This week I was confronted with two very different ideas on how a company’s actions should be evaluated in terms of their ethicality. Two ideas that make evaluating the current business practices of companies such as those mentioned in the article, “Big Food Must Invest In Social Responsibility To Thrive, Experts Say” by Connor Sheets, extremely difficult.

If we take the stance of someone like Milton Friedman, believing that a business’ only responsibility is to maximize its profits, we would be tempted to say that the businesses mentioned in the article above are in fact operating in a very unethical manner.  That, in a truly “free market” operating under the concept of the “invisible hand”, it is irresponsible of these businesses to spend such large amounts of money, in effect reducing profits, to promote such social causes.

However, how feasible is it to say that businesses should never take into account the social interests of corporate stakeholders?

Opposing the idea that profit is the only  incentive that drives business decisions, is the principle of “Stakeholder Theory”. This theory claims that the interests of all stakeholders, no matter how “social” or “moral” in nature, are equally important to a business when it is determining how to function. In this respect, we might evaluate the companies in Sheet’s article as ones whom are actually ensuring they won’t soon become a “business in decline” simply by neglecting their consumers’ obvious  desire for more ecological or animal friendly businesses.

So how should we determine the ethicality of a business’ practices?

Really, it’s going to depend on the direction your own moral compass points you in.

sources:

Sheets, Connor A. “Big Food Must Invest In Social Responsibility To Thrive, Experts Say.” International Business Times. N.p., 28 Aug. 2014. Web. 10 Sept. 2014.