Bridget K. Johnson
Ethics in Business
Professor George Ackerman
November 10, 2012
Business ethics is a controversial topic. The concept of business ethics will be discussed compared to general ethical theories and consequences drawn and an expression of different writer’s interpretation of business ethics and social responsibility.
Ethical perspectives: Friedman vs. Drucker, Murphy
This report discusses to opinions of Patrick E. Murphy, Milton Friedman, and Peter F. Drucker. These men are authorities in the field of business ethics, and social responsibility. The writings discussed will be “The Relevance of Responsibility to Ethical Business Decisions”, by Patrick E. Murphy, “The Social Responsibility of Business is to Increase its Profits”, by Milton Friedman, and “What is “business ethics”, by Peter Drucker. These writings express different visions of business ethics, but show that business ethics is important for business corporations. The Relevance of Responsibility to Ethical Business Decisions (Patrick E. Murphy)
Patrick Murphy discussed that responsibility is the principle of business ethics. Murphy states that “responsibility pertains to an entity’s ability to respond to a person, situation, or issue in a certain way”. (Murphy, 2009) He thinks that the entity must be able to possess a conscious understanding of the magnitude of the responsibilities and the ability to react and act on them. (Murphy, 2009) Murphy discussed several different types of responsibility from legal, corporate, managerial, social, consumer and societal. (Murphy, 2009) Legal responsibility requires the entity to follow the law. These responsibilities Murphy states should be the baseline for all business ethics. (Murphy, 2009) This would also extend beyond to include standards and issues the law does not state. (Murphy, 2009) Next, “Corporate Social Responsibility” that is defined as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. (Murphy, 2009) The corporation would address social responsibilities that are relevant to the company. Also, social responsibility is the understanding and belief that the responsibility is for the common good of society. (Murphy, 2009) Consumer ethics, that the consumer must show ethical behavior in the exchange relationship. (Murphy, 2009) Murphy states that “the need for a more systematic analysis of responsibility from both a conceptual and empirical level”. Also, he states that if corporate America used responsibility within their ethics statements, then a better understanding of business ethics would develop. The Social Responsibility of Business is to Increase its Profits (Milton Friedman) Milton Friedman discussed the social responsibilities of business. Friedman asked whether it made sense to say that a corporation’s management must have the responsibility to interact in such social activities such as: “keeping their prices low, in order to fight inflation; spending more than required by law to reduce pollution or hiring the hard-core unemployed”. (Friedman, 1970) Friedman states that a corporation’s managers do not have the skills, obligation or the right to use shareholders’ money for these social activities. (Friedman, 1970) Friedman states that management should do what they are good at, making a profit for the company and shareholders within the scope of the corporation and general ethical rules. Friedman states that maximizing profits is the corporation primary obligation and being socially responsible will create jobs for workers, additional goods and services for customers, profits for shareholders, and economic growth and taxes for society and stakeholders. (Friedman, 1970) Friedman states that business managers who maximize profits are also...