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Case Studies

More than 70 cases pair ethics concepts with real world situations. From journalism, performing arts, and scientific research to sports, law, and business, these case studies explore current and historic ethical dilemmas, their motivating biases, and their consequences. Each case includes discussion questions, related videos, and a bibliography.

A Million Little Pieces

James Frey’s popular memoir stirred controversy and media attention after it was revealed to contain numerous exaggerations and fabrications.

Abramoff: Lobbying Congress

Super-lobbyist Abramoff was caught in a scheme to lobby against his own clients. Was a corrupt individual or a corrupt system – or both – to blame?

Apple Suppliers & Labor Practices

Is tech company Apple, Inc. ethically obligated to oversee the questionable working conditions of other companies further down their supply chain?

Approaching the Presidency: Roosevelt & Taft

Some presidents view their responsibilities in strictly legal terms, others according to duty. Roosevelt and Taft took two extreme approaches.

Appropriating “Hope”

Fairey’s portrait of Barack Obama raised debate over the extent to which an artist can use and modify another’s artistic work, yet still call it one’s own.

Arctic Offshore Drilling

Competing groups frame the debate over oil drilling off Alaska’s coast in varying ways depending on their environmental and economic interests.

Banning Burkas: Freedom or Discrimination?

The French law banning women from wearing burkas in public sparked debate about discrimination and freedom of religion.

Birthing Vaccine Skepticism

Wakefield published an article riddled with inaccuracies and conflicts of interest that created significant vaccine hesitancy regarding the MMR vaccine.

Blurred Lines of Copyright

Marvin Gaye’s Estate won a lawsuit against Robin Thicke and Pharrell Williams for the hit song “Blurred Lines,” which had a similar feel to one of his songs.

Bullfighting: Art or Not?

Bullfighting has been a prominent cultural and artistic event for centuries, but in recent decades it has faced increasing criticism for animal rights’ abuse.

Buying Green: Consumer Behavior

Do purchasing green products, such as organic foods and electric cars, give consumers the moral license to indulge in unethical behavior?

Cadavers in Car Safety Research

Engineers at Heidelberg University insist that the use of human cadavers in car safety research is ethical because their research can save lives.

Cardinals’ Computer Hacking

St. Louis Cardinals scouting director Chris Correa hacked into the Houston Astros’ webmail system, leading to legal repercussions and a lifetime ban from MLB.

Cheating: Atlanta’s School Scandal

Teachers and administrators at Parks Middle School adjust struggling students’ test scores in an effort to save their school from closure.

Cheating: Sign-Stealing in MLB

The Houston Astros’ sign-stealing scheme rocked the baseball world, leading to a game-changing MLB investigation and fallout.

Cheating: UNC’s Academic Fraud

UNC’s academic fraud scandal uncovered an 18-year scheme of unchecked coursework and fraudulent classes that enabled student-athletes to play sports.

Cheney v. U.S. District Court

A controversial case focuses on Justice Scalia’s personal friendship with Vice President Cheney and the possible conflict of interest it poses to the case.

Christina Fallin: “Appropriate Culturation?”

After Fallin posted a picture of herself wearing a Plain’s headdress on social media, uproar emerged over cultural appropriation and Fallin’s intentions.

Climate Change & the Paris Deal

While climate change poses many abstract problems, the actions (or inactions) of today’s populations will have tangible effects on future generations.

Cover-Up on Campus

While the Baylor University football team was winning on the field, university officials failed to take action when allegations of sexual assault by student athletes emerged.

Covering Female Athletes

Sports Illustrated stirs controversy when their cover photo of an Olympic skier seems to focus more on her physical appearance than her athletic abilities.

Covering Yourself? Journalists and the Bowl Championship

Can news outlets covering the Bowl Championship Series fairly report sports news if their own polls were used to create the news?

Cyber Harassment

After a student defames a middle school teacher on social media, the teacher confronts the student in class and posts a video of the confrontation online.

Defending Freedom of Tweets?

Running back Rashard Mendenhall receives backlash from fans after criticizing the celebration of the assassination of Osama Bin Laden in a tweet.

Dennis Kozlowski: Living Large

Dennis Kozlowski was an effective leader for Tyco in his first few years as CEO, but eventually faced criminal charges over his use of company assets.

Digital Downloads

File-sharing program Napster sparked debate over the legal and ethical dimensions of downloading unauthorized copies of copyrighted music.

Dr. V’s Magical Putter

Journalist Caleb Hannan outed Dr. V as a trans woman, sparking debate over the ethics of Hannan’s reporting, as well its role in Dr. V’s suicide.

East Germany’s Doping Machine

From 1968 to the late 1980s, East Germany (GDR) doped some 9,000 athletes to gain success in international athletic competitions despite being aware of the unfortunate side effects.

Ebola & American Intervention

Did the dispatch of U.S. military units to Liberia to aid in humanitarian relief during the Ebola epidemic help or hinder the process?

Edward Snowden: Traitor or Hero?

Was Edward Snowden’s release of confidential government documents ethically justifiable?

Ethical Pitfalls in Action

Why do good people do bad things? Behavioral ethics is the science of moral decision-making, which explores why and how people make the ethical (and unethical) decisions that they do.

Ethical Use of Home DNA Testing

The rising popularity of at-home DNA testing kits raises questions about privacy and consumer rights.

Flying the Confederate Flag

A heated debate ensues over whether or not the Confederate flag should be removed from the South Carolina State House grounds.

Freedom of Speech on Campus

In the wake of racially motivated offenses, student protests sparked debate over the roles of free speech, deliberation, and tolerance on campus.

Freedom vs. Duty in Clinical Social Work

What should social workers do when their personal values come in conflict with the clients they are meant to serve?

Full Disclosure: Manipulating Donors

When an intern witnesses a donor making a large gift to a non-profit organization under misleading circumstances, she struggles with what to do.

Gaming the System: The VA Scandal

The Veterans Administration’s incentives were meant to spur more efficient and productive healthcare, but not all administrators complied as intended.

German Police Battalion 101

During the Holocaust, ordinary Germans became willing killers even though they could have opted out from murdering their Jewish neighbors.

Head Injuries & American Football

Many studies have linked traumatic brain injuries and related conditions to American football, creating controversy around the safety of the sport.

Head Injuries & the NFL

American football is a rough and dangerous game and its impact on the players’ brain health has sparked a hotly contested debate.

Healthcare Obligations: Personal vs. Institutional

A medical doctor must make a difficult decision when informing patients of the effectiveness of flu shots while upholding institutional recommendations.

High Stakes Testing

In the wake of the No Child Left Behind Act, parents, teachers, and school administrators take different positions on how to assess student achievement.

In-FUR-mercials: Advertising & Adoption

When the Lied Animal Shelter faces a spike in animal intake, an advertising agency uses its moral imagination to increase pet adoptions.

Krogh & the Watergate Scandal

Egil Krogh was a young lawyer working for the Nixon Administration whose ethics faded from view when asked to play a part in the Watergate break-in.

Limbaugh on Drug Addiction

Radio talk show host Rush Limbaugh argued that drug abuse was a choice, not a disease. He later became addicted to painkillers.

U.S. Olympic swimmer Ryan Lochte’s “over-exaggeration” of an incident at the 2016 Rio Olympics led to very real consequences.

Meet Me at Starbucks

Two black men were arrested after an employee called the police on them, prompting Starbucks to implement “racial-bias” training across all its stores.

Myanmar Amber

Buying amber could potentially fund an ethnic civil war, but refraining allows collectors to acquire important specimens that could be used for research.

