Discuss about the Method Issues in Business Ethics Research.
Highly profits seeking multinational organizations are more likely to maximize their profit beyond their domestic boundaries. Organizations having businesses in overseas countries are expected to comply with some legal and ethical parameters for running successful business (Grant, Arjoon and McGhee 2017). The Government of home country expects some ethical compliance from the organizations, while they are operating in overseas countries. However, the intension of earning more and more profit and maximizing in hand cash, some of the global business organizations are not complying with ethical and moral principles. Though the organizations are complying with the legal obligations, but they are not exhibiting ethical compliance and moral business practice. Moreover, the most significant ethical dilemma can be measured in terms of tax avoidance measures by some tech giants in the world (Giacalone and Promislo 2013). Some of the most important theory of ethics highlights on ethical dilemmas of business. Kant theory highlights the right and wrong of business practice on fulfilling their basic duties. Apart from that, ethical egoism reflects on the fact that whether business is harming others for their own self-interest or not.
The recent newspaper article posted on The Economic Times on 3rd May, 2017 highlights the ethical dilemma in the business practice of Apple. Moreover, this newspaper article has raised the ethical issues of Apple, which it is practicing in its overseas business. While conducting business in overseas marker, the global business organizations have some ethical responsibilities towards its home country. However, in this article, it is found that the cash stockpile of Apple has hit a staggering $256.8 billion (The Economic Times 2017). It has become a sparking debate on Apple regarding the massive cash reserves. In order to avoid the complex tax codes of USA, Apple is not bringing back its overseas profit in USA. It has ultimately generated its cash stockpile to almost $2.5 to $3 trillion (The Economic Times 2017).
Apple is the topmost US multinational company, who has been accused for avoiding the tax in their home country and make huge cash pile. Chellet al. (2016) opined that Apple has 90% stockpiles outside of USA market for avoiding complex tax rate of USA. Moreover, the organization has left almost $1.2tn of their earnings in overseas market for skirting the tax chargein USA. On the other hand, Michaelsonet al. (2014) pointed out that the intension of maximizing the profit has made the organization unwilling to move its overseas profit back to its home country. However, this business practice of Apple is actually causing ethical dilemma in the organization. It is also causing the corporate social responsibilities issues in the business practice of Apple.
As per the CSR norms, an organization is liable to pay proper taxes to the Government and maintain transparency with the Government regarding the business practice. However, in such extent, Apple is not fair enough to maintain transparency with the US government regarding their tax payment in home country. In this way, there are enough CRS issues in this organization, which has become the major concern of debates. Moreover, this practice has drawn the attention of US president Donald Trump. Moreover,with an intension to encourage the global organizations towards moving overseas earning in US, he has initiated some new tax strategy. These strategies can lower the tax rate for repatriated earning of multinational companies on moving their profits back in US. As per, (Titcomb 2017) the president has initiated slashing business tax and one-time tax holiday for reducing tax rate of repatriated income. While asking to the Apple board, it has been known that the organization is still waiting for another tax holiday for bringing their overseas money back to USA.
While the cash and securities are piling up in overseas countries, Apple is piling up its debts in the United State. Giacalone and Promislo(2013) pointed out that Apple recently sits in about $53.2 billion long-term debt obligations. On the other hand, Grant, Arjoon and McGhee(2017) stated that Apple also huge non-current liabilities. Moreover, the organization is facing pressure on returning more cash to the shareholders with higher dividends and more share buybacks. Moreover, these debts are not included in the cash of Apple, which it has promised to the shareholders. In this way, the organization is also being incapable of providing fair return on investment in its US market. This practice of Apple is also indicating unethical dilemma in this business practice in home country. As per the stakeholder ethics, the organization should provide fair return on investment to the shareholders. However, in this case, Apple is not able to provide fair return on investment to the shareholders. It is actually causing ethical issues of the organization towards dealing with its US shareholders.
