Beneficence in Business

The ultimate goal of any business is to turn a profit. Indeed, there are many benefits of a business that runs itself to be profitable: employees keep their jobs, the government is able to tax revenues and reappropriate the taxes to common-good programs, and shareholders see a return on their investment. Over time, business ethics have run the gambit from shareholder theory (businesses owe a duty to make money for owners) to stakeholder theory (businesses have a duty to many parties with which they engage, such as employees, clients, communities, and shareholders), all the way to a sense of corporate social responsibility. But could there be more to it?

When I recently reviewed the American Psychological Association’s code of ethics, one particular principle stuck out to me: beneficence (APA, 2010). A duty of beneficence, first identified by Kant in the 18th century, describes an obligation “to make the happiness of others one’s own end” (Mansell, 2012, p. 586). This is a concept that stuck with me for a few days after reading it; the APA code and its call for psychologist to work for the benefit of others was never intended to be used in a corporate context. The code of ethics for the Academy of Management certainly makes no mention of beneficence. Managers are held to responsibility, integrity, and respect, but not specifically to work selflessly for the benefit of others (AOM, 2001).

But I want to challenge that.

Shareholder theory has worked for a long time; you cannot argue with it in the sense that managers have a duty to prioritize the objectives of the owners who sign their paychecks. Certainly if the owners are acting unethically or demanding managers to commit fraud, the managers must act with integrity and refuse. However, those shareholders do have basic duties to their fellow humans, and those duties, by proxy, become the objectives of the organization.

Consider if you were a wealthy land-owner in the middle ages, and a poor beggar asked to sleep in your stables for the night. Certainly you would allow him the space, since it does not infringe on your rights or impact you, but for him it will be exceptionally beneficial. You understand that, maybe somewhere along the line, someone was helpful to you and it is now time to repay that. Or, at large, you understand that society cannot go on without people helping people, because at one point or another everyone will need help. Someone has to be there to provide the help. So you let the beggar sleep in your stable. So it is with these shareholders, who benefit from a passive investment, and should have a duty of beneficence to society at large. Shareholders command an entity more powerful than any individual. So the saying goes: with great power comes great responsibility.

Some organizations understand this. Look at the great corporations that offer mission statements aimed at helping others (Toms is a great example of this). Others work tirelessly to benefit their employees by offering stock sharing programs, providing tuition assistance and incredible development options, choosing to pay a higher wage than the market commands, and all sorts of other great programs for their employees. Still others take a stand in their communities to offer donations, support for charities, sponsorships, volunteer drives, and other great community development initiatives. Many managers will claim that these things are good business decisions, that they are investments in their employees and in their customer’s perception of the brand, but they are also more than that. These things are corporate social responsibility, but they are also good for shareholders because they satisfy those individual’s duty to help their fellow human.

Mansell (2012) found that “the adoption of C[orporate ]S[ocial ]R[esponsibility] policies with a standardised approach to the relevant moral issues for each company is the most effective way forward” (p. 597). This is the shift is needed in the corporate climate. This involves building beneficence into corporate culture as a part of sustained business processes that work to benefit a wide array of other people. In the examples above, companies engaging in those programs are often leaders in the market; others would do well to follow their lead. An investment in people, after all, is never a wasted investment.

In this case, beneficence should always be carried out ultimately for the good of others, but no one will fault a company for incidentally gaining from their investments along the way.

References:

  • Academy of Management. (2006). Code of ethics. Retrieved from http://aom.org/About-AOM/Code-of-Ethics.aspx
  • American Psychological Association. (2010, June 1). Ethical principles of psychologists and code of conduct: Including 2010 amendments. Retrieved from http://www.apa.org/ethics/code/
  • Mansell, S. (2012). Shareholder Theory and Kant’s ‘Duty of Beneficence’. Journal of Business Ethics,117(3), 583-599. doi:10.1007/s10551-012-1542-9

One Comment

  1. Jolie Kaye Kilcoyne October 10, 2016 at 8:38 AM #

    Unit 02 comment.

    Hi Courtney,
    I enjoyed your blog. However, I did notice you mentioned Toms shoe company and I can recall a few years back watching a segment on whether or not what the company was doing was even helping. For those unfamiliar with Toms the idea is that “for every pair of shoes bought, the company will donate a pair to a shoeless child in a developing country and continue to do so throughout their childhood” Wilson’s critique (as cited in Gregg, 2012, para. 1). Toms charges around 145 dollars for a pair of their shoes which costs around 5 dollars to make Wilson’s critique (as cited in Gregg, 2012). Now, I understand we all face this markup every time we shop, but for a company that is supposed to be charitable, this markup seems a little extreme. And since Toms is “for-profit” Wilson’s critique (as cited in Gregg, 2012), they are really cleaning up. The other concern is that Toms is supporting the idea that these people cannot make it on their own, and making them dependent on handouts, Wilson’s critique (as cited in Gregg, 2012). Painting these people as helpless is not the way to go. I enjoyed the quote, “ethics is messy and everything has a shadow side” Wilson’s critique (as cited in Gregg, 2012). This is true of the biggest and best companies. In regards to Principle A: Beneficence and Nonmalificence involves “doings one’s best to avoid harming others” (PSU, 2016). Tom’s plan seemed to be doing more harm than good from the handouts along with the notion that they were causing shoe sales to drop in developing countries (Chapin, 2015). So is Toms really helping with poverty or not? To be honest, I do not know. If you visit their website, the contents are pretty remarkable (I had no idea they were involved in donating eyewear) (Toms, 2016).
    Just reading your Toms input reminded me of that segment I saw that questioned their ethical practices, and I wanted to comment on it. I am in no way a professional and cannot truly determine if what they are doing is making a difference or not.

    Great blog, Courtney.

    Jolie

    References:

    Chapin, A., (2015). TOMS Shoe Donations Might Not Be Doing Any Good. Retrieved from http://www.racked.com/2015/7/27/9046207/toms-shoes-charity-poverty

    Gregg, C., (2012). Against Toms Shoes: Ethics are Messy. Retrieved from http://www.patheos.com/blogs/carlgregg/2012/03/against-toms-shoes-ethics-are-messy/

    Penn State University (2016). Unit 02, Lesson 05: APA Ethics Code. Retrieved from https://psu.instructure.com/courses/1791578/pages/l05-general-principles?module_item_id=21393698

    Toms (2016). Retrieved from http://www.toms.com/what-we-give-shoes

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