Question

Which one of the following is not a particularly justification for why a company's strategy should be ethical?

A) An unethical strategy can put a company's reputation at risk and do lasting damage, especially when the misdeeds get into the public spotlight and make media headlines.
B) An ethical strategy is in the best interest of shareholders.
C) An unethical strategy reflects badly on the character of the company personnel involved.
D) Shareholders profits are not greatly reduced by using ethical strategies.
E) A strategy that is unethical in whole or in part is morally wrong.

Answer 1

The debate between profit-maximization and ethical business practice is complex, challenging the notion that profits must be sacrificed for ethics. Companies are scrutinized for their moral responsibilities to various stakeholders, not just shareholders. The role of corporations extends beyond legal rights to include ethical considerations within society.

Step-by-step explanation:

The tension between profit-maximization and ethical business practices is a significant issue in the corporate world. The assertion that shareholder profits are not greatly reduced by using ethical strategies presents a complex situation. It challenges the belief that ethical strategies might lead to financial sacrifice, which is a false dichotomy, as businesses can be both profitable and ethical.

Meanwhile, the claim that a strategy is morally wrong if it's unethical in whole or in part aligns with many moral theories that advocate for responsible corporate conduct that goes beyond solely increasing shareholder wealth. Milton Friedman’s essay suggesting an obligation to maximize profits has been countered by the reality that businesses operate within a social context and have responsibilities to multiple stakeholders, including employees, customers, and the community, not just shareholders.

The expanding legal rights of corporations, such as political contributions and exemptions on religious grounds, further complicate the debate. These rights can come into conflict with other social and ethical responsibilities, leading to questions about to whom corporations are truly morally responsible.