Friedman And Milton Friedman's Corporate Social Responsibility?

1433 Words 6 Pages
Up until the mid to late 20th century, businesses were only recognised for doing one thing which was to increase their profit return to their investors within legal boundaries. However, as a result of an era of social activists, Carroll (1991) acknowledges Corporate Social Responsibility (CSR) as a further extension of a business’s arm to also act within ethical and philanthropic avenues that society would expect of businesses.
Like most controversial discussions there is always two opposing views which I will introduce as those like Milton Friedman who opposed CSR as the only obligation a business had was to “make as much money as possible while conforming to the basic rules of society” and to not simply do this would be to disadvantage the
…show more content…
Friedman builds a case that (1) a business does not have responsibilities, businessmen do and they are acting as an agent of the principle (the company) and should therefore be serving the interests of the stockholder (Friedman 1970). Gibson (2000) despite supporting stakeholder theory, the component that “an individual surrenders a degree of autonomy to an organisation” (Gibson 2000; p. 252) is still relevant in the traditional view. If the shareholders’ interests are in line with maximising profits than, to a certain extent, so too are the businessmen’s actions. (2) If they were able to spend the profits of stockholders, a big issue would be knowing how much of the profits they are able to spend before it stops being the shareholders’ profits and becomes their losses, hence damaging their competitive advantages (Friedman 1970). Gibson (2000) also supports that it is not adequate for all stakeholders to be given an equal benefit because if stakeholders (other than the shareholders) are given power of influence over the business it is not fair that shareholders are not given, in return, power of influence over society’s communities and initiatives. (3) If the free-market is unable to solve social problems, the responsibility of the solutions should not befall corporate …show more content…
Carroll and Shabana (2010) retort that Friedman (1970) may believe in a business’ priority to make as much profit as possible but Friedman (1970) does say that this should be done within legal and ethical constraints and thus indicates that the only component of the pyramid that Friedman disapproves of is philanthropic responsibilities. In today’s business market engaging in philanthropic responsibilities is seen as the norm and comes under the stakeholder theory, where the business must take into account the interests of groups that have any sort of dealings with the business where they may be impacted; including customers, suppliers, communities and employers (Gibson 2000).
Benefits that come about from employing CSR initiatives are that of reducing costs and risks not so much in the short time but the viability of the business in the long term, whereby volunteer initiatives of the company in social and environmental problems will allow positive impacts from society in effect flexibility from future governmental regulations, and any sort of tax disadvantages (Carroll and Shabana 2010). This benefit works like clockwork where reducing negative social impacts now will result in future positive effects, and in turn the viability of the

Related Documents