Topics: Business ethics, Ethics, Applied ethics Pages: 5 (2022 words) Published: April 9, 2013

By: Karla Powell
North Central University

What is business ethics? The word business can mean different things, but in this context it means a commercial or industrial endeavor to make/sell products or services. The word ethics is defined as a set of principles of right conduct or a system of moral values. So what does business ethics mean? Used together it means for a commercial/industrial endeavor to form a set of principles or rules to follow while they are making or selling products or services. The word business ethics is frequently heard as it relates to social responsibility. According to the dictionary social responsibility is “an ethical ideology or theory that an entity, be it an organization or individual has an obligation to act to benefit society at large” (the freedictionary.com). Three notable management authorities: Patrick Murphy, Milton Friedman, and Peter Drucker, have different opinions on what business ethics and social responsibility are and what is should mean to the business world. According to Patrick Murphy (2009) responsibility is a key principle of business ethics which implies a moral obligation to act. The word act is used as a verb and means to “do something.” Murphy points out that one is to not only act but to act in a certain way based on the persons extent of the freedom they have, meaning the bigger the space of freedom the bigger the obligation or responsibility one has. So, the higher up in an organization one is, the bigger the responsibility they have (Murphy, 2009). Several types of responsibility are addressed by Murphy: legal, corporate, managerial, social, consumer, and societal. More has been discussed in the past several years about social responsibility. The term “corporate social responsibility” also known as CSR, was defined by the Commission of European Communities as: a concept whereby companies integrate social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis (Murphy, 2009). Milton Friedman (1970) takes umbrage with the phrase “social responsibilities of business.” He questions what it means for a business to have responsibilities because only people can have responsibilities. He believes “business” as a whole cannot be said to have responsibilities. In a free-enterprise, private-property system, Friedman says as executive is obligated to the owners of the business, who are his employers. He is responsible for operating the business as they request him too, not what society wants him to do. Usually a company is in the business to make money and it is up to the executives of the company to make this happen. The executive also needs to operate within the rules of the law. Now as a person, the executive has other personal responsibilities, separate from those he has to his employers. He can chose to fulfill those responsibilities as he sees fit, as long as it is on his own time or with his own money, not that of the company. These may be called “social responsibilities,” but they are to him as an individual not as an agent of the company or as the company (Friedman, 1970). An example of this would be if the executive were to keep prices down to contribute to the social objective of preventing inflation at the expense of profits for the company. As an executive of the company he is not fulfilling his obligation to his employers to make money, he is using the company’s money to fulfill a social responsibility. Friedman states, “Whether blameworthy or not the use of the cloak of social responsibility and the nonsense spoken in its name by influential and prestigious businessmen does clearly harm the foundations of a free society.” According to Peter Drucker (1981), there are many different approaches to business ethics and social responsibility. One thing, all authorities of Western traditions of philosophy agree on, when it comes to business...
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