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Write a 5–7-page paper in which you:

· Examine the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. (See attached Walmart Case Study)

. Provide one example of Walmart in an ethical situation.

· Determine the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

· Analyze three of the legal mandates that workers and the U.S. government have accused Walmart of violating.

. Provide an explanation as to why these legal mandates were violated, citing specific violations.

· Evaluate the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions.

. Provide a rationale for your response.

· Recommend two actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies.

. Provide a rationale for your recommendations.

· Use the attached Four books as references

· Please complete a heading for each individual criterion.

· Number all Pages

 

Unacceptable

Needs Improvement

Competent

Exemplary

Examine the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. Provide one example of Walmart in an ethical situation.

Points:

(0.00%)

Did not submit or incompletely examined the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. Did not submit or incompletely provided one example of Walmart in an ethical situation.

Points:

20.25 (13.50%)

Partially examined the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. Partially provided one example of Walmart in an ethical situation.

Points:

22.95 (15.30%)

Satisfactorily examined the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. Satisfactorily provided one example of Walmart in an ethical situation.

Points:

27 (18.00%)

Thoroughly examined the manner in which Walmart’s business philosophy has impacted its perception of being unethical toward supply and employee stakeholders. Thoroughly provided one example of Walmart in an ethical situation.

Determine the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

Points:

(0.00%)

Did not submit or incompletely determined the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

Points:

20.25 (13.50%)

Partially determined the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

Points:

22.95 (15.30%)

Satisfactorily determined the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

Points:

27 (18.00%)

Thoroughly determined the major effects that Walmart’s business philosophy has had on its human resource practices and policies.

Analyze two of the legal mandates that workers and the U.S. government have accused Walmart of violating. Provide an explanation as to why these legal mandates were violated, citing specific violations.

Points:

(0.00%)

Did not submit or incompletely analyzed two of the legal mandates that workers and U.S. government have accused Walmart of violating. Did not submit or incompletely provided an explanation as to why these legal mandates were violated, citing specific violations.

Points:

20.25 (13.50%)

Partially analyzed two of the legal mandates that workers and U.S. government have accused Walmart of violating. Partially provided an explanation as to why these legal mandates were violated, citing specific violations.

Points:

22.95 (15.30%)

Satisfactorily analyzed two of the legal mandates that workers and U.S. government have accused Walmart of violating. Satisfactorily provided an explanation as to why these legal mandates were violated, citing specific violations.

Points:

27 (18.00%)

Thoroughly analyzed two of the legal mandates that workers and U.S. government have accused Walmart of violating. Thoroughly provided an explanation as to why these legal mandates were violated, citing specific violations.

Evaluate the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions. Provide a rationale for your response.

Points:

(0.00%)

Did not submit or incompletely evaluated the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions. Did not submit or incompletely provided a rationale for your response.

Points:

20.25 (13.50%)

Partially evaluated the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions. Partially provided a rationale for your response.

Points:

22.95 (15.30%)

Satisfactorily evaluated the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions. Satisfactorily provided a rationale for your response.

Points:

27 (18.00%)

Thoroughly evaluated the efficiency of the structure of the ethical decision-making framework that Walmart has used in making its decisions. Thoroughly provided a rationale for your response.

Recommend three actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Provide a rationale for your recommendations.

Points:

(0.00%)

Did not submit or incompletely recommended two actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Did not submit or incompletely provided a rationale for your recommendations.

Points:

20.25 (13.50%)

Partially recommended two actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Partially provided a rationale for your recommendations.

Points:

22.95 (15.30%)

Satisfactorily recommended two actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Satisfactorily provided a rationale for your recommendations.

Points:

27 (18.00%)

Thoroughly recommended two actions that Walmart’s human resources department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Thoroughly provided a rationale for your recommendations.

Four references.

Points:

(0.00%)

No references provided.

Points:

5.625 (3.75%)

Does not meet the required number of references; some or all references are poor-quality choices.

Points:

6.375 (4.25%)

Meets number of required references; all references are high-quality choices.

Points:

7.5 (5.00%)

Exceeds number of required references; all references are high-quality choices.

Writing mechanics, grammar, and formatting.

Points:

(0.00%)

Serious and persistent errors in grammar, spelling, punctuation, or formatting.

Points:

5.625 (3.75%)

Partially free of errors in grammar, spelling, punctuation, or formatting.

Points:

6.375 (4.25%)

Mostly free of errors in grammar, spelling, punctuation, or formatting.

Points:

7.5 (5.00%)

Error free or almost error free grammar, spelling, punctuation, or formatting.

Rubric for Assignment 3 – Ethics and Compliance Challenges

Exit

Walmart Case Study:

Walmart Stores, Inc., is an icon of American business. With net sales of over $485 billion and more than 2.3 million employees, the world’s largest retailer and one of its largest public corporations must carefully manage many stakeholder relationships. Its stated mission is to help people save money and live better. Despite past controversies, Walmart has attempted to restore its image with an emphasis on diversity, charitable giving, support for nutrition, and sustainability. In fiscal year 2016, the company, along with its Walmart Foundation, donated $1.4 billion in cash and in-kind contributions. Walmart often tops the list of U.S. donors to charities. However, more recent issues such as bribery accusations and employee treatment have created significant ethics and compliance challenges that Walmart is addressing in its quest to become a socially responsible retailer.

7-2
History: The Growth of Walmart
The story of Walmart begins in 1962, when founder Sam Walton opened the first Walmart Discount Store in Rogers, Arkansas. Although its growth was initially slow, over the next 45 years the company expanded from a small chain to more than 11,500 facilities in 28 countries. Much of Walmart’s success can be attributed to its founder. A shrewd businessman, Walton believed in customer satisfaction and hard work. He convinced many of his associates to abide by the “10-foot rule,” whereby employees pledged that whenever a customer came within 10 feet of them, they would look the customer in the eye, greet him or her, and ask if he or she needed help with anything. Walton’s famous mantra, known as the “sundown rule,” was: “Why put off until tomorrow what you can do today?” Due to this staunch work ethic and dedication to customer care, Walmart claimed early on that a formal ethics program was unnecessary because the company had Mr. Walton’s ethics to follow.

In 2002 Walmart officially became the largest grocery chain, topping the Fortune 500 list for that year. Fortune magazine named Walmart the “most admired company in America” in 2003 and 2004. Although it has slipped since then, it remains within the top 50. In 2015 Fortune ranked Walmart the 42nd most admired company in the world.

7-2a
Effects on Competitive Stakeholders
Possibly the greatest complaint against Walmart is it puts other companies out of business. With its low prices, Walmart makes it harder for local stores to compete. Walmart is often accused of being responsible for the downward pressure on wages and benefits in towns where the company locates. Some businesses have filed lawsuits against Walmart, claiming the company uses unfair predatory pricing to put competing stores out of business. Walmart countered by defending its pricing, asserting that it is competing fairly and its purpose is to provide quality, low-cost products to the average consumer. Yet although Walmart has saved consumers millions of dollars and is a popular shopping spot for many, there is no denying that many competing stores go out of business once Walmart comes to town.

Walmart wages, decline by 5 percent after Walmart enters a new market. As a result, some activist groups and citizens have refused to allow Walmart to take up residence in their areas. This in turn brings up another social responsibility issue:

Introduction

With such tremendous success in profits and growth, it has also brought many challenges relating to ethical issues in regards to; off-the-clock-work, sexual discrimination, health benefits, the role of unions, use of illegal aliens, and issues relating to child and labor laws. It is the intent of this case study to identify the ethical issues Wal-Mart has faced, as well as discuss four questions of thought. Off-the-Clock-Work

From 2000 to 2007, Wal-Mart has been in court facing numerous lawsuits, in which they have paid out millions of dollars, for violation of laws surrounding non-payment of overtime compensation to its employees. Several employees claimed that managers required them to work off the clock by requiring them to work after punching out their timecard. If the employee refused to work after their shift and off the clock, then they would be threatened with termination of employment.

One of the many complaints includes the use of “lock-ins”. They stated, “Managers would lock the doors after the store had closed and would force the workers to stay in the store until all the work had been completed”. Employees were also told that if they could not complete their assigned work in their eight-hour shift, that they would have to remain at work, off the clock, until their work was complete.

It was evident that the managers had no respect or appreciation for the employees, who should have been valued as stakeholders that contributed to the success of the store. Sexual Discrimination In 2001, Wal-Mart faced a lawsuit with regards to sexual discrimination for not promoting women to managerial positions and for not paying them a wage equivalent to what the male employees were making. Some of the facts that supported the lawsuit include 65% of the hourly employees and 33% of the managers were women, and on average women received 6. % less in wages than their male counterparts received. One example of discrimination included a female employee being told that a man was promoted over her, who was qualified because the man had to support his family. Another example of discrimination was when a woman was told that a man was paid more because according to the Bible, Adam came before Eve. The managers involved in these and other sexual discrimination cases included in this lawsuit made poor ethical decisions by discriminating against its female employees.

In 2003 Wal-Mart’s policy of lower costs in every part of its operation was highlighted based on the type of health benefits that it offered to its employees”. New employees had to wait six months before being eligible for the health care benefit, and retirees were not allowed to keep their benefits. Wal-Mart’s payout for employee healthcare benefits in 2002, was 40% lower than the average that all companies in the U. S. were paying and 30% less than their competitive retailers (Stanwick & Stanwick, 2009). In an effort to keep health care costs down, Wal-Mart recommended to the board of directors that it should hire more part-time employees and try to discourage unhealthy employees by requiring all employee’s responsibilities to include some type of physical activity. It is evident that Wal-Mart’s board of directors and upper management were more concerned with profit than the welfare of the employees. The Role of the Unions

In an effort to keep low prices for its customers, Wal-Mart kept its labor costs low. There has been a constant battle between Wal-Mart and its employees, who wanted to create a union. The purpose of the union was to ensure that employees, who were members of the union, would receive a wage that was competitive to others in the workforce. In 2002 a comparison of wages for unionized workers and Wal-Mart employees showed that unionized Kroger employees would get four to five dollars an hour more than the Wal-Mart employees. It was discovered that Wal-Mart would discourage employees from forming unions, by firing those that promoted it. On the contrary, the Wal-Marts in China were allowed to have unions, as they received pressure from the All-China Federation of Trade. Unions were believed to be a part of the Chinese Communist Government. Use of Illegal Aliens, in an effort to keep their costs low every day for its customers, Wal-Mart used a campaign slogan of “Roll Back the Prices,” but again it came at the sacrifices of its employees.

Wal-Mart outsourced to third-party contractors to hire janitors to clean its stores after hours. To keep costs down, these third-party contractors, with Wal-Mart’s knowledge, hired illegal aliens to clean the stores after hours. This was discovered after federal agents, from the Immigration Service, raided sixty Wal-Mart stores in an operation called “Operation Rollback,” in 2003.

As a result of the raid, more than 250 illegal aliens were arrested, and Wal-Mart faced thirteen felony indictments and paid $5 million dollars in fines. Some of the illegal aliens also filed lawsuits that claimed they were forced to work every night and did not receive compensation for overtime. This was not only a violation of federal law, but it also showed a lack of the citizenship principle where every employee should respect the law.

Child and other Labor Laws From 2000-2005, Wal-Mart was faced with fines and lawsuits pertaining to violations of child and labor laws. It was identified by audits, that employees under the age of eighteen were working past midnight, working during school hours, and working more than eight hours a day. Discovered were employees under the age of eighteen operating machinery that was dangerous, which included chainsaws and cardboard balers (Stanwick & Also, exposed were employees who were not taking their breaks or given time off for a meal period.

Traditional violations of the reliability principle would include breaching a promise or contract or not fulfilling a promised action. An example of this is when Wal-Mart managers did not pay their employees for working overtime. Wal-Mart officials also stated that they did not feel women were interested in management positions at the company.

1 | P a g e

A System Approach to Implementing Business Ethics in

the Corporate Workplace

Clifton Clarke Department

of Finance and Business Management, Brooklyn College, City University of New York

[email protected]

Abstract

The current vitriolic discourse over the financial scandals implicating Wall Street and its satellite institutions

dictates a fresh look at strategies intended to eradicate or prevent unethical practices in business activities.

The spate of recently published unethical behavior among business executives in the United States confirms,

unequivocally, that past and current strategies have failed. This paper reviews and evaluates the impact of

some of these strategies. It found that the strategies focus on legislation, written corporate codes of ethics and

assorted activities in business schools. It found that these strategies are largely isolated and missed the fact

that unethical business conduct is systemic, reflecting the ethical lapses of two systems: a public system

(consisting of governmental bodies, business schools, and the general citizenry) and a corporate system

(consisting of boards of directors, executives, managers and employees). It found that there is a significant

gap between the rhetoric of corporate executives and their attention to unethical conduct in the workplace. It

concludes that isolated legislative actions, apathetic business schools’ policies, complacent and complicit

corporate boards, contribute to the failure. It also concludes that, the implementation of business ethics in the

workplace requires a transformation of attitude within and between these systems and posits that a system

approach is the only strategy that can successfully transform these systems and that business schools are

uniquely capable of leading this transformation.

Keywords

Ethics, corporate workplace, transformation, culture, business schools, legislations

Introduction

Hearings held by a subcommittee of the Banking and Finance Committee of the United States Senate on

certain practices of financial institutions, particularly those practices that might have contributed to the

economic collapse in 2008, revealed the disconnect between the public‟s and corporations‟ perceptions of

ethical conduct (Hauser 2010). Several of the questions posed to the Chief Executive Officer, and the

Executive Director of Structure Products Group Trading of Goldman Sachs Group, Inc., focused on the

company‟s ethics. For example, the senators wanted to know whether it was ethical for the company to sell

investments that its own trading team knew were “worthless”. In their defense, this and other questionable

practices were an integral part of their company‟s business model. Similarly, Morganton (2011), of the New

York Times reported that the former Chief Executive Officer of Countrywide Financial, then the largest

mortgage lender in the United States, knowingly developed and sold questionable loans. He reported that “E-

Mails and other documents supplied to regulators in the Security and Exchange Commission‟s ( S.E.C.‟s) case

against Mr. Mozilo showed him discussing the company‟s lending practices and describing some of its loans

as „toxic‟ and „poison‟. Nevertheless, the company kept selling the types of loans Mr. Mozilo was

denigrating”. For Mr. Mozilo the benefits of his action outweigh the cost, noting that “Countrywide was

helping to breakdown the racial and economic barriers to homeownership. This approach went a long way to

Page | 2

avoiding a serious social problem down the line” (Protests 2011). From the perspectives of these executives

their actions were well within the boundaries of the free market system, a view rejected by the general public

who saw the market ideology defense as a ruse to obfuscate their unethical, if not illegal practices. The

public‟s position is consistent with that of Gras (1939), who argues that exploitation is an abuse of the

capitalist system and is not inherent in the system itself. The contradictions alluded to are symptomatic of the

discord between normative and practical ethics. It is not surprising that the conduct in question has resurrected

the age-old debate over ethics, and in particular, business ethics and the role of business schools.

Context and Definitions

The advocacy for the integration of ethics into business and accounting education dates back many years. An

editorial in the Journal of Accountancy posited that “Ethics should be a subject of study for every accounting

student” (Journal of Accountancy 1953, p. 293). The American Accounting Association‟s Committee on

Future Structure, Content and Scope of Accounting Education recommended inter alia that accounting

education should provide students with the knowledge to “appreciate ethical standards and conduct” (The

Bedford Committee 1986, p. 179). The National Commission on Fraudulent Financial Reporting calls for

changes in accounting education to “. . . include ethics discussions in every accounting course” (The

Treadway Commission 1987, p. 83). Derek C. Bok, former president of Harvard University urged the

Harvard Business School to introduce ethics into their MBA curriculum (Bok 1983).

In 1982, The Wall Street

Journal reported on the proliferation of fraudulent and questionable financial reporting practices (Morris

1982). Recently, the highly publicized cases of fraudulent activities associated with the securities market and

financial accounting reporting and practices ( Bernard Madoff, Enron Corporation, The Galleon Group,

Primary Global Research, Arthur Andersen, WorldCom) to name a few, has fueled a chorus of demand for

ethical conduct from individuals in business. As the public looks for remedies to this seemingly corporate

cancer the question as to the role of corporate boards in stemming these behaviors in the workplace and the

role business schools in molding the character of their graduates grows louder and more pervasive. But the

precise actions expected from businesses and business schools have been evasive.

Philosophers and politicians have struggled with the concept of ethics for centuries with conflicting

conclusions on how to define and implement it. Theodore Roosevelt (1858-1919), 26
th
President of the United

State is reported to have said “To educate a man in mind and not in morals is to educate a menace to society”

(Roosevelt, n.d.) It is interesting to note that this was said in a period of U.S. history that is known for

„political discrimination‟, „economic exploitation‟ and „social segregation‟. And despite their campaign for a

just and moral society, Plato and Aristotle concurred that slavery was necessary for the success of their society

(Taeusch 1931). Likewise the literature is saturated with debates and discussions on the need to improve

ethics in business. Although there is a consensus that ethics should be at the core of business transactions,

there are chasms among the myriad of interpretations and applications. The inconsistencies alluded to above

reflect the challenge to wed general or normative ethics and situational or practical ethics. Critical questions

such as what is ethics, are there two ethics (business and personal), what role the extant culture plays in

decision-making, and what role can business schools effectively play in implementing ethics in the workplace,

have not been sufficiently answered.

A generally accepted definition of ethics is that it is the study of what is good and bad, right and wrong, just

and unjust. Others such as Kohlberg described it as moral judgment and argued that “the exercise of moral

judgment is a cognitive process” (Reimer et. al. 1983, p. 3). According to Cavanagh “ethics is a system of

moral principles and the methods for applying them; ethics thus provides tools to make moral judgments. It

encompasses the language, concepts, and models that enable an individual to effect moral decisions”

(Cavanagh 1984, p. 137). De George (1987) defines ethics as the study of morality and immorality. Kaviya

Page | 3

(2011) offers this explanation “ethics is the discipline dealing with that which is good and bad and with moral

duty and obligation. Business ethics is concerned with the behavior of a businessman in doing a business and .

. . developed by the passage of time and custom. Custom differs from one business to another”. Ethics, for

some executives, has more nuances. It is casuistry, a cost-benefit calculation based on whether their behavior

accrues benefits to their shareholders (Drucker 1983). This view point is consistent with the utilitarian theory

of ethics (Bentham 1789) and (Mill 1863). Obviously, civil rights (Locke 1690) and justice (Aristotle 1953)

are not factors in their decision set. These normative concepts are easily understood. The challenge is to

implement them in tangible ways, that is, to construct strategies which promote business creativity and

innovation, while simultaneously protect all stakeholders.

The interpretation and therefore implementation of ethical principles are further complicated by social

concerns. Since ethics involves the interaction among people, it functions in a social system, whether that

system is the general society or the workplace or both. A social system undergirds culture, which may be

defined as the values and ideology that influence decision-making. Values determine the basis on which

choices are made. An ideology is comprised of the integrated values in a social system. It provides purpose,

directions and identity to that system. Thus an ideology determines goals, strategies and reputation of a

system. The implication is that ethics is communicated through social systems. The ideologies and strategies

that government, corporations and business schools employ to combat unethical business conduct and their

results are evaluated against this backdrop.

Government and Ethics

The solutions for unethical business conduct have evaded both federal and states governments for decades.

The origin of governments‟ involvement in business ethics can be traced to the Sherman Anti-trust Law of

1890 (Taeusch 1931). The objective of that and subsequent laws is to prevent or to deter unethical conduct

“through strengthening systems and controls, and promoting transparency, accountability and informed

citizenry” (Chene 2010). The central features of major federal legislation discussed in this section illustrate

the extent of governments‟ anti-fraud interventions. These legislative actions may be divided into two

categories; those designed to protect consumers on the one hand and investors on the other. The Sherman

Anti-trust Act of 1890, and the Clayton Act of 1914, are among the first set of consumer protection

legislations (Taeusch 1931). The former aims to prevent restraint of interstate and foreign trade while the later

prohibits price discrimination in contracts and other agreements that restrict competition. The Foreign Corrupt

Practices Act (FCPA) of 1977 and revised in 1988 has anti-bribery prohibitions and accounting and record-

keeping requirements (Gaetti 1997). The anti-bribery prohibitions “make it illegal for U.S. persons to bribe a

foreign government official for the purpose of obtaining or retaining business” (Gaetti 1997). The record-

keeping provisions require publicly traded companies in the U.S. “to devise and maintain an accounting

system which tightly controls and accurately records all dispositions of company assets” (Gaetti 1997).

The

Credit Card Accountability Responsibility and Disclosure Act of 2009 (the Credit Card Act) prohibits

predatory practices in the credit card industry and confirms certain consumer rights (Detweiler 2009). The

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was enacted to protect both consumers

and investors. It, among other things, regulates transactions in products such as home mortgages, car loans,

credit cards and certain derivatives. The oversight of these legislations is distributed among a maze of

governmental agencies which oftentimes have overlapping objectives and contrary enforcement practices.

The securities markets are subject to the oversight of the Securities and Exchange Commission (SEC). The

purpose of the SEC is to protect investors and maintain market integrity. The online publication “How the

SEC Protects Investors, Maintains Market Integrity” discusses the main legislations in pursuit of this

objective. The Securities Act of 1933 requires publicly traded companies to register their securities and

Page | 4

accurately disclose financial and other information that will influence investors‟ decisions. It also prohibits

deceit, misrepresentations, and other fraud in the sale of securities. The Securities Exchange Act of 1934

regulates companies and individuals engaged in the sale and exchange of securities. It also authorizes the SEC

to require periodic reporting of information by companies with publicly traded securities. The Investment

Company Act of 1940 regulates the organization of companies engaged primarily in investing and trading in

securities offered to the investing public. The Investment Advisers Act of 1940 and amended 1996, with

certain exceptions, requires investment advisers to register with the SEC and comply with rules designed to

protect investors. Finally, the Sarbanes-Oxley Act of 2002, was enacted in response to the Enron, WorldCom

and other similarly high profile scandals. It, among other things, mandated several reforms to guard against

corporate and accounting fraud. Since 1991 the enforcement strategies have been augmented by the federal

sentencing guidelines designed to encourage ethical conduct in the workplace (Desio 2004). Despite these

strategies by government, unethical business conducts continues in various forms. The strategies employed by

corporations have produced no better results.

Corporate Culture and Ethics

The origin of unethical business practices is unknown. However there are events in history which indicate that

it is not a recent phenomenon. These events demonstrate that unethical behavior is not a victimless activity.

Unfortunately, it usually takes egregious incidents to expose the injury it inflicts on individuals and society.

One of the earliest reported incidents is in the Holy Bible (Mathew 21: 12), where it is reported that Jesus in a

rage directed mainly at the moneychangers (bankers), drove the merchants and moneychangers out of the

temple (Scripture Backdrops). The moneychangers were notorious for charging pilgrims exorbitant foreign

exchange rates and fees (Scripture Backdrops).

Taeusch (1931) opined that business ethics emerged at the

peak of the westward migration. He asserts that “from this time on, excess social, political, and economic

energies could no longer expend themselves on a virgin territory, but reacted more and more upon established

human communities. It is in such reflective situations that ethical considerations arise; and so they arose in our

economic life, first in the form of labor disturbances and agrarian readjustments, and later in the sharper

conflicts of business competition” (Taeusch 1931, p. 53). De George (1987) and Gras (1939) suggested that

attention to ethics in business has its origins in religious values; the expectation that one should be concerned

about the wellbeing of others.

While there may be a universal expectation of corporations to do what is good, right and just, the question

remains as to what is good or bad, right or wrong, just or unjust in business. Drucker and others have

expressed skepticism of the very idea of a business ethics. He asked, “. . . if there is indeed something that one

could call business ethics and could take seriously, what could it be?” (Drucker 1993, p.195). There are two

main theories of business ethics. One is the theory of moral unity which holds that business actions can be

judged by the general ethical standards of society (Steiner and Steiner, 1985). This point of view is consistent

with those of moralists such as F. H. Bradley (Ethical Studies, 1876), Edmond Cahn (The Moral Decision,

1955) and Aristotle (Ethics, 1953). But moralists do allow for unethical behavior in “extenuating” and

“aggravating” circumstances based on social and cultural mores. For example, they accept that a poor widow

who stole bread to feed her starving children should receive clemency. In Nicomachean Ethics, Aristotle

suggests that unethical behavior caused by ignorance and incapacity to perform an action should be excused.

As Gras (1939) observed, “Unhappy lies the head of the moralist, for he must try to fit parts that do not

match” (Gras, 1939, p. 315).

Another school of thought, the amoral theory, argues that business activity is amoral and so decisions should

be based solely on considerations of economic self-interest (Steiner & Steiner 1985). This economic theory

and its contaminant business practices flourished in the nascent period of capitalism under the doctrine of

Page | 5

Social Darwinism (survival of the fittest) and laissez-faire economics. This doctrine underpins the philosophy

of Adam Smith (1904) and others who believe that the common good is best achieved by individual pursuit of

their self-interest. This line of thinking is the central tenet of corporations‟ practices. The financial crisis of the

U.S. in the 1930‟s and the subsequent intervention of the federal government in the economy (the New Deal)

at least modified the scope of business autonomy and thereby the behavior of individuals in business. The

resurrection of the doctrine of „survival of the fittest‟ saw a resurgence of business practices that are obviously

not good, not right and not just. Some of the purveyors of these practices have been prosecuted. Others such

as those associated with certain practices related to subprime mortgages and credit swaps and the subsequent

collapse of the housing market are being investigated. Both the moral and amoral theories have some validity.

Groups of all kinds need a set of principles that guide the behavior of their members. But individuals must

have the space to create and innovate and to benefit from the fruits of their action.

Ultimately, ethics is practiced by individuals, and so it cannot be evaluated in a vacuum. The challenge

individuals face is how to apply general principles of ethics in the context of the situation that confront them.

A survey conducted by Merchant (1987) suggests the following reasons for the spate of fraudulent and

questionable financial reporting experienced then and which seem appropriate now:

1. Incentives and other inducements: rewarded by the 3P‟s – Pay, Promotion and Praise. They become

ends.

Managerial performance is measured in terms of results. Results are which justify means. “The

means-ends ethics” is often associated with the Italian political philosopher Niccolo Machiavelli. In

the Prince he wrote that worthwhile ends justify efficient means, that when ends are of overriding

importance or virtue, unscrupulous means may be employed to reach them.

2. Temptations:

The ineffectiveness or nonexistence of corporate controls to detect managers‟ deceptive practices

3. Lack of moral guidance and leadership from top management.

Merchant (1987) concluded that corporations could resolve these problems by using strong penalties for

violations, by using realistic performance targets, and by deemphasizing short-term goals. The implementation

of these suggestions may serve as deterrents for some employees, but they missed the salient point and that is,

unethical behavior is system induced and nurtured. A system will produce the best product it is designed to

produce, the saying goes. Corporate systems are designed to produce profits, first and foremost. If ethical

behavior generates profits, businesses will provide incentives and rewards to employees who adhere to ethical

standards.

A study of businesspeople by Baumhart shows that most believe a code of ethics would help them clarify their

own standards and decisions (Baumhart, 1961). In essence, business executives are not against the concept of

ethics and a large majority has developed written codes of conduct for their own firms. The struggle between

normative and practical interpretation of ethics is a challenge for business executives in a viciously

competitive world. They need successful models, that is, proven practices and processes that produce

measurable outcomes. Ethics, as a discipline, lacks these attributes and therefore it does not offer the

confidence executives need to plan. Planning is about the future. The future is a dark place and no executive

will enter there without some protection. It was probably in recognition of this vagueness that Blumenthal,

former chair of Burroughs Corporation and Bendix, and secretary of the United States Treasury, proposed the

establishment of a national code of business ethics among Chief Executive Officers (Blumenthal 1975).

It

was in the same vein that The Caterpillar Tractor Company developed and distributed its own code of conduct

Page | 6

to its managers worldwide (Caterpillar 1974).

These proposals were widely accepted as evidenced by the

growth in the number of firms that subsequently created ethics committees within their boards of directors

(Cavanagh 1984).

The number of firms with written codes conduct has grown since the 1970‟s. Kerin, et al (2007), estimated

that “80 percent of United States companies have some sort of ethics code and one of every five large

companies has corporate ethics officers “(Kerin et al. 2007, p. 84). However, the actions of some companies

could have been driven by the plethora damaging disclosures of unethical and illegal acts in which of some of

the largest American firms engaged during the 1970‟s (Ross 1980). Such conduct was not confined to

activities in the United States. According to Clinard & Yeager (1980), many corporations were implicated in

the practice of paying bribes to foreign officials. The growth in corporate ethics programs might also be

motivated by the 1991 Federal Sentencing Guidelines for Organizations (Joseph 2003). It provides for a

significant financial incentive to corporations who implement these guidelines. Programs that follow the

sentencing guidelines may receive a reduction of up to 95 percent in Federal Government fines (Desio 2004).

Regardless of the reasons companies develop codes of conduct; the evidence shows that their strategies are not

succeeding. As recent as April 2010 the U.S. Justice Department and the Security and Exchange Commission

were investigating whether Hewlett Packard Company executives paid millions of dollars (US) in bribery

money between 2004 and 2006 to the Prosecutor General of Russia to win a large contract to supply computer

equipment throughout Russia (Crawford 2010). More recently, Tyson Foods settled bribery charges with the

Justice Department (Neuman 2011). Surprisingly, or maybe not, there is no evidence that the executives of

the accused accompanies have ever conceded that their conduct was unethical.

Although these practices are reprehensible, they do not confirm that business executives are necessarily

unethical. Their priority is to maximize the wealth of their shareholders in a highly competitive environment.

This requires them to make assumptions about the future based on tested and proven models. Ethics is an

amorphous concept and is often discussed in normative rather than practical terms. For a short time ethics was

synonymous with social responsibility a concept embraced by business executives. However, it can also be

morphed into self-justification. Wright, quoting a former corporate executive wrote “the system of American

business often produces wrong, immoral and irresponsible decisions, even though the personal morality of the

people running the business is often above reproach” (Wright 1979, p. 61). This comment can be summed up

with this piece of cynicism: “An ambassador is an honest man, lying abroad for the good of his country”

(Wotton, n.d.). The case of the CEO of Galleon Group exemplifies this conundrum. The prosecution accused

him of knowing “tomorrows business news and traded on it” but his lawyer countered that he obtained

information through “shoe-leather research, diligence and hard work” (Lattman 2011). Bridgeport Education,

an online education company, is another example of normative versus practical ethics. The company obtains

86 percent of its revenue from the federal government. Its dropout rate ranges from 63 to 84 percent

depending on the degree program and they paid little attention to job placement, a crucial promise to students.

And, of their per student cost, $700 went to instruction, $2,700 went to recruiting and $1,500 went to profit.

Their justification for this perceived abuse of students was that they provide education at a lower cost to

taxpayers than public colleges (Lewin 2011).

Despite the heightened awareness, there is no noticeable impact on corporate unethical practices. A possible

reason is an absence of leadership on this issue among business executives. Leadership is reflected in the

perceived message from top management and not necessarily in a written code of conduct. The ethical tone set

by top executives should be the doctrine of the workplace, that is, every employee should be indoctrinated in

those values. The positive effects of indoctrination will outweigh any negative concerns. A review of surveys

conducted by the Ethics Resource Center (ERC) revealed a persistently significant gap between executives‟

rhetoric and their actions. The 2007 National Business Ethics Survey (NBES) survey shows that only one in

Page | 7

four companies has a well implemented ethics compliance program. Although The 2009 NBES survey found

that an ethical culture in the workplace is highly regarded and that there is awareness among executives that

financial fraud or other misconduct can be discovered before the damage shows up in financial reporting if

there is an ethical culture in the workplace, unethical conduct persists in corporations.

In the executive

summary of the 2000 NBES survey, the Ethics Resource Center reports that “one in eight employees feel

pressure to compromise their organizations‟ ethics standard.” According to the 2005 NBES survey, ethical

misconduct returned to the pre-Enron levels during 2005, and, as was in 2000 survey, one in eight employees

experience some form retaliation for reporting misconduct. More recently, the 2009 NBES survey reported an

increase in retaliation against those who reported misconduct in the workplace.

Studies conducted by Bolt-

Lee, Farber & Moehrle (2011)

, of among other things, whistleblowing in corporations found similar pattern of

retribution against auditors and employees. They found that the auditors who reported findings of fraud were

not rewarded. However there was an “approximately 50% probability that the whistleblowing auditor would

lose the account of the company involved in the irregularity”, and “82% of named whistleblowers alleged

they were either fired, forced to quit or demoted after blowing the whistle” (Bolt-Lee, Farber & Moehrle 2011,

p. 38). The 2009 NBES Supplemental Research Briefs found that “Actions – and Perceptions – of top

managers drive the ethical culture of the company and have a significant impact on outcomes” (NBES 2009,

p. 8). Such impact includes the prevention of the kinds of workplace behavior that can put a business at risk.

The 2009 NBES survey also found that “in a weaker ethical culture, employees observe more misconduct”

(NBES 2009, p. 16). These findings raise questions about the commitment of corporate executives to

implementing ethics in the workplace. Any positive response from corporate executives may be driven

primarily by mitigating factors against punishment rather than concerns about social responsibility. Clearly,

corporate culture or what Sonenshein characterized as thick or organization moralities (Sonenshein 2005), is

the primary determinant of the degree of ethical behavior in the workplace.

Corporations are living organisms. They have culture, leadership and emotion. They experience desperation,

depression, denial, hope, and fear (Foster & Kaplan 2001). Most of all they have mental models. These are

“the core concepts of the corporation, the beliefs and assumptions, the cause-and-effect relationships, the

guidelines for interpreting language and signals, the stories repeated within the corporate walls” (Foster &

Kaplan 2001, p. 18). Corporate systems are built on mental models, some of which have produced less than

virtuous results. Mental models are invisible, implicit, yet real, enduring and omnipresent. It develops and

nurtures interrelationships and interdependence. The workplace is an ecosystem and as with other ecosystems

adaptation is imperative for the survival of its members and the system itself. System thinking is pervasive,

that is, the view that an organization is effected by what happens to the parts. It encourages cohesiveness,

positively or negatively, among employees. Senge defines system thinking as “the discipline that integrates the

disciplines (personal mastery, mental models, building shared vision, team learning), fusing them into a

coherent body of theory and practice” (Senge 1990, p. 12). A corporation is also a learning organization “a

place where people are continually discovering how they create reality and how to change it” (Senge 1990, p.

13). People in the workplace slide between two realities, namely, personal culture and the culture of the

workplace. The decisions they make may be based on moral or amoral principles. It depends on the corporate

culture and by extension, corporate boards.

Corporate boards of directors have a crucial role in the quest to eradicate unethical business practices. The

boards of directors are the official management of corporations. It is at this level that the ideology and

message regarding ethical standards should emanate as do all other policies and strategies of the corporation.

According to Gras (1939), “Business ethics is the reservoir of clear water which may be drawn upon to build

the codes of industry. It is a lake upon which the individual firm can sail its ship into the harbor of Good

Policy” (Gras 1939, p.310). Although investors sometimes chided directors for the under-performance of their

corporation, they usually escape punishment for the unethical behavior of their executives. This breeds

Page | 8

complacency and contempt for ethical issues. The SEC‟s suit against the directors of DHB Industries might

represent a change in this practice. The SEC accused three ex-board members of DHB Industries of “willful

blindness”, alleging that they turned a blind eye while the company sold defective armor to the military and

law enforcement agencies (Norris 2011). This action was welcome by investors and members of the legal and

enforcement communities, but a more proactive approach might have avoided the suffering meted out to the

victims of this alleged fraud. The SEC‟s charges signals that board members must become proactive on

matters of ethics because they may be held accountable for the malfeasances of their executives. Business

schools have the ability and capacity to assist corporate executives with their ethical challenges.

Business Schools and Ethics

The role of business schools in the moral development of their graduates is not settled. It is reasonable to

assume that most, if not all students, have some notion of what is good and bad, right and wrong, just and

unjust in the abstract. The purpose of business schools is to provide their graduates with among other skills,

critical thinking. Teaching is a process which results in the voluntary modification of the behavior or thought

of others. In so doing it should produce critical thinkers. “Good teachers produce skeptics who ask their own

questions and find their own answers” (Ackoff & Addison 2007, p. xi). Ethics is a diffused discipline and by

extension business ethics is an undefined body of knowledge. Therefore, the application of ethics is invariably

the product of critical thinking, which is influenced by the environment in which the decision is being made.

Subjectivity often trumps objectivity in crucial circumstances, therefore a set of rules must be available for

reference at all times. The workplace is highly competitive and corporate culture, directly or indirectly,

provides the weapons used in this combative environment. It is where the feedback loop of performance and

reward is established, evaluated and controlled. Against this backdrop, business schools should not be

expected to teach their graduates to unilaterally disarm. This could lead to career suicide. As Machiavelli

observed, “it is not reasonable to suppose . . . that any unarmed man will remain safe among armed servants”

(Buskirk 1974, p. 40). Business schools can and should create awareness. But such knowledge is impotent or

at best a blunt instrument in an unethical culture.

Business schools provide ethics education through various means. In addition to course materials they have

encouraged ethical behavior among their graduates through honor societies and other means. Professor Nitin

Nohria (who became Dean of Harvard Business School in May 2010), has been actively promoting business

ethics for more than two decades. He has been leading the crusade to adopt an MBA Oath. The Oath is a

voluntary pledge for graduating and current MBAs to “create value responsibly and ethically.” MBA students,

graduates and advisors representing over 250 business schools worldwide, the Aspen Institute and the

Economic Forum are participating in this Oath (The MBA Oath). There is nothing new about professional

and organizational Oaths. The Hippocratic Oath, Thunderbird‟s Oath of Honor and the Columbia Business

School‟s Honor Code are notable examples. These activities are necessary but are obviously insufficient to

prevent unethical behavior by their graduates. Therefore, business schools must become more innovative if

they are to remain credible in the quest for solutions to this scourge.

Conclusion

The need for a more ethical workplace is no longer debated. It is also a demonstrable fact that there is a

colossal failure of the current strategies employed to control unethical conduct in the workplace. Laws have

been enacted, codes have been written, oaths have been taken and pledges have been made but they all fell

short of their objectives. The federal government has tacitly admitted the failure of the legislative approach by

its resorting to a cooperative posture through the sentencing guidelines developed by the United States

Sentencing Commission. One is not sure of the extent to which a business school can influence the ethical

Page | 9

behavior of their graduates but they can help corporations. One of the main reasons the strategies fail is that

there is a lack of meaningful collaboration among business schools and corporate boards. The justification for

their collaboration is self-evident. Firstly, there is a natural link between the two institutions, the responsibility

to protect the public interest. Secondly, there is a need to bridge the divide between normative ethics as taught

by business schools and the ethical challenges that confront corporations. This presents a unique opportunity

for business schools to take a leading role in ameliorating this intractable problem. Business schools can

begin to demonstrate their commitment to developing ethical corporate workplaces by establishing direct

contact with corporate boards and by hiring faculty who are business ethicists and avail their services to

corporations. These are faculty who appreciate the concerns of business executives, understand how

corporations work, and are dedicated to protecting the interest of the public.

Corporate boards of directors can reciprocate by appointing a member whose sole responsibility is to develop,

monitor and enforce ethical standards in the workplace. This member would be required as a matter of

corporate policy to establish consultative relationships with ethics faculty at business schools. Parenthetically,

the new posture of the SEC might encourage this direction. The relationship will facilitate the flow of ideas

and best practices between business schools and corporations. It will also intersect the application of

normative and practical ethics. It is essential because ethical questions usually arise at the margin. For

example, a discussion may occur on issues of disclosure; what should be disclosed, to whom it should be

disclosed, and when it should be disclosed. Taken separately or in any combination, the response to these

questions can have significant financial and public relations consequences. The notion of corporations

obtaining external opinions is not new. They routinely seek the advice of external professionals such as

lawyers. While corporate executives may be impaired by parochial ideologies, independent business ethicists

would not be restrained by such handicaps, thus allowing for better decisions.

Clearly, the engagement and cooperation between business schools and corporate boards at a level that matters

can transform attitudes, policies and practices within the public and private systems. The nature of the problem

requires coordinated solutions. And a system approach is the only strategy that can provide these solutions.

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individual use.

EXTENDING THEORY THROUGH EXPERIENCE: A FRAMEWORK FOR BUSINESS
ETHICS FROM YOGA

PATRICIA DOYLE CORNER

Faculty of Business
Auckland University of Technology

Auckland, New Zealand, 1010

ABSTRACT

The relationship between workplace spirituality and business ethics is extended by
integrating the “yamas”, yoga’s guidelines for social interaction, with existing literature. I
developed a theoretical framework that depicts relationships between spirituality and business
ethics suggested by this integration.

INTRODUCTION

A theme emerging in the management literature is that workplace spirituality and business
ethics are inextricably intertwined. However, existing research on this topic is predominantly
theoretical (Jurkiewicz & Giacalone, 2004). Its application in real world organizations thus is
limited despite the fact that conceptual treatments of workplace spirituality and ethics are thought
provoking and begin to do what theory should do — suggest plausible connections and
relationships not yet glimpsed (Van Maanen et al., 2007). But, conceptualization needs to be
matched with experience or empirical data in order to prevent theories from being remote from
the phenomenon they intend to describe (Van de Ven & Johnson, 2006). The purpose of this
paper is to provide an experiential framework as a basis for workplace spirituality thereby
extending the theoretical research in this area into the realm of practice. The framework is from
an ancient eastern spiritual tradition, yoga, and provides five practices that organization members
enact in order to initiate and harmonize social connections and interactions. The Sanskrit word
for these practices is yamas and they also provide a means for the practitioner to consciously
witness or experience their own beliefs about and reactions to social interactions and connections.

WORKPLACE SPIRITUALITY AND BUSINESS ETHICS

Workplace spirituality is most often defined as workers seeking connectedness in their

work community and exploring their inner selves (Ashmos & Duchan, 2000, Gull and Doh,
2004). Researchers suggest that workplace spirituality and business ethics may be linked but
they have only begun to consider what this linkage is and how it may unfold. Gull and Doh
(2004) say that workplace spirituality helps stimulate the moral imaginations of its members who
have to deal with thorny ethical issues. Stimulated moral imaginations are thought to lead to
more ethical decisions being made regarding such thorny issues. Jackson (1999) states
spirituality in organizations provides a basis for ethics by creating a depth of understanding that
deepens a person’s sense of morality which then leads to more ethical behavior and decision
making. Contributing to this discussion, the yamas provide a set of practices to enhance
awareness of connectedness with others and with the broader social environment. These
practices thus provide a useful framework to introduce experiential ideas to this theoretical notion
of connectedness that is so strongly communicated in the literature on workplace spirituality.

YOGA AS PHILOSOPHY

The word yoga in Western cultures conjures up images of physical postures for relaxing

and limbering up the body. However, the postures are a very small part of the ancient philosophy
and science that is yoga and interestingly, the postures are a relatively recent addition to the
plethora of practices that constitutes this spiritual tradition. More ancient practices include
meditation, mantra, chanting, codes for behavior, prescriptions for bodily cleanliness and
acquisition of knowledge — literally thousands of practices. The idea is that an individual,
through the sustained practices of yoga, can transcend their personal likes and dislikes, pains and
pleasures, successes and failures in order to achieve a permanent state of peace, joy, and selfless
dedication to humanity (Satchidananda, 2004). This transformation is described by some masters
as evolution wherein individual consciousness is transcended and merged with universal
consciousness (Niranjanananda, 2002). Yoga offers a scientific approach for acquiring the mental
discipline for controlling patterns of consciousness and achieving this transcendence
(Satyananda, 1976). This yogic view of the human mind echoes Steingard’s (2005) view wherein
the mind obfuscates a whole spectrum of human consciousness and spiritual potential.

Yoga has a few texts that articulate its basic tenets. Arguably, one of the most important
is the Yoga Sutras authored by the sage Patanjali. In English this title might be best translated as
“Verses on Yoga” but the Sanskrit word “sutra” literally means thread. The Yoga Sutras thus are
196 verses that “thread” together the entire philosophy of yoga, according to Patanjali. The
writing of the Yoga Sutras cannot be exactly determined but it is believed to be between 3,000
and 5,000 years ago. Patanjali presents an eightfold path of yoga within his sutras; consisting of
eight general categories of yogic practices that an individual can perform to, ultimately, transcend
individual consciousness and merge with universal consciousness. It is the first category of
practices, known as the yamas, which are the focus of the present manuscript. The yamas are 5 in
number and are designed to harmonize a person’s social interactions. Harmonized relationships
are needed because any discordance here disturbs the mind (Satyananda, 1976).

YAMAS AND BUSINESS ETHICS

The yamas are 5 practices whereby social interactions can be harmonized so that a
person’s actions towards others are consistent with the intrinsic “good” qualities of human nature.
These practices are described in the below sections and must be enacted over a long time in order
for an individual to gain an in-depth awareness of the self (Satyananda, 1976). Even novice
practitioners however, will gain insight into subconscious patterns that are driving their behavior
and shaping social interactions. It is these small insights gathered over time that provide the in
depth self-awareness that is the realization of yoga. A table giving examples of how each yama
can be demonstrated in the workplace is available from the author upon request.

Ahimsa

The first practice is ahimsa, often translated into English as “non-violence” and it entails a

person having non-harmful intent in all actions. Ahmisa means absence of enmity towards other
people, loving other people for the potential that resides within them (Satyananda, 1976).
Practicing ahimsa can create ethical behavior in the workplace. An excellent example of a
business leader who practices ahimsa is G. Narayana, formerly the executive chairman of Excel

Industries Pvt. Ltd., India, a highly respected manufacturer of environmentally friendly bio-
pesticides and waste management processes. G. Narayana describes his leadership style as
reaching the hearts of others through love; avoiding hurting others (Pruzan & Mikkelsen, 2007).
Further, he speaks of always looking for the divine nature in others and working towards being
responsible toward that divine nature in people and all living beings (Pruzan & Mikkelsen, 2007).
His leadership style is clearly consistent with the first yama, ahimsa.

Satya

The second yama is satya or truth. Truth in what a person speaks is part of this but truth
is also what we know to be correct when the rationalizations of the mind are stripped away. This
practice of truth is encouraged for all interactions with others but is especially recommended for
uncovering and acknowledging any fears or needs in ourselves that may unconsciously shape our
interactions with others. This self-awareness aspect of satya seems particularly important to
include in a framework of workplace spirituality. Satya requires a person to understand his or her
personal desires and wants without the filter of personal ego or intellectual rationalization. In this
way the practitioner can begin to know her authentic self and change behavior away from ego
driven actions towards action more consistent with her intrinsic, positive nature. As a result, the
practitioner and work colleagues suffer less from the harm that ego driven behavior often creates.

Asteya

Asteya is most often translated as honesty but most literally and simply it means not
stealing others’ possessions. To practice asteya means to not cheat or manipulate for your own
gain (Vivekananda, 2005). Also, it extends to not justifying our cheating or dishonesty or that of
others through corporate rules/ policies that may allow us to do that or to hire expensive lawyers
to exploit loopholes in corporate rules or societal laws that may allow such justification.
Crucially for business, asteya means not stealing others’ ideas, inventions, or intellectual
property. Given the importance of “not stealing” in personal interactions in the workplace and in
relationships among businesses, asteya is a practice that extends our knowledge of what
constitutes spirituality in the workplace and functions as a guideline for business ethics.

Aparigraha

This yama is generally translated as non-possessiveness. Yoga texts warn us to avoid
becoming possessive not just of material goods but also of people in our lives, jobs, titles, roles,
social positions, beliefs, and behavior patterns. The practice of aparigraha does not prevent us
from caring for the people in our lives or taking care of our material possession but it cautions us
against addiction to these things. Over time aparigraha helps a person identify possessive
tendencies within the subconscious mind and draw these tendencies into consciousness where
they can be witnessed and gradually let go of. In this fashion possessive behavior diminishes.
Non-attachment to things is seen as a way to break down boundaries between the self and others,
thereby becoming more interconnected with co-workers in our lives (Kernochan et al., 2007).

Brahmacharya

The fifth and final yama is best translated as continence and can be thought of as
continence in “desire states” (Vivekananda, 2005). This yama is often narrowly thought of as
sexual continence but it is really broader and applies to all situations of emotional involvement,
not just sexual involvement. A person practicing bramacharya would show discretion and
discrimination in all activities leading to emotional involvement with others to avoid the stress
that can result from the multiplicity of emotional connections. Brahmacharya is similar to
practicing tough love on yourself; you may desire to flirt with your attractive colleague but you
realize the complications and potential misunderstandings it could create so you don’t.
Brahmacharya therefore serves as a contribution to literature on workplace spirituality in that it
provides a practice whereby a person can explore their inner desire states and, through the
avoidance of personal, emotional entanglements in the workplace can create appropriate,
enduring connections with co-workers.

YAMAS’ ROLE IN SPIRITUAL & ETHICAL BEHAVIOR

The discussion of the yamas provided the background from which I derived a theoretical

framework linking experiential practice to spiritual and ethical outcomes in organizations. This
framework is depicted in Figure 1 and represents an initial attempt at conceptualizing
relationships across these topics. The figure shows the key linkages that surfaced when
integrating the yamas with the workplace spirituality literature.

——————————-
insert Figure 1 about here
——————————-

Figure 1 shows human consciousness in the first box, separated into what yoga

philosophy sees as its components of consciousness, subconsciousness, and unconsciousness
(Satyananda, 1976; Vivekananda, 2005). The “C” at the apex of the triangle represents the
conscious mind or surface thought and perception about the world. It is this component of the
conscious mind that would inform the workplace behavior of the spiritually unaware person.
However, the second “behavior” box in the figure illustrates that a person can chose to enact the
yamas and have these practices influence his or her behavior. The yamas are illustrated in the
figure as behavior because they are practices that a spiritual aspirant enacts. In the absence of the
yamas, behavior is informed only by consciousness (surface thought and perception of outside
world) plus subconscious beliefs and patterns that a person remains unaware of.

Following through the figure, behavior then produces spiritual outcomes. The spiritual
outcomes included in the figure are the two most common elements of workplace spirituality
expressed in the literature: feeling a connectedness with others and expanded self-awareness
(Ashmos & Duchan, 2000; Gull & Doh, 2004). The arrow connecting the behavior box to the
spiritual outcomes box suggests that behavior does influence the level of spirituality in any
individual. In general, I contend that a person practicing the yamas would increase their feeling
of connectedness to others and similarly, expand their self awareness.

According to the figure, spiritual outcomes inform human consciousness (see feedback
loop in Figure 1). This relationship was alluded to in the discussion of the yamas when I
indicated that the practice of asteya (honesty, not stealing from others) leads people to understand
that their previous acquisitive behavior came from insecurities buried at the subconscious level.
However, consciousness has now expanded to include this knowledge of insecurities which was

previously reflected in the subconscious only. This new conscious knowledge can be used to
inform future behavior. The arrow within the human consciousness box depicts this evolution or
expansion of consciousness. According to yoga and other spiritual traditions, as self awareness
and connectedness increase, a person’s consciousness grows so that it includes knowledge that
was previously hidden from view in the subconscious.

Also, enhanced spirituality improves ethical outcomes as shown in Figure 1 (see arrow
connecting spiritual outcomes and ethical outcomes). This general relationship has been
articulated in the workplace spirituality literature but specific spiritual constructs that may
interact with particular ethical outcomes are scarce (Sheep, 2006). The framework thus includes
the two most common spiritual elements identified across the workplace spirituality literature in
the third box in the figure. Further, I extrapolated ethical outcomes from the business ethics/
workplace spirituality literature to include in the fourth box. These include: understanding of
ethical problems (Gull & Doh, 2004; Jackson, 1999), creativity in ethical decision making (Gull
& Doh, 2004), and ability to envision outcomes beyond the self (Jackson, 1999; Neck &
Milliman, 1994; Mitroff, 2003). Tables that state specific propositions that can be tested from the
presented framework are available from the author on request.

CONCLUSION

The further exploration of the relationships hypothesized is important for the field of
management for two reasons. First, evidence accumulates showing that workers wish to be free
to express their spiritual side in the workplace (Mitroff, 2003, Sheep, 2006). Workplace
spirituality thus is a fact of organizational life and management researchers can help illuminate
this phenomenon that managers increasingly have to deal with. Second, the link between
workplace spirituality and business ethics appears poised to make a valuable contribution to
emerging notions of success in management theory. Success is no longer seen as economic
sustainability but also as social and environmental sustainability. I contend that research on the
relationship between workplace spirituality and business ethics can extend our understanding of
social sustainability and thereby enrich management theory and practice for the 21st century.

REFERENCES

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of Management Inquiry, 9: 134-145.

Gull, G. & Doh, J. 2004. The “transmutation” of the organization: Toward a more spiritual

workplace. Journal of Management Inquiry, 13: 128-139.

Jackson, K. 1999. Spirituality as a foundation for freedom and creative imagination in

international business ethics. Journal of Business Ethics, 19:61-70.

Jurkiewicz, C., & Giacalone, R. 2004.A values framework for measuring the impact of workplace

spirituality on organizational performance.Journal of Business Ethics,49: 129-142.

Kernochan, R., McCormick, D., & White, J. 2007. Spirituality and the management teacher.

Journal of Management Inquiry, 16(1): 61-75.

Mitroff, I. 2003. Do not promise religion under the guise of spirituality.Organization,10:375-
382.

Neck, C. & Milliman, J. 1994. Thought self-leadership: Finding spiritual fulfilment in

Organizational Life. Journal of Managerial Psychology, 9: 9-16.

Niranjanananda, S. 2002. Yoga Darshan: Vision of the Yoga Upanishads. Munger,India:Yoga

Publications Trust.

Pruzan, P.&Mikkelsen, K. 2007.Leading from a spiritual basis.Asian Management

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Satchidananda, S. 2004. The Yoga Sutras of Patanjali.Virginia,USA:Integral Yoga Publications.

Satyananda, S. 1976. Four Chapters On Freedom: Commentary on the Yoga Sutras of

Patanjali. Munger, India: Yoga Publications Trust.

Sheep, M. 2006. Nuturing the whole person: The ethics of workplace spirituality in a society of

organizations. Journal of Business Ethics, 66: 357-375.

Steingard, D. 2005. Spiritually-informed management theory: toward profound possibilities for

inquiry and transformation. Journal of Management Inquiry, 14: 227-241.

Van de Ven, A. & Johnson, P. 2006. Knowledge for theory and practice. Academy of

Management Review, 31: 802-821.

Van Maanen, J., Sorensen, J., & Mitchell, T. 2007. The interplay between theory and method.

Academy of Management Review, 32: 1145-1154.

Vivekananda, R. 2005. Practical Yoga Psychology. Bihar, India: Yoga Publications Trust.

Figure 1: Yamas ’ Role in Generating Spiritual and Ethical Workplace

Behavior

Sub-

conscious

C*

Behavior
Spiritual

Outcomes
Ethical Outcomes Human

Consciousness

Yamas

Workplace

Behavior

Connectedness

with others

Self

awareness

Understanding

of Ethical

Problems

Creativity in

Ethical decision

making

Ability to envision

outcomes beyond

self.

*C signifies consciousness that can expand as ego -driven patterns and beliefs are surfaced

from the subconscious into the conscious.

Unconscious

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AN: 945913 ; Zgheib, Philippe.; Business Ethics and Diversity in the Modern Workplace
Account: strayer

Business Ethics and
Diversity in the Modern
Workplace

Philippe W. Zgheib
Lebanese American University, Lebanon

A volume in the Advances in Human Resources
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Table of Contents



Foreword……………………………………………………………………………………………………………………………xiii

Preface……………………………………………………………………………………………………………………………….. xv

Acknowledgment………………………………………………………………………………………………………………xxiii

Introduction…………………………………………………………………………………………………………………….. xxiv

Section 1
Macro Ethics of Social Welfare

Chapter 1
EthicsPerception:LearningandTeachingofEthics…………………………………………………………………… 1

INTRODUCTION………………………………………………………………………………………………………………………………………….1
BACKGROUND:CANETHICSBETAUGHTORLEARNED?………………………………………………………………………..2
AMPLIFYINGTHENEEDFORETHICS………………………………………………………………………………………………………..3
BEHAVINGETHICALLYINATTAININGBUSINESSOBJECTIVES………………………………………………………………4
FORMALBUSINESSETHICSEDUCATION………………………………………………………………………………………………….6
DEBATINGANDDECISIONMAKINGINBUSINESSETHICS………………………………………………………………………9
FUTURETRENDS………………………………………………………………………………………………………………………………………11
CONCLUSION…………………………………………………………………………………………………………………………………………….11

Chapter 2
Utility,Duty,Morality,andJustice…………………………………………………………………………………………. 16

INTRODUCTION………………………………………………………………………………………………………………………………………..16
BACKGROUND:SIMPLEPLEASURESANDPAINS……………………………………………………………………………………16
PHILOSOPHYOFUTILITY:CONSEQUENCESOFBEHAVIOR…………………………………………………………………..17
PHILOSOPHYOFDUTY:WILLINGNESSTODORIGHT……………………………………………………………………………19
PHILOSOPHYOFMORALITY:MORALABSOLUTESMUSTBELEARNED………………………………………………20
FUTURETRENDS………………………………………………………………………………………………………………………………………22

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Chapter 3
AbuseofPower……………………………………………………………………………………………………………………. 24

INTRODUCTION………………………………………………………………………………………………………………………………………..24
BACKGROUND…………………………………………………………………………………………………………………………………………..24
ABUSEOFPOWER:DEFINITIONANDDILEMMA…………………………………………………………………………………….24
GENERALHISTORY…………………………………………………………………………………………………………………………………..25
THEDILEMMASTORY(TRUTHVS.LOYALTY)………………………………………………………………………………………..27
DETAILS,DYNAMICS,ANDINTRICACIES………………………………………………………………………………………………..31
LESSONSLEARNED…………………………………………………………………………………………………………………………………..34
EXPERTOPINION………………………………………………………………………………………………………………………………………35
FUTURETRENDS………………………………………………………………………………………………………………………………………36
CONCLUSION…………………………………………………………………………………………………………………………………………….37

Chapter 4
SexualHarassmentLawsandTheirImpactontheWorkEnvironment……………………………………….. 41

INTRODUCTION………………………………………………………………………………………………………………………………………..41
BACKGROUND…………………………………………………………………………………………………………………………………………..41
SEXUALHARASSMENTINTHEHEALTHSECTOR…………………………………………………………………………………..42
SEXUALHARASSMENTATWORKWORLDWIDE:STATISTICSFROMTHEU.S.……………………………………..43
SEXUALHARASSMENTATWORK:STATISTICSINCANADA………………………………………………………………….43
SPECIFICBACKGROUND…………………………………………………………………………………………………………………………..43
INTRODUCTIONTOSEXUALHARASSMENTLAWS…………………………………………………………………………………44
IMPACTOFISSUINGSEXUALHARASSMENTLAWSONTHEWORKENVIRONMENT…………………………..45
DRAWBACKSOFSEXUALHARASSMENTLAWS……………………………………………………………………………………..46
SEXUALHARASSMENTBACKGROUND/HISTORYINLEBANON…………………………………………………………….47
THECASEOFONEAUTOMANUFACTURINGBUSINESS…………………………………………………………………………49
CONCRETEEXAMPLEORCASE……………………………………………………………………………………………………………….49
CONTRASTBETWEENCONTEXTSANDREGULATIONS…………………………………………………………………………49
SOLUTIONSONHOWTOAVOIDTHENEGATIVEANDPROMOTETHEPOSITIVE………………………………….50
SEXUALHARASSMENTDILEMMA:TRUTHVS.LOYALTY……………………………………………………………………..51
CASE:SEXUALHARASSMENT………………………………………………………………………………………………………………….54
ACTUALRESOLUTION………………………………………………………………………………………………………………………………56
PROPOSEDRESOLUTION………………………………………………………………………………………………………………………….57
LESSONSLEARNED…………………………………………………………………………………………………………………………………..58
OPINION…………………………………………………………………………………………………………………………………………………….59
FUTURETRENDS………………………………………………………………………………………………………………………………………59
CONCLUSION…………………………………………………………………………………………………………………………………………….60

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Chapter 5
MonopolyAbuse………………………………………………………………………………………………………………….. 66

INTRODUCTION………………………………………………………………………………………………………………………………………..66
BACKGROUNDOFMONOPOLYPOWER…………………………………………………………………………………………………..67
DYNAMICSANDINTRICACIESOFMONOPOLY……………………………………………………………………………………….69
MONOPOLYBACKGROUNDINLEBANON……………………………………………………………………………………………….71
TELECOMMUNICATIONSSECTORINTHEARABWORLD………………………………………………………………………72
FUTURETRENDS………………………………………………………………………………………………………………………………………74
CONCLUSION…………………………………………………………………………………………………………………………………………….75

Chapter 6
TheEthicsofSocialMediaandNetworkSecurity:IssuesintheWorkplace………………………………… 79

INTRODUCTION………………………………………………………………………………………………………………………………………..79
BACKGROUND…………………………………………………………………………………………………………………………………………..79
STATEOFTHEART……………………………………………………………………………………………………………………………………80
SOCIALMEDIAINTHEWORKPLACE………………………………………………………………………………………………………84
FUTURETRENDS………………………………………………………………………………………………………………………………………85
CONCLUSION…………………………………………………………………………………………………………………………………………….86

Chapter 7
EnvironmentalPollution……………………………………………………………………………………………………….. 91

INTRODUCTION………………………………………………………………………………………………………………………………………..91
BACKGROUND…………………………………………………………………………………………………………………………………………..92
DEFINITIONOFPOLLUTION…………………………………………………………………………………………………………………….92
TYPESOFPOLLUTION………………………………………………………………………………………………………………………………94
THEETHICSOFENVIRONMENTALPROTECTIONANDTHECOSTSOFPOLLUTIONCONTROL……………94
FUTURETRENDS………………………………………………………………………………………………………………………………………95
CONCLUSION…………………………………………………………………………………………………………………………………………….95

Chapter 8
ClimateChange:GlobalWarmingMitigationorAdaptation……………………………………………………. 100

INTRODUCTION………………………………………………………………………………………………………………………………………100
BACKGROUND…………………………………………………………………………………………………………………………………………100
RESPONSIBILITYANDSTALEMATE……………………………………………………………………………………………………….103
LOGFRAMEINDICATORS………………………………………………………………………………………………………………………..104
FINDINGSONMITIGATIONOFCLIMATECHANGE……………………………………………………………………………….104
RECOMMENDATIONS:IMPLEMENTATIONCHALLENGESANDOPPORTUNITIES……………………………….106
FUTURETRENDS…………………………………………………………………………………………………………………………………….106
CONCLUSION…………………………………………………………………………………………………………………………………………..107

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Chapter 9
TaxEvasion……………………………………………………………………………………………………………………….. 110

INTRODUCTION………………………………………………………………………………………………………………………………………110
BACKGROUND…………………………………………………………………………………………………………………………………………111
DEFINITION……………………………………………………………………………………………………………………………………………..111
TODAYINLEBANON……………………………………………………………………………………………………………………………….112
LESSONSLEARNED…………………………………………………………………………………………………………………………………114
FUTURETRENDS…………………………………………………………………………………………………………………………………….115
CONCLUSION…………………………………………………………………………………………………………………………………………..116

Chapter 10
MediaBias………………………………………………………………………………………………………………………… 118

INTRODUCTION………………………………………………………………………………………………………………………………………118
BACKGROUND…………………………………………………………………………………………………………………………………………119
DYNAMICSANDINTRICACIESOFMEDIABIAS…………………………………………………………………………………….122
COMPARATIVEEXAMPLE………………………………………………………………………………………………………………………123
LOCALREGIONALSTORY………………………………………………………………………………………………………………………125
FUTURETRENDS…………………………………………………………………………………………………………………………………….126
CONCLUSION…………………………………………………………………………………………………………………………………………..127

Section 2
Corporate Business Ethics

Chapter 11
CorporateSocialResponsibility…………………………………………………………………………………………… 132

INTRODUCTION………………………………………………………………………………………………………………………………………132
HOWCORPORATESOCIALRESPONSIBILITYISDEFINED……………………………………………………………………133
CORPORATESOCIALRESPONSIBILITY:RUNNINGAGREENCOMPANY…………………………………………….133
CSRSPECIFICBACKGROUND:ASPATIALCONTEXT……………………………………………………………………………134
CSRLEBANONCASE:BANKING……………………………………………………………………………………………………………..135
INTERNATIONALCASE:MNC…………………………………………………………………………………………………………………136
ACTUALRESOLUTION…………………………………………………………………………………………………………………………….136
PROPOSEDRESOLUTION………………………………………………………………………………………………………………………..137
LESSONS………………………………………………………………………………………………………………………………………………….137
FUTURETRENDS…………………………………………………………………………………………………………………………………….137
CONCLUSION…………………………………………………………………………………………………………………………………………..138

Chapter 12
NepotisminaFamilyBusiness…………………………………………………………………………………………….. 142

INTRODUCTION………………………………………………………………………………………………………………………………………142
BACKGROUND…………………………………………………………………………………………………………………………………………142
WILLNEPOTISMBEDESTRUCTIVEORPRODUCTIVEINYOURCOMPANY?……………………………………….144
WHYNEPOTISMISCONSIDEREDBADPRACTICEINBUSINESSCOMPANIES……………………………………..145

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ISNEPOTISMRELATEDTOSOCIALCULTURE?…………………………………………………………………………………….146
WHENNEPOTISMPAYSINSTEADOFHARDWORK………………………………………………………………………………146
FUTURETRENDS…………………………………………………………………………………………………………………………………….147
CONCLUSION…………………………………………………………………………………………………………………………………………..147

Chapter 13
WhistleBlowing………………………………………………………………………………………………………………… 152

INTRODUCTION………………………………………………………………………………………………………………………………………152
BACKGROUND…………………………………………………………………………………………………………………………………………152
DEFININGTHEMEANINGOFWHISTLEBLOWING………………………………………………………………………………..153
WHISTLEBLOWING:CURRENTDEBATEANDITSCONSENSUS…………………………………………………………..155
INTERPRETINGWHISTLEBLOWING:UNANSWEREDCONCERN………………………………………………………….155
LESSONSLEARNED…………………………………………………………………………………………………………………………………157
FUTURETRENDS…………………………………………………………………………………………………………………………………….158
CONCLUSION…………………………………………………………………………………………………………………………………………..158

Chapter 14
ToxicWasteDisposal………………………………………………………………………………………………………….. 162

INTRODUCTION………………………………………………………………………………………………………………………………………162
BACKGROUND…………………………………………………………………………………………………………………………………………163
CURRENTSTATE……………………………………………………………………………………………………………………………………..165
CAUSESOFINDUSTRIALPOLLUTION……………………………………………………………………………………………………166
TYPESANDIMPACTSOFINDUSTRIALPOLLUTION……………………………………………………………………………..167
ORIENTALCASESTUDY:INDUSTRIALESTATE,THAILAND…………………………………………………………………168
ENVIRONMENTALETHICS:LEBANON…………………………………………………………………………………………………..169
SOLUTIONSANDRECOMMENDATIONS………………………………………………………………………………………………..173
FUTURETRENDS…………………………………………………………………………………………………………………………………….174
CONCLUSION…………………………………………………………………………………………………………………………………………..174

Chapter 15
AdvertisingDeceit:ManipulationofInformation,FalseAdvertising,andPromotion…………………. 177

INTRODUCTION………………………………………………………………………………………………………………………………………177
BACKGROUND…………………………………………………………………………………………………………………………………………178
CURRENTRESEARCH……………………………………………………………………………………………………………………………..178
ISSUEDESCRIPTION……………………………………………………………………………………………………………………………….179
CALIFORNIAADVERTISINGREGULATION:HISTORYOFTHEUCL……………………………………………………..180
BACKGROUNDINLEBANON…………………………………………………………………………………………………………………..181
LOCATION,LOCATION,LOCATION!……………………………………………………………………………………………………….183
LESSONSLEARNED…………………………………………………………………………………………………………………………………186
FUTURETRENDS…………………………………………………………………………………………………………………………………….186
CONCLUSION…………………………………………………………………………………………………………………………………………..187

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Chapter 16
Plagiarism…………………………………………………………………………………………………………………………. 190

INTRODUCTION………………………………………………………………………………………………………………………………………190
BACKGROUND…………………………………………………………………………………………………………………………………………190
CURRENTDEBATEANDCONSENSUS……………………………………………………………………………………………………192
FUTURETRENDS…………………………………………………………………………………………………………………………………….192
CONCLUSION…………………………………………………………………………………………………………………………………………..193

Chapter 17
BriberyandCorruption……………………………………………………………………………………………………….. 196

INTRODUCTION………………………………………………………………………………………………………………………………………196
BACKGROUND…………………………………………………………………………………………………………………………………………197
ISBRIBERYLOCALORINTERNATIONAL?…………………………………………………………………………………………….200
ACTUALRESOLUTION…………………………………………………………………………………………………………………………….205
PROPOSEDRESOLUTION………………………………………………………………………………………………………………………..205
HOWTOAVOIDTHENEGATIVEANDPROMOTETHEPOSITIVE………………………………………………………….206
FUTURETRENDS…………………………………………………………………………………………………………………………………….207
CONCLUSION…………………………………………………………………………………………………………………………………………..208

Chapter 18
PiracyofIntellectualPropertyRightsandCopyrightInfringement…………………………………………… 211

INTRODUCTION………………………………………………………………………………………………………………………………………211
BACKGROUND…………………………………………………………………………………………………………………………………………212
DEFINITIONOFPIRACY………………………………………………………………………………………………………………………….213
FACTSANDFIGURES………………………………………………………………………………………………………………………………214
GENERALHISTORYOFPIRACY……………………………………………………………………………………………………………..216
GENERALDEFINITIONOFCOPYRIGHT…………………………………………………………………………………………………217
PIRACYINLEBANON………………………………………………………………………………………………………………………………218
COPYRIGHTINFRINGEMENT………………………………………………………………………………………………………………….218
INTERNATIONALCASEOFPIRACY:USA……………………………………………………………………………………………….222
POSSIBLESOLUTIONS…………………………………………………………………………………………………………………………….223
FUTURETRENDS…………………………………………………………………………………………………………………………………….224
CONCLUSION…………………………………………………………………………………………………………………………………………..225

Chapter 19
EthicalYielding…………………………………………………………………………………………………………………. 229

INTRODUCTION………………………………………………………………………………………………………………………………………229
BACKGROUND…………………………………………………………………………………………………………………………………………230
YIELDINGINSPORTSENTERTAINMENT……………………………………………………………………………………………….231
RESTAURANTYIELDING………………………………………………………………………………………………………………………..232
YIELDINGINAIRLINESECTOR………………………………………………………………………………………………………………232
YIELDINGINHOTELINDUSTRY…………………………………………………………………………………………………………….233
YIELDMANAGEMENT…………………………………………………………………………………………………………………………….234
FUTURETRENDS…………………………………………………………………………………………………………………………………….234

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Chapter 20
FinancialFraud:Embezzlement,PonziSchemes,andCreditFraud………………………………………….. 238

INTRODUCTION………………………………………………………………………………………………………………………………………238
BACKGROUND…………………………………………………………………………………………………………………………………………239
FINANCIALFRAUDAROUNDTHEWORLD……………………………………………………………………………………………240
FRAUD:UNDERTHEHAMMER………………………………………………………………………………………………………………242
THEPONZISCHEME………………………………………………………………………………………………………………………………..242
ANALYSISOFFINANCIALFRAUDINLEBANON……………………………………………………………………………………243
FUTURETRENDS…………………………………………………………………………………………………………………………………….246
CONCLUSION:SOLUTIONSTOPREVENTFINANCIALFRAUD……………………………………………………………..246

Chapter 21
ChildLabor……………………………………………………………………………………………………………………….. 250

INTRODUCTION………………………………………………………………………………………………………………………………………250
BACKGROUND…………………………………………………………………………………………………………………………………………251
CHILDLABOR………………………………………………………………………………………………………………………………………….251
LEBANESEBACKGROUND……………………………………………………………………………………………………………………..258
OPINIONS…………………………………………………………………………………………………………………………………………………261
LESSONSLEARNED…………………………………………………………………………………………………………………………………262
FUTURETRENDS…………………………………………………………………………………………………………………………………….262
CONCLUSION…………………………………………………………………………………………………………………………………………..263

Section 3
Country Applications and Case Studies

Chapter 22
OrganSelling:WhenItBecomesaBusiness………………………………………………………………………….. 268

INTRODUCTION………………………………………………………………………………………………………………………………………268
BACKGROUND…………………………………………………………………………………………………………………………………………269
STATE-OF-THE-ART…………………………………………………………………………………………………………………………………270
ORGANTHEFTINLEBANON…………………………………………………………………………………………………………………..272
ASTORYINTHEUS…………………………………………………………………………………………………………………………………272
ASTORYINLEBANON…………………………………………………………………………………………………………………………….273
LESSONSLEARNED…………………………………………………………………………………………………………………………………274
FUTURETRENDS…………………………………………………………………………………………………………………………………….275
CONCLUSION…………………………………………………………………………………………………………………………………………..275

Chapter 23
RealEstateValuationFraud…………………………………………………………………………………………………. 278

INTRODUCTION………………………………………………………………………………………………………………………………………278
BACKGROUND…………………………………………………………………………………………………………………………………………279
REALESTATEVALUATIONFRAUD…………………………………………………………………………………………………………280
INTERNATIONALCASEOFVALUATIONFRAUD……………………………………………………………………………………285
EXAMPLEFROMLEBANON……………………………………………………………………………………………………………………286
POSSIBLESOLUTIONS…………………………………………………………………………………………………………………………….287
FUTURETRENDS…………………………………………………………………………………………………………………………………….288

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Chapter 24
IllegalDrugsinLebanon:RecreationalorMedicinal…WhoIstheVictim?………………………………. 292

INTRODUCTION………………………………………………………………………………………………………………………………………292
DEFINITIONS……………………………………………………………………………………………………………………………………………293
GENERALBACKGROUNDOFRECREATIONALDRUGUSE……………………………………………………………………293
ILLEGALDRUGSINLEBANON……………………………………………………………………………………………………………….295
DEFINITIONOFPHARMACEUTICALSALES…………………………………………………………………………………………..299
PHARMACEUTICALSALESINLEBANON……………………………………………………………………………………………….299
ACTUALRESOLUTION…………………………………………………………………………………………………………………………….301
PROPOSEDRESOLUTION………………………………………………………………………………………………………………………..301
FUTURETRENDS…………………………………………………………………………………………………………………………………….302
CONCLUSION…………………………………………………………………………………………………………………………………………..303

Compilation of References………………………………………………………………………………………………… 306

About the Author……………………………………………………………………………………………………………… 323

Index………………………………………………………………………………………………………………………………… 324

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xiii

Foreword

Business ethics is a perennially controversial topic: Should it be a required course for business students?
Can ethical behavior be taught at all? Perhaps more fundamentally, what is business ethics? Does it
exist at all, or is it an oxymoron, like “jumbo shrimp” or “military intelligence”?

Since business ethics is a largely normative discipline, asking what decisions we should make in
difficult situations in our work lives, it is open to a great amount of disagreement and controversy.
Ethical decision-making is grounded in and conditioned by the contexts we find ourselves in, includ-
ing economic and organizational ones, but it is also guided by our philosophical beliefs concerning
what we owe others in society to whom we are not directly connected. Since these differ widely from
person to person, and even from society to society, there are bound to be important disagreements
concerning what is acceptable in commercial life.

On the other hand, there is widespread agreement that certain things are detrimental to society
as a whole and ought to be fought as much as possible. These include business and governmental
corruption, environmental degradation caused by industrial activity, exploiting vulnerable popula-
tions through fraud or force in order to make a profit, and sexual, racial, religious, and other forms of
group-based harassment in the workplace. While there may be disagreement on the larger philosophi-
cal level as to what ethical theory should govern human life, there is a great deal of agreement that
certain things are harmful or even shameful, and that, on the practical level at least, decent human
beings shouldn’t do them.

It may be best then to view business ethics as a discipline that explores the connection between
these wrong or harmful activities on which there is widespread agreement and the decisions made
by individuals that lead to them. The dominant ethical philosophies of utilitarianism, deontological
(Kantian) ethics, virtue ethics, and even the major religious traditions all have an important influence
on how we think about ethical dilemmas and problems in the workplace, and no business ethicist or
philosopher can offer definitive proof that one theoretical viewpoint has an exclusive right to govern
human action. Good business ethics teaching instead guides students through ethically problematic
situations to explore: firstly, why we feel something is wrong, and secondly, what sort of decisions
we think might lead to ethically better outcomes.

It is in this spirit that Professor Philippe Zgheib has written Business Ethics and Diversity in the
Modern Workplace. Professor Zgheib’s book covers a broad array of issues in contemporary business
ethics, from environmental ethics to corporate social responsibility to financial fraud, concluding with
an examination of topics of special concern to his home country, Lebanon. His contribution to the
business ethics literature draws on a wide range of sources, including the literary, philosophical, and
journalistic, as well as the more standard business ethics and management literature. He illuminates

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many of the most pressing issues that leaders in business, government, and academia are grappling
with in this time of economic uncertainty and fundamental social change, particularly for the students
who will soon be graduating from university classrooms to the “real world” of work and the task of
building successful lives in very challenging social conditions.

