Ethics

Ethics and Social Responsibility in Business

Ethics and social responsibility is a key element in the development of strategic planning. Organizational management must balance carefully the needs of the various groups of stakeholders. This paper will detail the role that ethics and social responsibility plays in developing an organization’s strategic plan. Additionally, an example of a company overstepping ethical boundaries is provided.

The Role of Ethics and Social Responsibility in Developing a Strategic Plan

Ethics and social responsibility plays a major role in the development of a business’s strategic plan. Strategic decisions often affect more than just the corporation; they can also impact the community both positively or negatively. According to Wheelen and Hunger (2010), “social responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit” (p. 72). Economist and statistician Milton Friedman and business professor Archie Carroll have contrasting views of the responsibilities of business firms to society. For example, Wheelen and Hunger (2010) stated:

A business person who acts “responsibly” by cutting the price of the firm’s product to prevent inflation, or by making expenditures to reduce pollution, or by hiring the hard- core unemployed, according to Friedman, is spending the shareholder’s money for a general social interest (p. 72).

Friedman argues that by taking on the burden of these social costs, a business becomes less efficient and prices for products or services increases because of investments in new activities.

Carroll proposes that managers of business have four responsibilities, economic, legal, ethical, and discretionary. Carroll also believes that a firm’s social responsibility goes beyond the economic and legal aspects of a business and that ethical and discretionary aspects are the elements of social responsibility (Wheelen & Hunger, 2010). For example,...