In the field of business, ethics is something which can be considered from different viewpoints, from the business firm to the employee in the firm’s customer. Ethics is a concept which finds its basis in the moral principles which have been accepted and advocated by society. Each aspect of ethical behaviour has been ingrained in the culture of human beings to essentially provide guidance in distinguishing what is wrong from what is right. Due to the high involvement of businesses within communities, they are also responsible for acknowledging and acting upon ethical behaviour. Although this appears to be within the common ground in the theoretical role and purpose of businesses in society, in practice this is not necessarily always the …show more content…
Among the major business ethics related theories there is Friedman’s, developed in the 1970s in the US (Harrison, 2010, pp. 186-187). The following quote from Friedman’s thesis, sums up his general view of the social responsibility businesses have in society: “There is one and only one social responsibility of business – to use its resources (…) to increase its profits so long as it stays within the rules of the game, (…) engages in open and free competition without deception or fraud.” (Horrigan, 2010, p.92) Friedman’s thesis was simple and is still relevant to today, simply that businesses should act in order to increase their profit as they are meant to but without fraudulent behaviour, respecting the rules of the social contract. Deriving from Friedman’s thesis there is ‘Corporate Social Responsibility’ (CSR), which simply states that businesses should be “taking responsibility for the economic, social, ethical, and environmental impacts of its activities”. An increasing number of companies have adopted CSR policies, in an attempt to help their community as well as diminishing to some extent certain negative impacts they could be causing e.g. pollution. (Harrison, 2010, pp.191-193) The importance of ethics for society and business alike is self explanatory, it simply stands to ensure behaviour which is both correct and beneficial for each entity which is affected. In fact it appears as though over the
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Ethics has been around for a long time. Merriam-Webster defines ethics as rules of behavior based on ideas about what is morally good and bad. It is an area of study that deals with ideas about what is good and bad behavior. Ethics has much to do with feelings and beliefs. If you feel deep down in your heart that something is not right, then it you should not do it. The Bible says, “So whoever knows the right thing to do and fails to do it, for him it is sin” (James 4:17 English Standard Version). Ethical business procedures include guaranteeing that the main legality is in place. Also, the company observes moral standards in its relationships with the people in its business community, which includes the most important people in their business, who are the customers. This report will discuss ethics in business, ethically transformed organizations; organizations preparation to make ethical decisions, ethical danger signs, and organizations that does business globally.
Milton Friedman’s shareholder theory of management says that the purpose of a business is to make money for the owner or the stockholders of the business. Friedman says that there is only one social responsibility for the business: to use its resources in order to increase
Business Ethics are defined as “moral principles that guide the way a business behaves” (Businesscasestudies, 2017). In order for any business or individual to act in an ethical
First thing let us start with a little overview of what Milton Friedman exposed in his article. It seems that the whole point of his essay revolves around one basic statement which clearly says that the only social responsibility of business is to use its resources and engage in activities designed to increase its profits so long it stays within the rules of the game (Milton Friedman, the social responsibility of business is to increase profit).
What Friedman implies is that shareholders should only be concerned with maximizing profits and not be obligated to be “socially responsible.” In that case, the manager would only have one priority, to maximize profits. However, what if that manager determined that social endeavors is the best option to maximize profits? This would make the corporation socially responsible while still maintaining maximum profits. The argument presented by Friedman in this case is that while the manager is performing as expected by maximizing profits, this type of “social responsibility is frequently a cloak for actions that are justified on other grounds rather than a reason for those actions.”
Ethics in business addresses the ‘right’ and ‘wrong’ behaviours of business practises, and how these practices impact the employees, shareholders, the general public and the environment.
Many believe that business entities should have an ethical duty to be socially responsible, to work towards increasing its positive effects on society while decreasing its negative effects. Many organizations look for opportunities to be socially responsible while also creating shareholder wealth.
Can business thrive by profit alone? Barry (2000) described Milton Friedman’s short essay, in the 1970’s, as extremely controversial, in which he denied that corporate executives had any moral duty to relax the conditions of profit maximization on behalf of the wider interests of society. This example of the “bottom line” of business has been demonstrated within the past couple of decades by publicly criticized companies, for fraudulent activities, such as, Enron, WorldCom, and HealthSouth along with many others. These company executives were willing to sacrifice the vast majority and greater good of society for profit gains. This mindset left many of loyal investors, consumers and employees without a sound stabilized future. There are also many businesses that produce a high yield on their investments;
Business Ethics is a set of moral principles applied in the commercial world. Business ethics provide guidelines for acceptable behavior by organizations in both their strategy formulation and day-to-day operations. An ethical approach is becoming necessary both for corporate success and a positive corporate image. Following pressure from
Milton Friedman took a “Shareholder Approach” to social responsibility. This approach asserts that shareholders advance capital to a company’s managers, who are supposed to spend corporate funds only in ways that have been authorized by the shareholders. Friedman wrote: "There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
Milton Friedman wrote in his famous 1970’s article in The New York Times Magazine, that “the one and only social responsibility of business, is to increase profits for shareholders.” Milton Friedman's view on business responsibility accentuates the importance of maximizing firm's value. He pointed that the “there is one and only one social responsibility of business –to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engaged in open and free completion without deception or fraud’’ and by taking on the burden of social cost, the business becomes less efficient (Milton Friedman, 1962).
Milton Friedman was an American economist, statistician and writer, who had a massive impact on the research agenda of the economics profession. His famous words “the only responsibility of business is to increase its profits” (Friedman, Milton. 1970) led to many controversial debates on whether businesses should have ethics or if profit should be their main goal. Corporate social responsibility has many definitions, as its interpretation is quite loose, so I have chosen one that relates the most to this essay, given by the World Business Council for Sustainable Development, in 2000: “Corporate social
Friedman has been at the forefront of undermining the concept of business ethics ever since the 1960s. In his view, the purpose of any business is to maximize profits and so return as much value for shareholders as possible (Friedman, 2002). Friedman also argues that the current trend toward greater corporate social responsibility is working in opposition to the advantages that stand to be gained through the adherence to unfettered free-market capitalism. Friedman (1991) states: There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud (p. 245).
Milton Friedman's statement that a business's social responsibility lies in making profit has shown a controversial point of view in modern business. Some people believe in Friedman's ideas while others do not. Is it possible that Friedman can be both right and wrong? In business, there are different situations that require different perspectives and methods of approach. On one hand, it is correct to say that the main focus of a business should be to make profit. Without profit, a business can not survive. In a way, Friedman's theory does
“As a branch of ethics the field of business ethics is interested in how judgments of right and wrong, good and bad, moral obligation and responsibility, rights and duties, and the like, are made and justified” (Gill, David). As a descriptive enterprise, business ethics is an analytical exercise in understanding and explaining how people and businesses make their ethical judgments and decisions. If your business does not carry the proper ethics it cannot thrive. It takes the necessary steps within the business management to enforce these ethics upon their business. The field of business ethics is interested in more than just social and environmental responsibilities but those are certainly critical component areas.