At what stage does unethical become criminal? We review articles considering (un)ethical behaviour.
It is ethical to make drones to kill civilians?
A drone industry has emerged in the US, initially funded almost exclusively for military applications. There are now also other uses, both governmental and commercial (in the US and abroad). Many military drones are still being made, however, especially for surveillance and targeted killings. Regarding the latter, this essay calls into question their legality and morality. It recognises that the issues are complex and controversial, but less so as to the killing of non-combatant civilians.
The government using drones for targeted killings maintains secrecy and appeals to non-traditional justifications. Most scholars who assess these killer drone practices support citizen immunity, either by favouring a modified just war theory that prioritises civilians’ right to life or by challenging official deviations from applicable laws.
They accordingly declare such killing immoral if not a war crime. The manufacturers of these killer drones are not themselves the killers, but they are abetters, i.e., sine qua non facilitators. So, I argue that any company concerned about its corporate social responsibility should cease manufacturing them.
Edmund F. Byrne. 2018. Making Drones to Kill Civilians: Is it Ethical?
Journal of Business Ethics, 147(1), 81–93.
Is gender bias in bank lending ethical?
The evidence on gender discrimination in lending remains controversial. To capture gender biases in banks’ loan allocations, authors Cozarenco and Szafarz observe the impact on the applicants of a microfinance institution (MFI) and exploit the natural experiment of a regulatory change imposing a strict EUR 10,000 loan ceiling on microcredit.
Descriptive statistics indicate that the presence of the ceiling is associated both with bank-MFI co-financing and with harsher treatment of female borrowers. To investigate causal links, the authors develop an econometric approach that addresses the concerns of selection biases, multi-collinearity, and endogeneity. The empirical findings suggest that the change in the MFI’s gender-related attitude was triggered by banks through co-financing.
Hence, the researchers speculate that co-financing pushes ceiling-constrained MFIs to import whatever biases in loan granting that the banks are prone to. Overall, this paper stresses that apparently benign regulations such as loan ceilings can significantly harm the women’s empowerment efforts made by MFIs.
Anastasia Cozarenco and Ariane Szafarz. 2018. Gender Biases in Bank Lending: Lessons from Microcredit in France.
Journal of Business Ethics, 147(3), 631–65.
Is exploiting loopholes in tax laws ethical?
This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer “a way out” of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes.
This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity’s tone at the top.
The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report.
Dinah M. Payne and Cecily A. Raiborn. 2018. Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality.
Journal of Business Ethics, 147(3), 469–487.
How ethical is lack of punishment in the financial system following the Global Financial Crisis?
The subprime mortgage crisis which was caused to a large degree by questionable mortgage lending and securitisation practices that were furthered by deregulatory policies devastated the economy, led to large scale unemployment, and caused the foreclosure of millions of homes.
There is evidence that numerous mortgage companies, financial firms, rating agencies, and high-level professionals were involved in unethical and often fraudulent business practices leading to the most severe economic meltdown since the Great Depression. In spite of the great economic and social harm, there was a lack of criminal sanctions against those companies and individuals, who were involved in creating the crisis that reached even global dimensions.
This article analyses the reasons for and the possible social impacts of the lack of criminal sanctions against those who crossed the line between unethical and criminal business practices.
David Shichor. 2018. Thinking About Punishment (or the Lack of it): The Case of the Economic Meltdown.
Journal of Business Ethics, 147(1), 185–195.
Ethics of management-by-fear in Finland?
The purpose of this article is to qualitatively describe and critically explain the discursive construction of employee co-operation negotiations in Finland as an arena for management-by-fear. The article consists of a theoretical review, covering the legislative basis of co-operation negotiations and recent research on management-by-fear. The empirical study consists of media texts and company media releases in Finland in 2012–2013.
The main conclusions are that there are distinctive features in the co-operation negotiations that enable and enforce the possibility of management-by-fear, and thus destructive leadership. The process, supported by law and very much against the original aim, enhances authoritative leadership, objectification of employees, distortion of information and misleading, and the negative consequences thereof.
The process is an employer-invited discursive dance where the employee has to follow through the set steps and in the set rhythm, with the media orchestrating the tune and managing the fear. The study adds a valuable element to the research areas of downsizing, bad management, and the discursive construction of these phenomena.
Anu Pynnönen & Tuomo Takala. 2018. The Discursive Dance: The Employee Co-operation Negotiations as an Arena for Management-by-fear.
Journal of Business Ethics, 147(1), 165–184.
Insider trading and ethics in Australia
The Kamay and Hill insider trading conviction in Australia highlights many of the issues and problems involved in the prevention, detection and prosecution of insider trading. The case uniquely highlights how ethical behaviour is instilled at home, in school and in society, and the need for ethical responsibility at the personal and organisational level to complement legal rules and enforcement.
The authors use the Kamay and Hill case to explore the reasons behind the failure of the traditional top-down approach to insider trading prevention, where institutional ethical codes of conduct largely reflect and rely upon national rules, norms, and regulation.
The authors propose a bottom-up approach to ensure that individual and organisational behaviour is ethical, where emphasis is not on compliance but on a set of core ethical values that allow individual and corporate expression. It is the authors’ strong belief that compliance cannot replace ethics.
Jonathan A. Batten, Igor Lončarski, and Peter G. Szilagyi. 2018. When Kamay Met Hill: Organisational Ethics in Practice.
Journal of Business Ethics, 147(4), 779–792.
Insider trading 2.0? The ethics of information sales
The sale of faster access to financial market data has recently generated public controversy. NY Attorney General Eric Schneiderman has referred to such fast data feeds as “Insider Trading 2.0”. For example, Thomson Reuters sold the University of Michigan’s Consumer Sentiment Index to computerised trading firms 2 seconds before releasing its data to its other paying clients. This paper explores the ethical issues involved in the sale of such information.
Is selling faster access ethically the same as traditional insider trading, which generally involves a breach of fiduciary duty or the use of misappropriated information? Such practices are extremely different from traditional insider trading as there is neither a breach of fiduciary duty nor misappropriation of inside information.
The ethical issues are similar to other market segmentation and price discrimination issues, in which different prices are charged to different customers. The ability to price discriminate across segments can actually benefit large segments of the population who may receive lower prices because others, such as the high-speed traders, are paying more.
The sale of faster access to information, especially by exchanges, raises additional ethical issues. There may be adverse effects on market quality that must be addressed. The moral distaste for the practice expressed by some stems from the seeming unfairness of a modern market structure that provides advantages to a small group of computerised traders.
James J. Angel and Douglas M. McCabe. 2018. Insider Trading 2.0? The Ethics of Information Sales.
Journal of Business Ethics, 147(4), 747–760.
Men, mammals, or machines in dehumanised organisations?
The present study combines dehumanisation research with the concept of organisational trust to examine how employees perceive various types of maltreatment embedded within the organisational practices that form the ethical climate of an organisation.
With the help of grounded theory methodology, the researchers analysed 188 employment exit interview transcripts from an ICT subcontracting company. By examining perceived trustworthiness and perceived humanness, the researchers found that dehumanizing employees can deteriorate trust within organisations. The violations found in the empirical material were divided into animalistic and mechanistic forms of dehumanisation and linked to perceived integrity and benevolence, respectively.
Based on the results, a model describing the link between dehumanisation and trust is presented and discussed in relation to the ways in which perceptions of humanness become rooted in practices and affect the basic assumptions underlying (un-)ethical organisational behaviour.
Tuure Väyrynen and Sari Laari-Salmela. 2018. Men, Mammals, or Machines? Dehumanization Embedded in Organizational Practices.
Journal of Business Ethics, 147(1), 95–113.