Business ethics Questions and
Answers
Responsible business management
✓ ~~~ When businesses assumes responsibility for the Triple Bottom Line
(SUSTAINABILITY) while delivering Value to Stakeholders (CORPORATE SOCIAL
RESPONSIBILITY) and in doing so addressing Moral Dilemmas (BUSINESS ETHICS)
being faced by the business.
The triad
✓ ~~~ - Sustainability
- CSR
- Business ethics
Shareholder theory
✓ ~~~ Theory
Milton Friedman said that "The social responsibility of business is to increase its
profits" (The New York Times Magazine 1970)
Friedman argued against the notion of social
responsibilities for corporations based on three main arguments:
,- Only human beings have a moral responsibility for their actions
- It is managers' responsibility to act solely in the interests of shareholders
- Social issues and problems are the proper province of the state rather than
corporate managers
Stakeholder theory
✓ ~~~ Theory states that the organisation has a responsibility for any group or individuals
who can be affected or is affected by the achievements of an organisation.
(Edward Freeman, 1984).
●Principle of Corporate Rights - the corporation has the obligation not to violate the
rights of others
●Principle of Corporate Effect - companies are responsible for the effects of their
actions on others
Corporation and social responsibility debates
, ✓ ~~~ - Legal Identity: Corporations are typically regarded as 'artificial persons' in the eyes
of the law as they can sue and they can also be sued (Corporate Personhood). Hence,
like humans, they have social obligations.
- Organizational Culture: All organisations manifest a set of beliefs and values that
lay out what is generally regarded as right or wrong in the organisation.
- Power Argument: As powerful social actors with recourse to substantial resources,
corporations should use their power and resources responsibly.
- Dependency Argument: Corporations rely on the contribution of a larger set of
constituents or stakeholders in society, hence have a duty to take into account the
interest and goals of these stakeholders.
Corporate Social Responsibility
✓ ~~~ An attempt by companies to meet the economic, legal, ethical, and philanthropic
demands of a given society at a particular point in time. (Carroll (1991)
comprises of:
-The responsibilities of business in wider society
-How the responsibilities are defined and negotiated
-How the responsibilities are managed and organised
, Evolution of CSR
✓ ~~~
Carrol's four part model of CSR
✓ ~~~ The four responsibilities displayed on the pyramid are:
ECONOMIC - This is the responsibility of business to be profitable
Only way to survive and benefit society in long-term
LEGAL - This is the responsibility to obey laws and other regulations
E.g. Employment, Competition, Health & Safety
ETHICAL -This is the responsibility to act morally and ethically
With this responsibility, businesses should go beyond narrow requirements of the
law
E.g. Treatment of suppliers & employees
PHILANTHROPIC -This is the responsibility to give back to society. The
responsibility is discretionary, but still important
E.g. charitable donations, staff time on projects
Business ethics
Answers
Responsible business management
✓ ~~~ When businesses assumes responsibility for the Triple Bottom Line
(SUSTAINABILITY) while delivering Value to Stakeholders (CORPORATE SOCIAL
RESPONSIBILITY) and in doing so addressing Moral Dilemmas (BUSINESS ETHICS)
being faced by the business.
The triad
✓ ~~~ - Sustainability
- CSR
- Business ethics
Shareholder theory
✓ ~~~ Theory
Milton Friedman said that "The social responsibility of business is to increase its
profits" (The New York Times Magazine 1970)
Friedman argued against the notion of social
responsibilities for corporations based on three main arguments:
,- Only human beings have a moral responsibility for their actions
- It is managers' responsibility to act solely in the interests of shareholders
- Social issues and problems are the proper province of the state rather than
corporate managers
Stakeholder theory
✓ ~~~ Theory states that the organisation has a responsibility for any group or individuals
who can be affected or is affected by the achievements of an organisation.
(Edward Freeman, 1984).
●Principle of Corporate Rights - the corporation has the obligation not to violate the
rights of others
●Principle of Corporate Effect - companies are responsible for the effects of their
actions on others
Corporation and social responsibility debates
, ✓ ~~~ - Legal Identity: Corporations are typically regarded as 'artificial persons' in the eyes
of the law as they can sue and they can also be sued (Corporate Personhood). Hence,
like humans, they have social obligations.
- Organizational Culture: All organisations manifest a set of beliefs and values that
lay out what is generally regarded as right or wrong in the organisation.
- Power Argument: As powerful social actors with recourse to substantial resources,
corporations should use their power and resources responsibly.
- Dependency Argument: Corporations rely on the contribution of a larger set of
constituents or stakeholders in society, hence have a duty to take into account the
interest and goals of these stakeholders.
Corporate Social Responsibility
✓ ~~~ An attempt by companies to meet the economic, legal, ethical, and philanthropic
demands of a given society at a particular point in time. (Carroll (1991)
comprises of:
-The responsibilities of business in wider society
-How the responsibilities are defined and negotiated
-How the responsibilities are managed and organised
, Evolution of CSR
✓ ~~~
Carrol's four part model of CSR
✓ ~~~ The four responsibilities displayed on the pyramid are:
ECONOMIC - This is the responsibility of business to be profitable
Only way to survive and benefit society in long-term
LEGAL - This is the responsibility to obey laws and other regulations
E.g. Employment, Competition, Health & Safety
ETHICAL -This is the responsibility to act morally and ethically
With this responsibility, businesses should go beyond narrow requirements of the
law
E.g. Treatment of suppliers & employees
PHILANTHROPIC -This is the responsibility to give back to society. The
responsibility is discretionary, but still important
E.g. charitable donations, staff time on projects
Business ethics
