Ethics and Governance - Case Study Example

Ethics and Governance In Friedman’s (1970) article The Social Responsibility of Business is to Increase its Profits, he describes businessmen as “unwitting puppets of the intellectual forces that have been undermining the basis of a free society”. In this case, I believe him to be referring primarily to leftist intellectuals since they are the most likely to speak out against business and profits. The cause for Friedman’s statement is probably due to the birth of ‘Ethical business’, this is where companies will demonstrate a social conscience, possibly to gain support from consumers who buy their products, but will cut the profits of the shareholders in a company.

Freidman also assumes that there is a link between the birth of ‘Ethical business’ and the growth of left-wing academia, particularly in the United States, although I am not convinced of the relation between the two and that one affects the other. However, Friedman believes that it is these academics that are making the businessmen act like “unwitting puppets” who are “preach­ing pure and unadulterated socialism”. Still, I believe that Friedman is putting across his biased political views with this statement, where he thinks that anything relating to socialism is automatically bad so he does not really back up this quote.

I also disagree with Friedman in that he believes that the “intellectual forces” really have that much influence on businessmen to make them “unwitting puppets”. The factor which would make businessmen turn to a more ethical approach could be down to a rapidly expanding interest in business ethics and the rise of the middle-class looking to ‘clear their conscience’ by buying ethically.BibliographyFriedman. M, 1970. The Social Responsibility of Business is to Increase its Profits, The New York Times Magazine, 13 September. SM172. Friedman (1970) discusses whether corporations can have a “social responsibility” or whether having responsibilities is a uniquely human trait.

Friedman argues, reasonably convincingly, that a company cannot have responsibility since it is “artificial”. We can see this in his article when he says “Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities”. This would lead him to the conclusion that corporations have no moral obligation to be ethical since they are not moral beings and that the only responsibilities of a company “is to increase its profits”.

With Friedman’s belief in free-market Capitalism, it is understandable that he believes that no one person can be socially responsible since “no individual or company affects the price” it simply “reflects people’s wishes” (Fisher & Lovell 2009, 21). However, the view that the corporations responsibility is solely to the shareholders is not shared by many, Fisher & Lovell (2009, 43) quotes the late John Paul II in saying that whilst profit is a good indicator to see how efficient a company is being run, the employees are “the firm’s most valuable asset”.

John Paul II appears to be saying that the corporation’s responsibility is not only to shareholders, but to all the stakeholders, this includes employees, customers and the local community. With this in mind, it would seem that the corporations would have to have some sort of social responsibility as well, at least to the people who are affected by the actions of the business as a whole. I believe that corporations do have responsibility to the stakeholders, this is because there are times where the actions of corporations have a dire effect on people’s lives.

Examples of these include the Bhopal disaster in India, Nestlé in Africa and Coca-Cola in Colombia. The actions of corporations can have huge impacts on people’s lives and while Friedman might say that it is unfair on shareowners and managers having to pay compensation to these people, I would say it is more unfair on the people who have to suffer because of events caused by the corporation.BibliographyFisher. C, M and Lovell. A 2009 Business Ethics and Values: Individual Corporate and International Perspectives 3rd Edition, New Jersey: Pearson Education LimitedFriedman. M, 1970. The Social Responsibility of Business is to Increase its Profits, The New York Times Magazine, 13 September. SM17