How can Business Ethics be framed?
Having previously discussed what constitutes as business ethics, as;
“The study of business situations, activities, and decisions where issues of right and wrong are addressed”.
Consequently, it would only be natural to assess the issues of right and wrong. Therefore, we need to pinpoint where businesses responsibilities to society start and end. This question is crucial in identifying whether companies must take actions beyond merely producing goods and services in order to make a profit.
In 1970, Milton Friedman published an article questioning the supposed social responsibility of businesses, titled ‘The social responsibility of business is to increase its profits’. In this article he went against the notion of social responsibilities for corporations, centring his belief on three main principles.
Firstly, he believed that only human beings have a moral responsibility for their actions, as corporations are not human beings and as a result cannot claim responsibility. Hence, since corporations are set up by individuals, it is their responsibility for the actions of the corporation.
Freidman’s second point was that the sole concern of a manager at a corporation is to make a profit for shareholders, as long they work within the parameters of the law decided on by society. Behaving in any other way would mean betrayal of the responsibility they have to shareholders.
His third and final view was that it is the responsibility of the government and not corporate managers, as they are neither qualified to decide what is in society’s best interest or democratically elected to do so.