Steven McNamara
The American University of Beirut, Lebanon

Steven McNamara is a business law professor and an international entrepreneur. His business expertise spans many years of
practice of business law in the USA, and many more in academic business law and business ethics. He is currently serving as
assistant professor of business law and business ethics at the Olayan School of Business in the American University of Beirut.
He holds a PhD in Business Law from Boston College, and a professional postgraduate professional certification from Columbia
University. His latest business research interests include moral intuition in the structure of insider trading law, informational
failures in structured finance, and legal aspects of international entrepreneurial initiatives.

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Preface



OVERVIEW OF BUSINESS ETHICS

Thesocialresponsibilityofbusinessistomaximizeitsprofits.Underwhatconstraints?Whatinitial
conditions?Whatboundarylimitations?

Iftheobjectivefunctionofbusinessisprofitmaximization,thenbusinessethicsprovidestheframework
ofvalidityofbusinesspractice.Ancientphilosophy,aswellasmoderndeontology,providessufficient
lightontheethicalissuesfacingourmodernworldtoprovidehumansocietieswiththeiroptimalwelfare.

Yet,businessexcessesdrawlavishlyonimmoralityandonunfairnessinpursuitofhappiness,ofexcel-
lence,andofsuccess.Today’sbodyofscientificknowledgeisadvancedenoughthateverydaybusiness
decisionscansettleon-goingdilemmasinfullknowledgeofconsequences,ofcosts,andofbenefits.

Thisbookaimsatdissectingonebyone,asmanyoftoday’sethicaldilemmasaspossible,viewing
humanityasaglobalcommunityoperatinginthemodeofalocalvillage.Diversityistheessenceof
societyintoday’sworldofinstantaneouscommunications,inconstantfrenzyforspeed,andforlight.
Yetdarknessprevailsattimes….

HOW BUSINESS ETHICS FITS IN THE WORLD TODAY

Everysectorofbusinesspracticeoperateswithintheconfinesofthehumanmind.Areasofknowledge
include philosophy, religion, mathematics, communications, and biotics. Bankers, factories, airlines,
governments, all big and small, depend permanently on the uniqueness of the human spirit and the
individualityofthedecisionmaker.Algorithmsandsoftwareaboundinpursuitofautomateddecision
making,yeteverystakeholderisunique,everycaseisspecial,andeverymanagerisaleader.Thisbook
aimsatinstillingthesenseofautonomousdecisionmakinginthefaceofcomplexdilemmas.

Thebookfollowsasequenceofknowledgesynthesisinthreesections.Section1,“MacroEthicsof
SocialWelfare,”aimsatraisingtheissuesofteachingversuslearning,specificallyinthefieldsofmoral-
ity,duty,justice,andvirtue.Thissectioncontinuesontoaddressaggregateissuesofsocietalconcern:
pollution,sex,taxation,climate,media,andmonopoly.Section2,“CorporateBusinessEthics,”peelsthe
layersofeveryparticularareasofconcern:ananalyticalapproachisusedtoprobethedepthofillusions,
anddeceptionsintopicssuchasnepotismwhistle-blowing,deceit,plagiarism,bribery,piracy,fraud,
andchildlabor.Section3,“CountryApplicationsandCaseStudies,”offersparticularregardtoextreme
issuesofbusinessethicsaspracticedinoneparticularcountrywheremarketforcesarereminiscentof
thewildestjungle,whereextremeculturaldiversitymakeseverydaylivingaconstantlaboratorytest-

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Preface

ingofbusinessdilemmasinconstantlife-or-deathsituations.InLebanon,lifeissuchapassingillusion
thatissuesofdrugproduction,tradinginhumanorgans,andrealestatefraudcarryanextremelevelof
businesssignificance:marketforcesattheirwildestdancearoundthefrenziedblazeofbusinessprofits.

CHAPTER DESCRIPTIONS

Ethics Perception: Learning and Teaching of Ethics

Educationisoneofthemostconsistentandpowerfulcorrelatestothedevelopmentofmoraljudgment
inindividuals.Educationbuildstheoreticalandsomepracticalbasicsformakingmoreeffectiveethical
decisions.Educatorsinfluencestudentsintheirlearningaboutbusinessethics,butethicscanbecon-
sideredascontinuousknowledge,whichcouldbetaughtandlearnedinwaysdifferentfromteaching
traditionalsciences.However,teachingofethicsispossiblebecausetheaimistocreatecertainskills
andbuildthebasicsforpromisingwisethinkingforproperdecisionmaking.Buildingethicalaware-
nessinadiversesocietyimpliesbuildingawarenessinschoolsanduniversitiesbyhavingethicsasa
universityrequirement.Teachingofethicsmuststartfromearlyschoolstagesandmustengageparents
actively.Integrationofacodeofethicsinthecurriculumisbroughttolifebyaddressingreallifestories
ofunethicalbehavior.Thischapterexploresthelearningandteachingofethics.

Utility, Duty, Morality, and Justice

Utilityisthetheoryofthegreatesthappinesstoasmanypeopleaspossible.Theendjustifiesthemeans
whereconsequencesmatterandwhatmakestheactionmoralistheresult.Dutydeontologyimpliesthat
wearedoingagoodjobaslongaswearefollowingtherulesevenifitisagainstourwill.Itisourduty,
ourobligation,evensometimesleadingtopain.Allactionsanddecisionsshouldbeofagoodwillre-
gardlessoftheresults.Ontheotherhand,moralvirtueisacquiredbyhabitanddoesnotcomebynature.
Virtuerepresentsthemeanbetweenextremes.Therefore,moralvirtuehastodowithfeelingsfollowedby
actions,wherethemeanisnotalwaysthemiddleoftwooppositeextremes.Thischapterexploresutility.

Abuse of Power

Thepersonthatabusespowerfindshim-orherselffacingadilemma.Thatpersonmustchoosebetween
gainingbenefitsatthecostofharmingthepersontheyareabusingorself-restrainingtheirhandlingof
powerandavoidingharmtoothers,astheysacrificeanypossiblegainsorenduringareductioninper-
sonalbenefitsorevenoftentimesaloss.Fearofunemploymentmakesworkersgenerallywanttoprotect
their jobs and definitely avoid any confrontation with their boss, which may lead to enduring power
abuseinsilence.Theabuseofpowerpracticeiscommon,sincemanagershavetheopportunitytotake
advantageoftheirsubordinatesfortheirownbenefits.Whatreallyvariesisthelevelofacceptanceand
thetreatmentthatmustnormallyincludemeansandwaysofprotectionandpunishment.Thischapter
exploresabuseofpower.

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Preface

Sexual Harassment Laws and Their Impact on the Work Environment

Thischapterexaminestheimpactofsexualharassmentlawsinaworkenvironment.Differentcontexts
areexaminedwithdifferentsexualharassmentlaws.Themostvulnerableindividualsareidentified.The
particularcaseofLebanonisinspectedwherefewlawsregulatethismatter.Acomparisonisestablished
withtheUSA.LebanonandtheUnitedStateshaveadifferentviewofsexualharassment.InLebanon,
noclearlawsprotectwomen.Inaddition,LebanonismoretolerantthantheUnitedStates.Thediffer-
enceinculturesalsocontributesinpeople’swillingnesstodiscloseharassment.IntheUnitedStates,
peopleareusedtotheconceptofrightandajudicialsystemthatpreservesit.InLebanon,suchamatter
istaboo,andpeoplearediscouragedfromdisclosingtopreservetheirreputation.

Monopoly Abuse

Monopolyisthecasewhenafirmprovidesproductsorservicestowhichthereisneithercompetition
nor a near substitute, dictating price and quantity produced. Monopolies raise concerns of unethical
business practice because they perform acts of conspiracy and collusion. Consumers will be buying
neededproductsatunfairpricesandquestionablequalitystandards.Theinstrumentalapproachiswhen
acompanyperformsmonopolisticbehaviorinordertomaximizecompanyprofitsandsatisfycorporate
shareholders.Thesocialapproachiswhenacompanyseeksthegoodofthegreaterenvironment,look-
ingbeyondthebenefitofshareholders.Monopolisticbehaviormayprovidecertainpositiveadvantages
likehelpingexpanddifferentindustries,generatingalotofcapitalintothebusinesscycle,introducing
innovation,andbringingasolutiontosomemajoreconomicproblems.Disadvantagesofmonopolies
aremal-distributionofthesocialproduct,decreasedeconomicnationalgrowth,andincreasedunem-
ployment levels, blocking competitive markets, and lacking socio-economic efficiency. This chapter
exploresmonopolisticabuses.

The Ethics of Social Media and Network Security: Issues in the Workplace

Adefinitionofmodernsocialmedialeadstothecharacterizationofadvantagesanddisadvantagesof
socialmediaintheworkplace.Thecharacteristicsofsocialmediaare:reach,accessibility,immediacy,
andpermanenceparadox.Theextentofmediainvasionofprivacyisdiscussedinthischapter,andethical
dilemmasareraised.Socialnetworksareregardedasthemainreasonsforthedecreaseofproductivity
andotherunanticipatedconfidentialproblems,whichacompanymayface.Furthermore,theimplications
ofsecurityalertsleadtoadilemmabetweenindividualprivacyandcommoninterest.Differenttypesof
attacksmightinterferewithanexistingfunctionalnetwork.RelevantcurrentissuesinNetworkSecurity
include:authentication,integrity,confidentiality,non-repudiation,andauthorization.

Environmental Pollution

Environmentalethicsisthepartofethicsthatinspectsquestionsofmoralrightandwrongrelatingtothe
management,defense,orendangermentofthenaturalresourcesavailabletous.Environmentalethicsfalls
undertheuniversalethicstheory.Itdoesnotseemfairtopeoplefromthefuturethatweareconsuming

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Preface

theworld’sresourcesnowandleavingjustalittletothem,andthatwe’releavingtheworldpolluted
andinasituationworsethanitoncewas.Thiscanbeexplainedthroughthreedifferentperspectives:the
utilitarianperspective,thedeontologicalperspective,andourdutiestoothersbasedonourrights.This
chapterexploresenvironmentalethics.

Climate Change: Global Warming Mitigation or Adaptation

Growingeconomiesoflessadvancedcountriescarrypartofthemitigationloadofclimatechange.A
logicalframeworkanalysisidentifiestheeconomicimpactformitigationofclimatechangeinlessin-
dustrializedeconomieswhereclimateadaptationseemstoofferbetterprospectsoffeasibility.Financial
instrumentsareproposedwithindevelopmentofastrategicactionplaninmitigationofclimatechange.
Animplementablepolicymatrixisformulatedaccompaniedwithasetofperformanceindicatorsthatare
coherentwiththeactionplan.Challengesthatarespecifictogrowingeconomiesareidentified.Recom-
mendationsincludelessonslearnedandlimitationsofalternativerenewableenergysources.

Tax Evasion

Taxevasionisconsideredbytheinternationallawsanddomesticlawsofmostcountriesasaformof
fraud.Inmostcountries,agapexistsbetweentheexpectedtaxrevenuesandthetaxrevenuesthatare
actuallycollected.Thisgapisnaturallyduetotaxevasion.Understandingwhyindividualsandorganiza-
tionsevadetaxesisthefirststepinreducingtheaforementionedgap.Forataxationsystemtobewell
receivedandacceptedbyboththestateandthepublic,ithastobejustandfair,clearandprecise,and
takeintoconsiderationtheinterestofboththestateandthecitizen.Thischapterexplorestaxevasion.

Media Bias

Asolutiontowardsmediabiaswouldbequitehardsinceitissomehowpartofitsculture,butanattempt
canbemadebyallowingwatchdogNGOorganizationstoenforcethelawwhenabreachisinevidence.
Thenanyfinechargedshouldbegiventotheorganization.Thiswaytheorganizationismotivatedto
continuestrictandpropermonitoring.Anethicaldilemmasurfaceswhenitshouldneverhavearisenin
democraticsociety.Givethepeopletruthfulandfairaccountsofeventsandberegardedasnon-patriotic
ordefendthecountrywithanymeansortactics.Journalisticethicsismostsensitiveinsituationssuch
asthesewhendisagreementisseenasdisloyal.Thischapterexploresmediabias.

Corporate Social Responsibility

Theimpressionthatbusinessenterpriseshavesomedutiestowardsocietybeyondthatofmakingprofits
fortheownershasbeenaroundforcenturies,anditisstill,today,atthecoreofthebusinessethicsdebate.
Thesocialresponsibilityforabusinessistouseitsresourcesandengageinactivitiesdesignedtoincrease
itsprofitssolongasitstayswithintherulesofthegame,appealinginopenandfreecompetitionwithout
dishonestyorfraud.InordertoeffectivelycommunicateCSR,corporationsshouldbetransparent,use
third-party verification, remember the workers, explain their metrics, and be proactive. The benefits
ofCSRarecorporatereputationandenhancedbrandimage,earningandmaintainingsociallicenseto
operate,establishingreputationwithinvestors,reducingandmanagingbusinessrisks,competingfor

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Preface

accesstoresources,attractingandkeepingemployees,maintainingemployeemoraleandproductivity,
meeting changing stakeholder expectations, and eventually improving the bottom line. This chapter
explorescorporatesocialresponsibility.

Nepotism in a Family Business

Nepotisminbothitsbadandgoodscopesisnotmainlyaresultofnationalsocio-culturalvariances,nor
isittheoutcomeofaglobaldispersionofmoralsandstandardsacrossnations.Ratheritisaculturally
drivenbusinesspractice.Nepotismoccurswhentraditionalformsofinteractionarereplacedbymod-
ernformswithoutacorrespondingmodernsubstitutionfortraditionalsocialmorals.Forthesuccessful
useofnepotism,familymembersmustmeetcertainqualificationssuchasanappropriateeducational
backgroundandoutsideworkexperience.Outsideworkexperienceisthemostimportant.Inaddition,
corporationswhohirefamilymembersshouldinformthemthattheywillbefiredinthecaseofunethi-
calorillegalbehaviornomatterhowcloselyrelatedtothemtheyare.Thischapterexploresnepotism.

Whistle Blowing

Whistleblowingbringstothenoticeoftheworldwrongdoingsandimmoralacts.Itisseenasanactof
defenseforproperactionforanymisconduct,whichisatplaybetweenindividualcoherenceandorga-
nizationalvalues.Whistleblowingisanimportantwaytopreventanddeterfraud,waste,andabusein
organizationalworkenvironments.Whenemployeesarefeelinguncomfortablewithwrongdoing,which
necessarily arises in organizations, their sense of morals also come into effect, which compels them
tomakeanywrongdoingorunethicalactpublic.Inessence,theinterplayofpoliciesanditsdiscourse
thatmakeitmarkinorganizationalrealmsfigurewithinthatmoralityconsideration;moralitypermits
individualtoactmorallyandreasonably.Thischapterexploreswhistleblowing.

Toxic Waste Disposal

Recognizingtheseverityofthetoxicwastedisposal,approximately50countriessignedatreatyin1989
seekingtoregulateandcontroltheinternationalshipmentsthatcontaintoxicwastematerials.However,the
primarychallengethathinderstheproperdisposalofhazardouswasteremainsthehighcostsofdisposal
andthetime-consumingnatureofthedisposalprocess.Thesetwofactorsconstitutethemainreasons
whysomecompaniesseekoutclandestinemeanstodisposeoftheirtoxicwastesinsteadofadheringto
thelawsandregulations,thusendangeringboththeenvironmentandthehealthofsurroundingliving
beings.Aproperdisposalsystemisessentialtoguaranteethesafetyoflivingcreatures,aswellasthe
welfareofthesurroundingenvironment.However,sometimesthatiseasiersaidthandone,andeven
disposaltechniquesthatabidebytherelevantlawsmayhaveunforeseenanddevastatingconsequenceson
thelivesoftheemployeescarryingoutthedisposalprocess.Thischapterexplorestoxicwastedisposal.

Advertising Deceit: Manipulation of Information,
False Advertising, and Promotion

Deceptiveadvertisingdenotesaproducer’susageofmystifying,deceiving,orblatantlyuntruestate-
mentswhenendorsingaproduct.Thereareseveralillegalmethodsforattemptingtodeceiveconsumers.
Thiscanbedonethroughconcealedfeesortheusageofsurcharges.Deceptiveadvertisingcanalsotake

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placewhen“goingoutofbusinesssales”chargeconsumersmoreforproductsthathadalreadybeen
markeddown.Advertisinglawidentifiesthemanipulationofstandardsasdishonestyundercustomer
law.Undefinedterminologyisalsoconsideredaviolationunderconsumerlaw.Marketingdeceitisa
practicethatcanequatetoacrime.Thus,amarketershouldnotgetinvolvedindeceivingtheirpotential
customersforthismanipulationwouldleadtovariousharms:iterodesone’sself-confidenceandhin-
dersthedevelopmentofresponsibleadvertising.Bigcompaniesmakebigmistakes,thisistosaythat
trustassociatedwithbigcompaniesholdssevereuncertainties.Thischapterexploresadvertisingdeceit.

Plagiarism

Plagiarismiseasilydifferentiatedfrompiracy.Piracyisthesaleofqualifiedbutunauthorizedcopiesof
awork,anactiongrudgingtheauthorofprofitbutnotcredit.Deprivingauthorsofprofitthatisright-
fullytheirsistheft,butplagiarismfocusesonownershipcreditratherthanprofit.Themainworriesfor
plagiarismareitsinfluenceoncreativity,motivation,andabilitytothinkinalternativeways.Thesequali-
tiesofpersonalitymaybenegativelyimpactedbyhabitualplagiarism.Moreover,thevariousimpactsof
plagiarismarelackofinformationauthenticity,fakecredit,personalityfaults,spoilingofprofessional
reputation,anddestroyingthecreate-abilityofcreativeprofessionals.Thischapterexploresplagiarism.

Bribery and Corruption

Bribesaremainlydirectedatgovernmentofficials,althoughtheycouldbedirectedattheemployees
andmanagersofbusinessfirms.However,briberyappearstobeaself-definedcrime.Briberyofsmall
public sector employees is a white-collar crime. However, bribery also exists in high-level decision-
making processes, whether political, economic, or corporate situations. These are large-scale bribes,
consistingofmillionsand/orbillionsofdollars,paidouttoexecutivesandpublicofficialsinreturnfor
constructioncontracts,oilcontracts,telecommunicationcontracts,etc.Althoughpunishmentsexistand
areimplemented,itisuptotheindividualalonetomakethefinaldecisionandchoosebetweenpersonal
moralvaluesystemandpersonalwelfareinoppositiontoservingthepublicwelfare.Thischapterex-
ploresbribery.

Piracy of Intellectual Property Rights and Copyright Infringement

Originatorsofbooks,songs,ormoviesspendalotoftime,effort,andmoneytocomeupwiththeir
creativework.Inordertoprotectthevalueoftheirproduction,theyissueacopyright.Thiscopyright
entitlesthemtobenefitfromprofits(royalties)andatthesametimeprohibitsothersfromillegalre-
productionwithoutpermission.Fromanethicalperspective,theimpactofpiracyaffectsanumberof
stakeholderssuchasconsumers,artists,andgovernment.Consumersbenefitfromlowpricesandsuffer
whentheyfindoutthattheyhavepurchasedapoorqualityproductfromonlinewebsitesorwhenthey
donotreceivetheproductstheypaidfor.Artistsorproducerssufferastheyaredeprivedfromcollecting
theirroyalties.Thisnegativelyaffectscompaniesduetolossesinrevenues.Governmentsareincapable
ofcollectingtaxesfromtherevenues.Anumberofsolutionsareavailabletocombatpiracy.Thischapter
exploresintellectualpropertyrightsandcopyrightinfringement.

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Preface

Ethical Yielding

CustomerProfitabilityAnalysis(CPA)isaprocedurethatprovidesmanagementwithinformationrelated
tocustomersthatwillallowthemtomanagerevenuefromaprofitperspective.Thedataattainedfrom
CPAwillassistwithdecisionsregardingmarketing,productdevelopment,andcapacitymanagement
tocreateacustomermix,whichwillprovidethebestprofitresults.BARmeansthebestavailablerate,
inwhicharegularcustomerischargedincasehehasapprovedtoreserve.Thevariousstagesofyield
managementinclude:1)growaprofitculture,2)studytheoveralldemand,3)createpricevaluerelations,
4)formsuitablemarketsegments,5)evaluatethepatternofdemand,6)findthefailuresanddenials,
and7)assessandreviewthesystem.

Financial Fraud: Embezzlement, Ponzi Schemes, and Credit Fraud

Fraudisadeceptiondeliberatelypracticedinordertosecureunfairorunlawfulgain.Financialcrimes
affectprivateindividuals,companies,organizations,andevenstates,andhaveanegativeimpactonthe
entireeconomicandsocialsystemthroughtheconsiderablelossofmoney.Itisverydifficulttoestimate
theamountofmoneyoffraudaroundtheworldsincemostofthetransactionswillneverbeactually
reported.Announcinganyfraudincidentcouldaffectnegativelythecompanythatisreporting,since
anypublicitywouldmakecustomerslosetheirconfidenceinthecompanyandthereforethepriceofthe
sharewoulddropsignificantly.Therefore,companieswouldnotbewillingtorevealanyassumptionsof
fraudandwouldtrytokeepthewholestoryawayfromthemediaandstakeholderstominimizenegative
outcomes.Thischapterexploresfinancialfraud.

Child Labor

Childlaborisasocialprobleminvadingtheworldandespeciallythelessdevelopedcountrieswhere
educational levels are low. Despite the laws that are enforced each year by international agencies to
preventchildlabor,realitydoesnotreflecttheefficacyoftheselaws.Twocases,oneinternationaland
onelocal,reflecthowabusedchildrenarebeingtreatedaroundtheworldandhowtheirrightsarebe-
inginvaded.Illiteratepoorfamiliesaswellasbusinessescontributeintakingadvantageofchildlabor
inservingtheirownprofits,especiallywiththelackofstrictregulationsthatabolishthisissue.Child
laborisanissuethatcannotbeneglectedandahumanrightconcern.Itisaffectingchildrennegatively
becausetheyarebeingexploitedandforcedtoworkataveryearlyage,whileotherchildrenaregetting
educatedandhavingaproperchildhood.Thischapterexploreschildlabor.

Organ Selling: When It Becomes a Business

Citizensofunderprivilegedareassubmittotemptationsandendupsellingtheirorgansfortheirgreat
needformoney.Somesaythatitisapersonalchoiceandthateachisresponsibleformakingsucha
decision,whileothersbelievethatsuchatransactionisinherentlyunethical.Inreality,theexchangeof
anorganformoneydoesnotendwellmostofthetime.Quiteoften,thegangsanddoctorsreceivingthe
organfailtoabidebytheagreementleadingtotheethicaldilemmaresultingfromorganselling.Organ

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Preface

sellingshouldneverbelegalizedsincetherewouldalwaysbeapricewaranditseffectscouldnotbe
confined.Peoplebynaturearegreedy;thus,leadingtoblackmarketagain.Moreover,thedemandis
muchmorethanthesupply;thus,thereisnospecifiedcriteriaforwhoreceivestheorganasanymethod
usedwouldeventuallyleadtomorecomplications.

Real Estate Valuation Fraud

Valuationprofessionisalinkbetweentheborrowerandthelender.Fraudisanintentionaldeliberate
deceptioncommittedforillegitimatepersonalgain.Thereareseveralformsofrealestatefraud,especially
whentherealestatemarketisfacingaboom.Themostwidespreadtypesofrealestatefraudinclude
thepreparationoftwosetsofsettlementstatements,propertyflipping,andfraudulentqualifications.
Therearemainlythreetypesofvaluationtolookoutfor.Valuationmaybereceivedfromanunauthor-
izedagency.Furthermore,arealvaluationmaybealteredfromtheoriginaltogenerateprofit.Thirdly,
intentionalinflationofthevalueofapropertywillhidetherealmarketvalue.Itisusuallydifficultto
spotrealestatefraudulentactivities,sodeepinvestigationsandprofessionalismisneeded.Thischapter
exploresrealestatefraud.

Illegal Drugs in Lebanon: Recreational or Medicinal… Who Is the Victim?

Based on utility, Lebanon is pursuing illegal drug trade activities for the monetary value they offer.
TheethicaldilemmaisthatLebaneselawprohibitsdrugplantation,yetthegovernmentisimplicitly
encouragingtheseactivities,thusthecontradictionandthecorruptiondilemma.Onapharmaceutical
andeconomicallevel,drugshaveapositiveoutcome,butonarecreationalandabusivelevel,drugscan
beveryharmfulandsometimesdeadly.Theyarenotdangerousbecausetheyareagainstthelaw;they
areagainstthelawbecausetheyaredangerous.Lebanonshouldlegalizesomedrugs,theonesthathave
minimalnegativeeffectonconsumers.Therefore,Lebanon’seconomywouldstillbenefitmonetarily
fromthisindustry,whilemakingthelifeofthefarmersmucheasier,andmaybegivethechancetopoor
ruralareastooffersecurityandamoderatelevelofliving.ThischapterexploresillegaldrugsinLebanon.

CONCLUSION AND IMPACT

Thisbookpromisestoservemultiplepurposes.Whereasitstartedasadepositoryofinvestigativeconcerns
regardingpracticalbusinessdilemmas,ithasevolvedintoaresearchsynthesisofprominentliteraturein
everyoneoftheissuesinvestigated.Atlast,itappearstobeanobviousstand-alonelearninginstrument
thatcanbestructuredwithinacurriculumofhighereducationinanyschoolofbusiness.Thisbookwill
hopefullyserveformanyyearsasauniversitytextbookinbusinesseducation.Furthermore,itpromises
toevolveinsubsequentversionswithupdatesonspecifictopicsofinterest,whileitwillalsoopennew
domainsofinvestigationinrecentlyevolvingfieldsofbusinesscommunicationsandcrisismanagement,
suchasWebsecurity,privacy,andbioticcloning.

Philippe Zgheib
Lebanese American University, Lebanon

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xxiii

Acknowledgment

The author would like to acknowledge the help of all involved in the review process of the book, without
whose support the project could not have been satisfactorily completed. Deep appreciation and gratitude
goes to Dr. Steven McNamara, Professor of Business Law, for his feedback and support. In addition,
sincere appreciation goes to all business graduate and undergraduate students at the various universities
of Lebanon who have participated in the business surveys and in data collection for the various studies
mentioned in this book.

Sincere thanks go to all those who provided constructive and comprehensive reviews for their unwavering
support. Gratitude goes to my colleagues at the Olayan School of Business at the American University
of Beirut, also to my venerable dean, Dr. El Fakhani, at the School of Business in the Lebanese Ameri-
can University, whose enthusiasm motivated me to initially accept the invitation to take on this project.
Special thanks also go to the publishing team at IGI Global, USA, whose contributions throughout the
whole process, from inception of the initial idea to final publication, have been invaluable.

Special thanks go to my immediate family, whose unconditional love and vibrant energy have kept me
going against all odds. My loving gratitude goes to the genius and spirited company of Alma, Yara,
Naim, and especially, Wadih, who has also helped me in the final editing of the manuscript. And last
but not least, my better half, Nathalie, has kept us all pointed in the right direction aiming for nothing
less than the stars through her unfailing support and steady encouragement during the months and years
it took to give birth to this book.

In closing, I wish to thank all my friends and foes alike for their valuable insights and for their excellent
competitive minds. I hope this book will bring a lasting impact of making our business world and our
daily lives better than we found them.

Philippe Zgheib
Lebanese American University, Lebanon
August 2014

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Introduction



Simplisticsubjectivismreferstotheviewthatethicsissimplyamatterofpersonalopinion,thatthere
isnothinganyonecansayordotochangeaperson’smindaboutethicalissues.Culturaldiversityliesin
theperceptionofbusinessethicsandnotintheapplication.Commondenominatorofpeoplediversity
istheprimaryconcernwithsecondarycaringforprofitmaximizationandconservationofwealth.A
diverseculturemaydisregardacademicintegrityandthusmaylacktheessenceofbusinessethicstoan
extentwherebehavingunethicallybecomesanormalhabitbuiltincultureandintraditions.

TomRobbins,novelist,reclaimsthat:“Weareourowndragonsaswellasourownheroes,”and“we
havetorescueourselvesfromourselves.”Yet,wearewhatwelearnandperceiveandthuswechoosewhat
tobe.Peoplearenotcreatedofthesameskillsandabilitiesinlife,andtheyarenotraisedinthesame
conditionsandcultures.Theyallsometimeshavedifferentperceptionsofthingsanddifferentpersonal
opinionsthateachonemayconsiderhis/hertruthbasedonhis/herlevelofknowledgeandunderstand-
ing.ThisisoneofthemajorchallengesinethicswhichiscalledbyNancyJ.Matchett(2009)“simplistic
subjectivism”.Sheexplainsitsaying“Simplisticsubjectivismreferstotheviewthatethicsissimplya
matterofpersonalopinion,thatthereisnothinganyonecansayordotochangeaperson’smindabout
ethicalissues;indeed,thatthereissomethingwrongwithtryingto”(Matchett,2009).Afterall,people
havearighttotheirownopinion,andethicsisjustaboutbeingtruetoyourcorevalues”.Howeverwhat
ifcorevaluesandthewaythatanindividualunderstandssomethingwaswrong?

DEFINITIONS

Ethics

Ethicsisawayoflifethatconstantlyevaluatesdecisionsinaspaceofmoralimaginationwhereevery
dilemmaissettlesinfullknowledgeofrationalesandunderlyingphilosophies.Assuch,ethicscreatesa
spaceofsocialintegrationwhereeverydilemmaissettlesuniquelyinitsowncircumstances,andactors.
Ethicsallowtheconfrontationofchoicesbetweenrightandright,orevenbetweenwrongandwrong.
Theobviouschoicebetweenrightandwrongisthusautomaticallysettled.

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Introduction

Business

Businessisaworldofactivityaimingatsatisfyingwantsandneedsthroughmarketmechanisms.In
thesameprocesswealthisaccumulated,investedorredistributed.Government’srolecanbehelpfulor
detrimental,businessproceedsanyway.

Diversity

Intoday’smodernworld,theglobalcommunityhasbecomealocalvillage.Communicationhasbrought
everyonesoclosetogetherthatdifferencesofculturetradition,language,religion,governance,gender
anddemographicshavebecomeinterwovenintrinsicallyinaglobalmeltingpot,theresultisaworldof
diversitywheredifferenceisrecognized,andmustbecelebrated.

PERCEPTION OF BUSINESS ETHICS IN CULTURAL DIVERSITY

Thisbookwillfocusonbusinessethicssensitivity,perceptionandawarenessamongBusinesspeopleas
adiversesociety.ResearchersshowedthatBusinessproblemliesintheperceptionsideofbusinessethics
andnotintheapplication.Accordingly,awakeningthemisanindispensablestepsinceitforbidsthem
fromchoosingunethicalfuturedecisions.Furthermore,alatestsurveybyaWalkerResearchofIndia-
napolisabouttheperceptionofethicsexposedthatemployeesshowpreferancetoworkatcorporations
whichdistinguishbusinesspracticesasethicalpriortoworkinafinancialstablecompany.(“Business
EthicsResearchProposalSample”,2008).Ontheotherhand,businesspeopleareprimaryconcerned
withthetheoryofprofitmaximizationcaringlesstothewaysthatproducemoney.MostofBusiness
peoplerestricttheirselvestopowerthatisgeneratedfrommoney,andthusgiveitagreatimportance
intheirattitudesandbehaviorsintheireverydaylifeandtheyrefertoitas“thefinalsay.Briberiesfor
examplearenowbecomingacommonpracticeinmanydiverseculturalsettings.

TRENDS

Corporationsingeneral,actasacivilizingagentandplayanessentialroleintheindustrialandcom-
mercial developments of their mother countries. Although their primary goal is to maximize profit
nonetheless;therehappentobemorecrucialthingsthanensuringtheirsurvivals;whichareitsethics.
Companiesthatlackvirtuessuchashonestyandtrustmustbehaveethicallyintheirjourneytoensure
theirpermanentsuccess.Beingproductiveandefficientarebasicstoachieveprofitsbutourstudygoes
beyondthisoutcometotheessenceofsuccess:ethics.Businessethicsnowadaysisconsideredabud-
dingsegmentofethicsandthebusinessworld.Kreitnerbelievesthat“[e]thicsisdefinedasthestudyof
moralobligationinvolvingthedistinctionbetweenrightandwrong”(1998,p.142).Itparticularlydeals
withtheperceptionofbusinessethicsandthebehaviorrevealeduponit.Itissetofregulationandlaws
orevensocialdisciplinegoverningthecorporatetransactions(Moussawer,2004).

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Introduction

REFERENCES

Ghillyer,A.W.(2010).Business ethics: A real world approach.NewYork:McGrawHill.

Hartman,L.P.,&Desjardins,J.S.(2011).Business ethics: Decision making for personal integrity and
social responsibility.NewYork:McGrawHill.

Jennings,M.M.(2009).Business ethics: Case studies and selected readings.SouthwesternLegalStud-
iesinBusiness.

Matchett,N.J.(2009).Cooperativelearning,criticalthinking,andcharacter.Public Integrity,12(1),25–38.

Moussawer,T.N.(2004).Business ethics sensitivity and awareness in Lebanon: An empirical investiga-
tion.AcademicPress.

KEY TERMS AND DEFINITIONS

Business:Isapracticeofexchangeaimingatraisingaprofitthroughprovidingaproductthatsatis-
fiesaneed.

Diversity:Celebrationofdifferencesinculture,tradition,language,religionand/orotherdemographics.
Ethics:Awayoflifeinaspaceofmoralimaginationwhereongoingdilemmasaresettledinfull

knowledgeofrationales.
Simplistic Subjectivism:Theviewthatpersonalopinionunderliesdecisionsinlife.
Workplace:Dynamicspacewherebusinessoperationsareconductedawayfrompersonalindividual

concerns.

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Introduction

xxvii

APPENDIX

Learning Objectives

L.O.1:Definebusinessethics.
L.O.2:Characterizeworkplacediversity.
L.O.3:Definesimplisticsubjectivism.

Summary

Define Business Ethics

Objectiverationalmechanismforsettlingdilemmasonthego.

Characterize Workplace Diversity

Theglobalhumancommunityisquicklybecomingalocalvillagewherediversitymustbecelebrated.

Define Simplistic Subjectivism

Simplisticsubjectivismreferstotheviewthatethicsissimplyamatterofpersonalopinion,thatthere
isnothinganyonecansayordotochangeaperson’smindaboutethicalissues.

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Section 1

Macro Ethics of Social Welfare

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1

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 1

DOI: 10.4018/978-1-4666-7254-3.ch001

Ethics Perception:
Learning and Teaching of Ethics

ABSTRACT

Education is one of the most consistent and powerful correlates to the development of moral judgment
in individuals. Education builds theoretical and some practical basics for making more effective ethi-
cal decisions. Educators influence students in their learning about business ethics, but ethics can be
considered as continuous knowledge, which could be taught and learned in ways different from teaching
traditional sciences. However, teaching of ethics is possible because the aim is to create certain skills
and build the basics for promising wise thinking for proper decision making. Building ethical aware-
ness in a diverse society implies building awareness in schools and universities by having ethics as a
university requirement. Teaching of ethics must start from early school stages and must engage parents
actively. Integration of a code of ethics in the curriculum is brought to life by addressing real life stories
of unethical behavior. This chapter explores the learning and teaching of ethics.

INTRODUCTION

Is it too late to start teaching ethics at Universi-
ties? Education opens the minds of students to
considering ethics in every detail of their business
career. Education validates, reforms, and expands
the individuals’ perceptions and beliefs since there
are various sources of knowledge for dilemmas.
Students are captivated with huge values, that can’t
be changed. Ethics is not like science or math to
be taught and learned, it is designed since the
early stages of our life. Also, because at certain
situations some people don’t see ethical problems
as others do.

Reasons why we need business ethics educa-
tion include:

1. Global companies recognize that ethics is
the essence of business hence it is crucial to
integrate ethical values in their businesses;

2. Companies cannot survive in isolation, the
need to act socially;

3. Companies are no longer just competing
for profit but also for reputation hence most
of them are recruiting and training ethical
employees.

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2

Learning and Teaching of Ethics

BACKGROUND: CAN ETHICS
BE TAUGHT OR LEARNED?

Reaching uniformity in ethics so that there is
only one opinion about how to behave in certain
dilemma is impossible, but at least removing the
clear misconceptions and common mistakes that
people mainly fall in should be well known to be
avoided. Hence, we should always have someone
to teach us how we should think and take effec-
tive decisions, reform and explain for us why
doing so and so could be wrong and bad to the
community. No one is familiar with everything.
We need sometimes the teaching or assistance
from more experienced individual than us, who
have passed through similar dilemmas and have
become knowledgeable about them in order to
make us aware of certain hidden truths. Particularly
in dilemmas we are not dealing with two clear
positions, one is good and the other bad. On the
other hand it is between two extremes that could
both be good, or both are bad. Therefore teaching
of ethics will provide decision making rationale
for different kinds of real life situations, which
make it easier for learning and taking the correct
decisions. Also, being negligent about unethical
consequences of actions does not justify improper
behavior. Thus, teaching of ethical thinking will
remove ignorance and make people more socially
responsible for their actions and decisions.

Education’s Role in
Behaving Ethically

The major source of attaining, reforming, and
testing our knowledge and perception is educa-
tion (McCabe et al., 1991). Education is one of
the most consistent and powerful correlates to the
development of moral judgment in individuals.
Starting from the elementary classes at schools
to the undergraduate and post- graduate studies
at the universities, education provides fertile
grounds through carefully designed stages to grasp

unlimited knowledge. In the university stage, un-
dergraduates start experiencing the real life and its
drifts, and in the former the child starts building
perceptions and personality. This long journey
will be expressed in the business filed especially
when the individual faces complicated decisions
and ethical dilemmas. Perhaps what the individual
faces during their education is simpler than what
he/she is going to face in real life. Education builds
the theoretical and practical basics of the sciences
and skills, while it also builds similar basics for
taking more effective ethical decisions. “Educa-
tors influence students in their learning about
business. Therefore, higher education faculty
members should be able to influence students
in their learning about ethics as well” (Gloria,
2002). Education makes the minds of the students
opened on considering ethics in every detail of
their business career. For example, teaching the
student to succeed with high academic integrity,
he/she will not cook the accounting books to show
that their company is highly successful. Also,
giving examples and always reminding marketing
students about the dangers and unethical conse-
quences of untrue advertising will at least make
them think before acting. Moreover, since there
are other sources of knowledge, and given the
variety of dilemmas, stakeholders, consequences,
business executives are in need for ethics educa-
tion to validate, reform, or discuss and expand
their perceptions and beliefs. For example, the
framework of ethical thinking that consist of seven
steps, with practice and application to multiple case
studies at all the education stages, will lead later
to high volume processing of wisdom while deal-
ing with complicated problems. Kohlberg (1981)
found that a person’s ability to deal with moral
issues is formed in stages of the pre-conventional,
conventional, and post-conventional physical de-
velopments. Kohlberg found that education is one
of the most significant factors that can stimulate a
person’s growth through the three levels of moral
development. “Kohlberg discovered that when his

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3

Learning and Teaching of Ethics

subjects took courses in ethics and these courses
challenged them to look at issues from a universal
point of view they tended to move upward through
executive levels.” (Sims & Felton, 33)

Furthermore, teaching ethics is not like teach-
ing standard rule to be applied in all situations,
it is how you teach the student how to think and
behave when he/she faces certain dilemma. It is
like the vaccination that injects weak virus inside
the body. Hence, the person will get used to it,
and initiate an effective defense (way of thinking
and analyzing) to take the most suitable decision
in the dilemma which is the real harming virus.
Therefore, in addition to teaching the principles
and the details of every major to develop the
required career skills, ethics logic and concepts
should be added to direct students to an ethical
career too. As a result, student will realize that
being ethical in every action he/she takes, is a
requirement for true successful job.

Ability of Teaching and
Learning Ethics

Certain groups of people from both academic
communities and business argue that ethics could
not be taught or learned as what was stated in the
Wall Street Journal. They claim that it is too late
to start teaching ethics at Universities, because
students were bombarded with huge set of values,
that can’t be changed. More specifically, ethics is
not like science or math to be taught and learned,
it is kind of concepts that are designed since the
early stages of our life, and according to Miller
(1976) “honesty” is not a course to be taught.”
Also, because at certain situations some people
don’t see ethical problems as others do. Conversely,
since ethics was learned and grasped in the past it
can be considered as continuous knowledge to be
always taught and learned. Yes it is not as science
and math, it is beyond standard rules and it could
be taught and learned in other way than teaching
such traditional sciences. Moreover, Lester Thu-
row, former dean at the Management School of

Massachusetts Institute, validate that ethics could
be taught and leaned by saying “Universities and
colleges can do little if students have not already
learned ethics from families, clergy, previous
schools, or employees (Trevino and Nelson, 1999).
Furthermore, if people don’t see ethical dilemmas,
this doesn’t mean that they do not exist. Even
though the law considers the intent in punishing
for torts such as doing unethical behavior, but also
it punishes for being negligent about dangerous
consequences if they exist.

Hereafter, ethics could be learned and taught
because the major consideration is not to teach
students that if X occur how to deal with it. In
real life there are unlimited dilemmas and even
unlimited conditions for the similar dilemmas.
However ethics teaching is possible because the
aim to create certain skills and built the basics for
promising wise thinking that is able to choose the
better choice. Recent researches discovered that
teaching ethics has a great influence on students’
analytical and reasoning skills and “that moral
behavior can be developed from a thorough un-
derstanding of ethical concepts and dilemmas and
reinforced by awareness of ethical issues (Alam,
1999; Sims and Sims, 1991).

AMPLIFYING THE NEED
FOR ETHICS

Teaching ethics in the consequences of recent
global financial crisis is a social obligation and
an immense opportunity for professional educa-
tors to teach and train the next leader generation
to be ethical and better than the proceeding ones.
(Cavalere, Mulvaney, and Swerdlow, 2010) In
addition, many research papers and a growing
number of published articles have tackled this is-
sue, varying between describing the ethical setting
primarily to what should be done to enhance the
ethical level. Nowadays, global companies recog-
nize that ethics is the essence of business hence
is crucial to integrate ethical values in their busi-

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4

Learning and Teaching of Ethics

nesses. Knowing that companies cannot survive
in isolation, the need to act socially responsible
is increasing dramatically and promotes the qual-
ity of the community life. They are no more just
competing for profit but also for reputation hence
most of them are recruiting and training ethical
employees.

Moreover, Robert Noyce, “The Mayor of Sili-
con valley”, believes that: “If ethics are poor at
the top, that behavior is copied down through the
organization.” (“Business Ethics Quotes/Respon-
sibility Quotes”, n.d). Therefore, top managers are
responsible to transmit a good image and reputa-
tion of their company by being ethical managers.
Professional companies nowadays, adopt code of
ethics which is a right choice but is not considered
a cure. And thus, mangers should support the code
of ethics and must ensure that is integrated through
the value system of each employee.

Indifference about Ethical Behavior

In the 80s, “business ethics” term was barely
used in the world of business. Companies at
that time were nurturing ethics and living in
harmony with them. (“Business Ethics Research
Proposal Sample”, 2008). However, as com-
petition increased, companies started harshly
competing for their core purpose, leaving ethics
lagging behind. As a result, various erupting
scandals, ethical misconduct and briberies such
as WorldCom, Enron, Tyco, the savings and loan
devastation of the 1980s, and other scandals of the
early 2000s,Nasdaq, Ford. shed a light on a huge
deficiency of ethics in the business community.
(Cavalere, Mulvaney, &Swerdlow, 2010) Thus,
in this case building awareness is a vital process
and must be implemented in our daily basics.
Companies for instance, believe that supporting
unethical decisions will earn them more profit and
thus an opportunity to grow. This may be the case
but only for short-term, but what they have missed
is that these behaviors will cause them a loss of
their public image, reputation, and certainly mil-

lions of dollars each year that is because of high
lawsuit costs… Lantos argues that: “[Un]ethical
business practices lead to societal costs which are
borne in part by everyone who wishes to survive
and thrive in that society.” (Lantos, 1999)

BEHAVING ETHICALLY IN
ATTAINING BUSINESS OBJECTIVES

Alleviation of Corruption Levels

It is really shocking to know that only 25% of the
sampled students hear about ethical dilemma in
Lebanon; indeed Lebanon records high levels of
corruption in most of its domains. For example,
the Lebanese Center for Policy studies realizes
that 62% of the firms admit paying bribes to the
public servants. We are not going to dig deep in
the corruption level in Lebanon, but it is well
known that its presence create a fertile soil for
unethical behavior in all the business domains and
others. Particularly in the Judiciary system where
34% of the Lebanese population thinks that it is
highly corrupted and 47.9% moderately corrupt
(Information International Research Consultant,
105). Such percentages show that ethics education
is indispensable because corruption is one of its
consequences and the party responsible to reduce
it is already drawn in it. This will “damage invest-
ments, distorts political and economic develop-
ment, makes civil and basic rights in danger, and
introduces inefficiency in dealing between the
state and private interests” (Johnson, 26).

Serious Role of Education in
Building a Culture of Trust

For many years, The American Assembly of
Collegiate Schools of Business (AACSB) has
wanted to include ethics education into the busi-
ness curriculum. Critics criticize that business
schools focus put too much effort on teaching how
to maximize shareholder value and too little on

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Learning and Teaching of Ethics

the ethical and social aspects of business leader-
ship. According to some analysts and scholars,
ethical behavior cannot be taught. But many do
not assume this position, as the general idea is
that ethical behavior can and should be tackled
in education. The issue of teaching ethics is not
novel. Philosopher Socrates discussed this subject
over 2,500 years ago, and claimed that ethical
behavior is the consequence of knowing what
the right thing to do is, and thus it can be taught
to individual.

Many would agree with Socrates today.
Modern-day researches of moral development
show that (Hammer 2002):

• Developments happen during the 20s and
30s, as young adults face ethical problems
more frequently and learn how to deal with
ethical problem solving..

• The individual’s perception of soci-
ety and his/her role in it is also linked to
development.

• An individuals’ perception of moral issues
is highly influential on his/her behavior.

• Educational efforts that are aimed at rais-
ing awareness towards moral problems,
and improving the reasoning/judgment
process, have proven to be effective .

Therefore according to this research, and in
accordance with Socrates, ethics can be taught to
individuals. Educational institutions around the
world, in the Arab world and more specifically
in Lebanon, have to understand this fact, and
start offering courses that would promote moral
development and ethical behavior. From Enron
to Xerox and WorldCom, the series of corporate
scandals is drawing attention to the ethical failings
of the business world. Schools and universities
have the imperative role of preparing students
for that world, and academic integrity should be
the starting point. As Students at the American
University of Beirut, we are harvesting the posi-
tive effects of such decisions.

In the business world of today, given the ever-
increasing competition between firms and the
proved payoffs of illegal and unethical actions, it
is hard to believe that academic honesty can go on
to become professional ethics. “College is an in-
credibly formative period. It is a time when young
people redefine their vocational aspirations…
when a community that teaches ethics well can
make an impact. It can be a very powerful time.”
(Elizabeth Kiss, director of the Kenan Institute of
Ethics at Duke University)

While students do face some ethical problems
within the university, a new set of more challenging
and life shaping problems occurs after graduation.
Experience in real-world situations is valuable,
and is very different from academic experience.
Universities now offer a handful of classes ad-
dressing ethical issues beyond the university.

A New York Times article published in No-
vember 2002, states that “with student cheating
on the rise, more colleges are turning to honor
codes.” According to the story, 30% of students
said “cheating during tests or exams” occurred
“often or very often” (Hammer 2002).Ethical
dilemmas faced at universities are a preparation
for complex situations students could face in their
professional life. Every person (graduate or not)
will ultimately encounter tough choices, and the
path he/she will follow may be a consequence of
the ethical environment he/she has been exposed
to at the university level. Lebanese universities
are facing a problem regarding academic integ-
rity. It is known that many students cheat on their
exams, or get external help in their academic
projects/papers. Many efforts are being made,
at the American University of Beirut, in order to
promote integrity and ethical behavior; a recent
example of such hard work was the launch of the
“bicharaf.org” campaign, promoting trust and
integrity between students and their professors.
This campaign encouraged all students to fill an
on-line survey in order to increase awareness
about the issue. Other Lebanese universities such
as USJ are also joining efforts by creating a new

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6

Learning and Teaching of Ethics

academic program about ethics. In the long run,
these efforts will hopefully have a positive impact
on the whole business community in Lebanon and
even other Arab countries

FORMAL BUSINESS
ETHICS EDUCATION

A broad perspective of business ethics theories and
issues provides a review of essential principles,
practices, and opportunities in Business Ethics
and to develop working knowledge and skills
for effective use of these tools and techniques in
business decisions.

A university course in Business ethics is typi-
cally intended to perform the following outcomes:

• To understand the role of public perception
in defining ethics.

• To foster an understanding of business eth-
ics as a multi-level construct that can be
analyzed at the individual, organizational,
and societal level.

• To familiarize executives with a frame-
work for ethical decision making.

• To foster ability to apply a framework for
ethical decision making.

• To develop capacity to identify and analyze
different and recurring ethical dilemmas in
the workplace.

• To stimulate the local investigation, analy-
sis, and application of Western-centered
Ethical concepts, definitions, and practices.

• To provide the opportunity to reflect on
personal ethical values and beliefs.

• To foster managerial abilities in plan-
ning, constructing, and defending ethical
choices, arguments and practical ethical
solutions in simulated business-related
scenarios.

• To foster active listening and debate com-
petencies through in class discussions and
teamwork assignments.

• To provide a working knowledge of the
role of ethics in business and relevant busi-
ness ethics debates.

Business executives in today’s modern mar-
ketplace need to be equipped with an in-depth
appreciation of business ethics at the individual,
organizational, and societal level. Issues such as
corruption, sexual harassment, fair trade, fraud,
whistle-blowing, corporate social responsibil-
ity, ethical norms, ethical values, environmental
responsibility and many more are earning acute
relevance in the global international as well as
local domestic context. Ultimately, this text book
is designed to foster skills related to critically
analyzing the ethical and social dimensions of
business-related problems in order to build more
ethically-informed rationales for decision making
in a modern world of diversity.

Culture Lacking Academic Integrity

Researches that tackled this issue showed a highly
positive correlation between academic integrity
at school and business ethics at work, In other
words, students that used to engage in academic
misconduct at their schools are likely to engage
in scandals at their work. This sheds light to the
importance of teaching ethics at schools whereby
students learn to choose the best according to
their perceptions, and to context. In Lebanon, it is
clearly stated that culture is not aware of academic
integrity and therefore lack the quintessence of
business ethics to a degree where acting unethically
becomes a usual pattern in the country’s culture
and traditions. Based on an interview made with
Deputy Director of Bicharaf, individuals’ behav-
iors are based and influenced by their perception
about business ethics (personal interview, Victor
Murad).Aiming to gain a better insight about the
relation between business ethics perception and
application among Lebanese people, a sample
survey was conducted on 30 business students
from the American University of Beirut. The rea-

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7

Learning and Teaching of Ethics

sons of people’s rating toward business ethics are
determined by various aspects such as: economic
situation of the country which is a major role in
changing their attitudes, habits and cultures, and
the political situation.

Answers varied among students. For example,
60% answered that they rate business ethics as
low and 40% believed that it was minimum. The
interesting fact about it is that is none rated busi-
ness ethics to be very high in Lebanon, which can
be translated as a great opportunity to invest and
work in. At first sight, people confuse between
the right ethical choices and the legal ones. Thus
defining what is ethical is a hard and basic step to
do before proceeding to whether to choose it or not.

Many research papers have investigated the
level of corruption in MENA region, and de-
signed ways and theories to measure it, few have
highlighted the importance that education could
play in diminishing corruption and hence few
have targeted the educational system. Particularly,
academic integrity issue is given a little importance
in schools and community, holding apparently a
slight role in the culture of the schools.(“Applica-
tion for an IDRC research grant”,2010).

The phenomenon of a culture deficient from
academic integrity is in itself disturbing, by as-
sociating with the corruption levels at work place
implies an even more alarming case. The lack of
business ethics and alleviation of corruption lev-
els form an obstacle to grow and be prosperous.
Thus, academic integrity should be enhanced in
the undeveloped countries such as Lebanon.

And with the increase of demand on business
ethics globally, many new Non Government orga-
nizations, NGOs, was established such as Ethics
Resource Center.ERC, in the United States. Yet,
in Lebanon Bicharaf, a local business ethics and
academic integrity initiator deliberated to be the
first step in the change process in its community.
It is not limited to create ethical awareness among
school and college students but also to employees
and business experts. It effectively convinces

anybody that ethics is the success for any business
and is significant in devoting resources, time, and
money into. (Bicharaf, 2009)

Founded in 2004 at AUB, Bicharaf is the
sole NGO in Lebanon that is concerned with
creating business ethics awareness. It enhances
academic integrity levels targeting numerous
schools with different classes around Lebanon.
It built a contact relationship with students
and their professors, investigate ways and pos-
sible measures to promote academic integrity in
schools, encourage students to behave ethically
besides supporting college students, universities
by offline (workshops, presentations, seminars
with professors) and online(website, newsletter,
tutorials) tools and companies to ensure them an
ethical culture. Bicharafuntil now have reached
88 schools, 300,000 students, 12 universities and
six companies. Furthermore, it extended its core
mission to become a regional NGO by partner-
ing with a Saudi school and built its own code of
conduct. It believes that academic integrity and
business ethics should be taught early to students,
since they will be the ethical leaders.

Recently, Bicharaf is conducting a research
project on 40 Lebanese private and public schools
with a total of 8000 students to measure and en-
hance the level of academic integrity aiming to
change the students’ attitudes and escalating the
level of academic integrity among them. Volun-
teering students in Bicharaf club will participate
in an academic integrity camp. Spoke persons
will explain more about academic integrity and
its importance. They will get an online certificate
that they have academic integrity and pledge to
behave ethically.

Building Awareness in
Schools and Universities

Any ethics course should not be meant to be a
hard course that will make students work only for
a grade on their transcripts. It is a highly important

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8

Learning and Teaching of Ethics

course, since everything else can be acquired using
a book, from finance, marketing, law, economic…
but not ethics. It is a universal issue that is not
just restricted to some disciplines like business,
engineering, philosophy or medicine; each and
every person should be influenced by. Ethics is
beyond standards and rules as we said and it is
taught through life experience. From a student’s
point of view, learning such delicate material is
affected by many factors, of which we can say: The
way the course is taught, the professor that guides
us students through the course and the degree to
which students are being involved in the progress
of the course. Recognizing the importance of
ethics courses has been shown through several
years. A couple of years ago, ethics course were
just an elective course that students could take as
part of their curriculum. This year, this course has
not only become a major requirement for business
students, but also a university wide humanity.
When this course was just an elective, not many
students were excited to enroll in it. Now, more
than 350 students are taking the course per year.
We did not recognize the importance of this course
until we took it. As we realized in the survey that
only 33% highly challenge themselves to take the
right decisions, the percentage of respecting copy
rights was like 60% sometimes, 20% always, and
20%never. These results among students at the
American university of Beirut are not that com-
fortable. For that reason, an ethics course should
be required by each major in the university and it
should be taken highly seriously. This being said,
having to take ethics a university requirement
would most probably follow the virtue theory,
because it would provide moral habituation and
moral practice. Students that would have to take
these courses would somewhat provide guidance
to students when faced with much harder and
complicated dilemmas. The moral mean is rela-
tive to the individual and to the circumstances in
which the individual is situated. Arguing with a
classmate regarding a certain ethical issue is not
that challenging, however it sets a blueprint for

more complicated situation where that student
would have to choose following ethical beliefs or
engaging in unethical behavior. Some people do
not care for other people feelings, interests and
for the well-being of society, and are willing to
engage in unethical behavior in order to achieve
their personal goals. Implementing and focusing
on the success of this solution would help reduce
the numbers of such people to a minimum level.

Code of Ethics Integrated
in the Curriculum

Including sections in the newspaper (university
or local) that talk about ethical situations that
people previously dealt with, could be a solution
for helping people to act ethically. Even though
ethical dilemmas differ from situation to situation,
reading this section could help many people have
some perspective as how they should act in simi-
lar situations. When reading a newspaper, most
people focus mainly on the first and the last page,
there such sections should be included in the last
page. This small ethics column should clearly tell
people what the problem is, who the stakeholders
are, what possible choices the person had, and the
future implications of his choice. This solution is
one of great importance, because many people do
not have the ability to recognize the different con-
stituent of making an ethical decision, and it would
introduce to people diverse acceptable choices for
making an ethical decision. This solution follows
the Deontology theory or Universal ethics theory
because this solution wants to stimulate people at
doing the right thing. This solution tells people
what the right thing is regardless of the situation.

Immanuel Kant (19xx) believes that morals and
the decision-making process can be self-learned or
taught. He argues that we are capable of learning
the moral law and application on our own behalf.
On the other hand he disputes that the role of edu-
cation may help in forming the “character traits”
or: “disposition” but education cannot ensure the
right application. (Moran, 2009). Teaching and

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Learning and Teaching of Ethics

training of ethics must cultivate and nurture the
critical thinking traits, characters, and skills that
are needed to be deliberated efficiently for ethical
choices in professional and personal life. (Match-
ett, 2009). Seminars and workshops should be the
tools to teach and assist values that are already
grasped from the surrounding, experience, right
and wrong, good and bad and moral obligation,
Hence, the importance of teaching ethics must
be implemented; taught and learned in schools
as early as kindergarten classes. Students should
get engaged with ethical dilemmas and get aware
of pinpointing the dilemma.

Given that the person’s ability to deal with
moral issues is not formed all at once, and since
every person have his own beliefs and perception,
it is important to realize how every individual
distinguish the right from the wrong choice. (“Bi-
charaf”, 2009). Many employees become lost when
it comes to “grey area”, they have tendency and
intention to behave ethically, however there is
ambiguity in understanding what ethics all about
is. Thus, applying their perception while making
a decision or choice is hard for them since they
are unclear about what is considered to be ethical
and what is not. For instance, code of conduct is
hugely recommended as a primary solution to
serve as an ethical reference yet never considered
a cure. (Buhler, 1991).

Going back to the role of education in shaping
our personality, students must concerned about
their personal branding image It is a brief history
about each personal acts and behaviors. Thus, if
someone was engaged in unethical behavior his/
her name would long last with him. Before gradu-
ation, universities for example can give them a
certificate of conduct which will allow them to
go for jobs. And in the recruiting process, ethical
dilemmas should be raised during the interview or
the assessment and must be integrated in the HR
recruiting process. Thus, students must be aware
of the short term dilemma versus their long term
which is losing their credibility and trust from their
fellows at school, university and certainly at work.

Ethics Teaching Starting from
School Stages and Engaging Parents

The debate that was raised concerning teaching and
learning of ethics morals and values was mainly
related to the universities and colleges stage.
There was no debate about teaching ethics at the
school level especially at the intermediate classes
For sure, teaching ethics as it is being taught at
the universities will be extremely hard to school
age children, so other simple ways should be used
like multimedia and movies. More specifically,
children may not realize that there is an ethical
dilemma in the plot of the movie, but graded
questions from teachers that focus on the ethical
point will record it in their minds. Thus, later in
the future they will understand it and realize the
hidden morals. Thus, teaching ethics and learning
it will be more interesting and effective where the
correct concepts are being posted in the children
minds, hence the solution start at a young age,
which makes it easier. Moreover, since the children
learn or mimic parent’s actions and thinking, it is
recommended to engage the latter in the teaching
process. Meanwhile, with parents’ participation,
this will be transferred to the coming generation
at minimal effort. For example grouping parents
all together to share their ideas and showing them
examples of the children behavior at the school
and analyzing them will clarify and leave great
influence on each other that could pave the way
for having the good ethical morals starting with
the family in the household setting.

DEBATING AND DECISION
MAKING IN BUSINESS ETHICS

Classical Dilemmas in
Business Ethics

A dilemma occurs when a hard choice has to be
made in exclusivity between several options that
all appear to be valid, each for a different reason

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Learning and Teaching of Ethics

as sustained by a different theoretical philosophy.
Moral imagination can investigate, explain and
even justify each one of the available options
based on a well established philosophical theory.
Such moral imagination can compare, weigh, and
even combine various theories to help arrive at a
conclusive settlement of a dilemma.

Most ethical dilemmas in business ethics fall
in one of the following categories:

1. The long run versus the short run;
2. The individual interest versus the community

interest;
3. Justice versus mercy; and
4. Truth versus loyalty.

To simply say that observation will not of
course solve the problem. What it really does,
is help to clarify the debate. We can’t do justice
to an ethical dilemma if we follow the policy of
always choosing one side of the argument, regard-
less of the particular circumstances. That is what
the proponents of fixed or deep-rooted positions
over social responsibility effectively do. Quite the
opposite, the circumstances always matter. There
is no easy excuse from engaging in the details of
ethical debate, and making an ethical decision
which unavoidably will not please everyone but
which you and your company are prepared to stand
up for. That is what Ethics require. And Business
Ethics cannot demand anything less.

Rules and Regulations

1. Opening speeches should be SEVEN minutes
in duration.
a. (From 0 min-1 min General intro-

duction, 1 min- 4 min P.O.I*, 4min-
5min concluding opening speech).

b. Point of Information (P.O.I.): Arguments
to be discussed; Why the party is for/
against, basically your reasoning.

c. P.O.I are not allowed to be given during
the 1st of the last minute of the speech.

2. A bell will be rung after the expiration of
one minute and six minutes. The bell will
be rung again at seven minutes.

3. You are not allowed to interrupt the speech
giver at any point during his/her speech. You
can write down your rebuttal arguments on a
paper and address them during the designated
time.

4. During the Proposition/opposition side
discussion time slot as mentioned on the
agenda, the group members of both parties
will agree amongst themselves what their
rebuttal arguments will be against the op-
posing party.

5. During the pro vs. opp. discussion, raise
your hand in order to participate. (Only
applicable to the participants, the audience
will get their own time slot to participate).

Table 1. Debate timeframe

Time Frame Duration Task

9:30 – 9:35 5 minutes Rearrangement of the classroom

9:35 – 9:43 8 minutes Opening speeches of both parties (4 minutes each)

9:43 – 9:47 4 minutes Side discussion, internal for each position

9:47 – 10:07 20 minutes Open argumentation between the 2 positions

10:07 – 10:14 7 minutes Open floor for audience comments (one minute each)

10:14 – 10:20 6 minutes Closing speeches of both parties (3 minutes each)

10:20 Debate winner announcement

Agenda: Total session duration: 50 minutes.

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11

Learning and Teaching of Ethics

6. When you address any individual from the
opposing party you must address them as
Mr. /Ms. Speaker and not by their name.

7. Before you begin your counterargument
towards the opposing party/individual, the
prosecutor must allow you to, so wait until
you receive a sign allowing you to begin.

8. Speakers must observe parliamentary lan-
guage i.e. bad language is not permitted.

9. Do not insult the person; argue for the idea
rather than the person him/herself.

10. Be careful to avoid leaving statements
hanging in mid-air. If you say something
important back it up.

11. Once the floor is opened for the audience,
they are allowed to participate; however,
they might not exceed one minute each.

12. The closing speech is done by both the
opposition and the proposition parties and
they must not open a new argument. The
closing speech should wrap up their entire
arguments.

13. The winners get a one point raise on their
overall average in Business ethics, and those
who gave opening and/or closing speeches
get a guaranteed point regardless if they won
or lost.

FUTURE TRENDS

“Some considerations such as moral standards
and moral reasoning make a distinction between
the two showing how one infuses the other. In the
teaching of ethics there must be a sense of goal
establishment via authentic contextualized ethics
curricula. The issue of implementation within a
standalone versus embedded ethics discussion
within curriculum was noted. Clearly both have
merit yet ethics discussions should pervade cur-
ricula and be contextualized.” (Ryan and Bisson,
2011). Several factors affect business ethics
education, namely students’ ethics literacy and
ethical perceptions, students’ attitudes towards

ethical issues, ethics and personal actions, personal
morality, religious and ethical business conducts.
This is in addition to the impact of formal business
ethics education as implemented in the university’s
curriculum. Business ethics could be taught if a
comprehensive formal and purposeful direction
exists in an institution to make students internal-
ize their perception of business ethics (Hejase
and Tabch, 2012).

CONCLUSION

Certainly some people are better at tackling ethical
dilemmas than others, but this is a talent, native
or acquired, is based on wisdom and experience.
To say that there is no ultimate perseverance of an
ethical dilemma is not to say that a choice that we
grasp is purely personal, or that we do not have a
duty to make the best decision that we can given
the conditions. The motives which inspire our final
choice are motives which we can present to oth-
ers, if requested to do so, and if essential, defend
with strong arguments; though by the nature of
the case such arguments are going to be less than
indubitable. There is usually a time constraint on
moral debate; when the time constraint runs out,
you have to make your ruling, call and act.

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211–219. doi:10.1007/BF00383158

Thurow, L. (1997). New rules. Harvard Interna-
tional Review, 20(1), 54–60.

KEY TERMS AND DEFINITIONS

Behavior: Individual action in everyday pur-
suit towards the satisfaction of wants and needs.

Code: Set of detailed specifications regulat-
ing performance and behavior towards achieving
a set purpose.

Education: Consistent pursuit of knowledge
production and exchange towards the building of
intellectual assets within individuals operating
in a society.

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13

Learning and Teaching of Ethics

Integrity: Consistence in behavior between
intention and performance matching the walk
with the talk.

Learning: Pursuit by an individual person in
the acquisition of knowledge towards internalizing
and integrating knowledge into everyday living.

Perception: Intent of action and image formed
of a specific issue.

Teaching: Deliberate effort in the transmis-
sion of knowledge skills and competencies aiming
at the transfer of intellectual capitol within the
explicit domain.

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Learning and Teaching of Ethics

14

APPENDIX

Learning Objectives

L.O.1: Describe the role of education in behaving ethically.
L.O.2: Discuss the ability of teaching and learning ethics.
L.O.3: List the reasons that highlight our need of ethics.
L.O.4: Discuss business ethics in Lebanon.
L.O.5: List the solutions for building ethical awareness in Lebanon.

Summary

Describe the Role of Education in Behaving Ethically

Education is one of the most consistent and powerful correlates to the development of moral judgment
in individuals.

• Education builds theoretical and some practical basics for taking more effective ethical decision.
• Educators influence students in their learning about business.
• Education makes the minds of the students opened on considering ethics in every detail of their

business career.
• Education validates, reforms, and expands the individuals’ perceptions and believes since there

are various sources of knowledge for dilemmas.

Discuss the Ability of Teaching and Learning Ethics

They claim that it is too late to start teaching ethics at universities because students were bombarded
with huge set of values, that can’t be changed and that, ethics is not like science or math to be taught
and learned, it is kind of concepts that are designed since the early stages of our life. Also, because
at certain situations some people don’t see ethical problems as others do. . But ethics was learned and
grasped in the past; it can be considered as continuous knowledge to be always taught and learned; it
could be taught and learned in other way than teaching such traditional sciences However ethics teaching
is possible because the aim to create certain skills and built the basics for promising wise thinking that
is able to choose the better choice.

List the Reasons That Highlight Our Need of Ethics

• Global companies recognize that ethics is the essence of business hence it is crucial to integrate
ethical values in their businesses.

• Companies cannot survive in isolation, the need to act socially.
• Companies are no longer just competing for profit but also for reputation hence most of them are

recruiting and training ethical employees.

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Learning and Teaching of Ethics

15

Discuss Business Ethics in Lebanon

Researchers showed that Lebanese problem lies in the perception side of business ethics and not in the
application. Lebanese people are primary concerned with the theory of profit maximization caring less
to the ways that produce money The Lebanese culture is not aware of academic integrity and thus lacks
the essence of business ethics to an extent were behaving unethically becomes a normal habit built in
their culture and traditions.

List the Solutions for Building Ethical Awareness in Lebanon

• Building awareness in schools and universities by having ethics as a university requirement.
• Integrate code of ethics in the curriculum by having a section in the newspapers about real life

story of an unethical behavior.
• Continuous informative seminars and workshops.
• Making ethical cases requirement in recruiting.
• Ethics teaching starting from school stages and engaging parents too.
• Increase the penalties of unethical behavior of the companies.

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16

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 2

DOI: 10.4018/978-1-4666-7254-3.ch002

Utility, Duty, Morality,
and Justice

ABSTRACT

Utility is the theory of the greatest happiness to as many people as possible. The end justifies the means
where consequences matter and what makes the action moral is the result. Duty deontology implies
that we are doing a good job as long as we are following the rules even if it is against our will. It is our
duty, our obligation, even sometimes leading to pain. All actions and decisions should be of a good will
regardless of the results. On the other hand, moral virtue is acquired by habit and does not come by
nature. Virtue represents the mean between extremes. Therefore, moral virtue has to do with feelings
followed by actions, where the mean is not always the middle of two opposite extremes. This chapter
explores utility, duty, morality, and justice as philosophical foundations of moral imagination in ethical
decision making.

INTRODUCTION

Sensations of pain and pleasure are part of a
continuum. Pain and pleasure are extreme states
of mind felt in our everyday life. These extremes
vary according to the phase of living. By taking
into consideration that the life lived is socially
attached, family oriented, and lived in normal
conditions. Extremes vary with respect to age,
to style of parental orientation, and to way of
thinking. Pain and pleasure reflect the result of
every feeling or action faced, from the physical
to emotional. Emotions, imagination, learning,
motivation, and maturation are mainly the basics

of these states of mind. Where the sole purpose
of business might be viewed as a financial maxi-
mization of profit (Friedman, 1970), other more
traditional philosophies dating back centuries, or
even millennia, shed a more humanist light on the
dilemmas of business ethics.

BACKGROUND: SIMPLE
PLEASURES AND PAINS

Pain and pleasure are among main driving forces
of behavior. Every intended action is driven by
these two unseen forces in order to avoid pain and

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Utility, Duty, Morality, and Justice

to gain pleasure. The simple pleasures, accord-
ing to Bentham, include the pleasures of sense,
wealth, skill, amity, good name, power, piety,
benevolence, malevolence, memory, imagination,
expectation, dependent on association, and relief.
Several simple pains can be listed as the pains
of privation, senses, awkwardness, enmity, ill
name, piety, benevolence, malevolence, memory,
imagination, expectation, and dependent on asso-
ciation. Utilitarianism was revised and expanded
by Bentham’s student; John Stuart Mill (1850).

Sigmund Freud also added about pain and
pleasure through an interesting article stating that
we are born with a pleasure principle and that
we will seek immediate gratification of needs,
for which our bodies reward us with feelings of
pleasure. And he also stated that the reverse is
also true, and the pain principle says that, while
seeking pleasure people will also seek to avoid
pain. The pleasure-pain principle was originated
by Sigmund Freud in modern psychoanalysis,
although Aristotle noted the significance in his
‘Rhetoric’, more than 300 years BC.

The pleasure principle represents hedonism;
the thought that life ought to be lived to the fullest
and that pleasure should be sought as a main goal.
Hedonists will engage in self-destructive ways
through their extreme use of sex, drugs, rock and
roll and other means of satisfaction. Pleasure is
also linked to Jeremy Bentham’s (1920) ideas in
utilitarianism, where the assessment of supreme
utilitarian gain in pleasure is measured through
sensible calculus. Pleasure and pain are basic prin-
ciples in conditioning, where you tend to get more
of what you reward and less of what you punish.

Pain may be more instant than pleasure, mak-
ing people think more about the avoidance of
pain, thus paying more attention to it. Anticipated
pleasure and anticipated pain are nearly as domi-
nant as the feeling itself as people think about the
pleasure and pain that may happen later in life. It
is questionable that these have had an important
outcome on human development as they move us
towards a more bearable life.

PHILOSOPHY OF UTILITY:
CONSEQUENCES OF BEHAVIOR

John Stuart Mill follows the consequentialist
theory (Parker, 1863). Consequences of actions
make them either right or wrong. John Stewart
Mill begins to question the goodness of something
good in itself. We need to go deep into the basics
and see how they apply to life situations, thus
making it easier to accept or reject it. Utility is not
only physiological. It can be as simple as having
fun. He then defines three meanings of pleasure
that are beauty, ornament, and amusement. He
distinguishes beauty from ornament by the idea
that beauty is in the eyes of holder; ornament is
in the eyes of the creator.

The Proof of Goodness

The proof of goodness is not intuitive or impulsive,
but it is rather subject of formal knowledge that is
verified and tested. No definite proof is given in
the “Utilitarian” theory. In order to prove some-
thing is good, one must show that it is a means
to something acknowledged to be good without
proof. By the utilitarian formula there are two dif-
ferent types of philosophers: ones who consider
that utility is only the test of right and wrong,
and others who consider that everything in life is
referred to pleasure and pain. Both groups can be
mistaken when they are extremists. Many writ-
ers and philosophers are commonly falling into
the mistake of opposing utility to pleasure at the
time when the founders of the Utilitarian theory
declare that utility is pleasure itself, along with
the absence of pain. Thus, actions are right if they
bring happiness, wrong if they cause the reverse
of happiness; where happiness means pleasure
and/or the absence of pain.

The Quality of Pleasure

Early on, utilitarianism was understood as simply
pursuing corporal pleasures just like pigs.. The

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Utility, Duty, Morality, and Justice

epicureans believe that human beings are capable
of the same pleasure as animals, but a beast’s plea-
sures do not sustain a human being’s happiness,
because the latter is attained by mental pleasure,
while the animals’ pleasure is purely physical.
Humans and animals alike have the same ‘rule
of life’, by introducing a general theme of the
different hierarchies of pleasure that humans are
capable of feeling. As the Stoic and later Chris-
tian school of thought believed, pleasure attained
through the intellectual, moral, or emotional realm
of the human mind is much higher in value than
pure bodily pleasures. Humans cannot be happy
until their faculties are satisfied, and this means
beyond the mere physical. The value aspect of
pleasure separates it into quality and quantity.
If one has experienced both, disregards moral
obligations and chose one of them then it is the
desirable pleasure. Then the criterion to choose
between pleasures considers quality as higher and
more reliable.

Utilitarians have taken one extreme in mea-
suring pleasure, considering quantity as the only
reference of measurement. If we want to know
which action gives more pleasure than the other,
it will be that which the majority of people agree
on, irrespective of action’s moral aspect. Quality
should also be considered. Between two pleasures
a person will choose the one which brought more
satisfaction. A person who has more pleasure will
suffer more; nevertheless, he would never consent
to be inferior unless he is extremely unhappy.
Humans’ refusal to be leveled with animals relates
to love of liberty, pride, personal independence,
power, excitement and above all the sense of dig-
nity. Humans’ utility is relative. Someone who did
not experience a certain good will not know what
he is missing. Anything that conflicts with dignity
cannot be considered other than a momentarily
object of desire. Humans choose the nearer good,
whether it turns out to be the less valuable or not.
Individuals who choose lower pleasures do it by
selection and enthusiasm; they do so because they

are unable to reach higher pleasures. Our ability
to seek higher levels of pleasure is limited by our
position in life and the society we live in.

People would never agree to be less than what
they are just to have pleasure, but very few might
reach a point of unhappiness that they become
willing to give up their life and status in exchange
for another person’s feelings of happiness. When
human beings are given access to all kinds of
pleasures, they will choose those with higher facul-
ties, even though they might suffer more; because
they prefer to maintain their dignity. People with
higher faculties are less content, because they have
a deeper sense of the limitations of the world.
Men “often postpone higher pleasures for lower
pleasures” out of the weakness of their character.
As people advance with age they become more
likely to enjoy the lower pleasures, because they are
the only ones they can any longer enjoy. The only
way one can measure or decide which pleasure/
pain has a greater quality is through experience.
One is qualified to judge and compare between
two pleasurable (or painful) entities if he/she has
felt and experienced them both. Pain and pleasure
are two dissected entities that cannot be confused,
but can be felt at the same time. The Greatest
Happiness is the altogether amount of happiness
associated with the person in addition to that of
other people who are in contact with that person
who are gainers by this happiness. The greatest
happiness principle is to have many pleasures and
minimum amounts of pain for all.

Greatest Happiness Principle

The best way to judge the quality of a pleasure or
the intensity of a pain should happen through the
admission of the feelings and opinions of those
who had experienced both sensations. Noble char-
acters (pride, dignity, justice…) must be nurtured
in each individual and then shared among them
in an attempt to benefit everyone and to make the
world a better happier place. Greatest Happiness

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Utility, Duty, Morality, and Justice

Principle is defined by the utilitarian opinion as
being the ultimate end of human beings, as it is
also the standard of morality. This principle is
not only applied to mankind, but to all sensible
creatures.

The theory of happiness states the ends or
targets that are pleasure and prevention of pain,
and that unhappiness is simply the reverse. Util-
ity theory maximizes happiness to most people,
yet it can’t satisfy all people. He thinks that those
end points are the only targets that people aim for,
and that everything humans do serves to satisfy
those ends. This higher end of pleasure and lack
of pain is considered a noble pursuit and desire, is
designated as a philosophy that promotes material
wellness of humans over the moral and intellectual
wellness. Utilitarian theory appears worthy of pigs
which signifies that animals experience a level of
pleasure and pain.

