Learning Objectives
Upon completion of this unit, students should be able to:
1. Compare and contrast the main features of Kantian ethics and of utilitarian ethics?
2. Describe and discuss the moral point of view and support the idea that business people must operate
from the moral point of view.
3. Compare and contrast the stockholder view of the corporation as defended by Milton Friedman and
the stakeholder view of the corporation as defended by R. Edward Freeman.
4. Compare and contrast Milton Friedman‟s view of the NYSEG Corporate responsibility program and R.
Edward Freeman‟s view of the NYSEG Corporate responsibility program.
5. Discuss John R. Boatright‟s main arguments in “What's Wrong—and What's Right—with Stakeholder
Management.”
6. Analyze the essay by Wayne F. Cascio, “Decency Means More than „Always Low Prices‟: A
Comparison of Costco to Wal-Mart‟s Sam‟s Club,” and determine whether it tends to support the
position of Milton Friedman or R. Edward Freeman.
Unit Summary
This unit introduces you to the concepts and problems of ethics or moral philosophy. One of the
purposes of this unit is to introduce you to a 2,500 year old tradition of inquiry and analysis of questions
of right and wrong. In this unit you will explore the differences between stockholder management and
stakeholder management. Utilitarian theories hold that the moral worth of actions or practices is
determined by the consequences of the actions or practices. The view is most commonly associated
with the work of Jeremy Bentham and John Stuart Mill. Mill defended the principle of utility, which that
holds that actions are right or wrong insofar as they promote happiness or pain. He argued that morality
taps a natural human tendency to be sensitive to the needs of others.
The idea of respect for persons is a central tenant of Kantian moral philosophy. Kantians argue that
persons, because they are self-governing beings, have unique dignity. Persons should not be treated as if
they have mere conditional or instrumental value like capital. This does not mean that persons cannot
be used by employers as a means. All employers use employees in this way. The point is that employees
cannot be used as a means only, as if they were disposable tools of production. Kantians argue that
employers must ensure that workers can live a life compatible with basic human dignity, and this entails
certain positive obligations regarding wages, working hours, and working conditions.
While Kantian ethics and utilitarianism have been the most influential ethical theories in the Western
tradition, three popular replacements, or supplements to these theories, have received considerable
attention in recent years. In his article, “The Social Responsibility of Business Is to Increase Its Profits,”
Milton Friedman indicates that classic libertarians defend profit maximization as the only legitimate goal
of publicly held companies. The social responsibility of business is to maximize profits. Any commitment
to fulfilling social responsibilities other than making money is an illegitimate tax, or even theft.
Maximizing profits will produce the best overall consequences for society. As such, private businesses
should do the same.
In his new essay, “Managing for Stakeholders,” R. Edward Freeman defends the view that the primary
job of managers and executives is to create value for all stakeholders while managing the nexus of
relationships among them.
Businesses should be managed so as to create value for customers, suppliers, employees, communities,
and financiers. In his article, Freeman discusses the Separation Fallacy: It is useful to believe that
sentences like “x is a business decision” have no ethical content or any implicit ethical point of view.
Also, it is useful to believe that sentences like “x is an ethical decision” have no business content. He also
discusses the Open Question Argument: If this decision is made, for whom is value created and
destroyed? Who is harmed and/or benefited by this decision? Whose rights are enabled, and whose
values are realized by this decision (and whose are not)? What kind of person will I (we) become if I (we)
make this decision? The Integration Thesis is also discussed in Freeman‟s article: Most business
decisions have some ethical content, or implicit ethical view. Most have ethical decisions, business
content, or an implicit view about business. Additionally, Freeman addresses the Responsibility
Principle: Most people, most of the time, want to, actually do, and should, accept responsibility for the
defects of their actions on others.