Negotiating Bankruptcy

Bankruptcy lawyer Gellene successfully represented a mining company during a major reorganization, but failed to disclose potential conflicts of interest.

Pao & Gender Bias

Ellen Pao stirred debate in the venture capital and tech industries when she filed a lawsuit against her employer on grounds of gender discrimination.

Pardoning Nixon

One month after Richard Nixon resigned from the presidency, Gerald Ford made the controversial decision to issue Nixon a full pardon.

Patient Autonomy & Informed Consent

Nursing staff and family members struggle with informed consent when taking care of a patient who has been deemed legally incompetent.

Prenatal Diagnosis & Parental Choice

Debate has emerged over the ethics of prenatal diagnosis and reproductive freedom in instances where testing has revealed genetic abnormalities.

Reporting on Robin Williams

After Robin Williams took his own life, news media covered the story in great detail, leading many to argue that such reporting violated the family’s privacy.

Responding to Child Migration

An influx of children migrants posed logistical and ethical dilemmas for U.S. authorities while intensifying ongoing debate about immigration.

Retracting Research: The Case of Chandok v. Klessig

A researcher makes the difficult decision to retract a published, peer-reviewed article after the original research results cannot be reproduced.

Sacking Social Media in College Sports

In the wake of questionable social media use by college athletes, the head coach at University of South Carolina bans his players from using Twitter.

Selling Enron

Following the deregulation of electricity markets in California, private energy company Enron profited greatly, but at a dire cost.

Snyder v. Phelps

Freedom of speech was put on trial in a case involving the Westboro Baptist Church and their protesting at the funeral of U.S. Marine Matthew Snyder.

Something Fishy at the Paralympics

Rampant cheating has plagued the Paralympics over the years, compromising the credibility and sportsmanship of Paralympian athletes.

Sports Blogs: The Wild West of Sports Journalism?

Deadspin pays an anonymous source for information related to NFL star Brett Favre, sparking debate over the ethics of “checkbook journalism.”

Stangl & the Holocaust

Franz Stangl was the most effective Nazi administrator in Poland, killing nearly one million Jews at Treblinka, but he claimed he was simply following orders.

Teaching Blackface: A Lesson on Stereotypes

A teacher was put on leave for showing a blackface video during a lesson on racial segregation, sparking discussion over how to teach about stereotypes.

The Astros’ Sign-Stealing Scandal

The Houston Astros rode a wave of success, culminating in a World Series win, but it all came crashing down when their sign-stealing scheme was revealed.

The Central Park Five

Despite the indisputable and overwhelming evidence of the innocence of the Central Park Five, some involved in the case refuse to believe it.

The CIA Leak

Legal and political fallout follows from the leak of classified information that led to the identification of CIA agent Valerie Plame.

The Collapse of Barings Bank

When faced with growing losses, investment banker Nick Leeson took big risks in an attempt to get out from under the losses. He lost.

The Costco Model

How can companies promote positive treatment of employees and benefit from leading with the best practices? Costco offers a model.

The FBI & Apple Security vs. Privacy

How can tech companies and government organizations strike a balance between maintaining national security and protecting user privacy?

The Miss Saigon Controversy

When a white actor was cast for the half-French, half-Vietnamese character in the Broadway production of Miss Saigon , debate ensued.

The Sandusky Scandal

Following the conviction of assistant coach Jerry Sandusky for sexual abuse, debate continues on how much university officials and head coach Joe Paterno knew of the crimes.

The Varsity Blues Scandal

A college admissions prep advisor told wealthy parents that while there were front doors into universities and back doors, he had created a side door that was worth exploring.

Providing radiation therapy to cancer patients, Therac-25 had malfunctions that resulted in 6 deaths. Who is accountable when technology causes harm?

Welfare Reform

The Welfare Reform Act changed how welfare operated, intensifying debate over the government’s role in supporting the poor through direct aid.

Wells Fargo and Moral Emotions

In a settlement with regulators, Wells Fargo Bank admitted that it had created as many as two million accounts for customers without their permission.

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Ethical Business Practices: Case Studies and Lessons Learned

Introduction

Ethical business practices are a cornerstone of any successful company, influencing not only the public perception of a brand but also its long-term profitability. However, understanding what constitutes ethical behavior and how to implement it can be a complex process. This article explores some case studies that shine a light on ethical business practices, offering valuable lessons for businesses in any industry.

Case Study 1: Patagonia’s Commitment to Environmental Ethics

Patagonia, the outdoor clothing and gear company, has long set a standard for environmental responsibility. The company uses eco-friendly materials, promotes recycling of its products, and actively engages in various environmental causes.

Lessons Learned

• Transparency : Patagonia is vocal about its ethical practices and even provides information on the environmental impact of individual products.
• Consistency: Ethics are not an “add-on” for Patagonia; they are integrated into the very fabric of the company’s operations, from sourcing to production to marketing.
• Engagement: The company doesn’t just focus on its practices; it encourages consumers to get involved in the causes it supports.

Case Study 2: Salesforce and Equal Pay

Salesforce, the cloud-based software company, took a stand on the gender pay gap issue. They conducted an internal audit and found that there was indeed a significant wage disparity between male and female employees for similar roles. To address this, Salesforce spent over $6 million to balance the scales.

• Self-Audit: It’s crucial for companies to actively review their practices. What you don’t know can indeed hurt you, and ignorance is not an excuse.
• Taking Responsibility: Rather than sweeping the issue under the rug, Salesforce openly acknowledged the problem and took immediate corrective action.
• Long-Term Benefits: Fair treatment boosts employee morale and productivity, leading to long-term profitability.

Case Study 3: Starbucks and Racial Sensitivity Training

In 2018, Starbucks faced a public relations crisis when two Black men were wrongfully arrested at one of their Philadelphia stores. Instead of issuing just a public apology, Starbucks closed down 8,000 of its stores for an afternoon to conduct racial sensitivity training.

Lessons   Learned

• Immediate Action : Swift and meaningful action is critical in showing commitment to ethical behavior.
• Education: Sometimes, the problem is a lack of awareness. Investing in employee education can avoid repeated instances of unethical behavior.
• Public Accountability: Starbucks made their training materials available to the public, showing a level of transparency and accountability that helped regain public trust.

Why Ethics Matter

Ethical business practices are not just morally correct; they have a direct impact on a company’s bottom line. Customers today are more informed and more sensitive to ethical considerations. They often make purchasing decisions based on a company’s ethical standing, and word-of-mouth (or the digital equivalent) travels fast.

The case studies above show that ethical business practices should be a top priority for companies of all sizes and industries. These are not isolated examples but are representative of a broader trend in consumer expectations and regulatory frameworks. The lessons gleaned from these cases—transparency, consistency, engagement, self-audit, taking responsibility, and education—are universally applicable and offer a robust roadmap for any business seeking to bolster its ethical standing.

By implementing ethical business practices sincerely and not as a marketing gimmick, companies not only stand to improve their public image but also set themselves up for long-term success, characterized by a loyal customer base and a motivated, satisfied workforce.

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Exploring Real-World Business Ethics Examples

Women and Business

Business ethics examples refer to the application of ethical principles and moral values in business activities. It involves the behavior that a business adheres to in its daily dealings with the world. These ethics guide the way a business behaves – the way it does business, how it treats its employees, customers, and the wider community, and how it handles its environmental impact.

