In recent years, various corporate scandals have sparked the debates where businesses should adopt a socially responsible approach to decision making. It is argued that corporations have societal obligations to not only maximizing corporate profits for the shareholders, but instead should also consider the interests of the stakeholders as well. This is because corporations are very powerful, and any irresponsible or unethical actions would be highly detrimental to society. As such, it is argued that corporation should be managed for the benefits of the various stakeholders, namely, the customers, employees, suppliers, shareholders, and the local communities.
There are many types of ethical reasoning useful in analysis a complex ethical issue. Four common theories are widely applied in investigating the ethical behaviors or actions for corporations conduct nowadays. The four common ethics philosophy normally used are relativism, natural law, utilitarianism, and universalism. In brief, relativism is often referred to the proponent that it is hard for people to decide on matters of right or wrong, and ethics should be a subject relative to the personal, society and cultural dimensions in which the actors situated. In contrast, natural law philosophy asserts that the right things to perform are revealed in nature or Bible. Utilitarianism however, propose that any action should consider the respective impacts to the people around, where an action is justified and ethical if it provides the greatest benefit for the greatest amount of people. Universalism however, recognize that the impacts from an action is hardly predictable or not within the control of the actors, and asserts that any actions is ethical as long as the motive behind the action is good.
Yet, another important topic in business ethics is about the need for stakeholder management. This should not be surprising as stakeholder analysis provides a structure for us to confront with ethical dilemmas, and it is useful as the analysis of perceptions from various stakeholders will enable us to weight various elements in a complex scenario. In a stakeholder analysis for ethical decision making, the very first step is to list down all the stakeholders involved. An evaluation on the advantages and disadvantages of a particular events or issues towards all these stakeholders should be identified. Then, an in-depth analysis on the rights and responsibilities of each party should also be investigated. Typically, the many stakeholders identify could include the following: the board of directors, customers, shareholders, bond holders, suppliers, employees, government, the affected community, the environment, future generations, and competitors.
The application of ethical reasoning and stakeholder management is important in managing a business in a more sustainable ways. It is only through such approach that the business communities can really create long term value for the society.
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