Economic analysis of ethics and social responsibility in today's business environment

Ethics and social responsibility are subjects that are becoming increasingly important in today's business environment. Their effects on the profitability and the long-term survival of a firm are enormous. Countless examples, such as the Intel Corporation and Procter & Gamble, have suggested that the more business firms incorporate ethics and social responsibility into their system, the more likely they will become successful.

John Kay, the director of the Said Business School at Oxford, said critics of business since Aristotle's time have argued that business, and the people engaged in it, are selfish in their motivation, narrow in their interests, and instrumental in their behavior. Kay's research on the characteristics of exceptionally successful companies shows that: "Whatever their common features, exceptional focus on profitability did not seem to be among them. They were particularly profitable, but not particularly profit oriented, and that is an important distinction." "Business is a profession", Kay said. "Successful businesses serve the needs of their customers, provide a rewarding environment for their workers, satisfy the needs of those who finance them, and support the development of their communities (Schofield, 1999)."

It is important to investigate the various definitions of ethics. Ethics, using a contemporary definition, is the motivation based on moral ideas of right and wrong. There are three different approaches to defining the parameters of ethics; utilitarian approach, religious approach, and the self-interest approach.