Ethics Taxonomy Dimension 4: Society

Abstract

Through their size and power, corporations have a significant impact on society. For instance, the mass-marketing of cigarettes has not just harmed the customers of tobacco conglomerates but passive smokers as well, retailing giants threaten community-based “mom-and-pop stores,” and corporate bail-outs financed by taxpayers put additional pressure on already strained national budgets. These are cases in which corporate activities might negatively affect society. Yet the activities of corporations provide social benefits as well: corporate income tax accounts for over ten percent of total U.S. federal tax revenue, investments of multinational corporations in emerging markets have improved standards of living and education for local residents, and corporations attract related and supporting industries, thereby boosting overall economic growth for the communities in which they are based. In economics, these societal costs and benefits of corporate conduct are described as negative and positive externalities, because they are incurred by parties who have not consented to the transactions that cause them. This power of corporations to inadvertently cause harm or do good for society has given rise to a fervent discourse about the social responsibility of corporations and their managers.