Journal of Business Ethics (2018): 1-16.
https://doi.org/10.1007/s10551-018-3794-5
Chell, Elizabeth, Laura J. Spence, Francesco Perrini, and Jared D. Harris. "Social
entrepreneurship and business ethics: Does social equal ethical?." Journal of business
ethics 133, no. 4 (2016): 619-625. https://doi.org/10.1007/s10551-014-2439-6
De Los Reyes Jr, Gaston, Tae Wan Kim, and Gary R. Weaver. "Teaching ethics in business
schools: A conversation on disciplinary differences, academic provincialism, and the case
for integrated pedagogy." Academy of Management Learning & Education 16, no. 2
(2017): 314-336.https://doi.org/10.5465/amle.2014.0402
Doh, Jonathan, Bryan W. Husted, and Xiaohua Yang. "Guest editors’ introduction: Ethics,
corporate social responsibility, and developing country multinationals." Business Ethics
Quarterly 26, no. 3 (2016): 301-315. https://doi.org/10.1017/beq.2016.40
Frynas, Jędrzej George, and Siân Stephens. "Political corporate social responsibility: Reviewing
theories and setting new agendas." International Journal of Management Reviews 17, no.
4 (2015): 483-509. https://doi.org/10.1111/ijmr.12049
Hahn, Tobias, Frank Figge, Jonatan Pinkse, and Lutz Preuss. "A paradox perspective on
corporate sustainability: Descriptive, instrumental, and normative aspects." Journal of
Business Ethics 148, no. 2 (2018): 235-248. https://doi.org/10.1007/s10551-017-3587-2
Nielsen, Richard P. "Action research as an ethics praxis method." Journal of Business Ethics
135, no. 3 (2016): 419-428. https://doi.org/10.1007/s10551-014-2482-3
Painter, Mollie, Sally Hibbert, and Tim Cooper. "The development of responsible and
sustainable business practice: Value, mind-sets, business-models." (2018): 1-7.
https://doi.org/10.1007/s10551-018-3958-3

11
Quarshie, Anne M., Asta Salmi, and Rudolf Leuschner. "Sustainability and corporate social
responsibility in supply chains: The state of research in supply chain management and
business ethics journals." Journal of Purchasing and Supply Management 22, no. 2
(2016): 82-97. https://doi.org/10.1016/j.pursup.2015.11.001
Randles, Sally, and Oliver Laasch. "Theorising the normative business model." Organization &
Environment 29, no. 1 (2016): 53-73. https://doi.org/10.1177%2F1086026615592934
Rhodes, Carl. "Democratic business ethics: Volkswagen’s emissions scandal and the disruption
of corporate sovereignty." Organization Studies 37, no. 10 (2016): 1501-1518.
https://doi.org/10.1177%2F0170840616641984
Wallace, Michelle, and Neroli Sheldon. "Business research ethics: Participant observer
perspectives." Journal of Business Ethics 128, no. 2 (2015): 267-277.
https://doi.org/10.1007/s10551-014-2102-2
Wang, Liz C., and Lisa Calvano. "Is business ethics education effective? An analysis of gender,
personal ethical perspectives, and moral judgment." Journal of Business Ethics 126, no. 4
(2015): 591-602. https://doi.org/10.1007/s10551-013-1973-y