Project 2: Business Obligations ( Your Name ) BMGT 496 ( ✓ Solved

Memorandum

To:

From:

Date:

Subject:

Introduction

Write an Introduction paragraph. The Introduction paragraph is the first paragraph of the paper and will be used to describe to the reader the intent of the paper explaining the main points covered in the paper. This intent should be understood prior to reading the remainder of the paper so the reader knows exactly what is being covered in the paper.

Summary of Friedman’s Position

Remember to layout not just his position, but all the justifications he gives supporting that position.

Summary of Contrary Positions

Explain the position of the Business Roundtable as well as other contrary arguments you find.

Demonstrate How Each Position Would Affect the Outcome of an Ethical Dilemma

Choose an ethical dilemma you have raised in a class discussion and illustrate how the resolution would be different applying Friedman’s or the contrary position.

Most Compelling Position

Between the two positions you have discussed, explain the position that you find most compelling. What are the weaknesses and strengths of each position?

Conclusion

Write a concluding paragraph that is brief and summarizes the main points. Make a specific recommendation to the CEO as to the approach she should take.

References

The reference page is on a separate page from the report. The reference page is completed according to APA with each reference left-justified with hanging indentation for subsequent lines. References are completed in alphabetical order. Please see the module, Learn to Use APA to ensure references are in APA format.

Paper For Above Instructions

Introduction

The ethical responsibilities that businesses hold towards various stakeholders have long been a subject of debate. In this paper, we will explore the contrasting viewpoints of Milton Friedman, who advocates for shareholder primacy, and the Business Roundtable, which supports a broader stakeholder approach. The discussion will delve into how each perspective influences the resolution of ethical dilemmas faced by corporations today. A specific ethical dilemma will be analyzed to illustrate the impact of these opposing positions on decision-making, followed by an assessment of the strengths and weaknesses of each viewpoint, ultimately leading to a recommendation for corporate leadership.

Summary of Friedman’s Position

Milton Friedman argues that the primary responsibility of a business is to its shareholders, emphasizing profit maximization as the correct approach to corporate governance. According to Friedman, corporate social responsibility (CSR) initiatives that stray from this goal equate to a form of taxation, as they divert resources away from the market's efficient allocation. Friedman asserts that engaging in CSR can undermine a company's legitimacy by prioritizing broader social goals over the firm’s responsibility to generate profits. His justification centers around market efficiency, where the pursuit of self-interest leads to overall economic benefit, thus supporting the idea that businesses should focus solely on economic performance to ensure a thriving society.

Summary of Contrary Positions

Conversely, the Business Roundtable, representing a group of CEOs from major U.S. companies, recently affirmed that corporations should not only focus on shareholder interests but should also account for other stakeholders—including employees, suppliers, and the community. This position advocates for a balance between profit-making and ethical considerations, suggesting that long-term value creation can coexist with social responsibility. Supporters argue that inclusive governance leads to better decision-making and sustainable business practices. Additionally, arguments from various ethical frameworks, such as stakeholder theory and social contract theory, emphasize that businesses must consider the wider implications of their actions on society and the environment, promoting a more ethical corporate behavior.

Demonstrate How Each Position Would Affect the Outcome of an Ethical Dilemma

To illustrate how these positions affect ethical dilemmas, consider the case of a company faced with deciding whether to cut costs by downsizing a significant portion of its workforce during an economic downturn. From Friedman’s perspective, the priority would be to cut jobs to maintain profitability and satisfy shareholders, potentially leading to short-term financial results but long-term reputational damage. On the other hand, adhering to the contrary positions advocated by the Business Roundtable would prompt the company to seek alternative solutions, such as temporary pay cuts across the board or seeking government assistance, thereby preserving jobs and maintaining stakeholder trust. Such an approach reflects a more holistic view of the company's role within the community and its commitment to ethical obligations.

Most Compelling Position

Among the two positions discussed, the stakeholder approach represented by the Business Roundtable appears more compelling, particularly in today's interconnected world. This perspective acknowledges the complexities of modern corporate responsibilities and recognizes that stakeholder engagement can enhance a company's reputation, foster customer loyalty, and encourage employee satisfaction. While Friedman’s shareholder primacy is grounded in traditional economic theory and offers clarity in corporate goals, it fails to account for the ethical implications of corporate actions. The weaknesses in Friedman's position lie in its potential to lead to detrimental social outcomes, while the strengths of the stakeholder model include its adaptability to societal changes and the potential for sustainable business practices. Ultimately, while profitability is critical, the ethical fabric of society and the long-term health of businesses necessitate a broader focus on stakeholder interests.

Conclusion

In summary, the exploration of the contrasting ethical perspectives of Friedman and the Business Roundtable reveals the complexities involved in corporate decision-making. Choosing to adopt a stakeholder approach not only reinforces ethical responsibility but also aligns with the long-term interests of businesses in an increasingly conscientious marketplace. Therefore, it is recommended that CEOs embrace a stakeholder-oriented framework, thus ensuring their companies contribute positively to society while still fulfilling their economic obligations.

References

  • Business Roundtable. (2019). Statement on the Purpose of a Corporation.

  • Friedman, M. (1970). The Social Responsibility of Business is to Increase Its Profits. The New York Times Magazine.

  • Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Pitman.

  • Harrison, J. S., & Wicks, A. C. (2013). Stakeholder Theory, Value, and Firm Performance. Business Ethics Quarterly, 23(1), 97-124.

  • Mackey, J., & Sisodia, R. (2013). Conscious Capitalism: Liberating the Heroic Spirit of Business. Harvard Business Review Press.

  • Moon, J. (2007). The Contribution of the Social Responsibility of Business in a Globalized World. Journal of Business Ethics, 71(2), 211-222.

  • Porter, M. E., & Kramer, M. R. (2011). Creating Shared Value. Harvard Business Review, 89(1-2), 62-77.

  • Sanders, T. (2016). Exploring the Corporate Social Responsibility Debate: A Critical Review of the Literature. Journal of Business Ethics, 136(4), 733-746.

  • Shelton, C., & Cone, J. (2019). Corporate Governance and Stakeholder Theory as a Check on Managerial Discretion: A Critical Assessment. Journal of Business Ethics, 150(4), 811-827.

  • Whelan, G., & Fink, S. (2020). The New Business Imperative: A Stakeholder-Oriented Approach to Corporate Responsibility. Journal of Business Ethics, 165(3), 587-607.