Final EG Essay
Question 1:
As a manager is it important to be ethical or is it really just important to focus on making money for the firm? And if so why, or why not?
Managing an organization is quite a difficult task. Managers often face ethical dilemma on whether to stand firm and be ethical on business conducts, or should they focus on making money for the firm. In many situations, ensuring proper ethics in a firm are usually complicated. However it is critical to ensure that managers’ decisions or actions conform to the legal requirements and maintain a reputable and working business environment.
This literature review will analyze three theorists – Milton Friedman, Archie B. Carroll and lastly, Edward Freeman - who have differing strong views on how a manager should behave in business conduct. The second part of the review will focus on the analysis and personal insights of whether is it important for a manager to be ethical, or is it really just important to focus on making money for the firm.
According to the classical economic theorist Milton Friedman, a manager is an agent of the owners of a firm and therefore, a manager’s sole responsibility, is to produce goods and services at a maximum profit according to the desire of owners, while conforming to the basic law and ethics required in the society (Friedman 1970).
Trevino and Nelson (2011) define ethical behavior in business as one that is consistent with the norms, principles and standards of business practice which are agreed upon by society. Yet in Friedman’s view, so long as a manager’s decision conforms to the minimum requirement of law and ethics, he will not owe the society anything, even if his decisions are not agreed by society. This is because a manager’s basic mission is to produce goods and services at a profit, and by doing so, the firm would be making its maximum contribution to society, and that is in fact the one and only socially responsibility that a firm needs to commit to the society (Ferrell,
As a manager is it important to be ethical or is it really just important to focus on making money for the firm? And if so why, or why not?
Managing an organization is quite a difficult task. Managers often face ethical dilemma on whether to stand firm and be ethical on business conducts, or should they focus on making money for the firm. In many situations, ensuring proper ethics in a firm are usually complicated. However it is critical to ensure that managers’ decisions or actions conform to the legal requirements and maintain a reputable and working business environment.
This literature review will analyze three theorists – Milton Friedman, Archie B. Carroll and lastly, Edward Freeman - who have differing strong views on how a manager should behave in business conduct. The second part of the review will focus on the analysis and personal insights of whether is it important for a manager to be ethical, or is it really just important to focus on making money for the firm.
According to the classical economic theorist Milton Friedman, a manager is an agent of the owners of a firm and therefore, a manager’s sole responsibility, is to produce goods and services at a maximum profit according to the desire of owners, while conforming to the basic law and ethics required in the society (Friedman 1970).
Trevino and Nelson (2011) define ethical behavior in business as one that is consistent with the norms, principles and standards of business practice which are agreed upon by society. Yet in Friedman’s view, so long as a manager’s decision conforms to the minimum requirement of law and ethics, he will not owe the society anything, even if his decisions are not agreed by society. This is because a manager’s basic mission is to produce goods and services at a profit, and by doing so, the firm would be making its maximum contribution to society, and that is in fact the one and only socially responsibility that a firm needs to commit to the society (Ferrell,
References: 14. News/Business Editors 2002, ‘Business leaders, politicians and academics dub corporate irresponsibility ‘An attack on America from within’, Business Wire, 7 November, p. 0547, viewed 23 August 2014, ProQuest Database.