Proponents of this counterpoint might also point to two difficulties with the „profit maximization“ approach to business strategy. First, very different decisions can be made depending on the timing of the maximization problem. Some decisions that maximize short-term profits could be disastrous for long-term profits. For example, Enron. When it comes to long-term profit, many decisions, such as investing in customer or community relationships, are rational, even if they don`t have a short-term impact on profits. Second, the best way to maximize profits might be to take a more engaged view of the business! No one likes to visit a company they don`t like, and no one likes to work for a company that doesn`t value employees. Far from being short-term, considering the needs of key stakeholders beyond shareholders is almost always an informed business decision that also leads to long-term profits for shareholders! Without strong leadership and a willingness to listen to both bad and good news, managers don`t have the feedback they need to keep the organization healthy. Codes of conduct have been introduced – partly in response to federal criminal guidelines and partly to encourage feedback loops with senior management. The best codes of ethics are ambitious or have an ideal that should be pursued, not legalistic or compliance-oriented. Johnson & Johnson`s Code of Ethics preceded the fear of Tylenol and the company`s often famous response.
 The company`s response was consistent with this code, which was experienced and modeled by the top of the organization. There are many theories about categorizing, managing, and prioritizing stakeholders. Some would recommend prioritizing „internal“ stakeholders (e.g., employees and shareholders) over „external“ stakeholders (e.g., local communities, customers, and the environment). Others may categorize stakeholders, such as „functional“ (e.g., employees), „enabling“ stakeholders (e.g., government), etc. For our purposes, a stakeholder categorization template will be useful when analyzing issues. This „stakeholder priority model“ divides stakeholders into „low interest“ or „high interest rate“ categories. Very interesting stakeholders monitor exactly what a company does, often because the company`s actions greatly affect their lives. For example, employees are often stakeholders who closely follow the company`s actions. Interest groups grow as the issues they care about range from „emergence“ (perhaps known only to specialized activists) to „consolidation“ (the industry has begun to see lawsuits, popular news articles highlighting the problem, etc.), to „institutionalized“ (employees strike on the issue, boycott consumers, governments pass laws, etc.). We would likely classify stakeholders with „emerging“ themes as „uninteresting,“ stakeholders with institutionalized topics as „high interest,“ and stakeholders with „consolidated“ topics somewhere in between, depending on the topic.  Few issues are more controversial or important than the role of corporations in society, especially if companies have a different social responsibility than maximizing shareholder value.
While the term „business ethics“ is not an oxymoron (i.e. a contradiction in terms), there is ample evidence that business people and corporations try to take care of themselves in the first place. However, companies ignore the ethical and social expectations of consumers, employees, the media, non-governmental organizations (NGOs), government officials and socially responsible investors at their peril. Legal compliance alone no longer serves the long-term interests of many companies, who find that sustainable profitability requires thinking about people and planet as well as profits. People often talk about the ethics or morals of individuals and also about the morality or ethics of corporations and nations. There are marked differences in the type of moral responsibility we can attribute to corporations and nations; We tend to think of individuals as a soul or at least a conscience, but there is no general agreement that nations or corporations have. Yet our common language indicates something important: when we say that some nations are „bad“ and others „corrupt,“ we are making moral judgments about the quality of the actions taken by the governments or peoples of that nation. For example, if North Korea is characterized by the US president as part of an „axis of evil,“ or if we conclude that WorldCom or Enron acted „unethically“ in some respects, then we judge their collective actions to be morally wrong. Utilitarianism is an important perspective on ethics, which is well aligned with economics and the free market perspective that has dominated much of today`s thinking about economics, management, and economics.
Jeremy Bentham is often considered the founder of utilitarianism, although John Stuart Mill (who wrote On Liberty and Utilitarianism) and others promoted him as a guide to good. Utilitarianism does not focus on rules, but on results. An action (or series of actions) is generally considered good or just if it maximizes happiness or pleasure throughout society. Originally conceived as a guide for legislators charged with finding the greatest good for society, the utilitarian view can also be practiced individually and by companies. Business law or commercial law is the body of law relating to commerce and commerce, banking and investment, contracts, marketing and advertising, incorporation and business structure, and debt financing and collection. In the United States, business law is governed by the Uniform Commercial Code (UCC), which sets the standards and rules for doing business. Each state has adopted at least part of the UCC. Land and federal governments supplement the CDU with other regulations that reflect individual situations affecting their territory. Legal compliance is not the same as ethical action. Your reputation, individual or entrepreneurial, depends on how others evaluate your actions.
Goodwill is difficult to measure or quantify, but it remains real and can be better protected by acting ethically. Sears Roebuck & Company was a staple of American retail throughout the twentieth century. At one time, people in rural America could order virtually anything (including a house) from Sears. Not without some precision, the company described itself as „the place where Americans shop.“ But in 1992, Sears was charged by California authorities with serious and deliberate fraud at several of its auto centers. A theory that judges the morality of decisions not by results (or „goods“), but by adherence to moral norms. The obligation to act in accordance with these standards is not linked to the expected consequences of the action. The usual answer is that good ethics are good business. In the long run, companies that pay attention to both ethics and law achieve better results; They are perceived more positively by customers. However, this is a difficult statement to measure scientifically because „long-term“ is an indefinite period of time and because there are still no generally accepted criteria against which ethical excellence can be measured. In addition, life is always lived in the short term, and there are many occasions when something other than perfect behavior is much more profitable. Social justice theorists worry about „distributive justice“ – that is, what is the equitable way to distribute goods among a group of people? Marxist thought insists that members of society should receive goods according to their needs.
But this redistribution would require the power of government to decide who gets what and when. Capitalist thought takes a different approach and rejects gift, which is not voluntary. Some economists, such as the late Milton Friedman (see Section 2.4 „Business and Corporate Governance“) also reject the idea that a corporation has a duty to meet society`s unmet needs, arguing that government should play this role. Even the most dedicated free-market capitalist will often admit the need for government and some forms of welfare—Social Security, Medicare, flood relief, pandemic assistance—as well as certain public goods (such as defense, education, highways, parks, and support for key industries that affect national security). Business ethicists have been talking about the intersection of law and ethics for years. Simply put, what is legal is not necessarily ethical. Conversely, what is ethical is not necessarily legal. There are many legal manoeuvres that are not as ethical; The frequently used term „loophole“ suggests this. Business law determines the minimum standards of conduct expected of companies and individual companies. Business ethics go beyond mere legality. They describe how a company should behave – how a company does what it is legally obliged to do. Ethics is not so much a specific code of conduct as a value to be respected and practiced.
The „conscious enterprise“ has a goal that goes beyond maximizing profits. It is designed to maximize profits, but focuses more on its higher purpose and does not focus solely on the end result. To do this, it strives to add value to all its stakeholders and align the interests of consumers, partners, investors, the community and the environment as much as possible. This requires business leaders to take „servant leadership“ and serve as gatekeepers of the deep purpose of the company and the company`s stakeholders. In short, if a company can prove that it has an ongoing process to eradicate wrongdoing at all levels of the business, the judge may consider this to be a significant mitigating factor in the fines the company will pay.