The importance of ethics in business cannot be overstated. Ethical business practices are crucial for several reasons:

• Trust and Reputation: Ethical behaviour builds trust among stakeholders, including customers, employees, and business partners. This trust is fundamental to forming strong and lasting relationships. A business known for its ethical practices will have a stronger, more positive reputation, which can lead to greater success.
• Legal Compliance: Adhering to business ethics examples helps ensure that companies operate within the boundaries of the law, thus avoiding potential legal issues and penalties.
• Employee Morale and Retention: When a company practices good ethics, it creates a positive work environment. Employees are more likely to feel respected and valued, leading to higher morale, greater productivity, and lower turnover rates.
• Customer Loyalty: Customers are increasingly conscious of ethical considerations in their purchasing decisions. A business known for ethical practices is more likely to attract and retain customers who prioritize these values.
• Long-term Sustainability: Ethical practices often align with sustainable practices. By being ethical, businesses can contribute to social and environmental sustainability, which is crucial for long-term success.
• Risk Management: Ethical behaviour can help mitigate various risks, including financial, legal, and reputational risks, that can be detrimental to a company’s long-term viability.

business ethics examples are vital for maintaining a positive reputation, ensuring legal compliance, fostering a healthy work environment, retaining customer loyalty, ensuring long-term sustainability, and managing risks. These principles are integral to the success and longevity of any business.

Table of Contents

Ethical Leadership

A prominent example of ethical leadership in the business world is that of Paul Polman, the former CEO of Unilever. Under Polman’s leadership, Unilever was widely recognized for its commitment to sustainability and ethical business practices.

Paul Polman’s Ethical Leadership at Unilever:

• Sustainable Living Plan: Polman introduced the Unilever Sustainable Living Plan in 2010. This ambitious plan aimed to decouple the company’s growth from its environmental impact while increasing its positive social impact. It included targets like halving the environmental footprint of Unilever products, helping over a billion people take action to improve their health and well-being, and enhancing the livelihoods of millions of people by 2020.
• Long-term Focus over Short-term Gains: Polman famously abolished quarterly reporting to shareholders, emphasizing the importance of long-term strategies over short-term profits. This move was aimed at encouraging sustainable growth and discouraging the short-termism prevalent in the business world.
• Advocacy for Climate Action: Polman has been a vocal advocate for corporate action on climate change. He played a significant role in mobilizing business leaders for the Paris Agreement and has been an influential voice in global discussions on sustainable business practices.

Impact on Employees and Business Success:

• Employee Morale and Engagement: Polman’s ethical leadership had a positive impact on Unilever’s employees. The company’s commitment to sustainability and social responsibility made employees feel part of a meaningful endeavour, thereby boosting morale and engagement.
• Attraction and Retention of Talent: Unilever’s ethical stance under Polman made it an attractive employer, especially for the younger generation who increasingly seek purpose in their work. This helped the company attract and retain talented individuals who shared its values.
• Brand Reputation and Customer Loyalty: The company’s commitment to ethical practices and sustainability enhanced its reputation, strengthening customer loyalty and brand value. Consumers increasingly prefer brands that align with their values, and Unilever’s approach resonated with this trend.
• Financial Performance: Despite initial skepticism from some investors about Polman’s sustainability-focused strategy, Unilever showed that ethical leadership and business success could go hand in hand. The company saw sustained growth during his tenure, proving that a focus on long-term, sustainable, and ethical practices is compatible with financial success.
• Innovation and Market Leadership: Unilever’s commitment to sustainability under Polman’s leadership drove innovation, as the company sought to develop new products and practices that were both profitable and environmentally friendly. This helped Unilever maintain its position as a market leader in various sectors.

Paul Polman’s tenure at Unilever is a testament to the positive impact of ethical leadership on a company. It demonstrates how a commitment to sustainability and ethical practices can lead to increased employee engagement, stronger brand reputation, customer loyalty, and financial success, all while contributing positively to societal and environmental challenges.

Corporate Social Responsibility (CSR)

An exemplary case of a company engaging in Corporate Social Responsibility (CSR) activities is Starbucks and its comprehensive approach towards community development, environmental stewardship, and ethical sourcing.

Starbucks’ CSR Activities:

• Ethical Sourcing: Starbucks commits to ethically sourcing 100% of its coffee through its Coffee and Farmer Equity (C.A.F.E.) Practices. These guidelines help ensure that the coffee is grown using sustainable methods and that farmers receive fair compensation.
• Environmental Stewardship: Starbucks has been proactive in reducing its environmental impact. This includes efforts to reduce waste through recyclable and reusable packaging, and a commitment to making its stores, offices, and manufacturing facilities 100% powered by renewable energy.
• Community Engagement and Support: Starbucks often engages in community service through various initiatives. This includes local projects like neighbourhood cleanups and global efforts like disaster relief. The company also encourages its employees to volunteer, offering them incentives for doing so.
• Investment in Employee Well-being and Diversity: Starbucks offers significant benefits to its employees, including comprehensive health coverage, stock options, and tuition coverage for online university programs. They are also known for their commitment to diversity and inclusion within their workforce.

Benefits to the Community and Company Reputation:

• Positive Impact on Local and Global Communities: Starbucks’ initiatives have a tangible positive impact on communities. Their ethical sourcing practices support sustainable agriculture and fair wages for coffee farmers, while their environmental efforts contribute to broader sustainability goals.
• Employee Satisfaction and Engagement: The company’s investment in employee well-being, diversity, and inclusivity leads to higher employee satisfaction and engagement. This not only benefits the employees but also translates into better customer service and a more positive customer experience.
• Brand Loyalty and Customer Trust: Starbucks’ commitment to CSR enhances its reputation among consumers, many of whom are increasingly looking to support companies with strong ethical and environmental credentials. This has helped in building a loyal customer base that aligns with the company’s values.
• Innovation and Business Resilience: Starbucks’ focus on sustainability has driven innovation in products and operations, such as developing more sustainable packaging solutions. This forward-thinking approach contributes to the company’s long-term resilience in a rapidly changing business environment.
• Positive Public Perception and Media Coverage: The company’s various CSR initiatives often receive positive media coverage, enhancing its public image. This positive publicity reinforces the brand’s reputation as a socially and environmentally responsible company.

Starbucks’ CSR activities not only benefit the communities and environments they touch but also enhance the company’s reputation. This holistic approach to CSR demonstrates how integrating responsible practices into a business model can lead to sustainable success, customer loyalty, and a positive brand image.

Ethical Marketing Practices

A notable example of a company employing honest and transparent marketing strategies is Patagonia, an outdoor clothing brand. Patagonia’s approach to marketing is deeply rooted in its commitment to environmental sustainability and ethical business practices.

Patagonia’s Ethical Marketing Strategies:

• Transparency in Production and Supply Chain: Patagonia provides detailed information about the sourcing of materials, the environmental impact of its products, and the working conditions in its factories. This level of transparency builds trust with consumers who are increasingly concerned about the ethical credentials of the brands they support.
• Honest Advertising: Patagonia’s marketing campaigns are known for their honesty and authenticity. One famous example is their “Don’t Buy This Jacket” campaign, which encouraged consumers to reconsider their need to purchase new products, highlighting the environmental cost of overconsumption. This approach is rare in an industry often driven by promoting constant consumption.
• Environmental Advocacy: Patagonia’s marketing often includes messages about environmental conservation. They use their platform not just to sell products, but to raise awareness about environmental issues, aligning their marketing with their broader mission.

