Summary lecture 4, ethics and International Business

Historical perspective:

• From agrarianàtechnological society. People did not really know what they were buying
• Consumers lack expertise to judge many sophisticated products
• We went from Caveat emptor (let the buyer be aware)à Due care (consumers interest are vulnerable, because sellers know more. So more responsibility to manufacturer)à strict product liability (all legal responsibilities of manufacturer to consumer even when negligent, so more responsibility to manufacturer). If the manufacturers do everything to prevent harm for the customer, is it than fair to keep them responsible when something goes wrong?

Consequences of the strict laws:

1. Economic cost: the cost of implementing a rule vs. the amount of lives that are saved. But difficult to put a price on an injury
2. Consumer choice is made smaller, so the increased risk cs. Cheaper products
3. Legal paternalism, law restrict freedom of individuals for their own good. But is it okay to restrict this freedom

Consumers rights:

Consumers are seen as stakeholders:

1. Product safety
2. Product quality/efficacy
3. Honest and truthful communications
4. Fair prices
5. Fair treatment
6. Privacy

Normative arguments for increased consumers rights;

• Utilitarian: maxims sum of total happiness
• Autonomy: seller must do whaterver they can to enable consumers to make autonomous choices
• Virtues: would you want to earn money by cheating on your customers, lying or selling children hazardous toys

Consumer rights:

1. Product safety is priority. Monitor manufacturing process and align market strategy and advertising with potential safety problems. Furthermore provide written information about product’s performance and investigate consumer complaints. However accidents don’t always happen because of misuse
2. Product quality measures up the claims made about it and to reasonable consumer expectationsà example: claims are not met
3. Fair prices: but what is fair (has to with psychology). Like price gauging, misusing the prices as seller (example: asking more for snow shovels when it snows). Also in general were are not good with numbers. We associate high quality with a high price. Redemptions is also a part of fair prices, for example giving a coupon and hoping that the customer forgets it. You also see this in cause-related marketingà buying something and giving it to charity.
4. Labelling and packaging. So what information is given about the product. This is sometimes difficult to understand and what information is omitted and highlighted
5. Fair communication: the goals of advertising to persuade people to purchase these goods. You can look at it in two ways. This is what consumers want (consumer sovereignty) vs as a society becomes increasingly affluent, wants are increasingly created by the process by which they are satisfied. There is objective (comes often not from the company itself) and deception information (activia for example, most of the time false claims). In between there is a grey area of manipulation (it is not clear that it is misleading). Nudging, change the focus but take the same decision. For example the piano stairs or saying that some choice is the popular one. If society does not want is and using someone’s momentum and weaknessà sludge

Ethical issues:

Consumer needs: consumer sovereignty vs. dependence effect

Market economics: advertising is an aspect of free competition in a competitive market which ultimately works to benefit all

Free speech and the media: right to say whatever you want vs undesirable social consequences

Ecology and how business fits in:

Humans believed in the past that the environment is free and its nearly unlimited. Without knowing the consequences.

Tragedy of the commons: something is beneficial on individual level, but if you look at collective level it is not. Therefore private costs vs. social costs

Social dilemma is a situation in which an individual profits form a selfishness unless everyone chooses the selfish alternative, in which the whole group loses (free-rider problem)

We have a moral right to be in a liveable environment but:

1. What is the quality of the environment we are aiming for
2. What precisely is necessary to bring about the kind of environment
3. How much will it costà who will pay the costs are those the one who are responsible or the ones who benefit from it (but how to define benefit)

Therefore lots of uncertainty+ taboo trade-offs= room for debate

Ongoing discussion about human-centred vs naturalistic view and the treatment of animals (how to measure their happiness)

How to achieve sustainable development goals?

Historyà September 2015 UN summità they have 17 goals.

1. Regulatory approach: punishment, but is difficult to measure it
2. Incentives: companies that do not good for the environment get a lot of money, while the people that already did good for the environment do not
3. Pricing mechanisms and pollution permits: but like this it becomes more a business transaction, therefore it changes a people perception of why they do something

So to get to the SDG’S we need an interdisciplinary approach:

• Technologies
• Behavioural scientists: acceptance of new technology as well a behavioural change
• Economists: understand how measures affect economy
• (Business) ethics: carefully consider what we should be aiming for and how that affects all of us