Business Ethics                                                                                              Discussion Project 

Applying Friedman's Free Market Philosophy and Stakeholder Theory

Return to your case from the “Cases for Discusssion” handout.   Try to agree on answers to the following questions about your case:

Note: These theories concern the responsibilities of business managers, not of each and every person involved in business.  So in a couple of cases we need to refine our examples. For case 3, instead of considering whether or not someone should take a job working for this company, consider the company's decision to move its production facilities to the Third World country.  (Assume that they had previously been getting this work done in the U.S.)  For case 4, assume that the person who has discovered his friend’s cheating is one of the top managers of the firm.

Part 1

According to Friedman, managers are agents of shareholders, who generally desire to make as much money as possible.  Consequently, mangers should do all they can to maximize their company’s profits (within the limits of the law and some basic ethical rules).  For the purposes of this exercise, use the ‘free market purist’ interpretation of Freidman’s view.  That is, assume that the only ‘laws and ethical customs’ that are in effect are those that prohibit ‘force and fraud’.
   

1. What course of action would be most consistent with Friedman's perspective?  (Explain.)
2. Does it seem to you that Friedman's approach leads to a conclusion about what to do in your case that is acceptable from an ethical point of view?  (Explain.)

Part 2

According to Freeman, managers should balance the claims and interests of all the ‘stakeholders’: investors, employees, customers, suppliers, and neighbors (the local community).  Shareholders do not have primacy over the other groups, and all stakeholders have a right not to be treated merely as a means to other people’s ends.

1. What stakeholder groups are relevant to your case?  How would their interests be affected by the decisions being contemplated?
2. What decision would best balance (or reconcile) the interests of the various stakeholders?
3. How well does this decision match your own ethical judgments about your case?