One of the approaches to business ethics is the philosophy of utilitarianism, which advocates for the benefit of the majority at all cost (Mill & Crisp 1998, p.37).
Business ethics outlined by Adam Smith championing the superiority of economic gain has a different approach to responsibility in business (May & Roper 2007, p.46).
Many businesses operate across societal, including national,boundaries. These are typically called “multinational” or“transnational” firms (MNCs or TNCs). Operatinginternationally heightens the salience of a number of the ethicalissues discussed above, such as CSR, but it also raises new issues,such as relativism and divestment. (Two issues often discussed inconnection with international business are not treated in thissection. One is wages and working conditions in overseas factories,often called sweatshops. This literature is briefly discussed in . The second issue is corruption. For discussion of this issue, see theentry on .)
Many businesses are active participants in the political arena. Theysupport candidates for election, defend positions on issues in publicdebate, lobby government officials, and more (see Stark 2010). Whatdoes business ethics say about these activities?
A famous example of CSR involves the pharmaceutical company Merck. Inthe late 1970s, Merck was developing a drug to treat parasites inlivestock, and it was discovered that a version of the drug might beused treat River Blindness, a disease that causes debilitating itching, pain, andeventually blindness. The problemwas that the drug would cost millions of dollars to develop, and wouldgenerate little or no revenue for Merck, since the people afflictedwith River Blindness—millions of sub-Saharan Africans—were too poor to afford it. In the end, Merckdecided to develop the drug. As expected, it was effective in treatingRiver Blindness, but Merck made no money from it. As of this writingin 2016, Merck, now in concert with several nongovernmentalorganizations, continues to manufacture and distribute the drug forfree throughout the developing world.
It is important to realize that a resolution of the debate betweenshareholder and stakeholder theorists (however we conceive of thelatter) will not resolve all or even most of the ethical questions inbusiness. This is because this is a debate about the ends ofcorporate governance; it cannot answer all of the questions about themoral constraints that must be observed in pursuit of thoseends (Goodpaster 1991; Norman 2013). Neither shareholder primacy norstakeholder theory is plausibly interpreted as the view that corporatemanagers should do whatever is possible to maximizeshareholder wealth and balance all stakeholders’ interests,respectively. Rather, these views should be interpreted as views thatmanagers should do whatever is morally permissible to achievethese ends. A large part of business ethics is trying to determinewhat morality permits in this domain.
Business ethics on the other hand is the code of a conduct that a company or an organization abides to in the day to day operations with the public (Conjecture Corporation, 2011).
There is lack of harmony between the perspectives of ethicists such as John Stuart Mill and liberal ethicists who maintain that businesses have to award themselves more benefits than the proportion the spare for corporate social responsibility.
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Complex and contentious areas of business ethics would include the effect a petrochemical company's actions have on the environment or the obligation of a pharmaceutical company to make its drugs available to developing countries....
This ethical perspective is directly opposed to Adam Smith’s view that businesses have an obligation to ensure their own survival in the competition (May & Roper 2007, p.49).
Recent studies in business ethics have shown both remarkable similarities and differences across cultures with respect to attitudes toward questionable business practices.
For this reason, businesses are forced by ethics to act in a manner that will result in the benefit of the society even if the action is retrogressive in its economic strategy (Buchan 2006, p.81).
Business ethics are guidelines or behaviors that businesses and individuals use daily to deal with the world, and even smaller situations they might find themselves in.
So much importance is attached to the theory of social responsibility such that a business entity must be willing to forego profit and even endure losses for the sake of ethical issues (Crane & Matten 2007, p.110).