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Lecture 6

MGCR 423 Lecture Notes - Lecture 6: Recycling, Contract Manufacturer, Profit MaximizationPremium

3 pages82 viewsFall 2017

Management Core
Course Code
MGCR 423

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Friedman’s Traditional view of Business Responsibility
Argues against the concept of social responsibility
Primary goal of business is profit maximization not spending shareholder money for the general
social interest
Urging a return to a laissez-faire worldwide economy with minimal government regulation,
Milton Friedman argues against the concept of social responsibility as a function of business
o Friedman thus referred to the social responsibility of business as a “fundamentally
subversive doctrine” and stated that: “ there is one and only one social reasonability of
business - to use its resources and engage in activities designed to increase its profits so
long as it stays within the rules of the game, which is to say, engages in open and free
competition without deception or fraud.”
*Note: Important to always think about incentives (cost/revenue). Difference between public and
private is push for profits. Less push in private companies (or companies with owner concentration)
because more power (ex: Patagonia created with purpose of sustainability, NOT profits). Avoid this by
proving the business case in it, why it is important to shareholders.
Carroll’s Four Responsibilities of Business
1. Economic responsibilities
o Produce goods and services of value to society so that the firm may repay its creditors
and increase the wealth of its shareholders
2. Legal responsibilities
o Defined by governments in laws that management is expected to obey
3. Ethical responsibilities
o Follow the generally held beliefs about behavior in a society
4. Discretionary responsibilities
o Purely voluntary obligations a corporation assumes
*Note: Foundation is legal and economic, but other matter too.
Five Reasons for Unethical Behavior
1. Unaware that behavior is questionable
2. Lack of standards of conduct
3. Different cultural norms and values (within or outside of an organization)
4. Behavior based or relationship based governance systems
5. Different values between business people and stakeholders
*If everyone found out you did it, would you still do it?
Three Guidelines for Ethical Behavior
Cavanagh’s questions to solve ethical problems:
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