Ethics Flashcards
Define “Corporate social responsibility”
A private corporation has responsibilities to society that go beyond the production of goods and services at a profit and serving share holders
What was Milton Friedmans opinions on CSR?
> The corporation should be run primarily for the benefit of its shareholders
Therefore business managers should seek to maximise profits (within the law)
To fail to do so is unethical
Any attempt to address any other responsibilities at the consequence of profit is unethical
What are the 2 justifications for Milton Friedmans opinions?
> Property Rights Justification (Principle)
> Utilitarian Justification (Consequences)
What is the property rights justification Friedman?
> The company (and its money) is ultimately owned by shareholders
Therefore shareholders get to decide what to do with it
Managers are shareholders’ agents - they work for the shareholders
Therefore managers have a duty to follow shareholders’ wishes with respect to the property which has been entrusted to them.
What is the utilitarian justification for Friedman?
> The (ethically) right action is the one produces the greatest happiness for the greatest number
Argument: if business managers concentrate on maximising profit within the law that will produce the greatest happiness for the greatest number…Therefore that is what they should do.
Maximising profit is good for everyone
What does CSR require of a company?
> Charitable giving
Paying a decent wage
Avoiding pollution
No lobbying
Summarise Donoghue v Stevenson
> Donoghue bought a bottle of ginger beer with a decomposing snail in it
She got very sick
At the time, there was no law against this
The passing of the ruling of the court case set precedent for food, medicine and engineering laws
What is the law of negligence?
Conduct that falls short of the standards expected of a person where a duty of care is owed and which causes foreseeable damage to another person
What is the Goodpasters opinions on CSR?
He believed in the stakeholder theory
What is the stakeholder theory?
> There are more stakeholders in a company than just the shareholders
Investors cannot expect of managers (more generally, principals cannot expect of their agents) behaviour that would be inconsistent with the reasonable ethical expectation of the community
Shareholders have moral obligations to the rest of us
A company should do what benefits stakeholders and shareholders
What is the point with the Donoghue v Stevenson case?
A company is expected to hold themselves to a standard that is better than what the law may dictate and are expected to have an ethical conscience.