PHILOSOPHY OF DUTY:
WILLINGNESS TO DO RIGHT

Immanuel Kant follows the deontology theory
(obligation theory). In disagreement with utility
theory, consequences don’t determine the righ-
teousness of actions. The most important thing
is a good will, which is motivated by duty (Kant,
1907). Furthermore, some qualities that constitute
a good will and are part of the intrinsic worth of a
person should not be called good without qualifica-
tion, because if they lack the principles of a good
will they may become extremely bad. Therefore,
a good will is good in itself, not because of what
it performs or what ends it reaches.

Rules of Nature

For the attainment of happiness an organized
adapted being follows the rules given by nature.
By doing so, one might also scarify his welfare
for the wellbeing of society. When a person uses
reason to reach happiness, he grows further away

from satisfaction. The will is what pushes a per-
son to do a certain action. While reason (logic)
is necessary it is not as strong and influential to
control our actions and lives. We are created in
a certain way that even without reason we find
ourselves spreading joy and interest. This act is
due to honoring one’s self. Another important
thing about the creation of man is the special gift
of patience and sympathy that nature has provided.

The Duty to Be Happy

We all have the intimate tendency to be happy,
and all our pleasures are combined in one higher
pleasure which is happiness. If someone has the
duty to be happy, it is the worth of others; which
means if you cannot be nice to others, you cannot
be nice to yourself. It is the practical love that
can be commanded, that is even though all our
senses and inclinations may oppose this feeling
and sometimes tell us to hate instead of love, we
love just because of the command of duty. In ad-
dition, actions that take place out of sense of duty
have moral value from the will to the action and
not from the purpose. These duties are governed
by law rather than inclinations, whereby this law
may be good in itself that it imposes a will towards
abiding by it irrespective of personal inclinations.

Universal Maxims

The good is not the effect of a certain action. It
is to what extent the action is good in itself and
respects social law. The reason of men always has
in view that human maxims should become uni-
versal laws. The maxim here is about extricating
ourselves from false promises (Hartman, 2011). In
this case it’s not more prudent to make our laws and
maxims universal but instead we should make it a
habit to make no promises unless we’re intending
to keep them. Duty should be admitted by itself
by every person and should be applicable all the
time because it could serve as a universal law for
the wellbeing of mankind. Therefore, in order to

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Utility, Duty, Morality, and Justice

determine whether a maxim could be respected
as a principle and become a universal legislation,
its worth must outweigh the worth of what desires
and inclination dictates. Thus, law is respected as
duty, and its worth will be the highest.

PHILOSOPHY OF MORALITY:
MORAL ABSOLUTES
MUST BE LEARNED

According to Aristotle (1941), moral virtue is
acquired by habit, does not come by nature. He
focuses on the learning of which actions of man
should be performed in order to become good.
The soul is defined by three qualities: capacities,
habits and passions, which are feelings that lead to
pleasure or pain. Virtue lies in the middle ground
between two extremes such as moderate anger. We
are labeled good or bad according to our virtue
and vices. Meanwhile we tend to move by our pas-
sions. The excess and defect of things belong to
vice, but the mean state of things belongs to virtue.
We are bad in many ways, but we are good in one
way only. Therefore virtue can be considered as
getting accustomed to moderation. But this virtue
isn’t found in all actions since some actions are
bad for themselves, such as adultery. There is no
context that justifies committing sin. Moreover,
there is no mean to wrong actions.

Aristotle realized that the lure of pleasure and
personal styles makes it difficult to choose mod-
eration, and human nature tends to take extremes.
The excess of anything can lead to destruction.
Finding a middle ground for doing things is the
best way to live. Virtues are intellectual or moral.
The excess or defect of any action human beings
peruse destroys virtue. Being in the mean preserves
virtue. Moreover, it is not only important to know
what virtuous actions are but also how to perform
them. Having intentions in choosing to perform just
or temperate actions doesn’t matter unless those
actions are really performed. For the act itself, is
the important part rather than intentions. Virtues

must be in relation to the propriety of time and
manner. Also, virtue is supposed to be in relation
to pleasures and pains. In resisting pleasure we
reach excellence. Good balance of pleasure and
pain makes virtue.

The Golden Mean of Two Extremes

He points out virtue is the mean of two extremes,
one of defect and one of excess. He believes the
mean is the correct action. Virtues represent
the mean between extremes. A good action is
not enough to be virtuous, there are two other
conditions: First, one must know they are doing
a virtuous act not by random accident). Second,
the action must be chosen for itself because it’s
good. The most important example of two ex-
tremes is pain and pleasure on which we base
our actions and that are relative to our everyday
lives. However, we should know how to deal with
pain and pleasure properly. Therefore the proper
use of them explains what virtue is. Justice and
temperance are virtues that people acquire by
performing just and temperate acts on a frequent
basis. More importantly, it is by acting that we
can become just and temperate, rather than only
listening or thinking. Moral virtue has to do with
feelings followed by actions.

Virtue is an act of deliberate preference. Ti-
midity and quick anger are the two extremes of
a segment. The middle point of this segment is
patience. Since the middle point doesn’t have to
be in the exact middle of the segment, patience
tends to be closer to timidity than to quick anger.
Thus, patience is the golden mean instead of the
middle of the segment. If the two extremes were
evil and good or wrong and right, we should always
look for the golden mean: when we are leaning
towards evil, we should push ourselves in an op-
posite direction than the usual one so we could get
closer to the golden mean which makes us happy.
But, Aristotle says that being angry towards the
right person to the right extent at the right time
for the right reasons in the right way is not easy

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Utility, Duty, Morality, and Justice

to achieve. So, it’s hard to find the middle point
or golden mean between two extremes. Aristotle
explains that some things are bad in themselves
and not in their excess or defect. For example, a
person cannot commit “a little of” adultery. They
have either committed adultery or they haven’t.
So in cases such as these, the mean state in itself
is an extreme. Thus it would be absurd to search
for a mean state of an excess or a defect because
we would be going after the excess of an excess or
the defect of a defect. He gives examples of some
habits and their mean state. He talks about fear and
confidence which are extreme states and says that
courage is the mean between these two. He then
talks about pain and pleasure and that temperance
is the mean state. Later, he talks about liberality
and prodigality that are to opposite extremes. At
the end he talks about honor and dishonor and
ambition and the lack of ambition. He claims that
the mean isn’t always the middle of two opposite
extremes. When someone is deficient to shame
then he is impudent. Indignation is the mean state
between the envious and the malevolent. For
Aristotle the mean state is the best choice but it
is difficult to achieve.

Measuring Virtue

The scale used for measuring virtues then can
become relative. For example: ambition can be
either a virtue or a vice. It’s easy to find a mean
between an extreme and a defect, but what is dif-
ficult is finding a balance between two extremes
on the same side. Whether on the passionate ex-
treme, where modesty stands as a mean between
a bashful and an imprudent person, or on the
defective extreme, where indignation stands as a
mean between envy and malevolence. Fear and
confidence are two extremes, and courage is the
mean state. In case of pleasure and pain, temper-
ance is the mean. Those who are in the insensible
state live in pain, and refuse to smile and laugh.
On the subject of the giving and receiving of
money, liberality is the mean state, illiberality the

defect and prodigality the excess. On the subject
of honor, magnanimity is the mean, the defect
meanness of spirit, the excess vanity.

A distinction is made with regards to the rela-
tionship between the two extremes and the mean
state. When compared with the excess, the means
is in defect, and when compared with the defect,
the mean is in excess. Human nature tends to be
more biased toward a certain extreme than the
other, and thus humans need to restrain themselves
and try to be at an equal pace of both extremes,
and try to find the appropriate mean. Therefore
we must always seek to hit the mean despite our
personal inclinations. So a person must know the
extremes, and focus on escaping them towards the
mean with the least amount of error.

The Golden Rule of Ethical Behavior

Do unto others as you would have them do unto
you. Behave with others as you want them to
behave with you…(Ghyllier, 2008).

• Buddhism: Harm not others in ways you
would find harmful to you. Udana Varga
5:18.

• Hinduism: Total duty to avoid unto others
that which would cause you pain if done
unto you. Mahabharata 5:1517.

• Islam: Do Not Be Angry, Hadith of the
prophet.

• Christianity: All things that men should
do unto you, do even so to them. Matthew
7:12.

• Judaism: An eye for an eye …

Awareness of Implementing
Ethical Behavior

Examining the golden rule of ethics and the other
extreme of it, makes you realize why it is important
to act ethically. When the person starts “Treating
others as he/she would like to be treated”, he/she
becomes, socially responsible and more caring

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Utility, Duty, Morality, and Justice

for most of the stakeholders and the consequences
of the decisions. Yes, it is so hard to have all the
people acting the same, but acting unethically is not
the solution. As we know following the majority
does not always lead to a correct track; thinking,
studying, and deciding for ourselves based on
certain facts could lead to a better path to follow.
In addition there is no doubt that if at least the
majority follows the golden rule, the whole world
will be in better position. On the other hand, could
you imagine where will we be if everyone “treat
others as he/she wouldn’t like to be treated”?
Simply human life will look like the animal forest
where each one is seeking his/her needs even at
the expense of others. Meanwhile, the ones who
follow this extreme will get affected negatively
by the actions of others but the ones who follow
the golden rule will get affected positively by
others if they follow! Therefore, acting ethically
is important and a must. However, it is not easy to
have all the people applying or thinking in similar
ways. Yes, they are aware of the importance of
ethics, because they disagree on being treated
unethically, but to a certain threshold. I mean
that they feel it is easier to achieve certain goals
by being unethical, like taking a bribe to increase
income, but they are not really aware of its long
term consequences. Fortunately, especially after
globalization and the level that corruption has
reached in Lebanon, NGOs and education orga-
nizations are starting to play a significant role in
raising that awareness.

FUTURE TRENDS

Individuals do have a sense of duty and sense of
what is right and what is wrong from an ethical
perspective. There is a need for a code of ethical
practice (CoEP) in business to encourage indi-
viduals to apply their sense of duty at employees
or management (Mc Nutt, 2010).

Moral values are values may be derived from wider
elements, and moral choices are such that they
should be expressed in principles that transcend
special times, place, or special pleading. There
is an expressed need for consistency of approach
(Massimo, 2012).

REFERENCES

AbdelSater-AbuSamra, N. S., & Bishara, N. D.
(2006). The Lebanese code of corporate gover-
nance. The Lebanese Transparency Association.

Achbar, M. S. (Director/Producer), Abbott, J.S.
(Director), Bakan, J.S. (Writer), & Simpson,
B.S. (Producer) (2004). The corporation [DVD].
Canada: Big Picture Media Corporation.

Aristotle, . (1941). Nicomachean ethics (W. D.
Ross, Trans.). New York: Random House.

Bentham, J. S. (1879). An introduction to the prin-
ciples of morals and legislation. Clarendon Press.

Caux. (2009). Caux rountable: Principles for
responsible business. Author.

Eichhoefer, G. W. (1995). Enduring issues in
philosophy. Greenhaven Press.

Friedman, M. S. (1970). The social responsibil-
ity of business is to increase its profit. The New
York Times.

Ghillyer, A. W. (2008). Business ethics: A real
world approach (Int. Ed.). McGraw Hill.

Hartman & Desjardins Business Ethics. (2011).
Decision making for personal & social respon-
sibility (2nd ed.). McGraw-Hill.

Kant, I. S. (1907). Morality is governed by will-
ing to do right: From, fundamental principles of
the metaphysics of morals (6th ed.; T. K. Abbott,
Trans.). London: Longmans, Green & CO.

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McNutt, P. A. S. (2010). Edited ethics: Corporate
governance and Kant’s philosophy. International
Journal of Social Economics, 37(10), 741 – 754.

Mill, J. S. (1991). Collected works of John Stuart
Mill (Vol. 33). University of Toronto Press.

Nardo, M. N., & Francis, R. D. (2012). Mo-
rality and the prevention of corruption: Ac-
tion or intent – A new look at an old problem.
Journal of Financial Crime, 19(2), 128–139.
doi:10.1108/13590791211220403

Son, D. P. S. (1863). Morality is governed by
consequences of behavior. In John Stuart Mill
utilitarianism (pp. 209–217). London: Academic
Press.

KEY TERMS AND DEFINITIONS

Deontology: Philosophy of education rational-
izing the behavior of ethical achievements within
the moral imagination space.

Duty: Self sustained discipline in the delivery
of tasks and associated results based on a perceived
philosophical value.

Golden Rule: Universal approach to be-
havioral exchanges between individual humans
formalized by all known existing religions and
philosophies.

Justice: A system of law implementation
formalized in a society utilizing mechanisms of
enforcement, courts, penal codes, police.

Morality: Regulation of behavior based on
individual consciences, innate values and acquired
culture.

Utility: A measure of satisfaction as perceived
by the human mind upon the satisfaction of needs
and desires and based only on the consequences
of action.

Virtue: Socially approved value system regu-
lating the distinction between right and wrong.

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24

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 3

DOI: 10.4018/978-1-4666-7254-3.ch003

Abuse of Power

ABSTRACT

The person that abuses power finds him or herself facing a dilemma. That person must choose between
gaining benefits at the cost of harming the person they are abusing or self-restraining their handling of
power and avoiding harm to others, as they sacrifice any possible gains or enduring a reduction in per-
sonal benefits or even oftentimes a loss. Fear of unemployment makes workers generally want to protect
their jobs and definitely avoid any confrontation with their boss, which may lead to enduring power
abuse in silence. The abuse of power practice is common, since managers have the opportunity to take
advantage of their subordinates for their own benefits. What really varies is the level of acceptance and
the treatment that must normally include means and ways of protection and punishment. This chapter
explores abuse of power.

INTRODUCTION

Abuse of power is the act of using one’s position
of power in an abusive way. Abuse of power may
be realized where hierarchies present; in govern-
ments, in economic systems, in the workplace, and
in families. Power can be defined as the ability,
or capacity to exert one’s will on others by virtue
of their social position, physical strength, wealth,
technology, weapons, or trust that others confide
in the person.

Power abuse is usually under-reported. In fam-
ily owned firms meaning that there are favorable
chances for a normal employee to be directly
supervised and monitored by the owner of the
company who control punishment and appraisal.

BACKGROUND

When you were made a leader you weren’t given
a crown. You were given a responsibility to bring
out the best in others. For that, your people need to
trust you. And they will, as long as you demonstrate
candor, give credit, and stay real. – Jack Welchf

ABUSE OF POWER:
DEFINITION AND DILEMMA

Abuse of power is a phenomenon that has existed
since people have occupied positions of power.
While the nature of man, whether good or evil has
been constantly debated, there is no doubt that
those in positions of power have tended to abuse

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25

Abuse of Power

it more frequently than should happen. Abuse of
power is not apparent in just one period of time or
in one region of the world, but throughout both,
and in hundreds of varying degrees and contexts.

In order to define it, we must define its compo-
nent terms individually and outline the situations
in which it may exist. Power can be defined as the
ability, or capacity to exert one’s will on others by
virtue of their social position, physical strength,
wealth, technology, weapons, or trust that others
confide in the person. The abuse of power would
then occur in the situations where this power is
unjustifiably or improperly used to exploit or harm
other, or through lack of taking action, allows
for exploitation and harm to occur. Given this
explanation, it becomes apparent that with any
ethical dilemma, it is extremely easy for there to
be a component that has to do with the abuse of
power, often in the business world, it is the abuse
of power that brings forth an ethical dilemma for
others. Even in cases where there is an issue of
truth and loyalty, or justice and mercy, they are
frequently the results of someone transgressing a
boundary that they should not have, and this can
only be done through the abuse of power, or trust
that they have. Environmental issues can even be
considered as examples of abuse of power, whereby
the corporation that has the ability to stop harming
both people and the environment, does not. That
is to say, almost any issue contains and element
of abuse of power.

In the developed countries there are laws and
regulations that have existed; these regulations in
their present formula provide merely for straight-
forward principles of the veracity and transparency
and an enormous challenge rests in emerging these
principles to discourse the explicit features. Yet
In Lebanon, major monopolies are a very good
example of abuse of power. The suppliers of elec-
tricity via private generators are a lucid model of
abuse of power through monopoly in almost all
Lebanese territory. For some people, power can
be a real power trip. They enjoy the feeling of
control over both people and information. That

is why they tend to keep secrets, hiding much of
their thinking regarding people and their perfor-
mance, and reserve their knowledge about the
company and its future. But it drains trust right
out of people. You know that old saying “The fish
rots form the head”. It’s mainly used to refer to
how politics and the abuse of power filter down
into an organization, but it could just as easily
be used to describe the effect of a bad attitude at
the top of any team, large or small. Eventually
everyone’s infected.

GENERAL HISTORY

Outside of the business world, there are thousands
of examples of power abuse all throughout history.
Nero burnt half of Rome when he believed that
there was a plot on his life. The great pharaohs
of Egypt portrayed themselves as gods and were
worshipped solely because of their position. The
conquistadors used their superior military skill
and technology to conquer and suppress the Az-
tecs. Henry VIII of England broke away from the
Catholic Church and beheaded all who opposed
him to secure a male heir to the throne. Abraham
Lincoln suspended Habeas Corpus and rendered
the American constitution useless. Mao Zedong,
Stalin, Hitler, Mussolini, all oppressors, using
whatever they could to benefit their own party
and country above all else. Nixon and Watergate
scandal as well as McCarthy and the red scare
also are all examples of abuse of power. While
these may be the most flagrant cases, abuse of
power can exist on a much smaller and less visible
day-to-day scale.

When it comes to abuse of power in a business
context, the abuse of power has been intricately
linked to historical events in each era. In the 1960’s
and during the Vietnam War a strong anti-war
sentiment existed leading to many employees hav-
ing adversarial relationships with their employers.
At the same time in the US, the war for African
American civil rights was still being waged, further

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26

Abuse of Power

adding to the existing tension. The impact this had
on business ethics is immense. Abuse of power
was extremely frequent during the civil rights
movement, both in and out of the business context.
In response, corporations addressed ethical issues
through legal or personnel departments, another
area where the abuse of power could easily occur.

During the 1970’s defense contractors and
many other major industries are riddled by scandal
as the US economy suffered through a recession
and unemployment became extremely high. This
era saw the worldwide resurgence of human rights
issues, and as a result, the abuse of power. These
are issues that dealt primarily with forced labor,
substandard wages and unsafe practices. In the
decade following that, businesses began to evolve
more thoroughly; corporations downsized, health
care issues are brought into light, but at the same
time employees’ attitude about loyalty to the em-
ployer are eroded. With such developments came
increasing instances and possibilities of power
abuse. During this time period bribes and illegal
contracting practices were rampant as well as the
peddling of influences, that is to say the selling
and trading of one’s influence to make better deals.
More so, the 80’s saw the beginning of deceptive
advertising, financial fraud and transparency is-
sues, all of which are intricately related with a
position of power being taken advantage of.

With the 1990’s the world saw globalization
and increased expansion that brought about new
ethical challenges regarding the abuse of power.
Major concerns regarding child labor arose, as
well as increasing environmental issues and
many related to bribery and facilitation payments.
Major ethical dilemmas regarding the abuse of
power and unsafe work practices in third world
countries arose, leading to several boycotts and
many awareness campaigns6. Increased corporate
liability was also an issue, as the case with many
cigarette companies and Dow Chemical for ex-
ample, who abused their power of having superior
wealth, technology and influence both to cause
harm and as an escape method thereafter.

From the beginning of the new millennium
until today the ethical climate has changed greatly.
Especially following the recent financial crisis
that left several corporations and their thousands
of employees penniless, the problem of financial
mismanagement has become something of great
concern, and one intricately tied to the abuse
of power; for it is CEO’s abusing the trust that
the shareholders have in them that leads to such
mismanagement. Another development related
to the abuse of power that is unique to the new
millennium is cyber crime and privacy issues.
Corporations now have a new arena where than can
exert their technological and monetary advantage
to gain knowledge about consumers without the
consumers knowing; a clear ethical transgression
that is permitted by the power of the corporation
in of itself.

Since the ancient history till nowadays the
abuse of power has been present at all times and
with all civilizations. The history is full of cases
of kings, emperors, army leaders, governments
who used their presence in power to abuse their
enemies as well as their own people. Take for
example the ancient Egyptian Pharaohs who con-
sidered themselves the ultimate power on earth,
they forced thousands and thousands of their slaves
into building their tombs (the great pyramids of
today) causing them lots of suffering and death
only because they thought they were immortal.

The abuse of power in the recent history can
be seen in the way the present-day United State
of America was built, by killing, moving, and
relocating the native Americans who did not have
the power to defend themselves against the more
developed weapons their enemies had. The Trail
of Tears is one of the most famous genocides in
history. One act of the abuse of power that its
consequences are still affecting the Middle East
and the word now, is the occupation of Palestine.
The abuse of power is not restricted to politics
and wars, it is also present in business taking
different forms, depending on the time where the
act of abusing is taking place. In the past, busi-

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27

Abuse of Power

ness owners (like farmers) forced their slaves to
work for free, and even when the slavery ended
the abuse of power in business continued. For
example in France they use to force children to
work in different industries for a very low pay if
any. They used their money to abuse the kids in
need to develop their business and make profits.

Today we see new corporates going more
toward encouraging team work and integrated
business, instead of the traditional hierarchy,
and as more and more regulations are being is-
sued in an attempt to prevent the abuse of power
in business. There will always be a way for the
men and women in power to use their authority
in the wrong place, especially with the presence
of motivated and ambitious employees who are
willing to give up a lot, in order to fulfill their
dream of owning the power.

Abuse of power has a universal definition but
what actually differs from region to region is how
it is being practiced, where and in which field. The
abuse of power is widely observed in Lebanon as
in most developing countries, especially in the
places that are still recovering from long internal
combats where the lords of war were ruling and
taking advantages of all resources they forcibly
grab for their own benefits. However this does not
eliminate the fact that sorts of Abuse of Power do
exist in the developed countries that are far beyond
the third world in applying and respecting of laws.

It is almost the same in other developed coun-
tries as we can sense similarities in realities and
mentalities. The laws are barely applied and the
rates of unemployment are high which also thrusts
employees to stick to their jobs and avoid con-
frontations with their managers who sometimes
extremely take advantage of their authorities and
invoke violations.

This isn’t the way such violations are treated in
the developed countries. Laws are strictly applied
and obeyed in a way that similar behaviors are to
be seriously abolished and penalized. Despite the
existence of little corrupted communities, breeches
however still exist even in well structured and

healthy environment as they’re all depending at
the end on the violated employee’s decision. It is
not always right to blow the whistle or to be quiet,
but each case has its own facts and each person
has its own perception. Many interrelated case
studies reveal and expose what these employees
are facing as dilemmas of deciding among two
choices mostly accruing bad side effects.

Although stealing other’ ideas is not accept-
able in all countries, similar abuses are favorable
to happen every day and everywhere because at
the end human greed is universal. This type of
violation is happening in every country despite
the variations in many levels among each that are
behind the deviations in judging this behavior.
There are still some places where such thing is not
considered wrong and here lays the major problem.

THE DILEMMA STORY
(TRUTH VS. LOYALTY)

The following story is happening every instant all
over the world. It is a common case that clearly
exposes the frequent practice of abuse of power
at all levels of business. This little tale will shed
the light on managers who are taking advantage of
their seniority power in order to violate the copy-
right of their subordinates and steal their ideas. It
happened actually in an advertising agency when
the creative department manager was in charge
of preparing a very creative ad that should amaze
a very important client who’s dealing with the
company for the first time.

The department was formed of three employ-
ees in addition to the manager. When they were
gathered for brainstorming, a clever employee
has threaded an amazing idea for the ad that was
admirably appreciated by all attendance. The
manager has had another idea that was good as
well but he suggested exposing both ideas during
the second meeting with the customer.

The department manager is only allowed to
attend the meeting with the customer as he’s

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28

Abuse of Power

representing the whole creative department. The
two ideas were presented and the clients were
deeply astounded by the employee’s idea and
strongly declined the department manager’s one
which they somehow appraised it as of-subject
advertisement. Nevertheless they decided to go
further with the chosen idea and settled another
meeting to do the fine tuning.

After the meeting, the general manager
addressed the department manager aside and
expressed how much he adored the concept and
informed him that he will financially reward who
was behind it. The department manager replied
then that he has come up with the winning concept
but his team who lack experience and perfection
were proposing the other idea that was rejected by
the customer but he wanted to present their sug-
gestion as an appreciation for their effort and since
they all approve on it. The department manager
has gotten a raise on his salary and granted with
the total confidence of the General Manager but
kept it confidential and top secret so he did not
inform his team members about it.

When the idea’s owner got the news, he was
shocked at first but he immediately conferred this
matter to his department manager, who claimed
that such reward is meant to be for the whole
team who were working as an intense unit. He
also stated that the guy will be his right successor
as the department manager for what knowledge
and creativity he possesses and that he is a crucial
necessity to the team and to the whole company
which will definitely gain more important custom-
ers due to his collaborations.

The employee felt more self-actualized as he
got verbally rewarded by his direct manager but
he thought he had to tell the general manager
the whole story. He knew that the GM trusts his
department manager and loves him, so telling the
truth might drive him out of the company, which
then would be detrimental and hurtful for the team
he belongs too and to the whole company and for
himself alike at the personal level. He might be

either appraised or punished for telling the truth
but if none has occurred then he will lose his
manager’s trust and his colleague’s respect. This
shed light on the dilemma the employee is facing,
he really wants to tell the truth but he also prefers
to be loyal to his manager and his company. Tell-
ing the truth might not be beneficial for him and
vice versa but in all cases he won’t gain again the
trust of his manager and his colleagues.

Abuse of Power in Lebanon

Numerous into-subject stories happen every day
in Lebanon but little to none are heard via media
or broadly discussed as these things are consid-
ered to be normal majorly. 80% of Businesses in
Lebanon are SMBs due to the constraints raised
due the small size of the Lebanese market. The
majority of these companies are family owned
firms which states in a way how many direct man-
agers are supposed to be the owner of the place
where they work or in a very close relationship
with the proprietor. There are favorable chances
for a normal employee to be directly supervised
and monitored by the owner of the company since
the hierarchies in greatest part tend to be flatter.

In the same context, the punishment and
appraisal systems in the Lebanese firms seem
directly monitored by the owner of firms who are
commonly supposed to be the direct managers
for their employees. As the unemployment rate
is high, the worker in the Lebanese companies
generally tends more to save his job and he will
definitely avoid any confrontation with his boss
which may probably lead him out of the place.
This unfortunate reality created ‘gods’ instead
of managers at least in their opinions and in the
eyes of their subordinates and pave the way for
critical violations where stealing the subordinates’
ideas may be one of the simplest infringements
comparatively.

Regrettably, the Lebanese Labor Law does not
refer to similar conducts or settle any associated

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29

Abuse of Power

punishments. Although Lebanese judicial system
condemns such violations in a way, however very
little cases were moved to courts due the facts
mentioned earlier.

Abuse of power has existed in Lebanon since
before the civil war; it is a problem that can be
linked to the political dynamics of this country.
The political system in Lebanon can be described
as “one of power-sharing between the elites of
different confessional communities”, where
these elites run the country in such a way that
they exchange favors that don’t necessarily have
to deal with monetary gain alone. Furthermore,
the whole country’s stability is dependent on
their actions since they continuously try to have
the greatest power over the voters and influence
their behavior. The government is influencing the
country’s economy negatively when it acts in its
own interest and shows the public that profits can
be made through abuse of power and manipulation
of the market and so they encourage the people
to participate in this unethical type of action to
also profit from this situation.

The Civil War was a main contributing factor
to the increase of abuse of power in Lebanon.
The ruling elite were weakened as a result of the
conflicts that occurred during the war especially
since Lebanon became a place where big powers
such as Russia and the USA were fighting by
proxy. Consequently, this caused instability in
the country and loss of control by the local gov-
ernment which gave militias and political parties
the chance to replace the people that were ruling
and manipulate the market to their advantage and
examples of such abuse of power were when these
groups took power over ports and airports in such
a way that they were controlling the country’s
economy, “corruption became the rule rather than
the exception”.

After the war ended, warlords of militias had
to be integrated in the political system of the
country and were given some of the highest po-
sition in the government. This meant they could

keep the privileges they acquired during the war
and all this would of course mean that corruption
would keep growing in Lebanon and the govern-
ment became more about gaining power over the
country than serving its citizens. In addition, it
is a well known fact that in this country there are
no means of controlling public officials and re-
ally monitoring their work since perhaps the only
people that are checking on officials are other
officials, according to a World Bank study done
among Lebanese expatriates in the year 1995,
“there is a perception that corruption has become
institutionalized in networks of protection, beyond
the law, for self-dealing, bribes and the bartering
of favors and influence.”

Many public institutions and politicians are
very corrupt to the extent that it is making it
more difficult for the country to recover from
the effects of the civil war. Official are using the
powers that are given to them by the people for
their own personal gain in ways that will only
harm citizens who are suppose to be benefitting
from public funds and services. This is surely
the reason for the public’s loss of confidence in
politicians as well as a matter that will discour-
age investors from putting their resources to the
growth of the country.

It can be said that politicians’ abuse of power
in Lebanon has existed before the civil war oc-
curred and it also continued to take place during
and after the war. This corruption has created a
state where the people have no confidence in the
system of their country and so they do not rely
on the government to help them when they are in
need so sometimes citizens take matters into their
own hands which causes even more instability in
the country.

After the war ended some there have been
some attempts to fight the abuse of power that
was happening within the government by Civil
Society Organizations as well as by some state
officials themselves. Parliament passed laws that
had the objective of prohibiting acts of abuse of

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30

Abuse of Power

power and would require public officials to make
information about their personal assets available
at the Central Bank of Lebanon2. Also, there
was some effort put into creating a committee
that would be in charge of creating a strategy to
fight corruption in Lebanon but it was never ac-
complished. Furthermore, we cannot forget the
initiative of local newspapers and media to expose
activities that they find to show that officials are
abusing the responsibilities they are in charge of
for their personal benefit.

In May 1999, the Lebanese Transparency As-
sociation was founded as an organization that has
the goal of fighting corruption in both the private
and public sectors and encouraging the value of
transparency in Lebanon as well as stressing the
importance of youth awareness and corporate
governance.2 The people who decided to start this
association were all aware that it would be in the
best interest of society if actions were taken to stop
the abuse of power that was going on in Lebanon.

So although we have seen some legitimate
attempts to try to fight abuse of power, the effort
that public officials make still seems to fall short
and never really changes the reality of corruption
in Lebanon. In the end we are left with a few civil
society organizations and media sources that take
it upon themselves to try to expose any politicians
as well as people in the business world, by doing
so they hope to promote transparency in privately
owned companies and in the public sector.

Related Event

Most of university graduates are filled with great
ambition and enthusiasm immediately after gradu-
ation; they are optimistic by looking at a perfect
world. Unfortunately, although people like to work
at a cooperative environment, unpleasant events
and mismanagement can destroy ambition and
motivation. Many bosses don’t give credit where
credit is due. Immediately after graduation Wil-
liam found a job in a good financial company and
he was so energetic and ambitious.

After spending few time in the firm he started
to bring in plenty of ideas of how to improve the
business process within the company and the way
the everyday work is being done. He suggested
new systems and work flows that decrease the
time, effort, and cost of doing business. He pre-
pared a detailed plan as per his boss’s request and
presented to the manager so he can advise back
or add up his recommendations. However, when
the boss saw the structured and well-planned
documentations, he frankly, felt the need to steal
these ideas and refer them to him.

William had a good feedback after meeting
his boss who told him that he’ll pass the project
to the upper management so they can reveal the
benefits beyond it and approve on it. The next
day William heard shocking news while he was
taking his morning coffee. The project he has
prepared has gotten approval which was leaving
a good impression on all the employees who were
referring this tremendous work to his boss and
appreciating what he has done and would do to
enhance the work process and profitability. He
decided to confer this matter to his direct boss
who told him that he is being congratulated as
he’s the head of the department and that all his
team will be rewarded.

Week later he got surprised when he saw his
boss moving to a new office which was larger
than the old room and got finally sure that his
boss has gotten all the associated bonus when no
extra amount had been added to their normal end
of year incentives. His only choice now might be
to proceed working for the boss who is an idea-
stealer. Being just a subordinate, it may be risky to
protest, especially that he is still new and his boss
has spent more than a decade in the company. The
upper management will definitely take his boss
side and he’s risking then to lose the job he has
always dreamt of. He thought that other ways of
dealing with the situation might not make it better.

As time passed William found out that his
boss could never establish trust by giving credit
where credit is due. His boss always steals ideas

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31

Abuse of Power

and claims them as his own. In bad times, he
never takes responsibility for what’s gone wrong.
In good times he never passes around the praise
of his team. When the team excels he easily says
“look at what I’ve done!” and only give credit to
himself. His boss is considered an example of the
kind of person who abuses his authority and relish
the feeling of control over people and information.
William is always hesitating between choosing to
tell the truth or to remain loyal to his company.
This dilemma will remain a companion for Wil-
liam as long as he is working at this company and
under his boss supervision. He is deeply thinking
of the best manner to get rid of it but he is hoping
that time might solve this matter especially that
he is the right candidates to replace his boss. He
is also wondering whether he will do the same as
his boss is doing when he took his place.

Abuse of Power at a
Global Corporation

One of the most notorious cases of power abuse is
the example of a global corporation CEO. In 2003,
after 18 years of being CEO at global corporation,
he resigned from the board in protest against bad
governance practices. These governance practices
were what lent him the opportunity to remain as
CEO for so long.

The President was the nephew of the original
founder and the company’s largest individual
stockholder. His resignation was due to the fact
that as a result of the new corporate governance
norms adopted by the corporation. He would
be past the maximum age limit to serve on the
board. Although it was acknowledged that the
top CEO was responsible for helping the corpo-
ration become a successful conglomerate, it was
felt that he was assuming too much power in the
organization. In his first thirteen years as CEO, the
market value of the corporation rose an incredible
amount, by the late 90’s however, analysts noticed

that the company was hinging too much on one
executive. In Business Weeks annual survey of
corporate boards, this corporation was ranked
amongst the worst in the US. The top executive
exercised an undesirable level of control over the
BOD. He resorted to nepotism and favoritism
when it came to appointing board member, and
made most of the appointments from among his
personal friends. This increased his power in the
company and the board merely became a rubber
stamp to his decisions. The company was described
as being his “personal fiefdom”.

It is evident from the above that this is a
case of abuse of power. In this case the person
performing the abuse itself is the top executive.
Here, the top executive uses mainly his influence
to conduct the abuse. He does not use his wealth
to bribe nor technology to steal documents, but
very subtle personal influence to promote certain
friends to the board, whom he knows will help him
in return. It is extremely important to highlight
the fact that what Top executive was doing was
in no way illegal, for he was perfectly within the
confines of the law, yet his actions are morally
impermissible. The dilemma that this executive
faces follows the trend in the previously explained
section. He faces the dilemma of either gaining
substantial personal benefit in terms of salary,
bonuses, influence and control, yet at the same
time, hinder the company’s growth and reputation
or being ousted, maybe replaced yet the company
would continue on the path of development that
it was on.

DETAILS, DYNAMICS,
AND INTRICACIES

Having discussed the abuse of power both in
the world in a general sense and in Lebanon, it
is important to provide a detailed description of
the dynamics intricacies of the abuse of power.

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Abuse of Power

In order to delve into such depths, a more com-
prehensive definition is needed. Although we had
previously defined power, we had given a narrow
definition and the concept of power, however is
actually much more complicated. The concept
of power is a measure of an entity’s ability to
control its surrounding environment. In often
cases in business situations this entity is a senior
executive or can even be the corporation itself.
Frequently the term authority is often used as a
substitute for power. In a business context, this
power or authority is perceived as legitimate due
to the social or organizational structure in which
it exists; CEO’s have power by virtue of the
authority assigned to the position of CEO itself
within the general structure. The use of power,
contrary to common belief does not necessarily
have to involve coercion, or threat of force. At
one extreme, power does involve these aspects,
but it more closely resembles what we know as
influence, a very subtle concept that can still hold
immense effects. Power has various sources and
types, and therefore, its abuse also can come in
several forms.

Due to the previous, the ethical dilemmas that
manifest themselves as a result of the abuse of
power are varied. The abuse of power is unique in
the sense that it its action or inaction is a dilemma
in itself, and it is also the cause of a dilemma for
the person being abused. This is especially true
in the organizational context. The person that will
conduct the abuse itself faces the first dilemma
that exists; that person must choose between gain-
ing benefits themselves and harming the person
they are abusing, or not abusing their power and
harming the person, but gaining no benefit and
oftentimes a loss. Repeatedly in the business world,
this person is the corporation itself. In many cases
the organization faces the dilemma of abusing
its power and taking advantage of its consumers,
partners, or shareholders to reap substantial ben-
efits, or incurring losses in order to protect these

parties This dilemma can occur at varying degrees,
for example, it can occur as something extremely
subtle: an executive, who through subtle actions
harasses his female employees, or something as
large as an entire corporation that through their
inaction allows for the dumping of toxic waste in
a local river. These both are essentially the same
dilemma mentioned earlier, but of obviously
varying degrees.

The commonality amongst all cases of power
abuse is that there always exist two main groups of
stakeholders, those that are performing the action
are one, and those that are on the receiving end
of the action are the other. From the perspective
of the person that is the performing the abuse the
situation must as an obvious requirement, occupy a
position in which they have some degree of power.
It does not necessarily have to be a top manager
or CEO with excessive amounts of power over
all of his surroundings, but even the cashier at a
small supermarket has a small degree of power
that he can abuse if he chooses to. There is no
one position that most commonly leads to abuse,
but it is usually the high executive positions that
lend themselves to the most flagrant cases. The
higher the position the more power that person
has, and as a result, the more opportunity for it
to be misused. As a result, those in higher posi-
tions of power have more opportunity to abuse
it, and therefore, it is they that most commonly
do so. In addition to this, and by virtue of their
elevated positions, these individuals, or even on
a general corporate level, receive extremely high
media attention. This is due to the fact that their
positions and the nature of abuse related to such
a high degree of power have consequences that
are far reaching and tend to be extremely serious.

On the other hand, while the receiver is tra-
ditionally part of the organization, they do not
necessarily have to be. The person or body being
abused can be composed of one individual, or
a specific group of people, or even hundreds of

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33

Abuse of Power

thousands of people all of whom can suffer as the
result of a CEO or corporation’s action or inaction.
Most commonly when it comes to serious cases of
abuse of power, the damage affects an entire group
of people. Another issue related with the abuse
of power is the legality of it. This factor tends to
be a highly circumstantial one, as in the case of
the creative accounting used at Enron, this is an
obviously illegal action to inaccurately write the
accounting books. More subtle forms of abuse of
power exist that are perfectly legal, yet still remain
unethical; a manager who instead of engaging in
active teamwork, instead relies solely on his own
decisions and does not consider the options offered
by others. In the previous examples he benefits by
feeling superior and taking all the decisions and
causes harm by putting his teammates down, yet
nothing is illegal in the matter.

The Situation in Lebanon

An example of abuse of power in Lebanon is when
a minister was accused of favoring one company
with a bad record of building dams over another
company that won the contract for building the dam
in question. This accusation is a good example of
unethical behavior, where the minister was accused
of using his authority against the interest of the
country and abusing the power that was entrusted
to him as a representative of the people.

Under any system of government a social con-
tract exists where the elected officials serve the
best interest of those who elected them. Ignoring
all the areas where that does not apply in Leba-
non, when it comes to business the government
isn’t much more ethical. Many, if not all of those
with strong political backing in Lebanon have a
stake in business. The political feuds that occur
tend to extend onto other arenas such as business.
The morality in this issue is the fact that this is
an outright breach of the social contract. The
government should not, by any standard, inhibit
personal business merely due to the fact that it
was in the aid of a competitive faction. In fact, it

turns out that they were to be distributed to Virgin
and not MTV, once this issue was cleared up, the
shipment of cell phones passed easily. This is
hardly a debatable issue as there is a clear case
of corruption in the system, which is immoral
by any standards. Not only is this for the benefit
of a small number of individuals, it is to the loss
of many more. In addition to this instance of the
shipment, the government had previously ap-
plied pressure on Virgin and confiscated a lot of
contraband, confiscating it only form virgin, and
not investigating local suppliers. Again this is an
instance of pressure on one business in which a
local party has a major stake.

Abuse of power is considered unethical and
a serious matter in all countries and that is why
values such as transparency and accountability
should exist and be practiced to limit abuse of
power and furthermore those committing this
crime should be punished. In our country it is very
common to accuse, but it is even more unethical
that these accusations are never followed through
until the end to prove the allegations or rectify the
issue. These accusations without intent to reach a
resolve are also unethical and will make citizens
lose confidence in politicians and the system. In
the business world, abuse of power is harmful to
companies when it favors unqualified businesses
over more qualified ones for personal interests,
this eliminates the very important value of fair
competition that must exist based on set rules
and procedures.

In the case of Lebanon as in the case of all
democracies, there exists a social contract between
those in government and those who put them there
and both these examples are a clear breach of that
contract. The government should be in service
of the people and not attempt to hinder personal
business due to political conflict.

Lebanon vs. the Rest of the World

Abuse of power in workplace is not only common
in Lebanon, it is happening word wide in small

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34

Abuse of Power

companies as well as in big powerful corpora-
tions. Infringing ideas and copyrights, will keep
on happening because employees will always face
the dilemma of Truth Versus loyalty. We always
hear stories of professors stealing their research
students’ ideas, employees coming up with new
ideas and inventions but not getting rewarded.
How knows whether some of the biggest inven-
tions and chef d’oeuvre in history are accredited
to the wrong person.

It is the managers responsibility to protect
their team members, against power abusers in
work place, a good manger should appreciate
his staff, encourage any creative ideas, and work
on improving their performance, efficacy and
efficiency, he should be inspiring and fair to his
employees, and open to share his experience with
them, unfortunately it is not always the case. In-
fringement of ideas is often done by supervisors,
who use their employees to enhance their pictures
in front of their mangers and their company’s
stockholders. And for that they use their access
to restricted information as well as their position
of authority, usually they are not questioned or
doubted by others because of the trust they gain
by years of experience.

What pushes a manager or an employee to
steal others ideas is the competition and the high
expectations from their employers, their col-
leagues, their families and friends in a way that
puts the person in front of a continuous exam
where he finds himself ready to cheat in order to
pass. Copyrights infringement and theft of ideas
is common everywhere in the word. Because that
type of abuse of power is independent of place
and geography, it is the way of dealing with such
a case and the consequences that varies from a
place to the other.

In Lebanon, cases of abusing authority in busi-
ness is complicated, because most of the time, it
is mixed with politics. A powerful politician can
sometimes change administrative decisions within
a company, or put a company out of business, he
can work his authority in order to force a man-

ager to hire or to fire an employee. In Lebanon
criminals can get away without punishment if a
powerful politician or a business man decides to
“pull some strings” for their sake, because even the
justice system is always under the threat of power
abusers. An example of the abuse of power in busi-
ness is the ongoing debate of gravel machines in
Lebanon, this business seems to be unstoppable
because gravel machines owners are protected by
powerful politicians and businessmen.

In other advanced countries, the abuse of power
also exists and it is as bad as the case in Lebanon,
one of the differences, is the mass media effect. In
Europe for example, a president, a governor, or a
manger can be forced to quit if the media discovers
an act of authority abuse. In Lebanon scandals of
abuse of power are almost a constant part of the
daily news, but going to the media does not stop
the power abusers because the media channels are
owned or funded by political and religious parties.

“Abuse of power in the workplace is becoming
a national concern in the United States. According
to the Workplace Bullying and Trauma Institute,
54 million employees surveyed in September 2007
reported being victims of abuse in the workplace”.
(Abuse of Power in the Workplace | eHow.com)
but the laws that protect against power abusers
are more respected in the USA than in Lebanon.

The fact of abuse of power in Lebanon is
sometimes justified by the famous saying “ev-
erybody else is doing it” and what is known to
be ethically wrong is not that immoral anymore,
because unfortunately blowing a whistle by any
abused person is practically impossible, either
because of fear and this is common everywhere,
or because the whistle blower does not expect to
be heard and this is a typical case in Lebanon.

LESSONS LEARNED

The abuse of power is a bad situation and conduct
that we can face everywhere in the world. It is not
exclusive or specific for any party, gender, color

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35

Abuse of Power

or even region on earth although the slide vari-
ance in its definition that may reside. Neverthe-
less the “abuse of power” practices and its level
of acceptance do change around the global. It is
forbidden in some communities whereas it forms
a life pattern and dissolves within the system in
other societies.

According to Aristotle for those things which
we must do after having learnt them we learn to
do by doing them, in other words we become just
when doing just actions and we become bad by
doing bad actions. Hence nobody is treated as
power abuser unless he is frequently abusing the
power he possesses till it becomes a habit and
consequently a vice since, and always per Aris-
totle, Moral virtues and vices arise from habits.
When abuse of power becomes a habit within an
organization, it has a high potential to become
a part of the system as it evidently appears in
many political regime where abuse of power is
exerted by the upper positions within the state. In
similar cases the abuse of power becomes a com-
mon and normal behavior as the people beneath
start to rationalize the related practices away and
justify them.

Generally the abuse of power filters down into
the organization. If the head of an organization is
infected, the below members and subordinates will
become as well. The flow of this negative infection
is due to the absence of any punishment or clean
idol symbolized by the highest authorities. “The
system is unfair”, If we don’t do it, someone else
will”, “That’s the way it has always been done”,
everybody else do it” these are common sayings
that contribute in rationalizing the abuse of power
away and justify the wrong associated actions.
They standardize the power abusing so it fits into
the culture and gets handed down from generation
to generation. As a result the power abuser will
be replaced by another power abuser since that
is the way it has always been done!

EXPERT OPINION

Before one becomes a leader, success is all about
growing oneself; when one becomes a leader,
success is all about growing others. Aristotle was
ultimately more interested in developing people
who were in themselves doing the right things for
their subordinates than formulating detailed rules
for exerting ones power. Leaders must develop in
the context of good leadership training to develop
the right habits which dispose them make good
choices. Anyone can manage for the short term
by just doing the everyday work, and every one
can manage for the long run by dreaming. Leaders
made leaders because people believed they could
manage and dream at the same time. Leaders
must have enough insight, experience, and rigor
to balance the conflicting demands of short- and
long-term results.

Performing balancing acts everyday is leader-
ship. Of course, life would be easier if leadership
was just a list of simple rules, but paradoxes are
always exists. So no matter how hard authorities
tried to put rules, regulations, codes of ethics to
prevent the abuse of power, still however leaders
will always see things that is actually true for them.
And that is part of the fun of being a leader even
though every day is considered a challenge. It is
an opportunity to improve in one’s job. One can
only give it everything one got. So leaders must
act form duty and moral worth. For Kant leaders
must not look for happiness rather they must be
equipped to will what is good and worthy even
if they don’t know the consequences. The good
will which is not motivated by duty is the only
valuable thing.

No one can control the results and the conse-
quences of an action; actually one can only control
the action by doing the right thing by being the
right person on the first place. So leaders in order
to act ethically and be a contributor team player

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36

Abuse of Power

must have to evaluate, making sure the right people
are in the right jobs, supporting and advancing
those who are performing and moving out who
are not. Leaders have to coach, guide, critique,
and help people to improve their performance in
every way. And finally they have to build self-
confidence, always providing encouragement,
caring, and recognition.

FUTURE TRENDS

Globalization and increased expansion brought
new ethical challenges regarding abuse of power.
World globalization and increased expansion
brought about new ethical challenges regarding the
abuse of power. Major concerns regarding child
labor arose, as well as increasing environmental
issues and many related to bribery and facilitation
payments. Major ethical dilemmas regarding the
abuse of power and unsafe work practices in third
world countries arose, leading to several boycotts
and many awareness campaigns6. Increased cor-
porate liability, cybercrime, and privacy issues
were also issue.

Parliament passed laws that had the objective of
prohibiting acts of abuse of power. Also, commit-
tees that would be in charge of creating a strategy
to fight corruption in Lebanon were created but it
was never accomplished. Furthermore, initiatives
of local newspapers and media to expose activities
of power abuse.

There exist a number of solutions in order to
decrease the frequency and effects of abuse of
power:

• Person in charge should always be con-
stantly evaluated on the work he or she is
doing; there should be a system that checks
on the integrity of the work that these peo-
ple and truthfulness. More reliable system
of checks and balances should be set in

place. People in power should not only be
evaluated on a performance bases but also
should not hold the same positions for too
long.

• Abusive management is adversely related
to people’s ethical bravery and their com-
pliance with the organization’s central
standards. Moreover, work situations with
different amounts of abusive supervision,
shown by the level of abusive supervision
conveyed by workers, weakened the rela-
tionship between the level of abusive su-
pervision experienced by people and both
their ethical bravery and their compliance
with organizational standards. Ethical
bravery and compliance with organization-
al standards accounted for the relationship
between abusive supervision and workers’
ethical purposes and unethical actions.
These results propose that abusive supervi-
sion can demoralize moral agency and that
being abused personally is not obligatory
for abusive supervision to adversely affect
ethical consequences (Hannah, 2013).

• An arbitrated moderation model of the
consequences of carefulness and handling
approaches on the relationship between
offensive management and workers’ job
performance across 2 studies conducted in
India found proof that the connection be-
tween abusive supervision and work per-
formance was weedier when workers were
high in conscientiousness. Moreover, the
use of an avoidance coping strategy fa-
cilitated a negative relationship between
abusive supervision and performance.
Finally, the moderating effects of consci-
entiousness were mediated by the use of
avoidance coping strategies. Our findings
contribute to theories of abusive supervi-
sion, personality, coping strategies, and job
performance (Sandkeolyar, 2014).

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Abuse of Power

• Leaders’ collective and individual identi-
ties were uniquely related to transforma-
tional and abusive behaviors, respectively.
“Abusive behaviors are most frequent
when a strong individual identity is paired
with a weak collective identity. Frequency
of transformational behaviors accounts for
the largest proportion of variance in per-
ceived leader effectiveness, followed by
frequency of abusive behaviors and con-
sistency of transformational behaviors
“(Johnson et al, 2012).

CONCLUSION

There are a number of solutions in order to decrease
the frequency and effects of the abuse of power.
The solution to decrease the likelihood of abuse
of power by politicians and within businesses is
that the person in charge, the elected official or
the manager or CEO of a company should always
be constantly evaluated on the work he or she is
doing. There should be a system that checks on the
integrity of the work that these people are doing
especially since they are given such important
responsibilities and should always practice their
jobs with honesty and truthfulness. Such a rewards
based system would encourage work in the favor
of the organization in whole and not just to secure
high bonuses.

Furthermore a more rigid system of checks and
balances should be set in place. While the BOD
and the shareholders provide such a system, a
more proactive one will greatly reduce instances
of power abuse. In addition, these people in power
should not only be evaluated on a performance
bases but also should not hold the same positions
for too long. It is important for the growth of any
company or country that its leaders always be
changed so that first there is less chance that one

person will occupy a post for too long that he is
given too much control and could abuse this con-
trol. Second it will be to the benefit of the people
these leaders and executives are working for if
they could always have people who are interested
in the wellbeing of others and are not afraid to
train others who will take over their jobs. Having
time limits on certain position can both aid the
personal development of the person holding the
position and benefit the company in a general
sense. For example, ambassadors abroad have
four-year limits in each country that they are in,
in order to avoid such an issue.

REFERENCES

Boyle, W. S. (2007). Abuse of power. Academic
Press.

Business Ethics Case Studies. (2009). Case study
in business, management. Author.

IMCRINDIA Case Studies. (2006). Trouble in
the ‘Magic Kingdom’: Governance problems at
Disney. Author.

CBS News. (2003). Corporate conflict. Retrieved
from www.cbsnews.com

Executive. (2002, July). A dam too far. The Ex-
ecutive.

Gebara, K. S. (2007). The political economy of
corruption in post-war Lebanon. Beirut: Lebanese
Transparency Association.

Ghilliyer, W. A. (2008). Business ethics a real
world approach (2nd ed.). New York: Mcgraw Hill.

Gunther, M.S. (2002, January 7). Has Eisner lost
the Disney magic? Fortune.

Gunther, M.S. (2003a, December 22). Disney’s
loss is Eisner’s gain. Fortune.

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Abuse of Power

Gunther, M.S. (2003b, December 27). The direc-
tors. Fortune.

Hannah, S., Schaubroeck, J. M., Peng, A. C., Lord,
R. G., Trevino, L. K., & Kozlowski, S. W. J. et al.
(2013, July). Joint influences of individual and
work unit abusive supervision on ethical intentions
and behaviors: A moderated mediation model. The
Journal of Applied Psychology, 98(4), 579–592.
doi:10.1037/a0032809 PMID:23647209

Johnson, R. S., Venus, M., Lanaj, K., Mao, C.,
& Chang, C.-H. (2012). Leader identity as an
antecedent of the frequency and consistency
of transformational, consideration, and abusive
leadership behaviors. The Journal of Applied
Psychology, 97(6), 1262–1272. doi:10.1037/
a0029043 PMID:22730903

Nandkeolyar, A. S., Shaffer, J. A., Li, A., Ekkirala,
S., & Bagger, J. (2014, January). Surviving an
abusive supervisor: The joint roles of conscien-
tiousness and coping strategies. The Journal of
Applied Psychology, 99(1), 138–150. doi:10.1037/
a0034262 PMID:23978107

Schellen, T.S. (2002, May). Playing it dirty. The
Executive, 26-28.

Tohme, N.S. (2002, December). Difficult to deal
with. The Executive, 14-15.

Transparency International. (2008). Africa and the
Middle East. Transparency International.

KEY TERMS AND DEFINITIONS

Abuse: Over utilization of available means of
practice resulting in excessive damages.

Appraisal: Method of measurement aiming at
establishing a numerical value for an existing asset.

Hierarchy: Multi-layered system of power
levels specifying direction of flow for authority
and communication channels.

Leader: Individual charting a course that is
followed by others later.

Manager: Executive enforcer of rules of
behavior and performance mechanisms towards
achieving set objectives.

Power: A source of energy providing a base
for the flow of clout, influence and achievements.

Subordinate: Individual operating under the
supervision of a higher level of authority.

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Abuse of Power

39

APPENDIX

Learning Objectives

L.O.1: Define abuse of power and discuss where it can be found.
L.O.2: Define power.
L.O.3: Discuss how globalization and increased expansion brought new ethical challenges regarding

abuse of power.
L.O.4: Discuss why power abuse stories are not reported in Lebanon.
L.O.5: Explain the Lebanese attempts to fight power abuse after the war.
L.O.6: Clarify the ethical dilemmas created by power abuse.
L.O.7: List solution to decrease the effect of power abuse.

Summary

Define Abuse of Power and Discuss Where It Can Be Found

Abuse of power is the act of using one’s position of power in an abusive way. Abuse of power may be
realized where hierarchies present; in governments, in economic systems, in the workplace, and in families

Define Power

Power can be defined as the ability, or capacity to exert one’s will on others by virtue of their social
position, physical strength, wealth, technology, weapons, or trust that others confide in the person.

Discuss How Globalization and Increased Expansion Brought
New Ethical Challenges regarding Abuse of Power

World globalization and increased expansion brought about new ethical challenges regarding the abuse
of power. Major concerns regarding child labor arose, as well as increasing environmental issues and
many related to bribery and facilitation payments. Major ethical dilemmas regarding the abuse of power
and unsafe work practices in third world countries arose, leading to several boycotts and many awareness
campaigns. Increased corporate liability, cybercrime and privacy issues were also issue.

Discuss Why Power Abuse Stories Are Not Reported in Lebanon

The majority of the Lebanese companies are family owned firms meaning that there are favorable chances
for a normal employee to be directly supervised and monitored by the owner of the company who con-
trol punishment and appraisal. Moreover, the high unemployment rate makes worker in the Lebanese
companies generally tends more to save their jobs and definitely avoid any confrontation with their boss
which may probably lead him out of the place.

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Abuse of Power

40

Explain the Lebanese Attempts to Fight Power Abuse after the War

After the war ended some there have been some attempts to fight the abuse of power that was happen-
ing within the government by Civil Society Organizations as well as by some state officials themselves.
Parliament passed laws that had the objective of prohibiting acts of abuse of power. Also, committees
that would be in charge of creating a strategy to fight corruption in Lebanon were created but it was never
accomplished. Furthermore, initiatives of local newspapers and media to expose activities of power abuse.

Clarify the Ethical Dilemmas Created by Power Abuse

The person that will conduct the abuse itself faces the first dilemma that exists; that person must choose
between gaining benefits themselves and harming the person they are abusing, or not abusing their power
and harming the person, but gaining no benefit and oftentimes a loss.

List Solutions to Decrease the Effect of Power Abuse

There exist a number of solutions in order to decrease the frequency and effects of the abuse of power:

• The person in charge should always be constantly evaluated on the work he or she is doing; there
should be a system that checks on the integrity of the work that these people and truthfulness.

• More rigid system of checks and balances should be set in place.
• These people in power should not only be evaluated on a performance bases but also should not

hold the same positions for too long.

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41

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 4

DOI: 10.4018/978-1-4666-7254-3.ch004

Sexual Harassment Laws
and Their Impact on the

Work Environment

ABSTRACT

This chapter examines the impact of sexual harassment laws in a work environment. Different contexts
are examined with different sexual harassment laws. The most vulnerable individuals are identified. The
particular case of Lebanon is inspected where few laws regulate this matter. A comparison is established
with the USA. Lebanon and the United States have a different view of sexual harassment. In Lebanon, no
clear laws protect women. In addition, Lebanon is more tolerant than the United States. The difference
in cultures also contributes in people’s willingness to disclose harassment. In the United States, people
are used to the concept of right and a judicial system that preserves it. In Lebanon, such a matter is
taboo, and people are discouraged from disclosing to preserve their reputation.

INTRODUCTION

An overall lawful definition of sexual harassment
is an unwelcomed bodily or verbal sexual advance
by coercion of the harasser’s superior position or
in an exchange for some kind of reward. It can take
both verbal and/or physical forms between people
from the same or opposite sex. Sexual harassment
in an office environment can be very destructive
as it creates an unsafe environment and promotes
unfairness. It affects one’s ability to perform cor-
rectly in his or her workplace, and makes it hard
for them to work at full efficiency, especially when
they are affected from the emotional, physical and

mental side. Employees who are mostly exposed
and affected by sexual harassment include mostly
low salary staff with lower level of education, and
young single women.

BACKGROUND

Sexual harassment is coercion, aggression, or
offensive behavior by a person towards another.
The United Nations adds the word ‘unwelcome’
to its definition of the word ‘sexual harassment’
and by that they mean although the act might not
actually be an assault and the person being harassed

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42

Sexual Harassment Laws and Their Impact on the Work Environment

accepted the act, in his/ her opinion it was an un-
welcomed act and therefore the act is categorized
as harassment. Sexual harassment is always unlaw-
ful. It can take place under any circumstances; the
simplest would be when an employee of a higher
rank asks a lower ranked employee for sexual favors
in return to bonuses or a raise. Human rights have
evolved tremendously; in the US the civil rights
act of 1991 gave the woman the right to sue for
sexual discrimination and harassment. In 2005
The European council amended the 1976 council
to include rights against sexual harassment. Lo-
cally the Lebanese ‘Anti-Harassment Campaign’
has launched its latest campaign using a mascot
called Salwa. “SALWA” was created to promote
gender equality, following a dramatic rise in re-
ports of sexual harassment. After taking a brief
understanding about the matter, we would like to
say that societies are evolving towards the better
where people of all races, sexes, colors have equal
rights. There are certain norms that apply here
in Lebanon and are common among most if not
all Arab countries that need to be changed, these
understandings must be altered and updated if we
were to be part of the forthcoming new social life
styles and the social welfare.

SEXUAL HARASSMENT IN
THE HEALTH SECTOR

Sexual harassment is a type of sex discrimina-
tion. Equal Rights Advocates (2012), the lawful
description of sexual harassment is

Unwelcome verbal, visual, or physical conduct of
a sexual nature that is severe or pervasive and
affects working conditions or creates a hostile
work environment.

International Labor Office (2001), “the two
principal types of sexual harassment in the work-
place included in the definition of the European

Communities are ‘quid pro quo’ harassment and
the creation of a “hostile working environment”
ILO, (2001) defines the two principles as:

1. Quid Pro Quo Sexual Harassment: “Refers
to a demand by a person in authority, such
as a supervisor, for sexual favors in order
to obtain or maintain certain job benefits,
be it a wage increase, a promotion, training
opportunity, a transfer, or the job itself. It
forces an employee to choose between giving
in to sexual demands and losing job benefits”
(ILO, 2001, p 21, Para.4).

2. A Hostile Working Environment: “Refers
to unwelcome sexual advances, requests for
sexual favors or other verbal, non-verbal, or
physical conduct of a sexual nature which
interferes with an individual’s work perfor-
mance or creates an intimidating, hostile,
abusive, offensive, or poisoned work envi-
ronment”. (ILO, 2001, p.22, Para.1)

Health service industry is not immune from
the problem of sexual harassment. One study pro-
poses that the high occurrence of harassment in
health care is linked to the health care industry’s
divided professional segregation. Prestige and
Power are important factors to sexual harassment.
(Kaye, 1996)

Bio-medicine (2009) ‘Doctors and administra-
tors in positions of authority harass other doctors,
nurses and other non-medical staff. Also, patients
may harass doctors, employees, and nurses.” In
short, victims of sexual harassment in health
sector can be nurses, doctors, patients, and staff;

Kaye, (1996) for example, a nurse may be
harassed by (Colleagues, Supervisors/directors,
Physician, doctors, Patients, Patients’ relatives);
also, patient may be sexually harassed by (Nurses,
doctors, staff in health center, physicians); in addi-
tion, lower level of employees may be harassed by
(nurses, physicians, Patients, Patients’ relatives).

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Sexual Harassment Laws and Their Impact on the Work Environment

BIO-Medicine (2009) reported that “Women
in the health care sector suffer a lot of discrimina-
tion in Lebanon, especially the nurses’ the role
of a nurse is greatly looked down upon by most
of the Lebanese community, with people seeing
it as a low profile job.”

BIO-Medicine (2009) reported:

Nurses described sexual harassment at the work-
place to be both verbal and non-verbal communi-
cation and/or behavior that might hurt the victim
physically and/or emotionally.

Nurses reported a wide range of harassing
behaviors, including but not limited to:

1. Offensive sexual remarks,
2. Unwanted physical contact,
3. Unwanted nonverbal attention,
4. Requests for unwanted dates,
5. Sexual propositions, and
6. Physical assault.

SEXUAL HARASSMENT
AT WORK WORLDWIDE:
STATISTICS FROM THE U.S.

Here are figures of sexual harassment at work
in the United States alone during the year 2010,
according to the Employment Equal Opportunity
Commission: In the year 2007, up to 12,510
charges of sexual harassment were received in
the U.S alone. They showed that females were not
the only victims. In fact, 16.0% of those charges
were filed by males.

SEXUAL HARASSMENT AT
WORK: STATISTICS IN CANADA

Even in Canada, sexual harassment showed to have
high levels of reporting during the past several
years, with the majority of these reports being a

result of sexual harassment at the office. Table 1
shows frequency figures that illustrate the situation
of sexual harassment in the work place in Canada.
Sexually harassed individuals in the field of work
in Canada show that the offenders coming from a
work environment (staff + professors) are as high
as 25% of the total persons accused.

SPECIFIC BACKGROUND

South Africa

No cases were reported in South Africa in the
recent year. However, firms are discreet to mention
what internal complaints they have controlled. As
a preventive measure, governments and private
firms, implement sexual harassment policies,
which regulate relationships between co-workers.
Companies may be held liable of employees’ sex
related discrimination, because of the absence
of internal systems to fight sexual harassment.
Then to avoid expensive lawsuits, companies start
implementing internal policies to hold individual
employees liable.

This increase in protection for female workers
created a safer environment and paved the way for
women to become the majority of the workforce.

A good sexual harassment law preserves the
right of the persons needing it, while being fair
to everybody else. When the first sexual harass-
ment laws were introduced they were intended

Table 1. Reported sexual harassment incidents in
Canada in institutions of higher education

Persons Accused Frequency Percentage

Students 33%

External 24%

Unknown 18%

Staff 15%

Professors 10%

Total 100%

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44

Sexual Harassment Laws and Their Impact on the Work Environment

to protect women in general as women are more
likely subject to sexual harassment than others.
The cons of sexual harassment laws are:

• They present a conceptual problem by vi-
olating equality right; women are getting
special treatment because they are women.

• They create under-inclusive and over-in-
clusive observations of the case.

• The law being over-inclusive creates a sep-
aration between males and females, which
builds a more hostile environment.

• Firms applied harsh employees’ inter-rela-
tions policies to avoid expensive lawsuits.

• Any suspects are pitilessly punished.
• Some firms used sexual harassment as an

excuse to fire employees.

INTRODUCTION TO SEXUAL
HARASSMENT LAWS

Sexual harassment is the act of directing dis-
criminatory sex-related actions towards a fellow
coworker (in the workplace) or any other person
out of sexual attraction or hostility. It can take
both verbal and/or physical forms between people
from the same or opposite sex. Harassment can
occur either by consent of both parties or by force
and intimidation. Thus when harassment occurs
the work place becomes hostile, offensive and
oppressive.

Sexual harassment in an office environment
can be very destructive as it creates an unsafe
environment and promotes unfairness. It affects
one’s ability to perform correctly in his or her
workplace, and makes it hard for them to work at
full efficiency, especially when they are affected
from the emotional, physical and mental side. As
a preventive measure, governments and private
firms implemented sexual harassment policies.

Those vary by strictness and degree of implemen-
tation, and their presence has a certain effect on
the work environments. Sexual harassment laws
are set by the government and policies by firms
to regulate relationships between co-workers. The
spectrum of restriction varies from no relation at
all outside work to complete freedom. However
the dilemma becomes whether employees have the
right to interact freely, or should policies regulate
this interaction?

Introduction to Sexual
Harassment Laws in the World

Sexual harassment laws were first established
in the U.S in the year 1964 as part of “The Civil
Rights Act of 1964”. They were meant to regulate
harassment directed to male and female workers,
but were created by the motive of the harassment
that was targeting female workers. The main
forms of discrimination that were prohibited by
the act were racial, sexual, color, national origin
religious. The first form of sexual harassment that
was addressed by the act was the job description
material that discriminated applicants based on
physical appearance. The series of regulations that
were created in the U.S were first triggered by the
case of “Barnes vs. Train (1974)”, which was the
first publicly acknowledged case of sexual harass-
ment. The United States of America is the most
knowledgeable and most educated country when
it comes to sexual harassment and its regulation.

In India sexual harassment was made illegal
leading to the establishment of regulations in 1997.
In Israel the first laws that addressed sexual harass-
ment were first introduced in 1988 under the name
“Equal Employment Opportunity Law” where a
harasser was not allowed to retaliate to his victim
if he or she were turned down. In 1998 sexual
harassment became illegal regardless of retalia-
tion. In “May 2002”, the first forms of laws that

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45

Sexual Harassment Laws and Their Impact on the Work Environment

address sexual harassment were created in Europe,
where the European Union forced all participating
countries to adopt the new regulations. In China,
in the year 2005 modifications were added to the
“Law on Women’s Right Protection”, where sexual
harassment became part of the regulations, and
was prohibited and placed under research in order
to further define sexual harassment.

General Historical Background
about Sexual Harassment Laws

In 1964, Title VII of the civil rights act gave the
rights to employees to be protected under both
state and federal law against the workplace sexual
harassment. Under this act, employers may not
intentionally use skin color or ages or any way of
discrimination as a basis for his decisions relating
to the employment relationship. Therefore this act
protects against discrimination including sexual
harassment. The civil right act of 1991 added to
the previous act more protections including the
expansion of women’s rights to sue and then collect
corrective damages for any sexual discrimination
incident.

In the last twenty decades of the twentieth
sanctuary, feminist groups started thinking about
the rights of women in the work place, and about
means to protect that right. According to Linda
Clarke’s article “Sexual Harassment Law in the
United States, the United Kingdom, ant the Euro-
pean Union: Discriminatory Wrongs and Dignitary
Harms” (2007), “the term sexual harassment was
first coined in 1975 during a brainstorm session at
Cornell University conducted by a feminist group”.

The need for laws protecting women from
any unwanted sexual action increased as women
joined the work force, and a clash between the
two genders occurred. During the seventies an
economic boom was taking place in the United
States, in addition feminist movements proclaim-

ing women rights were on the rise. This is when
many female workers joined the workforce. The
entrance of females to the workforce, which is
considered masculine, created a shock. Charles
Van Wijk, a psychology professor at the Univer-
sity of Cape Town, provides three explanations
for sexual harassment in the military context in
his study titled “Sexual Harassment of Women
in the South African Navy” (2009). The three
are as follows:

• When women entered offices, plants and
other work areas considered exclusively
masculine, male workers felt that their per-
sonal space was being violated and faced
this new development with unwelcoming
behavior that included sexual harassment.

• Another explanation suggests that men
wanted in their sub-conscience to repro-
duce in the work environment the same
sociological hierarchy between men and
women, where the latter is the inferior
being.

• A third explanation argues that the nature
of relation between men and women is
incorporated in humans since their early
developments. That’s why they tend to re-
produce this sociological intimate relation-
ship at work. Nevertheless men have more
capacity to accept this reproduction than
women.

IMPACT OF ISSUING SEXUAL
HARASSMENT LAWS ON THE
WORK ENVIRONMENT

In the workplace, there are people from different
backgrounds, cultures, gender. Each, as we have
already mentioned have a different perception
and tolerance rate to sexual harassment. On the

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46

Sexual Harassment Laws and Their Impact on the Work Environment

other hand a good law is the one that preserves
the right of the persons needing it, will being fair
to everybody else. When the first sexual harass-
ment laws were introduced they were intended to
protect women in general. However studies have
shown that some women are more likely subject
to sexual harassment than others and the purpose
of this section is to show who they are.

In Merkin’s study on “cross-cultural differ-
ences in perceiving sexual harassment” (2008),
she showed who are the classes of people who
are the most vulnerable.

In the United States, the types of employees
who are the most exposed are:

• Employees who have low salary;
• Lower level of education;
• Young single women.

The spectrum of different laws in the world:
from no laws to very uptight. The laws related
to sexual harassment in the world are shaped
according to the country’s constitution, cultural
background and beliefs. We can undoubtedly
assume that sexual harassment laws will not be
the same in Europe and the Arab world because
of the cultural differences, and how the relation
between man and women is seen.

In fact in western countries sexual harassment
involves a harasser, which is usually a man, and
a victim, usually a woman. However in the Arab
world there is a sort of “reverse sexual harass-
ment” where a woman can report any man if
he does not succumb to her demands. Sexual
harassment laws were born in the United States
to protect women from sex discrimination at the
workplace. However in Clarke’s article we learn
about two different frameworks one in Europe. In
the United States, sexual harassment is considered
as sex discrimination because of the arguments
(raised by MacKinnon):

• “The conduct is sexual by nature and sexu-
al equals sex.”

• “Sexual harassment is an example of sub-
ordination of women by men.”

In Europe, sexual harassment laws are seen
differently than in the United States. They are
built based on a different framework: “Dignity
for all”. This framework treats sexual harass-
ment as an assault to one’s dignity rather than
sex discrimination.

Looking a sexual harassment from this per-
spective is due to the fact that Europeans saw
it as “mobbing”, in other terms bulling and not
discrimination. Therefore the harm caused by
“mobbing” is not restricted to sexual harassment;
it includes any action that harms one’s dignity.
Another reason explaining why Europeans looked
at this matter from the dignity perspective can
be tied up to the Roman historical background.
Because both frameworks were not perfect, the
new UK framework for sexual harassment laws
included both American and European approach.

DRAWBACKS OF SEXUAL
HARASSMENT LAWS

Many scholars criticized sexual harassment laws,
and wondered if they were really in favor of
women’s rights. First the sexual harassment law
was accused of presenting a conceptual problem
by violating the equality right: women are being
treated in a more special way because they are
simply women.

Also, “One of the weaknesses of the American
law according to Vikki Shultz is that it creates
under-inclusive and over-inclusive observations
of the case. It is under-inclusive when the court
examines only sexual facts to determine whether
there is discrimination or not. It is over-inclusive

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47

Sexual Harassment Laws and Their Impact on the Work Environment

when the court considers any sexual behavior
as discrimination” (Clarke, 2008). The law be-
ing over-inclusive creates a separation between
males and females, which builds a more hostile
environment

Another weakness sexual harassment laws of-
fer is the fact that firms applied harsh employees
inter-relations policies to avoid expensive lawsuits.
In addition any suspect is pitilessly punished. As
well as some firms used sexual harassment as an
excuse to fire employees. In Clarke’s article it is
stated that MacKinnon, a female legal scholar
activist, refused to consider sexual harassment can
be covered by the emotional distress related laws
as it did not account for the fact that the crime
was addressed by a man to a women with sexual
implications or actions.

Therefore the issuance of sexual harassment
laws implied that specifically women, in the
workplace are protected from any sex discrimina-
tion act. As a result many companies were held
liable of employees’ sex related discrimination,
because the firms did not have internal systems to
fight sexual harassment. Then to avoid expensive
lawsuits, companies started implementing internal
policies to hold individual employees liable. This
increase in protection for female workers created
a safer environment and paved the way for women
to become the majority of the workforce in 2010
according to associatedcontent.com managed by
Yahoo.

In a study entitled “Cross-Cultural Differences
in Perceiving Sexual Harassment” conducted by
Dr. Rebecca Merkin (2008), a professor at Baruch
College in New York, it was proven that sexual
harassment is not universal in different cultures
in terms of perception, tolerance and reaction.
The study primary focuses on the differences
between American and Latin American workers
in Latin America. However we believe that we
can generalize this conclusion and state that the
perception and reaction towards sexual harassment
in Lebanon is different from the one in the United
States or any other country with different values.

Therefore to evaluate the definition of sexual
harassment laws according to society we need to
examine closely the set of beliefs related to sex,
reputation and work. We also need to evaluate
the perception and sexual harassment tolerance
of different groups of people.

SEXUAL HARASSMENT
BACKGROUND/HISTORY
IN LEBANON

The Lebanese society is considered as conserva-
tive and hard on information, giving that Lebanon
is a Middle Eastern country, a part of the world
where personal privacy is valued. Lebanese indi-
viduals are concerned to keep a good reputation.
In fact recently TV shows witness great success
because they relied on jokes telling, where most
of the jokes were sexually related. On the other
hand, sexual harassment perception and tolerance
varies among different tranches of the society:
Women versus men, Younger Women versus
Older Women, Younger men versus older men,
white collar versus blue collar.

In a study entitled Attitudes and Perceptions
of Workers to Sexual Harassment conducted by
Dr. Marita McCabe and Dr. Lisa Hardman, two
professors at the Deakin University, it was shown
that in the United states both blue and white col-
lar women are more perceive more acts as sexual
harassment than men; both white collar and blue
collar men and women saw the case as sexual
harassment when the scenario included a female
victim. When organization tolerance was lower
for sexual harassment (mainly white collar) men
were more tolerant than women about different
cases. When organization overall tolerance was
high (blue collar), the tolerance for both genders
was the same. McCabe and Hardman explain
this tolerance level by the fact that white-collar
women are less used to sexual harassment, as
opposed to blue-collar women. Conclusions can
be generalized to the Lebanese work environ-

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48

Sexual Harassment Laws and Their Impact on the Work Environment

ment since the study did not include any cultural
variables. Lebanon is high on tolerance for sexual
harassment since the overall acceptance is high
as laws are not strict about that matter, Television
shows broadcast sexual explicit, degrading for
women jokes shows without being stopped and
Lebanese public expresses temptation to watch.
The data we have relatively to the study stated
before proposes that Lebanese people are high on
tolerance, and start suspecting sexual harassment
when a sexual action is being made rather than
oral sexual insinuations only.

Sexual Harassment laws related to offices
imply that those laws preserve women’s right
in a work environment. However the Lebanese
constitution was issued in the 1920s and was a
copy of the French constitution. Furthermore little
changes were performed on this constitution and
women during the period of issuance did not join
the work force yet. This is why we suspect that
Lebanese laws do not have a clear definition of
sexual harassment, thus do not include clear previ-
sions to protect women at work. This hypothesis
is confirmed by an article on NowLebanon.com
entitled “sexual harassment” where it is men-
tioned that there is no clear law protects women
from sexual harassment. In the same article it is
mentioned that one of the primary reasons for
the prevalence of sexual discrimination is due to
the fact that the Lebanese constitution portrays
men as superior to women: Women cannot give
nationality to kids, women cannot open a bank
account for kids without consent of father…

Sexual Harassment Case in
Lebanon: Context, Laws, Impact

Many harassment cases exist but we do not hear
about them because of the nature of the society.
Everyone in Lebanon is acquainted with at least
one person who has suffered from sexual ha-
rassment. The first case is about child who got

sexually harassed by a 40-year-old man in the
month July of the year 2009. This took place at a
mini-market located in Beirut. The 9-year-old boy
went to the market to buy candy. Meanwhile he
was approached by the storeowner and was lead
to the 2nd floor where he got sexually assaulted.
After his encounter, the boy went and told his
mother about his experience. The mother contacted
the authorities, and the offender was taken into
custody. The storeowner was released from jail
and left the country to work overseas instead of
getting his three years in jail punishment.

