Ethics and Social Responsibility Essay

1738 Words7 Pages
Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for a given situation (Crane & Matten, 2010). Since law does not necessarily cover the morality of many controversial issues, moral reflection ought to be performed on any action, regardless of its lawfulness. The growing power of business in today’s society has enabled businesses to significantly impact the world. Hence, business ethics is highly relevant as it could determine whether businesses contribute or cause harm to the society at large.
Using ethical theories to guide moral reflection, business ethics can help businesses avoid scandalous conduct that could harm the
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A utilitarian would strongly advocate businesses to consider all the happiness and pains of all its stakeholders and focus on maximising happiness for the greatest number. Businesses have to look beyond short-term monetary gains and consider the impact of their actions on their significant stakeholders. In the subprime mortgage crisis, the financial institutes could have better analysed the extensive pains that its external stakeholders may face when they invest in subprime mortgages. Although high returns from risky investments may seem beneficial to the investors in the short run, greater costs may be incurred in the long run due to subprime mortgage foreclosures and its significant repercussions on the society. If the financial institutes had adopted the utilitarian framework and acted in a way that maximises overall happiness and not out of self-interest, the society could have avoided a major economic downturn.
Nevertheless, businesses may face challenges when applying the utilitarian framework. In many real life situations, businesses may not have sufficient time to make adequate predictions of the consequences of their intended actions. It may also be difficult to quantify happiness and justify what action will maximise the overall happiness. In order to optimize the utilitarian framework, it is critical that businesses can efficiently
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