IB Philosophy 4.3.2 Business Ethics Notes

What Norms and Values Should Govern Business?

1. Topic 4.3.1 applied the ethical frameworks from this unit to biomedical science, examining questions of life, death, and the responsible use of technology. This topic turns to a different domain of applied ethics: the world of commerce, industry, and corporate activity.
2. The central question is straightforward but philosophically rich: what norms and values should govern business?
3. This question matters because business decisions affect the lives of millions of people: workers, consumers, communities, and future generations. The normative theories examined in 4.1 (deontological, teleological, and virtue-based) each offer distinct frameworks for evaluating corporate conduct, and the meta-ethical questions of 4.2 (are moral values universal or relative?) are directly relevant to global business practices that span diverse cultures.
4. Deontological approaches to business ethics ask whether business practices respect moral duties and rights. Kant’s categorical imperative prohibits treating persons merely as means.
5. Applied to business, this principle condemns exploitative labour practices, deceptive advertising, and any corporate activity that treats workers or consumers as mere instruments of profit rather than as persons with inherent dignity.
6. Utilitarian approaches evaluate business practices by their consequences for overall welfare. A utilitarian analysis asks whether a decision maximizes total well-being across all affected parties: shareholders, employees, consumers, and the wider community.
7. This consequentialist framework can justify practices that produce net benefits but may struggle with cases where profits come at the expense of vulnerable minorities.
8. Virtue ethics asks not just whether a business practice is permissible but what it reveals about the character of the decision-makers. A virtuous businessperson demonstrates honesty, fairness, courage, and practical wisdom in navigating complex commercial situations.
9. Aristotle’s emphasis on the social dimension of virtue is particularly relevant: business operates within and depends upon a community whose flourishing it either supports or undermines.

Cultural Context, Shareholder Theory, and Stakeholder Theory

1. The overarching Unit 4 question, “Are moral decisions culturally influenced?”, is acutely relevant to business ethics. Multinational corporations operate across cultures with different moral norms.
2. Practices considered acceptable in one country (such as certain forms of gift-giving that might be classified as bribery elsewhere) raise the question of whether business ethics can be universal or must always be adapted to local cultural contexts.
3. Milton Friedman articulated the most influential minimalist position on business ethics in his 1970 essay “The Social Responsibility of Business Is to Increase Its Profits.” Friedman argued that a corporation’s only social responsibility is to maximize shareholder value within the law.
4. On this view, corporate executives who spend company resources on social causes are effectively taxing shareholders without their consent and usurping the role of democratic institutions.
5. R. Edward Freeman challenged Friedman's position with stakeholder theory, arguing that businesses have moral obligations not just to shareholders but to all parties affected by their operations: employees, customers, suppliers, communities, and the natural environment. Freeman's framework requires managers to balance competing interests and to treat all stakeholders as having legitimate claims on the corporation's decisions and resources.
6. The debate between shareholder theory and stakeholder theory reflects a deeper philosophical tension: should businesses look out only for themselves and their investors (a kind of self-interest-first thinking), or do they owe something to everyone around them? If business exists solely to generate profit, its moral obligations are minimal.
7. If business is a social institution embedded in a web of relationships and responsibilities, its moral obligations are extensive. IB students should be able to articulate both positions and evaluate them using the normative frameworks from 4.1.

Fair Trade, Child Labour, and Business Espionage

Fair Trade

1. The IB syllabus requires engagement with three specific business ethics cases: fair trade, child labour, and business espionage. Each case tests the normative frameworks from 4.1 in a distinctive way and raises questions about the relationship between moral principles and economic realities.
2. Fair trade is a movement that seeks to ensure producers in developing countries receive a fair price for their goods, rather than having prices dictated solely by market forces. Philosophically, fair trade raises the question of whether the free market is inherently just or whether structural inequalities in global trade require corrective intervention.
3. Utilitarian analysis asks whether fair trade produces better outcomes overall; deontological analysis asks whether paying poverty wages violates the dignity of workers.
4. The argument for fair trade draws on principles of justice: if global economic structures systematically disadvantage producers in poorer countries, fairness requires adjusting the terms of trade. John Rawls’s concept of justice as fairness holds that inequalities are only justified if they benefit the least advantaged members of society.