Ethics and Social Responsibilities Paper

Ethics and Social Responsibilities Paper
January 8th, 2007

Nowadays the concepts of business ethics and social responsibility have become widely used in the modern business environment. Trying to create the best possible reputation, large corporations are doing there best to seem as ethical as possible and to bear social responsibility. The reason for saying “to seem” but not “to be” is because not all of the businesses care much about customers they serve, but only pretend to.
The main purpose of this paper is to discuss the statement “Since the goal of the public corporation is to maximize shareholder wealth, management should take any action necessary to achieve this goal so long as no law is violated” in the context of ethics and social responsibility.
Before entering a market companies, which aim at staying in the market for a long term, always have to examine whether there is a chance that they may violate laws. If there is such a chance, such companies change their strategy in order to fit in with the existing legislation.
Ultimately, observing the existing laws and regulations is of high importance; however, it is not the only responsibility that companies will have to consider. Starting up a company is equaled to making a commitment to a large number of people, including shareholders, employees and consumers. All of the mentioned above groups of people will be affected by the company’s operation, thus, it is important to develop such a policy, which would allow to meet all commitments. Undoubtedly, the main purpose of any business is profit maximization, thus, businesses take all possible measures to maximize their profit and profit of its shareholders; however, it is not always good for company’s employees and clients. If there is no violation of state laws, it does not necessarily mean that there is no violation of the principles of ethics or social responsibility. When the company is focused on maximization of its shareholder wealth, it pays very little attention to its social performance, which is the “configuration of the principles of social responsibility, processes of social responsiveness, and policies, programs, and observable outcomes as they relate to the firm’s societal relationships” [Maignan and Ralston, 2002]. There are several principles of social responsibility, which include “community, diversity, environment, ethics, financial responsibility, human rights and safety” [Lallatin, 2004]. Hence, if a company is only interested in profits, it may decrease the quality of working conditions of its employees in order to economize, to eliminate all social programs, which are not obligatory according to the law, but desirable according to the principles of social responsibility. In this case a company will fail to address cultural diversity; it will pollute the environment unless it is not prohibited according to the law; or neglect safety regulations. Management of the company will only concentrate on increasing the performance of the employees, offering the latter very little benefits.
In order to make businesses be more socially responsible, government may issue new laws and regulations. Of course, it won’t be as affective as when a company itself understands the importance of developing certain social programs, creating better working conditions for the employees, taking care about the environment and etc.
Though some scientists and entrepreneurs “argue that businesses are not responsible toward society in general, but only toward their stakeholders” [Maignan and Ralston, 2002], it is not exactly so, because businesses are responsible for the issue of environmental pollution, which is very acute nowadays. They are responsible for producing safe products, because they can be purchased by any member of the society. A business is not obliged to take care of the society in a whole, however, it is logic that “a firm committed to CSR (corporate social responsibility) has principles and processes in place to minimize its negative impacts and maximize its positive impacts on selected stakeholder issues” [Maignan and Ralston, 2002]. In this case, stakeholders include not only partners and supplies, but employees and customers are also included in the concept stakeholders.
In conclusion, company’s desire to maximize profits of its shareholders, avowedly conflicts with some of the principles of social responsibility, which leads to the falling off of company’s reputation.

1. Lallatin, C.S. (2004). Business Ethics = Social Responsibility. Retrieved February 7, 2007 from
2. Maignan, I., Ralston, D.A. (2002). Corporate Social Responsibility in Europe and the U.S.: Insights from Businesses’ Self-Presentations. Journal of International Business Studies, Vol. 33.