Business ethics - scholars Flashcards
What did Adam Smith say about People?
They are born with a moral sense, an innate conscience and a feeling of empathy and sympathy with others within the community - means that business people would not be selfish.
What does Adam Smith say about free market capitalism?
Believed that it was the best way to encourage entrepreneurial ideas in business
What was Adam Smith’s trickle-down effect?
The benefits from the entrepreneurs would flow down into the community. If an entrepreneurial business owner of a factory did well then this will enable him to employ more workers and they would have the stability of a good job. The whole community gains from the higher employment levels.
What does Adam Smith say guides and causes the trickle-down effect?
Guided by the “invisible hand” - simply happens because business owners can make a profit within the free trade system and are innately good people. It brings more happiness to more people.
What does Karl Marx say about capitalism?
Felt it undermined those who do not own the means of production (Proletariat). It put the bourgeoisie into a position where they could bargain for power over the working class. The working class are subservient to the capitalists - the only way they can escape their status is to work harder and earn more for the capitalists - workers are exploited by the capitalists.
What did Milton Freidman say about social responsibility?
The only responsibility of a business was to increase its profits. He claimed that Greed is good and that a free market enterprise was best and a capitalist society because it encouraged and allowed entrepreneurs to set up businesses.
For Freidman, what was the only obligation of a business?
To maximise profits to help its shareholders whilst engaging in open and free trade between businesses without deception and fraud. Business people are obligated to follow the wishes of shareholders whilst obeying laws and ethical customs of societies.
What did Friedman say about Corporate social responsibility?
Claims that the “rules of the game” must be followed and argues these do constrain profit maximisation. He claimed that corporations should have no skills in the areas of supporting charities, health or educational projects in the communities in which they are based.
What did Solomon say about profit motive?
Said that the profit motive is an oversimplified view of what the profit motive is and why it is important. The pursuit of the profit is one of the main goals of business but not the only one.
For Solomon, what is the role of profit?
Should be seen as a way of encouraging and rewarding hard work “…building a better business and serving society better.” He develops Aristotle’s teachings on acting virtuously.
For Solomon, what is the link between profit and social responsibility?
A business should set out to make profit but by supplying quality goods to its customers, providing jobs and fitting into a community. Good business should take the community into account and if it does it helps make a profit and therefore increases productivity.
How does Solomon apply Aristotle’s teachings?
Corporations should put the virtues into practice such as fairness and honesty. Virtue and profit must thrive together.
Who supports Solomon?
Anthony Weston - social responsibility and profit are important.
What example did Weston give?
Pharmaceutical company Johnson and Johnson - 1981, 7 people poisoned by cyanide laced Tylenol capsules in Chicago J&J took 22m bottles of the shelf in response and offered to exchange already purchased bottles - made a loss of over £100m. Reintroduced the drug in tamper resistance packaging quickly reclaimed 80% of market share
What did Weston say about Johnson and Johnson?
“proving that doing the right thing by stakeholders also benefits stockholders too”