With an intension to maximize profit and avoid huge tax rate, Apple is reserving much of its money in low tax countries. As per Beets, Lewis and Brower(2016), much of the funds of Apple are hold by its Irish subsidiaries. However, they have actually invested US assets. On the other hand, BBC News(2017) the US Government has held hearing on the unethical business practice of Apple for not paying the tax on its operations outside of the home country. However, the CEO of Apple has defended this organizational practice. The CEO has strenuously asserted that the organization pays the tax bills for all of its domestic operation. However, in case of foreign operation, the organization exploits the avoidance provision of Irish Tax law like many other companies. However, this organizational practice actually goes beyond the legal boundaries and creates ethical dilemma for the organization.
Apple has become able to create corporations, which pay no income tax to any taxing nation. In order to reduce the tax burden for repatriated income, the organization has reserved much of its earning in Irish subsidiaries. According to Ethicalconsumer.org(2017), Ireland never assess the income tax on the entities, which are managed and operated from outside of the country. In such extent, Apple mostly invests asserts from US. Apple Operations International has no physical presence and no employees in Ireland. Moreover, the Ireland subsidiaries are completely operated and managed from the United State. In this way, the Irish Government cannot impose much tax on the business of Apple. Therefore, in Irish subsidiaries, Apple can utilize the tax avoidance provision and reserve more earnings by enhancing business profits. On the other hand, Campbell and Cowton(2015) opined that the United State assess the tax based on the subsidiary of incorporation only within the country. Therefore, it can be said that US uses complex tax codes for the multinational organizations. Furthermore, this complex tax codes actually leading the multinational companies like Apple to unethically avoid the US taxes and reserve more money in overseas subsidiaries of the organization.
As per Beets, Lewis and Brower(2016), the business practice of Apple cannot be alleged with any legal claims, but it is highly associated with ethical dilemmas. The organization is not transparent enough with the Government of its home country. Moreover, the organization is only seeking increasing profit even by sacrificing the intension of ethical business practice. On the other hand,West(2014) opined that Apple is also incapable of meeting its stakeholder interest to a full extent. Moreover, the organization has already increased its debt and become incapable of providing fair return on investment to the important shareholders in US market. It is actually highlighting the ethical issues of the organization.
As per Kantian theory, the right and wrongness of an action does not depend on its consequence, but on its motives towards fulfilling its duty.This theory is based on the view that intrinsically good things have good will. According to Chellet al. (2016), an action can be good enough, its maxim or principle is backed by moral law. Moreover, one should always obey the categorical imperatives, regardless of his/her desire or interest. On the other hand, Campbell and Cowton(2015) opined that morality must be based on categorical imperatives. These imperatives actually command a person to behave in moral way.
While assessing the business practice of Apple, it has been found that the organization is not moving its overseas earnings to US. However, the intension behind this action of Apple is not good enough regardless of its consequences on the US market. The actual motive of the organization behind this action is to maximize organizational profit (Ethicalconsumer.org 2017). Moreover, they are actually avoiding the complex rate of US market.In this way, this practice of tax avoidance is actually reflecting an unethical business practice. Moreover, the categorical imperatives of the organization are not closely associated with morality, which is resulting in an unethical behavior in the business practice.
Ethical Egoism is an ethical theory which is imposed on an individual or organization. According to West (2014), an organization should adhere to some standards of business practice, while doing any business. It should ensure that the any practice of the organization does not harm any individual. On the other hand, Michaelsonet al. (2014) opined that an organization should always avoid such actions or omissions, which can cause harm to others. Moreover, the breaching of standard can cause ethical dilemma in an organization, which can even lead to ethical issue.Furthermore, an organization should act responsibly in a given set of circumstances or otherwise, it can lead to ethical dilemma.
While measuring the business practice of Apple, it can be seen that the cash stockpile of the organization is staggering. However, the organization has increased the long-term debts in the US market. In this way, it can be assumed that the organization is not maintaining transparent relationship with the US shareholders. Despite of having huge organizational profit, the organization has increased its long-term debts. Moreover, it is not providing fair return on investment to its US shareholders (Titcomb 2017). Therefore, it can be said that the business practice of Apple is actually harming the shareholders, which can lead to law of negligence and ethical issue.