Long-term Benefits of Ethical Marketing:

• Consumer Trust and Loyalty: Patagonia’s honest marketing practices have helped build a high level of trust with its customers. This trust translates into customer loyalty, as consumers are more likely to remain committed to brands that share their values and demonstrate ethical behaviour.
• Brand Differentiation: In a crowded market, Patagonia’s commitment to transparency and environmental advocacy sets it apart from competitors. This ethical stance is a key part of its brand identity, attracting customers who seek products from companies that reflect their values.
• Positive Brand Reputation: Ethical marketing contributes to a positive brand reputation. Consumers, investors, and other stakeholders view Patagonia as a leader in ethical business practices, which can have a positive impact on the company’s overall reputation.
• Sustainable Business Growth: By focusing on sustainability and ethical practices, Patagonia ensures its business model is sustainable in the long term. This approach helps mitigate risks associated with environmental and social issues and ensures the company’s operations are resilient in the face of changing consumer expectations and global challenges.
• Influence on Industry Standards: Patagonia’s approach influences the broader industry. By demonstrating that ethical marketing can be successful, they encourage other companies to adopt similar practices, which can lead to industry-wide improvements in sustainability and ethics.

Patagonia’s use of honest and transparent marketing strategies not only benefits consumers by providing them with truthful information and aligning with their values, but it also benefits the company by building trust, loyalty, and a strong, differentiated brand. This approach exemplifies how ethical marketing can contribute to long-term business success while also promoting positive social and environmental outcomes.

Fair Labor Practices

A notable example of a company renowned for its fair labor practices and employee welfare is Costco Wholesale. Costco, a membership-only warehouse club, has consistently been lauded for its ethical treatment of employees, setting a high standard in an industry often criticized for poor labor practices.

Costco’s Fair Labor Practices and Employee Welfare:

• Above Average Wages: Costco pays its employees wages that are significantly higher than the national average for retail workers. This commitment to fair compensation is a cornerstone of their ethical approach to labor practices.
• Generous Benefits: The company offers a comprehensive benefits package to both its full-time and part-time employees, including health insurance, dental and vision coverage, 401(k) plans, and life insurance. These benefits are often more generous than what is offered by many other retailers.
• Opportunities for Advancement: Costco is known for its policy of promoting from within, providing employees with ample opportunities for career advancement. This not only motivates employees but also helps in retaining talent within the company.
• Safe and Positive Work Environment: Costco places a strong emphasis on creating a safe and inclusive work environment. They are known for having a respectful, team-oriented culture that values employee input and encourages open communication.

Contribution to Employee Satisfaction and Productivity:

• Increased Employee Morale: Fair wages, comprehensive benefits, and a respectful work environment contribute significantly to employee morale. When employees feel valued and well-compensated, they are more likely to be satisfied with their job.
• Lower Turnover Rates: Costco’s fair labor practices have resulted in remarkably low employee turnover rates. High retention rates are beneficial for the company as they reduce the costs and disruptions associated with the frequent hiring and training of new staff.
• Higher Productivity: Satisfied and engaged employees tend to be more productive. Costco’s approach to employee welfare has been linked to higher levels of productivity, which is beneficial for the company’s bottom line.
• Positive Company Reputation: Costco’s reputation as a fair and ethical employer attracts high-quality candidates, making it easier for the company to recruit and retain top talent. This positive reputation also enhances the company’s brand image among consumers.
• Employee Advocacy: Employees who feel well-treated are more likely to become brand advocates. Positive word-of-mouth from employees can enhance the company’s public image and contribute to customer loyalty.

Costco’s commitment to fair labor practices and employee welfare is a prime example of how ethical treatment of employees leads to mutual benefits for both the workforce and the company. This approach results in higher employee satisfaction, lower turnover rates, increased productivity, a stronger brand reputation, and employee advocacy, all of which are essential for the long-term success and sustainability of the business.

Environmental Stewardship

A prime example of a business that has embraced environmental stewardship through sustainable practices is Tesla, Inc. Tesla, known for its electric vehicles (EVs) and renewable energy products, has been at the forefront of reducing environmental impact in the automotive industry.

Tesla’s Sustainable Practices:

• Electric Vehicles: Tesla’s core product, electric cars, is designed to reduce reliance on fossil fuels. By focusing on EVs, Tesla is tackling one of the largest sources of carbon emissions – gasoline-powered vehicles.
• Renewable Energy Solutions: Beyond cars, Tesla also produces solar energy products and battery storage systems. Their solar panels and Solar Roof help in harnessing renewable energy, while their Powerwall and Powerpack systems store this energy efficiently.
• Innovation in Battery Technology: Tesla is continually innovating in the area of battery technology, striving to increase the efficiency and lifespan of their batteries, while also working on ways to recycle them.
• Reducing Carbon Footprint in Manufacturing: Tesla aims to minimize the environmental impact of its manufacturing processes. This includes efforts to power its factories with renewable energy and implementing sustainable manufacturing practices.

Importance of Environmental Ethics in Business:

• Reducing Environmental Impact: Businesses have a significant impact on the environment. By adopting sustainable practices, they can reduce their carbon footprint, conserve natural resources, and contribute to overall environmental health.
• Sustainable Business Model: Environmental ethics lead to a sustainable business model. Companies like Tesla demonstrate that sustainability can drive innovation and profitability, ensuring long-term business viability.
• Consumer Demand and Brand Loyalty: There is a growing consumer demand for environmentally friendly products. Companies that demonstrate a commitment to environmental ethics are more likely to attract and retain customers who prioritize sustainability.
• Regulatory Compliance and Risk Management: Adhering to environmental ethics helps companies stay ahead of regulatory changes and avoid potential legal issues related to environmental compliance. It also mitigates risks associated with resource scarcity and climate change impacts.
• Corporate Reputation and Leadership: Companies that lead in environmental stewardship often earn a positive reputation. This enhances their brand value and can position them as industry leaders, setting standards for others to follow.
• Employee Morale and Attraction of Talent: Many employees and job seekers prefer to work for companies that align with their values, including environmental responsibility. This can lead to higher employee satisfaction and makes it easier for companies to attract top talent.

Tesla’s commitment to sustainable practices exemplifies the crucial role of environmental stewardship in modern business. Such practices not only help in reducing environmental impact but also contribute to a sustainable business model, meet growing consumer demands, ensure compliance and risk management, enhance corporate reputation, and attract talent. These factors underscore the importance of environmental ethics in ensuring the long-term success and sustainability of a business.

Case Studies

I’ll provide brief outlines for case studies across different areas of business ethics, highlighting key aspects and learnings from each.

Case Study on Ethical Leadership: Paul Polman at Unilever

Background: Paul Polman, CEO of Unilever, emphasized sustainable business practices.

Actions: Introduced the Unilever Sustainable Living Plan, abolished quarterly reporting to focus on long-term goals, and advocated for climate action.

Outcomes: Improved employee morale, increased brand loyalty, and financial growth, and influenced other companies towards sustainability.

Learnings: Demonstrated that ethical leadership focusing on sustainability can lead to business success and positive global impact.

Case Study on Corporate Social Responsibility: Starbucks

Background: Starbucks, a global coffee company, is committed to ethical sourcing, environmental sustainability, and community engagement.

Actions: Ethically sourced coffee, reduced environmental footprint, employee benefits, and community service.

Outcomes: Enhanced brand reputation, employee satisfaction, customer loyalty, and innovative business practices.

Learnings: Showcased how CSR activities can benefit communities, employees, and lead to a strong, sustainable brand.

Case Study on Ethical Marketing: Patagonia

Background: Patagonia, an outdoor clothing brand, known for its commitment to environmental activism and ethical marketing.

Actions: Honest advertising campaigns (e.g., “Don’t Buy This Jacket”), transparency in production, environmental advocacy.

Outcomes: Built consumer trust, differentiated the brand, influenced industry standards, and contributed to business resilience.

Learnings: Ethical marketing strategies can create brand loyalty, drive industry change, and contribute to long-term business sustainability.

