The paper reconstructs in economic terms Friedman's theorem that the only social responsibility of firms is to increase their profits while staying within legal and ethical rules. A model of three levels of moral conduct is attributed to the firm: (1) self-interested engagement in the market process itself, which reflects according to classical and neoclassical economics an ethical ideal; (2) the obeying of the "rules of the game," largely legal ones; and (3) the creation of ethical capital, which allows moral (...) conduct to enter the market process beyond the rules of the game. Points (1) and (2) position the Friedman theorem in economic terms while point (3) develops an economic revision of the theorem, which was not seen by Friedman. Implications are spelled out for an instrumental stakeholder theory of the firm. (shrink)

Applied Business Ethics is a core module for business undergraduate students in an internationalised university business degree programme from the United Kingdom taught at a Private Higher Education Institution in Singapore. Students, who are working adults undertaking this part-time degree, are assessed purely on the application of theoretical knowledge through essays that show evidence of their ability to apply theory in workplace ethical dilemmas. This pilot study explores the utility of the module in terms of use and exchange value. It (...) was conducted in two phases as an empirical qualitative research. First, an email survey was sent to students, who had already graduated, to gather impressions of the module using open-ended questions. Based on the responses, semi-structured interviews of a purposive sample of four students were carried out to unearth insights on use and exchange value of the module through their stories. The study suggests that a key determinant of use value is workplace utility of the knowledge that has been gained. Over time, consistent derivation of use value translates to exchange value as long-term behaviour changes in the individual create positive workplace outcomes. The study also recognised the powerful influence of organisational culture in determining whether ethical thinking translates into ethical action, which also has a direct bearing on perceptions of use and exchange value. The findings of this study provide an insight to the understanding of the motivations of working adults attending the Applied Business Ethics module on a part-time basis. Having this understanding, it will be possible to further structure the module, in terms of positioning, delivery and assessment, to enable these students to become better managers when dealing with real-world workplace ethical issues. (shrink)

We examine the writings of Adam Smith and Milton Friedman regarding their interpretation and use of the concept of self-interest.We argue that neither Smith nor Friedman considers self-interest to be synonymous with selfishness and thus devoid of ethicalconsiderations. Rather, for both writers self-interest embodies an other-regarding aspect that requires individuals to moderate theiractions when others are adversely affected. The overriding virtue for Smith in governing individual actions is justice; for Friedman it isnon-coercion.

This article discusses issues of social and distributive justice in the context of global capitalism in the twenty-first century and the necessity of incorporating values-clarification and ethical leadership as part of the core curriculum for university graduates.

It is generally assumed that common stock investors are exclusively interested in earning the highest level of future cash-flow for a given amount of risk. This view suggests that investors select a well-diversified portfolio of securities to achieve this goal. Accordingly, it is often assumed that investors are unwilling to pay a premium for corporate behavior which can be described as socially-responsible.Recently, this view has been under increasing attack. According to the Social Investment Forum, at least 538 institutional investors now (...) allocate funds using social screens or criteria. In addition, Alice Tepper Marlin, president of the New York-based Council on Economic Priorities has recently estimated that about $600 billion of invested funds are socially-screened (1992). (shrink)

In this paper I respond to separate criticisms by Bill Shaw (JBE, July 1988) and Richard Nunan (JBE, December 1988) of my paper A Critique of Milton Friedman's Essay The Social Responsibility of Business Is to Increase Its Profits (JBE, August 1986). Professors Shaw and Nunan identify several points where my argument could benefit from clarification and improvement. They also make valuable contributions to the discussion of the broad issue area of whether and to what extent business should exercise moral (...) initiative.My objectives are (1) to show, with the aid of examples (inspired by Shaw) and the addition of one point of correction (inspired by Nunan), that my disapproving critique of Friedman's famous argument remains sound, (2) to show that Professor Shaw's argument contains serious problems, and (3) to build on the base laid by my critics by developing important reasons why business should exercise moral initiative. (shrink)

