Ethical perspectives Written by - Christopher Weber - Year 2010
This essay will discuss the writings and opinions of Milton Friedman (Friedman), Peter F. Drucker (Drucker), and Patrick E. Murphy (Murphy). All three authors are known management authorities that wrote books and articles on business ethics and social responsibility. In some segments of the business community, many believe the focus of business should be on business activities and therefore courses in ethics are not necessary. The three articles discussed are: The Social Responsibility of Business is to Increase its Profits (Friedman, 1970), What is business ethics? Public Interest (Drucker, 1981), and The Relevance of Responsibility to Ethical Business Decisions (Murphy, 2009). These articles represent different points and views that assist one in developing an informed opinion regarding the subjects and articles covered. Despite the differing views of various authors it is now generally believed in most global cultures that the evolution of ethical awareness for practicing managers and students is a necessary and valid pursuit.
Business, Increasing Profits, and Social Responsibility
Milton Friedman wrote an article titled, "The Social Responsibility of Business is to Increase its Profits" (Friedman, 1970). Friedman stated "there is one and only one social responsibility of business-to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud (Friedman, 1970, para. 36)." Thus, Friedman believed a company's primary goal and social duty should be generating revenue or increasing stock value, within the law, for an organization. Friedman believed only people can have responsibilities though Friedman conceded a corporation can be an "artificial" person and he therefore believed some artificial responsibilities may be implied as a result (Friedman, 1970, para. 5). Friedman's viewed executives as employees of the stockholders and therefore executives are not free to engage in social responsibility.
Friedman questioned if the corporate executive has a social responsibility as a businessman, and he believed that product prices would be in the best interests of a corporation; though the social objective would be preventing inflation (Friedman, 1970, para. 11). Friedman viewed socialism, and hiring the unemployed as having an adverse outcome on a business (Friedman, 1970, para. 11). Friedman's overall perspective was socialism had a detrimental effect on a corporation and that the only social responsibility of a business was to increase company profits.
An Exploration of Business Ethics
Peter F. Drucker's (1981) exploration of business ethics states that business ethics lends a special ethical status to an organization (Drucker, 1981, p. 3). Drucker's basic theme is that an individual can behave in a manner that is ethical; however, the same behavior when committed by a business may be unethical (Drucker, 1981, p. 3). Drucker uses the term "ordinary folk" when referring to an individual or person (Drucker, 1981, p. 3). Drucker argues that there is no such thing as business ethics, and that what does exist, is "casuistry" (Drucker, 1981, p. 22). Drucker points out business ethics do not represent the behavior of individuals, but of groups of individuals. Drucker believed casuistry involves striking a balance between the ordinary demands of individual ethics and one's social responsibility to one's organization (Drucker, 1981, p. 22).
Drucker essentially accuses business ethics of singling out an organization unfairly for special ethical treatment, and subordinating ethical concerns for political concerns; therefore, Drucker asserted business ethics is not ethics at all, but a "chic" (Drucker, 1981, p. 17). Drucker identifies key concepts for implementing a non-western style of ethics of interdependency (Drucker, 1981, p. 12). Much of Drucker's theories are based on behavior rather than one's intention. Thus, Drucker's views could be summarized as the purpose of business is to perform well by doing good.
The Relevance of Responsibility and Ethics
Patrick E. Murphy discussed the principle of responsibility, which he defined as "an entity's ability to respond to a person, situation, or issue in a certain way" (Murphy, 2009, p. 1). Murphy begins with an introduction of moral responsibility with the belief that currently no theory of responsibility in business has been developed (Murphy, 2009, p. 2). Murphy's purpose in writing his article was to examine the several articles and identify areas of responsibility which Murphy believes will provide a method of explaining the ethical impact of the studies conducted (Murphy, 2009, p. 1).
Murphy described various areas of responsibility that should be considered in any debate on business responsibility. Corporate social responsibility or CSR was used to describe firms that choose responsibilities most relevant to a respective organization (Murphy, 2009, p. 3). Societal responsibility is the belief in shared responsibility for the common good (Murphy, 2009, p. 3). Murphy believed responsibility implies that corporate executives are most at fault for ethical or unethical company behavior (Murphy, 2009 p. 3). Murphy discusses scenarios of possible business ethics situations or violations and how the types of responsibility should or could apply to the respective ethical counterparts. Murphy concluded his article with a call for more research so that a better understanding of responsibility in business will emerge" (Murphy, 2009, p. 7).
