Ethical Perspectives: Drucker, Friedman, and Murphey

Business Ethics Ethics in business is an extremely important matter that continues to be discussed in many organizations today. There are even many businesses that offer formal ethical training and believe in it vital to their business’s success. However, it can be proven that several professionals have different views on what is exactly ethical in business. Three professionals with different points of views regarding what is ethical in business include Peter Drucker, Milton Friedman, and Patrick Murphy.
Peter Drucker
Peter Drucker’s view on all ethical dilemmas is primum non nocere. This motto, taken from the medical profession, can be translated to mean “Above all do no harm” (Jennings, 2012). In other words, Dr. Drucker believed that people should make decisions that would not bring harm to other people. He, like many other management professionals, understood the many approaches philosophers have taken to understand ethics. However, he wanted to show how and where business ethics fit into the conflicting rules of ethics and human behavior.
Ethics of Prudence and Self Development
Dr. Drucker used his experience as a philosophy and a religion professor as well as his experience answering difficult ethical political questions as a method of drawing his conclusion regarding ethics in business. He believed that a major tradition of ethics in the West, Ethics of Prudence” would prove to be valuable in understanding business ethics. He noted that Senator Harry Truman gave an Army witness excellent guidance in the years of World War II: "Generals should never do anything that needs to be explained to a Senate Committee-there is nothing one can explain to a Senate Committee” (Drucker, 1981, p. 27).
This suggests that because Generals were leaders, they should always be aware of their actions. Therefore, any leader should make certain that he or she is making the best decisions that lead to the right action. Leaders are always being watched and their actions scrutinized and should therefore always choose the right action over the wrong action. Drucker stated,“The Ethics of Prudence do not spell out what "right" behavior is. They assume that what is wrong behavior is clear enough-and if there is any doubt, it is "questionable" and to be avoided. Prudence makes it an ethical duty for the leader to exemplify the precepts of ethics in his own behavior” (Drucker, 1981, p. 27). In other words, the Ethics of Prudence does not exactly say what the right thing to do is. Rather, it states that if there is any doubt about if a decision is wrong, then the individual should not do it. Simply knowing that it is not the right thing to do is justification in itself to not do it.
This idea can be further distributed to the society of an organization. Individuals who are in visual positions should be certain that they are choosing the right decision over the wrong decision. For example, in a hospital nurses are highly visible and while they may not be in a leadership position, their position is still highly visible and should thus follow the Ethics of Prudence. Furthermore, every individual is visual and should thus follow the Ethics of Prudence, always choosing to make the right decision.
Milton Friedman
Dr. Milton Friedman believed that the only social responsibility of business is to increase profits. He argued, for example, that it does not make sense to say that that a business has responsibilities. Rather, only people can have responsibilities. He believed that a corporation was an artificial person and could therefore have responsibilities; however, a business could not have responsibilities (Friedman, 1970).
Because Dr. Friedman believed that a business could have responsibilities, he identified the businessmen as those individuals who are responsible for the business. In most businesses, there is a corporate executive who is in charge of overseeing the business. The corporate executive has a direct responsibility to the owners of the business. In most cases, this would require that the executive make as much of a profit and run the business as the owner sees fit. Dr. Friedman also stated that making the most profit is not always the agenda of the owners of the business. For example, some businesses, such as hospitals, may not be as profit motivated as the owners may want the business to run in order to heal as many patients as possible.
Social Responsibility
Dr. Friendman believes that corporate executives should run the business in the best interest of the business owners. Therefore, it would be impossible for the businessman to have a social responsibility to the business. He is able to give several examples to support his theory of the businessman’s lack of social responsibility requirement: “For example, that he is to refrain from increasing the price of the product in order to contribute to the social objective of preventing inflation, even though a price increase would be in the best interests of the corporation. Or that, at the expense of corporate profits, he is to hire "hardcore" un-employed instead of better qualified available workmen to contribute to the social objective of reducing poverty” (Friedman, 1970).
However, the businessman may have personal social responsibilities and chooses to spend his money to fulfill those responsibilities. For example, the business man may choose to spend his money at church, taking care of children, his wife, donating to charity among other things. In this way, Dr. Friedman notes, the businessman does have a social responsibility. Again, this responsibility is to his personal life rather than with the nature of how the business is run and his responsibility to the owners.
Patrick Murphey
Dr. Muphy begins by addressing responsibility as one of the foundational principles of business ethics. In short, responsibility is a person’s ability to respond to a situation, person, or issue in a certain way (Murphy, 2009). A theory of responsibility has not been developed, he also notes. Murphy argues that there are several types of responsibilities. These responsibilities may include legal responsibility, corporate responsibility, corporate social responsibility, responsibility of stakeholders, and societal in nature responsibility. Furthermore, he concludes that corporate responsibility includes three separate components. The components include: (1) Who is responsible, (2) To whom is it responsible, and (3) for what is the corporation responsible.
In his article, Murphy examined several different articles as he found them important to social responsibility and business ethics. For example, to illustrate his point of legal responsibility, he used an article with regards to bribery and corruption. Bribery and corruption within an organization would certainly result in business ethics being tampered with. In addition, he reviewed an article with respect to the effects of religion on consumers and marketers.
Compare and Contrast
Dr. Drucker, Friedman, and Murphy each have different ethical perspectives. However, one concept that each agree is vital to business ethics is responsibility. Dr. Drucker states that each person has an ethical responsibility to make the best decision. If there is any doubt if an action is right, the action should not be done. Dr. Friedman states that business leaders have a responsibility to the business owners. Lastly, Dr. Murphy states that responsibility should be delegated to a certain individual.
