According to the Austro-Hungarian philosopher Ludwig Wittgenstein « no course of action could be determined by a rule, because every course of action can be made out to accord with the rule » (1968, section. 201). Therefore a rule can both be determined by or be a determinant of a set of actions - hence a rule cannot be right or wrong. In the juridical context one must weigh the consequences of the offence and reach a verdict. In the capitalist world in which most of us live moral values have deprecated to the extent that we can ask ourselves if ethical nihilism has become the norm for many corporations. Should corporate executive management be allowed to pursue financial satisfaction for its stakeholders without showing any moral duty in …show more content…
He contends that corporate executive management are agents working on behalf of the shareholders and that there is no room for social responsibility since their sole role is fulfilling shareholders’ objectives, i.e. generating profits. Shareholders invest and expect a return on their investment - the reasoning could not be any clearer. If we switch roles for a moment and try to understand how a shareholder thinks, the logic is even more understandable. By investing in a company, a shareholder expects dividends; if corporate executives use a portion of this investment for philanthropic eleemosynary, questions may be raised around their rights to contribute socially without appropriate authorizations. As business people, managers are not competent to make decisions concerning social needs and priorities (Chryssides, G. and Kaler, J., 1993, …show more content…
and Kaler, J., 1993, p.236). In their book An Introduction to Business Ethics, Chryssides and Kaler talk about “ usurpation argument” which they describe as the “usurpation of the role of democratically elected politicians”. The question that needs to be answered is whether managers are fit to don the cloak of elected officials. It seems rather atypical that an executive is given the power to represent a group of people or a body of constituents. Democracy still runs on the basis that the only articulation of people’s will are votes. Elections are held based on the ideas that our politicians embody, where they come from and what they represent. Furthermore it becomes clear that the political and social inclinations differ from one executive manager to another. For instance, while a more liberal manager may want to impact society as a whole, another more conservative one will likely be more focused on value creation rather than social responsibility. In his paper Jost (2006) portrays the ideologies of CEO’s in the United States and explains that their party-political penchants have very little chances of changing during one’s life time especially as he or she climbs the corporate social ladder. These beliefs are mainly influenced by friends, colleagues, family but most of all by the education from early
Corporate Social Responsibility (CSR) is the way a corporation achieves a balance between its economic, social, and environmental responsibilities in its operations so as to address shareholder and other stakeholder expectations. In general, when firms hold this wider encouraging role on the public by being engaged with stakeholders, a variety of profit can be produced for both company and the stakeholders. A key inclination is the combination of Corporate Social Responsibility (CSR) into the organization strategy, culture, mission and communications. By incorporating corporate citizenship into the company it is no longer an additional “nice thing to do” or something made to obey laws or regulations. Instead, corporate responsibility has become something business leaders and workforce want to engage in, frequently because executives who believe in the long-term see business profit. The four types of social responsibilities a...
In most cases, profits and social welfare are at odds. In such a case, business executives being answerable to shareholders are likely to focus on the profit-making aspect of the business rather than going against the interest of their shareholders by promoting social welfare at the expense of profits. In addition, research shows that companies actively involved in Corporate Social Responsibility efforts are more likely to be targeted by activists (Kress, 2011). In fact, it has been established that many companies initiate corporate social welfare projects when they stand to gain from those projects. For example, automakers resulted to creating fuel-efficient vehicles when they became profitable; similarly, energy conservation became an important CSR activity when the cost of energy became very costly. As such, the companies are benefiting their society as they follow their own
Vocation Ltd as an Australian education and training provider had entered into voluntary administration just over 12 months since the company was suspended of almost $20 million government funding in 2015 (KEATING, 2015). ASX (2014) principles are set for better regulation on corporate governance which is believed as an essential factor to achieve good governance outcomes. Therefore, this essay will focus on how a better application of Corporate Governance (CG) Principles can possibly prevent the failure of Vocation.
If you have a business background and have a desire to help managers and company leaders, you might want to consider a career as an executive coach. As a practitioner in this rewarding field, you can obtain an on campus or online education to enhance your coaching skills. Working as an executive coach is a very fulfilling line of work as you are directly responsible for helping individuals get out of a rut or to motivate them to go from where they are to where they need to be. When executives make use of your services they will be able to learn and improve, while still fulfilling the responsibilities of their positions. This is why coaching is a core element of executive development
Does the maximaization of shareholder value reward socially destructive actions by corporations?Certainly not.A company is not an instrument of shareholders, but a coalition between various resource suppliers, with the intention of increasing their common wealth and hence is contradictory to Mr Al Dunlaps view of share holder primancy.
