List some examples of ethical businesses and
unethical businesses.
Learning objective:
To know what is meant by corporate social responsibility
To understand why businesses may take these on
To consider whether it is unethical for a business to take on
corporate social responsibility in the hope of increasing profits.
Corporate social
responsibility
Shareholder – someone who has invested money in a business in return for a share of the
profits.
“So the question is, do corporate executives,
provided they stay within the law, have
responsibilities in their business activities other
than to make as much money for their
shareholders as possible?
Any my answer to that is, no they do not.”
(Milton Friedman, 1974)
What is Business Ethics?
• The ethical relationship between businesses
and stakeholders.
• The impact of globalisation on the
environment and society in general.
• The issue of social responsibility for the
modern business world.
Main issue:
the purpose of business
• Is it all about making money –
unbridled capitalism?
• Or do businesses have moral
responsibilities towards their
stakeholders?
The industrial revolution, unchecked, led to the
employment of millions in unhygienic
conditions, dangerous machinery, long hours, no
holidays, pollution and very low wages. Worker
had no rights.
Is this acceptable?
Since then, what has been put in place to
improve conditions for workers?
What other considerations, aside from
profit, should businesses have?
• Use materials from sustainable sources?
• Not testing products on animals?
• Offering staff a better wage?
Corporate social responsibility is the concept
that businesses should be accountable for the
impacts they have on people and the
environment.
“So the question is, do corporate executives,
provided they stay within the law, have
responsibilities in their business activates other
than to make as much money for their
shareholders as possible? Any my answer to
that is, no they do not.”
(Milton Friedman, 1974)
For Friedman, it is actually unethical to do
anything else. If you use money to fund
corporate social responsibility, it is like stealing
from shareholders. How far do you agree?
Why do businesses take on corporate
social responsibility?
Mind map some ideas.
Improve image with customers?
Attract certain shareholders
Retain employees?
Avoid strict government regulations
Stakeholder –
An individual or group which either
- Is harmed by or benefits from the corporation
Or
- whose rights can be violated, or have to be
respected, by the corporation.
For Cadburys, what are all the
groups/people who have some stake
in that business (i.e. Who are affected
in some way by it)?
Mind map
Discuss each group on your mind map – what is
the moral responsibility that Cadburys has to
each of those groups?
Stakeholders?
Management
Employees
Share
holders
The
Business
Government
Customers
Local
Community
Environment
Suppliers
Businesses’ responsibility to their stakeholders
• Shareholders
Generate profits and pay
dividends
• Customers
provide good quality products at
reasonable prices.
Safety, honesty, decency and
truthfulness
• Employees
health and safety at work,
security, fair pay
• Suppliers
pay on time, pay fair rates
for the work done, provide
element of security
• Local Community
provide employment, safe working
environment, minimise pollution
and negative externalities – provide
external benefits?
• Government
abide by the law, pay taxes, abide by
regulations
• Management
their aims versus those of the
organisation as a whole
• Environment
limit pollution, congestion,
environmental degradation,
development, etc.
Should businesses be ethical?
• Economist Milton Friedman.
• According to Friedman, corporate officers have no obligation to
support such social causes as hiring the hard-core unemployed to
reduce poverty, or reducing pollution beyond that mandated by
law.
• Their sole task is to maximize profit for the company, subject to the
limits of law and "rules of the game" that ensure "open and free
competition without deception or fraud."
Should businesses be ethical?
• Friedman advances two main arguments for this
position.
• First, corporate executives and directors are not
qualified to do anything other than maximize
profit. Business people are expert at making
money, not at making social policy. They lack the
perspective and training to address social issues.
Should businesses be ethical?
• Second, and more fundamentally, corporate officers have
no right to do anything other than maximize profit.
• If they invest company funds to train the chronically
unemployed or reduce emissions below legal limits, they in
effect levy a "tax" on the company's owners, employees
and customers in order to accomplish a social purpose. But
they have no right to spend other people's money on social
welfare projects.
Should businesses be ethical?
Milton Friedman on self-interest and the profit motive
How would a utilitarian and a Kantian ethicist
respond to the issue of corporate social
responsibility?
Kantian Business Ethics
• http://www.youtube.com/watch?v=RZr36ifwF
2I
Utilitarian Business Ethics
• http://www.youtube.com/watch?v=w34zmFb
4Pwk