business ethic

Topics: Stock, Fiduciary, Shareholder Pages: 5 (1479 words) Published: October 8, 2013
Chapter 2, Beauchamp and Bowie
In addition to Chapter 2, read What is the purpose of a Corporation?
Profits v. social responsibility
Stockholders v. Stakeholders
Who are stakeholders?
local community
According to Friedman, can a business do anything in the quest for profits? •No, it must not be deceptive or fraudulent
Who is Theodore Levitt?
Former professor of marketing at Harvard B-School, Ph.D. in economics, prolific writer, editor of Harvard Business Review, coined the term "globalization" has been referred to as the father of modern marketing What is meant by a "nonconsequentialist perspective?" (page 49 in textbook) •Check out definition of consequentialism here

Can there every be agreement between Friedman and advocates of "social responsibility?" •Yes, if the socially responsible act leads to higher profits. The Social Responsibility of Business is to Increase Its Profits by Milton Friedman •Is business social responsibility the same as socialism? (page 50) oYes, Friedman argues, since political mechanisms, not economic mechanisms, determine the allocation of resources - that is, the corporate CEO decides who should get what, rather than the market •Corporate executives are agents of the owners, i.e., the stockholders - they should not be spending someone else's money to advance a particular agenda oto do so is equivalent to taxing and the CEO becomes a civil servant of sorts, a public employee •Only people have responsibilities, corporations do not have responsibilities •In fact, this kind of thinking can lead to the downfall of capitalism A Stakeholder Theory of the Modern Corporation by R. Edward Freeman •Managers do not have a duty to stockholders but they have a fiduciary relationship with stakeholders. ostakeholders have an interest in, and must participate in "determining the future direction of the firm in which they have a stake." (page 56) •What kinds of laws and regulations support this view?

oconsumer laws, product liability
caveat emptor (let the buyer beware) has been replace with caveat venditor (let the seller beware) olaws related to employee relations, labor law, laws against discrimination in hiring olaws protecting the community - environmental protection, local restrictions on plant closings •Problems with free markets

omonopoly power
omoral hazards
There is a narrow and wide view of stakeholders - the narrow view includes only those who are "vital to the survival and success of the corporation." •The role of management is to balance the claims of the other stakeholders. •What is a "normative core?"

oa set of questions??
What are the ground rule principles for the Doctrine of Fair Contracts? othese are listed and explained in the textbook
What three principles does he advocate for reforming the law of corporations? othese are listed and discussed briefly in the textbook
Two Normative Theories of Business: A Critique by John Hasna •Stockholder vs. Stakeholder
Which theory of distributive justice (or ethical theory) is used to justify the stockholder theory? Two can be used: oUtilitarian - based on the idea that the invisible hand of the market leads to the best outcome for society - promotes the general interest •utilitarian can also be called consequentialist - outcome matters •The problem here is that we are very far from a free market in the U.S. •Another problem is that free markets can have other problems - REMEMBER THESE?? oDeontological or non-consequential

moral laws or duties - think Kantian
Rawls is also a deontologist to the extent that he thinks outcome is not the issue IF people's basic rights (liberties) are violated •We can also include Libertarians in this deontological/non-consequential category •supports stockholder theory because...
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