Furthermore, he believed that any corporation assuming a more socially responsible attitude would be met with economic limitations, rendering them less competitive in the market area (Friedman, 1970). R.E. Freeman’s ‘Stakeholder theory’ is often seen as a better alternative to Friedman’s ‘Shareholder primacy theory’. Both the Stakeholder theory and Shareholder theory are normative theories explaining what a corporations social responsibilities ought to be and both adopt a similar stance on management’s accountability (Smith, 2003). However, the Stakeholder theory states that a manager’s duty is not only to focus on shareholder’s interests, but also to balance them against the interests of the company’s other stakeholders. Freeman believes that managers should take into account their customer’s, supplier’s and employee’s interests, even if it brings about a decrease in shareholder returns (Smith, 2003). This is being expanded on because Freeman believes that if Friedman were alive today, he would be a supporter of his Stakeholder Theory. Simply because, in today’s day and age, globalization and increased competition in the markets has led to corporations having to rely not only their shareholders for support but on all their stakeholders (Makower,
The earliest impressions that the book makes on the mind of the reader is that “Corporate Social Responsibility” is not just about some kind of vague theories but supports all that it preaches with practical applications. Labelling the book as “a Bible for today’s corporate citizen”- as the publisher does on the flap of the book- may be stretching it a bit too far, but “Corporate Social Responsibility”, does provide thoughtful answers to a number of vital questions on how a corporation could do most good for itself and its
In recent years, more people begin to accept the concept of corporate social responsibility. Companies also pay more attention to the activities of CSR and investment. In addition to face the pressure of the environment and the social moral level, the enterprise managers also have the responsibility of the company 's performance and the value of the shareholder 's wealth. Therefore, enterprises need to pay more attention to the relationship between corporate social responsibility and financial performance.
An increasing large number of firms are developing mission statements that also attempt to define the social and ethical boundaries of their strategic domain. Some firms are actively pursuing social programs they believe to be intertwined with their economic objectives, while others simply seek to manage their businesses according to the principles of sustainability – meeting humanity’s needs without harming future generations. For example, Unilever has launched a variety of programs to help developing nations wrestle with poverty, water scarcity, and the effects of climate change. The firm’s motives are at least as much economic as moral. As environmental regulations grow stricter around the world, the firm must invest in green technologies or its leadership
Brian Schaefer, 2008. Shareholders and Social Responsibility, Journal of Business Ethics, Springer, vol. 81(2), pages 297-312, August.
A famous quote taken from his book Capitalism and Freedom, details that ‘there is one and only one social responsibility of business- use its resources and engage in activities designed to increase profits as long as it stays within the rules of the game’ . He feels that Directors or CEO’s of a business have a ‘’direct responsibility’’ to their employee’s i.e. its shareholders, and so therefore should aim to ‘’make as much money as possible while conforming to their basic rules of society’’ both in law and ethical custom.
The article “The Social Responsibility of Business is to Increase its Profits” is written by a famous economist Milton Friedman. Friedman in this article implies that shareholders are the main drivers of the corporations and he believes that it is to them corporations must be socially responsible to. The goal of any corporation is to maximize profits and return the portion of these profits to shareholders for investing in the corporation. The shareholders can themselves decide which social causes to take part in rather than assigning a corporate executive to decide on their behalf. Friedman argues that a corporation must have no social responsibility to society because its only concern is the increase profits for itself and its shareholders.
When the problem became serious two main views formed: the “narrow” view and the “broader” view, based on different ideas. The “narrow” view is based on the proposition that corporations have no social responsibility and they have only one main purpose, to make a profit (Friedman, 1970). So corporations should remain socially independent and all conflicts must be solved through the individual responsibility concept. On the contrary the “broader” view states that corporations have social obligations as all existing participants of market, persons and entities are tied together and are mutually dependent. So corporations cannot ignore some serious events or problems, which take place, and must help society, as profit is not their single purpose.
Milton Friedman is known in the business world for not having patience, he believes that companies are not truly concerned with making a profit but they are also promoting social conscience and need to take care of the employees, abolishing discrimination and pollution (Friedman, 1970, p. 3). In this article Friedman that the social responsibility of any company is to increase profits year over year (Friedman, 1970). Friedman believes if you give your employees the right to use their social responsibility, this would make an employee responsible for their action and ideas. The idea behind this theory is that it will make it very difficult for anyone to try taking advantage of co-workers for advancement in the company (Friedman, 1970, p. 3).
It seems obvious that large corporations have a tendency to ignore the negative effects of their actions in favor of profit. This example, although sensationalized, still says to me that with power comes responsibility. It affirmed my belief that a corporation’s goal cannot be just to provide profit to shareholders, but there must also be an element of social responsibility.