Case Study on Fair Labor Practices: Costco

Background: Costco is recognized for its high wages and strong benefits for employees, unusual in the retail sector.

Actions: Provided above-average wages, comprehensive benefits, opportunities for advancement, and a positive work environment.

Outcomes: Low employee turnover, high productivity, positive brand image, and effective talent recruitment.

Learnings: Fair labor practices lead to employee satisfaction, brand loyalty, and operational efficiency, proving beneficial for long-term business success.

Case Study on Environmental Stewardship: Tesla, Inc.

Background: Tesla, Inc. focuses on reducing the environmental impact of transportation and energy.

Actions: Developed electric vehicles and renewable energy products, innovated in battery technology, and sustainable manufacturing processes.

Outcomes: Reduction in carbon emissions, growth in sustainable energy solutions, and a strong, innovative brand in the automotive and energy sectors.

Learnings: Environmental stewardship can drive innovation, fulfil consumer demand for sustainability, and ensure a company’s long-term viability in a changing global landscape.

Each of these case studies provides valuable insights into how ethical considerations in different areas – leadership, CSR, marketing, labor practices, and environmental stewardship – can lead to tangible benefits for businesses, employees, communities, and the environment. They highlight the increasing importance of integrating ethical principles into the core strategies of modern businesses.

Examples of Business Ethics Examples

Here are some business ethics examples of business ethics in various scenarios, demonstrating how ethical principles can be applied in the corporate world:

Honest Accounting Practices: A company, despite facing financial difficulties, refuses to engage in fraudulent accounting practices. Instead, it transparently reports its losses and works on a recovery plan, maintaining integrity in financial reporting.

Fair Treatment of Employees: A technology firm is known for its equitable treatment of all employees, regardless of their position. This includes fair wages, respectful work conditions, equal opportunities for advancement, and a strict non-discrimination policy.

Consumer Data Protection: An online retailer implements robust measures to protect customer data, going beyond legal requirements. It transparently communicates how customer data is used and provides options for customers to control their information.

Sustainable Environmental Practices: A manufacturing company invests in green technologies to minimize its environmental footprint. It reduces waste, conserves energy, and sources materials sustainably, even if these practices incur additional costs.

Responsible Marketing: A food company markets its products truthfully, avoiding exaggerated claims about health benefits. It includes clear ingredient labelling and avoids targeting vulnerable populations with misleading information.

Ethical Sourcing and Supply Chains: A fashion brand commits to ethical sourcing, ensuring that its products are made without child labor or exploitation. It audits its supply chain regularly to ensure compliance with labor laws and ethical standards.

Addressing Customer Complaints Fairly: A service provider promptly and fairly addresses customer complaints, offering reasonable solutions and compensation if necessary. It values customer feedback as an opportunity for improvement.

Rejecting Bribery and Corruption: An international corporation refuses to pay bribes to secure business deals, even in regions where such practices are common. It adheres to anti-corruption laws and its ethical policies.

Supporting Community Development: A corporation invests in local communities where it operates, supporting education, healthcare, and infrastructure. It views community development as part of its corporate responsibility.

Whistleblower Protection: A company encourages its employees to report unethical or illegal practices within the organization and provides a safe channel for doing so. It protects whistleblowers from retaliation, valuing transparency and accountability.

These business ethics examples illustrate how businesses can integrate ethical considerations into their decision-making processes, covering aspects like financial integrity, employee rights, consumer protection, environmental responsibility, marketing honesty, supply chain ethics, customer service, anti-corruption, community involvement, and organizational transparency. Each of these practices not only adheres to ethical standards but also contributes to building a reputable and sustainable business.

A Chart Table for Business Ethics Examples

Here is a chart table presenting examples of business ethics across different principles, along with their descriptions:

This table provides a clear overview of various ethical principles and their applications in business, emphasizing the range of areas where ethical considerations are crucial for corporate integrity and responsibility. ​​

The exploration of business ethics through various business ethics examples and case studies highlights the profound impact that ethical principles have on the functioning and success of businesses. From the ethical leadership exemplified by Paul Polman at Unilever to the fair labor practices of Costco, each case demonstrates that ethical conduct in business is not just a moral imperative but also a strategic one.

The principles of honest accounting, fair employee treatment, consumer data protection, environmental stewardship, and ethical marketing, among others, are not only essential for maintaining legal compliance and public trust but also play a crucial role in building a sustainable, resilient, and reputable business. Companies like Tesla and Starbucks show how integrating ethical practices into core business strategies leads to long-term benefits, including increased customer loyalty, employee satisfaction, and market leadership.

Furthermore, these business ethics examples underline the evolving expectations of stakeholders — customers, employees, and the broader community — who increasingly favor businesses that prioritize ethical considerations. In an ever-more connected and transparent world, the commitment to ethical practices becomes a key differentiator and driver of success.

In essence, business ethics encompass a wide array of practices essential for creating a positive impact on society and the environment while ensuring profitability and sustainability for businesses. As the corporate landscape continues to evolve, the integration of ethical practices remains a pivotal factor in shaping the future of successful and responsible businesses.

For the topics we discussed like business ethics examples, corporate social responsibility, ethical marketing, fair labor practices, and environmental stewardship, here are the types of sources that would typically contain relevant and reliable information:

Academic Journals: Journals like the “Journal of Business Ethics,” “Business Ethics Quarterly,” and “Harvard Business Review” often publish in-depth articles and case studies on these topics.

Books on Business Ethics: There are many comprehensive books written on business ethics that provide detailed insights and case studies.

Business Ethics Examples: Decision Making for Personal Integrity & Social Responsibility” by Laura Hartman and “The Business Ethics Field Guide” by Aaron Miller, Brad Agle, and Bill O’Rourke.

Company Reports and Websites: Direct information from companies such as Unilever, Starbucks, Patagonia, Costco, and Tesla, including sustainability reports, corporate social responsibility reports, and official blogs, offer firsthand insights into their practices and policies.

News Outlets and Business Magazines: Reputable news sources like Forbes, Bloomberg, and The Wall Street Journal frequently cover stories related to ethical business practices, CSR activities, and leadership ethics.

Industry Reports and White Papers: Organizations specializing in business ethics, sustainability, and corporate governance often release reports and white papers that provide detailed analyses and case studies.

Government and NGO Reports: Reports from government agencies and non-governmental organizations can also provide insights, especially regarding compliance, legal standards, and industry benchmarks.

For the most accurate and up-to-date information, you may want to consult these types of sources directly.

Frequently Asked Questions (FAQs) about business ethics examples

Here are some frequently asked questions (FAQs) about business ethics examples, providing concise answers to common inquiries:

What is Business Ethics?

Business ethics refers to the application of moral principles and standards to business behavior. It encompasses a wide range of issues, including corporate governance, insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.

Can you give an example of ethical leadership in business?

An example of ethical leadership is Satya Nadella at Microsoft, focusing on transparency, accountability, and a commitment to diversity and inclusion within the company.

What are some common ethical issues in business?

Common ethical issues include conflicts of interest, insider trading, bribery and corruption, discrimination and harassment, and environmental impact.

How do companies benefit from ethical business practices?

Companies benefit through improved reputation, customer loyalty, higher employee morale and retention, reduced legal risks, and potential for long-term sustainable growth.

What is Corporate Social Responsibility (CSR)?

CSR is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. It involves taking responsibility for the company’s effects on environmental and social well-being.

How can a business ensure ethical practices?

A business can ensure ethical practices by developing a clear code of ethics, providing training to employees, implementing strong compliance programs, encouraging a culture of transparency and accountability, and establishing clear reporting mechanisms for unethical behavior.

