Chapter 13: Decision-making, ethics and social responsibility
Critical insight
Is ‘business ethics’ a contradiction in terms? Should ethics play a part in everyday managerial
decision making in organizations? In an influential essay, the American economist Milton Friedman
(1970) argued that the role of ethics in business management is rather limited: ‘there is one and only
one social responsibility of business – to use its resources and engage in activities designed to
increase its profits’. Others have countered that business managers can pursue a socially responsible
course without the objectionable results claimed by Friedman (Mulligan, 1986). Those who manage
organizations have to work out their own code of conduct, but the ethical framework in which
decision making takes place is embedded in society (Cadbury, 1987).
Barring legal interventions, others have noted that the major incentive for organizations to engage in
ethical activities is customer power. Shell’s behaviour over the Brent Spar incident is an example of
how customer boycotts can change corporate behaviour. There is evidence, however, that ethical
human resources practices are more likely to be offered to permanent knowledge workers
employed within an organization’s legal boundaries, than to routine production or in-service
workers on non-standard employment contracts (Legge, 2000).
Read the chapter on ‘The ethical context of HRM’ by Karen Legge (2000). What business does ethics
have in business organizations? In an era defined by increasing economic globalization and virtual
organizations, can organizations manage people at work and engage in value-added activities in an
ethical way?
© Macmillan Science and Education
For use with Introduction to Work and Organizational Behaviour, 3rd edition by John Bratton