Business ethic
Milton Friedman is rumored to have said “The business of business is business.” Why would a free-market economist have made such a statement? Does such a philosophy have implications for business ethics?
Milton Friedman was famously known for his quote that, ‘the business of business is business’. This quote calls upon every person involved in business, from business owners to employees to assume an important role in the workings of business. This implies that one should focus more on his or her business’ most important aspects. Apparently, the most important business activity is cash flow. This is the money either coming in or out of one’s business. Cash flow is important for the business and it is crucial for it to be tracked. Nonetheless, a business can only operate long term if the business makes profit. This is because profit ensures that business grows in addition to allowing future planning. Profits can also tie a business organization during hard times. This justifies the saying that, ‘the business of business is business profit’ (Rendtorff 79).
The saying, the business of business is business’ puts much emphasis of the key activities that are responsible for the success of a business. In this regard, the business owners and employees must utilize the best tools for the business. Good tools for business ensure easier and more cost efficient running of the business and also saves energy and time. This is the only way a business can thrive in a market economy. However, this philosophy has serious implications on the ethical side of the business. It is important to note that every business should have its moral purpose. In most cases, the moral purposes of a business include provision of jobs, capital investment, goods purchase and general day to day business activities. This ensures that corporations have positive and profound influences in the societies upon which they operate.
Contributing to a society’s positive economy is the most important thing a corporation can do to a community. Apparently, some of the areas where corporations operate in especially in developing countries are characterized by poverty, inequality, low wages and overexploitation of natural resources. Corporations have the resources and knowledge to change these circumstances and help to uplift the social and economic lifestyles of the disadvantaged communities. Every business enterprise should pursue the ethical side of their businesses including small scale businesses whose main goal is short term profit persuasions. They must therefore not be allowed neglect environmental and social implications associated with their businesses. Corporate social responsibility should be about finding equilibrium about business operating practices’ shared values and the social dimensions ( Halbert and Ingulli 67).
Based upon your readings in the book, your answer to the previous question, and the Porter/Kramer reading, what (if anything) does business owe society?
The original idea behind commerce is to assist society to purpose more efficiently through the use of intermediaries and media currency to facilitate the flow of ideas as well as goods and services. The idea by Friedman has contributed to the decline of this idea. However, Michael Porter and Mark Kramer argue that companies owe the society and must therefore coexist with it. Society is the ultimate destination of a business’ success. When the activities of a business lead to the destruction of a society’s environment, then the business owes the said society. For instance, a business organization that dumps pollutants into the rivers used by the entire society owes it and its future generation’s debts ( Cunningham and Harney 39).
Business activities must be integrated to the societal norms. It is only after understanding the interrelationship between a society and a corporation that a business can anchor its corporate social responsibility strategies on the specific needs of the society. It is common knowledge that business and society need each other. For a corporation to be successful it requires a society that is healthy. A productive workforce is characterized by good health care, equal opportunity and quality education. This can only come from an empowered and receptive society. When conditions for working and products are safe, customers will not only be attracted to the business but the accidents frequencies will also be lowered. Additionally, when water, energy and land resources are used more efficiently, the business will be more productive. Apparently, all these resources are obtained from the community ( Werther and Chandler 209).
The society provides for the business good government for operation including property rights, and the rule of law. These provide the required tools for innovation and efficiency. Strong standards of regulation help in cushioning consumers and companies competing from exploitation. A healthy society generates a demand expansion for business and this is indicated by the increased number of more human needs together with the growth of aspirations. Therefore, a business that is engaged in the sole pursuit of profit making at the expense of the society whereupon it operates will realize how difficult it is to operate. This clearly indicates that business owe the society. A business can pay this debt by engaging the society in social programs like innovations for the community and job creation.
It can only be enforced through pursuing an efficient corporate social responsibility. This requires strong leadership, organizational adjustments, and relationships reporting and reporting. Operating management must be engaged in processes that help in the identification and prioritization of social based issues. This should be based on the business operations’ salience as well as the company’s competitive importance. The CSR effects should yield philanthropy as well. However, achievement of this requires a different approach in that companies must abandon defensive and fragmented posture and embrace an approach that is affirmative and integrated. Focus should be removed from image emphasis to substance emphasis. Currently, a lot of energy is channeled towards measuring the satisfaction levels of shareholders. This should be stopped and more focus given to social impact measurement.
How do you think CSR translates to firm performance?
Corporate social responsibility has huge impacts on the performance of a firm. Company managers should be aware that devoting investments of the company towards corporate social relationship can yield tangible financial benefits and value for the same company. Outside-in influence of the context of competition is very important for the performance of a firm. As a matter of fact corporate social responsibility initiatives should have a granular understanding of all value chain activities. Competitive context investment and value chain in corporate social responsibility should be incorporated into the measures of performance with the responsibility of profit and loss for managers. This requires some prejudices that are long termed. Corporate social responsibility help get rid of the us-versus-them mantra. For a company to change their social leverage dimensions, they must be able to make good strategic choices on the end result of corporate social responsibility (Rendtorff 105).
Works cited
Cunningham, James and Brian Harney. Strategy & strategists. Oxford: Oxford University Press, 2012. Print.
Halbert, Terry and Elaine Ingulli. Law & ethics in the business environment. Mason, OH : South-Western Cengage Learning, 2012. Print.
Rendtorff, Jacob Dahl . Responsibility, ethics, and legitimacy of corporations. [Frederiksberg, Denmark] : Copenhagen Business School Press ; Portland, OR : International Specialized Book Services [distributor], 2009. Print.
Werther, William B and David Chandler. Strategic corporate social responsibility : stakeholders in a global environment. Los Angeles : SAGE, 2011. Print.
