Ethics and Social Responsibilities

Essay by Katinacc June 2006

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In a capitalistic market, the measure of success is the maximization of shareholder wealth and maximized profit. These goals are what drive the economy and effects more than just the corporation in and of itself. Regulatory issues are in place to protect competition and stimulate the economy. Without the regulations competition is stifled leading to a move away from a capitalistic market. The statement, "Since the goal of the public corporation is to maximize shareholder wealth, management should take any action necessary to achieve this goal so long as no law is violated" rings true for many corporations. Maximizing profit allows for growth and possible implementation of business ethics after survival of the corporation is no longer a concern.

Social Impact

In contrast to the economic impact of the above ethical statement, the social impacts are very different. Many possibilities of the outcome of decisions made regarding operating to maximize profits exist.

Regulations might exist to contain known social issues that might be faced by decisions made by a corporation. If these regulations are out of date or inadequate, it must be the responsibility of the corporation to self regulate. If it doesn't, the corporation runs the risk of becoming viewed as un-ethical. However, a company's directors have a responsibility to mitigate all expenses that are not direct costs and related to the operation of the company.

Regulatory Impact

There exists a large impact on business and profitability resulting from regulations placed on businesses due to ethical concerns. For instance, oil companies are investing large amounts of money to build new tankers that conform to the requirements for double hull containment. This requirement must be met by 2015 (, 2005). This places a large burden upon the oil companies. Undoubtedly, the companies would not be expending the great...