What is an example of unethical business practices?

An example includes false advertising, where a company deliberately misleads consumers about the quality or benefits of a product or service.

Can ethical business practices lead to higher profits?

Yes, in the long run, ethical business practices can lead to higher profits through enhanced brand reputation, customer loyalty, employee productivity, and sometimes by avoiding legal penalties.

What role do ethics play in decision-making within a business?

Ethics play a central role in decision-making by guiding choices that align with moral principles and the broader values of the company, its stakeholders, and society at large.

Are there international standards for business ethics?

While there are no universal standards, international guidelines like the United Nations Global Compact and OECD Guidelines for Multinational Enterprises provide frameworks for ethical business conduct across borders.

These FAQs offer a basic understanding of key concepts and issues in business ethics, providing a starting point for deeper exploration and study in this field.

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A case study of ethical issue at Gucci in Shenzhen, China

• Published: 09 October 2012
• Volume 2 , pages 173–183, ( 2013 )

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• Li Wang 1 &
• Robin Stanley Snell 2  

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Introduction

Gucci is a multinational company with over 270 directly operated stores worldwide, serving customers of elite goods, and generating billions of dollars revenue per year. It has an iconic, even noble, luxury brand image in the Greater China region, where its revenue increased by 35.6% in the first half of year 2011. Gucci has expressed its intention to accelerate the process of opening stores on the Chinese mainland. Recently, however, the company came under fire after five former employees from its flagship store in Shenzhen revealed information online about inhumane working conditions and labor mistreatment in the company. This paper focuses on events that took place in a Gucci flagship store located in Shenzhen, China.

This paper has two main research objectives. The first is to analyze why labor abuses (as exemplified in the Gucci case) are allowed to occur and persist in foreign-invested firms that are located in the People’s Republic of China (PRC). The second is to develop a multi-stakeholder approach to preventing further abuses of this kind. The next section provides a description of the case, focusing on the ethically problematic labor management practices and arrangements and noting some legal violations. We shall then present three propositions regarding why some foreign firms operating in the PRC and host local governments ignore and/or tolerate labor abuses of this kind. We follow this with a section in which we apply two different approaches, traditional Confucian ethics on the one hand and modern labor rights theory on the other, to provide a robust ethical basis for stakeholders to argue from, while taking action to persuade others that such malpractices are ethically unacceptable. Next, after identifying four stakeholders for the Gucci case, we suggest how each of them may play a role in discontinuing and/or preventing future labor abuses. We conclude with some further theoretical and managerial implications.

Case description

The employees’ complaints.

On 8 October 2011, an open letter—<A Public Letter to the Top Management of Gucci from Former Employees who resigned collectively> was spread on the Internet. This letter was written by five former employees of the Gucci Shenzhen Flagship Store. In the letter, they alleged that employees caught an occupational disease, that there was one miscarriage attributable to excessive working hours and that there was no compensation for these hardships. Moreover, they stated that there were excessive restrictions on employees’ behavior, including the need to obtain permission before getting a drink or a snack, and strict limitations on toilet time. They stated that, while the restrictions were applied strictly to all frontline employees, including one who was pregnant, they were not applied to the managers. The letter also claimed that the employees had to pay compensation for any product that was stolen or went missing, even though these luxury products had already been insured. They also criticized Gucci’s goods exchange policies which appeared to be arbitrary and dependent on the manager’s mood. All in all, they accused Gucci of lacking systematic and humane management and complained that their rights and dignity were being violated.

Once revealed online, this report aroused widespread discussion among Internet users. Further information emerged, suggesting that the case also involved falsification of records about working hours, and the imposition of forced, unpaid overtime work. Gucci implemented a system of working one full day, followed by a day off. Officially, 1 day’s work was about 10 h. But the workers complained that, on their working days, they were required to clock off at a certain time to establish a false electronic record, and then continue their work, counting goods until two or three o’clock in the morning without compensation.

Some netizens labeled Gucci as a “sweatshop.” Many opined that the labor management practices of some multinational companies and brand owners failed to match their international status. Several days later, the Gucci headquarters in China issued a statement, saying that “Gucci does not and will not endorse or tolerate the alleged malpractices.” Gucci also stated that that the company had conducted thorough investigations and had implemented a series of measures, including the replacement of the store manager and assistant store manager. Meanwhile, the Human Resources Bureau within the Legal Department of Shenzhen’s Luohu District said they would further investigate the case. On 26 October 2011, Gucci and the former employees eventually arrived at a settlement in conjunction with Shenzhen Federation of Trade Unions.

How Gucci used the labor dispatch system

Dispatch is a labor management model which separates recruitment from employment. Relationships under the dispatch system are portrayed in Fig.  1 . The employee leasing companies have labor contracts with the workers, and they send workers to other companies in which these workers actually work. The labor contract relationship exists between the employee leasing companies and the dispatched workers, but the actual working relationship is between the workers and the companies in which they work.

Relationships under the dispatch system

In this form of employment, the company which actually “use” these workers is only responsible for paying wages, while other aspects, including social security and dismissal compensation are passed on to the employee leasing company. The labor dispatch arrangement serves to reduce the user companies’ costs and contractual responsibilities for the employee. They can incur lower training costs and are not required to make social security arrangements. Because of these features, this employment model is widely used in China. The Gucci stores in Shenzhen actually adopted an even more complex dispatch system, involving at least three employee leasing companies that were located in Shanghai.

Legal considerations

One legal consideration is that, although the labor dispatch system has been officially adopted as way of arranging temporary employment only, Gucci used the system to employ people for durations of more than 2 years. Another is that many of the Gucci store employees are female and that pregnant employees legally enjoy special labor protection. According to the “Labor Contract Law,” female workers during their pregnancy should not participate in the state’s third-grade physical intensive work. Such work is deemed not suitable for female workers; for female workers who are more than 7 months pregnant, there should be no overtime work, and they should not be required to join night shifts. Furthermore, it is a legal requirement that sufficient rest periods should be arranged for such employees.

Why do labor abuses happen in China?

Underpinning the legal considerations, the basic ethical issue in this case is the violation of labor rights, through non-remunerated and forced work, inhuman restrictions, and other unreasonable policies. Gucci is by no means the first multinational company that has been accused of operating a “sweatshop” in Asia. For example, Nike was involved in abusive practices in Indonesia (Krueger 2007 ). What is especially interesting about this case is that it involves retail employees rather than factory workers. Also notable is that such labor abuses are generally uncommon in the Western countries, where these multinational corporations (MNCs) are quartered. Why did they come to China and “collectively fall ill”? We envisage that there are three possible reasons: First, overtime work without payment and other illegal employment arrangements are tolerated among local firms, and when foreign brands and multinational companies come to China, it is an easy temptation for them to slide into these malpractices, while giving themselves the excuse that it is a way of “adapting to the environment” (Hofstede 1993 ), i.e., moral relativism. Hence,

Proposition One: A philosophy of moral relativism allows some foreign firms in China to level down to abusive but locally condoned labor management practices.

The second possible reason for the persistence of labor abuses in China involving MNCs is that these large companies do not pay attention to the labor laws, let alone lobby to strengthen the laws and their enforcement, because they think their investment will furnish the local government with a good-looking GDP and that this is all that matters to them. Hence,

Proposition Two: Some foreign firms in China are preoccupied with economic goals, assume that local governments share their preoccupation, and believe that, because of shared economic imperatives, they can ignore the labor laws with impunity (Gao 2009 ; Ip 2009 ; McDonald 1995 ).

