Business and Society.ppt

Business and Society The Ethics of Business and Corporate Social Responsibility How Are Business and Society Related? Do organizations have morality? Yes: Economic forces are insufficient to hold organization together (Wieland) No: The firm operates mechanically, to reach a state of equilibrium (Maitland) So, what is it? Competing views: Market Capitalism Dominance Stakeholder Which one is “correct”? Market Capitalism Based on these ideas: Competition “Individuals have the freedom to own and control property and to make economic decisions in their own interest” “The ultimate goal is the good of the greatest number” Let’s look at…. Adam Smith Milton Friedman Adam Smith and The Wealth of Nations It’s basic human nature to “truck, barter, and exchange” It’s rational to exchange goods that you can produce efficiently for goods that you are less efficient at producing In a voluntary exchange, both parties increase marginal utility; an item is worth what a willing seller will take and a willing buyer pay Adam Smith, continued There’s competition among sellers and buyers (if something is desirable, more than one person will want it and more than one will sell) Thus, the law of supply and demand; the invisible hand will balance out, to a state of equilibrium (second corporate ethics article) Competition also forces sellers to become more efficient, thus… Division of Labor The best way to increase efficiency Also referred to as “deskilling” Why? By specializing, the worker becomes more skilled, or at least more efficient Time not lost by switching among different tasks Incentive to develop machinery Adam Smith: Recap “But man has almost constant occasion for the help of his brethren and it is in vain for him to expect it from their benevolence only” By pursuing his own interest he frequently promotes that of the society more effectively than when he really intends to promote it.” Milton Friedman “The Social Responsibility of Business is to Increase its Profits” His reas