The concept and definition of Business Ethics could be referred to as subjective or based on one's opinion and may differ from one culture to another. Based on the findings and discussions of Friedman, Drucker, and Murphy this author believes business ethics is applied to companies in a discriminatory fashion. This means if one takes two given organizations, one business may be deemed ethical and another unethical while both businesses are doing the same act or behavior. Therefore, in this authors view, if the rules change depending on who you are, or where you work, a true system of ethics is difficult to establish and make comparisons with. In other words, for business ethics to be discussed in an equitable way, the group of individuals and/or organizations should subscribe to equal standards regarding right and wrong.
Drucker argued that there is no such thing as business ethics, and that what does exist instead is "casuistry" (Drucker, 1981, p. 22). Murphy believed responsibility implies that corporate executives are most at fault for ethical or unethical company behavior (Murphy, 2009 p. 3). Friedman believed that only individuals can be responsible and not corporations, though he acknowledged some potential for artificial responsibilities on the part of a given organization (Friedman, 1970, para. 5). All three authors (Friedman, Drucker, and Murphy) offered their opinions of what responsibility is; however, none of them properly defined the topic.
Friedman believed that a business had a responsibility to increase profits for the company (Friedman, 1970). This author believes that responsibility is the willful acceptance of the inherent duties resulting from making a personal choice. Maintaining these duties and continued acceptance of responsibility produces benefits, while the neglect of these duties and responsibility generally causes the reverse effect. Some responsibilities are encouraged or enforced by law; while most are entirely the result of choices made. In either scenario, an accepted responsibility is the result or outcome.
Murphy believed that "one of the foundational principles of business ethics is responsibility" (Murphy, 2009, p. 1). Freidman argued that "only people can have responsibilities" (Friedman, 1970, para. 5). Murphy's article identified several forms of responsibility within an organization, and shares the author's opinion by quoting another writer (Schulz) stating "responsibility is a category of relations" (Murphy, 2009, p. 1).
This author disagrees with Friedman's view that there is one and only one social responsibility of business-to use company resources and engage in activities designed to increase its profits with the caveat the business must remain within legal parameters while doing so (Friedman, 1970, para. 36). Friedman ignores the financial benefits of a good public image which can generate more profits for a corporation or business. Thus this author believes Friedman is too absolute in his conclusions. This author agrees with Drucker's basic theme that an individual can behave in a manner that is ethical; however, the same behavior when committed by a business may be unethical (Drucker, 1981, p. 3). What validates Drucker's position is that a person can borrow money from a friend (for example) and not pay the debt, and remain ethical (i.e. the loaner/friend forgave the debt); however, if a business did the same thing, it could or can be construed to be unethical, theft, or even illegal not to repay debt. Murphy believed responsibility implies that corporate executives are most at fault for ethical or unethical company behavior (Murphy, 2009 p. 3); where Friedman believed only people can have responsibilities (Friedman, 1970, para. 5). This author believes ethical or unethical behavior stems from individuals and is often carried out by corporate executives.
This essay discussed the writings and opinions of Milton Friedman, Peter F. Drucker, and Patrick E. Murphy. All three authors are known management authorities that wrote books and articles on business ethics and social responsibility. Many organizations and business communities believe the focus of business should be on business activities and therefore courses in ethics are not necessary. The three articles by Friedman, Drucker, and Murphy were discussed in order to help form an opinion regarding the differing views of the respective aforementioned authors and topics covered. Despite the differing perspectives, it is now generally believed in nearly all global cultures that the development of ethical awareness for students, managers, and executives, is a necessary valid pursuit.
About Author / Additional Info:
Drucker, P. (1981b). What is business ethics? Public Interest, 63, 18-36. Retrieved from http://www.nationalaffairs.com/doclib/20080708_1981632whatisbusinessethicspeterfdrucker.pdf
Friedman, M. (1970, September 13). The social responsibility of business to increase its profits. N.Y. 32-33, p. 126. Retrieved from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html