The third reason is closely related to the second one and concerns how the pressures faced by local governments are reflected in their actual preoccupations. Despite movement toward the balancing of economic imperatives with social and environmental concerns under the “Harmonious Society” policy platform (See 2009 ), local governments still remain under pressure to meet economic targets. Although there is a considerable body of labor laws in the PRC, officials may perceive there is little risk of being punished if it is discovered that they have failed to enforce them. Furthermore, some local governments may be afraid that the strict implementation of the labor law will drive investors away and may consciously turn a blind eye to illegal and unethical practices by firms under their purview, resulting in lax monitoring and non-enforcement.

Proposition Three: Because some local governments perceive that economic imperatives override social responsibility concerns, they are lax in enforcing labor laws.

Two perspectives—how can we tell right from wrong?

We shall draw on two very different perspectives to conduct a moral evaluation of the labor management practices in the Gucci case. The first perspective is that of traditional Confucian ethics, the second is modern labor rights theory.

Confucianism

The core of Confucian ethics is comprised of five values. We shall focus on three of them—Ren, Yi, and Li. Ren is a capacity for compassion or benevolence for fellow humans. It is essentially expressed in social relationships. One can have a harmonious relationship with others and thinking about others’ stakes when doing business draws on Ren (Wang and Juslin 2009 ). In effect, Ren expresses the Confucian formulation of the Golden Rule: People should not do to others things that they do not want others to do to them. Consideration for others, caring for others, and loving others means Ren. By contrast, in the Gucci case, the management operates only with the economic interest of company in mind, with no regard for workers’ basic needs. It abused the dispatch system for the sole purpose of lowering the cost of hiring people, without considering workers’ needs for adequate salaries, social insurance, training … etc, thereby failing to practice Ren.

Of equal importance in Confucian ethics is Yi, which concerns the morality of righteousness. It is the capacity to discern appropriateness and the right direction for actions, relationships, and other human matters. Helping people when they are in need is one expression of Yi, but in the Gucci case, Yi is absent. For example, the employee who was pregnant should have been treated with special care, and help should have been given to her when she needed it, but to the contrary, long working hours and strict working restrictions led to her miscarriage.

Third, Confucian morality is regulated by Li, or decorum. This consists of a body of norms, rites, and unwritten understandings that govern and regulate social action in every aspect of daily endeavor (Lau 1992 ). Respecting people and their dignity involves Li, but according to the employees’ allegations, the management did not respect their dignity. Subject to many unreasonable restrictions, they were treated as if they were mere instruments to make money, rather than as human beings with dignity, and did not receive due respect and appropriate treatment.

A related aspect of Confucianism concerns the respective duties of the parties in a dyadic relationship. The junior party has the obligation to serve and obey the senior party, and the senior party has the responsibility to teach, lead, and look after the junior party. Applied to modern employment relationships, this would entail a benign arrangement under which the employees would be recognized and cherished as a key stakeholder group of the company, with which the company would build and maintain a cooperative relationship and seek win–win outcomes. “Squeezing” rather than nurturing employees may save economic costs and lead to more profits in the short-term, but, as in this particular case, is likely to give rise to low morale among employees and may lead to emotional distress and physical harm. The long-term risks include that employees will make their grievances public and that the company’s reputation will be harmed as a result.

Labor rights

In the advanced Western economies, the moral basis of human rights has been incorporated into legal rights. There are strong and well-enforced government laws and regulations and established labor to advocate and negotiate on behalf of workers; well-developed nongovernmental organizations (NGOs) and independent media make problems transparent and advocate remedies. There are also high levels of citizenship education. Worker rights and protections have thus been institutionalized within a system of law and democratic political accountability, and are monitored by unions, NGOs, and educators. Through these processes, public expectations of the ethical behavior of corporations have become progressively stricter; cases of labor abuse still occur but appear to be relatively uncommon rather than endemic (Greenwood 2012 ).

In China, however, labor rights turn out not be widely institutionalized and legal rights turn out not to be strongly enforced, allowing employers as the stronger party to exploit the employees as the weaker party. While there are differences between Western countries and China, all people in the world share the need for some basic characteristics of human dignity that ought never to be violated, regardless of social context (e.g., whether one lives in a rich or poor society) and thus regardless of whether they have an abundance of employment choices or nearly none, or whether they have adequate institutional mechanisms to protect their interests.

It is ethically insufficient for corporations merely to “do in Rome as Romans do.” Expedient moral relativism should be replaced by broader and “thicker” moral norms that have universal application. The Universal Declaration of Human Rights Article 5 states that “No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.” And Article 23 section (3) states that “Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.” The practices adopted by the management of Gucci in Shenzhen appear to have violated the Universal Declaration of Human Rights.

Stakeholders and their relevant stakes

To prevent the further occurrence of abusive practices in labor management requires efforts from various groups. In working out who needs to do what, we first need to define who the relevant stakeholders are (Argandona 1998 ). According to Freeman ( 1998 ), the stakeholders are defined as “any group or individual who can affect or is affected by the achievement of the firm’s objectives.” That is, we need to identify which groups can be affected by these abuses and which groups can prevent them (Carson 1993 ; Maak and Pless 2006 ). Stakeholders include the following.

The company and its shareholders, whose stake is that the company’s reputation should be rebuilt. This scandal may disrupt Gucci’s expansion plans in China, so the company has a strong incentive to take positive action repair the harm to its reputation there.

Employees: Regardless of whether an employee has resigned or still remains in employment with Gucci, he or she will require apologies and appropriate compensation. In addition, the current employees are likely to desire the adoption of more systematic management methods and improved working conditions.

Chinese government: It is the Chinese government’s responsibility to ensure that worker’s rights are enforced, especially on its own territory and that companies operate in accordance with the laws there.

Foreign (home) governments: Foreign governments have a stake in every firm that is headquartered in their territory, including those with subsidies in overseas countries, such as China. They can take action to reduce the incidence of labor abuses in China by enacting laws that are similar to the anti-bribery treaties that have been passed in many countries (OECD 2001 ).

Possible solutions

Action coordinated by Gucci: One means for a solution is for Gucci to lead efforts in developing and implementing industry-wide and worldwide codes of ethics, thereby creating a comprehensive set of explicit norms and expectation about ethical standards. This code should apply to all branches and stores in both developed and less developed countries (Beschorner and Müller 2007 ). Such codes have been successfully implemented by industries such as toys, textiles, and electronics. Those kinds of products are sold to mass markets. It is something of a paradox that Gucci, which sells a high-end product, has provided a poor working environment in China; surely a company like this is even more subject to public scrutiny and now under public pressure to adopt higher standards. We do not wish to imply that employees in mass market industries should be treated any worse, but one may expecte high-end providers to exert stronger ethical leadership worldwide in improving labor standards. The code should require every branch and stores of companies in the luxury industry to embrace ethical principles and embed them into management systems and policies and internal review processes.

Informed by common areas of worker rights identified in the literature on international labor management ethics, this code could include items on the following: use of written employment contracts with all workers, avoiding abuse of the dispatch system, equal pay for work of equal value, prohibition of compulsory and unpaid work, adherence to laws and regulations on working hours, provision of wages and benefits not below minimum legal requirements, anti-discrimination, anti-harassment, anti-abuse, and respect for occupational health and safety.

In addition, the establishment of a socially responsible management systems should include a statement of social responsibility objectives and targets, along with sufficient human and financial resources to ensure that these objects and targets are clearly communicated, that the system is adequately implemented, and that there are mechanisms for regular monitoring and auditing of the system and for corrective action in the event of shortfalls (Carroll 1991 ; Carroll and Horton 1994 ; Gond et al. 2011 ).

