A business needs profit to survive their bottom line, but should that be their sole objective? Are there times where businesses should place profit aside and implement corporate social responsibly into their business practices, not as an obligation, but out of respect for all stakeholders?
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The Friedman Theory:
Milton Friedman, a well-known economist created a traditionalistic perception of how a business should operate. He states that a business only has one social responsibility - "engage in activities designed to increase its profits" and that it is the government's responsibility to handle the ethical dilemmas of society. Friedman's theory illustrates how businesses should only care about its shareholders through profit making over other stakeholders.
However, what if the government is not standing up to their necessary ethical duties, to behave in favour of their country and society? Should businesses take a stand?
The Russian-Ukrainian War:
We have been witnessing the devastating impacts of the Russian-Ukraine war on the livelihoods of innocent people. Many unethical and worrying actions have been displayed by the Russian government and we have seen many large organisations make decisions that have disregarded profit in support for the humanity of the Ukrainian people.
Numerous multinational companies and large organisations have decided to suspend their operations in Russia. Companies such as Apple, McDonalds, Amazon and even Netflix have decided to take a stand against the Russian Government and show their support and solidarity to the unfolding humanitarian crisis.
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Here is a statement released by Apple detailing their suspended operations:
"We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering because of the violence. We are supporting humanitarian efforts, providing aid for the unfolding refugee crisis, and doing all we can to support our teams in the region."
We have taken several actions in response to the invasion. We have paused all product sales in Russia. Last week, we stopped all exports into our sales channel in the country. Apple Pay and other services have been limited. RT News and Sputnik News are no longer available for download from the App Store outside Russia. And we have disabled both traffic and live incidents in Apple Maps in Ukraine as a safety and precautionary measure for Ukrainian citizens. We will continue to evaluate the situation and are in communication with relevant governments on the actions we are taking. We join all those around the world who are calling for peace."
You may be reading this and thinking, well it is just the right thing to do! However, sometimes businesses operate from the self-interest and excessive greed for profit, disregarding moral responsibility and rationalism. In this specific instance, stakeholders such as customers, lobby groups and the general public condemn the war. Hence, the benefits of a business suspending its operations outweigh the consequences of losing potential profit. When ethical dilemmas arise, tough decisions must be made.
Organisational Culture:
Organisational culture can be referred to the overarching shared value, attitude and belief systems that underpin all activities made by the business and its employees. A strong organisational culture ensures there is consistency in behaviour and decision-making, ultimately reflecting their vision and morals to external stakeholders such as customers.
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Did you know that 89% of shoppers will stay loyal to a brand that shares the same values? When organisations choose to prioritise people over profit, they not only strengthen stakeholder trust, but reinforce their organisational culture.
Ultimately, shared values and morals are important for a business, as they not only help with decision making when ethical dilemmas arise, but in turn also strengthen brand image and reputation. Organisations will have to make some tough decisions that might negatively impact profit in the short-term. However, when an organisation looks out for all stakeholders’ best interests, their success and longevity will follow suit.
Whilst profitability is important, it most definitely should not be an organisation’s sole objective.
Written By Isabella Papavasiliou
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