The second case, which we will focus on more
than the previous one is that of a doctor who sexu-
ally harassed his hospital patients and was fired
as a consequence.

Me: Will it be inconvenient to you if we include
your name in the interview?

Source: I prefer not, for two reasons. First the
doctor’s daughter is a close friend of mine.
Second I think those issues of sexual harass-
ment should not be discussed with names.
However I think we should know about them
and learn from them for later on in our career.

Me: Do you mind if we include the name of the
doctor who committed these sexual harass-
ment acts?

Source: I don’t mind because this issue has been
publically known in the Lebanese com-
munity.

Me: Could you please tell us what you know about
the incident?

Source: This incident happened with a famous
gynecologist. I heard about it from different
people. The details of the story are that this
doctor was involved in different sexual acts
with his patients. After the hospital admin-
istration found out about this, he was fired
from the hospital and he had to open up his
own Clinic. However his business suffered
and patients took distance from him.

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49

Sexual Harassment Laws and Their Impact on the Work Environment

Me: Could you please provide us with more details
regarding the sexual harassment acts that
took place at the Hospital?

Source: Obviously he had sex with them.
Me: Did the doctor get tried for his actions or

was it solved in a discrete matter?
Source: In a discrete matter because the reputa-

tion of the hospital was at stake!
Me: What was the impact that this incident had on

the offender’s family? In other words, what
happened after the incident to the doctor
and his family?

Source: He got separated from his wife. His daugh-
ter remained with her mother. She sees her
father from time to time. There was no trial,
it was resolved with a mere dismissal from
work, and the impact that the incident had
on the harasser’s family was grave. He and
his wife got separated, and their daughter
who was at the age of 11 must have suffered
greatly because of it.

THE CASE OF ONE AUTO
MANUFACTURING BUSINESS

In 1998, an auto business in the USA agreed to
pay $34 million to female workers. The company
was charged with being hostile against women.
The United States Equal Employment Opportunity
Commission estimated that about 350 current
and former employees at the auto business plant
would receive payments of up to $300,000, the
maximum possible under civil rights laws. Also,
the consent decree requires the auto business to
provide sexual harassment training to employees,
revise its sexual harassment policy as essential and
examine claims of harassment within three weeks
under a “zero tolerance” policy. Eventually, the
auto business was able to clean up its tarnished
reputation. The company immediately overhauled
the anti-sexual harassment and complaint system,
which now boasts a zero tolerance policy.

CONCRETE EXAMPLE OR CASE

The case of the president and his staff: context,
laws governing the case, both point of views,
trial and impact: December 1998 US president
was impeached by the vote of the U.S House
of Representatives for obstructing justice by at-
tempting to conceal the affair he was having with
a Whitehouse intern.

The laws regulating and prohibiting sexual
harassment were those defined by “Title VII
of the Civil Rights Act of 1964” updated lately
when additions were triggered by different cases
that occurred during the period in between. No-
vember 1995, witnessed the beginning of the
affair between the 42nd president of the United
States and the 22 years old unpaid intern. April
1996, the intern was reassigned to the Pentagon.
A year later, the legal team calls upon the intern
for questioning. Later the same legal team asked
the president about his relation with the intern,
to whom he replies evasively. Then he clarifies
his statement before a grand jury and the press
the following statement: “I want you to listen to
me, I am [going to] say this again, I did not have
sexual relations with that woman”. The president
was denying ever having an affair with the young
intern, and she was testifying in court against him
in order to convict him of sexual harassment after
having acquired immunity from the government.
The controversy took place and the truth unveiled
itself in the summer of the year 1998. The president
gave the following statement: “Indeed I did have
a relationship with Miss Lewinsky that was not
appropriate, in fact it was wrong”.

CONTRAST BETWEEN CONTEXTS
AND REGULATIONS

The only relevant contrast we can make between
both cases is that in the United States there are
sever repercussions for sexual harassment because

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50

Sexual Harassment Laws and Their Impact on the Work Environment

of strict regulations. In Lebanon repercussions are
only due to intention of preserving the reputation.
Contrast between Lebanon and the United States
regarding relationships and professional relations,
and perception of sexual harassment. Lebanon
and the United States have a different view of
sexual harassment. As we have mentioned no
clear laws protect women in Lebanon as opposed
to the United States. Also as a general tolerance
Lebanon is more tolerant that the United States.
The difference in cultures also contributes in
people’s willingness to disclose harassment. In
the United States, people are used to the concept
of right and judicial system that preserves it. As
opposed to Lebanon where such a matter is taboo,
and people are discouraged to disclose for the sake
of preserving their reputation.

Finally when there are policies and regulations,
and when the individual can get compensation for
any assault, the latter is has an incentive to disclose
any case f sexual harassment. Three quarters of
Lebanese women are sexually harassed; Lebanese
women do not know exactly what sexual harass-
ment means, and confuse it with rape. Therefore
a clear regulation of sexual harassment is needed.
Improvements on two levels can be made regard-
ing sexual harassment in Lebanon. The first level
is laws and regulations issued by the parliament.
The second level of improvement should be made
on a popular level (awareness campaigns-NGOs
should be more-educate Lebanese women when
it comes to sexual harassment and their rights).

According to an article on Moheet.com, a statis-
tic, conducted by the Lebanese NGO called Kafa,
reveals that three quarters of Lebanese women
are sexually harassed. This number reveals that
Lebanese women do not know their right as stated
in the Constitution; Equality between men and
women. Lebanese women still fear the outcomes
of talking about sexual harassment incidents. By
having such a tolerant society, Lebanese women do
not know exactly what sexual harassment means,
and confuse it with rape.

Therefore a clear regulation of sexual harass-
ment is needed for the following purposes:

• Define exactly to the public what sexual
harassment means.

• Create a less hostile work environment for
women.

• Promote equality between men and women
as the constitution already promotes.

SOLUTIONS ON HOW TO
AVOID THE NEGATIVE AND
PROMOTE THE POSITIVE

Comparison of impact of the two extremes of the
laws spectrum: no laws versus very tight laws.
When having a highly regulated relation environ-
ment, gender segregation will occur because of fear
of the consequences of any explainable incident.

A good example would be “the reverse sexual
harassment” that could take place in the Arab
world because of the many restrictions on relations
between men and women. If a woman accuses a
man of any small visual contact, the latter can face
many charges, and risk his career in the region.
This is why fewer men will accept to hold jobs
where there will be contact with veiled women.
Even if the individual accepts the job, he will be
very careful when dealing with the women in
the workplace. This environment is not healthy
for doing business and it could become hostile
because of the gender segregation. In the case
of absence of laws and in an environment where
people do not disclose incidents, the rate of sexual
harassment will be very high. This is why some
measure should be taken to help create a healthy
environment.

What Can Be Improved in Lebanon

The improvements that should be made in Lebanon
regarding sexual harassment are on two levels. The

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51

Sexual Harassment Laws and Their Impact on the Work Environment

first level is laws and regulations issued by the
parliament. In fact laws should be issued to protect
women at work. However before the issuance of
those laws, the legislators have to identify who are
the most vulnerable to be harassed among workers?
What is the reason for their vulnerability? How
can they be protected? How can the law balance
between regular relations between employees
and women’s right at work? The second level of
improvement should be made on a popular level:

• More campaigns to encourage women to
disclose incidents should be conducted,

• NGOs such as Kafa and Salwa should be
more active and form a pressure group on
legislators,

• Lebanese women should be taught what
sexual harassment really is, and what the
misconceptions are, and

• Lebanese women should know their rights
but also their duty bit to abuse of the laws.

SEXUAL HARASSMENT DILEMMA:
TRUTH VS. LOYALTY

A male manager asks an employee (a woman) for
a sexual favor in return to a promotion at work.
This case leads to the dilemma. If she did not ac-
cept the offer what would she face? Will she lose
her current position? Will the manager change
the way he treats her? Will he fire her? Will he
keep and promote her for nothing in return? Why
did he initiate that request for sexual favor? A
simple scenario of creating a dilemma is when a
manager comes up to an employee and shows the
interest of promoting her but in return asks for a
sexual favor, which is interpreted internationally,
if unwelcome, as sexual harassment.

The dilemma here is that on one hand we have
the employee in a confused status and doesn’t
know whether she should approve to the harass-

ment, offer or not. If she does approve, then she
would get the promotion and improve her career,
whereas if she disapproves, she might be fired
and face the condition of not finding a job that
is as good as her current one. On the other hand,
the manager initiated this act only because he
requested sexual pleasure and satisfaction. But
he also faces a situation where he should have
made a choice of whether he should promote her
because she is good at what she does or whether
he should promote her because he wants favors
in return, apparently he decided to go with the
sexual favors.

How would you react when faced with such
a situation? After the promotion, would he stop
harassing her?

Sexual Harassment in Health Sector

Background (United States)

It was not until 1970 that sexual harassment law
was developed and implemented (Berlin, 2006).
“Societal attitudes about and attention to sexual
harassment began to change in the early 1970s
with the growth of the feminist movement. This
movement empowered women to speak out and
seek employment in higher paying positions that
traditionally have been filled by men.”However,
in 1970s sexual harassment has become an over-
riding concern of employers, groups, and associa-
tions all over the United States. Nowadays all big
companies, government associations, military,
collages, and universities have sexual harassment
policies in place. (Berlin, 2006)

Furthermore, Berlin (2006) “In 1970 Catharine
Mackinnon and Lin Farley and the many other
lawyer and activists who represented women in
and out of court were able to mount a concerted
assault of unprecedented magnitude of force on
the practice of sexual harassment.” furthermore,
due to the massive pressure exercised by the

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feminist movement, the American legal system
had no choice but to gradually respond to these
demands, and as a result, they acknowledged and
admitted women’s right to work free of unwanted
sexual advances.” (Sicgel)

Moreover, women for the first time dared to
share their experience and speak out about their
experiences at work, this act helped to establish
Sexual Harassment law (Sicgel); furthermore,
Sicgel said that “the term “Sexual Harassment”
itself grew out of consciousness-raising session
Lin Farley held in 1974 as part of Cornell Uni-
versity course on women and work.”

Berlin (2006) said that “The Civil Rights Act,
enacted in 1964, for the first time made it illegal
in the United States to discriminate on the basis
of race, color, religion, age, national origin, or
sex. Title VII of this act specifically prohibited
employers from discriminating or harassing on
the basis of sex with respect to compensation,
terms, conditions, or privileges of employment.”
However, congress adjusted the existing law in a
way that allows victims of sexual harassment to
be compensated (Berlin, 2006).

Brandeis (2004), “American law about em-
ployment discrimination grows from several
sources: statutes passed by Congress and by the
states (known as statutory law) that ban such dis-
crimination, and judicial decisions about exactly
when and to whom those laws apply made by the
relevant federal and state courts (known as case
law, since these decisions are made in individual
cases).” Case law is just as obligatory as legal law;
judges rely on it for all future cases.

Brandies (2004), Timeline overview of the
major pillars of American sexual harassment law:

1. 1787 US Constitution is ratified1964 Civil
Rights Act of 1964 passed. U.S. Congress
passes the civil Rights Act of 1964, which
bans discrimination based on race, color, reli-
gion, sex, or national origin in situations that
include voting and public accommodations.

2. In 1979, legal scholar and feminist Catherine
Mackinnon published in her book “Sexual
Harassment of Working Women” a concept
called “sexual harassment,” a term that, oth-
ers have reported, grew from discussions
within the 1970s feminist movement.

3. Later, sexual harassment is a civil violation
of the 1964 Civil Rights Act’s Title VII.

4. 1980 EECO Wrote clear and specific defini-
tion about “sexual harassment” distinguish-
ing between “quid pro quo” harassment and
harassment1986 Supreme Court declared
sexual harassment to be sex discrimination.

5. In 1991 Civil Rights Act of 1991 passed.
6. 1995 Government Accountability Act

passed.
7. 1997 Supreme Court declares same-sex

harassment is illegal.
8. Finally, 1998 Supreme Court define and

provide criteria that protect employers from
legal action.

Furthermore, Kaye, (1996) said that “the
American Nurses Association (ANA), estab-
lished in 1896, has taken a stand against sexual
harassment in the workplace by developing and
promulgating its Position Statement on Sexual
Harassment.” In general, due to strict application
of sexual harassment law in many organizations,
sexual harassment cases show that since the year
1997 harassment reports have decreased tremen-
dously (Business law, 2001). On the other hand,
ANA, (2012) reported that “like other occupations
the occurrence of SH in nursing is high, one may
even argue that it is a normative experience for the
nurse, rather than a rare occurrence. Some studies
showed that from 69% to 85% of nurses reported
experiencing some form of sexual harassment”

Background (Lebanon)

Although Lebanon is considered more “West-
ernized” than its neighbors in the Arab world, it

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53

Sexual Harassment Laws and Their Impact on the Work Environment

does not penalize what the West would consider
sexual harassment, such as unwanted comments
or touching.” (AFP, 2010, Para.6)

AFP, (2012) reported that “On a daily basis,
local women continue to suffer from harassment
in the streets, at workplace or while using public
transport.”

As mentioned in AFP, (2010, Para.8), “accord-
ing to a 2007 study by the social affairs ministry,
three complaints of harassment and rape are filed
in Lebanon each week. But activists say the figure
falls far short of the reality.”

Now Lebanon, (2008) said “The Lebanese con-
stitution is clear on the equality of rights between
males and females, but with the exception of cases
of rape, there are no specific laws or penal codes
that prohibit sexual harassment.” In the light of
this, Mulabi, (2012, Para. 23) suggested that “the
Lebanese civil society should urge the Lebanese
parliament to pass the bill that protects employees
mainly women form sexual harassment.”

One significant problem is that sexual violence
of all kinds is under-reported in Lebanon for a
variety of reasons. The underlying problem is that
there is no specific law that protects females from
the various forms of sexual harassment, let alone a
clear definition of the term itself; the definition of
sexual harassment is restricted to an actual physical
act, which most probably hides the real magnitude
of the phenomenon. This is in part because “no
one is coming forward and breaking the wall of
silence,” this leads to a culture of under-reporting
and a lack of awareness (Now Lebanon, 2008).

Moreover, Now Lebanon, (2008) reported “the
Lebanese society is still macho and systematically
places the blame on the woman, “even police
mock women who come in to their station to file
complaints of harassment or domestic violence”
There are legal and social inadequacies that en-
courage sexual harassment in Lebanon. Because
there are no systems that convict harassers and
there is no law to criminalize it, Adventures of

Salwa, (2009) reported “harassment is made to
seem normal and harassers do so because they
can and because everybody does it.”

In addition, because sexual harassment is still
a taboo and is not acknowledged as a problem in
our society, there is no clear definition that let us
say: yes what happened is certainly harassment.
Therefore, the first step toward ending sexual
harassment is to break the taboo surrounding it.
The law failure to protect women from sexual
harassment at work, didn’t, of course, pass un-
noticed, the fusion of feminist advocacy, such as
Kafa, Nasawina, Amel association, among others,
adapted mission to work towards eliminating all
forms of gender-based violence and abuse of
women.

In Lebanon, according to Mogul (2012) “dis-
crimination exists within all societies, no matter
how small or large the community”. Amel Associa-
tion’s project highlights a kind of discrimination
not many of us are aware of: discrimination against
females in Lebanon’s healthcare sector. Targeting
a few hospitals and medical centers where Amel
offices are placed and are well known, the study
aimed to understand the general situation of gen-
der discrimination and violence against women
in Lebanon, with a particular emphasis on the
healthcare sector. The study was conducted by
two professors from the University of Bologna in
north Italy and included focus group discussions,
interviews, and talks with the Ministry of Health
in Lebanon and the Ministry of Social Affairs.
With a response rate of 89.46%, the investigation
provided some startling results (Mougul, 2012):

• 43.8% believe that women working in hos-
pitals suffer from discrimination, violence,
sometimes abuse and sexual harassment.

• 31.3% highlighted discrimination with the
tasks given to male and female nurses, with
females getting more demeaning and un-
dermining tasks.

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Sexual Harassment Laws and Their Impact on the Work Environment

• 56.6% talked about verbal abuse, verbal
harassment and verbal mistreatment of fe-
male nurses.

• 45.1% talked about physical abuse, physi-
cal harassment and physical mistreatment
of female nurses.

• 66.3% of discrimination towards female
nurses comes from the patients and their
families.

• 37.9% of discrimination towards female
nurses comes from doctors.

CASE: SEXUAL HARASSMENT

At Department of Radiology in a Medical Center,
Susan during her training experienced sexual ha-
rassment from her director. It all began with the
residency director Joe telling her that she was “the
prettiest resident that we’ve ever had.” Sometimes
“the sexiest resident we’ve ever had.” On many of
these occasions Joe would sit down and chat with
the Susan about topics that made her feel “very
uncomfortable.” At times Joe would tell her that
he had an “unhappy marriage” and that often his
wife was “too busy” or “simply disinterested” in
meeting “his needs. He also asked her whether she
had “a boyfriend” on other occasions the director
invited the resident to join him for dinner, “so that
we can talk more privately”. On all these occasion
Susan made it very clear to Joe that his behavior
is bothering her and “she doesn’t want to hear or
talk about personal things.” She also declined all
of his invitations for dining or movies.

Susan first spoke with a colleague about
what is happening with her, she told her “rumors
were prevalent” that the residency director was
a “ladies’ man” knowing that no one have ever
lodged a complaint against the director before she
requested a private meeting with the department
chair. During this meeting she complained about
Joe’s behavior and the chair promised to look into
the matter. As a consequence, Joe avoided any

contact with her, ignored her, and started to favor
someone else. What bothered her is that she felt
discriminatory treatment from Joe.

Lebanon Case

“Do you want your reputation to be tarnished? A
man would not make this move unless he is ‘in-
vited’!” that’s mainly the Lebanese mentality when
it comes to sexual harassment. Sarah graduated
as a nurse in the year 2008, her mother died and
she had to take care of her father. Sickness with
no medical insurance means we need money . . .
she needed a job like many others fresh graduate,
in a society with high unemployment rate, it took
Sarah one year from graduation to get employed,
she started to work as a nurse for Beirut hospital
with this great team. Working hard to prove herself
from the start, Dr. Nader among others was really
supportive and understanding.

Later on Sarah realized that his eyes would
follow her wherever she goes and he would give
here undue attention, taking liberties to touch Sarah
on her shoulders, greeting her by saying “bonjour
yammer” which she thought was a bit weird but
did not give it much thought. However, another
time in the operation theatre a needle pierced
her hand and he said “ah”. Dr. Nader said, “Nice
sound, like you are having sex.”

Dr. Nader doesn’t call Sarah by my name. He
always calls me from behind and puts his hand on
her bra strap. Many times she has just shrugged
away at the touch. He will then look at Sarah
like nothing has happened. And so on …..Such
incidents happened frequently; it left its marks on
Sarah’s behavior, she became depressed, anxious,
and angry not knowing what to do and how to stop
him, without jeopardizing her job. All Sarah could
do was talk to her friend about what’s happening
trying to get her advice on the line of action she
should follow.

Her advice was, “if you want to keep your job
try to ignore Doc. Nader and get out of his way.

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“Easier said than done” she added to Sarah “don’t
you know everyone would say that you provoked
him and eventually you’ll be blamed …“unfortu-
nately that’s our society. Needless to say, many
nurses suffer and don’t discuss this with anyone;
unlike other countries you cannot report harass-
ments, because you will be judged negatively if
not fired. Complaining here is of no use, one has
to have one’s own strategy for survival…

Comparison between the Two Cases

The American nurse with the assistance of her
attorney succeeded in preserving her rights, and
settling the case to her advantage and the nurses’
cause. Actions taken against the harasser were
significant and of a magnitude that refrains others
form following suit. Hospital course of action:

1. The staff radiologist was relieved of his
position as residency director.

2. Financial settlement was paid for the nurse.
3. The hospital promptly instituted a sexual

harassment policy and grievance procedure
that was circulated to all employees and
personnel.

What can we conclude? The nurse was able to
stop sexual harassment by reporting the incidents
and confronting the harassers. Why?

1. Mainly, she knew her right and was not afraid
to come forward and confront the harasser.
The nature of the society that is supporting
in such case.

2. Awareness in the society regarding sexual
harassment.

3. Policies and procedures strictly prohibiting
sexual harassment are well publicized and
supported strongly by government.

4. Availability of labor law and other legislation
that restrict such acts.

On the other hand, looking at the Lebanese
nurse that experienced sexual harassment at work,
how she dealt with the situation?

1. She shared the incident with her friend only,
knowing that she can’t get any help.

2. She lived in a dilemma thereafter, she could
not take action against the harasser, and
fight for her right, as human being, and at
the same time couldn’t get over it, yet she
had to keep her job for her living.

Reasons behind her deed?

1. The mentality of the Lebanese society.
2. Lack of awareness among employers and

employees, of what sexual harassment is.
3. The absence of laws and the lack of enforce-

ment of existing ones.
4. The health sectors will not treat harassment

complaints seriously and sympathetically.
5. No policies and procedures adapted by health

sectors that harassed employee can follow,
nor employee manual/personnel policies.

Comparing the two cases, we find that having
laws, regulations, clear procedures, social aware-
ness, helped the American nurse to deal with the
issue. Whereas, this was not the case with the
Lebanese nurse, as our regime lacks all the neces-
sary drivers to overcome such similar issue. This
highlights the importance of the above mentioned
key drivers in overcoming sexual harassment
phenomena. It is very important at this stage that
we look at how other countries are dealing with
such issues and follow their lead.

In conclusion, even though laws and regula-
tion may not stop sexual harassment act but for
sure it will reduce its occurrence. In Lebanon,
we need to break the barriers that are hindering
the advancement of establishing necessary laws
and regulations that deal with sexual harassment

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Sexual Harassment Laws and Their Impact on the Work Environment

problem at its roots. It is the time that law is modi-
fied, and zero tolerance sexual harassment in all
organizations is adapted.

Sexual harassment is an extremely serious issue
that will cause tremendous damage to the victim,
the organization and society if not taken seriously.

Therefore, companies/hospitals/organizations/
health sectors must establish a policy in order to
protect its employees’ wellbeing as well as its
own by providing them with a comfortable work
environment and by constantly informing them
of what is work-ethical and what is not.

To overcome this serious issue that causes
serious damages to the sexually harassed victims,
the following need to be done:

1. The legislators should pass a comprehensive
law dealing with sexual harassment.

2. Law should be properly enforced with ap-
propriate punishment schemes that will help
reduce this phenomena.

3. And to have a comprehensive policy state-
ments that include a detailed description of
the complaints procedure and the manner in
which an investigation will be conducted.

4. Awareness-building and campaigns; aware-
ness and public education form the founda-
tion of any campaign. This can range from
organizing forums and seminars, producing
and distributing leaflets, to organize gather-
ings that will help to raise awareness (ILO,
2001, p. 46, Para.2).

5. Raising awareness of the general public in
order to break the Taboos. To help abolish
Ignorance about sexual harassment at work.

6. The feminist movement that encourage
women to speak out for their rights.

ACTUAL RESOLUTION

International Labor Office, (2001, page xvii, Para.
3) said that “At the national level, a majority of
countries have adopted some form of legislation

either through specific legal provisions on sexual
harassment or by addressing it under another
broader statute such as human rights or equal
opportunity and treatment.” In an ever-growing
number of industrialized and developing countries,
specific legislation or provisions are being adopted
to address the issue explicitly, not only providing
direct remedies for complainants but also placing
legal liabilities on employers to take action in the
workplace. In addition to this, numerous trade
unions and several employers’ organizations as
well as individual employers have adopted policy
statements against sexual harassment, or devel-
oped workplace policies that address the issue in
tandem with national legislation. (ILO, 2001, p.
xviii, Para. 1)

Unfortunately, Lebanon is not one of these
countries, and has no law of any type that ad-
dresses sexual harassment in any of its forms!
Nurses working in health centers explained that
there are no specific rules and regulations that
dictate what measures should be taken in case of
asexual harassment incident in the health center.
They added that what usually happens is, the su-
pervisor or director in the health center takes the
lead and interfere to resolve the conflict and try
to help the victim overcome the problem. (Deep,
2003)Whenever the patients are the source of the
violent incident, it is taken for granted that the
health worker has to tolerate the patients’ behaviors
as long as he/she can stand it.

The nurses working at hospitals said that in
case of a sexual harassment incident they had to
fill some papers and complain to the head nurse,
who in turn informs the director. Unfortunately,
nurses do not go through this because they know
that not only it will not help them in anyway but
also it might affect them negatively especially
when the aggressor is a physician (Deep, 2003).

Regardless of the situation, we find many
feminist activists such as Amel Association,
Kafa, Nasawiya, along with NGO, UN, and ILO
organizations have been working on women issues
in Lebanon, but mostly none of them are work-

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Sexual Harassment Laws and Their Impact on the Work Environment

ing on women issues in the health care sector.
Until recently, Amel Organization launched their
3-year project in February 2009, Funded by the
European Union and run by Amel Association,
with Italian partner, Costas, as their implementing
partner, enhancing the status of Lebanese women
in healthcare.(Mogul, 2012)

In addition, Nasawiya, a feminist collective,
was established on January 2010, working on
gender justice in Lebanon. Through them, the
adventures of Salwa was established on October
2011, they have started a campaign against sexual
harassment, and are advocating for changes in the
Lebanese labor law. In addition, they have orga-
nized discussion groups about sexual harassment
where women share experiences and opinions, they
established support line, and organized workshop
against sexual harassment in many universities.

PROPOSED RESOLUTION

As with every employee, health sector employees
have the legal right to work in an environment that
is free of sexual harassment. It is the responsibil-
ity of the organization, the employees, society, as
well as, the government to help abolish or at least
minimize such phenomena. Responsibility for
discouragement of harassment involves commit-
ment and action from government, employers and
employees (Kaye, 1996). As mentioned earlier in
the report by Now Lebanon (2008), “the Lebanese
constitution is clear on the equality of rights be-
tween males and females, but with the exception
of cases of rape, there are no specific laws or penal
codes that prohibit sexual harassment.”

According to ILO, (2001, p. 109, Para. 3) “It’s
true that effective legal remedies are necessary.
However, the main aim of most victims of sexual
harassment is not to sue their employer for dam-
ages, but that the offensive behavior should stop,
that it should not recur and that they should be

protected against retaliation for having bought
a complaint.” Therefore, the most effective way
to deal with sexual harassment is to develop and
implement a preventive policy at all health sec-
tors level.

Health care facility employers have a legal
responsibility to work with medical staff members
and nonemployees to keep the workplace from be-
ing a hostile environment and employees free from
sexual harassment. Health sectors most provide a
comprehensive Code of Conduct that addresses
harassment as an issue and how to report it and
escalate it as deemed appropriate. Hospitals ought
to communicate clearly its rules and regulations
to its employees regarding prohibited code of
conduct, and ensure that employees have access to
help in an easy and confidential set up. Moreover,
all employees or/and non-employees who have
business contact with employees must comply
with company’s code of conduct.

In addition, the Code of Conduct should be
backed up with comprehensive procedures that
act as guidelines for employees to follow in case
they were subject to any prohibited harassment
action; these guidelines should specify ways of
reporting incidences of sexual harassment such
as a secure confidential hot-line. However, the
health sectors responsibilities does not end here,
but further steps are needed such as taking prompt
and necessary steps to investigate the submitted
petition or complaints and finally take prompt
corrective action, all of which are handled with
high confidentiality.

Furthermore, the health sectors policies,
guidelines, and corresponding corrective actions
should all be supported by the enacted Labor laws
and regulations regarding “sexual harassment at
work” which makes the penalties and punishments
applied in such cases clear. Moreover, having tone
at the top that has zero tolerance to sexual behav-
ior, and dealing severely with any reported case
of sexual harassment incidents sets precedence.

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Sexual Harassment Laws and Their Impact on the Work Environment

What’s the point of having policies, training, and
hot-line if the companies have tolerance for this
behavior?

However, stopping sexual harassment at work,
in general, and specifically at health sectors, in
Lebanon is a long process that does not simply
stop by applying strict policies at work, it for sure
will help but other major things need to be done,
and these include; raising awareness of the general
public in order to break the Taboos. Awareness-
building and campaigns, awareness and public
education form the foundation of any campaign.
Women and workers’ organizations can be active
and creatively use various means to increase pub-
lic knowledge of issues that affect women. This
can range from organizing forums and seminars,
producing and distributing leaflets, to organize
gatherings that will help to raise awareness (ILO,
2001, p. 46, Para.2).

Recommendations for Solutions

• A clear, detailed policy that specifically
outlines the organization’s position against
sexual harassment.

• A complaint procedure that encourages
employees to come forward with any ha-
rassment complaints.

• An investigative strategy that protects the
privacy interests of both the alleged victim
and the accused offender.

• Periodic management training and employ-
ee-awareness programs that communicate
the organization’s position on this issue.

On the Individual Level

On the individual level, victims of sexual ha-
rassment at work should work on the following
procedures:

1. Communicating the disapproval.
2. Keep a record. Victims should note down

the date, time, and details of each incident
and the response of the harasser.

3. Find a confidant.
4. Formal complaint.
5. External resources.
6. Quit.

LESSONS LEARNED

Based on the findings, discussion and research info
found about sexual harassment around the world
and in Lebanon specifically, we can conclude that
the following lessons were learned:

The effects of sexual harassment in the work-
place: such acts can negatively affect the productiv-
ity, culture and communication in the workplace.

Researching the consequences of sexual ha-
rassment on nurses health sectors, findings were
as follows: Most of the female nurses working
in health sectors, “being the victim of sexual ha-
rassment, verbalized the following psychological
consequences; feelings of discomfort, embar-
rassment, indifference fear, humiliation, shame,
disgust, depression, anxiety, anger, loss of self
esteem, sense of helplessness, low confidence,
anger, irritability, nervousness, sense of alienation
and disillusionment” (Deeb, 2003).

In addition to this, “sexual harassment also
effects health sectors employees professional
behaviors like decrease work motivation, decrease
work efficiency, increase rates for transfer, resign-
ing from the job and withdrawal from the work
place. None the less sexual harassment also ruins
health sectors employees’ physical wellbeing that
includes decrease skill level, increase rates of er-
ror, nausea, headaches and tiredness. Thus it was
found that sexual harassment has very destructive

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Sexual Harassment Laws and Their Impact on the Work Environment

effects. It not only disturbs the individual life but
it ultimately decreases the image of the institu-
tion” (Deeb, 2003).

Regardless of the different cultures, back-
ground of the two nurses (mentioned in section
IV and V) being American or Lebanese or form
any other culture in the world, the consequences
of sexual harassment at work is the same. This
fact imposes the following question. Is sexual
harassment at work, in general and specifically
heath sector being handled the same by the two
countries?? Well the answer is obviously, NO.

OPINION

In the United States, it is estimated that ignoring
problems of sexual harassment can cost the av-
erage company up to $6.7 million a year in low
productivity, low morale, and employee turnover
and absenteeism, not including litigation or other
legal costs.

To avoid damages of sexual harassment, compa-
nies should act BEFORE the harassment occurs.
Employers should take all necessary steps to pre-
vent the harassment from taking place. Examples
of steps that can be taken are:

• Affirmatively raising the subject.
• Expressing strong disapproval.
• Developing appropriate sanctions.
• Informing the employees of their rights

concerning how to raise the issue of sexual
harassment and who to raise this issue to.

But first, companies need a clear, compre-
hensive and a detailed policy regarding sexual
harassment and the policy should be available to
all employees and should be signed on after read-
ing it before enrolling in the company. This policy

should be signed by all employees, supervisors and
managers, and also, in some companies it should
be signed by non employees who are frequently
present at the firm (like sales representatives).

Supervisors should help the employees to
understand well the term of sexual harassment,
because it could be in many forms, from a joke
to distributing e-mails with sexual material. Post-
ing photographs of sexual content or romancing
subordinates. To help employees gasp the nature
of sexual harassment, companies should provide
employees with examples of conducts that are
considered as sexual harassment by the policies
of the company and by law.

FUTURE TRENDS

Focusing mainly on sexual-advance forms
of harassment, in the lives of women, less is
known about the gender harassment of women,
or about any kind of harassment of men. “The
underrepresentation of women in a workgroup
relates positively to increased odds of women
experiencing gender harassment, but not sexual-
advance harassment. For men, the opposite pattern
emerges: underrepresentation does not increase
men’s risk for either type of harassment, instead
relating to decreased odds of harassment in some
contexts” (Kabat and Cortina, 2014). “In light of
theories of tokenism, gender stereotyping, and sex
role spillover in organizations, findings support
the recommendation that, to reduce harassment
(whether it is illegal or legal, gender- or sexuality-
based, targeted at women or men), organizations
should strive for gender balance in every job at
every level. For male-dominated contexts, this
implies a need to recruit, retain, and integrate more
women throughout the organizational hierarchy”.
(Lundy et al, 2013) An intersectional approach that
appreciates both sexual harassment as well as the

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racial climate, concludes with recommendations
for incorporating both strands of literature into
research on educational environments.

CONCLUSION

Sexual Harassment is an issue that was raised
when women joined the workforce, and a repro-
duction of the men/women role in society was
reproduced inside the workplace. Female activists
have demanded laws to protect women against
discrimination or mobbing in the work place. There
are different sets of laws in countries around the
world based on history, culture and context. Laws
vary from very strict to absence and each extreme
represents a negative aspect. This is why a good
and fair set of law needs to be implemented. The
set of laws should recognize women’s rights but
also accept employees’ relations in order not to
create gender segregation.

REFERENCES

Adventures of Salwa. (2012). My views on sexual
harassment. Author.

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doi:10.1007/s12147-008-9049-5

KEY TERMS AND DEFINITIONS

Activism: Translation of a conviction and
commitment to principles or value systems into
sustained patterns of activity.

Awareness: Recognition of the mind by in-
dividuals or groups for the existence of an issue.

Culture: Way of life translated by traditions,
customs, norms, and value systems.

Discrimination: Differentiation in treatment
of individuals or groups enforced by bias and
prejudice and resulting in social stratification.

Harassment: Unwelcome aggressive behavior
in attitude words or actions resulting in unwelcome
response.

Litigation: Dispute by differing parties toward
settlement of grievance by court justice.

Sexuality: Implicit and explicit behavior in
attractions among individuals.

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APPENDIX

Learning Objectives

L.O.1: Define sexual harassment. List and define the types of sexual harassment.
L.O.2: Determine the reason for implementing sexual harassment laws.
L.O.3: Discuss the impact of issuing sexual harassment laws on the work environment.
L.O.4: State the part being protected by the sexual harassment laws.
L.O.5: List the types of employees who are mostly affected by sexual harassment.
L.O.6: List the disadvantages of sexual harassment laws.
L.O.7: Describe why sexual harassment is a significant problem in Lebanese health sector.
L.O.8: Contrast the difference in perception of sexual harassment between Lebanon and the United Sates.
L.O.9: Determine whether the absence of direct and specific sexual harassment laws makes a difference

in Lebanon.
L.O.10: List improvements that should be made in Lebanon regarding sexual harassment.

Summary

Define Sexual Harassment

A general legal definition of sexual harassment is any unwelcomed physical or oral sexual advances
in exchange of a certain reward, or by intimidation of the harasser’s superior position. It can take both
verbal and/or physical forms between people from the same or opposite sex. Unwelcome verbal, visual,
or physical conduct of a sexual nature that is severe or pervasive and affects working conditions or cre-
ates a hostile work environment.. There are two principal types of sexual harassment in the workplace:

• Quid Pro Quo Sexual Harassment: Harassment refers to a demand by a person in authority for
sexual favors in order to obtain or maintain certain job benefits.

• A Hostile Working Environment: Refers to unwelcome sexual advances, requests for sexual
favors or other verbal, non-verbal or physical conduct of a sexual nature which interferes with an
individual’s work performance or creates an intimidating, hostile, abusive, offensive or poisoned
work environment.

Determine the Reason for Implementing Sexual Harassment Laws

Sexual harassment in an office environment can be very destructive as it creates an unsafe environment
and promotes unfairness. It affects one’s ability to perform correctly in his or her workplace, and makes
it hard for them to work at full efficiency, especially when they are affected from the emotional, physical
and mental side. As a preventive measure, governments and private firms, implemented sexual harass-
ment policies; these laws regulate relationships between co-workers.

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Discuss the Impact of Issuing Sexual Harassment Laws on the Work Environment

Many companies were held liable of employees’ sex related discrimination, because the firms did not
have internal systems to fight sexual harassment. Then to avoid expensive lawsuits, companies started
implementing internal policies to hold individual employees liable.

This increase in protection for female workers created a safer environment and paved the way for
women to become the majority of the workforce.

State the Part Being Protected by the Sexual Harassment Laws

A good sexual harassment law preserves the right of the persons needing it, while being fair to everybody
else. When the first sexual harassment laws were introduced they were intended to protect women in
general as women are more likely subject to sexual harassment than others.

List the Types of Employees Who Are Mostly Affected by Sexual Harassment

The type of employees who are the most exposed are: employees, who have low salary; lower level of
education; young single women. The main effects on the victims of sexual harassment include:

• Psychological stress and health impairment.
• Decreased work or school.
• Being objectified and humiliated by scrutiny and gossip.
• Having one’s personal life offered up for public scrutiny—attack.
• Defamation of character and reputation.
• Loss of trust in environments similar to where the harassment occurred.
• Having to relocate to another city, another job, or another school.
• Loss of references/recommendations.

List the Disadvantages of Sexual Harassment Laws

The cons of sexual harassment laws are:

• They present a conceptual problem by violating equality right: women are getting special treat-
ment because they are women.

• They create under-inclusive and over-inclusive observations of the case.
• The law being over-inclusive creates a separation between males and females, which builds a more

hostile environment.
• Firms applied harsh employees’ inter-relations policies to avoid expensive lawsuits.
• Any suspects are pitilessly punished.
• Some firms used sexual harassment as an excuse to fire employees.

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Describe Why Sexual Harassment Is a Significant
Problem in Lebanese Health Sector

In Lebanon, there are legal gaps that encourage sexual harassment in society, there’s nobody there to
challenge this behavior, and there are no laws to criminalize it, harassers do it because they can.

There are legal and social inadequacies that encourage sexual harassment in Lebanon. There are no
specific rules and regulations that dictate what measures should be taken in case of asexual harassment
incident in the Lebanese health center. Whenever the patients are the source of the violent incident, it is
taken for granted that the health worker has to tolerate the patients’ behaviors as long as he/she can stand it.

Contrast the Difference in Perception of Sexual Harassment
between Lebanon and the United Sates

Lebanon and the United States have a different view of sexual harassment. In Lebanon no clear laws
protect women as opposed to the United States. Also as a general tolerance Lebanon is more tolerant
that the United States. The difference in cultures also contributes in people’s willingness to disclose ha-
rassment. In the United States, people are used to the concept of right and judicial system that preserves
it. As opposed to Lebanon where such a matter is taboo, and people are discouraged to disclose for the
sake of preserving their reputation.

Determine Whether the Absence of Direct and Specific Sexual
Harassment Laws Makes a Difference in Lebanon

Three quarters of Lebanese women are sexually harassed; Lebanese women do not know exactly what
sexual harassment means, and confuse it with rape. Therefore a clear regulation of sexual harassment
is needed.

List Improvements That Should Be Made in Lebanon regarding Sexual Harassment

Improvements on two levels can be made regarding sexual harassment in Lebanon. The first level is
laws and regulations issued by the parliament. The second level of improvement should be made on a
popular level (awareness campaigns-NGOs should be more-educate Lebanese women when it comes to
sexual harassment and their rights). Development and adoption of a nationally accepted explicit defini-
tion of sexual harassment.

• Broad scope of protection to cover as many persons as possible.
• Delineate clearly the liability of the employer and the alleged harasser.
• Provide affirmative duties to act towards the prevention of sexual harassment.
• Ensure fair, clear and suitable procedures of due process for both accused and claimant covering

filing and hearing of complaints, investigations evidence, burden of proof, protection of confiden-
tiality and privacy.

• Protect against victimization.

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• Provide for a wide range of damages, remedies and sanctions that both punish and deter harassing
conduct.

• Supplement legislation with guidelines.
• Establish an administrative body or mechanism with resources and competence to handle com-

plaints and promote application of the law.

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66

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 5

DOI: 10.4018/978-1-4666-7254-3.ch005

Monopoly Abuse

ABSTRACT

Monopoly is the case when a firm provides products or services to which there is neither competition
nor a near substitute, dictating price and quantity produced. Monopolies raise concerns of unethical
business practice because they perform acts of conspiracy and collusion. Consumers will be buying
needed products at unfair prices and questionable quality standards. The instrumental approach is when
a company performs monopolistic behavior in order to maximize company profits and satisfy corporate
shareholders. The social approach is when a company seeks the good of the greater environment, look-
ing beyond the benefit of shareholders. Monopolistic behavior may provide certain positive advantages
like helping expand different industries, generating a lot of capital into the business cycle, introducing
innovation, and bringing a solution to some major economic problems. Disadvantages of monopolies are
mal-distribution of the social product, decreased economic national growth, and increased unemploy-
ment levels, blocking competitive markets, and lacking socio-economic efficiency. This chapter explores
monopolistic abuses.

INTRODUCTION

Monopoly power is an economic concept that
many consumers want to avoid, since the seller
benefits from charging a high price in order to
increase revenue, while passing on the burden to
consumers. According to Reed, “a monopoly is
against the public interest and is unlawful” (Reed,
1916). Many economists believe that monopolies
affect the price structure of the market through
“higher prices, unfair dealing, restricted supply,
and lack of freedom to enter the market” (DeMarco,
2001). Therefore, competition is highly required

for the market to operate effectively especially in
markets where goods and services are considered
as necessities.

A market operates efficiently only at equilib-
rium price and any factor that reduces competition
would be considered unjust (DeMarco, 2001).
This unjust behavior is also reflected when the
monopolist sets a very high price compared to the
actual value of the product or service. Therefore,
the theory behind unjust pricing is preventing the
greatest good for the greatest number of people;
this is reflected by the utilitarian ethical theory
(Ghillyer, 2008).

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Many anti-trust laws have been introduced
around the world to prevent monopolies from
operating. The ethical issues related to these
anti-trust laws are based on two theories. First,
is the theory of universal ethics which states that
“universal principles are seen to apply to everyone,
everywhere, all the time” (Ghillyer, 2008). The
second theory is related to the theory of justice,
where people apply “right or wrong” depending
on what the law states. Although monopolies are
practiced differently in every country, they still
have the same outcome on consumers.

In Lebanon many economists and politi-
cians are encouraging the privatization of many
state-owned industries, because they believe that
privatization would end monopolistic abuse and
would help the economy prosper through increas-
ing efficiency and introducing competition. The
telecommunication service companies, which
were previously known as “Libancell” and “Cel-
lis” were one of the sectors that were privatized in
Lebanon. Several years passed after privatization
took place and there is still no information about
new firms entering the industry. The two compa-
nies operating today, which are known as “mtc
touch” and “alfa,” function together as a duopoly.
This leads to an ethical problem, since most of the
services offered in the telecommunication sector
are regarded as necessities in today’s global world.
These companies are imposing extremely high
prices for their services, in which many believe
are one of the most expensive in the world. This
is one of many examples of monopolistic behavior
in Lebanon, where consumers always carry the
burden of paying very high prices.

BACKGROUND OF
MONOPOLY POWER

Economist William Hutt once stated “Political lib-
erty, can survive only within an effective competi-
tive economic system” (Hutt, 1936). Those words

remain pillars for economic idealism. However,
the business world we live in today is far from
idealistic. When a certain firm dominates a sec-
tor in the market, it gives birth to a monopolistic
face of the market. In the case of a monopoly, a
firm would provide products or services to which
there is neither a competition nor a near substitute,
dictating price and quantity produced. It controls
how much consumers sacrifice in order to obtain
the monopolized product or service. That is, con-
sumers can find no alternative to the monopolistic
firm since none exist. According to Hutt, “the
enemy of democracy is a monopoly in all of its
forms: gigantic corporations, trade associations
and other agencies for price control” (Hutt, 1936).
It is important to note that a monopoly can never
have unlimited power, because of governmental
pressure. Governments have taken precautions
and counter actions to fight the negative effects of
monopolies, especially after the Great Depression
of 1929. Though such actions do not terminate
monopolies, they do somehow place controlling
limits over them.

In some cases, even more, the government
is itself the monopoly holder. In the Socialized
Medicine: The Canadian Experience, economist
Pierre Lemieux discusses the socialized medicine
system in Canada. Socialized medicine is a form
of monopoly whereby the medical industry is
nationalized and thus controlled by the govern-
ment. This form of system helps regulate medical
care and removes business interest in this industry
(Lemieux, 1989). As a result, the medical industry
is no longer a for-profit industry, and medical care
becomes much more accessible by the general
public. Lemieux explains that this system “pro-
vides all Canadians with free basic health care:
free doctors’ visits, free hospital ward care, free
surgery, free drugs and medicine while in the
hospital” (Lemieux, 1989).

The main reason that gives rise to monopolistic
power is a firm gaining control over the supply of
raw materials being used. A good example is the

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petroleum industry. Firms engaging in petroleum
businesses race to gain control over the limited
supply of remaining petroleum. The limited sup-
ply of petroleum gives easy monopolistic market
control to representative firms. Governments
usually try to enforce rules to prevent monopo-
listic behavior in order to maintain efficiency
and growth; however, most anti-trust laws are
not effective. Anti-trust laws were introduced in
Texas to end monopolistic abuse and to increase
growth. Joseph A. Pratt explains in his study The
Petroleum Industry in Transition: Antitrust and
the Decline of Monopoly Control in Oil, “that
standard Oil exercised monopoly power in Texas
in the late 19th century”, but when the government
set new anti-trust laws its operations were ceased”
(Pratt, 1980). Although government tried to end
monopolistic abuse, “Gulf Oil and Texas Com-
pany entered the market and formed an oligopoly”
(Pratt, 1980). The Gulf Oil-Texas Company issue
presents a clear example of the inability of govern-
ments to fully terminate monopolistic behavior
over a certain business sector, especially if the
raw material used is scarce, such as petroleum.

Monopolistic advantage does not have to be
achieved solely through the control over raw
material. In the case of EU versus Intel (top PC
microprocessor manufacturer), Intel was fined
$1.44 billion for monopolistic behavior (White,
2009). Naturally, Intel monopolized the computer
chip market through “its marketing strategies
rather than through control of the global silicon
supply” (White, 2009). In an article issued by the
Associated Press in May 13, 2009 by Aoife White,
Intel Corp was exposed to having, among several
tactics, exploited the market by pressuring top PC
manufacturers (Dell, Acer, HP, Lenovo, and NEC)
to purchase their CPU’s from Intel and disrupted
the launch of PC’s that operated on AMD CPU’s,
Intel’s sole surviving competitor. In a quote from
EU Competition Commissioner, “Intel has harmed
millions of European consumers by deliberately
acting to keep competitors out of the market for
computer chips for many years” (White, 2009). In

its acts, Intel had broken anti-monopolistic laws set
by the EU, and was fined according to the time it
had been practicing these illegal acts. While $1.44
billion might seem as a harsh punishment against
Intel, actual facts remain that many saw that the EU
should have placed stronger punishments against
Intel reaching a $3.8 billion. This is to show the
effect that monopolistic behavior can have on the
environment in which it was practiced.

Some monopolies operate through patents or
copyrights; these prevent other companies from
producing the same product or service innovated
by a person or firm. However, one cannot argue
against patents or copyrights since they are a
form of protection for intellectual property. They
prevent theft of ideas and usually have to do with
“want” products rather than “need” products.
Other monopolies, however, form when two
major companies merge their operations; at this
point one can question ethical issues. Microsoft
Corporation was said to violate the Sherman Anti-
trust Act when it merged Microsoft Windows and
Internet Explorer (Chandrasekaran, 1998). In a
staggering case against Microsoft “the Justice
Department and 20 states allege that Microsoft
has used illegal tactics to crush competition in
the software industry” (Chandrasekaran, 1998).
These illegal tactics were related to the fact that
Microsoft did not have any social responsibility
toward the public and only operated to maximize
shareholders wealth.

Another example in the world of merging for
monopoly is the Paramount Pictures Corporation
and Du Mont Television Network merger. The
merging of what Walter Adams describes in The
Quarterly Journal of Economics, 1953 as the “larg-
est motion picture producer” (Paramount Pictures)
and “the nation’s fourth largest TV network” (Du
Mont) created an unequaled television dominant
force. Government actions that were taken to pre-
vent this merger failed, leaving Paramount and Du
Mont to operate as a monopoly (Adams, 1953).

One can distinguish between two different ap-
proaches that a company uses to address corporate

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Monopoly Abuse

social responsibility. The first is the “instrumental
approach” where, a company would perform
monopolistic behavior in order to maximize
company profits and satisfy corporate sharehold-
ers (Ghillyer, 2008). The second approach is the
“social approach,” by which a company seeks the
good of the greater environment, looking beyond
the benefit of shareholders (Ghillyer, 2008). A
company that operates for the benefit of the public
and has social responsibility is said to be operating
under ethical standards.

Contradictory views over the effect of monopo-
ly on consumers exist. These views believe in cer-
tain positive advantages monopolies may provide
for consumers. When high impact products, for
instance pharmaceutical and medical industries,
are monopolized by large professional corpora-
tions, a minimal standard of quality is set. Con-
sumers would not want to encourage competitive
products to penetrate the medical industry, since
quality standards may be hindered. In this case,
the barriers to entry that monopolies face in the
pharmaceutical industry would act as a protective
measure to consumers. Such an occasional need
for a monopolistic party over a certain business
sector is the primary cause of a state controlled
monopoly. While many economists argue that
governments should monopolize industries that
are better off left to the competing market, there
are certain industries that governments cannot risk
going out of control. If public safety is at stake,
governments usually keep monopolies. According
to Adams, for public policy to take place, “eco-
nomic power has to be dispersed among many
buyers and sellers competing actively in open
markets” (Adams, 1953).

DYNAMICS AND INTRICACIES
OF MONOPOLY

Monopolies have been envisaged by many
economists as operating against public interest
and therefore demonstrating unethical behavior.

In fact, a monopoly by definition is “the power
or tendency to control prices” (Reed, 1916). One
fundamental argument against firms that practice
monopoly power is that “they exploit their posi-
tion by raising prices in markets where demand
is inelastic, extracting the consumer surplus from
buyers and as a result increasing profit margins
” (Riley, 2006). Thus, it follows that producers
engage in price discrimination by setting prices
that are higher than the actual value of the product
or service. The aim of price discrimination is to
extract the greatest amount of profits, through
the act of setting the highest price that consumers
are willing to pay, hence “turning the consumer
surplus into extra revenue” (Riley, 2006).

Consumer surplus is “a measure of the welfare
that people gain from the consumption of goods
and services” (Riley, 2006). Monopolists engage
in unethical acts by extracting the consumer sur-
plus and benefiting from it. Thus, prices are set
above the competitive equilibrium level, where
consumers continue to buy the product or service
at the higher price. In fact, consumers suffer a
loss which is equal to the additional revenue that
monopolists gain (Posner, 1975). According to
business ethics, this loss or consumer surplus is
defined by some philosophers as being the “social
costs” of monopoly power (Posner, 1975).

The classical argument by Adam Smith, is
another argument against monopoly abuse. This
argument is related to the “effect of monopolies
on the distribution of resources between different
employments and on the distribution of income
between individuals” (Boulding, 1945). Monopoly
power leads to a “mal-distribution of the social
product” implying that resources are forced to
remain idle instead of being utilized (Boulding,
1945). In other words, the monopolist is operating
against society, thus violating ethical standards
of providing the greatest good for the greatest
number of people.

Monopoly power also affects the economic
growth of nation and its unemployment level.
Many believe that a monopoly acts in an unethi-

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cal manner by leading to unemployment in the
economy. When a monopoly functions, it sets a
high fixed price, preventing factors of produc-
tion and the prices of commodities from falling
when these downward movements are held to be
necessary (Boulding, 1945). Another argument
against monopolistic abuse is derived by Thomas
Aquinas and is primarily concerned with social
justice. According to Aquinas, in any market the
exchange of goods and services falls within the
boundaries of cumulative justice. This recognizes
the relations among individuals, which is based on
the “principle of equality” (Roover, 1951). Aquinas
believes, the just price is the “competitive price…
the one set by the free valuation of the buyers and
sellers, or by the interplay of the forces of demand
and supply.” Therefore, a monopoly operates in an
unethical manner, because consumers are buying
the products they need at an unjust price. “a thing
is justly worth what it can be sold for without
fraud” (Roover, 1951). One can conclude that a
monopolist violates the principle of equality by
setting a high unjust price.

Aquinas’ theory states that a monopolist sets
the basis for exploitation. The price a monopolist
charges is severely above the equilibrium com-
petitive level, hence, violates cumulative justice
(Roover, 1951). Sir Edward Coke and Edward
Misselden have extended this theory by stating
that “all monopolies are against the Magna Charta,
because they are against the Liberty and Freedom
of the Subject” (Roover, 1951). Furthermore,
monopolistic abuse practiced by bankers “who
manipulate the exchange rates in order to create
artificial stringency in the money market” have
a dramatic effect on the economy and are said
to cause the greatest harm (Roover, 1951). Oth-
ers believe that monopolistic acts are unethical,
because they involve conspiracy. These perfor-
mances by monopolies have a negative influence
on consumers, since a monopoly functions against
public interest and is unjustified by the ethical
utilitarian perspective.

Another argument presented against monopo-
listic behavior is through the neoclassical theory.
This theory argues for a competitive environment,
since it is the only environment where a fair and ef-
ficient exchange occurs. Monopolies, on the other
hand, block competitive markets through “unfair
dealing, higher prices, restricted supply, and lack
of freedom to enter those markets” (DeMarco,
2001). The market can only operate with entire
freedom in a competitive environment, where
there is an easy entry and exit into the market. As
a conclusion to these arguments, monopolies lack
efficiency and are unable to provide freedom for
prices to reflect consumers’ demand, therefore
harming justice (DeMarco, 2001).

Many economists support monopolistic acts
for different reasons. One of the arguments that
encourage monopolistic behavior is that they
have expanded in different industries, such as
agriculture, and have become “the normal state
of affairs” (Boulding, 1945). This is related to the
universal principle of ethics, where “actions apply
to everyone, everywhere, all the time” (Ghillyer,
2008). Therefore, some governments encourage
monopolies to function, instead of prohibiting
them. Benson highlighted the importance of this
theory by stating that, “economists….were not in
agreement” of what position to defend in the dis-
cussions that gave birth to the Sherman Antitrust
Act of 1890 in the United States (Demarco, 2001).
Furthermore, Benson states that most economists
are against these regulations, because monopolies
in certain industries are generating a lot of capital
into the business cycle.

Schumpeter and Hayek, “members of the
Austrian school” have also generated arguments
that support monopolistic behavior in an industry
(DeMarco, 2001). Hayek believes that it is nec-
essary to distinguish between “bad monopolies”
which usually impose high prices on consumers
and “good monopolies” which may lead to “a
better quality of entrepreneurship” (DeMarco,
2001). Moreover both philosophers believed that

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Monopoly Abuse

even if free competition is present in an industry,
a monopoly may be formed. Schumpeter supports
the presence of a monopoly, by emphasizing
that a monopoly can be achieved fairly in certain
conditions, such as when it introduces innovation
and therefore proves to be a beneficial source to
the economy.

Althusius believed that the presence of a mo-
nopoly is justifiable under the case of “national
emergency” (Roover, 1951). Therefore, a mo-
nopoly can be “imposed by the State in order to
provide revenue, if it is impossible to raise enough
through taxation or other means, or if communi-
cations are disrupted by enemy action” (Roover,
1951). The presence of a monopoly functioning in
an industry is ethically justifiable, because it could
be a solution to some economic problems such
as deflation. Deflation is defined as the decrease
in prices, which could lead to negative impacts
on households and employment in the economy.
Therefore, a monopoly could save the society
from these negative impacts, since it prevents
prices from falling. This argument supports the
utilitarian theory of ethics, since it functions to
provide the greatest good for the greatest number
of people, and therefore protects public interest.

Many economists support monopolistic be-
havior by acknowledging the limitations of the
theories that are against monopoly abuse. First,
the classical theory is said to be a “static theory”,
indicating that the ends justify the means and the
“process of movement towards those ends are
unreasonable” (Boulding, 1945). Furthermore,
Aristotle supported the neoclassical theory and
stated that “competition is the life of trade and
in the interest of the public. The weakness of the
neoclassical theory is that it bases its standing on
a certain premise and does not examine whether
the premise is true. For example, this theory
considers the notion that competition is the life of
trade as an “eternal law of nature” (Reed, 1916).
Therefore, the premise can be considered inac-
curate, implying that a monopoly by definition
is not necessarily unethical.

MONOPOLY BACKGROUND
IN LEBANON

The main reasons that give rise to monopolistic
power are:

1. Control over the supply of raw material being
used;

2. Marketing strategies;
3. Patents and copy rights; and
4. Merger of operations between two major

companies.

Monopolies can be operating either extremely
inefficiently or extremely efficiently. Major ex-
amples in a developing economy are Electricite du
Liban (EDL), and Middle East Airlines (MEA),
both based in Beirut Lebanon. Furthermore, the
telecommunication sector in Lebanon is flourish-
ing. But, the immense profits generated in this
industry are questioned from an ethical point of
view because of the monopoly abuse and high
prices for the services. Privatization could be the
solution. However, state-telecom monopolies are
quickly evolving in the Arab World. In order to
overcome problems the Arab state-owned tele-
coms are required to give up their monopolies by
privatizing the industry. This raises a plethora of
social concerns, and of business ethical issues.

In order to understand the ethical dilemmas
faced under monopoly abuse, one should first
acknowledge how monopolies are formed and
how they operate in Lebanon. According to many
economists and politicians, monopolies that are
state-owned cannot be abolished unless they are
privatized. The President of the telecommunica-
tions regulatory authority, Kamal Shehadi states,
“The private sector must be brought in to keep on
introducing new technology and make the sector
more competitive” (Tohme, 2002). State-owned
monopolies operate in Lebanon, because the gov-
ernment benefits from their revenues, although
most of these companies are running inefficiently
and selling overvalued goods and services to

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consumers. Furthermore, Shehadi (2007) states
“We need parliament’s cooperation or else priva-
tization will not go through” (rebuildlebanon.gov,
2007). Therefore, if the parliament does not pass
privatization laws, privatization cannot take place
and monopolies would still have the advantage of
controlling the market.

Taking a closer look into Lebanon, one can find
many monopolies operating. Some companies that
are operating as monopolies in Lebanon include
Electricite du Liban, Middle East Airlines, and
Alfa and Mtc Touch functioning as one entity.
By introducing competition to these industries,
companies will be forced to work efficiently and
decrease costs incurred in production. “Over $1
billion of the revenues of the telecom industry are
generated to the treasury” (Habib, 2009). While
many support privatization, some politicians and
economists hold a conservative view to the act of
privatizing these companies, because the revenues
generated by these companies are also a source
of income to the government.

Although many investors would be interested
to invest in the telecommunications industry, no
one would find it profitable to invest in Electricite
du Liban, since its annual deficit is more than $1.3
billion a year (Habib, 2009). Most consumers do
not have full access to electricity in their homes
and in return pay a very high price to comple-
ment this service. In addition, electricity bills
in Lebanon differ from area to area, where most
areas in Beirut pay extremely high prices. This
also raises an ethical dilemma, as to whether it is
fair for some areas to consume the same service
for a higher price. The Finance Minister stated,
“in order to raise funds, the government can either
increase taxes or allow the private sector to get
involved” (Habib, 2009).

The price burden that consumer’s carry and
the minimal access consumers have to electricity
create an ethical dilemma. One of the problems
is realized through consumers and their reaction
to the high prices paid, where consumers are pro-

voked to steal electricity through different means.
Two main ethical theories may be proposed in this
situation. The first is the utilitarian theory related
to “Electricite du Liban”, where it does not oper-
ate to provide the greatest good for the greatest
number of people. The second ethical theory is
related to consumers and their moral values, since
some consumers are committing fraud, shifting
the burden of the high price to other consumers.

According to Nash, “MEA’s success was due to
the lack of competition.” (Nash, 2008) The Leba-
nese airline industry was formerly composed of
three companies which were Air Liban, Lebanese
International Airways, and Middle East Airlines
(MEA). The former two companies failed during
the war, giving MEA the opportunity to “stand
alone” in the airline industry (Nash, 2008). Fur-
thermore, Nash stated that the company’s high
profits prevent the state from giving it up and
“lifting the shield from local competition” (Nash,
2008). Therefore, one can conclude that state-
owned monopolies in Lebanon operate to benefit
the government. In order to end monopoly abuse
many economists and politicians are campaign-
ing for privatization to take place and in return
introducing competition to these industries. The
question remains as to whether these companies
should be privatized in order to introduce com-
petition and solve the ethical dilemmas faced by
companies and consumers.

TELECOMMUNICATIONS
SECTOR IN THE ARAB WORLD

State-telecom monopolies are facing difficulties
in the Arab world. In order to survive, they are
forced to decrease costs and improve their services,
since consumers are looking for different ways
to communicate, especially through “Internet
telephony” (Martin, 2000). According to Martin,
Arab state-owned telecoms are required to give
up their monopolies by privatizing the industry.

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Privatization is not an easy decision, since “state-
owned monopolies have been a major source of
public income” (Martin, 2000). Therefore, the
same dilemma is faced by many Arab countries,
as whether to forgo the fixed income received and
sell the telecom industry or keep the telecom sector
operating inefficiently as a monopoly.

“Telecoms are vital for survival in the modern
global economy” (Martin, 2000). Phone rates are
relatively high in the Middle East forcing busi-
nesses and consumers to purchase an overvalued
service. Furthermore, the high price sustained is
not covered by improved services, because the
service networks are too small to absorb all the
telephone lines that are being utilized. This poses
a problem as to the low quality of the service
being provided compared to the high price that
consumers are paying.

In 1999, privatization took place in Morocco’s
telecom sector. The results were rewarding to
consumers, as they experienced “service upgrades,
aggressive marketing campaigns, decrease in sub-
scription rates and a reduction in tariffs” (Martin,
2000). These are some benefits that privatization
can bring along, but many are against privatization,
especially if a state-owned monopoly becomes
private. A private monopoly is said to cause more
harm, because it would be harder to control by
the government and may have greater ability to
engage in aggressive monopoly abuse. According
to Meed, more operators are encouraged to enter
the telecom industry in the Middle East, because “it
is a young market” and the investment prospectus
is distinguished as a strategic one (Meed, 2004).

The telecommunication sector is worth at
least $6 billion, where the profits of this industry
are flourishing (Habib, 2009). Many economists
question whether these immense profits produced
by this industry are ethical. Monopoly abuse in
Lebanon is evident in the telecom sector, where
Mtc-touch and Alfa are currently running Leba-
non’s mobile networks, and are operating as a
duopoly. Since 2000, the Lebanese government

has been trying to introduce competition through
privatizing the telecom sector. According to
liberal economists, privatization would enhance
investments and reduce costs, where most of the
costs that these companies impose are “artificial
because a large share of costs per minute of use
is taken by government taxes” (rebuildlebanon.
gov, 2007). Any factor that reduces competition
would be considered an unjust behavior; therefore,
the burden of paying high prices for a service
that is overvalued defines the ethical dilemma in
this industry.

Shehadi believes that if a third network enters
the telecom sector “the penetration would jump
to 60 percent within four years” (Shehadi, 2004).
Therefore, the number of subscribers would in-
crease, implying that costs would decrease con-
siderably. There are many strategic objectives that
can be achieved by liberating the telecom sector
such as, the creation of new job opportunities in
telecom, improvements in productivity and in the
information system. Shehadi further states that
through privatization a capital market could be
developed by increasing ownership and listing
telecom stocks on stock exchange (Shehadi, 2004).

Privatization was mentioned in the ministerial
statement as designed to “modernize the structure
of the national economy, preserve its stability, and
bolster the chances of growth” (Habib, 2009).
According to Barakat, Head of Economic Unit
Analysis at Banque Audi, “privatization is a
means to disrupt the vicious circle of accumulated
government deficits”, therefore, privatization is a
method to end unethical behavior in the telecom
sector (Konrad, 2000). The Lebanese government
has a few assets for sale and the telecom sector is
they only sector that is considered as a “mouth-
watering product” (Habib, 2009). This sector
has been improving through better services, but
telephone rates are still fixed at high prices. The
main problem that consumers are facing is the
high rates that are being imposed on them, since
consumers in Lebanon pay one of the highest rates

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in the world. This is related to the cumulative
justice theory that a monopoly violates (Roover,
1951). The price that consumers pay compared
to the services received is extremely high and
is said to be unjust. In addition, Mtc-touch and
Alfa operate as one entity, thus their acts involve
conspiracy against public interest.

Some economists argue for monopolistic pow-
ers, because they believe that it is a “normal state
of affairs” (Boulding, 1945). Monopolies may
operate ethically if they operate under specific
laws and have corporate conscience. Corporate
conscience indicates that the “organization is run
with an awareness of its obligations to society”
(Ghillyer, 2008). Many companies in Lebanon
operate in chaos, therefore with monopoly power
present and without any regulatory body, corpo-
rate conscience is hard to achieve. This ethical
dilemma is complex, as to introduce competition
which may lead to offering a “fair price” or to
keep the monopoly operating and benefiting from
its vast profits.

FUTURE TRENDS

Sources and types of administrative monopoly and
the possible harms that administrative monopoly
causes to the macro economy. Arguments for and
against the inclusion of provisions on administra-
tive monopoly in the Anti-Monopoly Law explain
the weaknesses of such provisions. (Wu, 2010)

Many argue that the only solution to protect
consumers from monopolistic abuse and promote
public welfare is through the “regulation or ad-
ministration of a body responsible to the whole
community” (Boulding, 1945). A “regulated
monopoly” is always preferable, because it may
prevent monopoly abuse and in return operate
in the interest of the public. Many regulatory
procedures and administrative policies have been
applied in the various fields of transportation
and public utilities, these bodies have prevented
monopoly abuse towards consumers (Boulding,

1945). However, such policies should also be en-
forced in other fields, especially in sectors where
monopolies are not state-owned, such as “land
rents” (Boulding, 1945).

Moreover, monopolistic abuse is usually
present in “a highly unstable oligopoly” (Bould-
ing, 1945). This situation is characterized by
“alternative periods of destructive price-cutting
and quasi-monopolistic agreements” (Boulding,
1945). These acts sometimes come to the benefit
of the consumers, because destructive price-cuts
involve aggressive acts towards decreasing prices,
and therefore the whole sector may become un-
profitable. Monopolies sometimes suffer huge
losses; they do not always operate in a profitable
environment.

Some economists believe that the dilemma in
the presence of a monopoly is whether “business
is a matter of private interest and of private law or
a matter of public interest and public law” (Reed,
1916). Liberals believe that the major objective
for any business is to promote public interest
and increase consumer satisfaction. This view
is related to the social contract approach where
a corporation “has an obligation to society over
and above the expectations of its shareholders”
(Ghillyer, 2008). Hence, consumers in this situa-
tion would be able to purchase goods and services
at a fair price without any discrimination. How-
ever, if private interest is of primary significance
a corporation’s aim would be to maximize profits
and therefore, monopolistic power would not be
considered unethical.

In the last half century, industries have de-
veloped at a faster rate than business morals.
Therefore, “the misapplication resulting from
the unequal evolution between business morals
and business conditions appear to be the fun-
damental cause of our present monopolies and
other industrial problems engaging in the serious
efforts of legislatures and courts” (Reed, 1916).
The application of ethical standards to the busi-
ness conduct hasn’t been present in many sectors,
especially in Lebanon.

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CONCLUSION

Abolishing monopolies corresponds to the global
trend to liberalize markets, this in response would
lead to free-trade, and a reduction in prices and
taxes. On the other hand, many believe that if
monopolies are eliminated many disadvantages
would be present and new ethical problems would
arise. Competition does not necessarily reduce
price and may lead to poor quality, due to the large
number of products being offered in the market
(Chedid, 2002). In addition, “ending exclusive
dealerships would lead owners to close down their
establishments and in return, increase unemploy-
ment” (Chedid, 2002). Therefore, there is no right
decision as whether to abolish monopolies and
introduce competition or to keep them operating
and benefiting from their presence.

An independent regulatory body is going to
be needed, whether privatization is going to take
place in Lebanon or if monopolies are going
remain functioning. In addition, there should be
a clear policy, where companies should abide by
different rules set by the law. The government
can also intervene by setting a ceiling price in
which businesses cannot go beyond. In Lebanon,
unfortunately, politicians are too busy with matters
that do not usually deal with public interest and
therefore, applying new rules and formulating a
regulatory body would be too hard to achieve. Even
if a regulatory body is to be formed, it cannot be
independent of political objectives. Therefore, the
only solution for solving the telecommunication
sector dilemma in Lebanon is for a third opera-
tor to enter the market, which would definitely
decrease costs and force all companies to operate
efficiently in order to survive.

REFERENCES

Adams, W. S. (1953, November). Competi-
tion, monopoly and countervailing power. The
Quarterly Journal of Economics, 67(4), 469.
doi:10.2307/1883596

Boulding, K. E. (1945). In defense of monopoly.
The Quarterly Journal of Economics, 59(4),
524–542. doi:10.2307/1883294

Chandrasekaran, R. (1998, November). Microsoft
attacks credibility of intel exec. Washington Post.

Chedid, F.S. (2002, February). Anti-monopoly
move instigates scorching battle in Lebanon.
Lebanon Wire.

De Roover, R. (1951, November). Monopoly
theory prior to Adam Smith-A revision. The
Quarterly Journal of Economics, 65.

DeMarco, C. (2001, May). Knee deep in technique:
The ethics of monopoly and capital. Journal of
Business Ethics, 31.

Ghillyer, A. S. (2008). Ethical Theories. In Busi-
ness ethics: A real world approach (2nd ed.).
Academic Press.

Habib, O. S. (2009, December). Privatization
mostly sidelined in ministerial statement: Telecom
sector can fetch hefty sum, but debate persists over
its sale. Daily Star Newspaper.

Hutt, W. H. (1936, March). Discriminating monop-
oly and the consumer. The Economic Journal, 46.

Konrad, A. S. (2000). Foundation. In Proceed-
ings of Privatization and the Communication
Sector in Lebanon: Workshops and Seminars.
Academic Press.

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Monopoly Abuse

Lemieux, P. S. (1989). Socialized medicine: The
Canadian experience. Academic Press.

Martin, J.S. (2000). Arab telecoms: Monopolies
challenged. Middle Eastern & Central Asian
Studies, 301.

Meed, J.S. (2004). Blueprint for change: Middle
East economic digest. Middle Eastern & Central
Asian Studies, 48.

Nash, M.S. (n.d.). Under lock key: No end in sight
for state control and protection of Middle East.
Academic Press.

Posner, R. A. (1975, August). The social costs
of monopoly and regulation. Journal of Political
Economy, 83.

Pratt, J. A. (1980, December). The petroleum
industry in transition: Antitrust and the decline of
monopoly control in oil. The Journal of Economic
History, 40.

Reed, H. B. (1916, January). The morals of mo-
nopoly and competition. International Journal
of Ethics, 26.

Riley, G. S. (2006). As markets and market sys-
tems. Eton College.

Shehadi, K. S. (2004). Competition in telecom-
munications and the information-based economy:
Planet Lebanon 2004. CONNEXUS Consulting.

Tohme, N. S. (2002, October). Hanging on to the
cash cow. The Executive Editor, 38-39.

White, A. S. (2009, May 13). Intel fined record
$1.44B for monopoly abuse. Fox News.

Wu, C. Z. (2012). A tiger without teeth? Regulation
of administrative monopoly under China’s anti-
monopoly law. Review of Industrial Organization,
41(1–2), 133–155.

KEY TERMS AND DEFINITIONS

Competition: Rivalry among several players
aiming at over performing and resulting in higher
quality and wider coverage.

Corporation: A legal form of an expanding
business activity reaching a social wide scale.

Market Structure: Degree of intensity of com-
petitive forces within a specific business industry.

Monopoly: Productive delivery including
only one player.

Oligopoly: Productive delivery orchestrated
by a relatively small (3 to 30) number of players.

Pricing: Allocation of a numerical value to
an exchange within a market resulting in the as-
signment of the various terms and parameters of
the exchange.

Privatization: Transfer of government owned
public property to private ownership.

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Monopoly Abuse

77

APPENDIX

Learning Objectives

L.O.1: Define monopoly.
L.O.2: Determine the source of monopolistic power.
L.O.3: Discuss different approaches used by companies to address CSR.
L.O.4: Describe how monopolies operate in Lebanon, and give examples of some companies that are

operating as monopolies.
L.O.5: List advantages and disadvantages for monopolies.
L.O.6: Discuss the telecommunication sector in the Arab world and Lebanon.

Summary

Define Monopoly

Monopoly is the case when a firm provides products or services to which there is neither competition
nor a near substitute, dictating price and quantity produced.

Determine the Source of Monopolistic Power

The main reasons that give rise to monopolistic power are:

• Control over the supply of raw material being used,
• Marketing strategies,
• Patents and copy rights, and
• Merger of operations between two major companies.

Discuss Different Approaches Used by Companies to Address CSR

Two approaches are used by companies to address corporate social responsibilities, the instrumental ap-
proach, and the social approach. The instrumental approach is when a company performs monopolistic
behavior in order to maximize company profits and satisfy corporate shareholders. The social approach is
when a company seeks the good of the greater environment, looking beyond the benefit of shareholders.

Describe How Monopolies Operate in Lebanon and Give Examples
of Some Companies That Are Operating as Monopolies

In Lebanon monopolies are operating inefficiently and are selling overvalued goods and services to
consumers. Major examples are Electricite du Liban, and Middle East Airlines.

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Monopoly Abuse

78

List Advantages and Disadvantages for Monopolies

Monopolistic behavior may provide certain positive advantages like helping expand different industries,
generating a lot of capital into the business cycle, introduces innovation, a solution to some major eco-
nomic problems.

Disadvantages of monopolies are mal-distribution of the social product, decreased economic growth
of nation and increase in its unemployment level, block competitive markets, and lack of efficiency.
Moreover, monopolies raise unethical concerns because they involve acts of conspiracy and consumers
will be buying products they need at unjust prices

Discuss the Telecommunication Sector in the Arab World and Lebanon

Stat-telecom monopolies are facing difficulties in the Arab World, in order to overcome these problems
the Arab state-owned telecoms are required to give up their monopolies by privatizing the industry.

The telecommunication sector in Lebanon is flourishing. But, the immense profits produced by this
industry are questioned from an ethical point of view because of the monopoly abuse and high prices
for the services; privatization maybe the solution.

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79

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 6

DOI: 10.4018/978-1-4666-7254-3.ch006

The Ethics of Social Media
and Network Security:

Issues in the Workplace

ABSTRACT

A definition of modern social media leads to the characterization of advantages and disadvantages of
social media in the workplace. The characteristics of social media are: reach, accessibility, immediacy,
and permanence paradox. The extent of media invasion of privacy is discussed in this chapter, and ethical
dilemmas are raised. Social networks are regarded as the main reasons for the decrease of productivity
and other unanticipated confidential problems, which a company may face. Furthermore, the implications
of security alerts lead to a dilemma between individual privacy and common interest. Different types of
attacks might interfere with an existing functional network. Relevant current issues in Network Security
include: authentication, integrity, confidentiality, non-repudiation, and authorization.

INTRODUCTION

A social media site is a podium that permits user-
generated content to emerge through interactions
and associations in a virtual community. Security
has several implications by which one must watch
for. Heterogeneous networking technologies, high-
er speed connections, and ubiquitous access lead
to theft of confidential information, unauthorized
use of network bandwidth/computing resource,
spread of false information, and disruption of
legitimate service. Data diddling (the changing

of data before or during entry into the computer
system), spoofing, network eavesdropping, email
related: virus, Trojan, worm.

BACKGROUND

Ever since the onset of the digital age, human reli-
ance on computer technology and the Internet has
grown and continue to grow exponentially. This
growth, however, was constantly and consistently
met with numerous security concerns. This is best

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showcased by the fact that the “market for security
software has witnessed an unprecedented growth
in recent years” (Dey et al., 2012). As the name
implies, providing Network Security is the act of
monitoring activities being conducted in a certain
network, and protecting the data being transmitted
through the network from any form of outside or
unwanted interference.

Network Security is the series of policies and
provisions taken by a network administrator in
order to ensure the safekeeping of a network and
to prevent any possible unwanted or unauthorized
access, alteration of data flowing through the
network, and misuse or abuse of the network by
individual who have access to it. The most basic
form of network security, other than setting secure
passwords for each individual using the network, is
the firewall. The firewall could either be a software
or a hardware-based security system that monitors
the incoming and outgoing network traffic, and
determines based on analyzing the information
passing within the network whether data should
be allowed through or not. There are two types
of attacks that could compromise the security of
a network: either passive attacks or active attacks
(Wright & Harmening, 2009). Passive attacks
include wiretapping, port scan, and idle scan. Ac-
tive attacks are larger in number and most notable
include denial-of-service-attack, spoofing, and
format string attack (Wright & Harmening, 2009).

