Business Ethics: A Historical Perspective

This assignment delves into the historical development of business ethics. Students are tasked with analyzing scholarly works by prominent figures like Ciulla and De George to understand how ethical considerations in business have evolved over time. The analysis also encompasses various schools of thought within business ethics, including teleological and deontological perspectives, as well as contemporary challenges and trends.

Business Ethics

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The background and development of theoretical ethical approaches..............................1
1.2 Compare and contrast Absolute and relative ethics.........................................................2
1.3 The ethical issues which have impact on operational activities of Volkswagen..............3
TASK 2............................................................................................................................................4
2.1 Impact on business objectives due to ethical consideration of Volkswagen....................4
2.2 The implications for Volkswagen and its stakeholders to operate ethically....................5
TASK 3............................................................................................................................................6
3.1 The role of Toyota acting as a moral agent......................................................................6
3.2 The development of mechanism for achieving employee involvement and empowerment. 7
TASK 4............................................................................................................................................8
4.1 A current ethical issues affecting Toyota.........................................................................8
4.2 Ways to improve ethics while keeping performance maintained.....................................8
4.3 Designing suitable ethical code........................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business ethics are applied or professional ethics that examines various values and
principles that should be followed by companies to avoid any issues or problem to society or
environment. These principles cover all aspect of business activity and has to be followed for
ensuring standardised conduct of individuals and entire organisation. At simplest, it is a system
where moral principles impacts the decisions taken by people which have high level of impact on
their own life (Audi, 2012). They are the values which states about what is good for business,
people and society at large. This report is based on Volkswagen scandal and other companies
ethical issues. It will also cover all the aspect which will assist in developing a suitable ethical
code of conduct for business organisation.
TASK 1
1.1 The background and development of theoretical ethical approaches
The whole concept of business ethics is not new to the world, they are being used by
people from long time. There are many researcher who have given different theories about
ethics and how they impact business, people, society and environment at large (Bageac, Furrer
and Reynaud, 2011). Basically, all theories stated about different dilemmas which are covered in
following points:
 Ways to live good life while following values
 Rights and responsibilities of a person
 The language and understanding of right and wrong
 Taking moral decision while evaluating their impact
Ethics are concerned with various factors which have influence over person decision
making capabilities. That is why they need to be recognised and used for ensuring right results in
future (Bardy, Drew and Kennedy, 2012). There are many theories which are are applied to all or
specific decision. They are as follows:
 Teleological Ethics: This is a theory which was proposed by Aristotle. It is concerned
with keeping all the actions at par with moral values that bring in more happiness and
enhances the end results. It is a consequentialist ethical theory which is absolute in
nature. There are three types of teleological ethical theories:
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◦ Ethical egoism: This is a theory which states that, ' an action is considered to be good
if it produces a positive and better result, such as maximising the person self interest
as per his desires, even if it impacts others.
◦ Utilitarianism: This theory was given by John Stewart Mills (Belak and Milfelner,
2011). It states that an action is considered to be good if it is able to satisfy huge
population who will get impacted by the action.
◦ Eudaimonism: It is a theory which states that an action is good if it is able to fulfil all
goals while also enhancing happiness of human beings.
These theory were evolved over time and thus considered as relevant for all except
utilitarianism theory which is relative in nature and consequentialist.
 Deontology theory: It was proposed by Emanuel Kant, who was a social scientist. It
refers to perceptive which is based on duty or obligation (Calabretta, Durisin and
Ogliengo, 2011). It is a normative ethical condition that judges the moral values in an
action that is based on rules. It is different from teleological theory as it focuses on the
rightness or wrongness of action and not the consequences.
These theories act as a basis for making code of conduct in business today. They are
mostly applied to all and some are used in specific condition.
1.2 Compare and contrast Absolute and relative ethics
The ethical theories are not always applied to all or absolute in nature, there are some
which are specific or
Theory Absolute (objective)
or Relative
(Subjective)
Comparison of
theories
Contrast of these
theories
Teleological ethical Absolute as it applies It is theory that is This is a theory which is
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Illustration 1: Teleological Ethics, 2017

theory to all. relevant for all and it
is focused on the end
results and not the
actions rightness or
wrongness.
based on consequences.
Deontological or
Duty
Absolute This theory opposes
teleological ethics, as
it is focused on the
rightness and
wrongness of the
action itself and not
the end result.
This is a theory which is
based on action itself
and moral values
followed while taking
these decision.
Utilitarian theory Relative – It is
subjective in
nature(situational).
This is a theory
which state that any
action that brings in
greater level of
satisfaction for many
people is good.
