“What’s a Business For?”

1. “What’s a Business For?” Ethics in Management The University of Winnipeg Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

2. What is the Purpose of Business? • The Social Responsibility [Purpose] of Business is to Increase its Profits • Milton Freedman, Nobel Laureate in Economics • New York Times Magazine, September 13. 1970 • Managers’ only obligation is to shareholders, whose only objective is financial gain. Laws are the only constraints. Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

3. What’s a Business For?Charles Handy, Harvard Business Review, December 2002 • “The purpose of business is not to make a profit, full stop. It is to make a profit so that the business can do something more or better.” Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

4. Shareholders Revisited • “Shareholders provide essential fuel .,.. investment capital … but they have none of the pride or responsibilities of ownership.” • What’s a Business For? • Charles Handy, Harvard Business Review, December 2002 Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

5. Communities with a Purpose • “Good businesses are communities with a purpose ... individuals who want to accomplish something collectively that they couldn’t do separately – people eager to make a contribution to society.” • What’s a Business For? • Charles Handy, Harvard Business Review, December 2002 Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

6. Human Sustainability • “When companies demand that employees forgo the rest of their lives for work, they risk losing key members and damaging productivity.” • What’s a Business For? • Charles Handy, Harvard Business Review, December 2002 • Work-life balance is important Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

7. Business Success • “Business has always been an agent of progress. In itself, this is a noble cause … making the good things in life accessible to more and more people.” • “Think of success as outcomes for others, as well as for shareholders and employees” • What’s a Business For? • Charles Handy, Harvard Business Review, December 2002 Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

8. Alternative Purposes • “The Japanese tradition defines managers’ obligations as promoting the welfare of employees and strengthening the nation.” • Conflicting Responsibilities, HBS 9-392-002 • “Property imposes duties. Its use should also serve the public weal [general good].” • Article 14, Section 2, German Constitution Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

9. Purpose as a Definition • The purpose of business is not an objectively determined phenomenon. It is a social construct (and therefore very much a debatable issue). Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002

10. Implications for Management? • The medical profession has the Hippocratic oath • Should business practitioners make an analogous commitment? • The MBA Oath Slides and lecture draw upon What’s a Business For? Charles Handy, Harvard Business Review, December 2002