STATE OF THE ART

The security software market has witnessed a
boom during the past few years. The number
of individuals buying Network Security tools is
increasing rapidly. In fact, this particular market
has grown from 6.4 billion dollars in 2004, to 16.5
billion dollars in 2010 (Gartner, 2011). Accord-
ing to Dey et al., there are two main categories of
Network Security software. These categories are:

1. Off-the-Shelf Third-Party Standalone
Tools: Includes antivirus, antispyware, anti-
spam-ware software among other products;
and

2. System Components: Such as encryption
software and firewalls that are engraved
within the operating systems of computers.

There are currently 81 vendors of antivirus soft-
ware in North America, and 87 vendors worldwide
(Dey et al., 2012). The most prominent companies
specializing in Network Security software are
Symantec, McAfee, Kaspersky and others.

One type of vulnerabilities that unauthorized
individuals could use to hack into a network is
the open ports used in wireless networks. The fre-
quency of usage of wireless networks is increasing
rapidly, as a growing number of public places are
using such networks to provide internet services to
incoming clients. In fact, there was an estimated
143,700 public access points worldwide as of
2006, and this number was projected to increase
to 818,700 throughout 2007 (Chenoweth et al.,
2010). These public access points, also known as
hotspots, are used in a wide array of establishments
such as airports, coffee shops, restaurants, hotels,
etc… These establishments are usually located
in heavily populated areas, making the threat of
network hacking through open ports very real.
With more and more users getting accustomed to
connecting their wireless devices to these freely
available hotspots, the threat of these users picking
up malicious codes that compromises their private
information increases (Chenoweth et al., 2010).
In 2010, Chenoweth et al. investigated the vulner-
abilities present in public access points located
on a college campus. Their data was collected
during a period of 41 days. During this period,
3331 unique users accessed the public access
points available on campus. The results of the
study revealed that 8.62% of the 3331 computers
that connected to the campus hotspots had an open

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port, and that 65% of the time, these open ports
posed a significant security threat (Chenoweth et
al., 2010). Results also revealed that approximately
9% of the users did not have any form of firewalls
on their computers, rendering them particularly
vulnerable to attacks, and that in fact, seventeen
computers had been compromised by some sort
of malware. Another network soft spot is what is
known as peer-to-peer sharing (or P2P sharing).
Internet users use P2P sharing software in order
to send images, videos, songs, and other files
back and forth to one another. Like public access
points (hotspots), P2P networks are growing at
a fast rate. In fact, “the file movement on these
networks represents a significant percentage of
internet traffic” (Johnson et al., 2009). The dangers
of P2P are grave in nature. Users may unwittingly
compromise very sensitive information that could
be used against them in the future by hackers and
other criminals. The way P2P works is that users
share a folder containing files with other individu-
als. Usually these files include songs, pictures,
and videos, but may also include private files
that contain valuable information pertaining to
the users. Through vulnerabilities in the software,
these files may become accessible to unwarranted
hackers who can then use them for malicious in-
tents (Johnson et al., 2009). More often than not,
users unwittingly upload sensitive information on
the P2P network. According to Johnson et al., this
occurs for several reasons, most notably:

1. Misplaced File: The file containing private
information is placed in the uploaded folder
by mistake;

2. Confusing Interface Design: Users may
not realize what files are being uploaded;
and

3. General Laziness on the Part of the Users:
Users may not take the needed time to prop-
erly organize their files before uploading a
document.

To prove the dangers of P2P sharing networks,
Johnson et al. searched the Gnutella P2P network
for sensitive information and they came up with
startling results. They were able to obtain no less
than 45 Birth Certificates, 42 Passports, 208 Tax
Returns, and 114 Free Applications of Federal
Student Aid (FAFSA). These results portray the
dangers of using P2P sharing networks and urge
the users of such networks to be particularly care-
ful when sharing files online.

Fengmin Gong (1999) presented his article
“Addressing Network Security”. Gong explains
the two concepts of Security and Security attack,
were he defines the second as any action that
threatens the state of security’s well-being. He
then adds that security has several implications
by which one must watch for. First a heteroge-
neous networking technologies which adds to
its complexity, a higher-speed communication
puts more info at risk in a given time period, and
ubiquitous access increases risk exposure. From
that comes a consequence of attacks from which
Gong mentions: theft of confidential information,
unauthorized use of network bandwidth/comput-
ing resource, spread of false information, and
disruption of legitimate services. Later, he adds
about security mechanism that helps detect and
prevent such attacks.

Later, Ariana Eunjung Cha (2005), a Wash-
ington Post Staff Write, discussed in her article
(Viruses, Security Issues Undermine Internet) how
internet is undermined by looking at its benefits
and forgetting about how dangerous it can get
once attacked by users having no “goodwill”. As
an example, in the Internet Store Center, more
than 1000 sites became unreachable including
Google. As a conclusion, experts think that the
network has to be redesigned in order to overcome
the bugs that were introduced in its first design.

Daniel Millions (2007) wrote an article titled
“Defining Computer Security and Privacy Is-
sues”, where he mentions that “it is crucial for

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businesses to keep information they have secure
so that hackers can’t access the information, just
like home users also need to take means to make
sure that their credit card numbers are secure
when they are participating in online transac-
tions”. He defines “computer security risk” as
“any action that could cause lost of information,
software, data, processing incompatibilities, or
cause damage to computer hardware, a lot of these
are planned to do damage”. Daniel differentiates
between different kinds of attackers: cybercrime,
hacker, cyber-terrorist, script kiddle, and finally,
a corporate spy.

Brendan Collins (2008) wrote an article titled,
“Privacy and security Issues in Social Network-
ing”, where he mentions that “given the rising
popularity of social networks, it’s little surprise
that there have been several high-profile breaches
of security on sites as huge as MySpace and
Facebook”. He describes in his article how sites
are vulnerable for security breaches and access
to personal data. Sites with great number of users
suffer more from security breaches than sites that
are hardly visited. Recently Facebook has been
a victim to a type of security breach through the
use of the third party API exposed to developers.
With the existence of massive developers, the
probability of such issue is less possible to be
controlled but can be made complex by having
a well designed and secured framework. On the
other hand, Facebook users are ought to share
information that is not completely private and be
more careful about sharing passwords. On the
same topic, Radell Hunter (2010) wrote an article
(Common Network Security Problems), where the
Hunter’s point out that Network Security issues is
not only about viruses and malwares it is also not
about malicious intent to attack data circulating
on the network. Security problems can be initiated
by employee’s lack experience and misuse of the
system, and then comes the deliberate illegal ob-
tainment of information through hackers’ attacks

or its destruction. As for the common problem,
the software attacks for example viruses that aim
at bringing down a network and sometimes caus-
ing irreparable damages. Network security issue
do not have to originate from human, a network
is prone to natural forces such as lightning and
floods. It is important to consider all these risks
in order to protect the network.

Recently Daniel Brecht (2011) wrote an ar-
ticle concerning Social Engineering and its rise,
which also was edited by Bill Hunter, in August
30. According to the writer, “Attackers can be
from outside organizations, but they can also be
insiders — disgruntled or greedy employees or
contractors. When attackers are able to physically
access a system, they can wreak a world of havoc.”
He mentions that network attacks continues to
rise due to lack in security and network awareness
training, for if a user fail to physically protect their
system it will leave it open to variety of attackers
to hack the PC or network. Daniel introduces the
topic of social engineering of which one of the
most common kinds is physical access attack. It
involves the interaction with computer users to
have them reveal security-relevant information
to cause breaches in a network system or even
impersonate the person. For this, a biometric
device would be a good investment in owning,
since passwords are known to be easily hacked.

The topic of Network Security was discussed by
several writers and experts. SandMartin, an Out-
sourcing Experts, emphasizes on the importance of
network security in breaching the confidentiality
of customers’ data, in an article “Data/Network Se-
curity”. For the experts, the implemented security
plan is at 3 levels: Physical, Network Security, and
confidentiality. The first and last deal with having
monitored environment ranging from deploying
CCTVs and excessive security guards to signing
Non-Disclosure Agreements. As to the measure-
ments related to security, they start with having
unique authentications to employees, forbidding

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the use of electronic devices on the productions
floors, continuous monitoring of data traffic, anti-
virus plans and ending with daily data backups in
order to prevent data corruption and loss.

In 2012, a famous attack was known to be as
the Man in the Browser (MitB), were it’s primar-
ily used to modify financial transactions in online
banking. Another issue discussed was the “The
Inside Man”, which basically mentions the trust
which organizations got towards their employees,
were it should protect itself and its clients from by
limiting access to sensitive information. Finally,
the article talks about Wireless Network Security,
which mentions that attacks have increased signifi-
cantly even for encrypted networks. Another article
in businessresearchguide.com addresses Weak
Passwords, where attackers have to compromise
the right account through brute force or dictionary
attacks and they will have access to sensitive data.
Another issue addressed is the Smartphones and
Tablets, pointing out that nowadays Smartphones
and tablets must be considered just like a computer
for a mobile malware is designed to compromise a
network simply upon the connection of the phone
or tablet, thus, needing an anti-virus, else it will
be used as a Trojan horse. Finally, it mentions that
Foreign Powers has a significant increase with
cyber attacks which are originating in antagonistic
industrializing nations. It has become the most
common origin for “Advanced Persistent Threat”
attacks, which employ persistence and multiple
attack vectors as the primary weapon.

Concerning Computer Networking, an article
is written on Business Link which mentions that
network is becoming more used in businesses as
they combine several servers or computers all to-
gether, where multiple computers can access their
data from a centralized server. The advantages are
apparent by enabling a transparent way to access
user profiles from any machine and transmit data
from any computer to the other. However, this

introduces the security issues, where a malware
on a machine can circulate on the network to
bring the whole system down. In order to prevent
such incidents, it is favored to only authenticate
one user with full rights on the network where
restricted access to other users will diminish the
possibilities of having security attacks.

Security is becoming more important as people
are spending more time connected. The different
types of attacks which might interfere with one’s
network are:

1. Data diddling (the changing of data before
or during entry into the computer system);

2. Spoofing;
3. Network eavesdropping;
4. Session tokens;
5. Email related (e.g. virus); and
6. Trojan (e.g. worm).

Network Security implies:

1. Authentication: The process of determining
whether someone or something is, in fact,
who or what it is declared to be, integrity,
confidentiality (data cannot be modified
undetectably);

2. Non-Repudiation, and
3. Authorization: What you are allowed to do.

Network Security issues are becoming a main
concern for companies especially after the increase
of using of network to facilitate data sharing
between employees. As soon as data transition
has started between machines, the network has
become a point of attraction for hackers to retrieve
and corrupt this information. In order to secure
data, companies attempt to keep up with latest
technologies and implement more developed net-
work solutions. However, this is done at risk too
therefore the need of experts in the field to make

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sure that the transition is smooth and happens
with least damage. It is unsafe to believe that our
network is completely secured since there might
be someone ahead taking advantage of vulnerable
aspects of the network to attack.

SOCIAL MEDIA IN THE WORKPLACE

According to ACAS (2011), social media has
4 characteristics: the reach, accessibility, im-
mediacy and permanence paradox which need
to be understood when considering its impact
upon organizations. Social media has the ability
to reach a vast number of people instantaneously
and quickly. It is cheap and unlike traditional
media production – it does not require specialized
skills from users. In addition, social media can
be adapted or enhanced through user comments,
editing or content submission.

“There is an ongoing debate between employers
and employees over the widespread use of social
networking sites. The question is that whether
social media networks should be banned in the
workplace or not” (Silva, 2007). Besides that,
discussions on the advantages and disadvantages
of using social networks in the workplace are also
under fire (Burton, 2007).

To Ban or Not to Ban?

The decision to ban or not to ban social network
in the workplace should be taken with much con-
sideration. Employers should find appropriate
and flexible ways to capitalize the increased use
of social networking sites rather than just focus
on its negative impacts and ignore the benefits it
might bring to the company” (Schiller). Moreover,
Schiller states that, “employers should state clear
the company’s policy on social networking. Not
only that, employers should ensure that employees
fully understand the policy’s purposes as well as
the punishments for breaking the rules.

Use of social media and tools such as IM and
Web conferencing encourage team building and
enhance communication and collaboration skills.
Blogs, YouTube, Google Documents, and online
communities support in research, hone creative
thinking, and can actually increase employee
productivity and efficiency (Awolusi, 2012).

Adrian Ott(2010) argues “there are many benefits
to social media that companies cannot ignore such
as customer relationships, collaboration and mar-
ket research. For business-to-business providers,
employees and executives are the customer making
social media interaction a necessity”.

“Workers who communicate easily, accurately
and quickly have the best chance at being produc-
tive and effective. As those who grew up using
instant messaging and other online contact systems
advance in the business world” said Under. In con-
trast, “most employers believe that the increased
use of social networking websites of employees
while at work reduce their productivity and harm
for the organization’s reputation as well as lead to
other unexpected confidential problems” (Silva,
2007; Himmelspach, 2008; Moore, 2011).

Moore provides statistical information that
79% of employees admit to using social media at
work for “business reasons” and 82% of employ-
ees admit to using such media during work time
for “personal reasons”. Having the same idea as
Moore,(2011); Murugesan, (2008) stated that “the
main reason for the diversion of social networks
was because of the huge desire of employees to
socialize and engage with others. Meanwhile, for
most employers, productivity of employees is their
most important concern. Arguing that employees
should use their time at the office to serve the
company’s best interests and that employees are
not paid to check and update status profiles, a lot of
companies have tried to block access of employees
to Facebook, Twitter and other social networking
sites” (Moore).“Using social networking sites
may divert employees’ attention away from more

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pressing priorities, so it’s understandable that
some companies limit access,” (Willmer, 2010).
“For some professions, however, these sites can
be leveraged as effective business tools, which
may be why about one in five companies allows
their use for work-related purposes.” The study
conducted by Robert Half Technology revealed
that “54% of U.S. companies say they banned
workers from using social networking sites like
Twitter, Facebook, LinkedIn and MySpace, while
on the job. It also found that 19% of companies
allow social networking use only for business
purposes, while 16% allow limited personal use”.

Many organizations believe that social net-
working sites have the ability to support branding
and promoting the organization in the market
(Burton; Murugesan). Many employees perform
unethically at their workplace and might cause
numerous risks to the organization with their use
says Mintz (2011) “Accessing social media, like
Facebook, for personal use while at work. Using
a company computer, personal digital assistant or
Smartphone to access social media, with risks of
excessive bandwidth use, equipment ‘wear and
tear’ or breakage, or access to improper social
media (such as ‘adult’ or ‘hate’ sites)” (Mintz,
2011). Other unethical behaviors performed by
employees are when they post or discuss others
or display certain social media at work that can
lead to claims of harassment, use one’s company
email address or a username that refers to one’s
employment with the company, use without per-
mission the company name, logo, trademarks,
copyrighted information or discussion boards or
other social networking sites that can infringe on
the company’s rights to and control over these as-
sets and maintain a blog that accepts advertising
from his or her company’s competition or post
a false review about a competitor’s product or
service (Mintz, 2011).

“It is obvious that social media is being used
unethically at the workplace” says Brooks. “Much

is said about the benefits of social media for busi-
nesses, but what about the drawbacks? Though
we’ve long heard about the productivity drain
among employees who use social media at work,
a new downside is getting some attention: ethical
violations” (Belicove, 2012). According to the
Ethics Resource Center study, the use of social
media appears to be contributing to the problem
of violation of law in which the research revealed
that45% of U.S. employees observed a violation
of the law or ethics at workplace. “Socially adept
employees may be more likely to slack off and
engage in traditionally unethical behavior simply
because of job dissatisfaction, as seven in 10 em-
ployees reported having plans to switch jobs in the
next five years. That was compared to four in 10
of their non-active social networking colleagues”
(Belicove, 2012).

FUTURE TRENDS

Vulnerabilities that threaten the integrity of
Network Security are very real and dangerous.
The consequences of gaining access to sensitive
information by malicious parties could prove cata-
strophic. Therefore, it is important to figure out
ways to ensure that Network Security threats are
kept to a minimum. One way to minimize threat
is to join a managed service security provider
(MSSP). MSSP’s are “a form of collaboration
where several firms share resources such as diag-
nostics, prevention tools, and policies to provide
security for their computer networks” (Gupta &
Zdhanov, 2012). The advantages of joining these
networks include the pooling of risk facing each
enterprise which in turn reduces the overall threat
of a cyber-attack, as well as the benefitting from
more security-enabling resources and professional
expertise (Gupta & Zdhanov, 2012). Another way
to avoid leakage of sensitive information online is
encrypting such information. In fact, Castle (2013)

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states that encrypting data “makes it completely
unreadable to anyone but you or its intended re-
cipient. Best of all, much of the software used in
offices and on personal computers already comes
with encryption functionality built in”. The author
goes on to list the items that could be encrypted.
These include the entire hard drive, the internet
traffic, the email, and even word documents,
PowerPoint presentations and Excel spreadsheets
(Castle, 2013).

“As mobile malware and virus are rapidly in-
creasing in frequency and sophistication, mobile
social media has recently become a very popular
attack vector” (Wu, 2013). Disparate discussions
in literature on security aspect of mobile social
media through blog mining provide some key
insights can help enterprises understand security
risks associated with mobile social media. Risks
related to mobile social media are identified to
help enterprises mitigate risks of mobile social
media, and to mitigate the security risks of mobile
social media.

Moreover, the NET generation will be inter-
ested in advanced security and privacy issues such
as phishing, hacking, firewalls, and sexting among
teenagers, and online predators and other Web
related cases. Since this is such a large topic that it
actually can be expanded and divided into several
upcoming areas of interest. Other topics that can
be further expanded include: white collar crimes;
money laundry; pansy scheme ; online reputation;
prism; industrial espionage; mass surveillance;
government secrecy; wiki leaks and snowmen;
food safety; building code and building safety;
public transportation safety; who; genetically
modified food; and cloning. Some of the above
topics and other issues are currently in the domain
of science ethics or engineering ethics, but as soon
as services or products are commercialized, they
become business ethics issues.

CONCLUSION

Mintz (2011) claims that

…companies should establish clear policies and
procedures with respect to the use of social me-
dia including: clarifying the distinction between
use of social media for company versus personal
use; monitoring and auditing of employee use;
assessing proper company use of social media;
compliance with laws and regulations; and edu-
cating employee regarding proper and improper
use of social media.

REFERENCES

ACAS. (2011, September). Social media and its
impact on employers and trade unions. ACAS.

AT&T. (2011, November 11). Social networking
in the workplace increases efficiency. AT&T.

Awolusi, A. N. (2012). The impacts of social
networking sites on workplace productivity.
Academic Press.

Belicove, A. N. (2012, January 13). How social
networking breaks down ethics in the workplace.
Business Insider.

Brecht, D. (2011). Understanding social engi-
neering and password network attacks. Academic
Press.

Brooks, J.S. (2012, January 10). Social media con-
tributes to ethical lapses at work. Business News.

Burton, J.S. (2007, November 7). Bringing social
media to work. ZDNet.

Castle, A. S. (2013, January 18). How to encrypt
(almost) anything. PC World, 31(4), 29–30.

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Chang, H. Y., Narayan, R., Wu, S. F., Vetter, B. M.,
Wang, X., Brown, M., et al. (1999). Deciduous:
Decentralized source identification for network-
based intrusions. In Proceedings of Integrated
Network Management (pp. 701-714). IEEE.

Chenoweth, T. S., Minch, R. S., & Tabor, S.
(2010). Wireless insecurity: Examining user
security behavior on public networks. Com-
munications of the ACM, 53(2), 134–138.
doi:10.1145/1646353.1646388

Collins, B. (2008). Privacy and security issues in
social networking. Academic Press.

Cooney, M. (2011). 20 hot IT security issues.
Academic Press.

Dey, D. S., Lahiri, A. S., & Zhang, G. S. (2012).
Hacker behavior, network effects, and the secu-
rity software market. Journal of Management
Information Systems, 29(2), 77–108. doi:10.2753/
MIS0742-1222290204

Eunjung Cha, A. (2005). Viruses, security is-
sues undermine internet computer networking.
Academic Press.

Gartner. (2006, September). Gartner says security
software revenue totaled $7.4 billion in 2005 (Press
release). Stamford, CT: Gartner.

Gupta, A. S., & Zhdanov, D. S. (2012). Growth
and sustainability of managed security services
networks: An economic perspective. Management
Information Systems Quarterly, 36(4), 1109–1130.

Harned, S. S. (2009). Ethics recourse center survey.
Ethics Resource Center.

Himmelspach, J. S. (2008). Facebook finds its
way into the workplace. Grand Rapids Business
Journal, 1(December), 5.

Johnson, M. E., McGuire, D. S., & Willey, N. D.
(2009). Why file sharing networks are dangerous?
Communications of the ACM, 52(2), 134–138.
doi:10.1145/1461928.1461962

Kumar, A. S. (2011). Computer network security
problems and solutions: Quick fix tips. Academic
Press.

Mintz, J. S., Branch, C. S., March, C. S., &
Lerman, S. S. (2010, June). How easy is it to
introduce something new? Issues associated with
introducing a new technology tool (the HANDS
mobile solution) to develop social skills with
children with autism. In Proceedings of World
Conference on Educational Multimedia, Hyper-
media and Telecommunications (pp. 1799-1808).
Academic Press.

Mintz, S. (2011, May 8). Social media ethics in
the workplace. Workplace Ethics Advice.

Moore, J.S. (2011, October). Social networking
in the workplace. National Law Review.

Murugesan, S. S. (2008, March 11). To ban or
not to ban. Cutter Consortium.

Ott, A. J. S. (2010, November). How social media
has changed the workplace. Fast Company.

Redspin Security Team. (2011, January 7). Top
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Schiller, K. S. (2009, November). Employers crack
down on social networking. Information Today, 21.

Silva, C. S. (2007, November). Productivity con-
cerns pull HR into debate over social web sites.
Employee Benefit News, 32.

Smith, J.S. (2010, April). The Facebook global
monitor. Inside Facebook.

Under, J.S. (2012, February 17). Social media in
the workplace. Investopedia.

Willmer, S. S. (2010). CIOs forecast increase in
second-quarter IT hiring. Robert Half Technology.

Wright, J.S., & Harmening, J.S. (2009). Security
management systems. Managing Information
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Wu, H. (2013). A survey of security risks of mobile
social media through blog mining and an exten-
sive literature search. Information Management
& Computer Security, 21(5), 381–400.

KEY TERMS AND DEFINITIONS

Confidentiality: Protected space of informa-
tion based on privacy and preselected span of the
information.

Data: Large amounts of measurements pre-
sented consistently in a raw pattern.

Information: Translation of data into useful
knowledge.

Multimedia: Technology driven means of
communication through social networks.

Network: Inter related connections between
individuals and groups all related to a source.

Privacy: Privilege of containing information
and attitudes within an individualized space.

Security: Protection system against criminal
activity and unexpected adverse events, usually
related to human misconduct.

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89

APPENDIX

Learning Objectives

L.O.1: Define network security and social media.
L.O.2: Discuss the advantages and disadvantages of social media in the workplace.
L.O.3: Define security attack and list different kinds of attackers.
L.O.4: Discuss the implications of security that one must watch for.
L.O.5: Define computer security risk.
L.O.6: Understand different types of attacks which might interfere with one’s network.
L.O.7: Discuss different issues in Network Security.

Summary

Define Network Security

Network security is the authorization of access to data in a network, which is controlled by the network
administrator.

Define Social Media

A social media site is a platform that allows user-generated content to emerge through interactions and
collaborations in a virtual community. It is a broad term given to describe the latest evolution of internet
and web based communication platforms which enable users to rapidly connect and interact in a variety
of different formats.

Discuss the Advantages and Disadvantages of Social Media in the Workplace

• Disadvantages: Time wasters, drain employee productivity, harm organizations reputation, prob-
lems in confidentiality, distracts employees

• Advantages: Enhance collaboration, communication, and teambuilding, increase creativity, aid in
research; enhance customer relationships, increase employee knowledge and access to information.

Social networks find their way into the corporate world; employers are struggling with the decision
whether to ban or not to ban the use of these websites. Hence, social networks are considered as the main
causes for the decrease of productivity and other unexpected confidential problems which a company
might face with. However, it is also necessary for people to acknowledge the positive aspects of social
networks and the benefits.

Define Security Attack and List Different Kinds of Attackers

Security attack is any action that threatens the state of security’s well-being. There are different kinds
of attackers: Cybercrime, hacker, cyber terrorist, script and finally a corporate spy.

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Discuss the Implications of Security That One Must Watch For

Security has several implications by which one must watch for. Heterogeneous networking technologies,
higher speed connections, and ubiquitous access lead to theft of confidential information, unauthorized
use of network bandwidth/computing resource, spread of false information, and disruption of legitimate
service.

Define Computer Security Risk

Computer security risk is any action that could cause loss of information, software, data, processing
incompatibilities, or cause damage to computer hardware, a lot of these are planned to do damage.

Understand Different Types of Attacks Which Might Interfere with One’s Network

1. Data Diddling: The changing of data before or during entry into the computer system,
2. Spoofing: Situation in which one person or program successfully masquerades as another by fal-

sifying data and thereby gaining an illegitimate advantage,
3. Network Eavesdropping: Network sniffing is a network layer attack consisting of capturing

packets from the network transmitted by others’ computers and reading the data content in search
of sensitive information like passwords, session tokens, or any kind of confidential information,

4. Email Related: Virus, trojan, worm.

Discuss Different Issues in Network Security

1. Authentication: The process of determining whether someone or something is, in fact, who or
what it is declared to be,

2. Integrity: The assurance that information can only be accessed or modified by those authorized
to do so,

3. Confidentiality: Data cannot be modified undetectably,
4. Non-Repudiation: Ensure that a transferred message has been sent and received by the parties

claiming to have sent and received the message, and
5. Authorization: What you are allowed to do.

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91

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 7

DOI: 10.4018/978-1-4666-7254-3.ch007

Environmental Pollution

ABSTRACT

Environmental ethics is the part of ethics that inspects questions of moral right and wrong relating to
the management, defense, or endangerment of the natural resources available to us. Environmental
ethics falls under the universal ethics theory. It does not seem fair to people from the future that we
are consuming the world’s resources now and leaving just a little to them, and that we’re leaving the
world polluted and in a situation worse than it once was. This can be explained through three different
perspectives: the utilitarian perspective, the deontological perspective, and our duties to others based
on our rights. This chapter explores environmental ethics.

INTRODUCTION

Pollution is the introduction of the impurities into a
natural environment that causes uncertainty, harm,
or distress to the ecosystem i.e. physical systems
or living organisms. The major forms of pollution
are visual pollution, air pollution, noise pollution,
soil contamination, radioactive contamination,
thermal pollution, light pollution, and littering.
Noise pollution is extreme displeasing human,
animal, or machine-created environmental noise
that disturbs the activity or balance of human or
animal life, it can cause problems in both health
and behavior. Soil contamination is caused by
the existence of human-made chemicals or other
modification in the natural soil environment. At
adequate dosages a big number of soil impurities

can cause many chronic illnesses and even death.
A common assumption in business is that busi-
nesses only have duties towards people and that
nonhuman units aren’t worth moral deliberation,
but nature can have intrinsic value; this is called
“naturalistic ethic”. The main causes behind
industrial pollution are: unregistered small scale
units, lack of pollution control systems, and lack
of awareness. Various solutions are suggested
solutions to decrease industrial pollution:

1. Country wide studies need to be done
throughout the country;

2. Institutional policies and legislations need
to be developed; and

3. Greenpeace and NGOs are needed and should
be heard.

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BACKGROUND

For the most part, environmental pollution is the
byproduct of human activity, industrial or other.
Pollution can take on many forms, and these forms
are categorized into two main group: Chemical
Substances, and Energy. Examples of chemical
substance pollution include air pollution, soil
contamination, water pollution etc… In contrast,
energy pollution encompasses light pollution
(over-illumination which could sometimes be
harmful to nearby eco-systems), noise pollution
(caused by operating heavy machinery such as
planes), visual pollution (the over-abundance of
materials and objects that influence the integ-
rity of the landscape, such as billboards, scarred
landforms, power lines etc…). Pollutants are the
actual waste materials that cause pollution and the
degree of perniciousness of the pollutants depends
on their chemical composition, concentration, as
well as their persistence. Some examples of pol-
lutants include pesticides, noxious gases such as
sulfur dioxide and chlorofluorocarbons, as well
as heavy metals that cause soil contamination.
Pollution, although harmful to the environment
and to the living creatures that inhabit it, is a nec-
essary consequence of economic growth. In 2012
Ahmed et al. tested the relationship between envi-
ronmental pollution and economic growth of the
Maldives using the Environmental Kuznets Curve
and the Ordinary Least Squares (OLS) method.
The analysis of the empirical data retrieved from
the study revealed “a strong positive relationship
between environmental pollution and economic
growth” (Ahmed et al, 2012).

Businesses don’t deliberately set out to damage
the environment. Yet, some factors create an ill-
fated situation, which in many cases is poorer than
it needs to be like disregarding natural resources
that are held in common and seem abundant.
Businesses are driven by the motive of making a
profit. Businesses believe that they do not have a
responsibility to protect the environment out of

what the law necessitates, and that environmental
responsibility rests with consumers. Environ-
mental responsibility of a business can be shown
by three different theories. The anthropocentric
theory that says all environmental responsibility
is derived from human interest alone. The animal
rights view states that higher animals qualify as
morally significant creatures. The eco-centrism
theory states that we have direct responsibilities
to environmental collections as we have direct
responsibilities to humans.

Consequentialist ethical theories stem from
utilitarianism. It regards the intrinsic “good or
bad”, “value or disvalue”, as more important than
the “right or wrong”. Right or wrong is determined
as whether the consequences of a certain action
are good or bad. Environmental ethics, calls for
weighing out the consequences of each decision
to be made by the direct effects it will have on the
environment; the environment being not only that
of the natural area but also of all living things in
the surroundings.

DEFINITION OF POLLUTION

Pollution is the introduction of the impurities into a
natural environment that causes uncertainty, harm,
or distress to the ecosystem i.e. physical systems
or living organisms. Pollution can take the form
of chemical substances or energy, such as noise,
heat or light. Pollutants, the components of pol-
lution, can be either foreign substances/energies
or naturally occurring contaminants. Pollution
is often classified as point source or nonpoint
source pollution.

Environmental pollution poses a serious threat
to the environment as well to human beings in that
it “affects the quality, or aesthetics, of human life,
and displays potential to undermine conditions
necessary for the sustainability of human life”
(Youngblood Coleman, 2013). Different countries
and regions are affected by pollution to varying

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extents, depending on the level of their industrial
activities, size of their population, and the state
of their infrastructures (Youngblood Coleman,
2013). In 2013, Denise Youngblood Coleman
presented an overview of the current environmen-
tal conditions of different regions and countries
around the world. Youngblood Coleman’s inves-
tigations revealed that the North-American region
(chiefly, Canada and the United States) is the
biggest contributor of pollution in the world. The
author affirms that the United States of America,
due to its great motor vehicle usage and industrial
activities is the number emitter of greenhouse
gases, especially carbon dioxide. Other factors of
environmental degradation in the United States
of America include the large-scale deforestation
(especially in the north-west coastline), as well as
agricultural pollution “including nitrate contami-
nation of well-water nutrient runoff to waterways,
and pesticide exposure-is significant in various
areas” (Youngblood Coleman, 2013). This has
caused the extinction of a number of endangered
species which has caused the decline of fish stocks.
Another major contributor to worldwide pollution
is Europe. In fact, the author states that Europe
contributes 36 percent of the world’s Chloro-
fluorocarbon (CFC) emissions. The continent is
also responsible for 30 percent of carbon dioxide
emissions as well as 25 percent of sulfur dioxide
emissions. Environmental pollution (especially in
Western Europe) has been the cause of acid rain
that has damaged many areas across the continent.
Luckily however, European countries have started
adopting environmental policies targeted at re-
ducing pollution. These policies include cleaner
production technologies and alternative methods
of waste disposal (Youngblood Coleman, 2013).

As previously mentioned, environmental pol-
lution poses a serious threat to human life and
survivability. In 2013, the United Arab Emirates’
government commissioned a team of research-
ers to investigate the prime causes of diseases in
the country. The research’s aim was to reveal to

main factors leading to the onset of disease so
that the government can better allocate its funds
to combat the root causes of the most prevalent
illnesses (Gibson et al., 2013). Health risks of
the population have shifted rapidly from infec-
tious diseases to “chronic conditions observed in
developing countries”. In order to determine the
disease burden of the country, six environmental
exposure roots were investigated: outdoor air,
indoor air, drinking water, coastal water, occupa-
tional environment, and climate change. The final
results of the assessment revealed that the prime
cause of deaths in the UAE was outdoor air pollu-
tion with 651 attributable deaths 04 7.3% the total
number of deaths at the time of the assessment
(Gibson, 2013). Outdoor pollution was followed
by indoor pollution with 153 attributable deaths,
and occupational exposures with 46 attributable
deaths. Moreover, the top contributor of hospital
visits was found to be the act of drinking polluted
water. The results of this research underline once
again the grave consequences of environmental
pollution on the lives of human beings, and the
urgent need to enact environmental policies that
limit the emissions and production of harmful
materials.

Similarly to the environmental policies
implemented by the European countries, Brazil
has enforced environmental regulations on its
industrial sector. These strict regulations were
imposed during the period spanning from 1999 to
2003, and forced many industrial entities to alter
their production processes so that they become
less harmful and more environmentally-friendly.
De Azevedo and Pereira (2010) investigated how
the largest Brazilian oil refinery was responding
to the government regulations. These regulations
aimed to “minimize local environmental impacts
around the refineries, specifically high water
consumption and emissions of solid, liquid and
gaseous discharges” (de Azevedo & Pereira, 2010).
Innovative solutions were found to the newly im-
posed regulations. In fact, the refinery invested

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around 22 million dollars in order to address its
environmental impacts. The investments were
mainly concentrated in areas of waste treatment.
Moreover, the refinery adopted two policies of its
own in order to comply with government protocols
which are: a) Regulation related to local impact:
which are techniques used in the production
process of the refinery aiming at reducing the
environmental impacts of pollutants (reducing
water, air, and soil contamination); and b) Regu-
lation related to producing less polluting diesel.

TYPES OF POLLUTION

The main types of pollution are listed as follows:

• Air pollution,
• Photochemical ozone and smog,
• Light pollution,
• Littering,
• Noise pollution,
• Soil contamination,
• Radioactive contamination,
• Thermal pollution,
• Visual pollution, and
• Water pollution. (Buchanan and Horwitz,

2001)

THE ETHICS OF ENVIRONMENTAL
PROTECTION AND THE COSTS
OF POLLUTION CONTROL

Environment cannot be protected by implementing
strict standards on firms to minimize the amount
of pollution. The costs it takes to help the environ-
ment are high. How do we take the decision to pay
higher costs to help and protect the environment?

One of the options is a cost-benefit analysis.
We can evaluate the damage and benefits done
to people by hurting or helping the environment.

Nevertheless, the cost-benefit approach is
usually an unreasonable approach and it may be
impossible to know how much damage a com-
pany’s environmental harm is worth.

In addition to this, the cost-benefit approach is
not solely about money. We may have to consider
the agony, pain, and death that can be caused by
pollution.

Who Should Pay the Costs?

Nobody wants to have to pay all the costs to pro-
tect the environment by himself. Most individuals
think that those who are responsible for creating
a damaged environment ought to pay or those
people who benefit from it.

Regulations, Incentives, and
Pricing Mechanisms

In some places, a firm has a certain limit on how
much pollution it is allowed to produce. The firm
may have to set up special techniques that help
minimize the amount of pollution, such as a filter.
The advantage of this is that the firm which does
not comply with this law will be forced to pay a
huge fine.

However, disadvantages arise from this as well.

1. Regulators need to know how much pollution
to expect from firms and if it is possible for
them to decrease pollution. This entails a
lot of research and expertise.

2. Regulations usually disregard differences
between industries and manufacturers and
require them all to be regulated in exactly
the same way.

3. Regulation may cause displacement.
4. Firms may be able to reduce pollution below

the regulated requirements, but have no
incentive to do so.

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FUTURE TRENDS

Exposure to air pollution results in an estimated
7 million deaths each year. This suggests that air
pollution—indoor, outdoor, or both—caused 1
in 8 deaths worldwide in 2012 (Kuehn, 2014).
Given the dangers of pollution on the environment
and human and animal life alike, important steps
and regulations must be taken to prevent or limit
its consequences. One possible solution is the
institution of property rights. In 2011, Kerekes
discussed her assertion that a negative correlation
exists between the ownership of property and the
level of pollution emanating from that property.
The author argues that “when property rights are
assured, an incentive is created for property owners
to properly care for the surrounding environment
and allocate resources efficiently, which leads to
economic development” (Kerekes, 2011). Kerekes
further argues that the issue of environmental qual-
ity should not be regarded as a result of market
failure prompting government intervention with
the imposition of environmental regulations and
policies, but should however be viewed from a
property rights perspective. To test this hypoth-
esis, the author conducted a cross-country study
whose results revealed that “where property rights
are well defined and enforced, as with property
rights pertaining to land and water, increases in
the security of property rights lead to improve-
ments in environmental quality”.

Another study found that issuing taxes on
harmful pollutants is positively correlated with
improving environmental quality. In 2010, Er-
bas investigated the effects of assigning a tax
on absorbable organic halide (AOH) on market-
demand elasticity, input prices, and asymmetries
in abatement and production processes. The results
showed that the aforementioned factors affect the

“the research and development portfolio of the
firms, total paper production and discharges of
pollutants, and compositions of dirty and clean
firms” (Erbas, 2010). These findings suggest
that understanding how certain factors affect the
production processes of pollution-producing busi-
nesses leads to environmental output.

CONCLUSION

Research claims that middle and junior managers
care very much about ethical behavior, but that
senior managers mostly only care about profit.
Senior managers are the ones who make the deci-
sions, but middle managers can slowly shift the
climate of opinion in a business.

Well-publicized cases such as Shell and the
Brent Spar suggest businesses are more sensitive
to public opinion about ethical behavior and have
started to act more ethically. Skeptics argue this is
not because of a change of heart, but just another
changed response to changed market conditions
in the stricter standards on companies and limit
the amount pursuit of profit.

REFERENCES

Ahmed, A. S., Herve, D. B., & Zhao, L. S.
(2012). Empirical study on relationship between
environmental pollution and economic growth of
maldives using environmental Kuznets curve and
OLS method. International Journal of Business
and Management, 7(21), 15. doi:10.5539/ijbm.
v7n21p15

Al-Azar, M. S. (2002, July 25). Environment code
launched after 5-year parliamentary sojourn. The
Daily Star.

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Environmental Pollution

Bhattacharya, C. B., & Korschun, D. S. (2011).
Leveraging corporate social responsibility: The
stakeholder route to business and societal value.
Cambridge, UK: Cambridge University Press.
doi:10.1017/CBO9780511920684

Captan, L. S. (2001, June 12). Environmental
activists are fighting against all the odds. The
Daily Star.

de Azevedo, A. M. M., & Pereira, N. M. (2010).
Environmental regulation and innovation in high-
pollution industries: A case study in a Brazilian
refinery. International Journal of Technology
Management & Sustainable Development, 9(2),
133–148. doi:10.1386/tmsd.9.2.133_1

Erbas, B. C. (2010). Factors affecting innovation
and pollution-reduction performance of environ-
mental regulations. Environmental Economics
and Policy Studies, 12(4), 139–163. doi:10.1007/
s10018-010-0169-2

Gibson, J. M., Thomsen, J. S., Launay, F. S.,
Harder, E. S., & DeFelice, N. S. (2013). Deaths
and medical visits attributable to environmental
pollution in the United Arab Emirates. PLoS ONE,
8(3), e57536. doi:10.1371/journal.pone.0057536
PMID:23469200

Greenpeace Press Release. (1995, May 11). Italian
toxic waste still lies dumped in Lebanon. Author.

Kerekes, C. S. (2011). Property rights and envi-
ronmental quality: A cross-country study. The
Cato Journal, 31(2), 315–338.

Kryter, K. D. S. (1985). The effects of noise on
man. Academic Press.

Kuehn, B. M. (2014). WHO: More than 7 million
air pollution deaths each year. Journal of the Amer-
ican Medical Association, 311(15), 1486–1486.
PubMed. doi:10.1001/jama.2014.4031

Masri, R. S. (1995). The human impact on the en-
vironment in Lebanon. International Relief Fund.

Michael, D. (2011). Business pollution – Effects.
Retrieved from http://www.library.thinkquest.org

US EPA. (1997). Risk assessment guidance for
superfund, human health evaluation manual.
Washington, DC: Office of Emergency and Re-
medial Response, U.S. Environmental Protection
Agency.

Youngblood Coleman, D.S. (2013). Global en-
vironmental snapshot. Kosovo Country Review,
188-199.

KEY TERMS AND DEFINITIONS

Contamination: Presence of foreign impuri-
ties inside a mixed with other elements modifying
the basic characteristics of that space.

Ecology: The science of nature which explains
the behavior in evolution of life systems in the
most natural form.

Environment: The space of linkages between
the various chains of eco-biologic life mechanisms.

Health: The state of normal function of a living
organism unaffected by disease or dysfunction.

Noise: Background contaminant of a popula-
tion or a mechanism.

Pollution: Excessive contamination of a given
space leading to the loss of its basic functions and
a modification of its individual characteristics.

Toxic Waste: Refused items containing poison
resulting from an industrial process with a con-
siderable half-life duration therefore representing
a threat to basic life.

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97

APPENDIX

Learning Objectives

L.O.1: Define pollution.
L.O.2: Understand forms of pollution and their effect on human health.
L.O.3: Discuss business attitudes on resisting environmental responsibility.
L.O.4: Review philosophical theories of environmental responsibility and implications on business.
L.O.5: Understand cost pricing mechanisms of pollution control.
L.O.6: Discuss obligations to future generations.
L.O.7: Assess the nature value of animal treatment and environmental destruction.
L.O.8: Define environmental ethics.
L.O.9: Discuss environmental ethics in the light of the Utilitarian theory.
L.O.10: Define Industrial pollution and determine how nations are reacting towards it.
L.O.11: List the causes behind industrial pollution.
L.O.12: Determine solutions to decrease industrial pollution in Lebanon.

Summary

Define Pollution

Pollution is the introduction of the contaminants into a natural environment that causes instability, harm,
or discomfort to the ecosystem i.e. physical systems or living organisms.

Understand Forms of Pollution and Their Effect on Human Health

The major forms of pollution are visual pollution, air pollution, noise pollution, soil contamination,
radioactive contamination, thermal pollution, light pollution, and littering. Noise pollution is excessive
displeasing human, animal, or machine-created environmental noise that disrupts the activity or bal-
ance of human or animal life, it can cause problems in both health and behavior. Soil contamination is
caused by the presence of human-made chemicals or other alteration in the natural soil environment .At
sufficient dosages a large number of soil contaminants can cause many chronic illnesses and even death.

Discuss Business Attitudes on Resisting Environmental Responsibility

Although businesses don’t deliberately set out to damage the environment, several factors create an un-
fortunate situation, which in many cases is worse than it needs to be like disregarding natural resources
that are held in common and seem abundant. Businesses are driven by the motive of making a profit.
Businesses believe that they do not have an obligation to protect the environment above what the law
requires, and that environmental responsibility rests with consumers.

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98

Review Philosophical Theories of Environmental
Responsibility and Implications on Business

Environmental responsibility of a business can be shown by three different theories. The anthropocentric
theory that says all environmental responsibility is derived from human interest alone. The animal rights
view states that higher animals qualify as morally significant creatures. The egocentrism theory states that
we have direct responsibilities to environmental collections as we have direct responsibilities to humans.

Understand Cost Pricing Mechanisms of Pollution Control

We can protect the environment by paying a cost for pollution control. The cost is to be paid by those
responsible for the pollution, and it should be paid through regulations, incentives, pricing mechanism,
and pollution permits.

Discuss Obligations to Future Generations

It seems unfair to people from the future that we are using the world’s resources now and leaving little to
them; and that we’re leaving the world polluted and less livable than it once was. This can be explained
through three different perspectives: the utilitarian perspective, and the deontological perspective, and
our duties to others based on our rights.

Assess the Nature Value of Animal Treatment and Environmental Destruction

A common assumption in business is that businesses only have obligations towards people and that
nonhuman entities aren’t worth moral consideration, but nature can have intrinsic value; this is called
“naturalistic ethic”.

Define Environmental Ethics

Environmental ethics is the branch of ethics that examines questions of moral right and wrong relating
to the management, protection, or endangerment of the natural resources available to us; Environmental
ethics falls under the universal ethics theory.

Discuss Environmental Ethics in the Light of the Utilitarian Theory

Consequentialist ethical theories stem from utilitarianism. It regards the intrinsic “good or bad”, “value
or disvalue”, as more important than the “right or wrong”. Right or wrong is determined as whether
the consequences of a certain action are good or bad. Environmental ethics, calls for weighing out the
consequences of each decision to be made by the direct effects it will have on the environment; the en-
vironment being not only that of the natural area but also of all living things in the surroundings.

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99

Define Industrial Pollution and Determine How Nations Are Reacting towards It

Industrial pollution is one that can be directly associated with the industry. Nations have recognized
that it is their responsibility to protect themselves and their neighbors from the grave repercussions of
industrial pollution by passing laws, holding conferences, signing protocols and attending summits.

List the Causes behind Industrial Pollution

The main causes behind industrial pollution are: unregistered small scale units, lack of pollution control
systems, and lack of awareness.

Determine Solutions to Decrease Industrial Pollution in Lebanon

Various solutions are suggested:

• Studies need to be done throughout the country.
• Institutional policies and new legislations need to be developed.
• Greenpeace and NGOs are needed and should be heard.
• Government makes a decision to put environmental as a priority.
• Waste management and sewage organization.

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100

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 8

DOI: 10.4018/978-1-4666-7254-3.ch008

Climate Change:
Global Warming Mitigation or Adaptation

ABSTRACT

Growing economies of less advanced countries carry part of the mitigation load of climate change. A
logical framework analysis identifies the economic impact for mitigation of climate change in less in-
dustrialized economies where climate adaptation seems to offer better prospects of feasibility. Financial
instruments are proposed within development of a strategic action plan in mitigation of climate change.
An implementable policy matrix is formulated accompanied with a set of performance indicators that
are coherent with the action plan. Challenges that are specific to growing economies are identified.
Recommendations include lessons learned and limitations of alternative renewable energy sources.

INTRODUCTION

Climate change is threatening the survival of
human civilization. The two common strategies
to combat climate change is to reduce the emis-
sions of greenhouse gases, which is known as
mitigation of climate change; and to cope with the
impacts of climate change, known as adaptation to
climate change. In other words, “mitigation aims
to avoid the unmanageable and adaptation aims
to manage the unavoidable” (Laukkonen et al.,
2009, p.288). Mitigation actions can be achieved
in different contexts. These actions can take place
at the international, regional, national, local and
individual levels (Laukkonen et al., 2009).

BACKGROUND

Definition and Dilemmas of
Climate Change Mitigation

The definition of climate change mitigation is
provided by the IPCC in its 4th Assessment Report
2007, which states any: “technological change
and substitution that reduceresource inputs and
emissions per unit of output. Although several
social, economic and technological policies would
produce an emission reduction, with respect to
climate change, mitigation means implementing
policies to reduce GHG emissions and enhance
sinks” Nationally Appropriate Mitigation Actions

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(NAMAs) for developing countries are included
under the post-Kyoto negotiations. Climate change
negotiations process has evolved since Rio up to
the current negotiations (mainly up to the Co-
penhagen Accord). Since its inception, the Kyoto
Protocol was designed to be legally binding in
emission reduction targets for the Annex I par-
ties (DeCanio, 2009) with the option for flexible
mechanisms. Non-Annex I parties can voluntarily
lower their emissions through the participation
in those flexible mechanisms, most notably the
Clean Development Mechanism (CDM) which
is stipulated in Article 12 of the Protocol. There
are 4 main post-Kyoto architectures (Streimikiene
and Girdzijauskas, 2009):

1. Targets and timetables;
2. Harmonized domestic policies and measures;
3. Resource transfer from developed countries

to developing countries; and
4. Economic policies in developing countries.

Mitigation is clearly a global public good
(Viguier, 2004) since its benefits accrue to all
people and not only to a limited set of people.
Therefore, it is categorized by being non-rivalry
and non-excludability which is the nature of a
public good. Mitigation strategies can have co-
benefits. This is the case with linking climate
change and air pollution. The reduction of CO2
emissions can have favorable impacts in reducing
other air pollutants through burning lesser fossil
fuels (Barker, 2003). Annex I Parties (Industrial-
ized countries) and Non-Annex I Parties (Develop-
ing countries) have refined their position towards
mitigation since the start of the negotiations up
to Copenhagen summit in 2009. Issues being
negotiated under mitigation include NAMAs and
potential consequences as well as institutional
arrangements (Friedrich, 2013). Navigating in-
ternational space allows comparison of positions
for various interested parties including:

1. Gulf,
2. Levant,
3. Middle income countries, and
4. Industrialized countries.

Climate Change Negotiations

The negotiations should take into account the in-
terplay between the international economic system
versus the issue of equity and fairness (Sugiyama
and Deshun, 2004). Hence, the current negotia-
tions are trying to focus on positive co-benefits and
spillover effects of mitigation actions from both
Annex I and Non-Annex I parties. There is also
special attention to the negative consequences of
these actions. A development oriented approach
to mitigation is a top priority to developing coun-
tries. That is why a wider set of actors need to be
involved in mitigation (WINKLER, 2008).

Article 3 of the UNFCCC clearly emphasizes
the necessity to avert dangerous anthropogenic
climate change via the stabilization of greenhouse
gases (GHGs). The debate focuses on two themes:

1. The cost-effectiveness of mitigating climate
change through the reduction of emissions,
and

2. The distribution of mitigation costs among
developed and developing countries, i.e. the
principle of equity with the right to sustain
development (DeCanio, 2009).

The issue of equity is directly related to the
principle of “common but differentiated respon-
sibilities”, which has been enshrined in Principle
7 of the Rio Declaration on Environment and
Development in 1992 as well as in the UNFCCC.

Although the principle of “common but dif-
ferentiated responsibilities” have been embodied
within the Convention, there are some developed
countries that refuse to participate in the Kyoto
Protocol unless there is meaningful participation

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from major developing countries or what is known
as the emerging economies of the developing
countries (Sugiyama & Deshun, 2004). This po-
sition is still being advocated in the post-Kyoto
negotiations. On the other side, the Non-Annex I
parties, especially China and India, and on the basis
of this principle argue that developed countries
should take on quantified emission reductions
first (Sugiyama & Deshun, 2004). This position is
due to the right to development and eradication of
poverty which is central to all developing countries.
Mitigation strategies are effectively implemented
when emissions reductions and welfare gains are
linked together (Halsnaers, 1996).

The problem of free riding exists within the
climate change negotiations. Even though there
is a common goal to reduce emissions, parties
only put forward limited emission reductions
targets (Viguier, 2004). It is important to note that
cost-effectiveness is essential for the conclusion
of any post-Kyoto treaty (Viguier, 2004). This is
clearly evident in the considerations of all major
negotiating groups whether they be from Annex
I or Non-Annex I parties. Moreover, the issue
of cost-effectiveness is also linked to the issue
of equity which is clearly stated in the principle
of “common but differentiated responsibilities”.

It is apparent that the negotiations are being
linked to other agreements and negotiations.
This is clearly evident with the linking of climate
change negotiations with international trade. This
has been illustrated in Viguier, 2004, under the
terminology of “leakage effect” which can occur
with emission reduction targets. Targets can raise
production costs of goods and thus encourage the
firms to relocate to developing countries where
no emission reduction targets are mandated.
Furthermore, the emission reduction targets can
induce a reduction in energy demand in developed
countries and thus a drop in world energy prices.
This drop can in turn stimulate energy demand in
developing countries that do not have any obliga-
tions to reduce emissions.

Dilemmas and Issues

The main issue at hand is the allocation of emis-
sion rights on the basis of equity (DeCanio, 2009).
Therefore, it is the political economy of this deci-
sion that will have to be dealt with in order to reach
a compromise for the post-Kyoto negotiations in
addition to the science behind climate change. The
UNFCCC is a science-based convention and it is
not only about economics. Therefore, there should
be a blend between the best available science,
the economics, and the political will to bring out
an equitable and fair legally binding treaty as an
outcome of these negotiations. Mitigation targets
should be long term and global. This is clearly
stated in Sugiyama and Deshun, which empha-
sized that the “nature of the science of climate
change is long term and global.” (Sugiyama and
Deshun, 2004).

Financial/Economic values driving mitigation
process in the Levant as proxy for middle income
countries. Basic areas of interest include energy
and transport sectors. Emissions are expected
to increase in developing countries. Therefore,
mitigation is essential in those countries (Hal-
snaes, 1996).

Although various proposals have been put
forward to mitigate GHGs, “no formula has been
worked out for how to distribute across nations
the obligations that surely must accompany sig-
nificant climate action.” (DeCanio, 2009, p.915)
Hence, one of the main contentious issues for

Table 1. Statistics from the International Energy
Agency (IEA) reveal the trends carbon dioxide
emissions per capita in the Levant.

Country 2007 2008

Egypt 2.24 1.99

Jordan 3.35 3.12

Lebanon 2.77 3.68

Syria 2.70 2.56

Source: IEA 2010.

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the post-Kyoto negotiations remains the issue of
mitigation amongst developed and developing
countries or as known Annex I and Non-Annex I
Parties to the UNFCCC respectively.

It is important to stress on the word “dangerous”
since its meaning is decided by society (DeCanio,
2009). Every society perceives “danger” from its
point of view and interprets it accordingly. This
is clearly visible in the post-Kyoto negotiations.
For example, the EU considers the target of
global average temperatures should not exceed
2 degrees Celsius as safe. While Non-Annex I
parties and most notably the AOSIS consider
that the global average temperatures should not
exceed 1.5 degrees Celsius (DeCanio). Therefore,
the perception of what is safe and what is not is
relative among different societies and is related
to their national circumstances. The concept of
danger is subjective (Tompkins and Amundsen,
2008, p.2). Furthermore, countries act according
to their national interests. Hence, altruism is not a
feature of international relations (DeCanio, 2009).
This is clearly the case when illustrating the dif-
ference between the Ozone Layer problem and
that of climate change. This entails the “realist”
perspective of international relations, in which
each nation or region is a rational actor pursuing
its own interests“(DeCanio, 2009, p.920).

RESPONSIBILITY AND STALEMATE

The issue of responsibility and the discourse that
developed countries should act first to reduce emis-
sions is often the main reason of stalemate in the
current negotiations (Tompkins and Amundsen,
2008). There are 7 different proposals for commit-
ments in the post-Kyoto negotiations. They are the
following (Streimikiene and Girdzijauskas, 2009):

1. The continuing Kyoto approach;
2. The multi-stage approach;

3. Contraction and convergence approach;
4. Multi sector convergence;
5. Brazilian proposal;
6. Triptych approach; and
7. Commitment to human development with

low emissions approach.

Developing countries consider that developed
countries should take the lead in mitigating climate
change through reduction emission targets due to
their historical responsibility in emitting GHGs.
Developing countries will only commit once the
developed countries have demonstrated progress
in curbing their GHG emissions (Streimikiene and
Girdzijauskas, 2009). On the other hand, some
developed countries, notably the US, argue that
the Kyoto Protocol does not provide a good basis
for continued discussions on the mitigation of
climate change since it contains too many flaws
(Streimikiene and Girdzijauskas, 2009). These
flaws are linked to the leakage effect. The US is
inclined towards the least cost option of emission
reductions in order not to distort international
trade competitiveness. There are economic factors
behind the need for emerging developing coun-
tries such as China and India to take initiative in
curbing emissions as proposed by industrialized
countries. The main concern is that a country like
China will derive additional advantages regarding
international trade if it does not adopt any bind-
ing emission reduction targets (Richerzhagen and
Scholz, 2008).

Therefore, the debate within the climate
change regime has continuously focused on the
significance of policies and measures that are
directed towards sustainable development as
well as commitments that are voluntary in nature
(Richerzhagen and Scholz, 2008). Hence, the
creation of the notion of NAMAs for developing
countries. In Montreal 2005, Parties agreed to
launch a two-track process to negotiate further
commitments as mandated by Article 3.9 of the

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Protocol. Since major developed countries aren’t
parties to the Protocol, then mitigation actions
should be discussed under the Convention (Win-
kler, 2008). The Bali Action Plan attempted to
provide a balance between mitigation actions in
both Annex I and Non-Annex I parties (Winkler,
2008). This is clear in Articles 1(b)(i) and 1(b)
(ii). These two articles have put the basis for the
negotiations that led up to Copenhagen summit.
Developed countries should put forward quantified
emission reduction targets including those that
are no parties to the Kyoto Protocol, notably the
US. On the other hand, developing countries have
agreed to put forward mitigation actions that are
MRV. Furthermore, developed countries should
provide technology transfer and financial resources
and should be subject to MRV (Winkler, 2008).

LOGFRAME INDICATORS

The LOGFRAME matrix is a tool to develop
consistent strategic implementation relating it-
eratively in a “one-page “overview overall goals
through purpose, activities, and outputs based
on predefined indicators as predefined means of
verification of executive performance. Implemen-
tation is monitored through activities and outputs,
whereas strategy impact is evaluated by securing
consistency of overall goals with intended behav-
ioral changes as a purpose for action.

Horizontal logic of policy implementation
relates hierarchy of objectives to performance
indicators as means of verification of strategy
impact and execution results. Indicators specify
precisely how each objective contributes within
overall strategy. They set performance targets in
order to measure the extent that each objective has
been achieved. Finally they provide the basis for
monitoring and evaluation. To fulfill their func-
tion, successful indicators must be independent,
substantial, verifiable, and precise. They serve two
categories of performance: process, and quality,

whereas quantity is viewed as target. Elaboration
of meaningful indicators is guided by the follow-
ing considerations:

1. Relevance to decision making;
2. Transparency and meaning to stakeholders;
3. Feasibility and skill for monitoring;
4. Human oriented coverage (gender, culture,

demographics);
5. Time sensitivity; and
6. Multidimensional sustainability.

FINDINGS ON MITIGATION
OF CLIMATE CHANGE

Q1: Mitigation Processes
in Growing Economies

Analysis of climate change mitigation under two
alternative scenarios offers insight into economic
potential of mitigation: a reference or baseline
scenario (BS) and a mitigation scenario (MS). On
one hand, the BS mirrors the business as a normal
state of matters and consequently designates the
most likely evolution of the economy. On the
other hand, the mitigation scenario integrates new
explicit guidelines. In the alternative scenario, the
MS, policy analysis and climate change mitiga-
tion assessment, is consistent with commitment
to the U.N. Framework Convention on Climate
Change (UNFCCC). The mitigation scenario
typically carries a negative net present value in
comparison to the baseline scenario. Henceforth,
the analyzed mitigation policy can be expected to
pose several challenges.

Q2: Financial Instruments

Key Findings on financial instruments for ad-
dressing climate change are based on the enabling
capacity of suggested instruments. The following
section lists and briefly describes some of these

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mitigation instruments. Which focus on two fi-
nancial aspects: economic efficiency and business
profitability.

Economic Efficiency

• Link Changeability of the Economic
Development with Environmental Ruin:
Economic externalities are essential to
economic development. Environmental ex-
ternalities could be measured through the
connection with development.

• Link Possible Advantages of Energy
Usage Efficiency to New Energy Causes:
Stowage efficacies of wind energy usage
denote business and consumer enticements
to shift to substitute sources.

• Evaluate Startup Charges of Wind
Power-Driven Building Cyphers:
Construction costs per unit or per area of
done space display economic worth and
hook up fittings costs for new and existent
buildings.

• Take Part in Local Fund for Wind
Energy Equipment: Multi-country
regional strategy for wind energy creation
can lead to economies of scale and econo-
mies of scope.

• Begin organized structure supporting in-
tegration of new practices in existing eco-
nomic styles.

• Establish financial tools at local, national,
and international levels (Farajalla et al.,
2010).

Business Profitability

• Create Startup Investment Costs of
Wind Farming: Controls of capital in-
vestments for joints stations, and initial

costs for individual units permit clear pro-
cedures for break even parameters and re-
muneration schedules for long term action.

• Deliver Sensitivity Analysis on
Scenarios Concerning Cost Benefit
Ratios: Opposed situations are related to
satisfactory situations to offer sensitivity
of financial ratios for a range of markets
and reality situations. Back up preparation
is probable in order to lessen opposing
conditions.

• Evaluate Business Rates of Return
and Net Present Values on Micro Wind
Construction Divisions: Wind energy con-
struction can be completely self-supported.

• Evaluate annuity costs of maintenance of
wind energy production as well as costs of
operation (Farajalla et al., 2010).

Q3: Policy Matrix

MACRO Aggregation: At Country Level

• Endorse private/ public partnerships at a
domestic level.

• Create Positive Cooperation be-
tween Environment and Economy:
Environmental quality turns into econom-
ic worth shown in consumer demand for
ecological friendliness.

• Deliver global negotiation agenda for bilat-
eral and/or multilateral collaboration.

• Distribute Information for Public
Awareness on New Energy Machineries:
Relocate information on new wind ener-
gy from study to consumer publicity and
marketing.

• Integrate the arrangement of data col-
lection and storage on wind technology
applications.

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MICRO Scoping Incentives and
Instruments: At Business Level

• Start a specific research entity in the matter
of wind energy production.

• Recognize energy invention funding do-
nors by energy source.

• Device a logical agenda for wind energy
management.

• Grasp critical talent and expertise.
• Provide training for staff; human resources

are the main element of success in the im-
plementation process.

Q4: Logical Framework
(LOGFRAME) Indicators

Indicators within LOGFRAME framework secure
coherent performance with policy matrix.

Finance Indicators

• Adopt market economies for off-grid elec-
tronic generators.

• Evaluate third party costs of spill over for
pollution control.

• Encourage institutional promotion with fi-
nancial incentives.

• Discover privatization choices of the en-
ergy sector in Lebanon.

Policy Indicators

• Provide security of the reliability of data
on energy ingesting by user category.

• Care for the progress of wind atlas for eo-
lian energy creation.

• Promote productions guidelines; match re-
gional and international criteria of air qual-
ity and environmental safety.

• Improve applications tools (Frajallah et al,
2010).

RECOMMENDATIONS:
IMPLEMENTATION CHALLENGES
AND OPPORTUNITIES

Policy Implementation

• The policy matrix should be divided into
environmental, social, and economic crite-
ria (Streimikiene and Girdzijauskas, 2009).

• The policy matrix may look at the individ-
ual, organizational, and institutional levels.

• We should look at public attitudes in the
policy matrix (Rajan, 2004).

• There is a need to green FDI since only
a tiny fraction goes to the environment
(Zhang and Maruyama, 2001).

• The barriers related to climate change
mitigation projects are related to technolo-
gies, management, uncertain rates of re-
turn, higher initial investment costs, and
small project size and implicit transac-
tion costs (Zhang and Maruyama, 2001).
Hence, there is a need to reduce these risks
such as policy measures and new financial
instruments.

• Institutional arrangements are key to en-
hance investments in mitigation. Therefore,
there is a need for public-private sector
linkages (Zhang and Maruyama, 2001).

FUTURE TRENDS

Challenges

• Unique physical landscape features offer
unusual transportation concerns, as well
as intense differentials in meteorological
features.

• Vehicle traffic density produces severe
emissions that require immediate monitor-
ing and control.

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• Currently operating power generators uti-
lize economically and environmentally
inefficient as well as outdated fossil fuel
technology.

Opportunities

• Develop market for carbon credits.
• Restructure organizational governance and

functioning of energy sector.
• Synchronize adaptation technologies to

provide better impact of mitigation policy.
• Investigate business profitability potential

of alternative wind and/or solar sources.

Some programs, including state programs in Ari-
zona, Massachusetts, New York, North Carolina,
and a program in the city of San Francisco, will as-
sess the potential health impacts of climate change
and which local populations are most vulnerable.
Other programs, such as those in New York City
and the states of Maine, Michigan, Minnesota,
and Oregon, will develop strategies for mitigating
threats that have already been identified (Kuehn
2010).

CONCLUSION

Growing economies are in a likely vulnerable food
security position. Although public policy includes
allocation of food subsidies, the prevalent rate of
malnutrition is very low, while the food bill is
increasing. Concerning future food uncertainties
and climate change consequences, the food import
bill could be predicted to increase and become
more unstable. Adaptation strategies carry a more
pertinent likelihood of success than mitigation.
Yet mitigation efforts for climate change offer a
most needed plan of immediate action.

REFERENCES

Barker, T. S. (2003). Representing global cli-
mate change, adaptation and mitigation. Global
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S0959-3780(02)00085-7

DeCanio, S. J. (2009). The political economy of
global carbon emissions reductions. Ecological
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lecon.2008.10.003

Frajallah, et al. (2010). The national economic,
environment and development studies (needs)
for climate change project. American University
of Beirut.

Friedrich, M. J. (2013). Climate change linked
with increase in diarrheal disease. Journal of the
American Medical Association, 309(19), 1985.
doi:10.1001/jama.2013.5879

Halsnæs, K. S. (2002). Market potential for Kyoto
mechanisms—Estimation of global market po-
tential for co-operative greenhouse gas emission
reduction policies. Energy Policy, 30(1), 13–32.
doi:10.1016/S0301-4215(01)00056-8

Kuehn, B. S. (2010). CDC targets climate change.
Journal of the American Medical Association,
304(20), 2232. doi:10.1001/jama.2010.1684

Laukkonen, J., Blanco, P. K., Lenhart, J., Keiner,
M., Cavric, B., & Kinuthia-Njenga, C. S. (2009).
Combining climate change adaptation and mitiga-
tion measures at the local level. Habitat Interna-
tional, 33(3), 287–292.

Powell, R. A., Single, H. M., & Lloyd, K. R.
(1996). Focus group research: Enhancing validity
of user and provide questionnaires. International
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Race, K. E., Hotch, D. F., & Parker, T. (1994). Reha-
bilitation program evaluation: Use of focus groups
to empower clients. Evaluation Review, 18(6),
730–740. doi:10.1177/0193841X9401800605

Rajan, S. C. (2004). The role of social change in
the US transport sector for climate change mitiga-
tion. Energy for Sustainable Development, 8(2),
39–46. doi:10.1016/S0973-0826(08)60458-5

Richerzhagen, C. S., & Scholz, I. S. (2008). China’s
capacities for mitigating climate change. World
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worlddev.2007.06.010

Streimikiene, D. S., & Girdjzijauskas, S. S. (2009).
Assessment of post-Kyoto climate change mitiga-
tion regimes impact on sustainable development.
Renewable & Sustainable Energy Reviews, 13(1),
129–141. doi:10.1016/j.rser.2007.07.002

Sugiyama, T. S., & Deshun, L. S. (2004). Must
developing countries commit quantified targets?
Time flexibility and equity in climate change
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Tompkins, E. L., & Amundsen, H. S. (2008).
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envsci.2007.06.004

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Winkler, H. S. (2008). Climate change mitigation
negotiations, with an emphasis on options for
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Zhang, Z. S., & Maruyama, A. S. (2001). Towards a
private-public synergy in financing climate change
mitigation projects. Energy Policy, 29(15), 1363–
1378. doi:10.1016/S0301-4215(01)00038-6

KEY TERMS AND DEFINITIONS

Adaptation: Acceptance of a change due to
the incapacity to affect its drivers.

Climate: Dynamic systems of meteorology
regulating atmospheric conditions of temperature
humidity and wind speed.

Dilemma: A situation of two truths coexisting
and competing for an exclusive choice where only
one of them will survive.

Global Warming: Generalized increase of
temperature levels by a significantly measur-
able amount throughout the entire planet due to
a green house effect in the upper atmospheric
layers resulting from intermittent thinning of the
external ozone layer.

Mitigation: Action affecting the drivers of
change in an unwanted circumstance aiming at
alleviating the consequences of the change.

Negotiation: Bargaining back and forth by
sequential steps aiming at reaching a compromise
or an agreement between competing parties.

Policy: Deliberate discretionary plan of action
preset by a government’s authority with a specific
purpose in mind.

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109

APPENDIX: ACRONYMS

CDM: Clean Development Mechanism.
FDI: Foreign Direct Investment.
GHG: Green House Gas.
IEA: International Energy Agency.
IPCC: Intergovernmental Panel on Climate Change.
KP: Kyoto Protocol.
MOE: Ministry of Environment.
MRV: Measurable, Reportable, Verifiable.
NAMA: Nationally Appropriate Mitigation Actions.
UNFCCC: United Nations Framework Conference for Climate Change.

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110

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 9

DOI: 10.4018/978-1-4666-7254-3.ch009

Tax Evasion

ABSTRACT

Tax evasion is considered by the international laws and domestic laws of most countries as a form of
fraud. In most countries, a gap exists between the expected tax revenues and the tax revenues that are
actually collected. This gap is naturally due to tax evasion. Understanding why individuals and organi-
zations evade taxes is the first step in reducing the aforementioned gap. For a taxation system to be well
received and accepted by both the state and the public, it has to be just and fair, clear and precise, and
take into consideration the interest of both the state and the citizen. This chapter explores tax evasion.

INTRODUCTION

“Tax Evasion is the general term for efforts by
individuals, corporations, and other entities to
evade taxes by illegal means. Tax evasion en-
tails taxpayers deliberately misrepresenting or
concealing the true state of their affairs to the
tax authorities to reduce their tax liability, and
includes, in particular, dishonest tax reporting such
as declaring less income than actually earned; or
overstating deductions” (Slemrod, 200). Mertens
(1996) the legal definition stating that tax evasion
is the “process whereby a person, through com-
mission of Fraud, unlawfully pays less tax than
the law mandates.”

The law differentiates between two major
terminologies that might be a misconception to
most people. There is an enormous difference
between Tax evasion and Tax avoidance. Tax
evasion is fraudulent act of manipulating numbers

and income statements in order not to pay taxes,
Tax avoidance, on the other hand, is the lawful
use of the tax regime to a person’s own interest, to
decrease the amount of tax paid within the law. So
Tax Evasion is illegal but tax avoidance is legal.
However both tax evasion and avoidance can be
viewed as forms of tax non-compliance, as they
designate a range of activities that are undesirable
to a country’s tax system.

Tax evasion is considered a crime in nearly
every industrialized country and makes the
guilty party subject to fines or prison time. In
most countries, actions that would quantity as
criminal tax evasion are looked at as civil issues.
Deceitful reporting income in a tax return is not
essentially regarded as a crime. Issues like these
are dealt with in tax courts instead of normal
criminal courts. Nevertheless, some fraudulent
tax behavior is considered criminal, for instance,
thoughtful distortion of archives. Additionally,

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civil tax indiscretions can also result in punish-
ment. It is usually regarded that the degree of eva-
sion is contingent to the harshness of punishment
for evasion. Generally, the higher the evasion, the
higher the level of punishment.

BACKGROUND

It appears that as soon as the taxation process
was presented somebody tried to escape it. For a
long time England shied away from straight taxa-
tion since the thought of revealing income was
disliked. The first Income Tax was presented as
a temporary tax to assist in providing money for
the Napoleonic wars. Tax evasion by appealing
too many payments became so predominant that
a severe refurbishment of all kinds of deductions
was affected.

DEFINITION

Tax evasion is the illegal act of evading the pay-
ment of taxes by individuals and organizations.
The relevant literature is rampant with articles that
examine the effects of certain financial practices
on tax evasion, as well as the steps that are being
taken by governments across the world in order to
combat this phenomenon. In fact, taxes constitute
the main source of revenue for any nation, which is
why tax evasion is an extremely dangerous practice
that can have catastrophic consequences on coun-
tries and societies as a whole if left unchecked.
That being said, governments around the world
are continually updating their tax-related laws
to ensure that tax evasion is kept to a minimum,
and that taxes are being collected efficiently. One
example of this is Jordan’s Income Tax Act No.
28 that was introduced in 2009. . Studying the
impact that newly introduced tax amendments
have on citizen compliance and tax evasion has
identified several characteristics that make up a

good taxation system. Most notably, for a taxa-
tion system to be well-received and accepted by
both the state and the public, it has to be just and
fair, clear and precise, and take into consideration
the interest of both the State and the citizen (Al-
Naimat, 2013). Ultimately, the study concluded
that the new amendments of the Income Tax Act
No. 28 increased the commitment of taxpayers to
paying their taxes.

One of the main matters that the Internal
Revenue Service and the US federal government
have to face concerning the IRS tax evasion and
harmonizing the federal budget is referred to as the
“tax gap”. The US is known to have a tax deficit
that it might never collect. Hard work has taken
place to try to terminate the gap, however, just a
slight percentage, has been collected by the IRS.
The gap remains to grow.

The reason behind this inequality is a lack of
resources for the Internal Revenue Service. The
failure of the Internal Revenue Service to inspect
each case lets the tax gap grow and IRS tax eva-
sion goes without punishment.

Table 1 shows movements on an explicit study
may cross fiscal years. Thus, the data shown in
cases started might not at all times represent the
same cases shown in other actions within the
same fiscal year.

Table 1. Tax criminal investigation data in USA,
with case outcomes

FY 2011 FY 2010 FY 2009

Investigations Initiated 153 166 174

Prosecution
Recommendations

110 115 83

Indictments/Information 85 83 69

Sentenced 79 62 69

Incarceration Rate* 81.0% 82.3% 78.3%

Avg. Months to Serve 24 19 25

*Incarceration includes confinement to federal prison, halfway
house, home detention, or some combination thereof.

Data Source: Criminal Investigation Management Information
System, 2012.

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Tax Evasion

Taxes represent a major source of revenue for
the State. However, one study that tackles this
issue was conducted in the spring of 2013 by
Gamze Oz Yalama and Erda Gumus using survey
data collected in Turkey. The study examined the
motives that lead to the tax evading behavior and
the results revealed that there are many factors that
cause individuals to evade paying taxes. In fact, the
statistical analysis showed that all 8 tested factors
were statistically significant. These factors are:

1. Tax Evasion Factor: Contained three items,
such as tax morality.

2. Taxational and Fiscal Factors: Contained
eight items, such as tax rate.

3. Economic Factors: Contained six items,
such as rational behavior, cost and benefit.

4. Demographic Factors: Contained four
items, such as gender.

5. Politic Factors: Contained three items, such
as democracy.

6. Administrative Factors: Contained two
items, such as tax penalties.

7. Mixed Factors: Contained five items, such
as income level.

8. Additional Factors: Contained two items,
such as informal economy. (Yalama, Gumus,
2013).

Similarly, another study conducted by Yiqun
Wang sought to identify factors contributing to tax
evasion using cross-country survey data targeted at
firms. The results uncovered that the main factors
behind this phenomenon are competition among
firms, tax administration and unfair practices, firm
size, age, ownership, as well as the quality of the
legal environment. (Wang, 2012).

TODAY IN LEBANON

Tax evasion has an effect that cannot be overlooked
on both the economy and the treasury. According
to the director general of the Finance Ministry,

“There is an immediate and direct cost of this tax
evasion. I mean the money you are not getting.
This also has a huge cost on the economy which
is better known as moral hazard, if the Finance
Ministry was unable to collect taxes properly then
it would be introducing a bias between companies
and tax payers.”

There are no precise numbers concerning tax
evasion in Lebanon bout it is thought that the
number is relatively high. Like most countries,
Lebanon relies on various forms of taxes such as
the Value-added Tax, the income tax, and tariffs.

Several economists claim that large companies
pay the majority of the total taxes to the govern-
ment while the small and medium institutes pay
the remaining. Many modifications have taken
place over the past few years by the Ministry of
Finance to reform the tax department, hire extra
staff from the civil sector, and sign some collabo-
ration contracts with the European Union, World
Bank and International Monetary Fund to assist
the government with the alterations.

International Practical Case

On the 12th of October, 2006, Wesley Snipes,
who is a well- known American actor and film
producer was charged with conspiring to deceive
the U.S. government and of purposely assisting
the creation of a false and deceitful claim for pay-
ment against the U.S.

Lebanese Briefing and
Practical Case

In today’s business, the service sector is playing
a big role in the world economy and especially
in Lebanon. This sector is the basic factor in
the Lebanese economy especially the food and
beverage segment. According to Paul Aris, the
president of restaurant owners’ union, food and
beverage sector generates 65% of the annual GDP.
However, despite its success and wide-spreading,
this sector involves a lot of legal and illegal ma-

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neuvers. The Lebanese ministry of finance does
its best to control these fraudulent actions but still,
due to its limited capabilities there are many non
compliant restaurants. The tax evasion concept
is theoretically very easy; it basically involves
falsifying the revenue to decrease the VAT and
substantially decrease the net income to minimize
the income tax. As we know, the revenue formula
is Price*Quantity; Price cannot be altered or ma-
nipulated to manipulate income statements since
it will be too obvious to detect price alterations
even by customers, therefore manipulation occurs
on the quantity level.

