Question

Do corporate shareholders have an obligation to make certain that their business corporations act in an ethical and proper manner in conducting their business. Describe some example of companies that did not behave this way. What happens when a corporation does not act ethically? Please cite some examples.

Answer 1

Do corporate shareholders have an obligation to make certain that their business corporations act in an ethical and proper manner in conducting their business?

No, from a business point of view, shareholders have no obligation to make certain that businesses need to act in an ethical way. But from the ethical point of view, it is expected from shareholders to oppose any unethical act when it happens. As actions are carried out by individuals and not corporations, so corporations themselves can't make ethical decisions. Board members and executives always look for profit maximization, so sometimes they may act unethically towards society.

Example -

One of the great examples of business is Starbucks. The company has ethical business practices that sometimes fix environmental issues.

What happens when a corporation does not act ethically?

One of the cons of not following ethics in the business is that business would gradually lose it's credibility as well as it's a good reputation. They also may lose a good number of the customer base as well as increase employee turnover. After some time due to an increase in the conflicting environment, an organization would reduce its productivity.