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The Social and Political Environment of Business • Social Role of Business • Ethical Business Policies – Descriptive – Normative • Political Role of Business Course Topics • • • • • • Product Liability Privacy Issues Employment Advertising/Marketing The Environment The Community Ethics • Free Market Theory • Utilitarianism • Rights Theory Free Market Theory • Corporate responsibility: Maximize shareholder wealth • Government responsibility: refrain from interference in the “free market” Free Market Theory • Milton Friedman – “social responsibility” = costs to owners and customers – Business manager acts as agent – “social responsibility” is socialism not free market – Rationalization of economic decisions – Exception: “without deception or fraud” Free Market Theory • Rebuttal to Friedman – Normative ethics – Political v. economic systems – What is a cost to one group is a benefit to another – Stockholders – investors or owners? – Failures of the free market Utilitarianism • Maximization of the greatest good – Greatest good – Norms for right and wrong – Good, right and wrong are relative Utilitarianism • Value – Intrinsic – Instrumental Utilitarianism • Classical Utilitarianism – Bentham (1748-1832) • Hedonism – Pleasure/pain – Mill (1806-1873) • Happiness – Politcally radical at the time Utilitarianism • Contemporary Utilitarianism – Preference Utilitarianism • Satisfying wants and desires – Interest Utilitarianism • People’s best interests • Good is objective Utilitarianism • Objectification of “good” • Measurement of “good” – Quantitative or qualitative • Measurement of consequences Rights Theory • Types of rights – Basic rights – Derivative rights • Rights create obligations • Conflicting rights Corporate Social Responsibility • Stakeholder Theory • Social Contract Theory • The Corporation as a Morally Responsible Agent Stakeholder Theory • Expands corporate responsibility beyond shareholders • Greater good of non-shareholders Stakeholder Theory • Primary stakeholders – – – – – – Stockholders Suppliers Customers Employees Community Management Stakeholder Theory • Secondary stakeholders – – – – Governments Media Special interest groups Financial institutions Stakeholder Theory • Principles – The corporation should be managed for the benefit of its stakeholders – Management bears a fiduciary relationship to stakeholders and to the corporation as an abstract entity, ensuring both the survival of the firm and the long-term interests of the stakeholders Stakeholder Theory • Equitable distribution of benefits • Increased pool of resources • Checks and balances Social Contract Theory • Implicit contract between members of society • Negative duties • Positive duties • Universal moral norms The Corporation as a Morally Responsible Agent • Corporation as an actor • Combinations of individual actors • Corporate liability and public policy