It considers benefits for
larger section of
society.
Ethical Egoism Relative theory It is focused on self
interest while also
promoting others
good sometimes.
On the other hand it
states about self interest
while keeping others
benefits up only in
some conditions.
These theories are act as a basis for various situational decision making today (Ciulla,
2011). They bring in a standardise output and assist managers in taking right decision which is
beneficial for business, employees, customers and environment at large.
1.3 The ethical issues which have impact on operational activities of Volkswagen
A company needs to focus on various issues which can impact its functionality and
operational capabilities. Volkswagen ran into trouble when it was found out that it is breaching
the environmental rules by using defeat system while testing vehicles pollution levels (De
George, 2011). It is a major issue which has impacted company financially and also its market
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image has been damaged at large. There is need to identify all the issues and their impact on
operational capabilities of Volkswagen, which is as follows:
 Volkswagen Lied to user: The company used different types of promotional activity to
state about its standards which convinced user that they are buying right product while
company was cheating them.
◦ The impact of this issue on operational capability of company was significant and it
led to drop in sales and increase in customer complaints.
 Used Deception: It is used different types of advertisement as a method of deception
which created a good image in customer mind while company was cheating.
◦ The impact was that their advertisements are now ineffective, until unless they make
changes.
 Usage of Defeat machines: They manipulated software which impacted the end result of
pollution check.
◦ It resulted in firing up of many old experienced engineers which now has troubled
whole IT department.
 Neglecting environment: The company neglected the whole environment and added
more pollution which lead to issues in people health.
◦ Customers are suing company for compensation as well as government has fined
them.
These are some issues which now exist because of scandal and now impacting whole
organisation mechanism and condition (Ferrero and Sison, 2014). Currently company is trying to
overcome the issues in the engines of cars and overcome the legal issues but it is costing it
fortunes.
TASK 2
2.1 Impact on business objectives due to ethical consideration of Volkswagen
There are certain issues which has been identified above. They are impacting company's
productivity and other operational capabilities (Fassin, Van Rossem and Buelens, 2011). Few
years back when Volkswagen entered into USA, it stated about its mission and objectives and
they were:
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“To become the best and most successful, fascinating and sustainable auto mobile
manufacturer in world”. But after the scandal came into public vie, company objective to
becomes best in market is shattered. Currently company has many issues which it has to deal
with and for doing so they need to promote collective responsibility in its employees. It needs to
fix issues by justifying the usage of such actions while also accepting its fault and take corrective
actions.
Volkswagen also have to fulfil all the terms and conditions to stay in US market
otherwise it will be exempted from operating in it (Ford and Richardson, 2013). Also need to
devise a set of ethical code of conduct for itself which will be followed by each and every
employee, such as:
 Serving customers standard or better products
 Honour the needs and demands of various stakeholders
 Avoid any wrong strategy to gain market share
 Preserving confidentiality
 Integrating economic and other liability
 Informing all stakeholders on time
 treating all employees as stated by laws.
These are some of the code of conduct which it will need to use in organisation for
ensuring that there are no issues in future. It also need to start building its image in market which
has been damaged by recent scandal (Giacalone and Promislo, 2013). Now company need to
start working and take decisions while considering all ethical issues so that it is able to serve the
masses and create higher level of satisfaction among end users of products and services.
2.2 The implications for Volkswagen and its stakeholders to operate ethically
There are certain implication for Volkswagen and all of its stakeholders to operate in a
ethical manner. They are both positive and negative in nature. Today the company is going
through a tough time due to its negligence of ethical issues which it covered with assistance of
false advertisements and promotion. But after issue came in public it has to change all the system
and introduce new ones which fulfil all the parameters defined by law. There are certain
implication for the business and stakeholders while doing so: Shareholders: These are the parties who have invested in business and they want long
term as well as short term returns. It will be reduced due to increase financial burden on
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company for overcoming the issues (Hunton, Hoitash and Thibodeau, 2011). But in long
term the business will be able to grow and give much higher returns. It will also ensure
long term business continuation, suitability and higher value creation. Employees: They will be provided with a new set of code of conduct which will be
followed as to ensure ethical acts. There are issues for sometime time but this will
provide them job security, incentives and better opportunities to grow. Government: The government has to keep on checking company performance and use of
different method to ensure that they are not violating any laws and regulation. Also they
will be charging different fines and reinvest it into environment. Pressure Group: There were many pressure groups which assisted government and
courts in finding out the issues and getting right information (Ma and et. al., 2012). They
will be channelising all information in future too but they need resources. Competitors: There are many competitors whose sales has boosted due to scandal but in
future when company will be using ethical values, it will become threat to their market
share. Customers: The customers were harmed by the rising pollution and also they were fooled
by company in buying their products and services while they were cheating them by not
following ethical issues.
