Social responsibility

The firm must decide whether to operate strictly in their shareholders' best interests or be responsible to their employers, their customers, and the society in which they operate. The firm might be included in activities that do not directly benefit the shareholders, though which will enhance the business environment. This has a long term benefit to the firm and hence in the long term the shareholders wealth might be maximized.

Business Ethics

Related to the issue of social responsibility is the question of business ethics. Ethics are stated as the "standards of conduct or moral behavior". It can be thinking of as the company's attitude to its stakeholders, which is, its customers, employees, suppliers, community in common, shareholders, and creditors. High standards of moral behavior demand that a firm treat each of such constituents in a fair and honest way. A firm's commitment to business morals can be measured by the trend of the firm and its employees to stick to laws and regulations associating to:

• Product security and quality
• Fair service practices
• Honest marketing and selling practices
• The utilization of confidential information for personal gain
• Illegal political involvement
• Bribery or illegal payments to obtain business