Self-interest and Ethics, Stakeholder/shareholder theory - Essay Example

However, Adam Smith purports that self-interest of individuals may contribute to the common good in a society when individual behaviors are governed by a general moral law in the face of ongoing competition (Evensky, 1993; Wilber, 1998). Despite Smith’s assumed antithetical stance towards business ethics Bragues argues that Smith envisions commerce as a moral endeavour similar to any human activity (Bragues 459). It can thus be seen that Smith’s perpetuation of self-interest aimed at company profits also encompasses a common social good upheld by business ethicists.

The link between corporate social responsibility and financial performance has long been established. Carrol and Bucholtz, in this respect, regard corporate social responsibility as a fair weather concept that gets expanded as the company becomes more and more successful in financial terms (Carrol & Bucholtz 69). Similarly, scholars like Kaler believe that the maxim: ‘Business is business’ expresses the true spirit of business ethics. Kaler goes on to argue that proponents of business ethics who value financial performance tend to believe that the goals of a firm are purely commercial than ethical and such people are preoccupied with the maximization of profits (Kaler 7).

There are also scholars who maintain that companies can afford to show corporate social responsibility only when they are financially successful (Schreck n.p). Thus, the financial performance of the company plays a pivotal role in company’s social performance. Another major question is whether CSR is an ‘after-profit obligation’ or a ‘before-profit obligation.’ Young -Chul Kang and Donna Wood (1995) observe that there is “a flawed assumption that CSR is an after-profit obligation” and this perpetuates the faulty message that companies that are not profitable need not have to show business ethics or CSR (Hopkins, 2007).

On the other hand, one needs to perceive CSR as