Business leaders are increasingly responsible for the societal and environmental impacts of their actions. Yet conceptual views on responsible leadership differ in their definitions and theoretical foundations. This study attempts to reconcile these diverse views and uncover the phenomenon from a business leader’s point of view. Based on rational egoism theory, this article proposes a formal mathematical model of responsible leadership that considers different types of incentives for stakeholder engagement. The analyses reveal that monetary and instrumental incentives are neither sufficient (...) nor necessary for business leaders to consider societal and environmental stakeholder needs. Non-monetary and non-instrumental incentives, such as leaders’ values and authenticity, as well as their planning horizons, counterbalance pure monetary and instrumental orientations. The model in this article complements the growing body of research on responsible leadership by reconciling its various conceptual views and providing a foundation for future theory development and testing. (shrink)

In this article we discuss whether it pays to invest ethically. Our aim is to examine corporate social responsibility from philosophical, moral and practical points of views. We focus on two main issues related to ethical investments. Firstly we discuss the moral dilemma of how capitalism has changed its shape in today's world and from 'blaming the business' there is a general attempt to use the markets to promote ethics values and corporate social responsibility. Secondly, we analyze the growth of (...) ethical investment funds in the UK today, and their performance, and highlight some of the institutional investors involved in the management of ethical funds. We discuss whether ethical investments really succeed in reducing the conflict between profit-making and social responsibility as they promise or whether they use commercial rhetoric and market mechanism to merely sell us our own perceived values back. We conclude that the paper has a key contribution in setting the scene for future research in an area that is evolving and of fundamental importance to companies, investors and various stakeholder groups. (shrink)

Corporate social responsibility (CSR) and its action-oriented offspring Corporate Citizenship (CC) currently trigger an intensifying debate on ethics, role and behavior of companies within civil society. For companies, CSR raises the question of what may be the "good reason(s)" for acting responsible towards its members, customers or society. In order to answer this question, we face the debate on CSR and its strategic engagement drivers on the levels of corporate culture, social innovation, and civil society. In this article, we provide (...) a conceptual framework based on the analytic distinction of legitimation and sensemaking. The conceptual framework developed in this article can serve as a basis to develop a company's CSR strategy. It provides measures and instruments to make complex CSR processes more visible and manageable. (shrink)

Milton Friedman famously stated that the only social responsibility of business is to increase its profits, a position now known as the shareholder model of business. Subsequently, the stakeholder model, associated with Edward Freeman, has been widely seen as a heuristically stronger theory of the responsibilities of the firm to the society in which it is situated. Friedman’s position, nevertheless, has retained currency among many business thinkers. In this article, we argue that Friedman’s economic writings assume an economy in which (...) businesses operate under the protections of limited liability, which allows corporations to privatize their gains while externalizing their losses. By accepting limited liability, Friedman must also accept a view of business as embedded in social interdependency, which serves as the logical and moral foundation for corporate social responsibility (CSR). To achieve consistency with his economic principles, Friedman must either abandon limited liability or modify his doctrine on CSR and his related shareholder model of business. (shrink)

Libertarianism and the shareholder model of corporate responsibility have long been thought of as natural bedfellows. In a recent contribution to the Journal of Business Ethics, Brian Schaefer goes so far as to suggest that a proponent of shareholder theory cannot coherendy and consistently embrace any moral position other than philosophical libertarianism. The view that managers have a fiduciary obligation to advance the interests of shareholders exclusively is depicted as fundamentally incompatible with the acknowledgement of natural positive duties – duties (...) to aid others that have not been acquired by some prior commitment or transaction. I argue that Schaefer is mistaken. Positive duties are incompatible with the shareholder model only if we must contribute to their fulfilment in the corporate context; only if we have some reason to think that it is not possible or not permissible to discharge these obligations entirely in our private lives or through our various other roles and capacities. But we have no good reason to accept this. I argue that individuals are presumptively free to decide how and when to discharge their positive duties, and that buying shares does not cause this presumption to lapse. Hence a non-libertarian moral theory can be held without incoherence by a proponent of the shareholder model. (shrink)