 Environment: Company added to pollution in environment by selling faulty vehicles.
TASK 3
3.1 The role of Toyota acting as a moral agent
Toyota is a company which has maintained high level of ethical values and treating its
employees and all other stakeholder at par with standards. It is a perfect moral agent who is
capable of taking decision while knowing what is right and wrong. The managers in company
have the ability to take more judgements which are based on notion of right and wrong. Toyota
follows policies which give high respect to the human rights and has been able to set proper
condition in supplier's factories.
It has adopted various policies and strategies which act as a basis in creating an
environment where ethical values are followed at each and every step. Toyota has been at the
forefront when it came to act as market leader in maintaining quality and ethics while
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productivity always remained high (Rutherford and et. al., 2012). They have developed and
established system such as six sigma and lean production which assist them in following all
environmental laws and other ethics while boosting its operational capabilities. It is considered
as a role model for all other car manufacturer in world. There are certain way which will assist in
understanding pros and cons of various steps:
Toyota Advantages Disadvantages
Dealing with suppliers Company is able to maintain
its relationship with supplier
and get qualitative products.
Some suppliers use ethical
concerns as a weakness and
exploit it by charging high
prices.
Public image The public sees Toyota as a
brand which represents
quality and ethics.
Company has to ensure
products and activities which
are ethical which increases
cost.
Treating employees right
way
It will motivate and boost
their performance
It is an added cost and time
consumption is high.
3.2 The development of mechanism for achieving employee involvement and empowerment
There are many strategies which are used by Toyota for enhancing workers interest and
performance. The managers in company understand the value of employees and know that to
gain their commitment they have to use different type of incentives and other motivational
schemes which enhances their skills and abilities as well as change their mental framework.
There are certain strategies which is used by Toyota, that are as follows: Job enlargement: This is a horizontal expansion where new task are added to job which
makes it more challenging (Wright and Bennett, 2011). It motivates employees to learn
more and perform better. Training and development: These are the learning events which are conducted for
enhancing skills and abilities of employees as to avoid any decline in performance and
increase their involvement. Information flow: The employees are provided with all the required information on time
for ensuring right decision making. Team building and working: This is an activity which boost organisation activity and
efficiency to a higher level. A group is always better performing than a single person.
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 Equal opportunities and rewards: Toyota management ensures that each and every
employee receives right number of opportunity and rewards as per their performance and
skills.
TASK 4
4.1 A current ethical issues affecting Toyota
There are certain ethical issues which are impacting Toyota and its operational
capabilities: Globalisation: There are many issues relating to various manufacturing facilities of the
company which are located in different parts of world (Bardy, Drew and Kennedy, 2012).
It faces tough competition which could lead to price war and increase pressure to reduce
prices of products which will minimise the margin of profits. Environmental policies: There are different policies which are implemented around the
world by various government. The recent Paris agreement is one of the example, which
states countries and companies to reduce carbon emission to a set standards. Corporate Social Responsibilities: Company need to keep on addressing social issues to
fulfil its ethical duties. It is very important for company as it builds a positive image in
the mind of people and also boost its sales.
 Corruption: There are various scales which scale different countries as per their level of
corruption (Bageac, Furrer and Reynaud, 2011). USA and United Kingdom all rank in
top 20 which makes them least corrupt country but Toyota manufacturing takes place in
Asia where there is highest level of corruption.
4.2 Ways to improve ethics while keeping performance maintained
There are certain ways to overcome the issues identified in the research. They have to be
dealt in a proper manner so that right level of result can be achieved. Toyota has a very effective
Research and development department which keeps on assessing various market changes as to
update technology as well as techniques to boost organisation productivity and overcome
challenges. There are activities and strategies which will be used by Toyota: Increasing investment in CSR: Company can increase its investment in various CSR
activities which will ensure that its social duties are fulfilled and achieved.
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 Using ethical techniques: They will keep on using various ethical codes to ensure that it
do not faces legal issues like Volkswagen and ensure positive image in society. Maintaining standards of suppliers: It will ensure that the suppliers are following
standards that company requires and report against people who break the norms. Improving manufacturing: It needs to utilise various new techniques as to improve its
production. It will reduce pollution and decrease impact on environment.
 Changing attitude and behaviour of consumer: For reducing corruption, people need to
change their behaviour. There are many ways this can be done, such as whistle blowing,
abiding by laws, etc.
