Transcript The Social and Political Environment of Business

The Social and Political
Environment of Business
• Social Role of Business
• Ethical Business Policies
– Descriptive
– Normative
• Political Role of Business
Course Topics
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Product Liability
Privacy Issues
Employment
Advertising/Marketing
The Environment
The Community
Ethics
• Free Market Theory
• Utilitarianism
• Rights Theory
Free Market Theory
• Corporate responsibility: Maximize
shareholder wealth
• Government responsibility: refrain from
interference in the “free market”
Free Market Theory
• Milton Friedman
– “social responsibility” = costs to owners and
customers
– Business manager acts as agent
– “social responsibility” is socialism not free
market
– Rationalization of economic decisions
– Exception: “without deception or fraud”
Free Market Theory
• Rebuttal to Friedman
– Normative ethics
– Political v. economic systems
– What is a cost to one group is a benefit to
another
– Stockholders – investors or owners?
– Failures of the free market
Utilitarianism
• Maximization of the greatest good
– Greatest good
– Norms for right and wrong
– Good, right and wrong are relative
Utilitarianism
• Value
– Intrinsic
– Instrumental
Utilitarianism
• Classical Utilitarianism
– Bentham (1748-1832)
• Hedonism
– Pleasure/pain
– Mill (1806-1873)
• Happiness
– Politcally radical at the time
Utilitarianism
• Contemporary Utilitarianism
– Preference Utilitarianism
• Satisfying wants and desires
– Interest Utilitarianism
• People’s best interests
• Good is objective
Utilitarianism
• Objectification of “good”
• Measurement of “good”
– Quantitative or qualitative
• Measurement of consequences
Rights Theory
• Types of rights
– Basic rights
– Derivative rights
• Rights create obligations
• Conflicting rights
Corporate Social Responsibility
• Stakeholder Theory
• Social Contract Theory
• The Corporation as a Morally Responsible
Agent
Stakeholder Theory
• Expands corporate responsibility beyond
shareholders
• Greater good of non-shareholders
Stakeholder Theory
• Primary stakeholders
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Stockholders
Suppliers
Customers
Employees
Community
Management
Stakeholder Theory
• Secondary stakeholders
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Governments
Media
Special interest groups
Financial institutions
Stakeholder Theory
• Principles
– The corporation should be managed for the
benefit of its stakeholders
– Management bears a fiduciary relationship to
stakeholders and to the corporation as an
abstract entity, ensuring both the survival of the
firm and the long-term interests of the
stakeholders
Stakeholder Theory
• Equitable distribution of benefits
• Increased pool of resources
• Checks and balances
Social Contract Theory
• Implicit contract between members of
society
• Negative duties
• Positive duties
• Universal moral norms
The Corporation as a Morally
Responsible Agent
• Corporation as an actor
• Combinations of individual actors
• Corporate liability and public policy