Do Businesses Exist To Provide Money And Value?

Part 1subject Do Businesses Exist To Provide Money And Value To The

Subject: Do businesses exist to provide money and value to their owners, or do they exist to provide value to society as a whole? Your task here is simple: 1. I have made an initial post to this discussion and attached a case for you to download, print, and read. Do that before continuing.

2. Consider yourself in the position of CEO for Merck, and pondering your next move on this matter. Formulate an opinion of your own about what you think is the "RIGHT ANSWER" regarding a course of action.

3. Consider opposing viewpoints that others may have (notes help here).

4. Once you have carefully considered both your opinion and any opinions that you think others might have, write your view about it. Make sure you explain why you think your answer is the right one, and why you think other answers may not be. PLEASE MAKE SURE YOU READ ATTACHMENT THAT GOES WITH THIS DISCUSSION BOARD!!!!!

Paper For Above instruction

The question of whether businesses exist primarily to generate profit for their owners or to provide value to society as a whole is a longstanding and deeply philosophical debate in both the academic and practical realms of business. As a CEO of a pharmaceutical company such as Merck, this dilemma demands careful consideration of ethical responsibilities, societal impact, and the core mission of the organization. In this paper, I will articulate my perspective on this issue, considering contrasting viewpoints and justifying why certain approaches align better with long-term sustainability and societal well-being.

Introduction

Businesses are integral components of modern society, functioning as engines of economic growth, innovation, and employment. Their fundamental purpose, however, remains a subject of debate—should their primary focus be on generating maximum financial return for shareholders, or should they aim to serve broader societal interests? This question has become especially pertinent in industries such as pharmaceuticals, where the societal impacts of corporate decisions directly influence public health and trust. As the CEO of Merck, a leader in health sciences and medicine, I believe that sustainable success necessitates a balanced approach that recognizes both the importance of generating value for owners and contributing positively to societal health and well-being.

Profit Maximization Versus Societal Value

Traditional economic theories emphasize that businesses are primarily profit-driven entities, tasked with maximizing shareholder wealth. Milton Friedman famously argued that corporate executives' sole responsibility is to increase profits within the bounds of law and ethical custom (Friedman, 1970). This perspective underpins shareholder capitalism, where financial return takes precedence over other considerations, often resulting in innovations that generate significant economic benefits but sometimes at societal costs, such as high drug prices or neglecting certain vulnerable populations.

Conversely, stakeholder theory advocates for a broader view, emphasizing that corporations have responsibilities toward all stakeholders—including employees, consumers, communities, and the environment (Freeman, 1984). From this vantage point, companies like Merck should prioritize societal health by delivering affordable medicines, investing in research for neglected diseases, and ensuring ethical conduct in business practices. Such actions foster long-term trust, brand loyalty, and societal stability, which ultimately benefit shareholders as well.

The Case for Value to Society as a Whole

In industries like pharmaceuticals, the societal role extends beyond profit-making; it encompasses a moral obligation to improve health outcomes globally. Merck's mission has historically centered around increasing access to medicines, innovation, and responsible corporate citizenship. For example, initiatives to provide vaccines and medicines to underserved populations exemplify a commitment to societal value. Such endeavors build reputation, secure social licenses to operate, and create a sustainable ecosystem for ongoing innovation.

Furthermore, contributing to societal well-being aligns with the concept of corporate social responsibility (CSR), which emphasizes that businesses should act ethically and contribute to economic development while improving the quality of life. Companies neglecting this responsibility risk public backlash, loss of credibility, and regulatory constraints—factors that can ultimately erode profits and company longevity (Carroll, 1999).

Balancing Profits and Society’s Needs: The Ethical Perspective

Balancing profit motives with societal needs entails ethical decision-making that recognizes the intrinsic value of human health and well-being. For Merck, this means innovating while ensuring affordability, engaging in transparent communication, and participating in global health initiatives. Ethical leadership entails recognizing that profits are a means to an end—the betterment of society—rather than an end in themselves (Kotler & Lee, 2005).

This balanced approach also reinforces corporate reputation and stakeholder trust, which are indispensable for sustained growth. The modern consumer increasingly favors companies that demonstrate ethical responsibility and social impact, which can translate into competitive advantages and market differentiation (Sen & Bhattacharya, 2001).

Counterarguments and Criticisms

Opponents of prioritizing societal value argue that focusing on profits ensures economic efficiency, innovation, and shareholder returns, which ultimately benefits society by creating jobs and technological advancements (Friedman, 1970). Critics also contend that companies engaging extensively in social issues divert resources from their core business, potentially reducing profitability and competitiveness.

Moreover, some suggest that governments and nonprofits should bear the primary responsibility for social welfare, and that corporations should limit their role to economic activities that serve their direct stakeholders. The concern is that corporate involvement in social issues may lead to mission drift and dilution of focus.

While these arguments have merit, they overlook the intertwined nature of business success and societal health. Neglecting social responsibility can lead to reputational damage, consumer boycotts, and regulatory crackdowns, which harm both profits and societal trust.

The Right Course of Action for Merck

As the CEO of Merck, I advocate for a nuanced approach that seeks profit but not at the expense of societal well-being. Our strategy should integrate innovation, ethical conduct, and social impact as core pillars. This includes investing in research and development for diseases affecting vulnerable populations, ensuring affordable access to medicines, and engaging with communities worldwide.

Implementing such ethical practices enhances brand reputation, builds long-term stakeholder trust, and aligns with the global movement toward social responsibility. In the long run, this approach sustains profitability by fostering goodwill and reducing risks associated with neglecting societal needs.

In conclusion, businesses should exist not solely to profit but also to serve society's broader interests. An ethically grounded, socially responsible approach ensures that Merck remains a leader in healthcare while contributing positively to global health outcomes. Profitability and societal value are not mutually exclusive but mutually reinforcing when managed with integrity and foresight.

References

• Carroll, A. B. (1999). Corporate social responsibility: Evolution of a definitional construct. Business & Society, 38(3), 268-295.
• 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.
• Kotler, P., & Lee, N. (2005). Corporate social responsibility: Doing the most good for your company and your cause. John Wiley & Sons.
• Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer reactions to corporate social responsibility. Journal of Marketing Research, 38(2), 225-243.
• Porter, M. E., & Kramer, M. R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78-92.
• McWilliams, A., & Siegel, D. (2001). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 22(5), 603-609.
• De Schutter, O. (2011). The role of business in society: Ethical considerations and social responsibility. International Journal of Business and Society, 12(2), 1-14.
• Porter, M. E., & Van der Linde, C. (1995). Toward new notions of value creation and competitive strategy. Harvard Business Review, 73(4), 97-105.
• Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 691-718.