Contemporary Consumer & Business Ethics
Milan 3 - 6 May, 2010
Dr Neil Connon
Contemporary Consumer & Business Ethics
Milan 3 - 6 May, 2010
Dr Neil Connon
Implications and reactions of business to contemporary ethics
Session 3&4
Wednesday
11.00 – 13.30 &
16.00 – 19.00
Outline of the lecture What drives business?
CRS
Boycotts
Environmentalism
Government
Media
Conclusions
Bibliography
What drives business? Consumer Sovereignty
What is produced?
How is it produced?
How is it distributed?
Determined by consumer preferences - expressed by individual choice in the market place (free market)
Adam Smith
producers will find that their self-interest is served by producing what is socially viable
..individual.. neither intends to promote the public interest, nor knows how much he is promoting it.. he intends only his own gain, and he is in this...led by an invisible hand to an end which was no part of his intention.
the interest of the producer ought to be attended to only so far as it may be necessary for promoting that of the consumer
What drives business?
Adam Smith
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages." What drives business?
Adam Smith
It is the highest impertinence and presumption, therefore, in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society. Let them look well after their own expense, and they may safely trust private people with theirs. If their own extravagance does not ruin the state, that of their subjects never will."
Smith, A. 1776 The Wealth of Nations
What drives business?
Consumers have a free choice to buy or not to buy
consumers choices determine a business’s success
choices are conditioned by
available information
Promotional activities
individual consumers are in a relatively weak bargaining position
What drives business?
Key features of a corporation A corporation is essentially defined in terms of legal status and the ownership of assets
Corporations are typically regarded as ‘artificial persons’ in the eyes of the law
Corporations are notionally ‘owned’ by shareholders, but exist independently of them
Managers and directors have a ‘fiduciary’ responsibility to protect the investment of shareholders
Social responsibility ...responsibility to society
Towards a framework for business ethics What is a corporation?
Can a corporation have social responsibilities? Milton Friedman 1970 classic article “The social responsibility of business is to increase its profits”
Vigorously argued against the notion of social responsibilities for corporations based on three main arguments:
Only human beings have a moral responsibility for their actions
It is managers’ responsibility to act solely in the interests of shareholders
Social issues and problems are the proper province of the state rather than corporate managers
Can a corporation be morally responsible for its actions? Evidence to suggest that legal designation of a corporation makes it unable to be anything but self-interested (Bakan 2004)
Long and complex debate but generally support from literature for some degree of responsibility accredited to corporations
Argument based on:
Every organisation has a corporate internal decision structure which directs corporate decisions in line with predetermined goals (French 1979)
All organisations manifest a set of beliefs and values that lay out what is generally regarded as right or wrong in the corporation – organizational culture (Moore 1999)
Why do corporations have social responsibilities? Business reasons (‘enlightened self-interest’)
Extra and/or more satisfied customers
Employees may be more attracted/committed
Forestall legislation
Long-term investment which benefits corporation
Moral reasons:
Corporations cause social problems
Because they are powerful, corporations should use their power and resources responsibly
All corporate activities have social impacts of one sort or another
Corporations rely on the contribution of a wide set of stakeholders in society rather than just shareholders
What is the nature of corporate social responsibilities? Corporate social responsibility encompasses the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time
(Carroll & Buchholtz 2000:35)
Corporate Social Responsibility Economic
Responsibility Legal
Responsibility Ethical
Responsibility Philanthropic
Responsibility Desired by society Expected by society Required by society Required
by society Carrol 1991
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