Abstract Globalisation has allowed for the rise of major corporations and the increased pervasion of unethical corporate behaviours, such as child labour or harming the environment. Therefore, it is crucial to explore the fundamental driving forces of these unethical behaviour. By taking a rational organisation approach, the paper examines how the rational decision making process is affected by various factors of the market and lead to unethical behaviour. I argue that profit and sustainability are the two primary goals of corporations and unethical decisions are geared towards these goals. Introduction Schulman (2002) mentions that rationality in business is kindred to professionalism.
Position: Companies and business people should be ethical Point 1: Being ethical in business strengthens the systems and relationships that support and sustain it Individuals, through corporations, have the right to amass wealth, but morality dictates that they do so ethically. Frist, principles of justice argue that unethical business practices, although may be legal, are unfair
Verma and Elman (2007) understand that not all governments and companies desire strict labor standards as they can be hindrances to competitiveness. If the labor standards are too extensive, strict, and expensive, buying companies will go somewhere else and the industry in that country will decline. Nonetheless, Verma and Elman (2007) argued that labor standards are beneficial to all because they can boost standards of living and national economic growth (p. 57). To support the design of effective labor standards, they examined the pros and cons of hard and soft models where hard models are legislation-based and soft counterparts are largely voluntary and pressure-based. Findings showed that consensus is vital to the creation of legitimate labor standards (Verma & Elman, 2007).
There is a lot of discussion and disapproval revolving around the concept of corporate social responsibility. Some critics are against corporate responsibility, stating that the goals of corporate social responsibility are in contradiction with the goals of social responsibility. They believe that the major responsibility of a business should only be in favour of its owners and shareholders. Many businessmen and economists argue that the true and sole aim of business is to make profit for the interest of shareholders. They also state that doing anything different and outside of this objective defeat the purpose of basic business principles.
When is a Parent Company Liable for the Actions of Its Subsidiary? From a purely legal perspective, a parent company is a legal entity that is separate from the juridical personality of its subsidiary. Still, a question arises as to whether the legal fiction of the juridical entity of each company is always strictly adhered to. In other words, may the legal separation between a parent company and its subsidiary be disregarded so that the former may be liable for the actions of the latter? If yes, in what circumstances should a court pierce the corporate veil?
Stakeholder theory Stakeholder theory has a purpose to create value for stakeholders not just shareholders and these stakeholders can come from inside or outside the organization. It aims to create value as much as possible to shareholders to keep the interests of executives aligned to the customers, suppliers, employees, communities and shareholders. Since KFA is so large and its impact on society is so substantial that it discharges accountability to many more sectors of society than solely its shareholders. However KFA failed not only in creating values to shareholders but also discharging accountability to stakeholders (Jones, 1995). After KFA got suspensions for all its international operations in the year 2012, employees of the KFA including pilots were not properly compensated and these problems led to strike resulting cancellation of flight.
Corporate social responsibility means that businesses have wider responsibilities than simply to their shareholders – they also have responsibilities towards other stakeholders, as well as the environment. Scholars such as Robert Solomon believe that businesses should take on these responsibilities, as they have a duty to behave ethically. Solomon believed that a person should follow their own personal values and attempt to stay ethical no matter whether they are at home or at work. Others, such as Milton Friedman and former British Prime Minister Margaret Thatcher, argue against the idea of corporate social responsibility, believing that the only responsibility of a business is to increase its profits for its shareholders. Friedman went on to argue that for a business to take money from their profits to fund corporate social responsibility projects is equivalent to stealing money from shareholders and is therefore unethical.
Similarly in the case of corporations, the company may be liable for the acts of its employees, agents, or any person for whom it is responsible. The traditional theory of vicarious liability holds the master liable for the acts of the servant in the course of the master’s business without proof of any personal fault on the part of the master.There was a conventional hesitance by the English courts to apply the idea of vicarious liability in the criminal sphere as it is by and large acknowledged as shameful to denounce and rebuff one individual for the behavior of an alternate without reference to whether the first was really at
The members have a right to protect the company from any damages. An action under this exception may be instituted directly against others members without associating the company as a joint defendant. d) Special resolution When the company is been managed in wrong way, it also can be resolved by ordinary resolution in general meeting. If in the article or statue provided that the act of the transaction can be approved by the consent of the majority shareholder that means the exception on Foss v Harbottle cannot be used. e) Where the justice is required It was the last exception of the rule in Foss v Harbottle where the justices of the case are required.
Not only this, but it also considers the economic elites of a region, and also politics, and how politics and business go hand-in-hand. One of the individuals who studied political economy was Harvey Molotch, in which he concluded that government affairs and cooperations in their entirety control local economics and politics. Molotch closely studied how corporations and government play a role in industrial growth, and stated that political moves influence industry, and industry influences urban growth. This ‘urban growth’ can be viewed as beneficial, although Molotch views it in a pessimistic manner, degrading the system and how it perpetuates a system that will ultimately lead to its own demise. Businesses gain leverage over the labor force, and the labor force has control over the politicians (partially), and politicians have power over the business and the taxes they pay, but in the end industry reigns.