Social responsibility is a term that appears to be utopian in today’s modern world. It seems that these days, the larger a company gets, the more its goals become solely about profit. There is no doubt that a corporation should mainly focus around making profit-in fact, that motivation is what has helped advance our industries over the past 100 years-however, there has always been a certain ethical standard surrounding the way that companies make profit. Does a company really need to be ethical, and to what extent?
Earlier this year, Perrigo Co. was found at the center of a scandal after authorities found that the world’s largest over-the-counter drug company was colluding with other smaller companies to create an unfair market price for pharmaceutical drugs. Whenever price collusion occurs, it always seems that pharmaceutical companies and other health care related corporations get the most public scrutiny. The notion that certain companies are purposely restricting access to medication for the sick is one that, excuse the pun, makes most sick. Certain corporations “might [exist] for an eleemosynary purpose – for example, a hospital or a school…such a corporation will not have money profit as [it’s] objective but the rendering of certain services.”[1] Many apply this argument to pharmaceutical companies, since they have a relatively inelastic good, one that is vital to many people’s health. Their practice should not only be ethical towards their stakeholders, but also to their market. Price collusion is something that does not allow the market to operate and adjust freely. It reduces competition and creates a negative image for every company involved. Not only is it immoral to society, it is also unethical to business.
There is an expectation by the public that a business will comply with laws and-hopefully-act in an ethical manner. The question that arises, however, is how much of an effect should ethics have on a business’s practices? The answer ties back to the type of business, and the public exposure said business has. A corporation that is a household name or provides a vital service is more likely to act ethically in order to maintain its PR image and maintain a fair market. Other companies that are smaller may feel they can get away with unethical practices, yet that shouldn’t be the case. Ethics should have a large impact on the decision making of a company, since those decisions usually impact employees, stakeholders, and the image of the company. Ultimately, practicing ethical business is the best way for a company to show social responsibility.
[1] Zimmerli, Walther Ch., et al. Corporate Ethics and Corporate Governance. Springer, 2010.
Information about Perrigo Co.:
Chen, Caroline. “Perrigo Offices Searched by U.S. Agents in Drug Price Probe.”Bloomberg.com, Bloomberg, 2 May 2017, www.bloomberg.com/news/articles/2017-05-03/perrigo-offices-searched-by-justice-department-in-drugs-probe.
Photos:
http://www.algonquincollege.com/hr/benefits/ehcs/over-the-counter-drugs/
https://www.trustedclothes.com/blog/2016/06/01/corporate-social-responsibility-is-good-for-business/
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