University of Western Sydney
College of Law and Business
School of Management
Individual Essay
Assignment “Management Foundations”

”Ethics and Social Responsibility“

by:
Petra Zschietzschmann

2004

Using your knowledge of ethics and social responsibility, critically analyse the following statement: “The obligation of organisations to make a profit is incompatible with a socially responsible approach to business. Consequently, profit-driven organisations are unethical.”

“The reasons for the newly elevated place of ethics in business thinking are many. Managers have seen the high costs that corporate scandals have exacted: heavy fines, disruption of the normal routine, low employee morale, increased turnover, difficulty in recruiting, internal fraud, and loss of public confidence in the reputation of the firm” (Clark & Johnson 1995, p. 26).

Therefore, why should an organisation intentionally act socially irresponsible or even unethically when managers seek to attain their goal of profit making as long as they are aware of these consequences?

The purpose of this essay is to acknowledge a socially responsible approach to business. It aims to analyse the relationship between profit making on the one hand and both social responsibility and ethical behaviour on the other hand. It will also reveal that profit-driven organisations are not automatically unethical in nature.

Corporate social responsibility

Thinking about social responsibility means considering an organisation’s social background which is made up of its stakeholders: the corporate social responsibility is seen as “… obligation of the organisation to act in ways that serve both its own interests and the interests of its many external stakeholders” (Schermerhorn et al. 2004, p. 158) which is to benefit society. Being socially responsible requires everyone being involved in the business process to act carefully.

Managers are forced to do the splits if they want to attain this objective: an organisation’s obligation is increasing its profits whilst there are various other interests of multiple corporate stakeholders. “… top managers increasingly come to believe that they and their companies must be socially responsible to their stakeholders.

Surveys show that as many as 80 per cent of top-level managers believe that it is unethical to focus just on shareholders” (Williams 2002, p. 88), so they have changed from a narrow classical view to the socioeconomic view which both are explained in the next part.

[...]