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products and production
, managers have responsibility to ensure that the public and their 
own employees are protected from danger. Attempts to increase profitability by cutting costs may lead to 
dangerous working conditions or to inadequate safety standards in products. In the United States, 
product liability litigation
is so common that this legal threat may be a more effective deterrent than 
general ethical standards.
Another ethical problem concerns 
payments by companies to government or municipal officials
who 
have power to help or hinder the payers' operations. Walton (1978) refers to the fine distinctions which 
exist in this area. 
BPP Tutor Toolkit Copy

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CHAPTER 19
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ETHICAL CONSIDERATIONS 
 
485 
(a) 
Extortion
. Foreign officials have been known to threaten companies with the complete closure of 
their local operations unless suitable payments are made. 
(b) 
Bribery
. This refers to payments for services to which a company is not legally entitled. There are 
some fine distinctions to be drawn; for example, some managers regard political contributions as 
bribery. 
(c) 
Grease money
. Multinational companies are sometimes unable to obtain services to which they 
are legally entitled because of deliberate stalling by local officials. Cash payments to the right 
people may then be enough to oil the machinery of bureaucracy. 
(d) 
Gifts
. In some cultures (such as Japan) gifts are regarded as an essential part of civilised 
negotiation, even in circumstances where to Western eyes they might appear ethically dubious. 
Managers operating in such a culture may feel at liberty to adopt the local customs. 
Business ethics are also relevant to competitive behaviour. This is because a market can only be free if 
competition is, in some basic respects, fair. There is a distinction between competing aggressively and 
competing unethically.
3.7 Social responsibility and businesses 
Arguably, institutions like hospitals, schools and so forth exist because health care and education are 
seen to be desirable social objectives by government at large, if they can be afforded. 
However, where does this leave businesses? How far is it reasonable, or even appropriate, for businesses 
to exercise 'social responsibility' by giving to charities, voluntarily imposing strict environmental 
objectives on themselves and so forth? 
Social responsibility action is likely to have an adverse effect on shareholders' interests. 
(a)