Drucker reasonably acknowledges that a leader’s actions are always being watched and they should always choose the most responsible action. Friedman counters that doing so could result in never increasing profits, making other bad business decisions, and not running the business in the way the owners want it done. Murphy argues that there are several types of responsibilities. These responsibilities may include legal responsibility, corporate responsibility, corporate social responsibility, responsibility of stakeholders, and societal in nature responsibility. Both Friedman and Murphy note that stakeholders may have a separate level of responsibility. They both note that individuals should stay aware of where their money is going as well as what the stock market is like.
Dr. Friedman and Dr. Drucker both seemed to have drawn a conclusion based on their beliefs and understandings of ethics. Dr. Ducker’s conclusion may be a result of him teaching religion and relating to ethics and the business environment. However, Dr. Murphy seems to still consider that additional research should be done prior to him making a conclusive report.
Discussion
I enjoyed reading each of their articles and believe that each of them offer good examples as to why they believe as they do. However, I believe that my conclusion would be a combination of the three. When I draw my conclusion, I am too aware that my beliefs may be contradicting and should thus also require additional research.
As I previously stated, I understand and had to consider each philosophers perception prior to drawing my own conclusion. I will start with Drucker. Drucker is completely correct in stating that a leader’s actions are constantly being watched a scrutinized. This can easily be seen as candidates for president get closer to election. One slip of the candidate’s ethical morality can result in the entire loss of the campaign. The candidate’s ethical decision does not even have to be anything work related. Rather, the candidate could cheat on his wife and lose the election because of the ethically wrong choice he made. Therefore, leaders should take careful concern when making a decision. Drucker, however, does not state who the “right” choice should be made for.
I agree with Friedman, the business executive should run the business as the owner sees fit. The owner, in my opinion, should make certain that the business is run ethically. When I say that I mean that the business owner should have a responsibility to hiring qualified employees, taking care of employees, making sure customer concerns are addressed, and only raising prices if it is absolutely necessary. Clearly, individuals know that inflation exists and that may be a reason why there is a raise in prices. However, when there is a raise in prices due to the product changing the business should make certain that customers know that the product has improved and thus raises the price. I think of Dell Computer Corporation in this sense. I purchased my first computer from them and was blown away by their customer service. They wanted my feedback and they wanted to make certain I was happy with my computer purchase. They even give their customers the option to “build” their own computer. This shows the customer what causes the prices to increase.
In this way I believe that business owners and executives do have a social responsibility. I cannot completely agree with Drucker as I do not believe there is a complete “right” or a complete “wrong” way to take action with regards to social responsibility. Rather, I believe that the business owner is obligated to make every possible effort to be socially responsible. Prices should remain competitive and Americans should be able to afford, customers should be properly taken care of, recycling should be done to improve the environment. However, as Friedman stated, being socially responsible may not always be possible. Business have to raise prices occasionally, the business may pollute the environment (factories), and the best qualified person may have to be hired rather than someone less qualified. Therefore, in my opinion, the business is only socially responsible for making decisions that it is able to without completely crippling itself.
Again, I understand that conclusions are not completely without flaws. A businessman may believe that he is doing everything as socially responsible as possible while another may feel as though he is not. Different philosophers and different businessmen may not agree on which items are required to be ethically responsible and which are not. However, I would agree with Friedman and say that staff members would have to rely on the owner to make socially responsible decisions. And again, there may be times where the owner is being responsible to the business and may not be being responsible socially. My theory will remain that the owner should be as socially responsible as possible but the owner’s ultimate responsibility is the functioning of his or her business.
I believe that business ethics will remain a top of discussion for many years to come. These three philosophers each presented their ethical perspectives and they each require that readers understand their points. They are just not without gray area. With Friedman’s argument I am left wondering if customers, employees, and potential employees are taken care of. With Drucker’s argument, I am left wondering if the best business decisions are being made. And finally, while Murphy never came to a complete conclusion, with him I can completely agree with. Business ethics and responsibility requires more research. While Murphy did not state an overall conclusion regarding social responsibility, he was able to make small conclusions within the articles that he reviewed. He seemed to think the most abstractly with trying to find what social responsibility was. His article is the newest of the three and it makes me wonder if there is a connection between the growths of philosophers over the years.
Conclusion
Peter Drucker, Milton Friedman, and Patrick Murphy each had excellent ethical perspectives with regards to making ethical decisions in the business world. They each had extremely strong reasoning to support their beliefs. However, it is clear that while each of their beliefs holds good reasoning, there are still conflicting objectives with regards to their theories. Business ethics will likely always render conflicting objectives as being ethical holds a different meaning to different individuals. While one philosopher (or individual) may believe that an individual is supposed to make the best ethical decision for the employees, another may assume the best ethical decision should me for profits, and again another may believe the best ethical decision should be made for the owners of the company. While one philosopher may believe that those executive managers have a social responsibility to the business, another may believe that they do not. Business leaders, especially those who affect business decisions, should stay aware of business ethics within their organization. Dr. Drucker, Dr. Friedman, and Dr. Murphy each show that what business ethics means to one business professional may differ to another. Business ethics will need to continue to be researched.
References
Drucker, P. (1981). What is business ethics? Public Interest, 63, 18-36. http://www.nationalaffairs.com/doclib/20080708_1981632whatisbusinessethicspeterfdrucker.pdf [->0]
Friedman, M. (1970, September 13). The social responsibility of business to increase its profits. New York Times, New York , N.Y. 32-33, 122-124, 126. http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Jennings, M. (2012). Business ethics: Case studies and selected readings 7th Ed. Mason, OH: South-Western Cengage Learning.
Murphy, P. (2009). The relevance of responsibility to ethical business decisions. Journal of Business Ethics: Supplement, 90 245-252. http://search.proquest.com.proxy1.ncu.edu/docview/365453640?accountid=28180

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