Case Study

What actually happens is that once the invoice
is paid by the customer, the electronic data is
transferred, and using special software called
ORETRIEVE, the company is allowed to reopen
this invoice, erase the quantity sold and reprint it.
Therefore, at the end of each day, the total sales
registered do not really reflect the actual sales. It
all starts when the company agrees on a certain
percentage of sales to be hidden. For example: if
a company chooses to hide 30% of its sales, the
total cash will be split into 70-30% and 30% will
be stashed in a separate account while the other
70% will be deposited in the company’s account.
At this stage the electronic data will be transferred
to ORETRIEVE whereby an operator will start
erasing items sold from the actual sales in order
to match the quantity sold to the new deducted/
manipulated sales. This manipulated data will be
presented to the ministry of finance. Therefore,
such a process will help the company evade a large
portion of income tax and VAT since the stashed
30% will be eventually tax free.

Due to this fraudulent act, the company will
not only be stealing from the government but
from its customers as well resulting in a double
theft from this organization. Since the government

imposes the VAT on the customers through com-
panies; therefore companies will collect the full
amount of VAT from customers but will submit
only the desired amount which is in this case of
the restaurant we speak about 70%.Furthermore,
those software are widely spread in the Lebanese
market and this option will only cost the company
400$ to purchase the software while earning mil-
lions in return.

Finally, the restaurant segment in Lebanon
represents a real example of fraud activities espe-
cially in the tax evasion type of fraudulent actions.
Supporting our example, a proof of two different
invoices for the same order will be presented in
the supporting papers at the end of the project.

Positive Scenario: The
Actual Resolution

Nowadays, the ministry of Finance in Lebanon is
doing whatever it can to control the tax evasion
phenomenon and to tie all loose ends. However,
with limited resources and the huge corruption in
the ministry by itself, it is nearly impossible to
enforce the law everywhere. Nevertheless, in the
last few years, it has been witnessed that a huge
improvement occurred regarding this matter. An
acceptable number of incidences occurred when
many fraudulent acts regarding tax evasion were
detected and those cases were transferred to the
concerned courts. The fact is that Lebanese citizens
have lived in such corruption for so many years
that it became of their culture, and the ethics in
their lives became with no respect, not to mention
the ethics in dealing with business matters.

Regarding what is happening today, techni-
cally speaking, many auditors are aware of those
fraudulent acts in many places and they tend to
be associates in the crime.

Therefore, the core of the problem is not in
detecting those fraudulent acts but in fact in re-
porting them; since many of the mentioned above

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auditors are paid bribery so they do not report
the actual status of the companies but associate
them to transfer their fake financial statements.
In that way, the bribers which are the fraudulent
companies will pay the auditors of the ministry
of finance an amount of money or some sort of
gifts that costs them very little compared to the
huge amounts they are saving from paying the
real taxes they should pay. This is where things
get complicated whereby we can easily jump
into many different areas of corruption, bribery,
fraud, theft, counterfeit and malpractice of the
Lebanese laws and constitutions spread in the
Lebanese community in general and government
institutions in specific.

Furthermore, there is another aspect that
sheds light on the issue is the political coverage
that many companies have in the country. As we
know, the country is divided into many political
and religious sections that can affect judgments
of the courts or the actual execution of the court’s
decisions regarding tax evasion cases. Therefore,
should we find a decent honest auditor who is
willing to report the fraudulent incidence and
then find a decent judge who is willing to execute
and carry on fair judgments, we can’t make sure
the execution takes place if companies have the
privileges of political coverage.

Normative Scenario:
Proposed Resolution

Regarding the discussed problem, no visible and
tangible progress can be done without serious
thinking of correcting the whole system of fraud
detection and prosecution in Lebanon.

To achieve the desired results of decreasing
the fraudulent acts of tax evasion, fraud detection
methodologies should be very well established
and implemented through several steps.

First of all, the government must employ a
set of qualified auditors and they should be very
well trained on the different fraudulent acts and
on the different methods used by tax evaders

not to mention an attractive incentive plan that
ensures the loyalty of auditors and to keep them
trustworthy and away from bribery temptations;
the more the auditor’s well being and wealth is
improved by the government, the less he/she could
be tempted to be bribed. Moreover, the training
that must be given to those auditors must include
not only technical issues or tricks that can be used
by tax evaders but also they should be trained on
the latest software and technologies those evaders
might use to make the detection of the fraudulent
act easier and more efficient.

Second, the government must make sure that
all its ministries and departments interchange
information and have ongoing and updated data
concerning all suspects. This information must
be intercommunicated within all institutions from
the ministry of finance, ministry of Justice and
the police that can detect, prosecute and make
sure of the execution of the punishment occurs.

Moreover, the justice system should handle
these cases firmly and must consider the auditors
under the same umbrella as the suspects so that
in case the auditors collaborate with the criminal
acts of tax evaders, they should be penalized with
maximum punishments. This will ensure that au-
ditors are below the enforcement of Law and will
make them think thoroughly before committing
such mistakes.

Finally, there is a part of the problem that can
be solved by the people themselves when selecting
the proper candidates upon elections to assume
that the right position is filled by qualified people.
This is the only way that we force the politicians to
lift up their coverings on some crime committers.

LESSONS LEARNED

At the beginning of this research we were not
aware of the difference between Tax evasion and
Tax Avoidance, and we were not aware of the
magnitude of the problem here in Lebanon.

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In our opinion tax avoidance is an acceptable
way of increasing wealth in condition that it does
not break the law. For example if a company
chooses to do some charity in the intention of
minimizing income tax so let it be. This is what
Morgan Friedman argued against in his wealth
maximization theory that states that social cor-
porate responsibility should not be conducted
by corporations because it is not their duty and
allows the government to lack its responsibilities
towards the community while the companies’ own
responsibilities are to make profit & maximize it.

Nonetheless, Tax Evasion, as emphasized
earlier, is an ultimate crime in most developed
countries around the world and whoever engages
in it will suffer the consequences, which include
either paying a certain fine or spending time in jail.

Looking to the International case that we took
as example for our research, we learnt that no one
is above the law whoever the criminal is, and we
see someone as famous as Wesley Snipes, very
successful and much known Hollywood actor, go-
ing to prison for committing a tax evasion crime.

This incidence teaches us a lesson that every
citizen is equal and no matter whom you are, if
you commit any crime, you will be still treated
like any suspect and you will be prosecuted for
justice. Following up these issues to the end is
very important and we see from the table “How
to Interpret Criminal Investigation Data in USA”
that 81% of the detected cases in the US are
prosecuted and punished. Here, in this case the
Media plays a role to shed the light on how the
government acts in setting examples of famous
people and celebrities to prove to the normal citi-
zens that no one is above the law. However, when
you look in the Lebanese case, you can actually
discover that we are far from being a country that
fights the fraudulent acts of tax evasion. As we
mentioned in a previous section of the research,
the problem is of many faces. First of all, the issue
of tax evasion is very popular here in Lebanon

since many people and companies practice this
type of Fraud and many speculations on whether
the government knows about them or not come
across people’s minds. Actually, the main reason
behind this phenomenon in Lebanon is the ease that
the governmental institutions offer to companies
to commit this crime.

Although the government knows about the
existence of such behaviors and the law states it
is a criminal act to commit tax evasion fraudulent
activities, but the corruption in the institutions
starting with the auditors who are selected most
of the time not on their qualifications but based
on shares for each politician. Those auditors don’t
have the qualifications to work in this field and
even if it happens to be that they have them, then
it wouldn’t be difficult to them to accept brib-
ery to misreport the financial statements of the
companies. Moreover, even if it happens that the
auditor is professional and he/she can report a fake
financial statement then it would be out of luck
to find a judge who isn’t affected by politicians’
enforcements of their opinions in the matter or
even being affected by possible bribes.

Therefore, due to all these unfavorable facts and
possible reasons, there is a slight possibility that
cases of tax evasion fraud in Lebanon are followed
to the end or that prosecutions will lead to arrests
or would let justice take its place. Finally, we think
that unless things change and a true reform to the
whole system occurs including auditors, technol-
ogy, justice system and politicians’ interventions
in these issues the case will not alter to the better
and the fight against tax evasion fraudulent crimes
will not move forward.

FUTURE TRENDS

Several recommendations were introduced
concerning future steps to be taken in order
to limit the effects of tax evasion. These steps

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include “enhancing the coordination between
the income tax department and the tax payers in
modern methods and developing an electronic
tax system” and “increasing and dissemination
the taxation awareness to limit the phenomena of
taxes evasion by conducting awareness campaigns
through the mass media and different publication
methods” (Al-Naimat, 2013). On a similar note,
the European Union announced new rules and
regulations aiming to fight tax evasion and fraud.
On December 6th 2012, the European Commission
required from EU member states to introduce new
laws that seek to homogenize the different taxa-
tion systems within the Union. These laws would
prevent individuals and corporations from taking
advantage of these differences in the present tax
laws in order to evade payment of taxes. More
specifically, and with regards to the double taxa-
tion law, the Commission advised EU members
to “introduce in their bilateral tax treaties a rule
which states that no avoidance of double taxation
shall be granted in respect of items of income
which have not been subject to tax in the other
contracting state” (Toscher, 2013).

Detailed empirical evidence from Greece
that around elections, misgovernance results in
significant increases in wildfires and tax evasion
and has important economic implications: these
effects have led to the destruction of property
or loss of government revenue estimated at 8%
of GDP. There are two plausible reasons why
misgovernance might intensify around elections:

1. Attention and effort of elected officials is
directed to campaigning instead of govern-
ing; and

2. The misgovernance may benefit special
interests and serve as a pork barrel transfer
that is hard to monitor or control (Skouras
& Christodoulakis, 2014).

Redistributive politics are likely a dominant
cause of electoral misgovernance. In the case of

wildfires political competition tends to increase
electoral misgovernance; furthermore, electoral
misgovernance helps incumbents get reelected.
While misgovernance may manifest differently
among countries, analysis suggests that electoral
cycles everywhere may be much more multifaceted
and harmful than previous literature suggests.

CONCLUSION

Hedge funds activists are shareholders of a cor-
poration who invest heavily in a certain firm with
the aim of effecting change. Activist investors can
be identified when a firm files the Securities and
Exchange Commission (SEC) 13D, which is filed
when an investor purchases a number of shares
amounting to or exceeding 5% of the company’s
total shares (Cheng, Huang, Yinghua Li, Stan-
field, 2012). Hedge fund activists choose which
firms to invest in based on the firm’s financial
and managerial situation. The weaker the firm
is, the more attractive it becomes for these inves-
tors who sweep in and buy a substantial amount
of shares. The ultimate results show that hedge
fund activism, and the high level of performance
monitoring that it entails improves tax efficiency
(Cheng, Huang, Yinghua Li, Stanfield, 2012).

REFERENCES

Al-Naimat, S. S. (2013). Theoretical and analyti-
cal study of tax law in Jordan according to the.
Income tax and sales tax and its relationship with
revenues and tax evasion. International Journal of
Financial Research, 4(3), 107–126. doi:10.5430/
ijfr.v4n3p107

Cheng, C. S., Huang, H. S., Yinghua, L. S., &
Stanfield, J. S. (2012). The effect of hedge fund
activism on corporate tax avoidance. Account-
ing Review, 87(5), 1493–1526. doi:10.2308/
accr-50195

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Ćosić, E. S. (2013). Crimes within area of indirect
taxes. Business Consultant, 5(27), 75–81.

Meder, Z. S., Simonovits, A. S., & Vincze, J.
S. (2012). Tax morale and tax evasion: Social
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S0313-5926(12)50019-6

Mertens, J. Jr. (1996). Mertens law of federal
income taxation. Rochester, NY: Clark Board-
man Callaghan.

Ross, A. S., & McGee, R. S. (2012). Attitudes
towards tax evasion: A demographic study about
south African attitudes towards tax evasion.
Journal of Economics & Economic Education
Research, 13(3), 13–58.

Skouras, S. S., & Christodoulakis, N. S. (2014).
Electoral misgovernance cycles: Evidence from
wildfires and tax evasion in Greece. Public
Choice, 159(3/4), 533–559. doi:10.1007/s11127-
013-0071-0

Slemrod, J. S. (2007). Cheating ourselves: The
economics of tax evasion. The Journal of Eco-
nomic Perspectives, 21(1), 25–48. doi:10.1257/
jep.21.1.25 PMID:19728420

Toscher, S. S., & Bauserman, D. S. (2013).
Surprise–The fraud of your tax preparer may
extend the statute of limitations on tax assess-
ments. Journal of Tax Practice & Procedure,
15(2), 23–30.

van der Made, B. S. (2012). European union: New
EC proposals on tax havens, aggressive tax plan-
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q4 2012. International Tax Review, 23(7), 55–55.

van der Made, B. S. (2013). EU: EU’s fight against
tax fraud and evasion, aggressive tax planning and
relations with non-EU tax havens. International
Tax Review, 24(1), 39–39.

Wang, Y. S. (2012). Competition and tax eva-
sion: A cross country study. Economic Analysis
and Policy, 42(2), 189–208. doi:10.1016/S0313-
5926(12)50020-2

Yalama, G. S., & Gumus, E. s. (2013). Determi-
nants of tax evasion behavior: Empirical evidence
from survey data. International Business & Man-
agement, 6(2), 15–23.

KEY TERMS AND DEFINITIONS

Black Economy: Illegal underground econ-
omy resulting from dangerous activities and
widespread crime.

Evasion: Avoidance or refusal to make legal
payments to government of legitimate tax amounts.

Fiscality: Set of rules by which taxes are
calculated.

Fraud: Disguise of theft or any other illegal
activity to appear as legal and regular.

Haven: Protected space away from the reach
of governments where activities remain beyond
monitoring and supervision.

Public Finance: The monitory dynamics of
wealth flow between private and public domains
and within the formal public space.

Tax: Amount of money owed to the govern-
ment at any level by a legal citizen or institution.

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Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 10

DOI: 10.4018/978-1-4666-7254-3.ch010

Media Bias

ABSTRACT

A solution towards media bias would be quite hard since it is somehow part of its culture, but an attempt
can be made by allowing watchdog NGO organizations to enforce the law when a breach is in evidence.
Then any fine charged should be given to the organization. This way the organization is motivated to
continue strict and proper monitoring. An ethical dilemma surfaces when it should never have arisen in
democratic society. Give the people truthful and fair accounts of events and be regarded as non-patriotic
or defend the country with any means or tactics. Journalistic ethics is most sensitive in situations such
as these when disagreement is seen as disloyal. This chapter explores media bias.

INTRODUCTION

Media bias describes the bias of selecting events
that will be reported and the way they will be
covered by journalists in the mass media. There
are several different types of media bias which
include: bias by omission, bias by selection of
sources, bias by story selection, bias by place-
ment, bias by labeling, and bias by spin. Bias by
omission occurs when the media reports selected
information, taking only one side of a story instead
of both sides; for instance within a story the media
omits the events or facts that are unfavorable for its
viewpoint (Babylon). Bias by selection of sources
happens when more sources are used to defend
a certain view against another view, for example
by using the phrase “observers believe”. Bias by
story selection is the selection of stories by the
media (newspaper, TV channel, radio etc…) that

would suit its standpoint or agenda. For example
if a channel was known to be on the conserva-
tive’s side it would select the positive stories
about the conservatives display them leaving out
the positive stories of the liberal’s side. Bias by
placement is the degree by which the editor of a
story places importance on it, for example if a
story is considered important for the editor she/
he is more likely to place the story on the first
page of the magazine or at the beginning of the
TV news. Bias by labeling occurs when a certain
group is placed under a label for example in most
western countries Arabs are labeled as terrorists.
Bias by spin takes place when a story only has
one side but depending on the way the reporter
reports it, his/her tone of voice, the viewers will
have a certain preference to the story, for instance
if the reporter says the story in a sarcastic way the
viewer is more inclined not to take it seriously.

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BACKGROUND

The Oxford dictionary defines bias as the “incli-
nation or prejudice for or against one person or
group, especially in a way considered to be unfair”.
That being said, media bias can have catastrophic
psychological and economic repercussions due
to the wide dissemination of different media
outlets and the heavy reliance of the majority
of consumers on the information provided by
these outlets. Sendhil Mullainathan and Andrei
Shleifer sought to dissect the reasons that drive
media bias and the consequences that result from
this practice. They identified two main reasons
for media bias: ideological, and the “need to
tell a memorable story”. The first reason behind
media bias (i.e. ideology) stems from the editor
or the reporter’s desire to influence audience into
adopting a certain opinion or belief system. On the
other hand, the second reason behind media bias
(i.e. spinning the story) has no hidden political
agendas and simply exists to liven up or create a
story that would be worth telling in the views of
the editors or reporters of a certain media outlet
(Mullainathan & Shleifer, 2005). However, David
P. Baron adds one supplementary cause of media
bias to the previously mentioned two and that is
reporter greed. In fact, Baron explains in an article
published in 2006 that if reporters or journalists
gather information through independent investi-
gation and believe that skewing, manipulating or
misrepresenting this information might aid in their
career advancement then these journalists might
be inclined to act unethically and bias their find-
ings to serve their own personal purposes (Baron,
2006). As an example to this point, Matthew
Gentnzkow published an article in 2005 and in it
he showcased how three different media outlets
reported on the same event (a military battle in
Samarra, Iraq during the U.S-led invasion in 2003).
The three media outlets included in the article

were Fox News (a conservative American media
outlet), the New York Times (a liberal American
media outlet), as well as AlJazeera (a prominent
Arab media outlet). It comes as no surprise that
these ideologically differing media outlets gave
very varying accounts of the events of that battle.
This example goes to show ideology can affect the
accuracy of media coverage and thus create bias.

A myriad of research articles has been pub-
lished seeking to define and explain how people
perceive and react to biased media. One of these
articles is one written by Matthew Gentzkow in
2005. In it Gentzkow remarked that a consumer
“who is uncertain about the quality of an informa-
tion source will infer that the source is of higher
quality when its reports conform to the consumer’s
prior expectations”. According to the same article,
media bias occurs by “selective omission, choice
of words, and varying credibility ascribed to the
primary source” (Gentzkow, 2005). Similarly,
recent studies have shown that consumers want
to read (watch) news that is consistent with their
tastes or prior beliefs rather than the truth” (Xi
Liang & Savary, 2007). In congruence with this
affirmation, Simon Anderson and John McLaren
state that media owners and editors of media
outlets often have personal political agendas and
may choose to manipulate and withhold certain
information from the public in order to shape
public opinion to their own personal advantage
(Anderson & McLaren, 2012). This is particularly
dangerous because the same paper uncovered that
even rational consumers who have prior knowledge
of the editor’s ideology and political agenda may
be deceived by this biased coverage of the news
due to the fact that the general public does not
know how much actual information the media
outlet has and thus is oblivious to how much is
being withheld (Anderson & McLaren, 2012).
Another reason why bias could be particularly
harmful is that it is “persistent” in the minds

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of the consumers (Anand et al, 2007). In fact, a
study conducted in 2007 by Bharat Anand, Di
Tella Rafael, and Galetovic Alexander provided
empirical evidence that suggests that media bias
“does not seem to disappear even when the media
is under scrutiny”.

Since the introductions and fast development of
the internet, journalists and reporters, both amateur
and professional have found new platforms to
spread their stories quickly and to a wide audi-
ence. But are news stories found and distributed
on the social media to be trusted? A recent article
authored by Church Akpan et al. suggests that
“most online stories are not objectively reported”
(Akpan et al., 2012).

Another study conducted by Chun-Fang
Chiang and Brian Knight in 2011 sought to
determine the effect of media endorsements on
public opinion, especially in newspapers. The
empirical results of the study have shown that
newspaper endorsements are indeed influential in
shaping public opinion and inclining consumers
into choosing the endorsed product. However, the
extent and amount of this influence is determined
by the source of the endorsement. For instance,
an endorsing source that has historically been
opposed to the endorsed product will be more
effective in influencing consumers into adopting
the product. As a matter of fact, this study that was
conducted to investigate and test the influence of
newspaper endorsements on future voting trends
revealed that when left-wing newspapers endorse
a Republican, or when right-wing newspapers en-
dorses a Democrat, the public is more influenced
into voting for the endorsed candidate than when
left-wing newspaper endorses a Democrat and
a right-wing newspaper endorses a Republican
(Chung & Knight, 2011).

Information has always been influenced by
those who possess it. Since information has been
shared within society, there has existed a bias in
‘media’. Even the heralds of the renaissance were

paid to skew the information they cried to the
public. Media bias has a long history, but truly
begins with the invention of the printing press.
With the printing press, information was able to
be produced at a very high rate, allowing it to be
produced and spread much farther than ever before,
and quickly. When it was first created, the print-
ing press was very expensive to create, operate
and sustain. Because of this, many publishers in
possession of a printing press were highly influ-
enced by powerful groups in society, as well as
politicians and government leaders.

Throughout history, media has progressively
become deregulated, especially in western coun-
tries. Media has been more and more placed
in the hands of private companies, supposedly
to separate the spreading of information from
the grips of governments, supporting what the
American Constitution labels ‘Freedom of the
Press’. Although, bias in the media has switched
from bias presented by governments to bias cre-
ated by powerful social and political groups.
Entering into the nineteenth century, the idea of
ethics was brought to the forefront of journalism.
It was held that journalism should maintain an
unbiased position when providing information to
the people. Despite this, media bias has become a
growing concern throughout history. It has taken
on many different shapes and forms, especially
now with the use of television news networks
and online information sharing. In fact, with the
introduction of television and radio, or broadcast,
media, propaganda took advantage of the ability to
reach large amounts of people in order to spread
particular messages in order to gain support, or
to deface someone or something.

With the growing power and influence the me-
dia was beginning to take hold since the creation
of the printing press, governments began to take
action in order to protect themselves. In 1798,
the United States of American passed the Alien
and Sedition Acts, which stated that newspapers

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were prohibited from publishing any articles that
directly attacked or questioned the government.
Also in the United States, Abraham Lincoln closed
many newspapers during the Civil War because
he thought they favored the views and struggle of
the Southern states.

With the coming of the 20th century, media
bias only became more apparent. World War II
involved a large war of media between and within
countries. Many political figures within the US
who supported the United States entering into the
war on the side of the Germans claimed that the
media was deceiving the American population,
and that it was in fact controlled by Jews. Events
like this also occurred in England. Adolph Hitler
used mass media to spread propaganda throughout
Europe and to gain the support of the German
population in his quest for world domination. He
convinced the German people that the woes of
their country were at the fault of the Jews, and
that they should be exterminated. As well, he con-
vinced the people that what he called the Aryan
race was superior in respect to humanity, and
that they deserved to hold power over all others.
These messages were all carried out through mass
media, with the use of newspapers and radios, and
propaganda-filled fliers.

With the closing of World War II came the
beginning of the Cold War; a global power struggle
between Democratic United States and Com-
munist Russia. This period also became known
as the War of Propaganda. Both sides attempted
to spread the message of their respective ideals
throughout the world in order to sway power in
their favor. This lead to a massive sweep in media
bias in the United States. The most notable figure
is Joseph McCarthy, who was the head of what was
later labeled ‘McCarthy’s Witch Hunt’. McCarthy
began a widespread campaign against Communist
ideas and support within the US. This led him
to utilizing various mediums of media to scare
people into fearing Communism and Communist
Russia. McCarthy defaced many political figures,

and even Hollywood actors, under accusations of
being pro-communist. McCarthy used his media
bias to scare Americans into fearing all forms of
Communism.

Media bias is extremely apparent in today’s
world. As time has passed, the number of news
organizations and providers of information has
exponentially increased. Today, you can flip
through channels on your television and find
different reports being offered from different
news organizations on the same issue or event.
America’s War on Terror has evoked the issue of
media bias among many analysts. It is a growing
belief that there is no longer a divide between
biased and unbiased media. Instead, there seems
to be a divide between two different forms of
biased media, slanted in different directions and
simply holding different views.

Historical Background of
Media Bias in Lebanon

Media bias- whether through television channels,
newspapers or radio- has always been an issue
worldwide; when it comes to Lebanon the case is
even more severe since the media bias is not only
occurring towards other countries for instance
Lebanese TV channels speaking negatively about
American matters but the bias even occurs between
different political groups within the country. With
time media bias in Lebanon is increasing rather
than decreasing, this is due to two major issues.
The first main cause of the increase in the media
bias took place in the year 2007 when opposition
political groups placed tents in downtown Beirut
in an attempt to overthrow the government. This
caused the conflict between the two opposing
views, those of the pro-government and those
of the anti-government, to become more tense
leading to an increase in the differing views of
different TV channels. The second cause of the
increase in media bias is the war that took place
in 2006 between Lebanon and Israel; some chan-

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nels would take a stand with the war while other
channels would be against the war. After the war
the media focused more on sectarianism instead of
the religious and political views it mainly focused
on before. When such an incidence takes place
each TV channel displays news that is in favor of
its owners. “you have to take into consideration
the owners and the shareholders; [for each,] you
have to respect their own policy.”(Hankir, 2007).
Since the owners of most of the Lebanese chan-
nels have a political affiliation it is obvious that
each channel will be taking the side of its owner
(political leader) whether it wants to or not because
if it doesn’t its “politician will intervene directly
if he feels the content of an article is unfavor-
able,” (Alamilnter, 2008) according to an editor
of an English local publication who preferred to
be unknown because of the subject’s sensitivity.

Different media channels are even becoming
more biased after the 2006 war focusing more on
sectarianism than on religious and political divi-
sions, which is causing the tension between these
channels to increase a lot more, it is not only the
media’s fault but the people behind the media,
the politicians. The politicians can be viewed as
the main stimulator of media bias since they are
the ones behind the journalists and TV channels;
as stated earlier if a politician senses that there is
something unfavorable with the article’s content
he would directly intervene. Another reason why
the politicians are behind the media bias is because
they bribe journalists to give in information that
is of advantage to the politicians, as stated by
Mona Alamilnter, Press Service, “Politicians
also bribe leading journalists working in local
newspapers, some of whom can be seen boasting
luxury watches and handsome cars, though they
hardly have the legitimate income to afford such
luxuries’ (Alamilnter, 2008). “You’re not asked
over the phone if you’re ready to cash a monthly
check. You are wined and dined, invited to trips,
and offered gifts” (Alamilnter, 2008) so the bribes
are formed in the long-run making journalist more
inclined to report news to their favorite politicians

since it is not a onetime inducement. What happens
in such cases is not that the journalists lie about the
information they are reporting or make them up
but they do it in a manner called self-censorship.

Self-censorship occurs when a journalist omits
certain information (a word, phrase or fact) in
order to display information to the politician’s
goodwill or even because of the fear from the
politicians. “An important event or speech will
be covered by one set of media, but not by the
opposing channels”(Executive, 2007) as stated by
Habib Battah, managing editor of the Beirut-based
Middle East Broadcasters Journal. Furthermore,
according to Khalifeh “Lebanese MPs tend to pro-
mote laws that are in their best interest and not in
the public’s” (Alamilnter, 2008) which evidently
increases the media bias. Basically the major TV
channels in Lebanon have a political interest and
rarely any neutrality. Table 1 by Comtrax, a Leba-
nese consulting company that audits and tracks
Lebanese media, shows the neutrality score of
Lebanon’s main TV stations on a neutrality scale
of 1 to 10 (10 being the most neutral).

DYNAMICS AND INTRICACIES
OF MEDIA BIAS

Media bias is the misrepresentation of facts in
order to meet the needs of the media station and
its viewers. There are many kinds of bias the me-
dia partake in. In the articles we have looked we
identified political bias and pressures to support

Table 1. Neutrality scores for some of Lebanon’s
TV stations

New TV 3.93

OTV 2.5

Al-Manar 1.49

NBN 2.2

ANB 9.56

LBCI 8.2

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common ideas. American news channels have
told their perspective of the events since 9/11
completely differently to the accounts told by
international media channels. They have defended
their actions at every stage and rarely condemn
their own nation. Here is the issue at hand, news
channels have a belonging, they represent a kind
of people. It seems the real problem with the
media is that it is used as mechanism to shape
peoples ideologies.

A perfect example of this is the terminology
‘’terrorism’’ which has become the exit strategy
for any plan gone wrong. A word that can create
a mist on any story and win any debate if brought
up is ridiculous. What was once a medium through
which the world could be educated and kept up
to date on events has become propaganda. Wars
are won on television screens and not in real
life. For example last year’s attacks on Gaza by
Israel were portrayed as a reasonable measure
of self-defense by US TV. The problem with the
broadcasting is that news has become more of an
opinion rather than facts. Touching stories which
can make headlines are more important than the
communication of the truth. For example when US
TV interviewed Israeli spokesmen about the siege
their replies were clear misrepresentation of the
truth and there were no further questions asked.

Is this ethical? Is this a fair representation
of the truth? Are the American people getting
the information they need to make an informed
opinion of the events? When Israeli spokesmen
are telling the nation that ample food and medicine
are being supplied to Gaza, are they supposed to
believe this? However on Arab TV the reporter’s
question the facts given and let the viewer decide
on the credibility of the evidence.

Another important point to make is where
should the line be drawn between making revenues
and carrying out its duties to inform the public of
important information. For example the O Riley
factor is a political show on Fox News which

discusses current political events. He is a right
wing conservative who is completely biased to
the war in Iraq and pro American in every con-
text. He supported the torture techniques against
Guantanamo victims. Again I must raise the
question, is this show ethical? What is the objec-
tive? Clearly he is not giving any accurate or fair
accounts to what is happening. However since he
is such a charismatic journalist, people want to
watch and be entertained. If people do not have
the knowledge or exposure to know better than
their ideologies will be shaped by these reports.
If News channels are trying to be profitable then
surely this is a conflict of interest. Getting great
interviews during times of crisis may not be as
responsible as concrete evidence and informative
accounts. For example during the Gaza conflict
the Arab TV journalists were in the middle of
the city reporting live action as seen by civilians.
However US TV had journalists on the borders of
Israel and Palestine, and were not close to any of
the action that was occurring. When Israeli spokes-
men reported events on Arab TV every account
was contested with greatly since they had real
footage action and portrayed real life scenarios.

Unfortunately news channels also have a
tendency to support political parties. This can
influence broadcasting and be biased towards
certain parties. This is extremely applicable to
Lebanon where every major political party has
a channel. Again what is the objective of this
channel? Surely this is a conflict of interest, since
they are representing themselves, it will be similar
to US TV on the war against terror with endless
justifications to inhuman actions.

COMPARATIVE EXAMPLE

The case we will be examining is the Media cov-
erage after the 9/11 incident. There are two main
points we are going to consider. The first will be

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the controversial actions taken by the American
government to influence content in media and
restrict Freedom of speech. The second will be the
media war between Arab TV and US TV during
the Afghan conflict and the ethical issues brought
up in this situation.

After the 9/11 incident the president’s national
security advisor asked Americans to “watch what
they say’’ after a comedian had made a controver-
sial comment. This was addressed to all Americans
including the press. So in fact the government
was questioning the ethical behavior of outspoken
Americans including journalists and citizens. One
of the problems the Administration faced was the
Osama Bin Laden video tapes being circulated
by the media. It questioned these actions as un-
ethical and inappropriate for the situation. When
Condoleezza Rice asked, rather than demanded,
that bin Laden’s statements be more carefully and
tightly edited by American networks, she was
aware that it was politically incorrect to demand
action; however it was implied.

The reasoning behind the administrations
anger was not that it was illegal to broadcast the
tapes but how media managers should use that
freedom in accordance with what is ethical and
professionally responsible. Although this was a
strong case for national security purposes, what
took place in the next few years became clear
misrepresentation of the truth. Although it was
not explicitly stated anyone who criticized the
government’s actions came under strong fire.
One newspaper in Oregon and another in Texas
fired staffers who wrote unflattering reviews of
the President’s performance since September 11.
Washington columnist Mary McGrory, another
of the few critical journalists, reported she was
receiving more angry mail than she had ever
received previously in her long career.

Frank Rich who was writing in the New York
Times noted that the administration was using
any tactics to sell its own version of events while
vigorously contesting any criticism. For example

Dr. Rice’s stated reason for more editing of bin
Laden included that he might be sending coded
messages to trigger new terrorist incidents. There
was no logic behind these statements since these
videos were being broadcasted by other media sta-
tions in other countries. This case is so significant
today because we are able to see how these news
channels have changed politics since 9/11. They
were faced with a decision to make in 2001, sup-
port the government or broadcast the true story.

An ethical dilemma surfaces which should
never have no risen in a democratic country. Give
the people truthful and fair accounts of events and
be regarded as non-patriotic or defend the country
with any means or tactics. Journalistic ethics is
most sensitive in situations such as these when
disagreement is seen as disloyal.

In times of crisis the media must take full
responsibility for the ethical decisions they make
because it can lead to shaping nations perspectives
on truths and lies. The significance of Media is
that it is separate from government and the press
is essential for democracy because of this fact.
In this case we are able to see the consequences
of the Americans press decisions to defend its
nation. It continued to support the war against
‘’terrorism’’ and created an enemy far greater
than they could imagine.

The conclusion is that it may have been right
not to pressure the president at such an unstable
stage and support the country through the tough
times. However these decisions should be made
from the media on ethical conditions and not on
patriotic means.

The article “A tale of two news corporations”
discusses US TVs and Arab TV coverage a year
on from the September 11 attacks. In 2002 Arab
TV had 30 million viewers compared to 80 mil-
lion for US TV. The ethical issue was the two
contrasting sides each newspaper took. While
both ‘’try’’ to present views from both sides of the
Israeli-Palestinian divide in order to be perceived
as honest journalist. US TV which is Pro- Israeli

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took events such as the siege of Ramallah and tried
to rationalize the actions with Israeli spokesmen
while the international community was shocked.
US TV is a welcome ground to Israelis Pr tactics
which continue to compare Palestinian attacks to
September 11 terrorists.

Arab TV also presents the same news, however
its “truth” is the opposite account of US TVs
truth. Arab TV focuses on the topic of occupa-
tion rather than terrorism. They do not support
suicide bombing however explain the desperation
and repression that lead people to these actions.
Although they also lean towards one side the
general information is based on live footage and
not mere speculation. US TV continue to accuse
the Arab freedom fighters as terrorists, and Arab
TV are replying by saying that they are missing the
point, and that the true ‘reasons’ for these attacks
are not being portrayed fairly in the West. This is
the ethical issue at hand, truth vs. opinion. US TV
have formed a network of opinionated journalist
trying to rationalize situations which are so clear
to the educated eye as misleading. Unfortunately
a lot of its audience cannot make this judgment
and are lead to believe in the propaganda.

LOCAL REGIONAL STORY

Media bias in Lebanon has been a hot topic for
many years; one case that proves this issue would
be the parliamentary elections that took place in
June 2009. Each political party made sure that
its affiliated television channel dedicated more
time to its candidate instead of spending the same
amount of time to talk about all the other candidates
equally. This is both an issue that is unethical and
illegal. First it is unethical because it is not allowing
audiences to hear about the other candidates and
it is biasing their opinion towards only a certain
candidate in the hope of getting people to vote for
him since by watching that channel they would
know more about him and unconsciously feel
some sort connection of connection with him/

her; this is just like advertising, when marketers
continuously advertise consumers eventually feel
they have a relationship with the product and for
example when they go to the supermarket and
see that product they will feel like they know
the product and unconsciously feel comfortable
to go ahead and buy it, it is just like voting for a
candidate. What makes it an illegal aspect to spend
more time talking about one political candidate
over another is one regarding the law. “By law,
Lebanon’s media should grant each candidate or
party an equal chance to share and explain their
agenda,” (Massey, 2009) as stated by Dr. George
Sadaka, representative of the Lebanese watchdog
organization, Maharat. In addition according to
article 68 of the law, media channels have to respect
freedom of speech “in a way to ensure equity,
balance, and objectivity between all candidates
and to abstain from supporting or promoting any
candidate or group of candidates in order to remain
independent.”(Massey, 2009). Obviously the law
is not followed in Lebanon and this can be seen
from what happened during the parliamentary
elections in June 2009; one TV spent three times
more time talking about some candidates while
another spent three times more time on opposition
parties as opposed to pro-governmental parties.

Lesson Settling the Dilemma

A solution towards media bias in Lebanon would
be quite hard since it is somehow part of its culture
but an attempt can be made. One step towards
improvement was taken during the July 2006 war
between Lebanon and Israel, in order to omit or at
least reduce the bias in the media and allow citizens
the freedom of speech. This attempt was taken by
an international grassroots documentary project
called Lens on Lebanon. During the war many of
the images and information were changed in a man-
ner to suit the TV channel’s political affiliation.
What Lens on Lebanon did during the war was
it gave Lebanese residents in the areas that were
affected by the war the chance to report and tell

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their own stories of the war through photographs
and videos. The residents were provided with the
appropriate equipment such as cameras and video
in addition to special training about how to use the
equipment. This technique allowed the residence
to speak up about their true feelings towards the
war instead of leaving it up to the media to report
the issues as it wants.

The approach taken by Lens on Lebanon was
certainly effective to some degree but it would not
last for a long time since it is expensive to provide
individuals with equipment and training; in addi-
tion many of the Lebanese people lean towards a
particular political party which may lead them to
report information in favor of their political leader.
One more disadvantage in Lebanon as to why this
approach might fail is that the residents who are
reporting are usually not very financially well-off
and this might be an advantage to some political
leaders. The consequences that might occur in such
cases is that some political leaders may decide
to give these residents some sort of compensa-
tion (such as money, maybe free electricity, free
schooling for their children, monthly salary, free
insurance and hospitality if they need it etc…)
in order for them to talk in the politicians favor;
due to the residents’ financial status, they will be
inclined to accept these compensations which will
probably enhance their standard of living.

One probable solution to control media bias in
Lebanon is to allow organizations such as Maharat
to enforce article 68 of the law and if the article
was not obeyed the TV channel should be given a
fine and that fine should go to the organization and
not to the government, this way the organization
is motivated to monitor TV channels. In addition
for further monitoring motivation the employee
within the organization, example Maharat, should
be given a commission when he/she detects bias
in a TV channel and makes it visible. Here again
four problems occur, since in Lebanon nothing
is actually followed as it should be. First the TV
channel can bride the monitoring organization and
its employees with some form of rewards in order

for the organization to keep silent about its bias.
The issue here is that the TV channels are willing
to pay more than the fine because their reputation
is at stake; no matter what the fine is whenever
a fine is imposed on a company it will give a
negative view of it. The second problem is that
the politician who is affiliated with a TV channel
will either bribe the employees with rewards or
threaten to inflict some form of negativity on the
employee in order for him/her to be quiet about
the issue. Third the employee is in him/herself
with a certain political leader so will evidently
not file anything against the politician’s channel.
And finally the monitoring organization in itself
has an association with a political party.

FUTURE TRENDS

In 2008 author Tom Cooper reported that “an
inventory of major studies between 1986 and 2006
indicates the public has continuing and in some
cases increasing concerns about specific ethical
practices in the mass media industries”. In fact, an
increasing number of people are raising concerns
over media bias and media deception (Cooper,
2008). Due to the dangers of media bias and
its strong potential to influence and manipulate
consumers using false or misrepresented informa-
tion, researchers have looked into ways aimed
at ending this phenomenon. In that light, a few
recommendations have been made to try and cut
down on media bias. First of all, news organiza-
tions can “control bias by restricting the discretion
allowed to journalists” (Baron, 2006). Taking into
account that one of the causes of media bias is
journalists twisting the information to suit their
own aspirations of career advancement, one way
to regulate bias would be to put more restrictions
on reporters and journalists. Another trending
solution for media bias is to promote competition
between media outlets (Andersen & McLaren,
2012), (Mullainathan &Shleifer, 2005). However
the notion of promoting competition between

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media outlets as a way of reducing media bias is
not unanimously accepted in the literature. In fact,
Anand et al. assert that In general, competition
does not lead to a reduction in bias unless this is
accompanied by an increase in verifiability or a
smaller dispersion of prior beliefs”. Moreover,
Mullainathan and Shleifer (2002) remark that
“whereas competition can eliminate the effect
of ideological bias, it actually exaggerates the
incentive to spin stories”.

Evidence suggests that:

1. The media assists in setting the public agenda,
by supporting specific events and causes, for
better or for worse;

2. The media affects people’s insight on risk,
by inexplicably overstating risk and by
highlighting possible negative effects over
possible positive ones;

3. The media affects elections and their results;
4. The media affects the people’s insight on the

manager, the reputation of the organization,
and the products that the organizations offers;

5. The media forms consumer sentimentality
and the consumers’ willingness to pay; and

6. The media forms business sentimentality,
and affects both the organization level as
well as the market level behavior (McCarthy
& Dolfsma, 2014).

The media studied are three to six times more
likely to associate conceptual labels with firms
with a conventional alignment than think tanks
having a liberal alignment. This makes the analy-
ses conducted by conventional think tanks less
objective than the analyses conducted by liberal
think tanks. Regression outcomes propose that
almost three-fourths of the explained differential
in framing rates is a result of media bias. The rest
is mainly clarified by the differential in the “qual-
ity” of think tanks (Dunham, 2013). Ideological
bias in large daily newspapers largely impact
public opinion.

CONCLUSION

In conclusion when it comes to Lebanon, a solu-
tion to stop media bias is a tough and maybe an
even impossible struggle, this is mainly due to
the fact that most Lebanese people lean towards a
particular political group in some way. For example
some Lebanese people might be with a certain
political leader simply because they are receiving
some type of benefits from him/her such as not
paying for electricity, breaking a certain law (for
example the politician allowing the citizen to get
away with building a building that exceeds the
height limits) or maybe the politician has helped
them find an occupation; it is basically a win-win
situation, the citizens are getting the benefits and
the politician is getting their votes in elections.

In a general context one of the main issues is
that news channels need to be aware of the huge
responsibility and power they yield. There should
be more accountability for journalists and news
channels reporting misleading information as
if it were facts. There seems to be the idea that
anyone can have an opinionated idea and tell the
news the way they see it. Unfortunately this is
not democracy.

Another important point is that links between
political affiliations and news channels should be
made illegal. Think of the way banks operate in
Lebanon, it is illegal for bank managers to meet
each other outside work since they could agree on
fixing prices. News channels will have a conflict
of interest if they have connections with politics.
They are no longer telling the reality of the situa-
tion, they are forming a biased opinion of a politi-
cal party and rationalizing its irrational behavior.

Finally an appreciation of the significance of
media bias needs to be comprehended and imple-
mented. Part of the reason America have caused
so much pain and grief to so many civilians in
Iraq and Afghanistan is because of the deception
and lies that were told through the media which
acted as smoke screens to the real life suffering.

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Even today in Palestine, US TV’s coverage is
embarrassing at best and is a disgrace to democ-
racy. News channels should be held accountable
for misrepresentation of the truth since it is their
duty to serve the public by giving them correct
information.

REFERENCES

Akpan, C. S., Paul Martin, O. S., Chima Alexan-
der, O. S., & Uchenna, A. S. (2012). Rethinking
objectivity in news reporting in the digital age.
Journal of Alternative Perspectives in the Social
Sciences, 4(4), 711–729.

Alamilnter, M. S. (2008). Lebanese media mirrors
‘profoundly divided’. Daily Star.

Anand, B. S., Di Tella, D. S., & Galetovic, G.
S. (2007). Information or opinion? Media bias
as product differentiation. Journal of Econom-
ics & Management Strategy, 16(3), 635–682.
doi:10.1111/j.1530-9134.2007.00153.x

Andersen, S. S., & McLaren, J. S. (2012).
Media mergers and media bias with rational
consumers. Journal of the European Economic
Association, 10(4), 831–859. doi:10.1111/j.1542-
4774.2012.01069.x

Baker, B. S. (2005). Types of media bias. Aca-
demic Press.

Baron, D. S. (2006). Persistent media bias. Journal
of Public Economics, 90(1), 1–36.

Chung-Fang, C. S., & Knight, B. S. (2011). Media
bias and influence: Evidence from newspaper
endorsements. The Review of Economic Studies,
78(3), 795–820. doi:10.1093/restud/rdq037

Cooper, T. S. (2008). Between the summits:
What Americans think about media ethics.
Journal of Mass Media Ethics, 23(1), 15–27.
doi:10.1080/08900520701753106

Elder, R.S. (n.d.). Ethical issues for the American
media in times of national emergency. Academic
Press.

Executive. (2002, September). A tale of two news
corporations. Executive.

Executive. (2007, December 16). Bias in the air
– Lebanon’s political. Executive.

Gentzkow, M. S., & Shapiro, J. S. (2005). Media
bias and reputation. National Bureau of Economic
Research. doi:10.3386/w11664

Hankir, Z. S. (2007, December 17). Against the
Bias. NOW Lebanon.

Massey, N. S. (2009, October 30). Media watchdog
slams election coverage. The Daily Star.

McCarthy, K. S., & Dolfsma, W. S. (2014). Neutral
media? Evidence of media bias and its economic
impact. Review of Social Economy, 72(1), 42–53.

Mullainathan, S. S., & Shleifer, A. S. (2002). Me-
dia bias. National Bureau of Economic Research.
doi:10.3386/w9295

Sarvary, Y. M. (2007). News consumption and
media bias. Marketing Science, 26(5), 611–628.

Selim, A. S. (2007, July 19). Lebanon: Beyond
mass media. The Daily Star.

Wayne, R. D. (2013). Framing the right suspects:
Measuring media bias. Journal of Media Econom-
ics, 26(3), 122–147.

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KEY TERMS AND DEFINITIONS

Audience: Group of people at the receiving
end of the delivered message.

Bias: Personalized preference towards a spe-
cific choice caused by prejudice or discrimination.

Communications: Active delivery of a mes-
sage.

Journalism: Professional reporting of infor-
mation and news in a periodic mode with frequent
updates.

Media: Any mechanism by which communi-
cations or journalism deliver their information.

Public Opinion: A generalized current percep-
tion of a trend or an issue usually resulting from
overwhelming events or journalistic activism.

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130

APPENDIX

Learning Objectives

L.O.1: Define media bias.
L.O.2: List the types of media bias.
L.O.3: Determine solutions towards media bias in Lebanon.

Summary

Define Media Bias

Media bias is a term used to describe a real or perceived bias of journalists and news producers within
the mass media, in the selection of which events will be reported and how they are covered.

List the Types of Media Bias

There are several different types of media bias which include:

• Bias by omission,
• Bias by selection of sources,
• Bias by story selection,
• Bias by placement,
• Bias by labeling, and
• Bias by spin.

Determine Solutions towards Media Bias in Lebanon

A solution towards media bias in Lebanon would be quite hard since it is somehow part of its culture
but an attempt can be made.

• An international grassroots documentary project called Lens on Lebanon gave Lebanese residents
in the areas that were affected by the war the chance to report and tell their own stories of the war
through photographs and videos during the 2006 war.

• Allow organizations such as Maharat to enforce article 68 of the law and if the article was not
obeyed the TV channel should be given a fine and that fine should go to the organization and not
to the government, this way the organization is motivated to monitor TV channels. In addition for
further monitoring motivation the employee within the organization, example Maharat, should be
given a commission when he/she detects bias in a TV channel and makes it visible.

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Section 2

Corporate Business Ethics

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132

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Chapter 11

DOI: 10.4018/978-1-4666-7254-3.ch011

Corporate Social Responsibility

ABSTRACT

The impression that business enterprises have some duties toward society beyond that of making profits
for the owners has been around for centuries, and it is still, today, at the core of the business ethics
debate. The social responsibility for a business is to use its resources and engage in activities designed
to increase its profits so long as it stays within the rules of the game, appealing in open and free com-
petition without dishonesty or fraud. In order to effectively communicate CSR, corporations should be
transparent, use third-party verification, remember the workers, explain their metrics, and be proactive.
The benefits of CSR are corporate reputation and enhanced brand image, earning and maintaining
social license to operate, establishing reputation with investors, reducing and managing business risks,
competing for access to resources, attracting and keeping employees, maintaining employee morale and
productivity, meeting changing stakeholder expectations, and eventually improving the bottom line. This
chapter explores corporate social responsibility.

INTRODUCTION

Detractors of CSR believe that management has
one responsibility and that is to maximize the
profits of its owners or shareholders; managers
are oriented towards finance and operations and
do not have social skills to make socially oriented
decisions. CSR would put business into fields of
endeavor that are unrelated to their ‘proper aim’,
making the business less competitive globally.
Moreover, CSR will give business social power
in addition to the power that it already has.

There are several arguments in favor of cor-
porate social responsibility. Large corporations
create many social problems, thus they should
attempt to address and solve them. Companies
must look beyond the short-term, and realize that
investments in society today will reap the benefits
in the future. By engaging in socially responsive
activities the corporate world may forestall govern-
mental intervention in the form of new legislation
and regulation. Businesses should assume social
responsibilities because they are among the few
private entities that have the resources to do so.

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HOW CORPORATE SOCIAL
RESPONSIBILITY IS DEFINED

In search for a universal definition of CSR, the
number and variety among the various definitions
has led to a significant explanation about CSR defi-
nition that will explain the difficulties to define:
“Corporate social responsibility means something,
but not always the same thing to everybody. To
some it conveys the idea of legal responsibility or
liability; to others, it means socially responsible
behavior in the ethical sense; to still others, the
meaning transmitted is that of ‘responsible for’
in a causal mode; many simply equate it with
a charitable contribution; some take it to mean
socially conscious; many of those who embrace
it most fervently see it as a mere synonym for
legitimacy in the context of belonging or being
proper or valid; a few see a sort of fiduciary duty
imposing higher standards of behavior on busi-
nessmen than on citizens at large’’ (Votaw, 1972).

There are too special studies done in this field,
one by Alexander Dahlsrud (How Corporate So-
cial Responsibility is Defined: An Analysis of 37
Definitions), and the second is a research under
the name of Corporate Social Responsibility:
Lessons Learned. In both studies CSR definitions
were gathered through a literature review as a first
step, and in the Second step the definitions are
categorized into five dimensions and frequency
counts are used to explore how consistently these
dimensions are invoked.

These five dimensions are: stakeholder, eco-
nomic dimension, environmental dimension,
social dimension, and governance performance.

• Commitment of business.
• Benefits to society/stakeholders.
• Ethical behavior.
• Environmental performance.

Altogether, 37 definitions of CSR were found
and analyzed in those 2 studies. The definitions
originated from 27 authors and covered a time span

from 1980 to 2003. The definitions were mainly
of European and American source, but meanings
from India and Canada were also involved.

But it was very interesting to observe that none
of the definitions actually defines the social re-
sponsibility of business, as so famously discussed
by Milton Friedman (1970) who conjectured that:

…there is one and only one social responsibility
for a business, to use its resources and engage in
activities designed to increase its profits so long
as it stays within the rules of the game, which is to
say, engages in open and free competition without
deception or fraud.

He concluded that there is no role for CSR, but
rather describe CSR as a phenomenon. This might
be the cause of the definitional confusion: it is not
so much a confusion of how CSR is defined, as it
is about what constitutes the social responsibil-
ity of business. As a conclusion for this debate
I found that there are many available definitions
of CSR and they are consistently referring to five
dimensions.

Although they apply different phrases, the
definitions are predominantly congruent, making
the lack of one universally accepted definition less
problematic than it might seem at first glance.

The CSR definitions are describing a phenom-
enon, but fail to present any guidance on how to
manage the challenges within this phenomenon.
Therefore, the challenge for us is not so much to
defines, as it is to understand how CSR is socially
constructed in a specific context and how to take
this into account when business strategies are
developed.

CORPORATE SOCIAL
RESPONSIBILITY: RUNNING
A GREEN COMPANY

A company’s sense of responsibility towards the
community and environment (both ecological and

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social) in which it operates induces Companies to
express this citizenship through their waste and
pollution reduction processes, by contributing
educational and social programs, and by earning
adequate returns on the employed resources.

There are different modes of CSR among them
are philanthropy and strategic models.

Business Benefits of CSR

Many articles from the one that I read stress
the importance of CSR to be implemented in
all corporations, no matter their size is, it could
goes from a multinational corporation to small
or medium one.

In one research done in Canada where they
monitored 10 big companies in different industrial
segment and they are already engaged in CSR
activities and they assess the outcomes from
those activities.

Government Role: Supporting CSR

“Governments have a strong interest in promoting
CSR initiatives as a complement to their ongoing
environmental and social programs to serve long
term national interests” (Mazurkiewicz, 2004).
So I found that is very important to highlights the
main steps that governments should take in order
to meet their goals.

CSR SPECIFIC BACKGROUND:
A SPATIAL CONTEXT

Now after portraying the Historical background
of CSR, we will examine the Spatial Context
whereby the CSR concept came to the forefront
of attention and played out majorly in the business
arena comparing the perception and implementa-
tion of the concept in the world versus Lebanon.

Globally we can identify different approaches
to CSR especially between the Continental Europe

and the Anglo-sphere that includes the UK, the
United States, Canada, Australia, Ireland, and New
Zealand. And even within Europe the debate about
CSR is very heterogeneous, whether in different
industries or in a same industry.

One approach for CSR that is becoming more
commonly accepted is community-based devel-
opment approach whereby companies work with
local communities to improve themselves; the
Shell Foundation’s involvement in the Flower
Valley, South Africa is an example: they set up an
Early Learning Centre to help educate the com-
munity’s children as well as develop new skills
for the adults.

A globally important element of CSR is Social
Accounting whereby the company is held account-
able for its actions. In this context, many reporting
guidelines and standards have been developed like
the UK Company Law.

In some European countries like France and
Denmark, there are legal requirements for social
accounting, auditing, and reporting, such as the
French Bilan Social the difficulty of establishing,
at the international or national level, an agreement
on relevant measurements of social and environ-
mental performance. In Denmark for instance it
is required by law for the 1100 largest Danish
companies to report about the policies adopted for
CSR and SRI *(Socially responsible Investment).

Sustainable Development and CSR issues
are mainly covered in externally audited reports
done annually, but even with the same industry
these reports defer widely in style, format and the
methodology used for evaluation. Yet, reports like
Enron’s Yearly Corporate Responsibility Report,
and Tobacco Corporations’ social reports are
considered by critics as slip service.

In South Africa, the companies that are under
JSE (Johannesberg Stock Exchange) are supposed
to generate an integrated report in place of an
annual financial report and sustainability report
that exhibits economic, social and environmental
practices in addition to financial performance.

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CSR Background in Lebanon

In the West, CSR has for a long time been a concrete
and deep-rooted concept, while such an inherent
perspective is far from a reality in the Levant — in
the MENA region and specially Lebanon.

Lately the notion of CSR has been gaining
significant momentum. Multi-national corpora-
tions (MNCs) are seeking to bring in their CSR
doctrines from abroad, while local companies
and small and medium sized enterprises (SME)
are hoping to expand, and many think CSR is the
exact tool for them to do that.

National companies tend to feel their partici-
pation is too little to make a significant impact,
especially when mammoth MNCs throw millions
of dollars at civil society. However, it seems the
trend is finally gaining momentum in the region,
though local corporations face the obstacle of how
to learn from successful CSR initiatives (from
abroad) without mimicking them.

Lebanon vs. United States

First, we need to know where Lebanon and the
USA stand in the world regarding the indexing of
being social responsible. In 2008, research shows
that USA index is 21 on the other hand Lebanon
goes down to 83 from the possible data collected
from 181 countries.CSR became the product of
the upgrade in profile and responsibilities of
companies, and most people are becoming more
influenced to invest in organizations that have a
significant impact in the wellbeing of the com-
munity and the environment.

In United States, where 61% of people own
shares, more than a quarter said they had bought
or sold shares on the basis of a company’s social
performance. Consumers, especially those in
North America, are likely to vote with their wallets
against companies whose social and environmental
performance seems to be poor. Forty-two percent
of North American consumers reported having

punished socially irresponsible companies by not
buying their products. In Lebanon, by contrast,
there is less pressure to follow ethical standards.
There, only 8 percent of consumers said they
had boycotted companies with low standards of
corporate behavior.

In Lebanon, there are no regulations obliging
companies to report they social responsibility
activities since the structure of the Lebanese pri-
vate sector, conquered by small and medium-size
enterprises, most of which are family-owned, is yet
another difficulty for improving corporate duty.

CSR is mostly practiced in the banking sectors,
retail enterprises and international organizations.
But most of these companies see the social activi-
ties as promotional investments. It has become
a way to advertise for their company showing
their good intentions to the community in order
to influence them.

CSR LEBANON CASE: BANKING

In June 30, 2010, The Bank grants Ministry of
Environment a Hybrid car for all formal events
.This type of hybrid vehicle, the Toyota Prius, is
in fact the first model hybrid car ever created in
the world and the first to enter Lebanon.

• In August 12th, 2009, The Bank employ-
ees and heads gathered at a public beach
site in Rmeileh, south of Beirut to clean up
the country’s shores.

• In 2009, The Bank is launching a school/
student competition under the theme
“Reducing The Environmental Impact Of
The School” to increase awareness among
students and create a new environmental
responsibility among the Lebanese Youth.

• Financing projects aimed at the rational-
ization of energy consumption and increas-
ing its efficiency.

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INTERNATIONAL CASE: MNC

MNC, an Irish-owned mobile telecommunica-
tion provides mobile services in 26 countries and
territories throughout the Caribbean and Central
America with more than six million wireless users.
Corporate social responsibility is very important
to MNC. MNC set up the first of its foundations
in Jamaica in 2004 – they have been energetically
tangled in charitable work all over the Caribbean
funding projects in the area of education, sports
and culture, environment and special needs to aid
individuals and communities and work to build
maintainable, telling programs for the good of
Jamaica and Jamaicans. Run completely by MNC
staff, MNC capitalized over $1billion and finished
over 206 projects to date, affecting the lives of their
two million Jamaicans. In 2008 and 2009, MNC
also established Foundations in two of its other
markets – Haiti and Papua New Guinea. In Haiti
the MNC Foundation built 20 primary schools in
its first year. MNC aims for accomplishing 100
percent literacy by 2015 by assimilating technol-
ogy into classrooms and improving the learning
setting and knowledge of children with disabili-
ties; allowing communities to flourish through
sustainable skills-based projects, nurturing youth
development and building cultural consciousness
and pride, while protecting their environment.

MNC knows the best people to drive their
corporate responsibility programs are MNC staff
members themselves. The latter wants communi-
ties to not only benefit from the financial support
of their CSR programs but also from the skills,
team work and dedication of their extraordinary
staff in order for the projects to be truly sustainable.

ACTUAL RESOLUTION

These days, there are all kinds of pressure on
corporations to “go green”, pay to their communi-

ties and get involved in a whole range of doings
that would once have been frowned upon, this is
from one hand, but from the other hand the CSR
concept is gaining popularity in today’s times.

Companies are becoming increasingly aware
of their responsibilities towards the various stake-
holders associated with them. More and more
companies are trying to work in a way so that to
protect the interests of the employees, customers,
suppliers and other parties and the society at large.

Even quite recently, the dominant view was
that companies existed to make profits for share-
holders, not to do good actions, but this concept
of a business firm working only with the motive
of earning profit is gradually becoming outdated.
The results of our small research showed that
there are a big gap between the CSR awareness
and application inside Lebanon and outside it,
and there is full absence of the government role
or guidance in it. A strategic CSR is gradually
increasing over the other types of CSR outside
Lebanon, specially over Philanthropy which still
increase in terms of dollar amount (based on a
study done in U.S.A), and sometimes they are
being used together, like our example about MNC
and the unexpected success of that strategy had
revealed in Haiti after the earth quick.

In Lebanon what we found was a little bit
contradictory with the findings outside it. Com-
panies still emphasis the Philanthropy CSR over
the Strategic one. However, in the last 5 years a
small number of corporations began to apply the
strategic CSR and the “Go Green” concept; among
them Industrial development companies with
their friendly environmental product, and their
friendly production process and its impact on its
surroundings. Moreover, recently, auto manufac-
turers launched its “Go Green” concept with its
new marketing campaign with the slogan “Don’t
Littre and Drive” with the purpose of spreading
awareness on dropping rubbish in public places
especially on the roads.

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PROPOSED RESOLUTION

The big question will be why corporations should
incorporate environmental concerns into their own
strategies? Possible answers are stated as follows:

• Key stakeholders such as consumers, em-
ployees and investors are increasingly like-
ly to take actions to reward good corporate
citizens and punish bad ones.

• Corporate reputation and enhanced brand
image.

• Earn and maintain social license to operate.
• Establish or improve reputation with inves-

tors, bond agencies, and banks.
• Reduce and manage business risks.
• Employee morale and productivity.
• Attract and maintain employees.
• Access to markets/customers.
• Corporate values; “the right thing to do”.
• Meet changing stakeholder expectations.
• Cost savings/improve the bottom line.
• Provide valuable input to strategic plan-

ning, as well as a better understanding of
sustainability issues facing the company.

• Stimulate innovation and generate ideas.

All these mentioned benefits will be blown
by the wind if corporations do not communicate
their CSR activities to their stakeholders, but
communication is a very delicate substance and
any bad or misusage of it will have a negative
impact on the corporations. Several indicators
must corporations take them into consideration in
their communication strategy, in order to minimize
stakeholder skepticism:

1. Don’t stretch the truth.
2. Be transparent.
3. Use third-party verification.
4. Remember the workers.
5. Explain your metrics.
6. Be proactive.

With all these advantages listed above; strategic
CSR is no longer a luxury but a requirement and
a business necessity.

LESSONS

Milton Friedman’s point of view argues that there
is one and only one corporate social responsibility
of business—to use its resources and get involved
in activities designed to increase its profits so
long as it remains within the rules of the game,
which is to say, engage in open and free competi-
tion without deception or fraud. However, there
is another approach of CSR which is valid and
important as much as Friedman’s.

The first lesson is that strategic CSR is an
important tool that can be adopted by companies
whom does not seek the short term profit and
consider it as cost center. Those companies should
select the right issue where their activities would
have more impact in the solution and commit to
it. Moreover, corporations must not consider CSR
as a “marketing tool” just to increase their profit
in the short run.

In the second lesson is the discovery of the
importance of governmental role in strategic
CSR. The Lebanese government should increase
its role in spreading awareness about the benefits
of CSR, encouraging companies that adopt such
activities by reducing their tax fees or providing
them with some incentives and joining their ef-
forts to achieve common goals.

FUTURE TRENDS

Increasingly, there is a growing perception among
enterprises that sustainable success cannot be
achieved solely through maximizing short-term
profits .Corporate social responsibility’s grow-
ing importance on business success and positive
impact on society is accepted by the enterprises.

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Perception of corporate social responsibility by
Junior Chamber International (JCI), an interna-
tional non-governmental organization operating
in 115 countries, differ in respect to demographic
factors, especially such as sex, age and regional
factors which are analyzed through frequency
analysis, correlation analysis, t test and variance
analysis (Öykü Iyigün, 2013). “Corporate orga-
nizations which consider their public relations
as corporate social responsibility during their
operations, earn more reputation among the con-
sumers” (Mudassar, 2010). There is growing need
for understanding of communication and image
management within the role of the diversity of the
board of directors within a CSR and governance
systems through transformational leadership at
the CEO level, which helps in the implementation
of a socially responsible business. This leads to
improved corporate financial performance, which
then increases the adoption of corporate social re-
sponsibility (Alshareef, 2012). Stakeholder theory
and transformational leadership theories help to
identify a future research agenda within this area.
A number of research propositions and research
agenda are presented on the potential adoption of
CSR literature, and the association it may have
with the corporate financial performance.

CONCLUSION

Why Do Governments Depend
on the Private Sector to
Achieve Public Goals?

The private sector has all the required tools for such
achievement starting from money availability, re-
sources, skilled employees and better management.
So what to do to avoid the damages and promote
the benefits of Corporate Social Responsibility?
Organizations in first world countries are com-
ing to realize the main benefits of incorporating
Corporate Social Responsibility into their business

strategies. And we believe it will not take too long
until Lebanese organizations come to the same
conclusion. Moreover, the board of directors and
CEO commitment to the matter is essential for the
CSR integration to be successful.

Some will think that it is ok to abandon CSR
plans during economic downturns; however, such
organizations will be risking losing ground as soon
as the economy gets better. And that’s why CSR
should be considered as a must even during the
hard times. In the future, there should be a shift in
traditional thinking in a way that CSR no longer
becomes managed as a separate deliverable, but
is part of the experience of being an employee in
an organization that lives its mission and vision.

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KEY TERMS AND DEFINITIONS

Advocacy: Position, from which an opinion
is formulated, heralded and displayed in support
of a sensitive issue.

Charity: An institution providing help and
support to a needy sector of society that has re-
mained outside the economic cycle.

Competition: A mode of rivalry promoting
basic values and aiming at exceeding each other’s
performance.

Corporate Social Responsibility (CSR):
Acceptance of ethical validity across all levels of
an economy and particularly a counting for third
party effects and business externalities.

Government: Formal authority institutions in
a society performing protection and security func-
tions and usually guaranteeing equitable welfare.

Public Concern: Issues affecting an entire
society usually settled within the public space.

Strategy: Long-term plan of action imple-
mented after a careful deliberate consideration of
intended goals and available resources.

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141

APPENDIX

Learning Objectives

L.O.1: List the dimension upon which corporate social responsibility is defined.
L.O.2: Discuss the arguments against CSR.
L.O.3: Discuss arguments for CSR.
L.O.4: Describe an effective way of CSR communication.

Summary

List the Dimension upon Which Corporate Social Responsibility is Defined

Corporate social responsibility is defined over five dimensions which are: stakeholder, economic dimen-
sion, environmental dimension, social dimension and governance performance.

Discuss the Arguments against CSR

Detractors of CSR believe that management has one responsibility and that is to maximize the profits
of its owners or shareholders; managers are oriented towards finance and operations and do not have
social skills to make socially oriented decisions. CSR would put business into fields of endeavor that
are unrelated to their ‘proper aim’, making the business less competitive globally. Moreover, CSR will
give business social power in addition to the power that it already has.

Discuss Arguments for CSR

There are several arguments in favor of corporate social responsibility:

• Large corporations create many social problems, thus they should attempt to address and solve
them.

• Companies must look beyond the short-term, and realize that investments in society today will
reap the benefits in the future.

• By engaging in socially responsive activities the corporate world may forestall governmental in-
tervention in the form of new legislation and regulation.

• Businesses should assume social responsibilities because they are among the few private entities
that.

Describe an Effective Way of CSR Communication

In order to effectively communicate CSR corporations should not stretch the truth, be transparent, use
third-party verification, remember the workers, explain their metrics, and be proactive.

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142

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Chapter 12

DOI: 10.4018/978-1-4666-7254-3.ch012

Nepotism in a Family Business

ABSTRACT

Nepotism in both its bad and good scopes is not mainly a result of national socio-cultural variances, nor
is it the outcome of a global dispersion of morals and standards across nations. Rather it is a culturally
driven business practice. Nepotism occurs when traditional forms of interaction are replaced by modern
forms without a corresponding modern substitution for traditional social morals. For the successful
use of nepotism, family members must meet certain qualifications such as an appropriate educational
background and outside work experience. Outside work experience is the most important. In addition,
corporations who hire family members should inform them that they will be fired in the case of unethi-
cal or illegal behavior no matter how closely related to them they are. This chapter explores nepotism.

INTRODUCTION

Nepotism is the act of hiring relatives in the same
company over other candidates. If a corporation
employs or promotes a family member, many
undesirable consequences may rise. Other employ-
ees may feel frustrated about this. In some cases,
unqualified heir takes over and drives the firm
towards bankruptcy. Reading all about nepotism,
listening to different point of views, finding out
the advantages and disadvantages, still doesn’t
cover one important question: is nepotism ethical?
Based on different theories understandings, if we
are to consider Utility theory, then we will need
to find out the outcome of the act whether taking
a decision under nepotism will be productive and
effective to the company, if so then it is an ethical
act. On the other hand, if we are to look into duty

obligation theory, then the act itself is not correct
no matter what kind of outcome we will have. So
these are different theories depending on personal
perceptions which theory to choose.

BACKGROUND

Nepotism is the act of hiring relatives, which
will result in emotional complications in decision
making. Nepotism is mostly common in family
business in which it will be acceptable, more
often, respectful positions for several reasons;
could be better for safety/security especially and
for confidentiality. However, others oppose this
idea that consequences of nepotism might result
in illegal employment discrimination. Still others
support nepotism in small businesses and/or family

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businesses based on being practiced in a reason-
able way having guidelines and qualifications as
well as enjoying fair reward system. This means,
if a relative or family member will be hired for
specific job, he/she should have the qualifications
and job related skills at the same time he/she will
be treated the same way like others & rewarded
likewise. Usually nepotism occurs in business
and politics.

Adams Bellow’s Explanation
of Nepotism

One of the experts in Family Business Enterprise
Adam Bellow through his book “In Praise of
Nepotism” explained the differences in Nepotism
between past and present as follows. New nepotism
is different than old nepotism. Parents are not the
ones who pull the strings. Instead, children do it
themselves.

Old style nepotism has changed since World
War II. Before that time, “…in most family busi-
nesses, you kept things in the family. But it wasn’t
just an upper class phenomenon. The same thing
was done among immigrants. Family members
would come over from other countries at different
points, and they didn’t come as individuals but
as families and ethnic groups. They habitually
relied on extended families to get credit and for
manpower and markets. All the ethnic groups
created their own independent economies, and
when businesses became successful they broke
out of their ethnic economy. And that’s how most
nationally successful businesses started, as a
family business. But we forget all of this. People
can’t remember when they weren’t in the middle
class. They can’t remember how they got here”.
(Adam Bellow, 2003)

With this explanation of Adam Bellow, that
nepotism has produced both positive and negative
results in everything from ancient Chinese clans
to Renaissance and American families like the

Gores, Kennedys, and Bushes. Practiced badly or
haphazardly, nepotism is embarrassing to every-
one, including the recipient, but done well it can
benefit society as a whole. Nepotism is always
found but changing the way or the approach from
generation to another.

Craig E. Aronoff and John L.
Ward’s Explanation of Nepotism

Aronoff and Ward wrote on Nepotism in Family
Business Succession: The Final Test of Great-
ness. Business Owner Resources, 1992. Craig
Aronoff and John Ward give guidelines to have
successful use of nepotism. Nepotism in family
business requires from members to meet three
qualifications before they are allowed to join the
family business:

1. Requires a good education;
2. At least three years of work experience;
3. A position that suits their background.

According to Aronoff and Ward (1992), “…
outside work experience is the most important for
both the business and the individual. It gives future
managers a wider experience base that makes them
better equipped to deal with challenges, let them
learn and make mistakes before coming under
the watchful eye of the family, make them realize
what other options exist and thus appreciate the
family firm, and provides them with an idea of
their market value”.

Aronoff and Ward also suggest that family
members begin their association with the business
by working part-time during their school years or
participating in internships. In addition, they stress
that companies who hire family members should
make it clear to the individuals that they will be
fired for illegal or unethical behavior, regardless
of their family ties. Finally, they recommend that
family businesses encourage their employees to

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maintain outside associations in order to avoid
problems associated with a lack of creativity or
accountability in management. Such steps can
improve the employee’s self-confidence and
preparation for an eventual leadership role in the
business. (Aronoff, Craig E., and John L. Ward,
1992).This is another explanation and approach
to nepotism to be successful because it is con-
tinuously experienced act in family businesses
& small businesses.

Linda C. Wong and Brian H.
Kleiner’s Understanding of Nepotism

Some describe Nepotism as giving negative effect
in the company and is a bad practice. Accord-
ing to Linda Wong and Brian Kleiner (1994),
“…trouble arises most often when family and
business needs conflict. A family’s purpose is to
care of family members; a business must produce
quality goods and/or services as efficiently and
as profitably as possible. If a company hires or
promotes an incompetent family member, other
employees may see this is a gross injustice and
many complications may result. More directly,
the unqualified heir may simply instill policies
that drive the company into the ground”. Indeed
Nepotism when is badly practiced then it becomes
biggest harm to the company.

Current Debate and Consensus

In business, no one seems sure how to talk about
nepotism or discuss it openly. Nepotism is con-
sidered a good thing for certain companies based
on the way it is practiced and still extremely bad
effects in other companies. It is considered that
Nepotism is mainly practiced in Asian and African
companies, which are traditionally based on fam-
ily networks, whereas it is a bad word in US and
western countries. We will take several cases and
debates to discuss about different point of views.

In the business world, is it generally agreed
that nepotism is the practice of showing favorit-

ism toward one’s family members or friends in
economic or employment terms. “Nepotism is an
explanation for the intergenerational transmission
of management within family firms. When the
founder retires, control of the firm is often trans-
mitted to his heir rather than to a hired professional
manager” (Burkart, Panunzi and Shleifer, 2003;
Bertrand and Schoar, 2006). Bennedsen et al.
(2007) and Perez-Gonzalez (2006) find proof that
the performance of firms decrease when family
succession is involved. Levine, Weinschelbaum
and Zurita (2007) have shown that the employer
may hire his “brother-in-law” because this gives
him utility and this may lead to a higher level of
employment. Goldberg (1982) has coined the term
“nepotism coefficient” to indicate the increase
in the employer’s utility deriving from employ-
ing preferred workers (positive discrimination).
The studies by Goldberg (1982) and Levine,
Weinschelbaum and Zurita (2007) point out that
favoritism benefits, in some form, the firm owner,
while we analyze a form of favoritism that is
detrimental to firm performance.

Just like any subject, nepotism is an open
debate, too many concepts, ideas, opinions, and
each has its advantage and disadvantage and
mainly it relies on the approach or the way prac-
ticed. When we hear the word nepotism directly
we think about it as unethical behavior however
when you study the situations and especially we
are referring here to small business for some it
is really a good asset if it practiced correctly. We
will discuss below several questions and debates
around each question.

WILL NEPOTISM BE
DESTRUCTIVE OR PRODUCTIVE
IN YOUR COMPANY?

Employees usually recommend their family mem-
bers and become very happy once these people
are hired. They feel responsible and get the feeling
of pride and loyalty.

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Maybe some kind of policies’ establishment
will help to support nepotism and practicing it in
small and big companies instead of forbidding.
Some of such policies could be:

1. Policies must be put in writing for all em-
ployees and family members to read and
understand.

2. These policies must be fair and evenly
enforced.

3. No entitlements. Just because you are a
member of the business owners, you are not
entitled to extraordinary consideration.

4. Nepotism ought to be encouraged for all
employees, not only the owner’s family
members.

5. Family members are employed only for the
positions they are qualified to accomplish.
If the owner’s child is best qualified for data
entry for instance, that is where they are
placed.

6. Members of the family are paid the same as
anybody else.

7. Performance should be the sole criteria for
promotion.

8. Family members ought not to report to other
family members.

9. Family members are on no occasion forced
on superiors. Supervisory personnel must
know that they have the freedom to hire, fire
and promote family members just as they
do other employees. Family should not be
favored or discriminated against because of
who they are.

It is important to mention that such policy of
nepotism has been applied in a company called
Thomas Publishing Company, a 100 year old fam-
ily firm with over 500 employees. Thomas proudly
declared his company as a big family. “There are
more than 30 examples of nepotism throughout
the company. Five Thomas family members, in-

cluding the president and chairman, work in the
business. Several husbands and wives met and
married while working there. Many examples of
mothers and daughters, fathers and sons, sisters
and brothers, and other related employees are
found on the payroll. Nepotism is a trademark of
Thomas Publishing and is used as a marketing tool
for the company” (Wayne Rivers, 2009).

WHY NEPOTISM IS
CONSIDERED BAD PRACTICE
IN BUSINESS COMPANIES

The horror stories coming from nepotism is from
those firms that don’t insist on fair and evenly
enforced policies. It is understandable that parents
who have spent a lot of money and time raising
their children want them to take over. However,
it is not always in the interest of the firm to have
these children later in charge. Nepotism should
be studied and properly designed in case a family
member is to be hired.

Using Influence, Power, or Contacts
of Parents and Relatives

Nepotism in not always bad, when the good inten-
tions are there and when it is used to the benefit of
both parties. If the candidate has the qualifications
of the vacancy and recruiter is familiar with the
intermediate then it is good recruitment by saving
time, meeting the objective, and hiring reliable
and trustworthy person.

If this goes the opposite way, then this same
person is taking an opportunity of another desir-
able person whom can benefit from the job and
benefit the company from his skills. Again it all
matters on the situation, conditions, and inten-
tion of the people. When it is startup business,
Nepotism is important aspect in hiring process
especially because owners will be looking more

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into hard workers and reliable people which for
them could be relatives, family members, or even
relative/family member of a close friend of them or
someone reliable they know who is already work-
ing with them. They usually welcome candidates
through references especially when the reference
is reliable. (Sandra Swanson, 2005)

IS NEPOTISM RELATED TO
SOCIAL CULTURE?

There is a debate says that nepotism in organiza-
tion is the outcome of two social morals. Culture
of the office in one side, and social distance and
reciprocity on the other. When one is weak the
other is strong. Means when the culture is strong
then everybody abides by the rules whereas when
the morals are strong organization behavior tends
to be influenced by personal relations and here
exists nepotism.

A study which was done by Simon UlrikKragh
of Department of Management and Intercultural
Communication (Copenhagen Business School)
which identifies the above debate between dif-
ferent cultures.

• Nepotism in Ghana and Kenya it was rec-
ognized that they are more into personal
relationships.

• Nepotism in Nicaragua and Columbia the
office of the first which is more influenced
by ethos.

One overall conclusion from this debate is that
organizational behavior in modernizing societies
is closely related to their position on the path from
traditional to modern socio-cultural and economic
conditions. The high incidence of nepotism in both
its negative and positive dimensions is not primar-
ily due to national socio-cultural differences, nor
is it the result of a global diffusion of values and
norms across countries (Simon UlrikKragh).