4.3 Designing suitable ethical code
Toyota need a new ethical code of conduct to ensure that it achieves all objectives and
goals while it is fulfilling all the ethical requirements (Wright and Bennett, 2011). There are
many issues which were identified in the research above and to overcome them in a proper
manner they need a new set of code of conduct which is as follows:
 Honouring language and spirit of law where ever they have operational facilities.
 Provide open and standardised facilities to the corporate citizen
 Providing higher quality of products at a reasonable prices to consumer.
 Developing and adopting technologies and other methods to enhance the level of
productivity and efficiency
 Invest a part of profits to overcome social issues and improve standard of living.
 Providing culture and environment that boost employee involvement and creativity
 Engaging global community to grow harmony and bring in innovative management.
 Actively engaging with business partner to achieve short and long term goals while
keeping their benefits in mind.
This a is new suitable code of conduct which needs to be used by Toyota to ensure that its
is able to fulfil all the ethical issue which exist in current environment.
CONCLUSION
Companies have to identify and take corrective actions regarding ethical issues to save
themselves from getting into any legal trouble. It saves a lot of resources as well as time which
can be invested in some innovative work. Every company needs to set a role model and then
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work according to it as to ensure that they are able to achieve all objectives and goals in a ethical
manner. Volkswagen scandal is a very major learning for companies that all its work and image
can get destroyed if they do not follow rules of land. On the other hand there is Toyota who is
considered as a benchmark when it comes to providing quality while fulfilling all ethical
responsibilities.
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REFERENCES
Books and Journals
Audi, R., 2012. Virtue ethics as a resource in business. Business Ethics Quarterly. 22(2). pp.273-
291.
Bageac, D., Furrer, O. and Reynaud, E., 2011. Management students’ attitudes toward business
ethics: A comparison between France and Romania. Journal of Business Ethics. 98(3).
pp.391-406.
Bardy, R., Drew, S. and Kennedy, T. F., 2012. Foreign investment and ethics: How to contribute
to social responsibility by doing business in less-developed countries. Journal of
Business Ethics. 106(3). pp.267-282.
Belak, J. and Milfelner, B., 2011. Informal and formal institutional measures of business ethics
implementation at different stages of enterprise life cycle. Acta Polytechnica
Hungarica. 8(1). pp.105-122.
Calabretta, G., Durisin, B. and Ogliengo, M., 2011. Uncovering the intellectual structure of
research in business ethics: a journey through the history, the classics, and the pillars of
Journal of Business Ethics. Journal of Business ethics. 104(4). pp.499-524.
Ciulla, J.B., 2011. Is business ethics getting better? A historical perspective. Business Ethics
Quarterly. 21(2). pp.335-343.
De George, R.T., 2011. Business ethics. Pearson Education India.
Fassin, Y., Van Rossem, A. and Buelens, M., 2011. Small-business owner-managers’
perceptions of business ethics and CSR-related concepts. Journal of Business ethics.
98(3). pp.425-453.
Ferrero, I. and Sison, A. J. G., 2014. A quantitative analysis of authors, schools and themes in
virtue ethics articles in business ethics and management journals (1980–2011). Business
Ethics: A European Review. 23(4). pp.375-400.
Ford, R. C. and Richardson, W. D., 2013. Ethical decision making: A review of the empirical
literature. In Citation classics from the Journal of Business Ethics. pp. 19-44. Springer
Netherlands.
Giacalone, R. A. and Promislo, M. D., 2013. Broken when entering: The stigmatization of
goodness and business ethics education. Academy of Management Learning &
Education. 12(1). pp.86-101.
Hunton, J. E., Hoitash, R. and Thibodeau, J. C., 2011. Retracted: The Relationship between
Perceived Tone at the Top and Earnings Quality. Contemporary Accounting Research.
28(4). pp.1190-1224.
Ma, Z. and et. al., 2012. Most cited business ethics publications: mapping the intellectual
structure of business ethics studies in 2001–2008. Business Ethics: A European Review.
21(3). pp.286-297.
Rutherford, M. A., and et. al., 2012. Business ethics as a required course: Investigating the
factors impacting the decision to require ethics in the undergraduate business core
curriculum. Academy of Management Learning & Education. 11(2). pp.174-186.
Wright, N. S. and Bennett, H., 2011. Business ethics, CSR, sustainability and the MBA. Journal
of Management & Organization. 17(5). pp.641-655.
Online
Teleological Ethics. 2017. [Online] Available through:
<https://www.britannica.com/topic/teleological-ethics>. [Accessed on 5th July 2017].
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Deontological Ethics. 2017. [Online]. Available through:
<http://businessjargons.com/deontological-ethical-theories.html>. [Accessed on 5th July
2017].
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