The often cited paper of Milton Friedman, in which he blasts the notion of social responsibility being held by corporations, seems to lead me to claim by extension that corporations, not being humans, have no responsibilities towards other people other than their shareholders.

However, such a claim fails to recognize that businesses, though technically only responsible to their shareholders, are capable of holding deeply ingrained relationships with their suppliers, clients, employees and other stakeholders. Though the corporation is not human, law designates it a virtual human, able to own property and carry on debt like a human, thus meaning it by extension may also be expected to conduct its activities pursuant to the moral codes of society. Although the corporation itself may be only directly responsible to its shareholders, those human owners have an ethical obligation to consider the consequences of their corporation’s actions, and conduct that business accordingly. A fair, considerate and honest businessman who stands by their moral code develops a positive reputation with clients and colleagues; corporations, by way of the people who represent them, allow people to develop a relationship with their organization as a whole.

Correct ethical behavior should be seen as a cornerstone of long-term success. Corporations which engage in ruthless and inconsiderate violations of ethical decision-making, making choices which for instance improperly treat employees or the environment, will find that the short term means to gain may also hinder their long term viability, whether by reducing the health and productivity of those employees, or the level of extraction available from that environment. Friedman’s Machiavellian corporation may seem to serve the best interests of its shareholders; however, corporations must exist as the arms of shareholders, who are morally obligated to uphold ethical standards which will govern the success of their relationships. Therefore, these corporations must follow the same ethical codes that fairly govern their human owners.