Four Basic Economic Responsibilities of a Business

A business has economic responsibilities to its direct stakeholders—its investors, employees, and customers. A business has an ethical obligation to meet these responsibilities.
There are four basic economic responsibilities a business has to its direct stakeholders:

1. Profitability: A business creates profit when it sells products or services that are more valuable than the materials and labor it uses to create them. Put simply, the business creates profit by adding value.
   Adding value and creating profit serve the interests of all of a company's direct stakeholders. The company produces products or services that are valuable to customers. The company uses profits to reward investors and pay employees.
2. Transparency: When a business acts with transparency, it provides as much information as practical about its operations. The company allows direct stakeholders to clearly see its practices, strategies, and financial positions. Transparency benefits direct stakeholders.
   Transparency serves the interests of investors by giving them information they need to evaluate the potential risks and rewards of investing in the company. Transparency lets employees and customers see how a company is run. They can make informed decisions about where they work and where they spend their money.
3. Nondiscrimination: In an economic sense, nondiscrimination doesn't refer to the absence of bias against gender or ethnic groups. It means a business applies the same financial criteria to all of its customers, suppliers, and employees. Direct stakeholders benefit from nondiscrimination because the company makes decisions on the financial merit, rather than on the biases and preferences of decision makers.
4. Sustainability: Businesses ensure the sustainability of their operations by improving business processes and developing secure, long-lasting relationships with suppliers and customers. An organization's investors, employees, and customers are called direct stakeholders because they have a stake in the company's future.

Direct stakeholders benefit from the sustainability of a business because when a business has a secure future, investors continue to earn dividends, workers continue to draw paychecks, and customers continue to buy the company's products and services. Why do business organizations exist? Their primary purpose is economic—to make profits for owners and direct shareholders and to provide jobs for employees. Their first ethical responsibility is to fulfill these economic goals.