Ethical egoism is a normative ethical positioning, which a moral agent ought to do with his self-interests. According to Giacalone and Promislo(2013), moral agents always have their obligations and interest towards helping others. Moreover, they always scarify their own interest for the sake of fulfilling other’s interests. On the other hand, Michaelsonet al. (2014) opined that the interests of moral agents are substantially equivalent to the interests and well-beings of others. Moral and ethical deliberations are occurred, when moral agents harm the interests and well-beings of others.
While assessing the cash stockpiling news of Apple, it can be seen that the organization has reserved 90% of overseas earnings in overseas markets (The Economic Times 2017). Moreover, the organization is not moving their overseas earnings back in US market. Moreover, the organization is not investing in the economy of the USA. In this way, the organization is not actually contributing the economic development of USA (BBC News 2017). Most of the money is invested in the foreign countries and developing the economy of those countries. In this way, the organization is harming the interest and well-being of its home country USA. Moreover, the cash stockpiling of the organization is actually causing ethical dilemma by harming the USA economy.
Conclusion
In conclusion, it can be said the cash stockpiling of Apple is staggering by avoiding the taxes in USA for its repatriated income. The organization is not willing to move its repatriated income back to its home country USA. The intension behind this practice is to avoid the complex tax code of USA. In this way, the tax avoidance practice of Apple is actually causing ethical dilemma in its business practice. Moreover, the organization is also not contributing properly in the development of US economy. Furthermore, most of the repatriated income of the organization is reserved in the Irish subsidiaries for getting tax avoidance provision. Donald Trump is encouraging the multinational organization to moving their overseas earnings back to US by cutting the tax rate.
Reference List
BBC News. 2017. Apple ‘among largest tax avoiders in US’ – Senate committee – BBC News. [online] Available at: https://www.bbc.com/news/business-22600984 [Accessed 7 May 2017].
Beets, S.D., Lewis, B.R. and Brower, H.H., 2016. The quality of business ethics journals: An assessment based on application. Business & Society, 55(2), pp.188-213.
Campbell, D. and Cowton, C.J., 2015. Method issues in business ethics research: finding credible answers to questions that matter. Business Ethics: A European Review, 24(S1), pp.S3-S10.
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business ethics: does social equal ethical?. Journal of Business Ethics, 133(4), pp.619-625.
Ethicalconsumer.org. 2017. Apple Inc – Anti-Social Finance. [online] Available at: https://www.ethicalconsumer.org/companystories.aspx?CompanyId=12944&CategoryId=288176 [Accessed 7 May 2017].
Giacalone, R.A. and Promislo, M.D., 2013. Broken when entering: The stigmatization of goodness and business ethics education. Academy of Management Learning & Education, 12(1), pp.86-101.
Grant, P., Arjoon, S. and McGhee, P., 2017. Reconciling Ethical Theory and Practice: Toward Developing a Business Ethics Pedagogical Model. Business and Professional Ethics Journal, 36(1), pp.41-65.
Michaelson, C., Pratt, M.G., Grant, A.M. and Dunn, C.P., 2014. Meaningful work: Connecting business ethics and organization studies. Journal of Business Ethics, 121(1), pp.77-90.
The Economic Times. 2017. Apple’s dilemma: What to do with $256 billion cash pile – The Economic Times. [online] Available at: https://economictimes.indiatimes.com/news/international/business/apples-dilemma-what-to-do-with-256-billion-cash-pile/articleshow/58491186.cms [Accessed 7 May 2017].
Titcomb, J. 2017. Apple’s cash reserves swell to $250bn. [online] The Telegraph. Available at: https://www.telegraph.co.uk/technology/2017/05/01/apples-cash-reserves-swell-250bn/ [Accessed 7 May 2017].
West, A., 2014. Ubuntu and business ethics: Problems, perspectives and prospects. Journal of Business Ethics, 121(1), pp.47-61.
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