Be Sure To Read Chapter 1 From The Velasquez Text ✓ Solved

Be sure to read chapter 1 from the Velasquez text and

Be sure to read chapter 1 from the Velasquez text and familiarize yourself with the Loyal Agents Argument. According to Velasquez (2018), The Law of Agency states, "The law of agency is that part of commercial law that specifies the duties of persons - 'agents' - who agree to act on behalf of another party - 'the principle'." Read the Friedman article, "The Social Responsibility of Business is to Increase its Profits" (shareholder theory). Bearing in mind that it's difficult to not judge yesterday's actions by today's standards, comment on the relevance of Friedman's position. Are there recent examples of the Law of Agency being used by company management to rationalize or justify their behavior and decision making in the marketplace? For example, the Wells Fargo customer account debacle. Are the arguments 'Profit benefits all' or 'If it is legal, it is ethical' sufficient to support the objection to applying moral standards to business activities? As a reminder, your response should be well crafted and consistent with college level writing. There is not a specific word count required, however your response should be substantive enough to provide a meaningful response.

Paper For Above Instructions

The relationship between principles and agents as articulated in the Law of Agency is fundamental to understanding management decisions in a corporate structure. Within this framework, organizations delineate constitutive responsibilities towards stakeholders including shareholders, customers, and communities. Velasquez (2018) posits that agents must act in the interest of their principle, raising essential questions about whether the decisions made by management truly reflect an ethical responsibility or are merely pragmatic shortcuts in context-dependent frameworks of legality and profitability.

Milton Friedman’s arguments in "The Social Responsibility of Business is to Increase its Profits," firmly align with the traditional shareholder theory, where the primary obligation of management is to maximize shareholder wealth (Friedman, 1970). This contention emphasizes profit as a primary metric for evaluation, leading to a perception that ethical considerations are secondary and perhaps irrelevant to business objectives. However, across decades since the publication of Friedman’s seminal article, there has been an evolving dialogue surrounding corporate governance, accountability, and morality in business practices.

In considering the implications of Friedman’s assertions, we must recognize the complexity of modern commerce, where acts previously deemed ethical (surpassing mere legality) are now scrutinized through the lens of social responsibility. For instance, the Wells Fargo scandal, where employees created unauthorized customer accounts to meet aggressive sales targets, exemplifies how management used the Law of Agency as a shield for unethical practices. In this case, the justification appeared to align with the notion that maximizing profits through any means possible, including questionable legal strategies, was acceptable. Such a mindset reflects a blatant violation of managerial duties toward stakeholders, diluting the essence of trust and ethical commitment (Romero, 2020).

The imperative of aligning ethical standards with business practices has galvanized movements toward corporate social responsibility (CSR). Advocates argue that pursuing profit alone, particularly through questionable means, can ultimately harm businesses by eroding consumer trust and loyalty (Elisha, 2021). The legal defenses articulated by Wells Fargo’s upper management underscored moral disengagement, reflected in arguments like "If it is legal, it is ethical," which neglect the broader context of shareholder and stakeholder rights that hinge upon ethical practices (Miller, 2019). This situation illustrates how recent applications of the Law of Agency can be manipulated to justify behavior that starkly contradicts moral expectations in business contexts.

From a philosophical standpoint, the arguments for profit-maximization and legality fail to encapsulate the essence of ethical obligation in business practices. A school of thought led by prominent figures such as R. Edward Freeman suggests a more integrative view of stakeholder theory, urging management to consider the implications of their actions not only for shareholders but for all stakeholders (Freeman, 1984). This perspective counters Friedman's traditional view, calling for a balanced approach in which ethical consideration is as crucial as legal compliance and profit (Harrison & Wicks, 2013).

Moreover, the evolution of ethical business frameworks has underscored the increasing necessity for organizations to cultivate a culture of corporate responsibility. Companies that embrace ethical standards are likely to enjoy competitive advantages, as they attract consumers who are increasingly evaluating brand loyalty through a moral lens (Harrison, 2020). This suggests that ethical profitability can, in fact, yield dividends beyond mere financial gains, enhancing company reputations and fostering sustainable markets.

In conclusion, while Friedman’s shareholder theory offers significant insights into the purpose of corporate firms, it fails to address the multifaceted nature of business ethics in an increasingly aware environment. The Law of Agency should not serve as a fig leaf for unethical behavior but rather act as a guiding principle that aligns management actions with both legal standards and ethical imperatives. Wells Fargo represents a cautionary tale of what occurs when profit becomes the unchallenged king of decision-making and illustrates the pressing need for a shift toward a more ethics-centric approach in business.

References

• Elisha, H. (2021). Corporate Governance: The Influence of Ethics. Journal of Business Ethics, 164(3), 645-658.
• Friedman, M. (1970). The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman.
• Harrison, J. S. (2020). Stakeholder Theory: The State of the Art. Cambridge University Press.
• Harrison, J. S., & Wicks, A. C. (2013). Stakeholder Theory, Value, and Firm Performance. Business Ethics Quarterly, 23(1), 97-124.
• Miller, R. (2019). The Ethics of Business Practices: A Reflection on Legal Boundaries and Moral Obligations. Business Horizons, 62(2), 233-242.
• Romero, C. (2020). Corporate Ethics in Crisis: An Analysis of Recent Scandals. Journal of Business Research, 128, 31-39.
• Velasquez, M. (2018). Business Ethics: Concepts and Cases. Pearson.
• Windsor, D. (2016). Corporate Social Responsibility: A Conceptual Framework. International Journal of Management Reviews, 18(1), 15-36.
• Wood, D. J. (2010). Business Citizenship: From Domestic to Global. Business Ethics Quarterly, 20(3), 435-453.