Simply implementing an industry code is not enough. The headquarters of Gucci, Italy, should urge and encourage its branches in China to comply with the necessary ethical standards in China (and every other host country). The encouragement needs to be strong, because managements in China may seek excuses and claim that there would be inordinate financial costs, or that the code may be difficult to implement because of cultural barriers. The headquarters may arrange for auditing by independent third parties, such as NGOs. Otherwise the enforcement might be weak or non-existent.

Action by employees : “Tolerance” is deeply rooted in Chinese people’s thoughts, and most of the time, it is even considered as a virtue (in contrast to assertiveness). In this case, we may notice that employees were tolerant of abusive practices until severe harm actually happened (the female employee’s miscarriage). The Chinese workers’ awareness of their rights may have been weak, and they appear to be accustomed to enduring their unjust treatment, which perpetuates the abusive practices. As China’s capitalism has been rapidly evolving, the institutional arrangements involved in human resource management, such as the labor dispatch system, have become increasingly complex and subject to abuse. In order to protect employees, it is of utmost importance to challenge the mindset of tolerance and to equip employees with a strong awareness of rights and of suitable ways to protect themselves collectively. They should be encouraged to get together and make their voice heard (like writing a public letter on the Internet). By voicing their grievances, they can attract more attention, thus win more support, and the relevant government departments are more likely to investigate into their concerns. Furthermore, they could express their hope to form organizations which have similar functions to those of independent trade unions in western countries, thereby helping them gain bargaining power vis-à-vis employers (Preuss et al. 2009 ).

Action by the Chinese government : It is recommended that the Chinese government should revise its entire approach to the monitoring and regulation of labor rights. “Harmonious Society” pronouncements have been a step in the right direction (See 2009 ), but there is much further to go. Workers in China are under-protected because there are few organizations that workers can appeal to, and trade unions in China do not serve the same purpose as in Western countries. It’s difficult for workers to stand up for themselves when their rights are at stake. In Western countries, companies are under the scrutiny of various NGOs and trade unions; these organizations protect workers’ labor rights through collective bargaining power. On the surface, this is paralleled in China by The Constitution of the People’s Republic of China, which requires that all its citizens have the rights of freedom of speech, freedom of the press, and freedom to peaceably assemble, organize, demonstrate, and petition. However, in practice, in order to organize in mainland China (i.e., to establish an NGO), one has to register the organization according to the Social Organizations Registration and Administration Act. If the organization does not do this, it is not protected under the law. It is criminal for such an organization to publicly accept outside donations without a legal status. In addition, to establish such an NGO, they must have a regular business location, full-time staff, a registration capital of more than thirty thousand yuan and official documents with a stamp of approval from the governmental agencies, which have been designated as “supervising offices.” This complex and time-consuming process makes it virtually impossible to form a NGO in China unless the government is prepared to champion and support the process. Another barrier is that every non-governmental organization will be co-administered by a civil affairs governmental office. This unique “Chinese way” of double administration weakens the independence of an NGO. Nonetheless, the Chinese government could consider having experiments in certain industries. China is now the biggest luxury-product-consuming country, as well as the biggest luxury-product-manufacturing country, so it has both the biggest customer group and labor force of the luxury industry worldwide. The Chinese government should consider giving permission to set up such a non-governmental organization with independent powers, to monitor these luxury multinational companies’ operations in China.

Action by foreign governments : A foreign government is typically responsible for creating and enforcing laws that apply to all the companies operating in their country, including MNCs that are operating subsidiaries all around the world, including China. A Western country could simply enact a law requiring all companies to apply fair and decent labor standards worldwide. The detail of such legislation is of course a much more complex matter that we can discuss in this article. The basic idea is that, if a company violates labor standards in China, it could then be prosecuted in the home country by the respective Western government. This arrangement might be championed by supra-national bodies, such as the United Nations, but again, we do not have space in this article in detail of the legislation process; it would help greatly if there is close collaboration between the Chinese government, Western countries, and supra-national bodies.

Theoretical and managerial implications

There are some key theoretical and managerial implications of this case. The first of these concerns the limitations and possible distortions of the virtue-based approach to business ethics as it has been applied in China. While some managers may recognize that a virtue-based Confucian firm should seek harmony by expressing benevolence to its employees, who would reciprocate with loyalty and gratitude, some key aspects of this approach can be forgotten when facing modern economic pressures. What may be remembered by managements is that Confucian ethics is based on the premise of inequality between the senior and junior parties in the relationship and that the junior party is expected to go along with whatever treatment they receive without direct protestation. What may be forgotten by managements is that all this is premised on the assumption that the senior party should consider, respect, and be responsive to the needs of the junior party. Such empathic concern is unlikely to flourish without a channel for listening and without a powerful incentive to listen. In their absence, all-powerful managements become de-sensitized from the concerns of their employees, and labor abuses will ensue.

From this, a second implication can be inferred. In order to prevent labor abuses in the PRC, it is necessary to institute strong, legally based mechanisms for enforcing and protecting labor rights. Conveying legitimate bargaining rights to labor organizations that correspond to their independent trade union counterparts in the West is one key step in this process. The second key step is for the national and local governments in the PRC to join hands in assigning a higher priority to encouraging and supporting corporate social responsibility, no longer relegating this to an afterthought or empty, token slogan. This, in turn, implies a role for foreign firms and foreign governments. Strengthening legal safeguards for labor rights in Chinese organizations is likely to require cross-national dialogues within corporations and between foreign governments and the government of the PRC.

Does this need for legal underpinning imply that the Confucian cultural legacy has no role to play in underpinning labor rights and preventing labor abuses in the PRC? Actually, this is not the case. Although concern about the Confucian virtues appear insufficient to constitute a safeguard against ethical violations in China-based firms, the picture may be radically transformed if legal imperatives are introduced that would serve to remind managements about the need to listen, understand, and respond to the needs of their employees. Confucian values originated in ancient times, when “rule of man” prevailed and when modern rule of law was inconceivable. China, having rapidly and breathtakingly developed into a modern society within the last two decades, is probably ready now to undergo the truly revolutionary process of blending Confucian morality and the Western rights-based paradigm into a moral compass that is more suitable for the contemporary world (Snell 2001 ).

Conclusions

Allegations of abusive labor practices in MNCs are by no means new phenomena but have typically referred to manufacturing sites in less developed countries. This paper highlights a less-extensively documented phenomenon, featuring abuses happening at a retail store—Gucci’s Shenzhen flagship store. Specifically, Gucci abused the dispatch system, which is a labor system with Chinese characteristics, and neglected some key labor rights. In considering how an MNC can operate ethically in China, we have considered some universal interpretations of labor rights, while taking account of Confucianism and the One-Party state, which are foundational components of China’s culture and institutional framework (Liou 2010 ). We have made recommendations for action by MNCs and other stakeholders, namely, employees, the Chinese government, and even foreign governments, where these can exert legal influence over MNCs that are headquartered in their jurisdictions. We have also foreshadowed the possibility, in the near future, of a fusion between Confucian virtue ethics and Western rational–legal approaches to the assertion and protection of labor rights and the profound practical and theoretical implications that would ensue.

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Wang, L., Snell, R.S. A case study of ethical issue at Gucci in Shenzhen, China. Asian J Bus Ethics 2 , 173–183 (2013). https://doi.org/10.1007/s13520-012-0024-6

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Received : 27 February 2012

Accepted : 25 September 2012

Published : 09 October 2012

Issue Date : July 2013

DOI : https://doi.org/10.1007/s13520-012-0024-6

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