Ignacio Ferrero

Must Milton Friedman Embrace Stakeholder Theory

Milton Friedman famously stated that the only social responsibility of business is to increase its profits, a position now known as the shareholder model of business. Subsequently, the stakeholder model, associated with Edward Freeman, has been widely seen as a heuristically stronger theory of the responsibilities of the firm to the society in which it is situated. Friedmans position, nevertheless, has retained currency among many business thinkers. In this article, we argue that Friedmans economic writings assume an economy in which businesses operate under the protections of limited liability, which allows corporations to privatize their gains while externalizing their losses. By accepting limited liability, Friedman must also accept a view of business as embedded in social interdependency, which serves as the logical and moral foundation for corporate social responsibility (CSR). To achieve consistency with his economic principles, Friedman must either abandon limited liability or modify his doctrine on CSR and his related shareholder model of business.

Corporate Reputation and Corporate Ethics: Looking Good or Doing Well

Corporate reputation (CR) has become a fashionable topic due, among other reasons, to the recent financial and economic crisis and spreading corporate scandals. Given its interdisciplinary character and intangible nature, CR has been a frequent issue in many disciplines, but scarcely present in the business ethics field. This neglect is odd since a good reputation is one of the most valuable consequences of doing the right things and the things right. In this paper, we intend to explain this absence through three hypotheses: a) business ethics literature largely identifies corporate reputation and corporate social responsibility; b) corporate reputation overlaps with corporate image and corporate identity, resulting interchangeable constructs; and c) business ethics scholars have focused on the negative side of the reputation phenomenon, highlighting reputational risk more than benefits. Based on a bibliometric analysis of the top journal of business ethics literature over a recent decade (2002-2011), we finally confirmed the three hypotheses although c) only partially. In addition, the findings of this study will allow for a deeper understanding of the link between looking good and doing well.

The Ethical Dimension of Industrial Production: the Role of Transitive Motivation

The ethical dimension of industrial production has been largely neglected by theorists of production. This article identifies three important features of the production process, i.e. utility, compartmentalization, and independent external end-point; brought about by industrialization in the development of the production of goods. We claim that a mechanistic understanding of these features gets in the way of an ethical approach to the topic. We analyze attempts to overcome such an understanding by appeal to intrinsic and extrinsic motivation. This article concludes that this strategy is insufficient and that a comprehensive ethics of production only comes into view if we incorporate transitive motivation into the analysis.

St. Albans Family Enterprises

This case study can serve as an instrument to help students and practitioners develop their ethical decision-making ability, in particular practical wisdom (prudence) within a virtue ethics framework. St. Albans Family Enterprises is a group of companies with three business lines: petrol stations, flower exportation and women´s fashion retail establishments, with around 300 employees and 20 stores in London, Liverpool, Manchester, Edinburgh and Bristol. Apparently, an alleged leakage of sensitive information took place at the Head Office, involving several employees who found themselves in a delicate professional situation and who happened to be relatives. Senior management are facing ethical dilemmas with respect to these employees but also with respect to themselves who feel partly responsible for having generated such compromising situation for some employees.

Experiential learning in virtues ethics through a case study: The 'St. Albans Family Enterprises'

Teaching business ethics effectively may prepare future leaders and managers to better deal with delicate situations that they might face in the workplace. However, such an aim is one of the biggest challenges that educators at universities are called on to solve. An increasing number of scholars are invoking the role of prudence in the virtue ethics context as a viable approach to teach students how to manage ethical dilemmas. In this regard, this paper presents the ‘St. Albans Family Enterprise’ case study that can serve as an instrument to help students and practitioners develop their ethical decision-making ability and to foster a disposition towards applying sound judgment or what can be called in classical terms, prudence. The paper also offers guidance to educators about how the case can be used for teaching purposes, and explains the implications of exercising practical wisdom (prudence) within a virtue ethics framework.