The Purpose of Business
By CB, JBSA and LDSSA student groups | february, 2013, Issue 2
Source: Deloitte Millennial Innovation survey (www.deloitte.com)
This article is a collaboration of CB, JBSA and LDSSA student groups. It is one of a series of articles written with the intention to increase the dialogue on campus regarding the role of business in society and our duties as future leaders.
Milton Friedman famously stated in a New York Times op-ed, "The social responsibility of business is to increase its profits." Given that respondents to last week's survey chose "creating profits" as the main purpose of business, it is clear that Friedman continues to enjoy support at Chicago Booth. But the survey results also reflect a change in attitude that has been more broadly observed within the Millennial generation: a growing view that business is meant to benefit society (see results from Deloitte's annual survey). But what happens when the pursuit of profit comes into conflict with societal benefit?
From discussions during LEAD courses to well attended Booth courses on ethics, there is a high level of dialogue on this topic occurring on campus. A principal question of any course on ethics is, naturally, what does it mean to be "ethical"? But the answer isn't simple. Did Bernie Madoff act unethically in defrauding his clients or should we categorize him as having broken the law? Perhaps he did both? The underlying issue behind the question is whether ethical decisions demand a moral "grey area" – namely, does staying within the boundary of the law constitute ethical behavior, or does it necessitate going above and beyond what the law demands? For example, if a non-disclosure agreement offers a loophole, is it permissible to violate it? What are the consequences of violating the "spirit" of the agreement?
The ancient Jewish sages offered their approach to the dilemma, affirming that everyone has an obligation to "act in ways that are straight and good." In modern times, this might seem comparable to the The New York Times "smell test" – would you perform an action if you knew that it would end up on the cover of The New York Times, whether legal or not? The difference between these two views is rooted in the idea of "act[ing] in ways that are straight." Whereas the NYT test gauges public perception, the Jewish sages urge us to look within ourselves before performing an action.
In this sense, ethics actually takes a broader view of the daily interactions of the workplace. Is it enough for a leader to make the financially optimal decision? What about how that leader makes the decision? There will be times in all our lives where a decision at the office demands from us a sacrifice – of time, of resources, or possibly our character. It could be as explicit as missing an important event to finish a project, or it could be more subtle, arriving home stressed and anxious and consequently acting uncaring to those around us.In these situations, the dictum of acting "straight" challenges us to assess every given decision's importance in the larger context of our goals and priorities. It also serves as a reminder that ethics is about others – and to consider the implications of each decision, both in the immediate workplace and beyond.
Add your voice to the discussion! Take our next survey at www.boothcb.org/polls