Nevertheless, it is quite a new and under-researched subject in Lithuanian academic … Expand. Companies that are concerned with environmental and social interests on an ongoing basis will continue to benefit in the future if carried out with full responsibility.
A company discloses its social … Expand. View 1 excerpt, cites background. The main arguments of Milton Friedman's famous and influential essay are unsuccessful: He fails to prove that the exercise of social responsibility in business is by nature an unfair and socialist … Expand. View 1 excerpt, references background.
The Modern Corporation and Private Property. Mathematics, Political Science. This monumental work on the corporation is one of those enduring classics that many cite but few have read. Graced with a new introduction by Weidenbaum and Jensen, this new edition makes this … Expand. View 2 excerpts, references background. Contemporary Issues in Business Ethics. Ethics, Ethics, and the Free Market. Philosophical Ethics: Utilitarianism and the Free Market.
When the issue of an electric company that cut supply to a customer for non-payment upon which the customer died as a consequence was presented to Friedman, he applied the Kantian view to justify their actions. He argued that a utility company that does not cut off electricity to non-paying customers would perish as there is no reason for customers to pay their bills.
In Friedman's view, disconnecting non-paying customers has to be regarded as a universal maxim, regardless of the specific outcomes. He considers this as ethical because the directors have a moral duty to ensure the survival of the corporation. The counterpoint to Friedman's view is developed in the socio-economic school of Corporate Social Responsibility. And this means in turn that the economy's means of production should be employed in such a way that production and distribution should enhance total socio-economic welfare.
The socio-economic view is a utilitarian argument as emphasises that the total socio-economic welfare of society should be enhanced, rather than focusing on the well-being of shareholders, as Friedman proclaimed.
Companies that operate exclusively for the sake of maximising shareholder return and thus do not engage in socially responsible activities are considered unethical in the utilitarian point of view. Following the utilitarian adage of providing the greatest good for the greatest number of people, companies are ethically obliged to participate in socially responsible activities that maximise the total welfare of all stakeholders.
There is, however, a problem with applying standard consequentialist theories where we are required to maximise agent-neutral value.
Utilitarianism does not distinguish between people whose utility should be maximised and thus requires a deontic constraint to ensure that maximisation of the welfare of all stakeholders does not jeopardise the long-term prospects of the business. A deontic constraint is a principle that assigns a value to individual agents over others, and in the case of corporate social responsibility, it could be argued that the rights of the shareholders should be protected in preference of the rights of the whole of society.
If corporate social responsibility is detrimental to business, as suggested by Friedman, then shareholders will tend to avoid investing in companies that act socially responsible. There is, however, empirical evidence that this is not the case. Firstly, Friedman fails to acknowledge that acting ethically can be a valuable marketing proposition.
By understanding the desires of consumers, a corporation can offer products and services that match their ethical thresholds, thereby adding value to both shareholders and consumers, thus avoiding marketing myopia as described by Theodore Levitt.
Consumers prefer products and services that make claims of social responsibility on product labels. Hygiene Factors are minimum conditions that must be met in the workplace to prevent work dissatisfaction. Meijer and Schuyt examined the role of Corporate Social Responsibility in purchasing behaviour and found that for Dutch consumers, corporate social performance serves more as a Hygiene Factor than as a Motivator. Interestingly, this behaviour was not related to household income.
Secondly, the growth of ethical investments demonstrates that some investors prefer organisations that do not seek profit maximisation by imposing ethical constraints on their operations. There is also a clear case to be made that Motivator-Hygiene Theory can be applied to shareholders.
Executives and directors that behave unethically create significant shareholder dissatisfaction, as demonstrated by the many recent examples or corporate misbehaviour.
Lastly, a meta-study undertaken by Griffin and Mahon showed that there is no consensus on a causal relationship between the level of socially responsible spending and business performance or shareholder satisfaction.
Milton Friedman argued vehemently against spending shareholder's money for anything that does not directly contribute to increasing shareholder wealth. He took the Kantian view that directors must look after the interests of shareholders, which seek wealth maximisation. As socially responsible activities, in the opinion of Friedman, reduce wealth, companies should not engage in any charitable activities.
The socio-economic view claims that companies should maximise the good for the greatest number of people. Following a utilitarian strand of thought, this view holds that companies should engage in socially responsible actions because it maximises the wealth of all stakeholders.
However, to ensure that financial sustainability of the corporation is not eroded, deontic constraints that recognise the right of shareholders to a reasonable return, need to be put in place. In conclusion, directors do not have total freedom to maximise profit as they have to act within both the legal and ethical rules of the game.
Here is the thesis of his argument:. This has been the rallying cry of business people for a long while now. It is the defense that they use when they make some decision that seems to cause harm to some people while making the business more profitable. It's often used as a sort of excuse for bad behavior on the part of businesses and business people. There are a couple of things that we ought to notice about this short quote, though.
It doesn't allow nearly the breadth of behaviors that some think it does. Many people stop there. If we replaced the ellipsis with a period, then this is a statement which allows businesses to do anything at all that might increase its profits. It would allow fraud that is, causing people to believe untrue things for personal gain , stealing your competitor's products, burning down your competitor's stores, or really any other thing which would allow you to increase your profits. This is because the above fragment only gives one social responsibility to business: "increase profits.
0コメント