To Whom Does an Ethical Business Owe a Responsibility?

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To Whom Does an Ethical Business Owe a Responsibility?

By | March 2011
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In my prior essay on ethics and capitalism , I argued that Ethical Capitalism is not inherently impossible. Now that I've established that it is possible--and even in a company's best interest--to behave ethically, I'm going to examine where a business owes its ethical responsibilities. A common myth today is that a company owes its primary, and possibly sole, responsibility to its shareholders. I will argue that an ethical company's true responsibilities lie with many different groups of people, both for practical and for ethical reasons. No person or organization can hope to take care of everyone and everything which might need help. So, the first step is to figure out who a company is ethically obligated to worry about. We need to have a working criterion for deciding who a business owes its ethical responsibilities:

A Company Owes an Ethical Responsibility To Those Individuals and Groups Who Are Responsible for Its Success.

I chose this for both an ethical reason, and a practical one. The ethical reason is one of mutuality: if a business has been helped by the actions of a third party, there is an obligation to recognize that. The practical reason is that if someone helped a business succeed, the same person or group could possibly cause it to fail, should the company misbehave and invite retribution.

Four groups of people are generally responsible for the success of a business: Employees, customers, the community, and shareholders. Ethical companies need to balance their responsibilities to these groups, especially when they conflict. Of these four, the shareholders are generally the least important, especially for public companies, even though the "responsibility to the shareholders" is often cited as a company's reason for taking a particular action vs. another.

Employees are the group most responsible for a company's success, since a business is essentially nothing more than a collection of individuals gathered together for a common...

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