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Corporations aren’t responsible only to stockholders. They are also responsible to stakeholders. A stakeholder is anyone affected by what a corporation does. Besides stakeholders, these include employees, consumers, and the community. Business shouldn’t put profits above its responsibility to these groups.

There’s much more to social responsibility than the pursuit of profit. Such responsibility should mean training workers and guaranteeing that wages increase when labour productivity increases. It should also mean paying workers more money and restricting layoffs even when doing so reduces profits. These goals are more important.

But by focusing on profits for stockholders, businesses ignore the interests of many stakeholders. The real issue of many isn’t money, its morals and ethics. Corporations have a responsibility to do what is ethical. Managers of a corporation can’t maximize earning for stockholders and still behave ethically. For example, businesses often treat workers as production costs. So when sales slow down, businesses cut their workers’ wages or lay them off. If they treated workers as valuable assets worthy of investment and training, this wouldn’t occur. But it happens because managers have their eyes glued to profit.

Corporations should look beyond their own self-interest and take into account how their decisions affect all stakeholders. They should promote the broader goal of social responsibility, act ethically as good corporate citizens, and worry less about earning a profit. Social responsibility is a vague foal that sounds good but ends up hurting society. The unlimited outcome is that fewer companies start up or grow. All that means fewer jobs and lower pay for workers and fewer products and higher prices for consumers.

What is more, pursuit of profit doesn’t deny ethical behaviour. Ethical behaviour is for everyone, not just people in business. It means being honest, recognizing and respecting others’ rights, obeying the law, honouring contracts, and taking responsibility for one’s behaviour. Yes, businesses may fail to measure up, but that’s failing of people in all walks of life. People can’t be ethical and still maximize profits. In fact, the ethical pursuit of profit is the best way to benefit society. Corporations don’t sell products and earn money by ignoring the interests of workers, consumers, suppliers, or their communities. They are more likely to maximize the return for stockholders by correctly identifying these interests and responding to them in the marketplace. So no one has to tell companies to do these things. They do them on their own when pursuing profits.

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