Business Ethics Essay

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A business is not one that lives in isolation; it can be an integral part in a community’s success or demise and has social responsibilities to; the community, stakeholders, and anyone who may be affected by a company’s actions. Corporate social responsibility is a term that is never used lightly and is a key role in the development of a successful and morally healthy business. “The objectives of a corporation are to outperform its competitors, presumably through preferred competitive strategies” (Joseph Heath 123). There are three main models by; Freeman, Friedman and Heath discussing corporate social responsibilities and all have distinct differences between their moral obligations, and the way they perceive business should be ran in a morally ethical way. Heaths argument is there is a fiduciary relationship between the company and its stakeholders. Heath argues that one must recognize this relationship and understand that all parties including the business and the stakeholders must gain from a company’s decision. Heath discusses that a company must take into consideration their social and moral obligations when making decisions that will fill this fiduciary relationship, but must be done by using socially and lawfully accepted actions.

“A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities” (Milton Friedman 65). Friedman argues that if a corporation is a separate identity and can be viewed as a person then it may have social responsibilities, and the corporate executive is the person that decides these responsibilities and has a direct responsibility to his employers. “There is one and only one social responsibility of 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.” (Milton Friedman 65) In this Friedman is arguing that the social responsibility of an executive is to engage in any activity that they see as the most profitable to maximize the companies profits. Also stating that it would be morally wrong to diminish profits in any way.

If an executive feels obligated to donate to a charity of his choice then he is able to do so. If he would like to donate a portion of all employees pay then he is imposing something that can be considered a tax. Because the executive is solely responsible for his employees, he must think of them before all, even if he feels that there is an outcome that would be more beneficial to the community. An example would be “at the expense of corporate profits, he is to hire ‘hardcore’ unemployed instead of better qualified available workmen to contribute to the social objective of reducing poverty” (Milton Friedman 66). Even though the executive may feel that he is helping the community, his number one objective is selfishly for his employees. Even though by hiring these employees, the company is helping the community that the company is running, spending more money on training these recruits is money that does not help the company in any way. Friedman argues that the only social responsibility they have is to make money and they have a social responsibility to the stakeholders. The community around the company is a separate identity to each company and it must then fend for itself.

The executive by having his own social responsibilities is wanting to spend the money of the; consumer, stockholder, and employees. Spending these people money in a way that he sees fit, is not necessarily the way they would like their money to be spent. The executive may feel that it is his social responsibility to help a local maternity home that is going to close if someone does not step forward and help them with funding, as they are a not for profit organization. This money, according to Friedman, is not the executives money...
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