WHEN NEPOTISM PAYS
INSTEAD OF HARD WORK

It is not because of the hard work you get paid
but because of how much you are favored in the
company based on being relative. What plays an
important role in getting promoted?

• 6% seniority,
• 26% doing good work,
• 48% connections (e.g. they’re the boss`s

son),
• 18% being well-liked.

What is nepotism about? It’s all about access,
care, and skills.

• Access: No matter how good you are if you
do not have the power, influence, or the
contact you will not go ahead.

• Care: When you have the access it is not
just about it, you should have the care of
those powerful people to go further.

• Skills: Having the access and care then all
what it matters is the skills (Keith Ferrazzi,
2011).

Reading all about nepotism, listening to differ-
ent point of views, finding out the advantages and
disadvantages, still doesn’t cover one important
question: is nepotism ethical? Based on different
theory understandings, if you are to consider
Utility theory of then we will need to find out
the outcome of the act whether taking a decision
under nepotism will be productive and effective to
the company, if so then it is an ethical act. On the
other hand, if we are to look into duty obligation
theory, then the act itself is not correct no mat-
ter what kind of outcome we will have. So these
are different theories which depends on personal
perceptions which theory to choose.

In business cases utility theory is the most
applicable, which means we have to look to the

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best way to have efficient and effective outcome.
If following nepotism will add value on the
above, then definitely we should follow. But at
the same time, there should be strict obligations
and conditions to follow nepotism. Not favoring
people on others just because of relatives or son
or brother or else.

FUTURE TRENDS

Nepotism, favoritism and cronyism, which can be
seen in all sectors of today’s business world, have
become quite common behavior. The granting of
privileges to certain individuals is an extremely
disturbing situation to the organization’s em-
ployees and the lack of trust arising under such
conditions negatively affects job satisfaction, or-
ganizational loyalty, and individual performance,
and can hinder the internal control system in the
auditing process (Keles et al., 2011).

As long as there is no right or wrong, then there
is no general convincing situation but rather there
is case by case decision making situation. Nepo-
tism is something can’t be cancelled or forbidden
because general after generation is being followed
but through careful studies and teachings, it can
be beneficial most of the cases. Unless people
will continue living by relying on others powers
to reach the top. Question will remain relevant in
the immediate and far future:

1. If we follow nepotism with all its condi-
tions protecting employee rights, then will
it be considered an ethical behavior to hire
relative?

2. If nepotism is bad for all type of business,
then how can an heir follow his/her fathers or
parents business? Can a stranger consistently
do better?

3. If you have forbidden nepotism and it is a
bad attitude by the company policy, then are
you going to follow the rule of firing one of

couples who got introduced to each other in
the company knowing that both of them are
in managerial position and have strategic
role in the company?

CONCLUSION

So solve the dilemma, each case of nepotism
or possible nepotism can be addressed from the
following perspectives: is it a short term or long
term decision? What is the result of the decision
in the short term versus in the long term? If we are
to take decision to hire a person who is a relative
of one of the existing employees are we solving
the problem of fulfilling the vacancy? Or we are
opening a gate for open nepotism decisions? By
hiring this same person are we being unfair by
not providing this same opportunity to another
skilled and better person? Here is the case of
having individual versus community.

Policies that help support nepotism must be
put in writing for all employees and must be fair
and evenly enforced.

• No entitlements or extraordinary
consideration.

• Nepotism ought to be encouraged for all
employees, not only the owner’s family
members.

• Family members are employed only for the
positions they are qualified to accomplish.
If the owner’s child is best qualified for
data entry for instance, that is where they
are placed.

• Members of the family are paid the same as
anybody else.

• Performance should be the sole criteria for
promotion.

• Family members ought not to report to oth-
er family members.

• Family members are on no occasion forced
on superiors.

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REFERENCES

Aronoff, C. E., & Ward, J. L. (1992). Family
business succession: The final test of greatness.
Business Owner Resources.

Bellow, A. S. (2004). Praise of nepotism: A history
of family enterprise from King David to George
W. Bush. Anchor Books.

Bennedsen, M. S., Nielsen, K. M., Pérez-González,
F. S., & Wolfenzon, D. S. (2007). Inside the fam-
ily firm: The role of families in succession deci-
sions and performance. The Quarterly Journal
of Economics, 122(2), 647–691. doi:10.1162/
qjec.122.2.647

Bertrand, M. S., & Schoar, A. S. (2006). The role
of family in family firms. The Journal of Eco-
nomic Perspectives, 20(2), 73–96. doi:10.1257/
jep.20.2.73

Burkart, M. P. F., & Shleifer, A. S. (2003). Family
firms. The Journal of Finance, 58(5), 2167–2202.
doi:10.1111/1540-6261.00601

Danna, Z. (2011). Ethics commission defers
nepotism decision. Academic Press.

DenizGevrek, Z.S., & EylemGevrek, S. (2008).
Nepotism, incentives and the academic success
of college students. Academic Press.

Ferrazzi, K. S., & Raz, T. S. (2005). Never eat
alone: And other secrets to success, one relation-
ship at a time. Random House Digital, Inc.

Goldberg, M. S. (1982). Discrimination, nepo-
tism, and long-run wage differentials. The Quar-
terly Journal of Economics, 97(2), 307–319.
doi:10.2307/1880760

Keles, H. N., Özkan, T. K., & Bezirci, M. (2011).
A study on the effects of nepotism, favoritism
and cronyism on organizational trust in the audit-
ing process in family businesses in Turkey. The,
10(9), 9–16.

King Country Board of Ethics. (2009). Nepotism
as a conflict. Author.

Kneale, K. (2009). Is nepotism so bad? Academic
Press.

Leslie, C. T. (2006). What is nepotism? Office of
Legal Counsel.

Levine, D. S., Weinschelbaum, F. S., & Zurita,
F. S. (2007). The brother in law effect. UCLA.

Manuel, F. B. (2008). Top civil service: Meritoc-
racy or nepotism? Academic Press.

Michela, P. S., & Vincenzo, S. S. (2010). A simple
model of nepotism. Academic Press.

CEO Mommy. (2007, October 17). Nepotism vs.
families in business. Author.

Nelton, S. S. (2011). Nation’s business. Academic
Press.

Nettopdf. (1996). Employment of related persons.
Author.

Nettopdf. (2007). Nepotism. Reference for Busi-
ness.

Rivers, W. (1997). FBI’s mission is to deliver
interpersonal, operational and financial solutions
to help family and closely held businesses achieve
breakthrough success. Academic Press.

Scott, E.S. (2008, September 23). Why nepotism
is good for business?. Vsellis.

Star Online. (2011, September 25). Nepotism talk
grows louder with Nurul’s decision. Star Online.

Verhezen, P. S. (2010). The return of a gift: Trust,
social capital and the limits of reciprocity. Aca-
demic Press.

Wong, L. C., & Kleiner, B. H. (1994, September-
October). Nepotism. Work Study.

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KEY TERMS AND DEFINITIONS

Career: Lifelong path of professional duties
and job positions held by a specific worker.

Discrimination: Differential treatment based
on specific demographic criteria resulting from
stereotyping or prejudice.

Family: Basic unit of society, its nuclear form
is built around parenthood and its extended form
evolves in generations.

Favoritism: Preferential treatment of one
member of a population over the rest due to a
variety of factors.

Nepotism: The practice of recruitment inside
the family where preference is given arbitrarily
to family relatives.

Qualifications: Set of skills, competencies,
and talents that make an individual best prepared
to fill a position and perform specific functions.

Recruitment: Active discretionary process
to attract qualified individuals in order to fill a
job vacancy.

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150

APPENDIX

Learning Objectives

L.O.1: Define nepotism.
L.O.2: List guidelines for the successful use of nepotism.
L.O.3: Determine the disadvantage of nepotism.
L.O.4: List policies that help support nepotism.
L.O.5: Discuss the relation between nepotism and culture/societies.

Summary

Define Nepotism

Nepotism is the act of hiring relatives in the same company over other candidates.

List Guidelines for the Successful Use of Nepotism

Nepotism in family business requires from members to meet three qualifications before they are allowed
to join the family business:

1. Good educational background;
2. At least 2 years of work experience;
3. Start by working part-time during their school years.

List Policies That Help Support Nepotism

Policies must be put in writing for all employees and must be fair and evenly enforced.

• No entitlements or extraordinary consideration.
• Nepotism must be encouraged for all employees, not just members of the owner’s family. If every-

one has the opportunity to recommend a member of their family for a position, the playing field
is level.

• Family members (both those of the owner and of other employees) will be considered and hired
only for the positions they are qualified to perform.

• Family members will be paid the same as anyone else who would fill the position.
• Performance alone must be the criteria for advancement and promotion.
• Family members should not report to other family members.
• Members of the family are never forced on managers.

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151

Discuss the Relation between Nepotism and Culture/Societies

Organizational behavior in reforming civilizations is associated with their position on the way from tra-
ditional to modern socio-cultural and economic circumstances. Nepotism in both its bad and good scopes
is not mainly a result of national socio-cultural variances, nor is it the outcome of a global dispersion of
morals and standards across nations.

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152

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 13

DOI: 10.4018/978-1-4666-7254-3.ch013

Whistle Blowing

ABSTRACT

Whistle blowing brings to the notice of the world wrongdoings and immoral acts. It is seen as an act of
defense for proper action for any misconduct, which is at play between individual coherence and orga-
nizational values. Whistle blowing is an important way to prevent and deter fraud, waste, and abuse in
organizational work environments. When employees are feeling uncomfortable with wrongdoing, which
necessarily arises in organizations, their sense of morals also come into effect, which compels them to
make any wrongdoing or unethical act public. In essence, the interplay of policies and its discourse
that make it mark in organizational realms figure within that morality consideration; morality permits
individual to act morally and reasonably. This chapter explores whistle blowing.

INTRODUCTION

Whistle blowing is the disclosure by organization
member whether former or current employee on
any illegal, immoral, or illegitimate practices to
outside party or person within an organization
so that action can be taken in the right order of
things. From an ethical point of view, the root
of whistle blowing and the object which makes
whistle blower and their acts is the ethics being
compromised. This means that the strength of
character can vary depending on the will of indi-
vidual and their reason to act.

BACKGROUND

Whistle blowing is not a new term. Whistle
blowing and the term attached to it is somewhat
perceived negatively (Steven H Appelbaum,
2006). When we observed the realms today we
feel that it is fraught with many dangers of ethi-
cal issues making inroads within the company.
Fact of the matter is that “…whistle blowing is
a very dangerous path to be taken by employees,
as this can attract many legal and disciplinary
actions (Goran Svensson, 2009). But we wonder
what makes whistle blower take the risk to blow

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the whistle after all? Part of it can be looked in
respect ethical conflict at play. Moreover, there
have been instances which showed that despite
accepting the responsibility of whistle blowing,
individual seems to be hesitant, especially internal
auditors due to the risk of their career (Mark Keil,
2001, p. 90). For that very reason, we assume that
whistle blowing and its impact is linked one or
the other way with ethical consideration and the
conflicting part of it.

In the organizational realms there are innumer-
able question of ethical issues and ethics being
compromised for all the good bad and ugly reasons.
Moreover, corporate governance also comes into
play in such instance. According to some scholars,
they held that “firm governance influence the qual-
ity of its voluntary disclosure.” (Denis Cormier,
2010, p. 576) But if there is voluntary disclosure
why so the idea of whistle blowing arises?

In the organizational realms there have been
many instance which shows that ethical issue
are internal and can expand to the range where
the world at large also have an insights. It is only
through a whistle blower that the public are aware
of the real thing and corruption is brought to book.
(Kreikebaum, 2008, p. 87). But what brought about
internal company informative insights to be dis-
seminated into the big bad world, either through
whistle blower or so? As we have said ethics is
at the root of it. It is about moral conduct of any
wrong doing, which generally don’t need to justify
an act, since every acts and action have a reason
behind it whether we think it is right or wrong.
(Davis). For this very reason, whistle blowing and
the topic of its discussion comes into play within
the organization and whistle blowing have often
been thought to either be a bad influence or a
rather good influence.

DEFINING THE MEANING
OF WHISTLE BLOWING

There are many definition related to whistle blow-
ing. Whistle blowing can mean an act of notify-
ing the wrong doing practices in an organization
and is motivated by the desire to prevent harm to
others. It also takes into account the action of an
employee or employer with a privilege access to
internal information in an organization. (Annette
D Greene, 2004, p. 220). In the word of Near and
Miceli (1995) whistle blowing can be understood
as the disclosure by organization member whether
former or current employee on any illegal, im-
moral, or illegitimate practices to outside party
or person within an organization so that action
can be taken in the right order of things (Janet P.
Near, 1995, p. 680).

According to Rocha and Kleiner (2005) whistle
blowing and the word related to it have been around
since the early 1970s. It relates to the wrongdoing
from someone inside the company as opposed to
the wrong doing by someone from outside the
company (Ester Rocha, 2005, p. 80). The idea of
whistle blowing is all about allegation that roots
within and outside the company. Some scholars
went to the extent also to define whistle blowing
in term of attitudes and values (Rothchild, 1999,
p. 116).

What is surprising is that some scholars and
their research show that at the heart of whistle
blowing situation, a loyalty conflict is the domi-
nant part of it involving employee and employer
relationship. Whistle blowing in that sense of the
term is understood as an act of disloyalty which
very often disrupts business and also injured the
reputation of the organization (Andrea Bather,
2005, p. 5). This sound very true, as there have

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many instances which shows that disloyalty have
been a subject of whistle blowing in organization.
Yet we are of the opinion that whistles blowing
in term of ethics holds it value also, which the
following discussion relates to.

Theory A: Ethics as a Subject
to Whistle Blowing

From our understanding, we belief that at the
root of whistle blowing scenario and the object
which makes whistle blower and their acts is the
ethics being compromised. In the business world,
ethics and its consideration is a heated subject of
debate. Scholars also have gone to the extent which
states whether ethical issue and its consideration
are a part of the problem or a solution involving
individual within organizational realms. Business
revolves around many compelling aspects, and
when it comes to ethics, we assume that some-
thing somewhere is lost in between. Moreover,
scholars assert that “moral intensity differs from
one issue to the other.”(Nathan C. Whittier, 2006,
p. 237) This means that the strength of character
can vary depending on the will of individual and
their reason to acts. An in that sense of the term
we can reason that the act of whistle blowing is
correlated. Thus, this is one theory we can see at
the root of whistle blowing which finds it place
with ethics.

Theory B: Justifying the Idea
behind Whistle Blowing

According to Michael Davis the standard theory
in argument is not about whistle blowing to be
precise, but the act of whistle blowing and its
justification, whether to say if an act is reason-
able or not. (Davis) In that sense of the term we
believe that accountability also find a place of
consideration when it is associated with issue

of accountability, (Brennan, 2008, p. 886) and
necessarily whistle blowing can streamline orga-
nization process. As scholar asserts, the goal of
any organization is to create an ethically minded
organization by developing a shared ethics, which
individual agrees to be reasonable so that it gen-
erate positive organizational behavior (Steven H.
Appelbaum, 2009, p. 526). But how does such a
development course undertake? We feel that the
morality aspects as Davis asserts also have some
relevance to it. In that essence the interplay of
policies and its discourse that make it mark in
organizational realms figure within that morality
consideration.

To top it all, as more and more employee are
feeling uncomfortable with wrong doing which
necessarily arise in organization, their sense of
morals also come into effect which compelled them
to make any wrong doing or act of unethical by
making it public (Ester Rocha, 2005, p. 80). This
is somewhat like what morality permits individual
to act morally and reasonably (Davis, p. 3).

Theory C: Organizational Behavior
and Work Environment

Somewhat we are placed in a situation that often
conflict with our very morals and reasoning. We
are forced to do certain thing which we would not
have obliged in principles, yet practically such
things happen. The same case also can be looked
in respect of the work environment, where we are
compelled to adhere with the responsibility and
commitment to certain things (Mette Sandoff,
2009, p. 201).

Moreover, in organization discourse, there
are many compiling issues and at conflict with
one another. Somewhat the term wicked problem
also come into play which defines that knowledge
sellers in the business world don’t only compete
only for clients but also for better solution (Wexler,

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2009, p. 535). Would not a case of immorality
bring to fore in search of that perfect solution,
where fraud are committed? It is very likely and
also brings to the question ethics in organization,
since it is built on a shared set of understanding
as to what is right or wrong or how ethical issue
should be handled (Laratta, 2009, p. 359).

WHISTLE BLOWING: CURRENT
DEBATE AND ITS CONSENSUS

There are various debates making the rounds when
it comes to whistle blowing in organizational
structure. Some scholars are of the opinion that
integrating ethics is the core basis of any orga-
nizational undertaking, and its corporate gover-
nance, which should be expanded into the realms
of social phenomenon (Steven H. Appelbaum L.
V., 2009, p. 529).

We think that whistle blowing is right and
correct to bring to the notice of the world the
wrong doing and any immoral acts. To top it all,
whistle blowing can be seen as an act of defense for
proper action for any misconduct, which is at play
between individual coherence and organizational
values (Mette Sandoff, 2009, p. 206).

Thus what we can arrive at a conclusion is that
consensus debate for that matter can be looked
to the arguments which supports that “whistle
blowing is an important way to prevent and deter
fraud, waste and abuse,” (Dennis Hwang, 2008)
in organizational work environment.

Whistle Blowing: Functional Debate

In recent time, the originations of Wiki-Leaks also
have given a new dimension as to what whistle
blowing can mean and how far journalism can take
its tread to define the very aspects of the social
conditioning and its discourse when it comes to
the ethical and unethical issue within and outside
the company or organizational realms.

Dishonesty and ethics being compromised is
not a new thing at all, but a matter of account-
ability and corporate governance thus helps root
out such issue (Stuart Turley, 2007, p. 77). Such
a situation for that matter leaves groups and in-
dividual within an organization with little choice
to tolerate instance of dishonesty or ethics being
compromised, which breeds the very object of
whistle blowers which normally report any concern
to those who matter (Stuart Turley, 2007, p. 77).
Fact of the matter is that whistle blower can either
be bad or good. Yet above all, their act reflects a
sense of personal ethics or a sense of duty to say
to any wrong doing any organization that don’t
seems right to them and their moral judgment
(Steven H. Appelbaum G. D., 2007, pp. 589-590).

INTERPRETING WHISTLE BLOWING:
UNANSWERED CONCERN

Whistle blowing may have both short and long-
term consequences for individuals, groups, orga-
nizations and society at larger. Support for whistle
blower and whistle blowing arise when there is
something to reveal about unethical behavior of
action that is taking place within the organizational
realms so that wrong doers are exposed and brought
to book (Goran Svensson G. W., 2009, p. 181).

Thus unanswered concern when looked to at
such a situation can be reflected in context of the
subject debate and its discourse that reflect the
realms of business ethics, professional conduct
and sense of duty. Besides, it can also engender
increased societal trust in organization. On the
other hand, organizational effectiveness also can
be linked to acts of whistle blowing. These are
some of the unanswered question and concern as
to what whistle blowing can relate to.

When we consider the term “whistle blowing”
we do not go back much in time, we look upon
it as a recent expression, even though the sort of
behavior to which it refers is not entirely new,

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having in mind the narratives of King David that
we read in the Bible more than 2000 years ago.
It is possible that many people don’t deliberate
blowing the whistle, not just out of fear of retali-
ation but also out of fear of losing their relations
at work and outside their job. In many parts of
the world persecution of whistle blowing has
become a major issue that they had to come up
with rules and legislations. Nowadays, more than
a dozen countries have comprehensive whistle
blower protection laws, which provide mecha-
nisms for reporting, investigating and providing
legal protection.

In the United States the first law adopted
specifically to protect whistle blowers was the
1863 United States False Claims Act -which was
revised in 1986- the law was put to fight fraud by
suppliers of US government during the Civil War.
It protected whistle blowers from unfair dismissal
and encouraged them by promising monetary
returns by the government. In July 30, 2002 the
Sarbanes-Oxley Act was enacted to protect cor-
porate fraud whistleblowers, after the collapse of
Enron and WorldCom. Securities whistle blowers
were provided in 2010 by the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
This regulation allows the SEC to recompense
those who deliver information regarding abuses
of the federal securities laws at corporations that
are obligated to report to the SEC. Moreover,
the law forbids bosses from hitting back against
whistleblowers. Employers may not fire, demote,
suspend, threaten, harass, or discriminate against
a whistleblower.

In the United Kingdom the whistle blowers
are protected by the Public Interest Disclosure
Act which was put in order in 1998 to provide
a framework of legal protection for whoever
discloses information of malpractice and unethi-
cal conduct. In 2011, the Australian government
promised to adopt a new law concerning the protec-

tion of whistle blowers, in contrast to what former
NSW Police Commissioner Tony Lauer stated that
“nobody in Australia likes whistle blowers”. In
2010 and onwards, a number of countries took up
and implemented comprehensive whistle blower
laws like Jamaica, Ireland, India, New Zealand,
Ghana, Kenya and Uganda.

In 2012, Lebanon is still one of those countries
that do not have a law or legislation that protects
whistle blowers. However, there is an association
called the Lebanese Transparency Association
(LTA), which is the national chapter of Trans-
parency International (TI), and supported by the
UK Department for International Development
(DFID) has launched Lebanese Advocacy and
Legal Advice Center (LALAC). LALAC is one of
those organizations that help victims of corruption
by providing them with efficient legal advice. Its
primary goal is to advice legally how to proceed
in filing cases with no fee. Most of the cases re-
ported with corporate fraud do not make it to the
court as per the center’s project manager because
of the absence of whistle blower protection law,
“no law protects people who come forward with
complaints about corruption”.

US Case

At a Company, which is a utility based near Buf-
falo, New York, a well- paid corporation lawyer
claimed that the chief executive and president
had ordered him to predate their stock options
on forms acquiesced to Security and Exchange
Commission in a way that made the options worth
considerably more. The company sued the lawyer
successfully for the return of the documents that
might have provided proof. It went beyond that and
persuaded a local court to ban him from practice.
Next, he was fired and the court ruled that he
undergoes psychiatric treatment, a ruling which
was then inverted on appeal on the grounds that

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it was not legal, however, not before he had been
“treated”. Finally, an authorized investigation into
the subject was angry at the unfortunate death of
the chairman of the corporation’s compensation
committee.

Lebanese Case

LK is an administrative employee at a local bank in
Beirut. She was hitting her career ladder to become
a prominent figure in the human resources depart-
ment. After her first promotion, one of her duties
was to check the process of annual performance
appraisal step by step, provide guidance on the
merit increase decisions, and follow up on each
employee compensation plan. While doing her job,
she found out that the human resource manager
was altering the true results of the performance
appraisal to the benefit of the person who is fa-
vored by him. LK was bold enough to confront
him and at a later stage took the issue to higher
level. But no one agreed with her that this issue
was unethical, on the contrary they demoted her
and put her in a situation that she is “biting the
hand that is feeding her”. LK had no other option
but to quit, because the culture of the bank had
no place for an individual like her and no back
up for whistle blowing activities.

Actual Resolution

In the foreign case, the consequences of whistle
blowing were very substantial and immense. Not
only was the whistle blower dragged into courts
but, lost his job, his income, his future career, his
network of colleagues, and last but not least was
forced to undergo psychiatric treatment. These are
huge private disincentives for blowing the whistle.

In the Lebanese case, LK’s decision of leaving
her job was the best alternative because of the
lack of protection of whistle blowers. However,
because no law exists in Lebanon that would assist

in her whistle blowing, and the Bank didn’t sue
her because of the Lebanese culture, she wasn’t
affected much beyond losing her job.

Proposed Resolution

Employees should have the right to report wrong-
doing. Accordingly, all companies are expected to
implement whistle blowing policies and continu-
ously revise them. The policy should indicate who
is covered under the policy and how the whistle
blower will be protected to avoid all the negative
situations that whistle blowers had to go through.
A whistle blower should have good documentation
of the evidence of wrongdoing before disclosing
it to others. If we want to follow utilitarian laws,
then the whistle blower should take into account
and abide by the pleasure versus the pain theory. If
the act of whistle blowing will generate less pain
than pleasure to a greater number of people, then
it is a good act; if not then it is wrong.

Some say that whistle blowers are heroes in the
sense that they uncover immoral subjects in spite
of knowing that they will be going up against their
bosses and companies who have the money to hire
excellent lawyers to protect themselves against
allegations. These people are heroes since they
knowingly put their jobs on the line just so the
public would get a chance to know the truth. It is
very clear that with the current whistle blower pro-
tection system, employees would hardly engage in
such an act. New regulation must be implemented
that will take into consideration the protection of
the whistle blower using different areas: economic,
financial, social and legal. These are necessary to
make the whistle blower whole again.

LESSONS LEARNED

Today in Lebanon, passing a law that protects
whistle blowers seems a farfetched task. But be-

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cause of the legislations and the laws that have been
enacted worldwide securing both governmental
and private sector support to protect the whistle
blower, as a result of the scandals presented in
different communities, I believe it is just a matter
of time before we shift from our current stand of
not recognizing and maintaining whistle blowing
acts to the stand of not tolerating whistle blower
punishment and penalty. Ethically, employees
do have the right to report wrongdoing. Kant’s
deontology of moral law proposes that it is the
morally good thing to pinpoint the wrong to protect
any party that will be hurt, including the whistle
blowers themselves.

If whistle blowing culture is encouraged in any
organization, then those organizations promote,
transparent structure, effective and efficient com-
munication. Moreover, whistle blowing activities
go beyond the boundaries of the organization;
they can protect the customer as a positive result,
because the unethical practices harm the whole
environment of the organization.

FUTURE TRENDS

There are at least four significant obstacles to
whistle-blowing to regulatory institutions. “Regu-
latory institutions are often understaffed and don’t
have the resources needed for whistle-blowing
cases. Regulators of whistle-blowing cases are
often inexperienced. Regulators are often under
pressure from the politicians who appoint them to
ignore whistle-blowing cases. There are also high
risks to whistle-blowers who blow the whistle to
regulatory institutions” (Nielsen, 2013). Neverthe-
less, thinking about how the establishments and
complications function can assist us in understand-
ing what kinds of whistle-blowing approaches may
be used to traverse around the complications and

the regulatory institution. Moreover, occasionally
whistle-blowing approaches may assist in reform-
ing regulatory institutions.

“Whistle-blowing issues raise debate. Develop-
ments in law and in corporate governance along
with the development of some special functions
inside of an organization have been an impetus
in widening the debate on whistle-blowing and in
encouraging moves to better and more transparent
disclosure arrangements,” (Susmanschi, 2012).
Whistle-blowing is regarded to be both a threat
and an asset that has played a major role in many
researches. People have always showed an interest
in whistle blowing, questioning about its scope,
who the whistle-blowers are, what motivations
they have to be able to blow the whistle, and
what the consequences of whistle-blowing are
(Susmanschi, 2012).The role play of the internal
auditing in the act of whistle-blowing is a task
intended to assist the management and further
improve both the management‘s performance as
well as the company’s performance.

The presence of whistle blower within the
functionary mechanism cannot be sided apart.
This poses many dangers and innumerable ethical
issues. Whistle blowers have been known to be
present in every organization. There is no denying
this fact. Hence, the subject matter debate for future
research can be ample to explore and examine the
dominion of whistle blowing and its discourse.

CONCLUSION

Many scholars believe that there is no universal
acceptance of whistle blowing. Some theories for
that matter are as awkward as it appears as well.
We are of the opinion that behind any visible acts
of whistle blowing there is an ethical theory at
play. By ethical we mean the moral jurisdiction as

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to what defines the good and bad aspects of any
actions being undertaken such as disclosure of
internal organizational information. Therefore the
following questions require further investigation:

• What leads the way for whistle blowing
situations to arise? Do ethics, moral be-
liefs and sense of guilt’s form the basis of
whistle blowing within the organizational
realms?

• What does it mean when the information
disclosed to the public is classified? If such
is the case does not the essential of fraud
come into play? Behind every whistle
blowing act there is a moral action at play
as well. Yet this is subject to debate as well.

• What are the moral obligations that whistle
blowers and theirs actions justify to the or-
ganization, third party or to the society at
large? And finally,

• What are the long-term and short-term
consequences of whistle blowing and how
are they making inroads into organization-
al realms and their culture?

REFERENCES

Andrea Bather, M. K. (2005). Whistle blowing: The
advantages of self regulation. Hamilton, Canada:
Waikata Management School.

Annette, D., & Greene, J. K. (2004). Whistle-
blowing as a form of advocacy: Guidelines for
the practitioner and organization. Social Work,
49(2), 219–230. doi:10.1093/sw/49.2.219
PMID:15124962

Brennan, N. M., & Solomon, J. (2008). Corporate
governance,accountability and mechanisms of
accountability: An overview. Accounting, Audit-
ing & Accountability Journal, 21(7), 885–903.
doi:10.1108/09513570810907401

Davis, M. (n.d.). Some paradox of whistle blow-
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Denis Cormier, M.-J. L. (2010). Corporate gover-
nance and information asymmetry between man-
agers and investors. Corporate Governance, 10(5),
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Dennis Hwang, B. S. (2008). Confucian culture and
whistle-blowing by professional accountants: An
exploratory study. Managerial Auditing Journal,
23(5), 504–526. doi:10.1108/02686900810875316

Ester Rocha, B. H. (2005). To blow or not to
blow the whistle? That is the question. Man-
agement Research News, 28(11/12), 80–87.
doi:10.1108/01409170510785264

Goran Svensson, G. W. (2009). Cross-sector orga-
nizational engagement with ethics: A comparison
between private sector companies and public sector
entities of Sweden. Corporate Governance, 9(3),
283–297. doi:10.1108/14720700910964343

Goran Svensson, G. W. (2009). Inculcating the
ethos of public-sector codes of ethics in Sweden:
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Janet, P., & Near, M. P. (1995). Effective whistle-
blowing. Academy of Management Review, 20(3),
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Kreikebaum, H. S. (2008). Corruption as a moral
issue. Social Responsibility Journal., 4(1/2),
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Laratta, R. S. (2009). Ethical climate in nonprofit or-
ganizations: A comparative study. The Internation-
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Mark Keil, F. D. R. S. (2001). Blowing the whistle of
troubled software projects. Communications of the
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Mette Sandoff, G. W. (2009). Freedom or docility
at work – Is there a choice? International Journal
of Sociology, 29(5/6), 201–213.

Nathan, C., & Whittier, S. W. (2006). Evaluating
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Nielsen, R. P. S. (2013, February). Whistle-
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Rothchild, J. S. (1999). Whistle-blower disclo-
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Steven, H., & Appelbaum, K. G. (2006). Whistle-
blowing: International implications and critical
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Wexler, M. N. (2009). Exploring the moral dimen-
sion of wicked problems. International Journal
of Sociology, 29(9/10), 531–542.

KEY TERMS AND DEFINITIONS

Corruption: Widespread effect of an indi-
vidual or a series of actions breaching the purity
of a system.

Dishonesty: Attitude based on partial truth
or on full lies that results in a lack of faith and a
loss of social value.

Loyalty: Unshaken attitude of followership
towards a provider or a leader.

Misconduct: Behavior breaking established
rules resulting in misdemeanor or crime.

Reputation: Established image perceives by
a wide audience after a long time persistent per-
formance which can be translated in social value.

Whistle Blowing: Sounding an alarm maxi-
mizing noise, usually through public media about
an event or a grievance that has been mishandled
or settled improperly.

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161

APPENDIX

Learning Objectives

L.O.1: Define whistle blowing.
L.O.2: Discuss whistle blowing from an ethical point of view.
L.O.3: Justify the act of whistle blowing.
L.O.4: Describe the effect of whistle blowing on an organization.

Summary

Define Whistle Blowing

Whistle blowing is the disclosure by organization member whether former or current employee on any
illegal, immoral, or illegitimate practices to outside party or person within an organization so that action
can be taken in the right order of things.

Discuss Whistle Blowing from an Ethical Point of View

The root of whistle blowing scenario and the object which makes whistle blower and their acts is the
ethics being compromised. This means that the strength of character can vary depending on the will of
individual and their reason to act.

Justify the Act of Whistle Blowing

When employees are feeling uncomfortable with wrong doing which necessarily arise in organization,
their sense of morals also come into effect which compelled them to make any wrong doing or act of
unethical by making it public. In that essence the interplay of policies and its discourse that make it
mark in organizational realms figure within that morality consideration; morality permits individual to
act morally and reasonably.

Describe the Effect of Whistle Blowing on an Organization

Whistle blowing brings to the notice of the world the wrong doings and any immoral acts. It is seen as
an act of defense for proper action for any misconduct, which is at play between individual coherence
and organizational values. Whistle blowing is an important way to prevent and deter fraud, waste and
abuse in organizational work environment.

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162

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 14

DOI: 10.4018/978-1-4666-7254-3.ch014

Toxic Waste Disposal

ABSTRACT

Recognizing the severity of the toxic waste disposal, approximately 50 countries signed a treaty in 1989
seeking to regulate and control the international shipments that contain toxic waste materials. However,
the primary challenge that hinders the proper disposal of hazardous waste remains the high costs of
disposal and the time-consuming nature of the disposal process. These two factors constitute the main
reasons why some companies seek out clandestine means to dispose of their toxic wastes instead of ad-
hering to the laws and regulations, thus endangering both the environment and the health of surrounding
living beings. A proper disposal system is essential to guarantee the safety of living creatures, as well as
the welfare of the surrounding environment. However, sometimes that is easier said than done, and even
disposal techniques that abide by the relevant laws may have unforeseen and devastating consequences on
the lives of the employees carrying out the disposal process. This chapter explores toxic waste disposal.

INTRODUCTION

The most critical issue of the century is by far
environmental ethics and the way corporations
are dealing with the constant threat to the natural
resources. Environmental ethics, by definition,
is the division of ethics that inspects inquiries of
moral right and wrong concerning the manage-
ment, defense, or endangerment of the natural
resources accessible to us. Toxic waste (also
known as hazardous waste) is the material that
results mainly from industrial activities and that
can prove to be harmful to both living creatures
and the environment. More specifically put, toxic
waste is waste material, usually in chemical form

that is able to cause death or damage to living
beings. It frequently is the product of industry or
commerce, but also originates from residential
usage, agriculture, military, medical facilities,
radioactive sources, and light industry, like dry
cleaning establishments. The term is usually
used in place of hazardous waste, or discarded
material that may have a long-term risk to one’s
health or the environment (Columbia Electronic
Encyclopedia, 2013). These toxic materials can
be disseminated into the environment by air, water
and land, rendering them extremely dangerous to
living organisms including human beings.

Consequentialist ethical theories stem from
utilitarianism. It regards the intrinsic “good or

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bad”, “value or disvalue”, as more important than
the “right or wrong”. Right or wrong is determined
as whether the consequences of a certain action
are good or bad. Hence the answer to the second
question brought forward by utilitarianism is a
direct effect of the answers to the first question.
Environmental ethics requests the consideration
of the effects of every decision to be made by
the direct consequences it will have on the envi-
ronment; the environment meaning not just the
natural zone but also of all living beings in the
surrounds. For example, when one intends to
start a power plant and launch a new industry, he
must make sure that this act will not have negative
repercussions on the surrounding environment.
On a smaller scale, when people in rural areas
burn the trash, they are completely disregarding
the health issues that come to be as an effect for
their reckless action.

BACKGROUND

Pollution: A Brief Description

Assume that extinguishing natural fires or exter-
minating some of a heavily populated local species
is necessary for the protection of a certain eco-
system. Will these actions be morally acceptable?
Is it morally permissible for farmers in 3rd world
countries to carry out slash and burn methods to
empty new grounds for agriculture? Suppose a
mining corporation executed open pit mining in
some, until that time, untouched area. Does that
company have a moral obligation to restore the
lands into their previous condition after it’s done?
What value does this humanly reformed land
have compared with the original natural setting?
“It is often said to be morally wrong for human
beings to pollute and destroy parts of the natural
environment and to consume a huge proportion

of the planet’s natural resources.” These are some
of the questions explored by environmental ethics
(Palmer & Grün, 2008).

Some observers believe that the term “envi-
ronmental business” is actually an oxymoron,
and that corporations by definition can never
be environmentally friendly. Others argue that
businesses have in fact made significant effort to
develop an environmentally sound strategy. The
wave of concern over the environment and the
effects of its misuse has on the public has risen
greatly since the very primary concern over coal-
derived air pollution to more advanced corporate
related environmental ethics such as nuclear
wastes, species extinction, solid waste disposal,
toxic pollution, deforestation and global warming.
As the repercussions of these different concerns
accelerated so did the search for new ways to make
businesses environmentally responsible.

Environmental ethics falls under the universal
ethics theory. Universal ethics states that there
exist several ethical standards that seem to apply
across cultures. The environment and its sound
existence, is one that concerns the world as a
whole. Therefore the set of standards business act
on regarding the environment affects not only the
country itself but also the whole region near it. The
ethical standards regarding environmental ethics
do apply across cultures however with a slight little
relativity in its implementation. For example, while
everyone views recycling as an important matter,
it is taken more seriously and implemented more
thoroughly in the Western world than in the Arab
world. Likewise, while toxic pollution in the US
takes a big part in the media coverage and in the
work of NGOs, it is not a focus of the public in
our region. Public awareness campaigns have not
impacted the public the way it should be. Due to
this particular capability of toxic waste to spread
throughout its surrounding environment and pose a
serious long-term risk to the health and wellbeing

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of living organisms around it, several laws have
been put into effect in order to ensure the proper
disposal and treatment of these waste materials so
as to limit or negate their possible harm. A quick
glimpse of these laws includes:

1. The Toxic Substances Control Act of 1976
which required the Environmental Protection
Agency to regulate potentially hazardous
industrial chemicals, including halogenated
fluorocarbons, dioxin, asbestos, polychlori-
nated biphenyls (PCBs), and vinyl chloride.

2. The Atomic Energy Act of 1954.
3. The Resource Conservation and Recovery

Act (1976).
4. The Comprehensive Environment al

Response, Compensation, and Liability
Act, or Superfund Act (1986)” (Columbia
Electronic Encyclopedia, 2013).

Environmental Ethics
Background: History

Environmental ethics as a discipline first started
to emerge in the early 1970s. It came about to
refute previously prevalent and socially accept-
able behaviors regarding the environment. Man
has always viewed himself and his interests as the
center of every goal. Many prevalent theories are
human centered. They advocate an intrinsic value
to humans and believe that non-human entities
exist solely to provide humans with the means to
achieve human interests or maintain their well-
being. These theories are anthropocentric perspec-
tives. “Nature has made all things specifically for
the sake of man” a famous statement by Aristotle
further proves that the values of nonhuman entities
are purely instrumental. “When environmental
ethics emerge in early 1970s, it posed a challenge
to traditional anthropocentrism. It questioned the
assumed moral superiority of human beings to
members of other species on earth. It also inves-

tigated the possibility of rational arguments for
assigning intrinsic value to the natural environ-
ment and its nonhuman contents.” (Palmer &
Grün, 2008). Anthropocentrism, henceforth, gave
man an unconfined license to exploit the natural
resources present on the planet such Asia, Africa
and the Americas.

This thinking long devastated the lands and
exploited most of the resources. Soon after an-
thropocentrism’s prevalence came the academic
work that rang the sirens for the environmental
crisis was Rachel Carson’s Silent Spring (1963).
Carson brought light upon commercial farming
practices. She states that these practices were
negatively impacting both the environment and
the public health more than helping it. Later on in
1973, Richard Routly an Australian philosopher
came forward with “land ethics”. He attempted
to stretch the human moral concerns to include
not only the natural environment but also the
non-human constituents that make it up. Routly
believed that the dominant traditional approaches
for western moral thinking stopped the citizens
from recognizing “that natural things have intrinsic
value, and that the tradition required overhaul of
a significant kind.” (Palmer & Grün, 2008)

Aldo Leopold’s book A Sand County Almanac
(1949) adopted the “land ethic”. Land ethics, was
the preliminary reference to environmental ethics,
as we know it today. He suggested that the “land”
should be an entity for human moral concerns. He
argued that there exists a set standard of moral
obligations that one should have regarding the
ecological system and its different elements (spe-
cies, ecosystems, etc.).

The convergence of political, legal and ethi-
cal debates regarding the environment, and the
surfacing of different philosophies that advocate
animal and environmental rights led to the rise
of environmental parties in Europe in the 1980s.
This rise was simultaneous to ongoing schisms
that appeared between two groups, the “realists”

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and the “fundamentalists”. “The ‘realists’ stood for
reform environmentalism, working with business
and government to soften the impact of pollution
and resource depletion especially on fragile eco-
systems or endangered species” (Palmer & Grün,
2008). “The ‘fundies’ argued for radical change,
the setting of stringent new priorities, and even the
overthrow of capitalism and liberal individualism,
which were taken as the major ideological causes
of anthropogenic environmental devastation”
(Dobson, 1992). It was the astounding land ethic
theory, in addition to the various warnings from
scientists that focused the world’s attention on
the environment.

CURRENT STATE

A case study authored by Hae-Kwan Cheong et
al. and published in2007, sheds light on the five
factory employees working at an industrial waste
plant who contracted acute toxic hepatitis while
disposing of hazardous waste materials. The in-
vestigation revealed that the most probable cause
of this unfortunate outbreak was in fact the change
in the waste disposal process that was in effect in
the plant. In fact, it was uncovered that the waste
disposal workers had been working in a high vapor-
generating area of the plant and had been handling
toxic chemicals with “hepatotoxic potential”
including pyridine, dimethylformamide, dimeth-
ylacetamide, and methylenedianiline (Cheong et
al., 2007). It is assumed that the inhalation of one
or several of these chemicals is responsible for the
hepatitis outbreak which claimed the life of one
of the five workers.

Due to the nature and the composition of some
toxic waste materials, special procedures must be
undertaken before land filling (Ferdowsi, Ferdosi
& Mehrani, 2010). In the medical field, hazardous
waste materials are divided into two categories: in-

fections and non-infectious. Infectious toxic waste
require special treatment before being transported
to landfills in order to neutralize the infectious
agents that may cause harm to living organisms
(primarily human beings). There are two main
procedures used in treating infectious medical
waste which are incineration, and autoclaving
(Ferdowsi, Ferdosi & Mehrani, 2010). However,
there has been a lot of recent criticism targeted
towards using the incineration method due to the
fact that this method results in the “emission of
hazardous gases such as CO2 and CO as well as
Carcinogenic gases such as Dioxins and Furans
which are generated as a result of incomplete
combustion of compositions like PVCs (PolyVinyl
Chloride)” (Ferdowsi, Ferdosi & Mehrani, 2010).
In a comparative study aimed at assessing and
comparing the benefits and the costs of the two
aforementioned medical waste disposal methods,
Ali Ferdowsi, Masoud Ferdosi, and Mohammd
Javad Mehrani uncovered that the autoclaving
method was much safer, more beneficial, and
more effective at neutralizing harmful agents in
the medical waste than incineration.

One innovation that would aid in regulating
and controlling waste disposal is the recently
developed garbage tracking technology. In 2013,
author Samuel Greengard provided an overview
of these new technologies. He states that these
technologies would “save landfill space, improve
recycling rates, and slow the flow of toxic materials
into the environment”. He adds that this system
would be able to track a portion of the estimated
2 billion tons of waste that humans across the
globe generate during a year by using “bar codes,
passive and active radio frequency identification
tags, cellular transmitters” as well as other tech-
nologies. This is particularly helpful due to the
fact that, contrary to popular belief that associates
toxic wastes with large industrial plants, regular
households also contribute a fair share to the haz-

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ardous material pool (Lerner, 2011). In fact, the
hazardous waste that is generated by households
has a considerable effect on the environment, yet,
these households are for the most part exempt of
the laws and regulations that seek to control and
limit the detrimental effects of toxic waste on the
environment (Lerner, 2011).

Environmental Ethics:
Utilitarian Theory

As much as environmental ethicists try to avoid
the anthropocentrism implanted in the traditional
ethical theories, they often base most of their
theories on traditional resources. Utilitarianism
is the ethical theory that calls for doing the right
for the greatest amount of people. It states that
the main goal behind every decision made, is
to deliver the most amount of happiness to the
maximum amount of people (Palmer & Grün,
2008).Utilitarianism considers two basic moral
questions: the first regarding the different kinds
of intrinsically valuable decisions and the second
question are regarding the constituents that make
a certain action right or wrong.

Industrial pollution is never curbed by the na-
tional borders of industrial nations. It is, however,
of effects on surrounding environments as well.
Ice cores collected from the Arctic and Antarctica
have depicted high concentrations of industrial
pollutants, proving that no distance is too short
for pollutants to cross. Moreover, indications of
industrial pollutant were found in isolated plant,
animal and human populations. Industrial pollu-
tion is one that can be directly associated with the
industry. Because of the rapid growth of industries
around the world, industrial pollution is proving
to be a life-threatening problem for planet as a
whole. This form of pollution goes back to the
industrial revolution in the 1800s and has been
accelerating rapidly ever since. The use of fuels
to aid in the mass production of products and

generation of electricity was prevalent. It was
used extensively with poor understanding of its
devastating consequences on the environment
(Industrial Pollution, 2003).

There are various types of environmental
problems that rise as an aftermath of industrial
pollution. Some of these are water pollution, air
pollution, and noise pollution.

The negative impact industrial pollution has
on the environment and its constituents are im-
mense. These pollutants endanger the lives of all
living things, imbalance the ecosystem, radically
change the planet’s temperature, degrade the qual-
ity of air inhaled, and damage water supplies and
much more.

The growing concern for the earth’s resources
has helped bring to the world’s attention the various
environment endangering practices of the indus-
tries around the world. Nations have recognized
that it is their responsibility to protect themselves
and their neighbors from the grave repercussions
of industrial pollution. Laws have been passed,
conferences held, protocols signed and summits
attended all in favor of regulating the pollution
spread by industries (Industrial Pollution, 2003).
This holds true especially that most developing
countries are now entering the race to technological
advancements. They now desire to achieve first
world standards in production hence adding to the
global burden of industrial pollution.

CAUSES OF INDUSTRIAL
POLLUTION

The main causes behind industrial pollution can
be summarized into the following: unregistered
small scale units, lack of pollution control systems,
and lack of awareness.

Small unregistered industrial facilities often
go unmonitored by the government. They do not
adhere to set rules and regulations that would

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regulate their chemical discharges. Hence, the
industrial pollution generated is discharged into the
area’s drainage systems or other water beds with
no treatment. This would cause water pollution.
Some industries function with total disregard of
pollution control systems. Efficient treatment of
chemicals should be ensures. It ensures that the
discharges meet the desired levels. This process
of treating discharges is of high cost; hence some
industries do not give it enough importance.
Lack of education and motivation has rendered
some industries unaware of some technological
advancements that would help reduce toxic emis-
sions while keeping the same rate of production.
Although this phenomenon is of less impact in
more advanced countries, it is still prevalent in
3rd world countries.

TYPES AND IMPACTS OF
INDUSTRIAL POLLUTION

Water Pollution

Water pollution is one of the most common types
of pollution caused by industries. Industries
usually use one fourth of water withdrawals in a
country. In some industrialized countries, 70% of
water resources are used by industries. Most of
the water is utilized to cool power plants. Hence,
when this water is returned, it causes thermal
pollution that damages marine and aquatic life
and endangers the ecosystem’s health (Industrial
Pollution, 2003). With the rapid industrializa-
tion the world is witnessing, the volume of water
needed for cooling industries is going to increase
dramatically. Water pollution can also be caused
by the dumping of toxic industrial wastes into
waterbeds or the incorrect containment of waste,
which will eventually leak into the groundwater
and pollute all reserve water supplies.

The contamination of underground water with
chemical pollutants leads to miscarriage, birth
defects, premature infant death and low birth

weight. Industrial pollutant discharge into water
resources can also cause various skin problem,
eye irritation and neurological problems in adults
and children. Even treated industrial discharges,
upon reaching surface water, react with the present
organic compounds to form cancerous elements.

Noise Pollution

Noise pollution can be described as unwanted
sounds being hurled into the atmosphere to agitate
unwilling ears. Noise pollution affects one’s psy-
chological and physiological well being. Industrial
clamor over a definite period of time is enough
to gradually deafen a person. High levels of noise
generations from factories are attributed to the lack
of adequate acoustic measures to keep the noise
within set limits (Noise Pollution, 2008). Many
small scale industries avoid installing these noise-
ambients because of the additional costs curtailed.
The amount of noise coming from factories and
power plants should be monitored and controlled.
As the concentration of people in different cities
and towns increase and industrialization grows,
the predicament of unwanted noise is deemed to
augment dramatically.

Air Pollution

Air pollution is yet another effect of improper
function of the industry sector. It is when toxic
chemicals and gasses are emitted into the atmo-
sphere. Each industrial process presents a dif-
ferent type of air pollution contribution. While
petroleum refineries are mainly accountable for
hydrocarbon and particulate pollution, steel and
iron mills, chemical and cement plants all emit
high concentrations of various other particulates
(Air Pollution, 2008). Carbon dioxide, sulfur di-
oxide, carbon monoxide, nitrogen oxide, ozone,
particulate matter, among other forms of gasses,
emitted by industries around the world contribute
in the rising global temperature and in the stag-
gering phenomenon of global warming.

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The first real step taken by the international
community in regards of the environmental crisis
was the Kyoto Protocol that was adopted in Kyoto,
Japan, on 11 December 1997 but put into action
on the 16th of February 2005. This protocol is an
international agreement between 184 countries to
set binding targets on 37 industrialized countries
and the European community to take action to
reduce greenhouse gas emissions. While the Kyoto
Convention encouraged those industrial countries
to reduce the GHG emissions, the Protocol forces
them to do so (Kyoto Protocol, 2009).It states
clearly that countries most responsible for the
high levels of GHG in our atmosphere are, in
fact, the developed countries. Under the principle
“common but differentiated responsibilities” the
Kyoto Protocol calls for pacing a heavier weight
on developed nations since they have been on
an increasing pace of industrial activity for over
150 years.

Under the Treaty, these countries have to meet
their preset targets above all through national
measures. The Kyoto Protocol, however, helps
the countries meet these targets by suggesting the
following three market-based mechanisms. The
Kyoto mechanisms are: Emissions trading – also
known as “the carbon market”, Clean development
mechanism (CDM) and Joint implementation (JI).
These mechanisms help decrease the emission of
green house gasses in a cost effective way (Kyoto
Protocol, 2009). The emission targets were to be
monitored by the international community. The
monitoring was to take place through Registry sys-
tems that would track transactions by the different
parties under the above-mentioned mechanisms.
These transactions were later benchmarked against
international transaction logs to verify that they
are consistent with the Protocol’s rules. In addi-
tion, the countries have to submit annual emission
inventory reports (Kyoto Protocol, 2009).

With climate change being one of the most
important topics in our world today, a summit

in Copenhagen was scheduled to discuss global
warming and what different nations can do to
stop the increase in Earth’s temperature. This
conference brought together over 119 world
leaders. The Copenhagen summit ended in a
big disappointment (O’Connell, 2009). Richard
Lambert, director-general of the CBI, described
the climate-change meeting as a “missed op-
portunity, and a disappointing conclusion to two
years of negotiations”. The summit witnessed a
compromise agreement brokered by the United
States and China. The Copenhagen Accord, a
non-binding pact, was not adopted by consensus
at the summit in Denmark (Black, 2009). The
Copenhagen Accord, states that it should be a
goal to decrease earth temperature by 2 degrees
Celsius (UN Climate Summit Ends With ‘work to
do’ – Summary, 2009). It also promises to deliver
30 billion dollars as aid to developing countries
between 2010-2012. Moreover, it promises to
deliver 100 billion dollars by the year 2020 to help
poor developing countries adjust to the staggering
impacts of global warming.

ORIENTAL CASE STUDY:
INDUSTRIAL ESTATE, THAILAND

One out of the 29 industrial estates in Thailand
was developed back in 1989 through consistent
governmental efforts and under the direct manage-
ment of the Ministry of Industry. It is located over
a 2,768-acre land. It began operation in 1990 and
consists of over 117 industrial factories. These in-
dustrial plants consist of 8 coal-fired power plants,
45 petrochemical factories, 2 oil refineries and
12 chemical fertilizer industries (Palmer & Grün,
2008). The area is surrounded by 25 communities,
which are occupied by around 24,668 residents.
These citizens have been directly affected by the
continuous air pollution. The local school brought
the most staggering case forward. Over 1,000

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students and staff members where rushed to the
hospital after they proved to be suffering from
severe headaches, nausea, breathing difficulties,
and nasal after inhaling the toxics emitted by the
industrial estate. In response, the Ministry of
Education signed a lease to relocate the school 5
kilometers away from the first location, in 2005.

Tests have shown that the industrial estate
emitted benzene, vinyl chloride and chloroform,
which are cancerous toxic chemicals. These toxic
emissions are widely known for their grave after-
math, which include casing cancer, birth defect
and other rigorous illnesses. The general safety
standards for gas emissions were exceeded by 60
to 3000 times. Health assessments carried out on
2,177 residents, in June and August 2007, revealed
that 329 of them had abnormally high levels of
benzene. Moreover, the nitrogen dioxide and sulfur
oxide levels were 200 to 500 times over the legally
accepted standards per year. The industrial estate’s
pollution was not limited to air pollution and toxic
emissions but also included water resource con-
tamination. The waterbeds located in the estate’s
surroundings were found to be tainted with high
concentrations of toxic metallic elements. Water
samples retrieved from 25 public ponds in the area
revealed that Cadmium was 6 times over the safety
level standard, zinc 10 times, iron 151 times, lead
45 times, and manganese 34 times.

Villager’s Lawsuit against National
Environmental Board (NEB)

27 villagers from 11 communities around that
industrial estate filed a lawsuit. The villagers
filed this law suit on the basis that the duties and
responsibilities is had to uphold and did assign
the area as a pollution control surrounding. “A
pollution control area refers to an area devoid
of toxic chemicals beyond the legal limits.” The
court issued its verdict on the 3rd of March 2009. It
established that the NEB had purposely breached

section 59 by disregarding the estate as a pollution
control area. In its ruling, the court found that NEB
was to declare the areas surrounding the Industrial
Estate as pollution control areas and to clean up
the contaminated industries within that region.
The court had been presented with studies by the
Pollution Control Department that revealed that
the air in those areas contained a stipulating 49
volatile organic compounds, 20 of which are can-
cerous. “19 of these carcinogenic compounds exist
in amounts that violate the permitted standards
up to 693 times”. More statistics where brought
forth to the court that depicted that the number of
leukemia patients was higher as opposed to other
regions. The Business sector urged the govern-
ment to appeal the court’s decision. Prominent
businessmen claimed that future investments in
the region would be highly affected if the area
were announced to be a pollution control area.
They asserted that this designation would highly
affect both the tourism and food industry sectors
of the district. The government went on with
implemented the “green factory” project. This
project encouraged the investors to spend more
on technologically advanced industrial waste and
emission treatments. The Ministry of Industry
also put in an action plan to develop health units
and labs in various local areas to test the water
and air quality and make sure that they meet the
set standards.

ENVIRONMENTAL
ETHICS: LEBANON

Lebanon, which is very well known for its as-
tounding water assets, fertile lands, and beautiful
mountains, has been jeopardizing these resources
for the last century. The constant pollution of our
country by environmentally unethical business
practices has lead to the endangering of life, human
and animal, leaving an imbalance in our ecologi-

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cal system. The continuous dumping of toxic and
factory wastes in the water has given rise to many
ethical questions regarding the mass repercus-
sions of these actions on the current generations
and the coming ones. Apart from the water pol-
lution, the pollution of the fertile Lebanese soil
has also emerged. Using chemical fertilizers, the
burial of several gallons of toxic wastes in addi-
tion to many other actions taken negligently have
also had a great aftermath on the Lebanese soil.
Lebanon was known for engaging in international
toxic waste trade and the holding of hazardous
substances of more advanced countries such as
Italy and Germany.

On November 14th, 1961 Article 6 of Regu-
lation 1104 has forbidden disposing into the sea
any kind of waste that could pollute the water
and impact ocean life. Like all legislations that
has passed after this date, it has not been enacted
by the people, nor by the industrialists, nor by
the government itself. The Lebanese beaches
are waste dumps, and the ocean water is the new
sewer. Successive wars and political instability
in Lebanon has driven the focus of the people on
other matters such as security and survival, and
have hindered any awareness for the environment
and for the importance of clean soil, water, and
air. All projects that were started were put to an
end when faced with the anarchy of the conflicts
lived between 1982 and 1990. Projects such as the
“Master Plan for Waste Water Management” and
the “Master Plan for Solid-Wastes Management”,
prepared by the Council for Development and
Reconstruction and UNDP and WHO in 1980-
82, UNDP LEB/77/033 and WHO/BSM/00, have
not yet been implemented 30 years after. New
proposed projects by environmental organiza-
tions and by successive ministers have all been
rejected. Even air pollution, which is the most
evident problem in the environment, is the least
researched and reported. Until Today, the quality
of the air in Lebanon continues to deteriorate; yet

no one claims responsibility for the protection of
the atmosphere. In 1973, the National Council
for Scientific Research initiated a program for the
continuous observation of harmful substances in
the atmosphere. Nonetheless, the plan was discon-
tinued due to war and conflicts that have always
been obstacles to real ecological and economical
development

Pollution in Lebanon: History,
Present, and Cases

Since the 1950s Lebanon has been through mul-
tiple wars. Environmental damage an inevitable
consequence of war. One of the major and long
lasting scandals in toxic trade happened in 1987
when a European firm shipped and unloaded
around 16000 barrels of hazardous waste in Leba-
non, taking advantage of the state of chaos and
paying the local militias an estimated amount of
about 20 million dollars to allow and supervise the
trade. This scandal was one of the events leading
to the Basel convention in 1989, a treaty created
to stop international waste trade. After pressure
from environmental organizations and even ter-
rorist organizations, The European industrialist
promised to take back all the waste, which it
claimed it did, only for Greenpeace to come and
oppose that claim in 1994 with evidence of toxic
barrels or substances still present in Lebanese soil
and water. The returned ships had only taken the
contents of 5500 barrels, and left the other 10000
to be burnt, used as raw materials, or buried in
the Keserwan Mountains and shores posing an
imminent threat of contamination of ground and
water. Adding to that, Hundreds of barrels of paint
from Canada, and chemicals from Europe were
still being imported into Lebanon as late as 1996
despite the Basel treaty, which clearly prohibited
trade of these kinds of substances. However, these
imports were labeled raw materials in order to ap-
pear in compliance with the Basel treaty, leaving

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Greenpeace as the sole whistle. The exact loca-
tion of the solid toxic waste remains unknown to
the public; while there have been many cases of
unexplained poisoning and deaths in the mountain
area. A Greenpeace report only states some of the
locations, which are Ouyoun al Simen, and the
Quarantina and Burj Hammoud dumps that are
still there today.

More than 700 Dumps stand on Lebanese lands.
Yet, on the coast of Beirut and Saida exist two of
the largest dumps in Lebanon: the Saida garbage
mountain and the Quarantina dump. The “Saida
Mountain”, as it is being called, was created in
1975 as a temporary municipal dump point and
has since then grown steadily to reach a volume of
21 million cubic feet with. It contains hundreds of
thousands of tons of garbage, combining house-
hold, hospital and factories waste with debris
from the 1982 Israeli invasion. Doctors directly
link the pollution from the mountain with cases of
asthma, respiratory problems, insect bites, rodent
infestations in the city and surrounding schools
and hospitals. Sometimes students are sent home
from school because of sickness and nausea. The
mountain has repeatedly caught fire and at least
three times partially collapsed into the sea, sending
in the last collapse 150 tons of waste into the sea.
Saida’s mayor states that marine life is inexistent
throughout a radius of 500 meters. Not only that,
but complaints have been also received from
Syria, Cyprus and Turkey, protesting that garbage
has reached their shores. On the other hand, The
Quarantina waste lying at the entry of the capital
is made of household waste and hazardous waste
from hospitals and industries dumped there dur-
ing the civil war, mixed with toxic ashes releases
by the waste incinerator. It also includes some
of the toxic waste barrels imported in 1987. The
Quarantina dump was closed in the early 1990s.
In 1997, Two Spanish and one Lebanese firm
that were in charge of “rehabilitating” the dump
were part of a scandal uncovered by Greenpeace

that involved them transporting the waste from
the dump in Beirut to the Monte Verde area in
Metn. Greenpeace then demanded them to take
responsibility and fix their mistake.

In fact, Greenpeace played a critical role in
putting pressure on the government and spread
awareness about the disastrous environmental
state of the country. However, regarding the issue
of Italian waste import, they were subject to life
threats and harassment, by officials who wanted
to keep the issue away from public focus. In fact,
some government officials were and are still
playing a big role in the environmental disaster.
Most of them have become experts in disguising
waste disposals as not only raw material, but also
real estate development projects. Developers are
focusing more and more on dumping grounds, such
as the Normandy landfill, the “shark canyon” in
Beirut, and the Linor Project in Jounieh, where all
studies show an unknown amount of toxic mate-
rial in the ground now used to build hotels and
apartments. These are dangerous practices, and
the fact that these lots sell for the highest value
in Lebanon is ironic. People aren’t fully aware of
what’s happening.

In 1997, The Greenpeace activists called on
the Association of Lebanese Industrialists to
acknowledge that they form a primary reason of
source nature pollution, to pay for the pollution
they cause, and to take charge in cleaning up
rivers and coasts. In fact, Toxic waste released
by industries and by the production of electrical
energy of thermo-electric power plants pollutes
the atmosphere and the water. Lebanon knows a
higher than average amount of Sulfur SO2 and
Petroleum coke. Refineries and cement factories,
especially in Chekka and Selaata, have been known
for intoxicating both marine and human life. On
one hand, industrial firms on the coast discharge
their waste into the sea without any treatment.
On the other, Inland factories discharge it into
the nearest stream or burry it in deep boreholes,

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creating a risk of contamination of underground
waters that people use in their households. The
truth is that cutting costs is more important than
the future of our land.

When Lebanon came out of the war under
pressure to rehabilitate the country and get out of
its deep economic struggle, industrialists quickly
adopted a mindset of acquiring cheap technolo-
gies from developed countries that are selling
their old polluting equipment at bargain prices.
This mindset dates back more than 50 years, as
the Lebanese government has always encouraged
the development of industry and the increase of
exports, disregarding environmental results. All
governments favored high-productivity concerns
by passing fiscal, customs and commercial legis-
lation. Yet, “no reference has ever been made on
the impact of industry on the surroundings and
on the protection of the environment, although
industrial development affects the environment
and other sectors”, states a national report on the
environment and development in 1991. Even laws
that already exist has been updated and helped
increase the pollution. As an example, in 2001,
a law was passed enabling factories to omit the
double of a previously allowed level of chemicals.
The environmental code was one of the few tries
from the government’s side to scope the pollution
issue. After 5 years of being referred to the par-
liament, the environmental code has introduced
new rules such as the obligation of Developers
to conduct an environmental impact assessment
a scientific study that clearly states a new proj-
ect’s impacts on the surrounding environment.
Moreover, fines for polluting the environment
with hazardous waste were increased from LL10
million to LL100 million. In Addition, incentives,
reaching 50 percent tax reductions, were offered
for businesses using environmentally friendly
methods. However, a big question mark remains
on the implementation of these rules. For more
than 50 years, the Lebanese Chemical Company
in Selaata has been dumping the acidic waste from
its phosphate fertilizer production. Greenpeace

studies on the Selaata coast revealed a level of
hazardous harmful material exceeding the amount
allowed by law. Furthermore, activists are still
releasing articles, last one on May 25th in a lo-
cal newspaper, opposing the abuse lasting years
of cement factories in Chekka, where the level
of petroleum coke on the shores is alarming, and
even claiming a government conspiracy to scare
citizens out of the city and transform it into an
industrial area.

The Ecological Consequence
of the 2006 War on Lebanon

Lebanon’s latest war in 2006, along with its
abominable humanitarian damage, has made of
the environment an additional casualty of war.
The main environmental event was the bombing,
one 13 and 15 July of storage tanks at the thermal
power station in Jiyyeh, 30 km to the south of
Beirut, by an Israeli air strike, releasing between
15,000 and 30,000 tons of heavy fuel oil into the
sea. The spill spread along the whole Lebanese
coast, and even neighboring country Syria, causing
an ecological tragedy and a grave endangering of
marine species. After numerous campaigns, the
massive spill pollution has been treated, but only
visibly, since underneath the surface in the deeps
of the sea still lies heavy fuel oil that sank quickly,
that is hazardous to fish and sea plants. Ironically,
this massive quantity of hydrocarbon present in
the sea is said, by the UN after-war assessment
report, to be “normal “and “expected” in that
part of the already polluted Mediterranean. As
for the atmospheric impact of the strike, the fire
was left burning for 27 days. The smoke would
have contained a potentially toxic cocktail of
pollutants of which carbon monoxide, methane
and hydrocarbons, potentially causing respiratory
problems for local residents.

The war has also left a variety of hazardous
substances, unexploded cluster bombs, tremen-
dous war-debris quantities, toxic ash and leaked
chemicals from bombed factories. “The sheer scale

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of the debris is overwhelming existing municipal
dump sites and waste management regimes”,
claimed a report by UNEP experts who carried
out an after-war in-depth field study. A chronic
problem had just worsened. Lebanon did not have
a proper infrastructure for waste treatment, and
especially for the war waste. Estimating the rub-
bish at about 3 million square meters, Lebanon
and UNEP still have yet to find a solution for
treatment. The only proposed solutions, still under
study three years later, are the cheapest ones. Ei-
ther crush the rubbish and reuse it as construction
material, or dump them in old already polluted
quarries. Awaiting a plan, and under pressure of
reconstruction and returning people to their homes,
the waste has been temporarily thrown in a chaotic
way in hundreds of places, rivers, forest, hills, and
road sides. The Ouzai dump, right on the shore
of Beirut, has just grown a million square meters
of construction, chemical and electronic material
destroyed in the attacks.

Post-War and Current State
of the Environment

The Lebanese government currently loses 550 mil-
lion dollars due to Pollution. The new government
has concrete plans to help the ecosystem. For the
first time, he announces the raise of fund for the
environment. However, the facts show that this
is a prolonged process; there is a lot to be done.
The current state of the environment is a disaster:

• There are a total of 700 municipal and na-
tional dumps in Lebanon, said the UNEP
after-war report. Solid waste management
is a primary concern.

• Garbage collection company operates sole-
ly in Beirut & Mount Lebanon. Throughout
the rest of the country, waste is still burned
or dumped in random quarries, in the sea,
or in nearby streams without treatment.

SOLUTIONS AND
RECOMMENDATIONS

First, the most critical first step into the envi-
ronmental problem is research and information.
Studies need to be done throughout the country.
This can be done with the help of UNEP and
Greenpeace that have already done some studies.
These should be pushed forward and multiplied.
They also should be available to the public, and
talked about in the media. Then, these researches
will provide a basis for the integration of envi-
ronmental studies in the education system. From
their childhood, people should know their ethi-
cal responsibility towards the environment, and
develop values that will guide them through their
life. In order to respect the environment, one
must know its importance. That can be taught in
science courses and repeated through the whole
education process. There should be specific reports
and cases to teach the impact and show the threat
of pollution. Study guides and courses should be
developed to include all kinds of pollution (air,
marine, soil).

Moreover, these researches will push for institu-
tional policies and provide information to develop
new legislation. Ecological integrity is neces-
sary in the formation of laws and policies. There
should be strict penalties for polluting factories,
regulations on imported goods and a ban of all
non-recyclable material. Once legislation is there,
law enforcement comes next. While some laws
already aim to stop pollution, their enforcement
is the biggest problem. State scientists should be
assigned to monitor all factories continuously, and
sent to perform ground and water studies next to
“suspected” industrialists, who might not be even
aware of the bad consequences of their activities.

Considering some cases like the toxic waste
and some anti-environmental practices by some
corporations and people that are close to govern-
ment, we can note political corruption as a primary

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reason of environmental harm. Many believe that
all these problems can go away if the government
makes a decision to put environmental as a prior-
ity. However, that would require inter-ministerial
work between the ministry of the environment and
the ministry of internal affairs.

As for practical solutions, they are waste
management and sewage organization. Experts
should develop plans so that none of the waste
or the polluted water manages to reach rivers and
the ocean without proper treatment. Factories
should have their own plants for recycling and
treating their waste. In addition, the solution to
the household waste problem can be the imple-
mentation of separation at source and recycling
plan. As for industrialists and hospitals dealing
with toxic material, their waste should be decon-
taminated before recycling. They should replace
their technologies with ones that do not generate
toxic waste, and develop non-polluting production
processes. Incinerators and landfills of hazardous
waste must be banned.

FUTURE TRENDS

Due to the importance of safely disposing of
toxic and harmful waste, institutions that generate
hazardous materials (industrial plants, hospitals,
agricultural plants, households etc…) must be
compelled and encouraged to follow the relevant
procedures that guarantee safe and clean disposal.
The model of the construction waste disposal
charging fee (WDCF) with a system dynamics
approach shows major factors and their dynamic
feedback loops. An appropriate WDCF can be
effectively determined by using the model, which
enhances construction waste minimization (Yuan
and Wang, 2014).

For managing medical wastes, hospital ad-
ministrators must be held liable for “the medical
wastes until they are not considered as hazardous
or infectious”. Managing medical waste includes
“negotiating with a medical waste disposal com-

pany, on-site treatment of medical waste, and
compliance with waste regulations”. Moreover,
steps to ensure proper disposal of medical waste
in the future include:

1. Encouraging companies as well as house-
holds generating toxic waste to separate their
garbage.

2. Planning for the development of hazardous
waste confinement centers.

3. Introducing a new waste management law
(Kastelein, 2004).

And finally, Cheong et al. (2007) suggested
that in the toxic waste disposal plants context,
any change in the process of waste disposal must
be closely monitored in order to limit the health
hazard exposure to factory workers.

CONCLUSION

Greenpeace and NGOs are needed and we want
them to be heard. Instead of neglecting them,
politicians and leaders need to be a benefit for
these kinds of organizations, and should finance
their activities in order to promote the awakening
of environmental awareness. The people need
to learn that the future of the country and their
children depends on the state of the environment.
Their lives depend on the healthy soil of the good
earth, and on the quality of waters. If it is not a
direct threat to them, they should be aware that the
products they use come from different factories that
might be engaged in unethical practices, cutting
costs band yet strategically hurting themselves
and compromising the quality of their products.

REFERENCES

AFP. (2009, December 5). Pollution costs Lebanon
500 million dollars a year. Beirut: AFP.

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Air Pollution. (2008). The Columbia encyclopedia
(6th ed.). Columbia.

Al-Azar, M. S. (2002, July 25). Environment code
launched after 5-year parliamentary sojourn. The
Daily Star.

Anid, C. S. (2009, September 21). Solid waste
management in Lebanon: A dead end. Retrieved
from http://www.iloubnan.info

Black, R.S. (2009, December 20). China and
Indonesia welcome Copenhagen summit deal.
BBC News.

Captan, L. S. (2001, June 12). Environmental
activists are fighting against all the odds. The
Daily Star.

Carson, R. S. (2002). Silent Spring: 1962. Boston,
MA: Mariner.

Cheong, H. S., Kim, E. S., Choi, J. S., Choi, S.
S., Suh, J. S., Choi, D. S., & Kim, J. S. (2007).
Grand rounds: An outbreak of toxic hepatitis
among industrial waste disposal workers. M.S.
Lebanon Housing Built on Toxic Waste Sites.

Dobson, A. P., Bradshaw, A. D., & Baker, A. Á.
(1997). Hopes for the future: Restoration ecology
and conservation biology. Science, 277(5325),
515–522. doi:10.1126/science.277.5325.515

Earth Times. (2009, December 19). UN climate
summit ends with ‘work to do’ – Summary. Earth
Times.

Ferdowsi, A. S., Ferdosi, M. S., & Mehrani,
M. S. (2010). Incineration or autoclave? A
comparative study in Isfahan hospitals waste
management system. Materia Socio Medica,
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Greengard, S. S. (2010). Tracking garbage.
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Greenpeace Press Release. (1995, May 11). Italian
toxic waste still lies dumped in Lebanon. Larnaca,
Cyprus: Author.

Greenpeace Press Release. (2009, September 2).
Firms evading responsibility of Lebanese waste
dump scandal. Beirut: Author.

Industrial Pollution. (2003). Department of Ecol-
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Kastelein, B. S. (2004). Toxic disposal dilemma.
Academic Press.

Kyoto Protocol. (2009). UNFCCC.

Lerner, M. S. (2011). Cash for clunkers, dimes
for duracells: An effective model to motivate the
proper disposal of household toxic waste. Jurimet-
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Mae Moh Power Plant, Lampang. (2009). Case
study. UNESCO Bangkok.

Masri, R. S. (1995). The human impact on the en-
vironment in Lebanon. International Relief Fund.

Moussaoui, R. S. (2009, October 8). Sidon chokes
under rubbish dump. AFP. Retrieved from http://
www.iloubnan.info

Noise Pollution. (2008). Student’s Guide.

O’Connell, D.S. (2009, December 20). Article.
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Palmer, C. S., & Grün, M. S. (2008, January 3).
Environmental ethics. In Stanford encyclopedia
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doi:10.1016/j.ejor.2014.02.034

KEY TERMS AND DEFINITIONS

Green House Gas: Industrial and transporta-
tion emissions rising in the atmosphere forming a

light refraction layer allowing solar light to enter
into the atmosphere and preventing it partially
from escaping thus producing an overheating
effect in the planet’s atmosphere.

Greenpeace: An international NGO associa-
tion that monitors and investigates incidents that
contributes to environmental degradation and to
ecologic disequilibrium.

Hazard: Danger that results from a specific
activity with uncertain consequences.

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177

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 15

DOI: 10.4018/978-1-4666-7254-3.ch015

Advertising Deceit:
Manipulation of Information, False

Advertising, and Promotion

ABSTRACT

Deceptive advertising denotes a producer’s usage of mystifying, deceiving, or blatantly untrue statements
when endorsing a product. There are several illegal methods for attempting to deceive consumers. This
can be done through concealed fees or the usage of surcharges. Deceptive advertising can also take
place when “going out of business sales” charge consumers more for products that had already been
marked down. Advertising law identifies the manipulation of standards as dishonesty under customer
law. Undefined terminology is also considered a violation under consumer law. Marketing deceit is a
practice that can equate to a crime. Thus, a marketer should not get involved in deceiving their potential
customers for this manipulation would lead to various harms: it erodes one’s self-confidence and hinders
the development of responsible advertising. Big companies make big mistakes, this is to say that trust
associated with big companies holds severe uncertainties. This chapter explores advertising deceit.

INTRODUCTION

Advertising is a kind of communication envi-
sioned to convince an audience to either buy or
take another action towards products, services, or
ideas. The power of advertising in persuading the
general public to buy or benefit from products and
services is undeniable. In fact, concentrated ads
that specifically cater to certain segments of the
market have a powerful effect on the constituents
of these segments as they play on their most par-
ticular needs, wants, and fears. In fact, advertising

has become so powerful that it is able to influence
consumers into purchasing goods and services
that they might not purchase otherwise. This is
why false advertising (also known as deceptive
advertising or deceitful advertising) is particularly
dangerous. In very simple terms, false advertising
is the act of using false or misleading statements.
More precisely, the U.S’ Lanham Act of 1946
unmistakably states that false advertising is “any
advertising or promotion that misrepresents the
nature, characteristics, qualities or geographic
origin of goods, services or commercial activities.”

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BACKGROUND

Advertising is a kind of communication envi-
sioned to convince an audience to either buy or
take another action towards products, services, or
ideas. These messages are regularly paid for by
sponsors and viewed via diverse media.

Nonprofit organizations may rely on free
modes of persuasion, such as a public service
announcement. To be perceived, understood and
memorized, advertising has generally a very little
time. It should simultaneously collect the attention,
retain it and transmit its message. In that matter,
advertising could be classified in the category of
techniques of mental manipulation. This technique
aims via messages to reach the result.

Deceptive advertising denotes a producer’s
usage of mystifying, deceiving, or blatantly untrue
statements when endorsing a product. The law of
advertising will protect customers from decep-
tive advertising by enforcing specific legislation.
Advertising law and consumer law both promote
truth in labeling.

A company will charge extra fees beyond the
advertised price for a certain product or service.

Companies going out of business may charge
customers higher prices. According to consumer
law, this is very unfair because it deceives the
consumer and takes advantage of him.

Terms that are not defined properly may lead to
false advertising because they may contain vague
meanings that customers do not comprehend.

CURRENT RESEARCH

Deceptive advertising can take on many forms.
An example of that is visual puffery. The Federal
Trade Commission (FTC) defines visual puffery
as “term frequently used to denote the exaggera-
tions reasonably to be expected of a seller as to
the degree of quality of his product, the truth or

falsity of which cannot be precisely determined,”
(Fetscherin and Toncar, 2009). A study authored
by Marc Fetscherin and Mark Toncar and pub-
lished in 2009 sought to investigate the presence
and effects of puffery in advertisements about
women’s fragrances. The final results of the re-
search showed that “… visual puffery does exist,
and can generate expectations that in many cases
exceed actual product evaluations” (Fetscherin and
Toncar, 2009). Other studies have shown that the
mental state of consumers has a severe effect on
their susceptibility to false advertising. In fact, one
study conducted by Kathryn and Michael LaTour
reveals that consumers who are in a good mood
are more likely to identify false advertisement.
What’s really surprising, however, is that these
people are also more likely to develop positive
feelings towards the brand that’s being falsely
advertised (LaTour and LaTour, 2009).

