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Unformatted text preview: ve the responsibility to provide their customers with full
information about the products they sell.
Ethical companies, says Nader, will often
also encourage their customers to “shop
around” to make sure they are getting
exactly what they want.
According to Nader, businesses should also
treat their employees well. For example, businesses should take employee grievances seriously and offer their employees a safe place to
work. In addition, when possible, businesses
should consider “quality of life” issues (such
as employee flex-time, and so on). Nader is
also in favor of businesses donating funds to
meet social needs in the community. The Friedman View
According to Milton Friedman, the winner of the 1976 Nobel Prize in economics,
“There is one and only one social responsibility of business—to use its resources and
engage in activities designed to increase its
profits so long as it stays within the rules of
the game, which is to say, engages in open
and free competition, without deception or
fraud.” According to Friedman, if
a company tried to use government to stifle its competition,
“Drive thy business
that company would not be
or it will drive thee.”
engaging in open and free com—Benjamin Franklin
petition and therefore would be
acting unethically. If a company
lied to the buying public about its product,
saying the product could provide certain
benefits that it actually could not provide, it
would be acting unethically.
After a business meets these ethical standards, says Friedman, its job is simple: it
should earn as much profit as possible by
selling the public something it wants to buy.
A business should forget about giving money
to the Red Cross, the homeless, or the children’s wing of a hospital. All of these organizations are outside its social responsibility.
Avon Products is
one of only 19
companies to make
Business Ethics magazine’s list of 100
Citizens in all six
years the award has
been given. Avon is
known for its threeday fund-raising
walks for cancer. Section 1 About Business Firms 169 07 (154-185) EMC Chap 07 11/17/05 5:14 PM Page 170 Asymmetric Information
Asymmetric information exists when one
party has information that another party to a
transaction does not have. For example, let’s
suppose you are planning to buy a used car
from Jack. If Jack has some information
about the car that he doesn’t pass on to you
(the potential buyer), then asymmetric information occurs. The information Jack has but
doesn’t pass on to you could affect your decision to buy the car. For example, suppose the
car has been in an accident, and you don’t
want to buy a car that has been damaged.
Without Jack giving you this piece of information, you might end up buying a car you
don’t really want to buy.
Asymmetric information can exist in
employer-employee situations too. For example, suppose you are being interviewed for a
job by a company. The person interviewing
you for a job doesn’t tell you that a few
employees have gotten sick worki...
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- Winter '14