After having established that consumers’
moods affect their susceptibility to false advertis-
ing, marketing and behavioral researchers began
exploring the neural processes that take place
when consumers are exposed to deceptive ads.
Along those lines, Craig et al (2012) collected
neuroimaging data of participants while they were
exposed to three types of advertising: believable
advertisements, moderately deceptive advertise-
ments, and highly deceptive advertisements (Craig
et al, 2012). The results showed that there is greater
brain activity associated with viewing advertise-
ments that were moderately deceptive than there
was activity when the consumers were subjected
to ads that were either believable or highly decep-
tive. These findings suggest that consumers are
more attentive to ads that are moderately decep-
tive and are thus more inclined to believe them.
(Craig et al, 2012).

While exploring the effects of deceitful adver-
tising, Quiang Yan (2012) states that “false adver-
tising not only undermines consumers’ interests,
it may also generate negative spill-over effects on

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competing firms and the society” (Quiang Yan,
2012). In this article, the author argues that this
negative spill-over is due to externalities that are
caused by false externalities. The author defines the
term “externalities” as results that are not intended
by neither parts involved in advertising activities
and the value of which are not incorporated in
any direct outcome related with advertising. In
some senses, we may perceive externalities as
side-products of advertising. Externalities can
be positive, which means bring positive values
to the third party beyond ads; and they can be
negative which means losses to the third part”
(Quiang, 2012).

Given the grave consequences of false advertis-
ing, stringent legal measures have been put into
place in order to limit and reprimand its usage.
The Lanham Act, mentioned above, is a shining
example of such measures. According to the Act,
“any person who, on or in connection with any
goods or services, or any container for goods, uses
in commerce any word, term, name, symbol, or
device, or any combination thereof, or any false
designation of origin, false or misleading descrip-
tion of fact, or false or misleading representation
of fact, which in commercial advertising or pro-
motion, misrepresents the nature, characteristics,
qualities, or geographic origin of his or her or
another person’s goods, services, or commercial
activities, shall be liable in a civil action by any
person who believes that he or she is or is likely
to be damaged by such act.” (Balough, 2012).
Furthermore, the act specifies that to establish
that false advertising has actually taken place, a
plaintiff must provide evidence to the following:

1. The defendant made a false or misleading
description of fact or representation of fact
in a commercial advertisement about his
own or another’s product.

2. The misrepresentation is material, in that it
is likely to influence the purchasing decision.

3. The misrepresentation actually deceives or
has the tendency to deceive a substantial
segment of its audience.

4. The defendant placed the false or misleading
statement in interstate commerce.

5. The plaintiff has been or is likely to be injured
as a result of the misrepresentation, either
by direct diversion of sales or by a lessen-
ing of goodwill associated with its products
(Balough, 2012).

ISSUE DESCRIPTION

Deception is a major relational transgression
that frequently directs to feelings of betrayal and
distrust between partners. It violates rules that are
in relation with each other and may sometimes
cause in a breakage of this relational base. It is
considered to be a negative violation of expecta-
tions. Most of us anticipate that friendship parties
be truthful most of the time. Even talking and
communicating would require an all-of-the-time
judge to tell whether what is being communicated
is based on truth or not, though, not even a judge
can have the capability to know of whether what
is being communicated is truthful, i.e. honest
or not and this means deceitful. “A significant
amount of deception occurs between romantic
and relational partners. Though commonly
used and allowed by the ethical guidelines of
the American Psychological Association, there
has been debate about whether or not the use of
deception should be permitted in psychological
research experiments” (Dresser, 1981). Accord-
ing to Dresser (1981) “researchers are only to use
subjects in an experiment after the subject has
given informed consent. However, because of its
very nature, a researcher conducting a deception
experiment cannot reveal its true purpose to the
subject, thereby making any consent given by a
subject misinformed”. Baumrind (1964), criticizes

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the usage of dishonesty in the Milgram (1963)
obedience experiment and contends that decep-
tion experiments unsuitably take advantage of the
conviction and compliance given by the subject
when volunteered to participate.

Deception covers different types of communi-
cations that aids at distorting or omitting the whole
truth. More than 50% of deception takes the form
of lies, around 30% take the form of concealments,
and the 20% left vary among the other forms of
deception. Honesty is a vital characteristic, and
many people cherish it and likes to believe that
it still exists nowadays. Dishonesty, however,
seems to be found every day, even in people that
are supposed to lead societies.

Many practices are deemed to be unethical,
moving to the specific, some marketing practices
are considered deceptive. Marketing practices are
considered deceptive when consumers think that
they are obtaining greater value than they actually
are. The deception might take different forms like
false pricing, omitting vital information, mislabel-
ing of packages, and selling damaged products.

General Practice of Deceit

It is understandable why companies tend to
send deceitful messages through their marketing
sometimes. They have a brand image to keep,
and customers to attract, to maximize sales and
reach the profit margins. But based on previous
experience there will always be negative conse-
quences – once the word gets out, the media can
ruin the business. This applies to one MNC in UK
– when they claimed in that 80% of the dentists
recommend their toothpaste, and then one of their
competitors claimed that the same percentage of
dentists interviewed suggested their distinguished
product, implying that the MNC had lied.

Furthermore, every time we visit a fast food
bar and order a burger that does not look half as
good as the juicy one we see in the advertise-
ment, or even half the size. Marketing practices

are deceptive when the customer receives a lower
value from a product or service than the value
he/she was expecting. Deception can happen
in any element of the marketing mix. However,
because consumers are now being exposed to a
great number of products and a lot of information,
they became skeptical of the marketing claims
and the messages they receive rather than passive
receivers, and try to protect themselves from being
deceived. Thus, when a product or service does
not provide expected value, customers will try to
find a different source.

When it comes to the low prices setting and
promotions, customers tend to believe they are
paying for a value less than it actually cost, when
in reality, they are getting either a poor quality
or expiring products. Among the most frequent
complaints are ones about products that are unsafe,
that are of poor quality in construction or content,
that do not contain what is promoted, or that go
out of style. Marketing can cause materialism. It
is well known that consumers’ purchases reflect
their identity and is affected by their personality
and who they are and what they see themselves as.
Children are considered to be the most important
target of advertising since they are believed to
influence the household shopping.

Advertising needs regulations to minimize the
effects that deception can have in society. Adver-
tising is regulated by the authority of the Federal
Trade Commission to forbid any dishonest biased
and deceptive behavior.

CALIFORNIA ADVERTISING
REGULATION: HISTORY
OF THE UCL

California Civil Code § 3369, enacted in 1872,
was California’s early unfair competition statute. It
“addressed only the availability of civil remedies
for business violations in cases of penalty, forfei-
ture, and criminal violation.” A 1933 amendment

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expanded the law to prohibit “any person [from]
performing an act of unfair competition.” This
amendment did not, however, extend UCL protec-
tion to consumers. This limitation was in response
to the U.S. Supreme Court’s 1931 decision in FTC/
Ramada. In Raladam, the Court held that a FTC
Act Section 5 violation must show actual injury
to competition. This ruling prevented individual
consumers from suing under the FTC Act. Fol-
lowing this rationale, California applied the UCL
to unfair business practices that affected business
competitors, not consumers.

In 1935, consumers, not just business com-
petitors, were given the opportunity to sue under
the UCL. The Supreme Court of California
clarified the statute in American Philatelic Soc.
v. Claibourne, stating that “the rules of unfair
competition” should protect the public from
“fraud and deceit.” In 1962, a California appellate
court reiterated this rule by stating that the UCL
extended “equitable relief to situations beyond the
scope of purely business competition.”In 1977,
the legislature moved the UCL to the California
Business and Professions Code § 17200. In 2004,
California voters enacted Proposition 64, which
limited UCL standing to individuals who suffered
financial/property loss because of an unfair busi-
ness practice.

BACKGROUND IN LEBANON

Marketing deceit is a very common issue in Leba-
non. The simplest example would be the clothing
store in the neighborhood of almost everyone that
advertises an 80% discount on ALL items. But
once you enter this store, of course most of the
items will have a 20-30 percent discount and some
would be the new collection that doesn’t include
any discount at all. Everywhere in the world and
in Lebanon specifically, marketing deceit is con-
sidered to be tactical marketing, a “clever” way for

businesses to increase their revenues. This might
be considered a clever idea but what businesses
don’t know is that customers are feeling that they
have been betrayed and treated as idiots. Once a
customer discovers their intentions, he or she will
no longer be a customer. Such an act will cause the
company to lose a lot of potential customers. The
issue of deceit in itself is extremely unethical and
unacceptable no matter what the circumstances
are. To be more precise, marketing deceit is even
more unethical and its results are severe since
they reflect on the company’s profitability and
reputation. Once a company loses its reputation
due to false advertising, not a single person would
ever take the company’s ads or products seriously.

In Lebanon, people consider marketing deceit
an issue that is practiced by all businesses in order
to increase their revenues. It has been happening
in Lebanon ever since the concept of marketing
evolved. People got used to such an unethical act
and no one ever tries to do something in order
to stop it. This should not be acceptable because
consumers have the right to revolt and ask for
honest and ethical advertisements. There are a
lot of laws in Lebanon that are present to protect
consumers and their rights. But the problem is
that consumers do not act in response to market-
ing deceit since they are brought up to believe
that ads are nothing but a means for a company
to make more profit and that they are never true.

One example that happens frequently in Leba-
non is that of Burger King. Every now and then,
this fast food chain restaurant decides to have a
promotion. So people will find ads all over the
place claiming that Burger King is offering with
every meal that consists of a burger, fries and a
coke, another burger for free. And the picture on
the ad shows a huge double burger. But, when a
customer decides to buy from this restaurant, he
or she will find that the ad was nothing more than
a lie in order to bring in more customers. That is
because the burger you will be buying and the

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one you will get for free are mini-burgers that are
normally served in kids meals. So the customer
would have paid in this promotion more than he
would have paid normally and remained hungry!

One of the major issues that Lebanon has
been facing, and continues to struggle with, is
the abysmal low internet speed connection. The
Ministry of Telecommunications promises to
work on this issue repeatedly but to no avail, and
in comparison to other countries, Lebanon ranks
in the last five for its internet connection which of
course affects most sectors in Lebanon, business,
economical and social.

The Lebanese Internet connection is ranked
among the slowest in the world (168 out of 170).
The government only recently agreed to release
needed bandwidth for a faster internet connection,
something that Lebanese internet users were look-
ing forward to for some time now. The campaign
began in August 2011. It clearly stipulated, and
promised the Lebanese citizens, that the “Load-
ing” days will be missed, and they will enjoy a
faster internet than the one they have had for many
years now. This campaign has been followed by
several other campaigns created by Lebanese
youth, mostly bloggers and avid social media
users, aiming to put pressure on the government
to get more information about the promises they
are giving, one of these campaigns was Ontornet
with its slogan (Trans. “Because I want internet…
Not wait-net”), a campaign demanding a decent
and affordable internet service in Lebanon.

As part of the Marketing campaign to answer
the questions of Lebanese internet users, the
Telecoms Minister has promised in a number of
his press conferences, that there will be no more
delays and that the service will improve “in the
coming weeks”. The internet connection does
not only include home internet, but it also covers
the broadband access to consumers on their cell
phones via 3G that was introduced a decade ago
in other countries.

The minister promised to continue what his
predecessor has been working on, insisting on how

the new third generation connection will change
the telecom’s face, something that the Lebanese
citizens have heard before. “Lebanon was outside
the knowledge economy,” the previous Minister
of Telecom said in 2007 during the launch of
services at that time, “Now it enters through the
front door.” And yet, the Lebanese internet con-
nection is still twice as slower as the connection
in countries like Tanzania and Zambia, where the
GDP per capita are one tenth that of Lebanon.

Furthermore, officials in the Ministry con-
tinue to fervently claim that Lebanon will be on
a par with international standards regarding the
internet connection, at the time where, even if the
speed was quadrupled, the web community in this
country will still lag behind regional competitors
like Jordan and Qatar. Not to mention the fact
that if placed in comparison to other countries,
the limited Lebanese bandwidth cap that is 3GB
per month is incredibly behind that of the United
States’ caps which reaches 250 GB per month,
and Australia’s bandwidth cap 200 GB, which
has been criticized by a popular site as belonging
to the “stone age”.

On top of all this, former minister has proudly
stated that the new speed that the ministry is trying
to establish, would reach up-to 20mbps on the 3G
network -“up to” being a key qualifier- although 3G
has become an old generation for many countries
as they have shifted to the fourth generation (4G).
Despite inquisitions on why the many promises
that have been made have not come to any actual
effect has been asked constantly of the individuals
attached to the current administration (who have
held the ministry for the past three years), or even
those who held the ministry three years prior to
that, no answers have been provided. But being
in Lebanon seems to make it legitimate that all
issues not related in any way to any political or
religious affiliations, and that people desperately
need, are in fact neglected and not taken seriously
for political reasons.

The promises that have been made and the
marketing and advertising campaign that has been

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done had citizens’ hopes up, especially after the
Minister’s press conferences; however, it turned
out to be only a method for the administration
to market themselves as a working government,
because each press conference claiming that the
internet will be faster, and that work is being done
to achieve this promise, was followed by another
conference apologizing for “technical” problems
faced which will, naturally, delay the launch for
a couple of more weeks.

The question remains then, how ethical is it,
in country that claims and tries to show a picture
of development and civilization to the world, to
have this marketing campaign ending up with a
failure to deliver what a whole population has been
promised. In this case, it is not a small private
company that had an actual “technical” problem,
or tried to deceive its customers to gain more
profits. It is a government that is failing to deliver
the basic rights for people in this country, after
promising them that the connection will finally
meet their expectations.

Today in Lebanon: False Advertising

• Is some advertisers’ sole purpose to copy
other countries’ advertisements? Do made-
in “anywhere else” advertisements really
suit Lebanon?

Lebanon is unique and they try to speak to the target
market in a “language” they will comprehend and
relate to. There is a lot of creativity in Lebanon.

• What’s with schizophrenic censorship?

What is the point of hiding anything when
magazines do not hide everything? People in
Lebanon are bombarded with visual pollution
that they will not really be affected by one thing
that they see.

• Why don’t companies put their employees
in the loop?

Employees of certain companies are surprised
to see their companies’ ads for the first time, just
like anyone else.

LOCATION, LOCATION, LOCATION!

Lebanon has become an advertising jungle. Most
advertisements fail to be placed in the right places.

Impact of Advertising

Lebanon Advertising: A One Way Street

• Lebanon’s billboards are known to be one
of a kind. They are very loud, demanding
attention.

• Lebanon’s advertising companies are be-
lieved to have the freedom to advertise al-
most anything.

• The ad about exotica on mother’s day took
Lebanon and the social media by storm one
day. Exotica made people angry, matching
big noses of mother and daughter along
with protruding ears of another mother and
daughter was too much to handle. All blog-
gers spoke and it wasn’t long before the ad
was changed.

Lebanese Case of Deceptive
Advertisement

In July 2009, a customer starting using green tea
and weight loss products from Diet business, a
well-known line of herbal treatments in Lebanon.
He had seen the ad on T.V.

He was supposed to use these products for
forty days but by the second week, he had trouble
urinating and got a high fever which hospitalized
him. Due to this, the parliament passed a law which
only allows pharmacists to make and sell herbal
products and forbids any ads of herbals unless
approved by the Ministry of Health.

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Current Resolution

Nowadays, advertising must adapt to a globalized
economy. It, therefore, had to develop networks
with the four corners of the planet to meet all their
needs. Moreover, different groups are essential
and they diversify their activities. For this reason,
advertising adopts niche strategies in which it
assimilates a specific jargon to each target. But
is this advertising really informs the consumer
or it just manipulates him to get to its objective?

The advertising jargon does not seek any more
to sell the product as it is, but bases itself on the
values, the state of mind in which the viewer must
see himself. Under information which publicity
provides in its various jargons, it tries to be in-
formative, suggestive. But rather to try to deduce
a hidden facet; it is at the first manipulative. Illu-
sionist, magician by its words it imposes a charm
on the consumers through implied persuasion.

Advertising is usually known by its openness
to all civilizations. But nevertheless, has a hidden
face. It is the charmer mask of the economy of
the market. It hides its face by hiding behind its
mask; the veil of persuasion. She never says “buy
this product.” But it gleams the perfection or the
assets of the products and deceives the consumers
whom we can reach only by buying, which it is
the unique & only objective. It incarnates several
forms, but it always returns to the most effective
form which is: persuasion. Besides it is the most
intelligent form in the industrial strategies, car-
ried out of a very rich and convincing jargon. It
creates among consumers a kind of latent desire
that grows through its lexical magnetism.

Baby Milk Ads Are Not
to Be Messed With

Assembly adopted Resolution WHA34.22 which
includes the International Code of Marketing

of Breast-milk Substitutes”. The Code covers
marketing issues where infant formulas are seen
to be appropriate in replacing breast milk. Such
ads are banned and health workers are given the
responsibility for advising parents. Nestlé agreed
to implement this code in 1984 after they met
with the boycott coordinators. Nestlé stated in an
anti-boycott advertisement that it promotes infant
formula “ethically and responsibly”. But Nestlé
could not support this claim since the boycotts
provided evidences against it. Nestlé’s case was
getting severe as its products were banned from the
shops and vending machines of many European
universities, colleges, and schools. Breastfeeding
is free and safe, it protects against infection, but
companies know that unless they get babies on
the bottle, they don’t do business. Thus, to what
extent does the food business comply with the
message that its entire formula product carry out,
“Important notice: Breast milk is best for babies.
Before you decide to use an infant formula consult
your doctor or clinic for advice”?

Opinion

The general ethical defense of marketing deceit
reflects both utilitarian and Kantian ethical stan-
dards. Marketing provides information for market
exchanges and therefore contributes to market
efficiency and to overall happiness. Advertising
information also helps consumers make deci-
sions regarding their purchases. What if it was
the Nestlé case that deceived African mothers or
the internet marketing campaign in Lebanon that
manipulated its target participants? Would this
still be considered true and accurate information
marketing? From the baby food case mentioned
above, companies might not think of it as a severe
act; instead they might consider it to be a faster
way to generate more profit. Of course they know
the consequences of their unethical act, but they

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are trying to neglect it and ignore it by thinking
of their own benefit and their own satisfaction.
From the utilitarian perspective, marketing deceit
is unacceptable since its consequences are not
providing the maximum good for the maximum
number of people. It is only providing satisfaction
for the company’s executives; while the people,
who are the majority, are suffering. Thus, business
transaction did not provide actual as proposed to
merely apparent benefits. Therefore, companies
should think about increasing their profit in an
ethical way while promoting their products and
their goodwill benefits. Marketing deceit should
not be present on the agenda of any marketing
manager or any director or executive of any com-
pany; no matter how insignificant and harmful the
deceit is considered. According to the Kantian
ethical tradition, Nestlé failed to a great extent to
ensure that its customers are respected as free and
autonomous agents, rather, it treated them simply
as means to the end of making a sale. Manipula-
tion in this case is a clear example of disrespect
for persons since it bypasses their own rational
decision making and like any other similar cases,
marketing deceit goes against human rights and
ignores all moral principles.

Marketing deceit also goes against these rights
in other life dimensions. As the use of marketing
and advertising increases with the increase of the
media and especially social media, the marketing
deceit phenomena is expected to dramatically raise
simultaneously. The Lebanese internet case was
one of the big marketing campaigns that ended
with the disappointment of the Lebanese internet
users and community. With the development and
improvement of the internet connection and band-
width around the world, the minimum one should
expect is a basic connection service similar to the
one offered around the world. What we are expe-
riencing now in Lebanon, is a slow connection.

Regardless of the probability that false prom-
ises might have been the result of a technical mis-
understanding, or a technical issue that prevented

them from delivering their promises, the results
were not satisfactory. Some people have had
enough. Others may say that something should be
done, at least so we could make sure that whenever
we are promised something, we will eventually
get it, and especially when it is with similar issues
that are tangible and that are neither politically
nor religiously affiliated, and that should not be,
these are services that all Lebanese people will
be benefiting from.

They say we are lost till we learn how to ask;
obviously some communities (ontornet) tried to
ask, but still, that was not enough. I think we need
to start going more into the legal side of things,
and start questioning our government. It is quite a
hard thing to do in our country where everyone’s
acts are covered and protected, but when it started
to get a bit Kantian, with one small problem: even
the means are not achieved, something bigger must
be done. People are supporting the unethical acts
and fake promises by not acting and questioning,
and this internet case is one additional story on
the shelve of the reasons why we should start to
be more active and involved in getting our rights
and what we have been promised to get.

Normative Resolution

Lebanon has achieved a lot in the advertising and
marketing sector. Despite great improvement, this
country still lacks laws, rules, or regulations to
follow – except the rule in which agencies and com-
panies should not name their competitor during
their advertisement. Lebanon has achieved a good
reputation as a leader of the regional advertising
market over the past few years.

Lebanon’s advertising companies are positive
about the future of advertising. They hope that, if
the situation in Lebanon remains stable, advertis-
ing will hit back strongly. They have recovered
well after the 2006 war and hope to continue
thinking optimistically.

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LESSONS LEARNED

Many lessons can be derived out of the two cases
discussed previously. First, marketing deceit is
a practice that can equate to a crime. Thus, a
marketer should not get involved in deceiving
their potential customers for this manipulation
would lead to various harms; it erodes one’s
self-confidence and hinders the development of
responsible choice among those manipulated, it
treats them as means to the marketer’s own end
and as an object to be used rather than as an au-
tonomous person in his or her own right. Second,
big companies do make big mistakes; this is to say
that trust associated with big reputed companies
holds severe uncertainties with it, so those who
are concerned need to be careful from falling in
the trap because in general, most manipulation
is done to further the manipulator’s own ends at
the expense of the manipulated. However, the
big company also gets harmed by the lasting bad
reputation it gets to hold. When it comes to the
baby food case, marketing deceit gets severe that
it risks the lives of new born babies. Thus, to what
extent is business practice ethical? To what extent
is this consequence tolerated? What decision
would justify the death of thousands of babies?

Ultimately, no decision. Speaking specifi-
cally about fake internet connection promises
and manipulations by the Lebanese government
would sound a bit redundant, for no other reason
than that it is being a sound in the wilderness.
From this case, we have learnt to, “let every eye
negotiate for itself and trust no agent”, because
despite what the reasons are, even the government
(represented by the minister of telecommunica-
tions) violates consumers rights with fake and
misleading promises. Marketing is an essential
information transferor that yields an efficient
economy, yet when it comes deceptive and outright
lies its role would no longer serve its purpose but
would reverse; i.e. misleading information with

an inefficient and unethical market. In a country
with no supervision—as we can say—deceit is
expected in our to achieve the set goal; deliver-
ing the message of selling the service or product.
Extremely alluring messages are sent to attract the
viewer and the listener making the product divine
or even not from our world. Here, no parties (the
listener and the advertiser) can be blamed. They
can say whatever they want about the product or
service but it is up to us if we listen and believe
and feel the deceit.

FUTURE TRENDS

A rhetorical work is any visual or verbal communi-
cation that applies rhetorical principles to enhance
audience processing or persuasion. Repeated
pairings of a brand and celebrity strengthen the as-
sociative link consumers establish between brand
and celebrity (Bratu, 2010). Positive absurdity
arises from illogical relationships among pictorial
elements in an advertisement, investigating one
particular type of absurdity – surrealism.

Consumers who successfully identify false
advertising trigger a process of defensive stereo-
typing which prohibits them from believing future
ads from the same source or a second-party one
(Darke and Richie, 2007). Furthermore, correc-
tive advertising doesn’t always work and can even
prove problematic as it “undermines responses
both to other products advertised by the corrected
firm and to products advertised by second-party
advertisers” (Darke and Richie, 2008). This goes
to show how companies and firms who engage in
false advertising risk damaging their credibility
and losing the trust of the public for an extended
period of time, which could prove catastrophic
to their bottom line. Finally, future ads should
provide more “product information, truth, and
ethical standards” (Milan and Mittal, 2009).

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CONCLUSION

For the advertiser, the ultimate goal is to sell a
product or a service. In a worldwide scenery, ad-
vertising has an essential social effect in several
ways. So deceit is nearly negligible. These regula-
tions and laws set, will back fire at the advertiser
if wrong or incomplete information was sent or
deceit was felt. Thus, sending the message with
facts and true numbers are a must but also hiding
the negative points if any just to gain competitive
advantage.

REFERENCES

Balough, C. S. (2012). A survey of false advertising
in cyberspace. Business Lawyer, 68(1), 297–304.

Baumrind, C. S. (1964). Some thoughts on ethic
of research. The American Psychologist, 19(6),
421–423. doi:10.1037/h0040128

Bratu, S. S. (2010). The phenomenon of image
manipulation in advertising. Economics, Man-
agement, and Financial Markets, 5(2), 333–338.

Craig, A. L. Y., Wood, S. S., & Vendemia, J.
S. (2012). Suspicious minds: Exploring neural
processes during exposure to deceptive advertis-
ing. JMR, Journal of Marketing Research, 49(3),
361–372. doi:10.1509/jmr.09.0007

Darke, P. S., Ashworth, L. S., & Ritchie, R. S.
(2008). Damage from corrective advertising:
Causes and cures. Journal of Marketing, 72(6),
81–97. doi:10.1509/jmkg.72.6.81

Darke, P.S., & Richie, R.S. (2007). The defen-
sive consumer: Advertising deception, defensive
processing, and distrust. Journal of Marketing
Research, 44(1), 114-127.

Fetscherin, M. S., & Toncar, M. S. (2009). Visual
puffery in advertising. International Journal of
Market Research, 51(2), 147–148. doi:10.2501/
S1470785309200372

La Tour, K. S., & La Tour, M. S. (2009). Positive
mood and susceptibility to false advertising. Jour-
nal of Advertising, 38(3), 127–142. doi:10.2753/
JOA0091-3367380309

Milan, E. S., & Mittal, B. S. (2010). Advertising’s
new audiences. Journal of Advertising, 39(3),
81–98. doi:10.2753/JOA0091-3367390300

Milgram, S. S. (1963). The experiment that chal-
lenged human nature. Social Influence, 1963.

Milone, R. S., & Ahmad, M. S. (2012). Insur-
ance coverage for false advertising claims. Intel-
lectual Property & Technology Law Journal,
24(3), 25–35.

Qiang, Y. S. (n.d.). False advertisements, exter-
nalities, and the regulation of false advertising:
A conceptual analysis. In Proceedings of AMA
Marketing & Public Policy Academic Conference
(vol. 22, pp. 65-71). AMA.

Rotfled, H. S., & Taylor, C. S. (2009). The adver-
tising regulation and self-regulation issues ripped
from the headlines with (sometimes missed)
opportunities for disciplined multidisciplinary
research. Journal of Advertising, 38(4), 5–14.
doi:10.2753/JOA0091-3367380401

KEY TERMS AND DEFINITIONS

Advertising: A discretionary campaign con-
ducted and paid for by a business for the purpose
of reaching and expanding a market.

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Branding: Establishing a widely recognized
image and relating it to a particular business
name or product in a wide fashion establishing
a large market.

Deceit: Disguising false information to ap-
pear true or otherwise a different image from its
true identity.

Distrust: The loss of respect towards an already
established honorable source.

Manipulation: Machiavellic orchestration of
a person’s perceptions and expectations for the
purpose of obtaining from them without their
acquiescence a desired outcome which they may
or may not be willing to deliver.

Marketing: Establishing the outside boundar-
ies of the potential outreach of a business product.

Promotion: Bringing into wide scale aware-
ness information about a new business product,
process, or system.

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189

APPENDIX

Learning Objectives

L.O.1: Define Advertising.
L.O.2: Differentiate between commercial and noncommercial advertisers.
L.O.3: Define deceptive advertising.
L.O.4: Discuss several methods the companies use in attempts to deceive consumers.
L.O.5: Define Deception and list its primary forms.

Summary

Define Advertising

Advertising is a kind of communication envisioned to convince an audience to either buy or take another
action towards products, services, or ideas.

Differentiate between Commercial and Noncommercial Advertisers

Commercial advertisers often seek to generate increased consumption of their products or services
through branding, which involves the repetition of an image or product name in an effort to associate
related qualities with the brand in the minds of consumers. Non-commercial advertisers who spend
money to advertise items other than a consumer product or service include political parties, interest
groups, religious organizations and governmental agencies.

Define Deceptive Advertising

Deceptive advertising denotes a producer’s usage of mystifying, deceiving, or blatantly untrue state-
ments when endorsing a product.

Define Deception and List Its Primary Forms

Deception is deliberately handling verbal and/or nonverbal memos so that the memo receiver will believe
in a way that the message.

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190

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 16

DOI: 10.4018/978-1-4666-7254-3.ch016

Plagiarism

ABSTRACT

Plagiarism is easily differentiated from piracy. Piracy is the sale of qualified but unauthorized copies of
a work, an action grudging the author of profit but not credit. Depriving authors of profit that is right-
fully theirs is theft, but plagiarism focuses on ownership credit rather than profit. The main worries for
plagiarism are its influence on creativity, motivation, and ability to think in alternative ways. These quali-
ties of personality may be negatively impacted by habitual plagiarism. Moreover, the various impacts of
plagiarism are lack of information authenticity, fake credit, personality faults, spoiling of professional
reputation, and destroying the creative ability of creative professionals. This chapter explores plagiarism.

INTRODUCTION

Plagiarism is proposition that people generally
value the esteem of others, particularly their peers.
In order to earn the esteem of our peers, we look
for the recognition of our originality, creativity,
insight, knowledge, and technical skills. Some
plagiarism is unintentional due to a psychologi-
cal condition called “cryptomnesia,” nonethe-
less there is certainly a considerable amount of
plagiarism that is conscious and purposeful, the
result of rational, cost-benefit calculation. Both
are common due to the availability of easily ac-
cessible electronic resources, such as Internet, as
a result of which it has become so much easier for
people to ‘cut and paste’ chunks of unedited text

BACKGROUND

The word ‘plagiarism’ originates from the Latin
words ‘plagiarius’, an abductor, and ‘plagiare’, to
steal. Generally, plagiarism is the use of another
person’s products of mind without acknowledg-
ing that they belong to someone else. There are
different types of plagiarism with different legal
and social aspects. Some ways of plagiarizing
include copying and pasting text without proper
way of citation, missing citation by using text
from a source without citing it, fabricating data
by manipulating someone’s research data or find-
ings to hide plagiarism, idea theft which occurs
frequently in advertising and design, by presenting
someone else’s idea as your own, and copyright

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Plagiarism


infringement which is reproducing, distributing,
or displaying a work without the permission of
the copyright owner. In the age of internet and
technology, access to information has become
very easy, people can find thousands of articles
and related publications by simply ‘googling’ their
topics, and the sources are difficult to be identified.

Plagiarism affects human creativity and knowl-
edge, by making them think less and learn fewer,
since no effort is needed to write texts, create
concepts and original ideas. Another drawback of
plagiarism is that it offends the literary rights of
the original author and the property rights of the
copyright owner. It is obvious that plagiarism is an
ethical issue, which is treated by different meth-
ods, such as spreading awareness on individual
and organizational levels, and creating codes and
regulations to punish and penalize those who get
caught in the act of plagiarism.

There are numerous writings and opinions
concerning the issues of plagiarism, by many
experts. Stuart P. Green (2002), Professor of Law
at Rutgers Law School-Newark, in his article ‘Pla-
giarism, Norms, and the Limits of Theft Law: Some
Observations on the Use of Criminal Sanctions
in Enforcing Intellectual Property Rights’ (2002)
explores the concept of plagiarism as a proposition
that people generally value the esteem of others,
particularly their peers. In order to earn the esteem
of our peers, we look for the recognition of our
originality, creativity, insight, knowledge, and
technical skills. This is very common among writ-
ers, artists, and intellectuals, who not only enjoy
the creative act itself, but also wish to see those
acts recognized by others. This desire for esteem
produces a norm that Stuart P. Green refers to as
the “norm of attribution.” Rendering to this norm,
words and ideas may be copied if and only if the
copier attributes them to their inventor. Without
this recognition there would be fewer inducements
to produce new work.

People who value the norm of attribution
would regard credit earned for someone else’s
work as illegitimate. Undeniably, such people

can attain gratification only if they know that
the work they are being known for is in fact their
own. However, for many people, the attribution
norm becomes a moral obligation, rather than a
willful desire to show respect and appreciation to
the work of others.

Edward Wasserman, professor of Journalism
Ethics at Washington and Lee University in Lex-
ington, Va., describes media and journalistic pla-
giarism in his article ‘Plagiarism and Precedence’
(2006). He states that journalistic plagiarism
“forbids un-credited reuse of what intellectual
property law would describe as unique expres-
sion”. Many times, looking to describe a reality,
journalists come up with characterizations that are
indeed original. This deserves credit, however even
this principle is not easily applicable. Innovative
expression slips into the depths of the Internet, and
suffers the risk of non-stop borrowing and lend-
ing. The first reporter who described some minor
incident as “a wake-up call,” may have imagined
he or she had come up with an astonishing new
idea; but soon enough, the same idea would be
found through Google search in dozens of other
web sources. Therefore, the moment of invention
is lost, and the whole attempt becomes useless.

Lawrence Lessig (2004), is an American aca-
demic best known as a supporter of reduced legal
restrictions on copyright, trademark, and radio
frequency spectrum, particularly in technology
applications. In his book ‘Free Culture’ (2004), he
claims that even though creative work has value;
the taking of something of value from somebody
without approval is wrong, and is a form of piracy.
However, the current debate in the US has this
turned around. He gives an example of a compos-
ers’ rights organization, ASCAP, which sued the
Girl Scouts for not paying for the songs which
girls sang around Girl Scout campfires. There
was “value” (the songs) so there must have been
a “right”—even against the Girl Scouts.

Before the Internet, this conflation didn’t mat-
ter all that much.

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CURRENT DEBATE
AND CONSENSUS

Why do people plagiarize, and how does pla-
giarism practice feel to the plagiarist and to his
victims? It may seem that some plagiarism is
unintentional. Psychologists have described a
particular psychological condition “cryptomne-
sia” it is when people by mistake believe that
they have produced a new idea when they have
actually retrieved an old one from memory. The
plagiarist is talented in his own way and has no
need to steal. He leaves clues that are easy to
detect and frequently repeats his offence. He acts
out of an unconscious desire to be caught, like a
kleptomaniac. Secretly, he intends to cause his
own destruction and self-deception.

However, there is certainly a considerable
amount of plagiarism that is conscious and
purposeful, the result of rational, cost-benefit
calculation. A designer who is too short of time,
imagination, or initiative to create a work of his
own, so he steals a design from an Internet gallery
site and presents it as his own creation.

Main worries regarding plagiarism are its ef-
fect on creativity. The creativity of an individual
is associated with many traits. “One of the traits
is motivation, that a person should be motivated
towards creative variation of some process. The
person should also have the capability to think in
alternative ways to an existing or new problem.
In addition, the person should have an ability to
convince others about his or her contribution.
These qualities of personality may be negatively
impacted by habitual plagiarism” (Naveed, 2010).
The student, researcher or an artist would be
copying the work of others only and the thinking
ability will fade way. Plagiarism ruins creativity.
At the heart of the problem is the availability of
easily accessible electronic resources, such as
Internet, as a result of which it has become so
much easier for people to ‘cut and paste’ chunks
of unedited text.

The various impacts of plagiarism are lack of
information authenticity, fake credit, personality
faults, spoiling of professional reputation and
destroying the create-ability of creative profes-
sionals. Some of the affects are obvious while
others may appear after a long time. One problem
linked to plagiarism is the lack of identification
of the authentic source of a knowledgeable work.
A large research database is obtainable over the
Internet in any research area and the search engine
yields many results when looking for some topic.
Now someone looking for some specific subject
or idea has choices to pick among so many links.
If the source of information sought is not original,
it will divert the direction of research. The main
problem of plagiarism is, of course, the fake credit
of a plagiarist and the lost credit of an original
source of the work. The honest students get frus-
trated when the students who plagiarize score
well and even better than them, since the honest
students put a lot of time to do an assignment
by their own effort. Same applies for a designer
who presents an artwork as his own, and takes
credit for it, while the real creator is left without
appreciation (Naveed, 2010).

The ethical aspects of plagiarism are even
more severe. According to R. McCuen (2008),
“plagiarism activity is a 5-step process of decision
whether to plagiarize or not. After the plagiarism
has been done by someone, he or she either may
decide to avoid it in the future or, on the other hand,
may rationalize his or her act”. As time passes, this
act will bring many faults in one’s personality and
moral values. It would disturb the rational thought
process; sacrificing moral values such as honesty
and trust. It is argued whether Plagiarism is like
theft, or there are ways to justify it.

FUTURE TRENDS

Investigating plagiarism in professional bio-
medical literature include the development of the

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electronic Text Basic Local Alignment Search
Tool (eTBLAST) textual analysis software and
its use as a plagiarism detector, the impact of the
findings on scientific journal editors, authors,
and the peer review system, and the suggestion
of a collaboratively-edited scientific publication.
(Harold, 2014). On the other hand, the issue of
student plagiarism in colleges and universities
has been receiving increased attention in recent
years (turn-it-in software). “Many studies show
that faculty has a variety of responses when they
suspect plagiarism; some report it and others
choose to address it themselves” (Bennington
& Singh, 2013). “Because the identification of
student plagiarism and the choice to report or not
report rests with faculty, faculty perceptions of
administration’s role and how those perceptions
influence their intent to report plagiarism. The
Theory of Planned Behavior serves as the frame-
work to examine this issue” (Bennington & Singh,
2013). A straight association was established
between faculty behavioral beliefs, normative
beliefs, and control beliefs and their intention to
report plagiarism to management. The study found
that faculty would be more likely to discourse
suspected behavior of student plagiarism if there
was a specific procedure for faculty to trail and
that they would be more likely to file reports if a
committee of faculty, students, and administrators
arbitrated suspected actions of student plagiarism.

CONCLUSION

There is consensus about:

1. Plagiarism might be both intentional and
unintentional.

2. Habitual plagiarism has a tremendous nega-
tive effect on human creativity, since it leads
to exerting less effort and decreases the
motivation to think of new ways and ideas.

3. With the birth of Internet, it has become
extremely easy to plagiarize and hide the
traces of the act, as a huge database is avail-
able over the Internet, and any search engine
returns millions of sources which are difficult
to trace.

However, the following questions are still
unanswered:

1. What are the boundaries of borrowing,
what form such borrowing can take, and
what kinds of material can be borrowed to
distinguish between inspirational borrowing
and plagiarism?

2. Should plagiarism be viewed as a strict li-
ability offense, or it should be distinguished
from unintentional inspirational borrowing?

3. Is punishment and penalizing, or ethical
education a more successful way to prevent
plagiarism?

REFERENCES

Bennington, A. J., & Singh, H. S. (2013). Faculty
expectations of administration: Predictors of in-
tention to report student plagiarism. Academy of
Educational Leadership Journal, 17(4), 63–76.

Bitton, M. S. (2008). Exploring European Union
copyright policy through the lens of the database
directive. Berkeley Technology Law Journal,
23(4), 1411–1470.

Carlton, D.S. (2006), Welcome to the credibility
loop. David Report, 4.

Geach, N. S. (2009). The future of copyright in
the age of convergence: Is a new approach needed
for the new media world? International Review of
Law Computers & Technology, 23(1/2), 131–142.
doi:10.1080/13600860902742588

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Green, S. P. (2002). Plagiarism, norms, and the
limits of theft law: Some observations on the use
of criminal sanctions in enforcing intellectual
property rights. The Hastings Law Journal, 54,
167–242.

Hamilton, J. S. (2007). When copywriting ends
and copyright begins. Campaign (UK), 42, 8.

Hansen, B. S. (2003). Combating plagiarism. CQ
Researcher, 13(32), 773–796.

Harold, G. S. (2014). The case of the stolen words.
Scientific American, 310(3), 64–67.

Lessig, L. S. (2004). Free culture. New York: The
Penguin Press.

Mattingly, T. S., & Samardzija, M. S. (2009).
Minimizing liability for copyright infringement.
Intellectual Property & Technology Law Journal,
21(1), 16–20.

McCuen, R. H. (2008). The plagiarism decision
process: The role of pressure and rationalization.
Education, 152–156.

Moulton, J. S., & Robinson, G. S. (2002). Plagia-
rism. In Encyclopedia of ethics (2nd ed.). Garland
Publishing.

Naveed, I. S. (2010). Electronic media, creativ-
ity and plagiarism. ACM SIGCAS Computers &
Society, 40(4).

Office of Assessment. (2010). Dealing with pla-
giarism. In Teaching and learning at Curtin (pp.
48–51). Teaching and Learning.

Pavel, A. S. (2009). Reforming the reproduction
right: The case for personal use copies. Berkeley
Technology Law Journal, 24(4), 1615–1615.

Stern, R. S. (2000, November-December). Nap-
ster: A walking copyright infringement?. Micro
Law, 4-5 & 95.

Wasserman, E. S. (2006). Plagiarism and prece-
dence. Media Ethics Journal, 18(1).

KEY TERMS AND DEFINITIONS

Author Rights: The original claim of owner-
ship by one person for their intellectual contribu-
tions.

Creativity: Artistic work of the mind in pursuit
of new free expressions.

Intellectual Property: Declared and registered
claims of ownership for creative works.

Morality: Self-conscious virtue in the conduct
of a person’s own behavior as inspired from social
tradition or inner beliefs.

Originality: Uniqueness and priority claim to
any work of the mind.

Piracy: Systematic theft of priority claims and
legitimate ownership of other people’s wealth or
intellect.

Plagiarism: Borrowing without permission or
without recognition of other’s intellectual contri-
butions in order that they appear to be original.

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Plagiarism

195

APPENDIX

Learning Objectives

L.O.1: Define plagiarism.
L.O.2: Determine the reasons that lead to plagiarism.
L.O.3: Discuss how plagiarism practice feels to the plagiarist and to his victims.
L.O.4: Distinguish between plagiarism and piracy.

Summary

Define Plagiarism

Plagiarism is proposition that people generally value the esteem of others, particularly their peers. In
order to earn the esteem of our peers, we look for the recognition of our originality, creativity, insight,
knowledge, and technical skills.

Determine the Reasons That Lead to Plagiarism

Some plagiarism is unintentional due to a psychological condition called “cryptomnesia”, nonetheless
there is certainly a considerable amount of plagiarism that is conscious and purposeful, the result of
rational, cost-benefit calculation. Both are common due to the availability of easily accessible electronic
resources, such as Internet, as a result of which it has become so much easier for people to ‘cut and
paste’ chunks of unedited text.

Discuss How Plagiarism Practice Feels to the Plagiarist and to His Victims

Main worries for plagiarism is its influence on creativity, motivation, and ability to think in alternative
ways. These qualities of personality may be negatively impacted by habitual plagiarism.

Moreover, the various impacts of plagiarism are lack of information authenticity, fake credit, personal-
ity faults, spoiling of professional reputation and destroying the create-ability of creative professionals.

Distinguish between Plagiarism and Piracy

First, plagiarism can easily be differentiated from piracy. Piracy is the sale of qualified but unauthorized
copies of a work, an action grudging the author of profit but not credit. Depriving authors of profit that
is rightfully theirs is theft, but here we focus on credit rather than profit.

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196

Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.

Chapter 17

DOI: 10.4018/978-1-4666-7254-3.ch017

Bribery and Corruption

ABSTRACT

Bribes are mainly directed at government officials, although they could be directed at the employees
and managers of business firms. However, bribery appears to be a self-defined crime. Bribery of small
public sector employees is a white-collar crime. However, bribery also exists in high-level decision-
making processes, whether political, economic, or corporate situations. These are large-scale bribes,
consisting of millions and/or billions of dollars, paid out to executives and public officials in return for
construction contracts, oil contracts, telecommunication contracts, etc. Although punishments exist and
are implemented, it is up to the individual alone to make the final decision and choose between personal
moral value system and personal welfare in opposition to serving the public welfare. This chapter ex-
plores bribery.

INTRODUCTION

O, this life|
Is nobler than attending for a check,
Richer than doing nothing for a bribe,
Prouder than rustling in unpaid-for silk.
– William Shakespeare

Though the bribe be small, yet the fault is great.
– Lord Edward Coke

Bribery, in itself, is a term that is described as the
attempt of offering, promising, giving, accepting
or soliciting of something else of value to an indi-
vidual or company in return for an illegal action

or a breach of trust, such as an attempt to sway a
view, opinion, or decision in a direction or another.
These inducements made are called bribes: they
are usually described by the broadly construed
term “anything of value”, which consists not only
of monetary rewards and cash equivalent but also
of favors such as gifts, discounts, entertainment
(drinks and meals), transportation and lodging
benefits or even promises of future employment.
The most common types of bribery are bribery
by/of a public official, bribery by/of a witness,
bribery of a foreign official.“Few men have virtue
to withstand the highest bidder.” (Washington,
188x) describes the interrelationship that bribery
creates with the people involved in it. Bribery, in

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itself, is a term that is described as the attempt of
offering, promising, giving, accepting or solicit-
ing of something else of value to an individual or
company in return for an illegal action or a breach
of trust, such as an attempt to sway a view, opin-
ion, or decision in a direction or another. These
inducements made are called bribes: they are
usually described by the broadly construed term
“anything of value”, which consists not only of
monetary rewards and cash equivalent but also
of favors such as gifts, discounts, entertainment
(drinks and meals), transportation and lodging
benefits or even promises of future employment.
A tricky issue with these inducements is that the
latter have no minimum or maximum value, and
are perceived and valued very subjectively and
differently by the briber and bribed individual,
making it harder for authorities to determine
whether the offer is actually considered a bribe.

Given the tough economic conditions that
plague most of today’s world, competition among
corporations and businesses remains as fierce
as it is ruthless. Any sliver of profit could spell
the difference between a firm’s survival and its
downfall. That being the case, some managers or
key executives in a firm might resort to unethical
practices in order to get slightly ahead of the rest of
the crowd and gain a faint competitive advantage
to ensure the survivability of their firm. One of
these unethical practices is bribery. Simply put,
bribery is the corrupt act of giving a bribe, which is
a sum of money, a favor, or any perceived object of
value (materialistic or non-materialistic) destined
to influence the behavior of an individual in favor
of the briber. The UK Bribery Act defines bribe
as “the payment of money, another financial ad-
vantage, or a non-financial advantage, including,
for example, lavish hospitality or gifts” (Maton
2010). In the business world, briberies are mainly
directed at government officials, although they
could be directed at the employees and managers
of competing firms.

BACKGROUND

Corruption is not only the sad circumstance of
government officials skimming off cash for their
own interest. It includes incidences where the
system does not function the way it is supposed to
operate, and normal people are left in a dilemma,
having to offer a bribe for the medicine or the
certificates they need. Public corruption involves
the misusage of the existence of a public office
for personal benefit. Private corruption, however,
exists among people in the private sector, like a
Mafia forcing some local business to give it money.

There are many types of corruption, some
includes:

• Bribery: The offering of money or favors
to a person in exchange of a service.

• Nepotism: Preference revealed by public
officials to friends or relatives.

• Fraud: Dishonest behavior towards the
government through deception.

• Embezzlement: Taking money or other
property that do not belong to the person.

• Administrative Corruption: Corruption
that changes the application of rules, such
as getting a license even if you don’t qual-
ify for it.

• Political Corruption: Corruption that im-
pacts the making of laws, regulations, and
policies, such as cancelling all licenses,
and gaining the solitary right to function
the beer or gas monopoly.
◦ A key difference exists between ad-

ministrative corruption and political
corruption.

General History

The Assyrians first recognized the term “bribe”
as a concept and as a reality in 3,400 BC. Dutch
archeologists found an administrative center giving

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evidence of its considerable existence at the time:
the archive of an interior minister (AshourAdin)
listed data of “employees accepting bribes” as well
as the names of senior officials and an Assyrian
princess. The list is believed to be a reliable source
of facts since the minister was considered to be
the most powerful man in the state after the king.

As a word, however, the word “bribe” came to
exist in the French language meaning a “piece of
bread” and was slowly transformed linguistically
to mean begging, theft and stealing later on. This
transition of meaning gave the word the opportu-
nity to be used by an English contemporary writer,
Chaucer, in his works in the 14th century. The
word referred to an idea of extortion, where the
bribe would make reference to the sum of money
demanded, and the briber was the person doing
the menacing in return for the money. The word
evolved from there on in the English language
till its meaning flipped in the 16th century: briber
finally meant the person giving the money in return
for a favor and a bribe was now an inducement
made voluntarily.

The following timeline shows the evolution
of bribery in history. The case of the Assyria
Empire in 3400BC, is the only documented case
found that far back in history, and is therefore
not on the timeline below. Mostly, the peak of
bribery remarkably occurs in the late 1900s on
an international level.

This rise in crime rate associated with bribery
on an international scale lead to the creation of
the Foreign Corruption Practices Act (FCPA)
in 1977, and which was later amended in 1988.
This act prohibits U.S. firms from paying bribes
or using middlemen as conduits for a bribe when
seeking to do business in foreign markets. As per
the explanation given by the FCPA Enforcement
website, the act “generally prohibits U.S. compa-
nies and citizens, foreign companies listed on a
U.S. stock exchange, or any person acting while
in the United States, from corruptly paying or

offering to pay, directly or indirectly, money or
anything of value to a foreign official to obtain
or retain business” and also requires proper book
and record keeping. The Securities and Exchange
Commission (SEC) as well as the Department of
Justice (DOJ) therefore jointly enforce the FCPA.

Current Situation of Bribery

Several anti-corruption laws have been passed with
the aim of limiting the act of bribery, as well as
dealing with its implications and ramifications.
The UK Bribery Act, passed in 2010 in Great
Britain and implemented in 2011 is considered
by many pundits as the toughest and strictest anti-
bribery law for three main reasons (Mihai & Alina,
2013). Firstly, the UK Bribery Act has a wide
jurisdiction which means that it is also applicable
outside the borders of the United Kingdom. In fact,
its jurisdiction is even wider than the US Foreign
Corrupt Practices Act of 1977. Secondly, the UK
Bribery Act applies to bribery in both the private
and public sectors. Finally, it contains “a corporate
offence of failing to prevent bribery by someone
performing services on behalf of a commercial
organization” (Maton, 2010). In short, the primary
offences that the Act criminalizes and punishes
are the following:

1. Proposing a bribe,
2. Taking a bribe,
3. Bribing a foreign public official, and
4. Failing to prevent bribery.

In 2008, Chen, Yasar and Rejesus wrote an
article exploring the factors that affect the occur-
rence of bribery to public officials. The factors
studied were both macro factors that have to do
with the external environment of the firm, as well
as micro factors that dealt with the firm itself. On
the one hand, the macro factors studied in this
cross-country analysis included:

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1. English lawful origin,
2. The number of adult schooling,
3. Populace,
4. Uncertainty avoidance index,
5. Masculinity, and
6. Power distance index.

On the other hand, the micro factors studied
in the paper were:

1. Dependence on infrastructure,
2. Exporting activities,
3. Perceptions regarding the consistency of

government regulations,
4. Probability of going to alternate power,
5. Present sales,
6. International operations,
7. Foreign ownership,
8. Government ownership,
9. Number of employees,
10. Number of competitors,
11. Percentage of revenues as financial support

from the government, and
12. Percentage of sales from the government.

The results of this study revealed that among
the micro-level factors cited above, those who
contribute most to the incidence of bribery are
dependence on infrastructure, and likelihood of
going to alternative authority (variables that grant
power to public officials over the firm) as well
as exporting and competition (Chen et al, 2008).
Among the macro-level factors cited above, those
who contribute most to the incidence of bribery
are the British legal origin, average years of
schooling for adults, populations size, and the
masculinity index (Chen et al, 2008). Amid the
reasons and factors that influence the incidence
of bribery is globalization. In 2010, Baughn et al
studied the effect of globalization on the preva-
lence of bribery. The authors argued that due to
differences in societal norms and legal regulations
between countries, the act of bribery is subject to
increases and decreases when conducting inter-

national operations. They state that “bribery in
international business transactions can be seen as
a function of not only the demand for such bribes
in different countries, but the supply, or willing-
ness to provide bribes by multinational firms and
their representatives” (Baughn et al, 2010). The
study was conducted on firms from 30 different
countries and probed their propensities to engage
in acts of bribery. The results revealed that the
tendencies to offer bribes were lowest in firms
based in countries who were countersigners of
the Organization for Economic Cooperation and
Development (OECD) anti-bribery convention, in
countries which did business with richer nations,
and when corruption was not tolerated in the mul-
tinational’s home countries (Baughn et al, 2010).

A portion of the literature concerning bribery
addresses methods that can be adopted by firms to
limit its frequency of occurrence. In 2008, Joseph
McKinney and Carlos Moore conducted a study
that sought to investigate the effects of a code of
ethics on the prevalence of bribery inside firms.
More specifically, the study aimed at assessing
whether or not the presence of a written code of
ethics inside a corporation would result in a de-
crease in bribery and other corrupt practices. Also
the study sought to relate the presence of a code of
ethics with the amount of revenues generated from
international operations. The results of McKinney
and Moore’s study have shown that the respondents
from companies that have a written code of ethics
were “significantly less likely to find international
bribery acceptable” (McKinney & Moore, 2008).
Moreover, the results revealed that companies that
generate revenue from international operations
were more likely to have a written code of ethics
than those who do not. This fact could indicate
that the act of bribery is more likely to occur
when conducting international business (McKin-
ney & Moore, 2008). In a similar study, Berinde
Mihai and Andreescu Nicoleta Alina explain the
importance of companies having a written code
of ethics in combating bribery and other unethical
practices. The authors define the code of ethics

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as “tool, a means of transmitting the organiza-
tional culture to its members, conferring them a
sense of common identity, like the membership
of a team”. Mihai and Alina stipulate that “both
managers and employees need guidance on how
to act in situations that raise ethical questions”.
They go further to stating that “The best way to
solve these situations is through the existence of a
code of ethics that both managers and employees
can turn to for guidance at any time and reach the
right directions” (Mihai & Alina, 2013).

The common belief is that bribery will help
business firms gain a competitive advantage over
competing firms and thus generate more profit.
However, a study carried out by James Weber
revealed the opposite. In fact, drawing on previ-
ous work done by Fisman and Svensson, Weber
observes that bribery could have a negative impact
on the firm’s sales (Weber, 2007). The original
study was conducted on a number of Ugandan
firms spanning a wide range of industries. The
results of Fisman and Svensson revealed that a 1%
increase in bribery resulted in a 3.3% decrease in
annual growth for the firm. Bribery has a more
negative impact when compared to the decrease in
annual growth rate that the firm faces as a result
of tax increase. Due to this fact, Weber concludes
that “it would be accurate to say that bribery had
a more negative impact on firm growth rates than
did taxation”.

IS BRIBERY LOCAL OR
INTERNATIONAL?

A local scandal went extremely big on the inter-
national level – that of the Oil -for-Food Program
(OFFP) implemented by the United Nations in Iraq
in 1996. The latter was initially put in place in
order to alleviate the effects of economic sanctions
against the Iraqi people under the dictatorial re-
gime of Saddam Hussein. The program’s approach
consisted of selling Iraq’s oil and depositing all of
the returns made by those sales in UN approved

bank accounts: the latter amounts of money were
then to be used by the UN to purchase humanitar-
ian goods and services, mainly food, medicine,
shelter, clothing, etc… for the Iraqi people.

It is recorded that Iraq sold more than $64
billion of oil in a period of 5 years, between 1997
and 2002. However, after suspicions of abuse
of the program and an investigation lead by the
Independent Inquiry Committee (IIC), it turned
out that over $1.8 billion had been paid in bribes.
Saddam Hussein had bribed a UN official to fake
and wrongly record the actual sales transactions
of oil: for instance, when a barrel was recorded
to have been sold at $60, it was actually sold at
$40 to certain company spread across the globe
having tight connections with Saddam Hussein or
his regime. The barrels of oil were always actually
delivered, and the scandal lied in the companies
buying the oil: these commissioned companies
were sometimes phony companies, and the oil
received would be sold not at $60 but at a price of
about $70. The $10 difference was the net profit
of the commissioned company, whereas the $20
difference between the real price at which a barrel
was bought and the price that was recorded in the
UN books was transferred to Saddam Hussein’s
off-shore accounts.

The bribed UN official was also receiving mass
payments on his personal bank accounts, which
raised questions with the IIC: when he was asked
about them, a certain lie about his aunt transferring
him these funds from Cyprus was told. However,
upon investigations, UN officials found out the
truth about his aunt being incapable of transferring
such large amounts of money to him, which lead
to uncovering the scandal being played out behind
the Oil-for-Food Program. The latter unveiled the
names of many politicians, businessmen and of-
ficials on a worldwide scale who were involved
in this scheme. Legally, it is choking to know that
only the UN employee who had altered the books
was imprisoned, whereas all other involved parties
were not, primarily since the UN had no jurisdic-
tion. It is interesting to know however, that most

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of the involved politicians and their businesses
were located in countries supportive of the regime
lead by Saddam Hussein in Iraq.

Five international mini-cases have affected
the course of the law worldwide when it comes
to bribes. In each case penalties were received
by each company for the violations that were
incurred. These cases are not only spread out
across the globe, but also show occurrences of
bribery at various stages of the targeted projects.
The Chinese used indirect bribes by sending the
government officials on trips whereas in Iran, a
direct monetary bribe was given to the son of a
former president. In Egypt, which was a remark-
able case, the aircraft company bribed several
Egyptian officials in order to get the aircraft
contract for the country and gain an edge over the
other companies that were bidding on that same
contract. In Germany however, a multinational
with a very respectable reputation in the Technol-
ogy and Telecommunications industries bribed its
way into larger market share. However, bribery is
evident on a cross-country basis including coun-
tries such as Bangladesh, China, Argentina and
Venezuela amongst others. Moreover even in a
strict religious regime where the “Shariaa’s Rule”
is fiercely applied and bribery and theft are forbid-
den in all their forms, bribery scandals are known
to break out in public. All of the latter resulted
in unethical behavior, whether the bribes were of
smaller or larger scales. If gone undiscovered, the
bribes paid represent on average a maximum of
1% of the contracts’ net amounts. However, if the
bribery scams were revealed, the penalties would
amount to a much higher price than the contract
itself. Also, the company’s image and reputation
would be on the edge, and customer goodwill lost.

The Dark Secrets of Tema Harbor:
Bribery Case in Ghana, Africa

Security officers in Tema Harbor cooperate with
clearing agents to snip money to the state through

tax evasion and bribery, beating the country’s
revenue mobilization hard work. Among all these
immoral doings, some agents have developed
ways of tallying the cost of bribery charges to the
fees they ordinarily collect from importers. This
reality makes the importers suffer while dealing
with imports.

History of Bribery in Lebanon

The Lebanese judicial system defines bribery as
a crime: however, it does so very broadly and the
existing penalties have not been updated since their
official publication – these fines range between
100,000 – 1,000,000thousands of Lebanese Li-
ras which use to be an important sum of money
before the currency was weakened versus the US
Dollar (1992), but now stands at 60 to 600 US $.
This has driven the Lebanese people to take the
laws against bribery for granted which is why the
subject is dealt with more rigorously in the US
legal system.

Firstly, bribery is considered to be a criminal
offense as per the common law – more specifi-
cally, a white-collar crime. Given the latter, the
following are some of the several kinds of bribery
that have been defined by the law:

• Bribery by or of a Public Official:
Includes any person whose job is to rep-
resent the United States and that gives or
accepts a bribe for an unlawful change of
duties.

• Bribery by or of a Witness: For a change
in testimony.

• Bribery of a Foreign Official: Was made
illegal by the FCPA (Foreign Corruption
Practices Act). It prohibits the bribing of
international officials to get important
business deals. However, this act does not
prohibit “grease payments” to speed up the
paperwork processes.

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The aforementioned offenses are taken very
seriously when it comes to punishments, which
usually include a fine totaling up to three times
the value of the bribe given, and sometimes a jail
sentence of up to 15 years.

However in Lebanon, application of the law is
taken rather lightly when it comes to crime and
punishment. The political system that has been
implemented in Lebanon since the establishment
of the Republic in 1929 is one that is dominated
by confessional groups (Confessionalism). The
sufferings that the Lebanese have endured due to
18 years on internal warfare (1974-1992) persist
today in form of grudges: people tend to support
their sect at the expense of their moral beliefs.
Also, the Lebanese administration was structured
based on the French bureaucratic system’s influ-
ence during the mandate in the 1920s. Later on,
President Fouad Chehab set the foundations of
the public civil service in the 1950s. Since then,
there has been no serious attempt to modernize
the system, therefore leading to an administration
that is unable to meet modern challenges and
growing demands in the world of today. All of
the latter has lead to a paralyzed administration of
the judicial sector using outdated laws still being
applied and some that are not even implemented.
Moreover, judges are at mercy of politicians since
the indirect acceptance of the latter officials is
required for their hiring.

The “rule of law” has gone in general disre-
gard of the law not only by the citizens but also
by the state itself, inducing a culture of absence
of accountability and responsibility amongst the
people. Simple procedures require uncountable
signatures and can take up to several weeks in
processing: it is safe enough to say that the bribes
used are the ultimate solution to reduce govern-
ment costs (paper circulation by postal services)
as well as save time and energy for the citizens.
In due course, these citizens that find themselves
facing firm economic difficulties and being short

on financial resources have to prioritize their inter-
ests and perceptions on things. On the other hand,
bureaucrats who can hardly provide an average
standard of living will not refuse “bribes” as an
additional source of income. Ultimately, bribes
not only facilitate transactions in the public sec-
tor but also support the livelihood of the public
servants. They are incentive payments, and at the
end of the day, transactions will not be processed
without them.

A very recent case, serving as proof of the
aforementioned, is that of a Lebanese judge who
was proven to have accepted a bribe of $200,000
for an unlawful verdict in a drug case, and set up
several assassination scenarios to lure the Higher
Disciplinary Committee into thinking that his life
was endangered. However, this case has served as
a precedent in the history of the Lebanese Judi-
ciary System. It is the first time that a judge has
not only gotten fired, but was also sentenced by
the Judiciary Committee to be denied indemnities
and retirement pensions. This case emphasizes
the fact that it has taken Lebanon 70 years (since
the Independence in 1943) to start a serious anti-
corruption fight, headed by the Justice Minister
who stated that “The plan to cleanse the Judiciary
has started and no one can stop it; it will continue
in spite of any political or personal intervention.”

How Bribery Presently
Plays out in Lebanon

The man who offers a bribe gives away a little
of his own importance; the bribe once accepted,
he becomes the inferior, like a man who has just
paid for a woman. – Greene, (Henry) Graham,
The Comedians, pt.1, ch.4.

Four major sectors are being studied by the
Lebanese Transparency Association (LTA): the
electricity sector, the health sector, the construc-
tion sector and the reconstruction sector. However,

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since the information available on these four topics
is inaccessible, the LTA helped determine smaller
and more reachable sectors. Therefore, the Real
Estate Registration Department, known as the
“Dawa’er Al Iquariya”, located in Baabda. A legal
document that was required (“IfadaIquariya”),
which usually costs 9,000 LL and should take a
maximum of 2 minutes to be printed out. However
the process cost about 50,000 LL and took two
days, since the amount of time that it takes to get
the paper is determined by the amount of bribe
to pay for it. Moreover, bribery is very obvious
and detectable by any visitor, since employees
take bribes for every paper that needs to be
processed. The amount of money paid per bribe
varies between the employees, depending on their
position and the required signature. In addition,
brokers approach individuals that walk in to the
department, offering them their “unethical and il-
legitimate” services in return for a certain amount
of money – a “bribe”. Also, we asked employees
about the drop-visits of the Ministry of Finance’s
supervisors. The response was as chocking as the
obvious bribes that were being made: the officer
specifically told us that they had nothing to be
afraid of, since they always know beforehand
about the drop-visit that are about to be made.

Moreover, we have witnessed the very famous
Ottoman Records, which is a book of all the exist-
ing real estate records in Lebanon. When a paper
related to any plot of land, apartment or building
is required, the employee must go through these
Ottoman Records – which needs two men simply
to be carried onto a table, and consists of old run
down pages. This processing system used is very
time consuming and hectic for the employees, and
therefore encourages an atmosphere of bribery.
The computerization of this process and the digi-
talization of all this information is a very costly
process for the government, however it would
limit bribery since the time and energy needed
by an employee to process an operation would be

much less than what is required today. Bribery in
this department, just like the rest of the Lebanese
public sector offices, is a mentality as well as a
culture that the people have grown accustomed to:
employees prefer to gratify their personal benefits
rather than obliging to their duties to the public’s
welfare. Public employees have lost faith in the
public sector’s administration and governance,
in addition to the fact that no serious legal action
is taken even when public knowledge of all this
bribery exists to the public.

What Is Happening at
the Port of Beirut?

It is important to contrast between grand corrup-
tion which involves considerable sums of cash and
typically high-level officers and petty corruption
which involves smaller amounts and usually more
junior officers. Levels of corruption may differ
within a country for diverse kinds. Corruption
at the port of Beirut, deals with the bribery type
at the grand corruption level involving several
hundred millions of US$ annually. Some estimate
the amounts of siphoned money above one billion
US$ per year.

It is a relation between the merchant or cus-
tomer and the agent—broker officer—operating in
the port. The Beirut Port ought to be a significant
source of income for the Lebanese’s government
from import tariffs. However, the corruption level
that exists there is very high.

The water in Beirut port doesn’t freeze during
the winter. Since they are available all year long,
warm water ports can be considered as an economic
interest. It serves as the country’s main seaport,
cruise home port, port of call, and Cargo ports.
Furthermore the Lebanese economy depends on
imports for more than 70% of the GDP. In peace
time, customs tariffs represent the main treasury
revenue for the Central government of Lebanon.

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The Process of Import/Export
Merchandise at the Beirut Port

From filing the declaration and until the payment
of duties and the retrieval of goods, the procedure
of customs clearance passes through the follow-
ing phases:

1. Preparation, signature and attachment of the
required enclosures to the declaration.

2. Presenting the declaration for admission.
3. Registration of the declaration.
4. Payment of manifest.
5. Payment of permits (if necessary).
6. Referral of the declaration to the Inspector.
7. Verification of declaration (Inspection).
8. Calculation of the declaration (determination

of duties and any other due sums).
9. Signature of the Head Inspection offi-

cer (with the possibility of performing a
counter-inspection).

10. Auditing of declaration by the audit officer.
11. Registration of duties in the daily register.
12. Issue of receipt.
13. Payment of duties.
14. Clearance of goods. When the product arrives

to the port, The declaration of the product
is saved (green line) or sent to the inspector
(red line). If the declaration is accepted, the
admission officer shall order its registration
and evaluation. If red, the declaration is
not accepted by the admission officer, the
declaration shall be returned to the declaring
party to perform the required corrections.

15. The declaration and its enclosures are sent to
the selected inspector through administrative
line.

16. The declaring party submits the evaluated
declaration to the inspector.

17. The inspection is performed in the presence
of the declaring party. The inspector shall

note the result of such inspection on A5 form
attached and made part of the declaration.

18. If the inspector discovers any discrepancies,
he shall log them into the system in order to
modify the declaration, if such discrepan-
cies represent a customs breach. Then the
declaration is signed.

The Chief inspector reviews the declaration
and either approves it and signs it or rejects it.
He shall, at his sole discretion, perform a counter-
inspection. A modified evaluation shall be printed
or the first evaluation shall be modified.

A Lebanese cleaning company frequently
imports most of its cleaning tools from China
such as vacuums, single discs, dusters, brooms,
squeegees. While another company imports pest
control tools and products from the US such as
mouse traps, special outfit, special product. Both
companies go through the import transaction at the
Port of Beirut. Both usually do it in the same way:
the easy way. They pay an illegal small amount of
money in comparisons with a large legal amount,
without knowing the procedure, having a clean
rapid operation in delivering their merchandises.
They only receive a call from the port telling them
that the merchandise is ready for delivery., and it
is on the way to the company’s location.

If a merchant is importing goods for the value
of $500,000 he must pay 15% ($75,000) plus 10%
value-added tax (VAT) ($50,000). In addition to
the Local Consumption duty and value added
tax, each declaration is subject to a lump sum
of 50,000LBP which represents the value of the
stamps that must be posted on the customs declara-
tion, and we don’t forget the money to the clearance
agent who finalizes the process; a lump sum of
$5000, ending up with the sum of $130,000 to be
paid as a legal procedure. This amount excludes
any and all other subsequent expenses incurred by
the buyer and they were not covered by the price

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205

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(including but not limited to, shipment, insurance,
unloading etc.) until the arrival of goods to Leba-
non. The 15% varies according to the nature of
imported goods. Sometime it may reach 100% for
goods that have the same production in Lebanon
where it might be considered as a threat to the
Lebanese local product in term of competition.

For a Lebanese merchant importing goods for
the first time, the moment he arrives at the entrance
of the port two agents approach him and asked him
whether he prefer to do it the easiest way (illegal)
or the hardest way (legal). If it the hard way he has
to pass through the precious mentioned procedure,
pay the $130,000 plus, if the merchandises, which
are stored within the vicinity of the Customs area
or in the yards or warehouses managed directly
by the Customs Administration for a period of
more than five days, are subject to storage fee.
It is deliberate to add extra costs for storage of
goods by postponing their release through a net
of methodically created interests. And if he holds
suspicious goods he should go back for revision
and interrogations etc…

However, if the merchant chooses the easiest
way to import the product, he hands a broker “a
flat fee” over. This deciphers into a proposition of
a lot of money covering customs fees, value-added
tax (VAT), bribes for customs agents and a gain
for the broker. It does not matter if the container
carries gold or vegetables

Port Beirut is regularly used for reexporting.
For instance, if a trade man imports new computer
screens to Lebanon, he will pay customs and VAT
fees. If they are later reexported, the paid VAT may
be reclaimed from the Ministry of Finance. This
legal process, however, may be bitter and immoral
dealers use it to illegally acquire massive amounts
of cash. These computer screens can be listed for
exportation, but a customs person and a bribed
agent may cooperate to guarantee that instead of
computer screens, the container contains locally
made bags of chips. Therefore, the trade man is

going to receive back the VAT he already paid
and pocket the VAT he collects from customers
buying the screens Lebanon.

These corrupt people sometimes feel sulky
towards the minority that actually follows legal
rules and tries to separate them. Some brokers
aren’t even registered but tend to use the stamps
of licensed colleagues to do their work. Corrupt
brokers are thought of having a politician helping
them out.

ACTUAL RESOLUTION

The minister of Finance is held accountable for
solving all of this corruption. However, this issue
has been going on for a while and it will be very
hard for anyone to do anything at this point. People
who are gaining from this corruption claim that the
minister of Finance is actually making an effort
to fix the problem. Beirut Port employees protest
that those presenting themselves to the minister as
correctors are actually themselves among the most
knowledgeable in the corruption arrangements.

PROPOSED RESOLUTION

The resolution of this problem should begin at
the very top by placing the right people in the
positions of General customs manager and head
of the Higher Council of Customs. Next, the Port
of Beirut has progressive scanners that have the
capability to carry out an internal examination of
containers without opening them. Furthermore,
Lebanese citizens, tourists, traders and passengers
should be informed and introduced to their rights
and obligations towards the Customs Administra-
tion which, like any other government adminis-
tration, was initially formed to provide services
to the inhabitant and to secure the appropriate
amenities that uphold his rights and reserve his

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dignity and also pledge the rights of the Treasury
and the compliance with the laws and regulations
governing the procedures of entry and the exit
of individuals and goods through the Lebanese
borders.

HOW TO AVOID THE NEGATIVE
AND PROMOTE THE POSITIVE

The universe would not be rich enough to buy
the vote of an honest man. – Gregory I, the Great
(Saint Gregory).

The private sector is not excluded, and Corporate
Governance should be promoted within it, in order
to reduce corrupt internal practices. In the public
sector however a wider range of interesting solu-
tions are possible to fight the bribery problem in
the country: the following is a summary of those
possibilities.

• Revitalization of the Administration:
Either by reorganizing it or developing it
in such a way to immunize it against cor-
ruption. The latter could be done by:
◦ Downsizing the Lebanese “adminis-

trative cadre”, that is too big for such
a small country, in order to lessen the
existing departments and the staff.

◦ Restructuring the administrative de-
partments that sometimes overlap in
jurisdiction or are repeated in differ-
ent ministries.

◦ A new hierarchy should eliminate old
positions that can now be replaced by
the technological advancements.

◦ A new Human Resources (HR)
Perspective should be adopted to gov-
ern the administration, its personnel
and its policies and procedures.

◦ Rewards and Punishment System by
lifting the immunity of public ser-

vants and holding them accountable
for their actions, while rewarding
them “based on merit” and punishing
them “fairly.”

◦ Salaries of the public sector should be
increased in order to reduce the gap
with the minimum income needed for
a good standard of living, therefore
eliminating the need for illegitimate
income sources.

◦ Simplification of procedures to re-
duce unnecessary procedures, signa-
tures and interaction with the pub-
lic: creating a “one-stop-shop for
procedures.”

◦ Education of the public servants on
the rights of citizens and on the con-
sequences of corruption on them-
selves and the institution. The citi-
zens should also be more aware of
their civil liberties.

◦ E-Government by implementing
technological advancements (IT and
Telecom mainly) that reduces the in-
teractions with the public, speeds up
processes, increases efficiency and
eliminates political interferences.

◦ Ombudsman Office should be es-
tablished: an impartial authoritative
monitoring office.

◦ Public Reporting of progress reports
on a regular basis to increase the ac-
countability and transparency of the
public offices.

◦ Access to Public Information for the
public that shouldn’t be “contended
or limited.”

• Decentralization of Authority: It would
give municipalities the power to “fully as-
sume the role of local governments”.

• Control Agencies: Should be set up with
enough immunity and power to fully en-
sure the abidance of the law of the public

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servants by modernizing organizations,
eliminating the duplicated tasks, improv-
ing audit systems, etc…

• Judicial Independence: Should be done
by clearly separating the judicial sector to
renew its truthfulness and strictly practice
its role while eliminating politically in-
fluenced judges, enhancing transparency
and empowering the judicial inspections
and establishing a “corruption-specialized
court”.

• Anti-Corruption Mechanism: Must be
put in place: an “ad-hoc” committee would
ensure a strategic national combat of cor-
ruption and its application with the help of
the already existing national committee,
OMSAR, etc…

• Policy Reforms: Should include the intro-
duction of new laws and an amendment of
the existing ones to fit the social changes
and better fight dishonesty. Also, inter-
national laws and conventions should be
signed and integrated.

• Media Reforms: Should be made in order
to increase the transparency and account-
ability of the sector while reducing the po-
litical and religious interventions and be
more aimed at the fight against corruption
through mass media.

• Civil Society’s Legitimacy: By ensuring
that NGOs aren’t corrupt, by empowering
the civil society to hold the government ac-
countable and allowing injured citizens to
sue the government.

• Reinforce Participation and Democracy:
By adopting modern, fair, transparent and
pressure-free electoral processes to enable
the public with enough power to hold those
in authoritative positions accountable for
their actions.

• Endorse Political Accountability: By
separating the legislative and executive

branches, lifting the immunity against
prosecution of high-level ruling figures,
etc…

• Creating a Public Anti-Corruption
Culture: By pointing out the drawbacks
and consequences of corruption and get-
ting the public as involved as possible in
helping the government fight corruption in
all its forms.

FUTURE TRENDS

Does bribery provide assistance or does it hurt
company development? Some propose that bribery
blubbers the wheel of commerce, whereas others
tend to believe that bribery sands the wheel of
growth (Zhou and Peng, 2012). Companies tend
to pick their level of bribery in accordance to
their surroundings and the fact that the benefits
and costs may differ for various kinds of bribery.
Small companies are more likely to be forced to
engage in the act of bribery, but bigger companies
might intentionally engage in bribery. “Utilizing
a large, cross-country survey sample involving
2,686 firms in 48 countries, we find that firms
choose a higher level of bribery when embedded
in under-developed market-supporting institu-
tions. After controlling for endogenous bribery
choices, bribery hurts firm growth for small and
medium-sized firms, but not for large firms” (Zhou
& Peng, 2012).

Bribery is measured by the frequency of extra
unofficial payments to officials to “get things
done”. Thus it is positively related to firms’
bank debt ratios, which provides evidence that
bribing bank officials facilitates firms’ access to
bank loans (Fungáčová et al., 2014). This impact
differs with the maturity of bank debt, as bribery
contributes to higher short-term bank debt ratios
but lower long-term bank debt ratios. Institutional
characteristics of the banking industry influence

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the relation between bribery and firms’ bank debt
ratios. Advanced levels of financial growth com-
pel the optimistic consequences of bribery while
larger market parts of state-owned banks have the
reverse effect. Foreign bank presence also affects
the impact of bribery, albeit this effect depends
on the maturity of firms’ bank-debt.

The main challenge in combating bribery as
an unethical business practice is to ensure the
compliance and commitment of firms with the
current laws and regulations addressing this is-
sue. One of the ways to achieve that end is to turn
to the media in or